US v. Gillotti
| Decision Date | 28 January 1993 |
| Docket Number | No. 92-CR-81A.,92-CR-81A. |
| Citation | 822 F. Supp. 984 |
| Parties | UNITED STATES of America, v. Francis A. GILLOTTI, a/k/a Frank A. Gillotti, Defendant. |
| Court | U.S. District Court — Western District of New York |
Dennis C. Vacco, U.S. Atty., Marc S. Gromis, Asst. U.S. Atty., of counsel, Buffalo, NY, for U.S.
Richard C. Southard, Lockport, NY, for defendant.
This matter was referred to Magistrate Judge Leslie G. Foschio, pursuant to 28 U.S.C. § 636(b)(1)(B), for report and recommendation on defendant's motions to suppress evidence and dismiss the indictment. Magistrate Judge Foschio filed a Report and Recommendation on December 30, 1992, denying defendant's motions.
This Court, having carefully reviewed Magistrate Judge Leslie G. Foschio's Report and Recommendation, as well as the pleadings and materials submitted by the parties; and no objections having been timely filed to the Magistrate Judge's Report in the abovecaptioned matter, it is hereby
ORDERED, that pursuant to 28 U.S.C. § 636(b)(1), the Magistrate Judge's Report and Recommendation is accepted in its entirety.
IT IS FURTHER ORDERED that the parties shall appear in Part II of this Court at 9:00 a.m. on February 8, 1993 for a meeting to set trial date.
IT IS SO ORDERED.
REPORT AND RECOMMENDATION
This matter was referred to the undersigned on May 8, 1992 by the Hon. Richard J. Arcara for report and recommendation on any dispositive motions. The matter is presently before the court on Defendant's motion to suppress evidence and to dismiss the indictment.
Defendant, Gillotti, was charged in a three count information, dated April 4, 1992, with violations of 26 U.S.C. § 7203. Specifically, Gillotti is charged with willfully failing to file income tax returns for the years 1985, 1986, and 1987.
On July 10, 1992, Gillotti filed a motion to suppress records obtained pursuant to administrative summonses issued under 26 U.S.C. § 7602 and § 7609 on the basis that the summonses were improperly issued, to dismiss the indictment on the ground of government misconduct, to dismiss the indictment for failure of the IRS to comply with the notice requirement of the Privacy Act of 1974, 5 U.S.C. § 552a, to suppress records obtained in violation of the Privacy Act, and to dismiss the indictment on the ground of selective or discriminatory prosecution.
In its response, the Government stated that, as the Internal Revenue Service ("IRS") referred Gillotti's case for criminal prosecution on November 27, 1989 and no administrative summonses were issued after July 1, 1989, there can be no claim of an improper issuance of a summons after the referral, and, therefore, the motion to suppress the records obtained through the use of summons should be denied. The Government also maintains that there is no basis to Gillotti's assertion that he did not receive proper notice of the summonses as required by 26 U.S.C. § 7609 as the summonses were served by certified mail and Gillotti personally signed the post office receipt. Therefore, there was no government misconduct in the serving of these summonses. As to the alleged violations of the Privacy Act, the Government claimed that such assertions have been rejected as frivolous by numerous courts. Finally, the Government contends that Gillotti's claims of selective and/or discriminatory prosecution are unfounded and unsubstantiated and Gillotti's motion to dismiss on this basis should also be denied.
Oral argument on these issues was held on October 22, 1992, at which time counsel agreed to submit these motions to the court on the papers.
For the reasons as set forth below, the court recommends that Gillotti's motions to dismiss and motions to suppress be DENIED.
Gillotti claims that, at the time the administrative summonses were issued in this case, the IRS was not collecting information relating to his civil tax liability, but, rather, issued the summonses for the purpose of obtaining evidence to use in a criminal prosecution against him. Gillotti also contends that the Government delayed submitting a recommendation to prosecute to the Department of Justice in order to gain additional information for the criminal prosecution. The Government claims that these arguments are unfounded as the criminal referral was not made until more than five months after the last administrative summonses were issued, and that there was no intentional delay on the part of the IRS to delay the referral as a special agent's report recommending criminal prosecution was mailed to Albany for review by the IRS quality review office there on July 18, 1989 and, thereafter, district counsel in the Buffalo office was empowered to concur in the agent's recommendation or to forego any criminal referral and simply seek civil penalties from Gillotti. In either event, the Government asserts, the administrative summonses were issued well before either of these events took place.
