United States v. Phillips

• Citation: 479 F. Supp. 423
• Decision Date: 26 October 1979
• Docket Number: 79-50 CR-T-H and 79-51 CR-T-K.,79-49 CR-T-K,No. 79-48 CR-T-H,79-48 CR-T-H
• Parties: UNITED STATES of America v. Vivian PHILLIPS and Esther Phillips. UNITED STATES of America v. Mark POPOVICH and Nina Popovich. UNITED STATES of America v. Frank J. RUSSELL. UNITED STATES of America v. Carl J. SEDLMAYR, Jr.
• Court: U.S. District Court — Middle District of Florida

479 F. Supp. 423

UNITED STATES of America v. Vivian PHILLIPS and Esther Phillips.

UNITED STATES of America v. Mark POPOVICH and Nina Popovich.

UNITED STATES of America v. Frank J. RUSSELL.

UNITED STATES of America v. Carl J. SEDLMAYR, Jr.

Nos. 79-48 CR-T-H, 79-49 CR-T-K, 79-50 CR-T-H and 79-51 CR-T-K.

United States District Court, M. D. Florida, Tampa Division.

October 26, 1979.

COPYRIGHT MATERIAL OMITTED

Wilmer Parker, III, Special Atty., Tax Division, U. S. Dept. of Justice, Washington, D. C., for plaintiff.

P. D. Aiken, Fort Lauderdale, Fla., Arnold D. Levine, D. Frank Winkles, Tampa, Fla., William R. Bagby, Lexington, Ky., B. G. Stephenson, Arlington, Va., George W. Ericksen, and Claude H. Tison, Jr., Tampa, Fla., for defendants.

ORDER ON MOTIONS TO SUPPRESS

HODGES, District Judge.

These cases are before the Court on motions to suppress filed by the Defendants seeking an order excluding from evidence the fruits of a search conducted by Canadian authorities in Edmonton, Alberta, Canada on July 24, 1975. The four cases were consolidated for the limited purpose of conducting joint proceedings on the motions, and an evidentiary hearing was held before me on August 6 through August 9, 1979. Prior to the hearing the parties had presented to the Court their respective memoranda, and the Court has since received supplemental briefs. It is appropriate, therefore, to now make the following findings of fact and conclusions of law concerning these motions.

FINDINGS OF FACT

1. The Defendant, Carl J. Sedlmayr, Jr., was during 1975 the President of Royal American Shows (R.A.S.) one of the largest traveling carnival shows in North America. R.A.S. travels from city to city in the United States and Canada using its own train and equipment. During the 1975 Canadian summer circuit, the carnival traveled to Winnipeg, Calgary, Edmonton and Regina in Western Canada.

2. The Defendants, Vivian and Esther Phillips, Mark and Nina Popovich, and Frank Russell, are independent concessionaires who were associated with R.A.S. Each of these Defendants, except Mark Popovich, traveled with R.A.S. during the 1975 Canadian summer circuit. As independent concessionaires they owned their own equipment, purchased their own supplies and made various payments to R.A.S. for transportation about the carnival circuit and for the right to conduct business on the carnival midway set up by R.A.S. pursuant to contract with fair or exhibition authorities in each city. They lived in their own trailers on the exhibition grounds or in rented cars aboard the R.A.S. train.

3. On July 24, 1975, from about 2:00 A.M. to 6:00 A.M., while the carnival was playing in Edmonton, Alberta, a force of approximately 139 officers of the Edmonton City Police (E.C.P.) and the Royal Canadian Mounted Police (R.C.M.P.) made a "raid" upon the fairgrounds for the purpose of conducting a massive search pursuant to judicially issued warrants. Trailers and train cars used as personal residences and/or business offices by the Defendants were searched and a large number of documents were seized. A United States Internal Revenue Agent was later permitted by Canadian officers to copy some of those documents, and the Defendants now seek to suppress them.

4. In 1974 Canadian criminal intelligence information accumulated by the R.C. M.P. indicated that certain individuals believed to be associated with the carnival industry were transporting large amounts of cash from cities in Western Canada, where R.A.S. and other carnivals were playing, to Vancouver, British Columbia, and ultimately into the United States. Airport squads of the R.C.M.P. detected persons carrying this money in hand baggage. Among the so-called "bagmen" were Benjamin Henry Mayers, William Percival Goggins and Walter Stokes. Canadian authorities determined that Mayers was an officer of Specialty Manufacturing, Ltd. of Vancouver and associated with Ace Novelty Co. of Seattle. Goggins was also known to have connections to Specialty Manufacturing. R.C.M.P. officers suspected that the money originated with R.A.S. and was derived from "skimming" operations on the midway in violation of Canadian tax laws, or from drug dealings or other criminal activities. However, the specific connection of these individuals with R.A.S. was not known. Much later it was determined that they were in fact involved in the sale of plush toys to carnivals and various independent concessionaires.

