US v. Levine

• Decision Date: 12 April 1988
• Docket Number: No. 86 CR 304.,86 CR 304.
• Citation: 690 F. Supp. 1165
• Parties: UNITED STATES of America, v. Sheldon LEVINE, Defendant.
• Court: U.S. District Court — Eastern District of New York

690 F. Supp. 1165

UNITED STATES of America, v. Sheldon LEVINE, Defendant.

No. 86 CR 304.

United States District Court, E.D. New York.

April 12, 1988.

COPYRIGHT MATERIAL OMITTED

Andrew J. Maloney, U.S. Atty., Brooklyn, N.Y., Edward A. McDonald, Attorney-in-Charge Organized Crime Strike Force (Christopher Ulrich, Sp. Atty., Raymond Jermyn, Sp. Asst. U.S. Atty., of counsel), Brooklyn, N.Y., for U.S.

Stroock & Stroock & Lavan (Thomas P. Puccio, Joel Cohen, Daniel Turbow, Joann Crispi, of counsel), New York City, for defendant.

MEMORANDUM AND ORDER

NICKERSON, District Judge.

Defendant Sheldon Levine, indicted on eight counts, moves to suppress evidence obtained by electronic surveillance and statements by him to law enforcement officials. The indictment charges him with (1) obstruction of justice by destroying business records, 18 U.S.C. § 1503; (2) conspiracy to violate the federal tax laws by attempting to evade excise taxes on the sale of gasoline, failing to collect and pay excise taxes, and aiding and advising one Herman DeJonge to prepare false excise tax returns, 18 U.S.C. § 371; and (3) aid, inducement, and advice to DeJonge to (a) attempt to evade payment of excise taxes, (b) fail to account for and pay excise taxes, and (c) prepare and present false excise tax returns. 26 U.S.C. §§ 7201, 7202, 7206(2).

I. BACKGROUND

The evidence at issue stems chiefly from an August 2, 1985 eavesdropping order of Suffolk County Judge Kenneth Rohl, issued on application of the New York State Attorney General. The order authorized state and federal officials to intercept at Levine's office in Melville, Suffolk County, New York, oral communications by him and certain others as those communications concerned New York State crimes of Grand Larceny in the Second and Third Degrees, N.Y. Penal Law (Penal Law) §§ 155.35, 155.30, Falsifying Business Records in the First Degree, Penal Law § 175.10, and Conspiracy to commit such crimes, Penal Law § 105.05. Theft of state sales and excise taxes constitutes grand larceny under the Penal Law.

Judge Rohl signed various extensions of the surveillance order on August 29, September 30, October 25, November 22 and December 20, 1985. In those extensions he authorized the interception of communications relating to the crime of Offering a False Instrument for Filing, Penal Law § 175.35. Interceptions ended on January 10, 1986.

The affidavits submitted to Judge Rohl on the application for the original order described the nature and extent of the investigation. Participating were some twenty full-time investigators from the offices of the State Attorney General, the Nassau and Suffolk County District Attorneys, the State Department of Taxation and Finance, the Nassau and Suffolk County Police Departments, the United States Attorney for the Eastern District of New York, the Organized Crime Strike Force for that district, the Federal Bureau of Investigation, and the Internal Revenue Service.

The affidavits asserted that there was cause to believe that for at least five years some twenty unscrupulous gasoline distributors, together with members of the Colombo, Luchese, and Genovese crime families, had engaged in a widespread, well-organized scheme to evade payment of any excise taxes imposed on motor fuel products. Since the objective of the scheme was to pay no tax on the sale of gasoline and since the methods to be employed to obtain that objective made no material distinction based on the governmental body imposing the tax, it was obvious that, although the investigation was designed to obtain evidence to prosecute for the state crime of grand larceny by stealing state taxes, the investigators had every reason to believe, indeed they avowed, that the intercepted conversations would also pertain to the theft of federal as well as state and local taxes.

On November 8, 1985, on the application both of the State Attorney General and of a federal prosecutor from the Federal Organized Crime Strike Force, Judge Rohl amended the eavesdropping warrant to permit the use and disclosure in any United States court or grand jury proceeding of intercepted communications relating to various federal crimes, including those now charged in the indictment. The order also permitted use and disclosure of testimony concerning those communications and evidence derived from them. Judge Rohl found that the application for the amendment had been made as soon as practicable.

Based on evidence obtained from the intercepted conversations, Judge Rohl issued, on February 11, 1986, warrants authorizing searches of Levine's office, home and several other locations. Agents conducted the searches the next day.

