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United States v. Armiento

decided: June 17, 1971.

UNITED STATES OF AMERICA, APPELLEE,
v.
JAMES ARMIENTO AND EDWARD JERNEK, DEFENDANTS-APPELLANTS



Friendly, Chief Judge, and Danaher*fn* and Hays, Circuit Judges.

Author: Danaher

DANAHER, Circuit Judge:

These appellants on brief told us that they are appealing "solely" from the pretrial denial of a motion to suppress. Judge Lasker's opinion, United States v. Armiento, 326 F. Supp. 960 (S.D.N.Y. Jan. 6, 1970), recited that the detailed affidavits predicating the search warrants, valid when issued June 1, 1966, adequately established probable cause. They reflected personal observations of special agents of the Intelligence Division of the Treasury Department, transactions carried out between the agents and the defendants, and telephone calls personally placed by the agents. Judge Lasker explained that "an element of one of the crimes which was the subject of the investigation" was an apparent failure to register [26 U.S.C. § 4412], concluding "In addition, it should be noted that the affidavits are not restricted to violations of the wagering tax statutes."

The appellants contended that the search warrants should have been retroactively invalidated pursuant to the Court's rulings in Marchetti v. United States, 390 U.S. 39, 88 S. Ct. 697, 19 L. Ed. 2d 889 (1968) and Grosso v. United States, 390 U.S. 62, 88 S. Ct. 709, 19 L. Ed. 2d 906 (1968). Judge Lasker rejected that contention, and so do we.*fn1

Let it be noted at once that, with the consent of the Government, the district court, taking account of the Marchetti-Grosso rulings, dismissed the third count which had charged the appellants with failing to pay the special tax imposed by 26 U.S.C. § 4411, and the fourth count which had charged a failure to supply the information required by 26 U.S.C. § 4412. Their Fifth Amendment privilege against compulsory self-incrimination was thus recognized*fn2 as a valid defense to their prosecution on these counts.

I.

After the dismissal of the third and fourth counts, the appellants stood charged in the first count, with the use of a wire communication facility for the interstate transmission of bets in violation of 18 U.S.C. § 1084; and in the second count with violation of 18 U.S.C. § 1952, the use of a facility in interstate commerce to carry on a gambling enterprise in violation of New York State law.*fn3 These statutes had been passed in aid of the Government's anti-racketeering program, and were in no way related*fn4 to an improper exercise of the Government's power "to assess and collect taxes on unlawful gambling activities." United States v. United States Coin & Currency, supra, note 1, 401 U.S. at 715, 91 S. Ct. at 1043, 28 L. Ed. 2d 434. Thus these appellants have not been convicted of failure to register and to pay the tax. Rather, they were convicted*fn5 because of the evidence adduced through and the testimony of the special agents of the Treasury after a trial running through some five court days.

II.

In contrast, and quite obviously to be distinguished from the circumstances in the instant case, we note that initially one Angelini had already been convicted of failure to register or to pay the wagering tax in violation of 26 U.S.C. §§ 4411 and 4412, United States v. Angelini, 346 F.2d 278 (7 Cir.), cert. denied 382 U.S. 838, 86 S. Ct. 86, 15 L. Ed. 2d 80 (1965). With that much in mind, we take account also of the additional background*fn6 predicating United States v. United States Coin & Currency.*fn7 There Mr. Justice Harlan emphasized that the Court in Marchetti-Grosso "took pains" to make clear that "It was only the method Congress had adopted in collecting the tax that raised the Fifth Amendment question" -- and " only this method of tax collection * * was subject to constitutional objection."*fn8 (Emphasis added.) In that case it was held that the wagering funds of the gambler Angelini were not to be forfeited on account of his earlier failure to comply with Sections 4411 and 4412 for "the conduct being penalized is constitutionally immune from punishment."*fn9 (Emphasis added.)

III.

The Eighth Circuit sat in banc to consider whether or not search warrants usable*fn10 when issued in connection with violations of 26 U.S.C. §§ 4411 and 4412, became unusable after the Marchetti-Grosso rulings came down. There as here, charges of violation of the gambling tax statutes were dismissed. Chief Judge Van Oosterhout commented, United States v. Hanon:*fn11

In our present case, defendants are not being punished criminally or otherwise for failure to comply with the wagering tax laws. They are being punished for violating § 1952, proscribing interstate gambling. The failure to register or pay the tax is not an element of the § 1952 charge. Defendants have not complied with the registration or tax laws and no evidence has been offered or received in their trial before the jury with respect to violation of the wagering tax laws. The only way the wagering tax is here involved is that it offers probable cause under the Fourth Amendment for the search. Probable cause for the search is a Fourth Amendment issue and such issue has heretofore been discussed and decided adversely to the defendants.

In United States v. Tiktin, 427 F.2d 1027 (6 Cir. 1970), the Government had appealed from a district court order granting the appellees' motion to suppress. Reversing, and following the reasoning of the Fourth Circuit in Washington v. United States, 402 F.2d 3, 6 (1968), Judge Edwards concluded that evidence seized pursuant to a search warrant issued upon the basis of an alleged violation of the federal wagering tax laws was not to be suppressed in a prosecution under the ...


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