United States v. Robson, 72-3114.

• Decision Date: 13 April 1973
• Docket Number: No. 72-3114.,72-3114.
• Citation: 477 F.2d 13
• Parties: UNITED STATES of America, Plaintiff-Appellant, v. Walter C. ROBSON, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

477 F.2d 13 (1973)

UNITED STATES of America, Plaintiff-Appellant, v. Walter C. ROBSON, Defendant-Appellee.

No. 72-3114.

United States Court of Appeals, Ninth Circuit.

April 13, 1973.

Stephen V. Wilson, Asst. U. S. Atty. (argued), William D. Keller, U. S. Atty., Eric A. Nobles, Asst. U. S. Atty., Los Angeles, Cal., for plaintiff-appellant.

Clyde R. Maxwell (argued), Los Angeles, Cal., for defendant-appellee.

Before DUNIWAY and WRIGHT, Circuit Judges, and RENFREW,^* District Judge.

EUGENE A. WRIGHT, Circuit Judge:

The government has appealed from an order of the district court suppressing certain exhibits. Respondent taxpayer was indicted on three counts of income tax evasion 26 U.S.C. § 7201 charging him with willfully failing to report more than $100,000 in taxable income for the calendar years 1965, 1966, and 1967.

During the trial below the government attempted to introduce into evidence three handwritten transcripts of some of respondent Robson's business records taken by an Internal Revenue Agent in the office of Robson's accountant with Robson's approval. Respondent moved to suppress these exhibits, but the motion was untimely. The court indicated that while it agreed with respondent on the merits of his motion it could not order suppression at that time since such an order would not preserve the government's right to appeal. At the court's suggestion, respondent moved for a mistrial, followed by a motion for suppression. Both motions were granted, and the government's right to appeal under 18 U.S.C. § 3731 was preserved.

Inquiry into respondent's tax matters dated from a telephone call to the local IRS office in March 1968. The caller, a young woman who stated that she was engaged to Robson in 1967, reported that he might be guilty of income tax evasion. She indicated the kind of business practice used and described some assets owned by Robson, including a boat, two automobiles and two lots. She also gave the names of banks where he did business. The informant indicated that she was filing a claim for a reward should any back taxes be assessed against and collected from respondent as a result of her information.

According to established IRS procedure, this information was taken over the phone by a special agent of the Intelligence Division assigned to receive such intelligence information items from the public. The information item was subsequently evaluated by another agent in the Intelligence Division to determine if the item had potential for an Intelligence Division criminal investigation. In light of the fact that there were no prior information items in the files with respect to Robson, and also because the information given by the informant was vague on several key points, this agent decided that the item did not warrant a criminal investigation by the Intelligence Division. Again according to established procedures, the information item was then forwarded to the Audit Division for its evaluation.

The Audit Division evaluated this information item in light of respondent's returns for the years in question and apparently decided that an audit was in order to determine the existence of any additional tax liability. After the referral to the Audit Division, the informant called in again.

This time she related that Robson had bragged that he had embezzled approximately $80,000 from one business during the previous year. She also indicated that by her estimate Robson had taken approximately $250,000 over the last three years. This information was not acted upon by Intelligence Division, but was instead simply forwarded to Audit Division to be added to the previous item.

Agent Larry Koba of the Audit Division was assigned the Robson case. His assignment was to examine Robson's tax affairs for the relevant years in order to determine the correct tax liability. His instructions were no different than those given him in examining any other return. Specifically, he was given no special instructions regarding fraud.

On June 24, 1968, Agent Koba wrote to Robson indicating that the latter's tax returns for 1965 and 1966 had been assigned to Koba for examination. Koba asked Robson to call and to arrange for a mutually convenient time for Koba to examine the books and records used by Robson in the preparation of his returns. Subsequently Robson's accountant, Mr. Gillmore, called Koba to arrange for an appointment.

The record discloses that Agent Koba at no time informed Robson of his Fifth and Sixth Amendment rights. Nor was Robson informed by Agent Koba of the criminal potential inherent in his investigation, or of Robson's right under the Fourth Amendment to demand a warrant before submitting his records for examination.

