The opinion of the court was delivered by: LASKER
This is a renewal of a motion to suppress. The original motion was denied by Judge Cooper on March 2, 1967. Since then the United States Supreme Court has ruled in Marchetti v. United States, 390 U.S. 39, 88 S. Ct. 697, 19 L. Ed. 2d 889 (1968), that the occupational tax registration provisions of the Internal Revenue Act, 26 U.S.C. §§ 4411 and 4412, "may not be employed to punish criminally those persons who have defended a failure to comply with their requirements with a proper assertion of the privilege against self-incrimination." Id. at 42, 88 S. Ct. at 699. Grosso v. United States, 390 U.S. 62, 88 S. Ct. 709, 19 L. Ed. 2d 906 (1968), applied the reasoning of Marchetti to the gambling excise tax, 26 U.S.C. § 4401, and the conspiracy law, 18 U.S.C. § 371, insofar as the latter is applied to wagering tax violations.
The defendants contend that, as a result of Marchetti and Grosso, evidence seized on the basis of two search warrants and an arrest warrant, which were in turn founded on affidavits substantially supported by information relating to violations of the wagering tax provisions, should be suppressed.
For the reasons set forth below the motion is denied.
The four-count indictment originally charged the defendants with (1) using a wire communication facility for the transmission in interstate commerce of bets and wagers in violation of Title 18, U.S.C. §§ 2 and 1084; (2) using a facility in interstate commerce to carry on a gambling enterprise in violation of Section 986 of the Penal Law of New York, McKinney's Consol. Laws, c. 40 (Title 18, U.S.C. §§ 2 and 1952); (3) failing to pay the special tax imposed by Title 26, U.S.C. § 4411; and (4) failure to supply the information required by Title 26, U.S.C. § 4412.
Counts 3 and 4 have been dismissed with the consent of the government because the defendants have properly asserted their Fifth Amendment defenses within the holdings of Marchetti and Grosso.
In view of the dismissal of counts 3 and 4, the only charges remaining against the defendants are those of using interstate facilities to violate New York and Federal anti-gambling and racketeering statutes.
The issue now raised, as distinct from the issue before Judge Cooper, which related solely to the question of whether the underlying affidavits validly established probable cause for the issuance of the warrants, is whether evidence pertaining to gambling and racketeering should be suppressed on the ground that the supporting affidavits for the warrants permitting the searches consisted of information relating primarily to wagering tax violations.
The defendants claim, on the authority of Lee v. Kansas City, 390 U.S. 197, 88 S. Ct. 901, 19 L. Ed. 2d 1037 (1968), De Cesare v. United States, 390 U.S. 200, 88 S. Ct. 900, 19 L. Ed. 2d 1036 (1968), Piccioli v. United States, 390 U.S. 202, 88 S. Ct. 899, 19 L. Ed. 2d 1034 (1968), and Stone v. United States, 390 U.S. 204, 88 S. Ct. 899, 19 L. Ed. 2d 1035 (1968), that Marchetti and Grosso should be retroactively applied and that under the holding of Silbert v. United States, 289 F. Supp. 318 (D.C. Md. 1968), warrants issued on the basis of wagering tax violations cannot survive Marchetti and Grosso and cannot be used in an interstate gambling prosecution. Although in the light of Desist v. United States, 394 U.S. 244, 89 S. Ct. 1030, 22 L. Ed. 2d 248 (1969), and United States v. Bennett, 415 F.2d 1113, decided by the Court of Appeals of this Circuit on September 9, 1969, defendants' position as to retroactive application of Marchetti and Grosso appears unfounded, I find it unnecessary to determine that question, since it is my view that the warrants in question remain valid even under the holdings of Marchetti and Grosso.
The defendants reason that under Marchetti and Grosso there is no longer any obligation for gamblers to register or to pay the wagering tax, and, therefore, that warrants based on information showing a failure to perform these acts are legally insufficient, since no probable cause existed to believe that a crime would be committed. The government, on the other hand, contends that the warrants in question are not affected by the holdings of Marchetti and Grosso because the sole purpose of the exclusionary rule under the Fourth Amendment -- to deter improper conduct by law enforcement officers -- is not applicable here, where the activity of the law enforcement officers was clearly proper, since the wagering tax provisions stood legally unimpaired at the time of the affidavits and search warrants. I add that, in my opinion, the affidavits and warrants still stand unimpaired, since the Supreme Court in Marchetti and Grosso did not hold the statutes as such unconstitutional. Precisely establishing the limits of its holding, the Court stated in Marchetti, 390 U.S. at 61, 88 S. Ct. at 709:
"We emphasize that we do not hold that these wagering tax provisions are as such constitutionally impermissible; we hold only that those who properly assert the constitutional privilege as to these provisions may not be criminally punished for failure to comply with their requirements."
Here, of course, the defendants will not be criminally punished for failure to comply with the requirements of the statute, the counts originally charging them with failure to comply having been dismissed. That the limited holding in Marchetti did not impair the validity of search warrants based on the wagering tax statute is further supported by the concurring opinion of Justices Stewart, Brennan and White in Stanley v. Georgia, 394 U.S. 557, at 570-571, 89 S. Ct. 1243, at 1251, 22 L. Ed. 2d 542. There a warrant was issued by the Commissioner for the seizure of "equipment, records, and other material used in or derived from an illegal wagering business." As Mr. Justice Stewart stated, on the basis of such a warrant:
"There can be no doubt, * * *, that the agents were lawfully present in the appellant's house, lawfully authorized to search for any and all of the items specified in the warrant, and lawfully empowered to seize any such items they might find."
Defendants cite for their position: United States v. $125,882 in U.S. Currency, 286 F. Supp. 643 (S.D.N.Y. 1968), and Silbert v. United States, supra. In United States v. Currency, Judge Tyler held that in the light of Marchetti and Grosso, the defendants could not constitutionally be punished by compelling forfeiture of money used in gambling operations. United States v. Currency is inapposite, however, since Judge Tyler based his ruling on the theory that "a forfeiture of property was deemed by the court to be an impermissible penalty to impose on the assertion of the Fifth Amendment privilege." (p. 645). Here, we have no penalty imposed for the assertion of the Fifth Amendment privilege. To the contrary, the defendants have asserted their Fifth Amendment privilege and, as indicated above, the counts based on the wagering tax statute have accordingly been dismissed with the consent of the government and the approval of the court, and no further Fifth Amendment assertions with regard to the remaining counts of the indictment have been made.
In Silbert, supra, the court concluded that, because the affidavits in question were "clearly underpinned and supported by the extensive allegations of federal wagering tax law violations," insufficient foundation for the alleged violations of the conspiracy and interstate racketeering laws existed in view of the fact that the affidavits' "underpinning and support has since been destroyed by Marchetti and Grosso." (289 F. Supp. p. 320). I find the reasoning of Silbert unpersuasive, and it is clear that the holding is a minority view, opposed to a substantial number of holdings to the contrary. The reasoning of Silbert has been refuted in Washington v. United States, 402 F.2d 3 (4th ...