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United States v. Conti

decided: June 1, 1966.


Waterman, Moore and Feinberg, Circuit Judges.

Author: Moore

MOORE, Circuit Judge:

Appellant Ralph Conti was convicted of willfully evading payment of the federal excise tax on wagering imposed by 26 U.S.C. § 4401, in violation of 26 U.S.C. § 7201; willfully failing to file a wagering excise tax return, in violation of 26 U.S.C. §§ 7203, 4401, 6071, and 6061; willfully failing to pay the excise tax on wagers, in violation of 26 U.S.C. §§ 7203 and 4401; and engaging in the business of accepting wagers without paying the tax imposed by 26 U.S.C. § 4411 and without registering with the District Director of Internal Revenue as required by 26 U.S.C. § 4412, all in violation of 26 U.S.C. § 7203. Appellant David Newman was charged with the same offenses and convicted of all but the first, as to which charge the jury disagreed.

I. The Legality of the Search of the Apartment

After Special Agent Nicholas Treretola of the Internal Revenue Service placed a bet in a call to a telephone located in Apartment B, 1582 First Avenue, New York, New York, the Internal Revenue Service placed the apartment under surveillance for a few days, observed Newman and Conti coming in and out of the apartment, and placed more bets over the phone. On January 22, 1964, a United States Commissioner issued a warrant for the search of the apartment, upon the affidavit of Special Agent David Ostrager. The warrant was executed the same day while Conti and Newman were in the apartment. Both men were arrested and a variety of bet slips, odds sheets, racing programs, and the like were seized.

Appellants moved to suppress the fruits of this seizure before trial. Judge Weinfeld denied the motions in an opinion reported at 232 F. Supp. 1004 (S.D.N.Y. 1964). The fruits of the search were admitted into evidence at trial over the objections of the appellants. Appellants now urge that the fruits of the search were inadmissible for any of several reasons, and that as a result the convictions must be reversed.

Appellants urge first that the warrant was fatally inconsistent with the affidavit upon which it was based. The warrant declared that there was probable cause to believe that betting slips and various other gambling paraphernalia were being concealed at the apartment and were being used in the business of accepting wagers in violation of 26 U.S.C. §§ 4401, 4411, 4412, and 7272. The first of these sections imposes a federal excise tax on wagering; the second imposes a $50 annual tax on persons accepting wagers; the third requires such persons to register with the district director of internal revenue; and the fourth imposes a $50 penalty on such persons who fail to register. Appellants urge that the only criminal offense mentioned in the warrant is that of not registering, whereas the affidavit of the Special Agent sets forth reasons for believing that the apartment was being used to carry on the business of accepting wagers without payment of the special occupational tax, but does not mention any grounds for believing that the residents had not registered with the District Director. An unreported case, United States v. Tripodi, 213 F. Supp. 735 (S.D.N.Y. 1962) 62 Cr. 655, held that just such an inconsistency between an arrest warrant and the complaint on which it was issued presented grounds for the suppression of evidence obtained as a result of the subsequent arrest.

We do not find this apparent inconsistency fatal. The facts set forth in the affidavit indicated reasonable grounds for the belief that appellants had not paid their occupational tax. Payment of the occupational tax accompanies filing of a return on Form 11-C, which is the means prescribed by the Regulations for registering in order to comply with § 4412 and to avoid violation of § 7272. Regs. § 44.4901-1 (a), (c). The same information which indicated failure to pay the occupational tax in this case also indicated failure to register, and therefore violation of § 7272.

Appellants also challenge the sufficiency of the affidavit upon which the search warrant was issued. The affidavit, given by a special agent of the IRS, set forth the following as indicative of probable cause:

" . . . Testimony of a Special Agent of the Internal Revenue Service who: (1) placed horse bets by telephoning number TR 9-2265; (2) that investigation has disclosed that the telephone number is installed at Ground Floor Apartment B at 1582 First Avenue, New York, New York; (3) that a search of the records of the Internal Revenue Service reveal that none of the persons residing at the aforementioned address have paid the Special Tax imposed by Title 26, United States Code, Section 4411; and (4) that wagers were placed by the Special Agent on January 20, 21, 1964."

The date of the affidavit was January 22, 1964.

Appellants point out that the information relied on is not that of the affiant. However, hearsay may serve as the basis for the issuance of a warrant, if there is reason to believe that the hearsay is reliable. Rugendorf v. United States, 376 U.S. 528, 533, 11 L. Ed. 2d 887, 84 S. Ct. 825 (1964); Jones v. United States, 362 U.S. 257, 4 L. Ed. 2d 697, 80 S. Ct. 725 (1960). Here, the declarant was a special agent, and he spoke of things he himself had done in telephone calls to the phone located in the apartment. This seems sufficient indication of the reliability of the information. See United States v. Freeman, 358 F.2d 459 (2d Cir. 1966).

Appellants contend that the affidavit does not indicate various crucial dates and, therefore, does not indicate that probable cause existed on a date close to the date of issuance of the warrant. Sgro v. United States, 287 U.S. 206, 77 L. Ed. 260, 53 S. Ct. 138 (1932). However, it seems fairly clear from the language of the affidavit that the special agent on whose information the affiant relies placed the bets on January 20 and 21. The use of the article "the" to refer to the special agent described under (4) indicates that the agent intended is the same as the one mentioned at the beginning of the paragraph. Moreover, the use of the present tense in the phrase "a search of the records . . . reveal" [sic] indicates that the search was made at a time close to the time of the giving of the affidavit.

It is true that details of who made the search and the investigation mentioned in (2) and (3) are not given. It is also true that the paragraph is not a paragon of grammar and style. But we must bear in ...

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