After auditing the records, Koba concluded that Robson had received over $100,000 in income that had not been reported in his returns.¹ Pursuant to standing orders to refer any case to the Intelligence Division upon the discovery of an indication of fraud during the course of an audit, Agent Koba referred the Robson case to the Intelligence Division. That Division then conducted a criminal investigation, and this prosecution ensued.

During the trial below, the government attempted to introduce into evidence three handwritten transcripts of Robson's business records taken by Agent Koba during the course of his examination of the records. The district court granted respondent's motion to suppress, on the following reasoning:

The reason I am granting the motion, Mr. Wilson, is that it appears to me from the evidence in this case—and I take the word from a question asked by you—that the audit, the civil audit, stemmed solely from, for no other reason but, the investigative report and the conduct of the special agents in notifying the Revenue agents of the possible tax fraud of Mr. Robson. The proximate causation, the sole causation, the only reason, and not a single other reason, why there was a civil audit of Mr. Robson stemmed solely from the acts of the special agent.

At that time the Government had one of two choices to make. The Government could have gone ahead and conducted an audit and would have at that time been limited in its remedies to civil relief. But if the Government did not want to limit its remedy to civil relief, it then had an obligation to inform the taxpayer and the taxpayer\'s agents of his right to refuse the examination of his books.

The government, under the facts of this case, did not have the right to exercise its options after the fact. The option had to be exercised before there was an examination of Mr. Robson\'s books.

If the Revenue agents had examined the books as a result of another practice or procedure or there had been another cause or there had been another reason why the books were audited, my ruling, of course, would have been different. But when the sole cause of the audit is a result of the efforts of the special agents, then the Revenue agent is acting as the agent of the special agent and the Fourth Amendment and Fifth Amendment rights of the defendant have been violated, primarily the Fourth Amendment.

On the facts of this case, there are four possible grounds for the suppression of these exhibits: (1) under the Fifth and Sixth Amendments because Robson was not warned of his Miranda- type rights; (2) under the Fifth Amendment because the IRS agents violated due process by not following their internal regulations directing them to give certain warnings to taxpayers suspected of criminal violations; (3) under the Fourth Amendment because Robson's consent to the search was induced by trickery, deceit, or misrepresentations of Agent Koba; or (4) under the Fourth Amendment because Robson's consent to the search was not a "knowing and voluntary" waiver of his right to demand a warrant.

FIFTH AND SIXTH AMENDMENTS

Miranda-Type Warning

In Kohatsu v. United States, 351 F.2d 898 (9th Cir. 1965), we held that where agents of the Intelligence Division had properly identified themselves and disclosed their purpose to audit tax returns, they were under no duty to advise the taxpayer of his Fifth Amendment rights or of the criminal nature of the investigation. We reaffirm that holding, and refuse to follow the only circuit to adopt a contrary view, the Seventh.²

This court has repeatedly refused to extend the Miranda rule beyond its stated limits. Simon v. United States, 421 F.2d 667 (9th Cir. 1970). As we stated in Simon:

"Absent custody in the conventional sense, we have declined to fault a government agent and reverse a conviction for failure to give a Miranda type warning unless the facts clearly demonstrated that the appellant was `deprived of his freedom by the authorities in any significant way.\'" Id. at 668.³

Here respondent was not deprived of his freedom in any way and accordingly we hold that Agent Koba was under no duty to inform respondent of his Miranda-type rights, including the fact that the investigation could have potential criminal consequences. The fact that Agent Koba had an informant's tip suggesting possible tax evasion in no was distinguishes the instant case. Feichtmeir v. United States, 389 F.2d 498 (9th Cir. 1968).

FIFTH AMENDMENT

Due Process

On October 3, 1967, approximately one year before Agent Koba initiated his investigation, the Internal Revenue Service issued News Release No. 897, which stated in relevant part as follows:

In response to a number of inquiries the Internal Revenue Service today described its procedures for protecting the Constitutional rights of persons suspected of criminal tax fraud, during all phases of its investigations.

Investigation of suspected criminal tax fraud is conducted by Special Agents of the IRS Intelligence Division. This function differs from the work of Revenue Agents and Tax Technicians who examine returns to determine the correct tax liability.

Instructions issued to IRS Special Agents go beyond most legal requirements to assure that persons are advised of their

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