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United States v. Caiello

decided: December 31, 1969.

UNITED STATES OF AMERICA, APPELLEE,
v.
RICHARD V. CAIELLO, APPELLANT



Lumbard, Chief Judge, and Medina and Feinberg, Circuit Judges. Feinberg, Circuit Judge (concurring).

Author: Lumbard

LUMBARD, Chief Judge:

Richard V. Caiello appeals from his conviction on three counts of willfully attempting to evade joint income tax liability in the years 1960, 1961, and 1962 in violation of 26 U.S.C. section 7201. The appeal raises the now familiar question of whether statements and records of a taxpayer under investigation by revenue agents and special agents of the Internal Revenue Service (IRS) may be received in evidence where the taxpayer has not been given the so-called Miranda warnings. All but one of the circuits which have considered this question have repeatedly held that such warnings are not required.*fn1 A divided panel of the Seventh Circuit recently held that such warnings "must be given to the taxpayer by either the revenue agent or the special agent at the inception of the first contact with the taxpayer after the case has been transferred to the Intelligence Division [of the IRS]." United States v. Dickerson, 413 F.2d 1111, 1116-1117 (7th Cir. 1969) (footnotes omitted).*fn2 We reject the reasoning of the majority opinion in Dickerson and affirm the conviction on the authority of our long line of cases refusing to require such warnings, the latest of which is United States v. White, 417 F.2d 89 (2d Cir. Oct. 10, 1969).

When considering whether warnings about Fifth and Sixth Amendment rights should be given during tax investigations which may lead to criminal prosecution, most courts of appeal have examined the facts surrounding the IRS interviews on a case-by-case basis to determine whether they presented the inherently compulsive aspects which the Supreme Court found to exist in the process of custodial interrogation in Miranda v. Arizona, 384 U.S. 436, 86 S. Ct. 1602, 16 L. Ed. 2d 694, 10 A.L.R.3d 974 (1966), and later in Mathis v. United States, 391 U.S. 1, 88 S. Ct. 1503, 20 L. Ed. 2d 381 (1968). See e. g., United States v. Squeri, 398 F.2d 785, 789-790 (2d Cir. 1968); United States v. Mackiewicz, 401 F.2d 219, 222-223 (2d Cir. 1968). As we stated in Squeri, supra, 398 F.2d at 790:

The Fifth Amendment privilege prohibits the government from compelling a person to incriminate himself. It was the compulsive aspect of custodial interrogation, and not the strength or content of the government's suspicions at the time the questioning was conducted, which led the court to impose the Miranda requirements with regard to custodial questioning. We believe that the presence or absence of compelling pressures, rather than the stage to which the government's investigation has developed, determines whether the Miranda requirements apply to any particular instance of questioning.

The testimony shows that at no time prior to the "formal interview" with the taxpayer did either of the IRS agents conducting the investigation specifically warn Caiello that he could refuse to answer their questions or produce records, that anything he said could be used against him in a criminal prosecution, or that he had a right to counsel, retained or appointed. Although many of the cases decided in this and other circuits have mentioned the fact that taxpayers undergoing audit were informed of some or all of their rights at some point during a long investigation, see e. g. Squeri, supra, 398 F.2d at 788, this factor has not been regarded as crucial.*fn3 Appellant contends that the complete absence of warnings in the present case distinguishes our previous decisions. We disagree. The fact that IRS agents sometimes give a partial warning at one or even several interviews during a protracted investigation does not mean that warnings of some kind are or should be required. Rather, proof that some warnings were given, or that none were given, merely serves as evidence bearing on the question of whether the questioning was noncoercive.

The substance of our prior decisions is that if the taxpayer is aware that he is the subject of a tax investigation and if he is interviewed in noncustodial situations, Miranda warnings are not required. The rationale is that once the taxpayer is aware that agents of the IRS are conducting a serious inquiry into his income tax liability and the agents do not conduct their investigation in a manner which is inherently coercive it is not improper to expect that "to some extent persons must be prepared to look after themselves." Morgan v. United States, 377 F.2d 507, 508 (1st Cir. 1967). In the present case, there can be no question that the IRS investigation satisfied both the conditions described above.

Caiello made a timely motion to suppress statements and records given by him to several IRS agents. Judge Port held a pretrial hearing and denied the motion; the objections were renewed at trial, and testimony about Caiello's statements and copies of many of his records were introduced in evidence over those objections. Thus, Judge Port found that Caiello had not discharged his burden of showing that the circumstances surrounding his contacts with the IRS were so coercive as to require the giving of warnings. Upon review of the record, we agree that this burden was not met.

The transcript of the suppression hearing shows that Caiello was contacted more than twenty times by revenue agent George Kowitt and special agent Michael Wilton, either together or separately.*fn4 There can be no doubt that the statements and records furnished by Caiello were important, for the government used the net worth and expenditure method of establishing unreported income.*fn5 As noted above, none of the Miranda warnings was specifically given.

Caiello was fully aware of what was occurring. The initial face-to-face meeting between Caiello and Kowitt, the first IRS man to contact him, took place on June 3, 1964, in the office of Caiello's bookkeeper Hurley. Caiello himself remained for only fifteen minutes, after delivering some records he had agreed to bring when Kowitt arranged the appointment over the telephone. Kowitt continued his audit at Hurley's office with the records made available to him there. Thus, from the inception of the IRS investigation, both Caiello and his bookkeeper Hurley were fully aware that a tax investigation was underway.*fn6

The investigation was referred to the Intelligence Division by Kowitt on August 4, 1964, and special agent Wilton first met with Caiello on August 17, eleven days later. Up to this point, Kowitt had visited Caiello twice after the brief meeting at Hurley's office. Wilton testified that he was introduced to Caiello by Kowitt as a special agent of the Intelligence Division and that he showed Caiello his badge and credentials. On cross-examination at trial, Wilton stated that he told Caiello: "I have been assigned to conduct an investigation of your tax liability." Thus, it was perfectly clear to Caiello that he was the subject of a tax investigation, and an investigation which had more serious aspects by reason of the appearance and formal introduction of a second IRS representative.*fn7

The record is also replete with testimony that none of the interviews took place in a custodial setting or were inherently coercive. At the suppression hearing, Caiello was asked several questions relating to the entire course of his contact with representatives of the IRS prior to the formal interview, which he attended with counsel on January 21, 1966. One set of exchanges is particularly significant:

"Q. Now at any time during the course of your contact with members of the Federal Internal Revenue Service did any of the representatives ever advise ...


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