US v. Yung, Crim. A. No. 91-20049-01.
| Decision Date | 03 February 1992 |
| Docket Number | Crim. A. No. 91-20049-01. |
| Citation | 786 F. Supp. 1561 |
| Court | U.S. District Court — District of Kansas |
| Parties | UNITED STATES of America, Plaintiff, v. Alex YUNG a/k/a Glen M. Hemsley, James M. Peterson, Steven J. Hemsley, James M. Peterson, IV, Conrad L. Caldwell, Edward T. Skinner, Dan E. Gibson, Raymond J. Stenson, Joseph E. Scheckel, Mary W. Wilson, and Robert D. Scott, Defendants. |
COPYRIGHT MATERIAL OMITTED
Julie A. Robinson, Asst. U.S. Atty., Christopher Cardani, U.S. Dept. of Justice, Tax Div., Crim. Enforcement Section, Washington, D.C., for U.S.
R. Bruce Kips, Fairway, Kan., for Alex Yung.
J. Charles Droege, Overland Park, Kan., for James M. Peterson.
Larry C. Pace, Kansas City, Kan., for Steven J. Hemsley.
Grant W.P. Morrison, Morrison, Neeleman & Cramer, Salt Lake City, Utah, J. Steven Schweiker, Overland Park, Kan., for James M. Peterson, IV.
Robert W. Manske, Olathe, Kan., for Conrad L. Caldwell.
Charles R. Harvey, Overland Park, Kan., for Edward T. Skinner.
Thomas L. Boeding, Kansas City, Kan., for Dan E. Gibson.
David Phillips, Kansas City, Kan., for Joseph E. Scheckel.
Charles A. Hallberg, Sherrill, Iowa, Zygmunt J. Jarczyk, Kansas City, Kan., for Mary W. Wilson.
Robert A. DeCoursey, Kansas City, Kan., for Robert D. Scott.
This matter is before the court on motions to suppress filed by defendants Dan E. Gibson (Doc. # 195), Alex Yung (Doc. # 131 and # 210), Steven J. Hemsley (Doc. # 104) and Edward T. Skinner (Doc. 146). A hearing was held on the motions on December 2, 1991, and defendant Gibson was given additional time to file a supplemental brief on his motion. Having considered the arguments presented by the parties, the court makes the following findings and order.
On February 27, 1990, Internal Revenue Service ("IRS") Criminal Investigation Division Special Agent Douglas Handley ("Handley") applied for a warrant to search defendant Gibson's offices located at 908 West College, Suite A, Independence, Missouri. In support of the application, Handley filed a seventeen-page affidavit setting forth the background of his investigation and alleging probable cause to believe that Gibson had committed violations of 18 U.S.C. § 371 (). The application further included an exhibit describing the property to be seized:
1. Originals and copies of domestic and foreign trust contracts, indentures, agreements, certificates, minutes of trustees, and trust correspondence, and related documents.
2. Originals and copies of trust accounting records, including workpapers, ledgers, journals, notes, checks and other banking instruments, memoranda, and correspondence for the taxable year beginning January 1, 1985, and continuing to the present.
3. Lists of trust customer's and client's names, addresses and telephone numbers.
4. Records of payments received from trust clients, including workpapers, ledgers, journals, receipts, invoices, bank account statements, checks, deposit tickets, memoranda, and correspondence for the taxable year beginning January 1, 1985, and continuing to the present.
5. Electronic equipment, such as computers, printers, word processors, printouts, magnetic storage media, software and related manuals used to generate and/or store the information described in items 1, 2, 3, and 4 of this exhibit.
6. Mechanical sealing devices of trusts, individuals, and other organizations, used to affix seals and notarizations to trust documents.
7. Retained copies of Internal Revenue Service forms including forms SS-4, W-8, 1040, 1041S, 1041, and 1040NR, along with related and supporting schedules prepared for trust purchasers and clients for taxable years beginning January 1, 1985, and continuing to the present.
8. Membership agreements for members of IBA (International Business Association) or any other organization promoting the sale of trusts, dated on or after January 1, 1985.
9. Records of payments made on or after January 1, 1985, for sales of trusts or the payment of commissions and fees to salesmen and others, paid in connection with the sale of trusts and related services.
10. Video tapes, audio tapes, photographs, pamphlets, brochures, and other promotional material used to promote the sale of domestic and foreign trust organizations.
11. Indicia of occupancy, residency, and/or ownership of the premises described above, including, but not limited to utility and telephone bills, and canceled envelopes.