II. ALLEGED SUBTERFUGE EAVESDROPPING IN VIOLATION OF 18 U.S.C. § 2517(5) AND NEW YORK CRIMINAL PROCEDURE LAW § 700.65(4)

Levine asks the court to suppress all evidence obtained pursuant to Judge Rohl's orders on the ground that the officials used the state authorizations as a subterfuge impermissibly to get evidence of federal tax violations for which they could obtain no order independently.

The pertinent federal statutory language appears in Title III of the Omnibus Crime Control and Safe Streets Act of 1968, 18 U.S.C. § 2510 et seq. (the Federal Act), passed by Congress "to define on a uniform basis the circumstances and conditions under which the interception of wire or oral communications may be authorized." S.Rep. No. 1097, 90th Cong., 2d Sess., reprinted in 1968 U.S.Code Cong. and Admin.News 2112, 2177. That legislation permits the interception and disclosure of wire communications by wire-tapping, and of oral communications by electronic surveillance or "bugging," where the communications may provide evidence of specified crimes. Unless the detailed procedures of the statute (and of any state provisions, if applicable) have been complied with, no such communication, or evidence derived from it, may be received in evidence in any federal or state proceeding. 18 U.S.C. § 2515.

Under 18 U.S.C. § 2516(1) certain federal officials may apply to a federal judge for an order approving wiretapping or electronic surveillance to seek evidence of specified federal crimes. Federal tax crimes, such as those charged in the present indictment, are not among those specified in the section.

Similarly under 18 U.S.C. § 2516(2) certain state prosecuting attorneys authorized by state statute may apply to a state court for an order to seek evidence of specified state felonies including crimes "dangerous to life, limb or property." New York State adopted N.Y. Criminal Procedure Law (C.P.L.) § 700.05(8), authorizing eavesdropping in connection with the state crimes of grand larcency and falsifying records, the subject crimes stated in Judge Rohl's orders.

Under the Federal Act intercepted communications "relating to offenses other than those specified in the order of authorization" may be disclosed and used pursuant to the official duties of law enforcement officials. 18 U.S.C. § 2517(1), (2), (5). However, any such communications, and evidence derived from them, may be admitted in a federal proceeding only if, "on subsequent application" made "as soon as practicable," a judge of competent jurisdiction "authorizes or approves" and finds that the communications have "otherwise" been intercepted in accordance with the federal legislation. 18 U.S.C. § 2517(3), (5).

According to the legislative history, these provisions permit the use in evidence of communications "otherwise intercepted" whether or not they pertain to "designated `offenses'" that themselves would support a surveillance order. 1968 U.S.Code Cong. and Admin.News, supra, at 2189; see, e.g., United States v. Aloi, 449 F.Supp. 698, 716-17 (E.D.N.Y.1977).

C.P.L. § 700.65 contains provisions similar but not identical to those in the federal legislation and recites, in substance, that when the state officials intercept "a communication which was not otherwise sought and which constitutes evidence of any crime," the communication and the evidence derived from it may be disclosed by a witness in a criminal proceeding, if a state justice finds that the communication was "otherwise intercepted" in accordance with the state law and amends the warrant accordingly. The application for the amendment must be made "as soon as practicable." C.P.L. § 700.65(4).

In requiring judicial approval before allowing interception of communications "relating to offenses other than" those specified in the initial authorization, Congress sought to preclude "subterfuge" searches. Thus where intercepted communications pertain to crimes for which an order was not or could not be obtained, the judge must determine that the original order was sought in "good faith" and that the communications were "in fact incidentally intercepted" during the course of a lawfully executed order. 1968 U.S.Code Cong. and Admin.News, supra, at 2189. See United States v. Marion, 535 F.2d 697, 700 (2d Cir.1976); United States v. McKinnon, 721 F.2d 19, 22 (1st Cir.1983).

Levine argues that the officials did not undertake the surveillance to obtain evidence of state crimes but employed a subterfuge to search for federal tax violations which themselves would not support an initial surveillance order.

As the officials informed Judge Rohl in their application, they had reason to believe from their extensive investigation that the conspirators sought to steal all gasoline taxes, whether local, state, or federal. Plainly the officials knew, therefore, that inevitably the same conversations would concern the theft of both federal excise taxes and local and state taxes.

Levine contends that the officials must be deemed to have sought the order of August 2, 1985 as a subterfuge unless they had no "expectation" of obtaining evidence of federal tax crimes and were surprised to discover that evidence.

A.

The Senate Committee report cited above makes it clear that the relevant consideration is not whether the...