This court, in a separate Memorandum and Order, dated December 30, 1992, found that, based on the fact that Gillotti had not made a substantial preliminary showing of an alleged abuse of process or that the administrative summonses issued in this case were improper, an evidentiary hearing into the issue was not warranted. See, Memorandum and Order at pages 5-6. See also, United States v. Millman, 765 F.2d 27, 29 (2d Cir.1985); United States v. Tiffany Fine Arts, 718 F.2d 7, 14 (2d Cir.1983), aff'd, 469 U.S. 310, 105 S.Ct. 725, 83 L.Ed.2d 678 (1985). The court could find no basis on which to order an evidentiary hearing.
In DeGroote v. United States, 1986 WL 8877 (W.D.N.Y.1986) (Telesca, J.), the court stated that 26 U.S.C. § 7602(c) was enacted in 1982 to provide a "bright line" test to determine when a referral for prosecution had occurred. Pursuant to the statute, a Justice Department referral is in effect as of the date when the case has been recommended to the Attorney General for a grand jury investigation or for a criminal prosecution for any offense connected with the enforcement of the internal revenue laws. 26 U.S.C. § 7602(c)(2)(A). The court further stated in DeGroote that the legislative history of 26 U.S.C. § 7602 indicated that Congress expected that, once a Department of Justice referral had taken place, the IRS would not use its own summons power as to do so would contravene the exclusive authority given the Department of Justice to pursue a criminal prosecution. See, DeGroote, supra, at page 2.
In this case, it is clear from the record that the summonses were issued well before the date of the referral of the action to the Department of Justice for criminal prosecution. Therefore, there is no basis on which to suppress the records obtained pursuant to these summonses or on which to dismiss the indictment based on improper usage of these summons.
As to Gillotti's claim of intentional delay, there is no evidence in the record that the IRS delayed referring this case for prosecution pending its receipt of records from the summonses it had issued in this case. It is not improper for the IRS to issue a civil summons when it is considering a criminal prosecution unless the summons is issued after recommendation of the criminal prosecution to the Department of Justice. United States v. MacKenzie, 777 F.2d 811, 819 (2d Cir.1985). However, a defendant may inquire into the "good faith" of the IRS in issuing the summonses even if they were issued before the criminal prosecution recommendation. MacKenzie, supra, at 819. In making such an inquiry, a court is required to look at the "institutional" posture of the IRS rather than that of the individual agent in deciding whether the IRS itself had been acting in good faith. MacKenzie, supra, at 819.
In this case, there is no evidence that the IRS decided on the criminal prosecution against Gillotti, yet delayed the referral to the Department of Justice in order to issue summonses designed to obtain records useful in the prosecution, thereby evading the limitations set forth in 26 U.S.C. § 7602. The earliest date on which an agent's report was sent to Albany for review by the IRS's quality review office was July 18, 1989, well after the last summons was issued. See, Affidavit of Thomas R. Hess at ¶ 3, dated July 23, 1992. Absent specific fact-based allegations, there is no basis on which to find that the IRS deliberately delayed referring the case to the Department of Justice to obtain information from Gillotti to bolster a previously determined criminal prosecution referral.
Finally, as to Gillotti's assertion that notice of the issuance of summonses to third-party record holders was not provided to him by the IRS as required by 26 U.S.C. § 7609, this allegation is clearly contradicted by IRS Special Agent Thomas R. Hess who states that notice of these summonses, as required by the statute, were sent by certified mail to Gillotti. See, Affidavit of Thomas R. Hess at ¶ 2, dated July 23, 1992. Agent Hess further states that his file on Gillotti contains numerous certified mail receipts signed by Gillotti. See, Affidavit of Thomas R. Hess at ¶ 2, dated July 23, 1992. Gillotti has not provided the court with any contradictory evidence. Therefore, the court concludes that the required notice was indeed provided to Gillotti.
Accordingly, based on the above, this motion to dismiss and/or to suppress records should be DENIED as there is no substantive basis on which to find that any abuse of process or improper service of summons resulted in this case.
Gillotti has also filed a motion to dismiss the indictment and/or to suppress evidence on the ground that the IRS violated the Privacy Act of 1974, 5 U.S.C. § 552a, by...
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