United States v. Ruggeiro
| Decision Date | 07 May 1969 |
| Docket Number | No. 69-42-69-47.,69-42-69-47. |
| Citation | 300 F. Supp. 968 |
| Court | U.S. District Court — Central District of California |
| Parties | UNITED STATES of America and Charles H. Moriyama, Special Agent of the Internal Revenue Service, Petitioners, v. M. P. RUGGEIRO, as Vice President Finance & Administration of Jordanos' Inc. and Jordanos' Inc., Respondents. UNITED STATES of America and Charles H. Moriyama, Special Agent of the Internal Revenue Service, Petitioners, v. John L. JORDANO, Jr., as President of Pacific Beverages Company and Pacific Beverages Company, Respondents. UNITED STATES of America and Charles H. Moriyama, Special Agent of the Internal Revenue Service, Petitioners, v. John L. JORDANO, Jr., as President of Chef's Vendors, Inc. and Chef's Vendors, Inc., Respondents. UNITED STATES of America and Charles H. Moriyama, Special Agent of the Internal Revenue Service, Petitioners, v. James D. JORDANO, as Vice President of Jantro Investment Company, and Jantro Investment Company, Respondents. UNITED STATES of America and Charles H. Moriyama, Special Agent of the Internal Revenue Service, Petitioners, v. John L. JORDANO, Jr., as President of Jorland, Inc., and Jorland, Inc., Respondents. UNITED STATES of America and Charles H. Moriyama, Special Agent of the Internal Revenue Service, Petitioners, v. John L. JORDANO, Jr., as President of Jorlease, Inc., and Jorlease, Inc., Respondents. |
Wm. Matthew Byrne, Jr., U. S. Atty., Los Angeles, Cal., for petitioners.
Baird, Holley, Baird & Galen, Los Angeles, Cal., for respondents.
These cases come before the Court on six separate petitions to enforce Internal Revenue summonses. An order to show cause was issued by the Court requiring respondents, M. P. Ruggeiro as Vice President Finance & Administration of Jordanos' Inc. and Jordanos' Inc., John L. Jordano, Jr. as President of Pacific Beverage Company (hereinafter called Pacific), John L. Jordano, Jr. as president of Chef's Vendors, Inc. (hereinafter called Chef's), James D. Jordano, as Vice President of Jantro Investment Company and Jantro Investment Company, John L. Jordano, Jr. as President of Jorland, Inc. and Jorland, Inc. (hereinafter called Jorland), John L. Jordano, Jr., as President of Jorlease, Inc., and Jorlease, Inc. (hereinafter called Jorlease), to show cause why they should not be compelled to testify and produce records demanded in the Internal Revenue summonses, served upon each respondent respectively.
Since each of the respondents have mutual interests and raise the same issues of law and fact, all are considered together.
Each of the summonses involved herein was issued by petitioner Charles H. Moriyama in his capacity as a Special Agent of the Internal Revenue Service, employed in the Intelligence Division of the office of the District Director in Los Angeles, California.
Separate answers have been filed by each of the respondents. In each of the answers there are admissions of the summonses and denials that they are legally enforceable.
Alleging affirmative defenses the respondents contend:
Respondent M. P. Ruggeiro as Vice President, Finance & Administration of Jordanos' Inc. and Jordanos' Inc. (hereinafter referred to as Jordanos'), further contend by way of affirmative defense:
1. The correctness of Jordanos' income tax returns for the fiscal years ending June 30, 1962, to June 30, 1965, inclusive, has been determined. The summons procedure of section 7602 of the Internal Revenue Code of 1954, as amended, does not authorize issuance of a summons in such a situation.
Respondent James D. Jordano as Vice President of Jantro Investment Company and Jantro Investment Company (hereinafter referred to as Jantro), interposes the additional affirmative defense:
1. The correctness of Jantro's income tax returns for the fiscal year ending September 30, 1965, has been determined. The summons procedure of section 7602 is therefore inapplicable.
Samuel Charles Harris, an Internal Revenue Agent in the Audit Division, assigned to the Santa Barbara office of the Internal Revenue Service, performed an audit of the federal corporate income tax returns of Jordano for the fiscal years ending June 30, 1962, June 30, 1963, June 30, 1964, and June 30, 1965. He also performed an audit of the federal corporate income tax returns of Jantro for the fiscal year ending September 30, 1965. These audits began in December, 1965.
In connection with the audits of Jordano and Jantro, Mr. Harris examined the minute books, general ledgers, general journals, disbursements journals, sales journals, voucher register and purchase journals.
On February 6, 1967, Mr. Harris procured the execution of a Form 870,1 Waiver of Restrictions on Assessment and Collection of Deficiency in Tax and Acceptance of Overassessment.
Sometime during 1967, George Franklin Regan, a Special Agent employed in the Intelligence Division of the office of the District Director, Los Angeles, California, received information of possible unreported income of Jordano for years that had already been audited.
At the time of the receipt of this information Orrell Davis, a Revenue Agent in the Audit Division, assigned to the Santa Barbara office, was conducting an audit of Jordano for the fiscal year ending June 30, 1966.
Special Agent Regan inquired of Revenue Agents Harris and Davis concerning the scope of the audit of Jordano and discovered that these income items had not been audited.
Upon the information received, Special Agent Regan submitted an information report through channels.
On February 29, 1968, Special Agents Moriyama and Regan were assigned to a preliminary investigation of Jordano. The source of the then unnumbered preliminary case was within the Intelligence Division of the Internal Revenue Service.
On April 3, 1968, pursuant to the request of Special Agent Moriyama, there was issued by Homer O. Croasmun, Regional Commissioner, Internal Revenue Service, Treasury Department, a notice of re-examination (Form L-153) to respondent Jordano for fiscal years ending June 30, 1962 through June 30, 1965.
On June 4, 1968, Special Agent Moriyama issued and served upon Jordano a summons requiring appearance with all corporate records for the fiscal years ending June 30, 1963 through June 30, 1967.
On June 26, 1968, the tax investigation involving Jordano was changed from an unnumbered-preliminary to a numbered tax case with the continued assignment of Special Agents Moriyama and Regan.
Simultaneously, Special Agents Moriyama and Regan were assigned to unnumbered-preliminary investigation of respondents Jantro, Jorland, Jorlease, Chef's and Pacific.
On June 27, 1968, Special Agent Moriyama issued and served a summons to each of respondents, requiring appearance with all corporate records as follows:
On July 15, 1968, pursuant to the request of Special Agent Moriyama, there was issued by Homer O. Croasmun, Regional Commissioner, Internal Revenue Service, Treasury Department, a notice of re-examination (Form L-153) to respondent Jantro for the taxable year 1965.
On August 2, 1968, Special Agent Moriyama issued and served a summons to respondent Jantro requiring appearance with all corporate records for fiscal years ending September 30, 1963 through September 30, 1967.
Each of the summonses issued was met with the same response by counsel for respondents — if the Internal Revenue Service would assure respondents that none of the evidence discovered, as the result of these records, would be used in a criminal prosecution of respondents or its officers, they would comply.
Respondents have raised some questions of the propriety of proceedings by orders to show cause which will essentially determine all of the issues of the petitions on file herein.
Petitioners' proceedings are brought pursuant to the provisions of Title 26 §§ 7402(b) and 7604(a).
Title 26 U.S.C. § 7402(b) provides:
Title 26 U.S.C. § 7604(a) provides:
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