5. During these investigative activities in 1974 Canadian and United States authorities exchanged considerable information concerning the individuals involved. In particular, memoranda were exchanged between the R.C.M.P. and the I.R.S. Intelligence Division in Seattle. On one occasion, on June 29-30, 1974, acting on a tip received from Canadian officers, Special Agent Stan Lovell and another agent of the Seattle I.R.S. office surveilled Mayers and Goggins in Vancouver prior to Mayers' entry into the United States. However, Agent Lovell testified at the suppression hearing that he did not go to Canada to assist Canadian authorities but that he was concerned only with possible violations of the tax laws of the United States.

6. Also during the summer of 1974, Sgt. Douglas, Egan, R.C.M.P., then stationed in Saskatchewan, investigated allegedly fraudulent carnival activities in that province. He reported to his superiors that about 40 games were detected on the midways of various carnivals, including R.A.S. in Regina, which he believed to be fraudulent or otherwise in violation of the Canadian criminal code. He also reported other illegal activities in which he believed carnival operators or employees were engaged. However, there is no evidence to indicate that United States officials cooperated or assisted in this investigation or that they were informed of the results.

7. In 1975, Canadian authorities continued their investigation of carnival operations in Western Canada. A copy of Egan's report of his 1974 investigation was forwarded to Inspector Graham George, R.C. M.P., liaison officer in Western Canada for the Criminal Intelligence Service (an organization of various Canadian law enforcement agencies). On May 13 and 14, 1975 in Regina a "task force" was formed consisting of representatives from several Canadian governmental agencies including the R.C.M.P., the Canadian tax agency known as the Department of National Revenue (D.N.R.), and local police forces. The force was organized for the purpose of a concentrated investigation of the carnival industry and R.A.S. was selected as the primary target of the investigation because it was the largest carnival operating in Western Canada.

8. The specific purpose of the task force was to investigate whether the Exhibition Boards in various cities which rented fairgrounds to R.A.S. were being defrauded, whether midway games were fraudulently operated and whether income taxes were being evaded.

9. Since no law enforcement officials in Canada had expertise in carnival operations the task force sought advice from state or local law enforcement authorities in Arizona or California concerning the nature of the carnival business. However, there is no evidence to indicate that any U. S. agency requested Canadian officials to investigate the carnival industry in Canada or that any U. S. agency suggested the formation of a task force for that purpose.

10. The task force investigated R.A.S. during its 1975 engagements in Winnipeg, Calgary, Edmonton and Regina.

11. Task force members observed activities by the "bagmen" in 1975 similar to those noted in 1974. On June 16, 1975, someone with the R.C.M.P. telephoned the I.R.S. office in Seattle and requested assistance in securing a list of motor vehicles registered in the State of Washington to Benjamin Mayers or Ace Novelty Co. On June 18 Special Agent Lovell supplied that information by telephone (apparently without inquiry as to the reason for the request). On June 26 in Winnipeg Benjamin Mayers and James Breen were seen by the R.C.M.P. leaving for Vancouver carrying $30,000. On July 12, William Goggin and James Breen presented $70,000 to the R.C. M.P. airport detachment in Calgary for a private inspection for flight clearance. The airport detachment noted the license number of the car used by the two men and passed the information on to the task force.

12. The R.A.S. carnival left Calgary for Edmonton on July 14, 1975 followed by the Task Force. Inspector Erhard Hahn, who commanded the Morality Division of the E.C.P., worked with the task force in Edmonton. On July 21, Hahn organized a raid in Edmonton upon tents housing a game known as the "Nickel Diggers." The "Nickel Diggers" were determined to be owned by Casper Bellino, an independent concessionaire, and officers obtained and executed that evening a warrant upon his trailer. The searching officers seized documents which were then examined by Edmund Swartzack, the D.N.R. representative on the task force. Swartzack formed the opinion from the accounting records and tax returns that there was a 40% under reporting of income.

13. Contemporaneously, on July 15, 1975, the task force sought an authorization to intercept private communications under the Canadian Protection of Privacy Act, Part IV-1, Criminal Code of Canada, § 178.1 et seq. Similar to the corresponding United States Act, 18 U.S.C. § 2510 et seq., the Canadian statute provides for judicial approval and supervision of wiretaps, and for exclusion of evidence obtained in violation of the Act. The authorization, granted by Judge Wachowitz in Edmonton, specified that private communications over three R.A.S. telephones on the Edmonton fairgrounds could be intercepted with respect to the offenses of theft, fraud and conspiracy under the Criminal Code. Authorization was also given to intercept any oral or wire communication in any hotel room or other similar accommodation in Edmonton that William Percival Goggin, James Breen, Benjamin Mayers or ...