Following issuance of the search warrant, Handley, accompanied by other government agents, executed the warrant and obtained numerous items of evidence.
Defendant Gibson, appearing pro se, now seeks suppression of the evidence on various grounds.
The majority of arguments now raised by Gibson were previously asserted in a pre-indictment motion to suppress evidence and return property filed by Gibson and his co-tenants with the United States District Court for the Western District of Missouri on March 13, 1990. That motion was denied by Judge Dean Whipple in a well-reasoned opinion filed on July 17, 1990.
In response to Gibson's current motion to suppress, the government argues that the doctrine of collateral estoppel precludes Gibson from reasserting the arguments presented in his first motion to suppress. "A party is generally estopped from relitigating an issue decided against him or her in a prior lawsuit when (1) the issue is identical to one presented in the prior adjudication; (2) the prior adjudication resulted in a final judgment on the merits; (3) the estopped party was a party or in privity with a party in the prior adjudication; and (4) the estopped party had a full and fair opportunity to litigate the issue in the prior suit." United States v. Rosenberger, 872 F.2d 240, 242 (8th Cir.1989).
The court finds that Gibson is collaterally estopped from reasserting the arguments previously presented and ruled upon by Judge Whipple. Five of the issues now presented by Gibson in his motion to suppress are identical to those presented by Gibson to Judge Whipple in the initial motion. Further, Gibson received a judgment on the merits of his initial motion. Finally, a review of Judge Whipple's opinion gives every indication that Gibson had a full and fair opportunity to litigate the five issues presented in his initial motion. Accordingly, the court finds that each of the prerequisites for application of the collateral estoppel doctrine have been met. Id.
Although several federal courts have held that the doctrine of collateral estoppel can be used to prevent a criminal defendant from relitigating the lawfulness of searches and seizures, Rosenberger, 872 F.2d at 242; United States v. Thoresen, 428 F.2d 654, 667 (9th Cir.1970); United States v. Levasseur, 699 F.Supp. 965, 980-82 (D.Mass.1988), the Tenth Circuit has never addressed this issue. Accordingly, out of an abundance of caution, the court will briefly discuss each of the issues now presented by Gibson, including those previously raised.1
Gibson first argues that there was a lack of probable cause to issue the search warrant because, in obtaining the warrant, "Handley made materially false statements with reckless disregard for the truth." Specifically, Gibson argues that: (1) Handley's affidavit stated that the items to be seized were "concealed" at the building when in fact the subsequent search "proved that nothing at the address was found to be concealed or hidden"; (2) certain of Handley's affidavit statements were based upon his experience and not specific testimony concerning Gibson; (3) the affidavit did not state that the building contained multiple occupants or was residential in nature; (4) nothing in the affidavit indicated that Gibson had conspired to commit a crime; (5) the affidavit erroneously alleged that Gibson had sponsored trust sales seminars in Paola and Louisburg, Kansas; (6) the affidavit statement alleging that informant information had been verified was unsupported; (7) the affidavit statements were misleading as to the nature of the conversations between Gibson and undercover agent Lucy Rangel; (8) the affidavit contained no information indicating that the trusts offered or used by Gibson were illegal; and (9) the affidavit failed to state that the occupants of the building were engaged in activities protected by the First Amendment.
In reviewing the validity of a search warrant, the court must determine "whether, under the totality of the circumstances presented in the affidavit, the magistrate had a substantial basis for finding a fair probability that contraband or other evidence of a crime would be found in the place to be searched." United States v. Cook, 949 F.2d 289, 292 (10th Cir.1991). Stated differently, the duty of this court "is simply to ensure the magistrate had a substantial basis for concluding probable cause existed." United States v. Parrish, 925 F.2d 1293, 1296 (10th Cir.1991).
Based on the totality of the circumstances presented in the affidavit, the court finds that probable cause existed for the issuance of the search warrant. Handley's affidavit indicates that he had been conducting a long-term investigation of an alleged nationwide conspiracy to promote and sell sham domestic and foreign trust organizations used by purchasers to evade federal income taxes. After detailing the background of the conspiracy and the nature of the trusts, the affidavit further indicates that defendant Gibson was a salesman for the trusts and that a trust sales seminar was held at Gibson's office during the week of February 19, 1990. Finally, the affidavit indicates that Gibson had agreed to meet an undercover agent at his office on March 2, 1990, to discuss the purchase of a trust. In light of this information, and in light of Handley's experience in investigating individuals involved in promotion and...
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