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UNITED STATES v. OSTRER

October 21, 1980

UNITED STATES of America
v.
Louis C. OSTRER et al., Defendants



The opinion of the court was delivered by: DUFFY

Louis Cuple Ostrer was convicted by a jury of conspiracy to evade taxes, income tax evasion, conspiracy to embezzle, embezzlement, interstate transportation of stolen property and running a corrupt organization influenced by racketeers.

The conviction is supported by overwhelming evidence, the most damaging of which came from the mouth of the defendant who admitted practically every element of each and every count of the indictment. Apparently his defense was based on an alleged lack of intent; as to this, the jury did not believe him. Indeed, if the jury had believed him, I would have been amazed. Ostrer's defense included a braggadocious explanation of how he cheated not only the government out of $ 6.8 million in taxes but various insurance companies, banks and pension and welfare funds out of enormous amounts of money.

 Ostrer, however, contends that his conviction must fall since it was tainted by illegal electronic surveillance, an illegal search and seizure and by use of immunized grand jury testimony. The testimony and other proof received at the post-trial hearing held with respect to these matters demonstrate that neither the direction of the investigation nor the evidence offered by the government were developed from the illegal wiretap, the subsequent search or the immunized grand jury testimony. I hold that the government has sustained its burden of showing that its knowledge of the facts on which the defendant was convicted was gained from legitimate, independent sources.

 A.

 Defendant Louis Ostrer's business at 377 Fifth Avenue was subjected to electronic surveillance by the New York County District Attorney's office from October 25, 1972 until February 21, 1973. Following this surveillance, a search of these premises was conducted pursuant to a state search warrant and numerous documents were seized. Shortly thereafter, the antecedent wiretap which allegedly led to the electronic surveillance of Ostrer's business was declared to be in violation of the Fourth Amendment by a New York State court. People v. Brown, No. 1392-1973 (N.Y.Sup.Ct. Feb. 1973).

 Defendant alleges that since the information leading to the February 21, 1973 search was obtained through an illegal wiretap, any documents seized therein are tainted. Defendant Ostrer further alleges that the seized documents were passed from one government agency to another until they ultimately catalysed the current prosecution of the defendant for violations of certain I.R.S. and other criminal statutes. There is no claim that any evidence obtained by the eavesdropping was itself introduced. Defendant Ostrer's sole contention is that the impetus and direction of the federal investigation of Louis Ostrer resulted from its review of the records seized by New York state officials from Ostrer's office.

 The government contends that its investigation of Mr. Ostrer and the evidence leading to his conviction were not tainted by the illegal wiretap for purposes of this case because no federal agent ever listened to the wiretap and because the government had an independent right to inspect the allegedly tainted documents.

 In order to make effective the fundamental Constitutional guarantees of privacy under the Fourth Amendment the Supreme Court has closed the doors of the federal courts to any use of evidence unconstitutionally obtained. Elkins v. United States, 364 U.S. 206, 80 S. Ct. 1437, 4 L. Ed. 2d 1669 (1960). The exclusionary rule has traditionally barred the use of evidence obtained either during or as a direct result of an unlawful invasion. Silverthorne Lumber Co. v. U. S., 251 U.S. 385, 40 S. Ct. 182, 64 L. Ed. 319 (1920). The essence of the rule is not merely that evidence illegally acquired shall not be used at trial but that it shall not be used at all, even for investigative purposes. Id. at 392, 40 S. Ct. at 182. The exclusionary rule, however, does not render the facts thus obtained "sacred and inaccessible." Id. Evidence disclosed solely from independent legal sources is admissable even though leads from illegal sources, if pursued, would have uncovered the same evidence. Id.

 The question that must be answered is whether the investigation by the IRS of Mr. Ostrer and the evidence thereby obtained were fruits of the illegal wiretap or instead were obtained from independent legal sources.

 The legal standard applicable here requires the defendant Ostrer to go forward with specific evidence demonstrating taint. "The trial judge must give opportunity, however closely confined, to the accused to prove that a substantial portion of the case against him was a fruit of the poisonous tree." Nardone v. United States, 308 U.S. 338, 341, 60 S. Ct. 266, 267, 84 L. Ed. 307 (1939). Once defendants meet their initial burden, the United States must convince the trial court by a preponderance of the evidence that its case had an origin independent of the illegal surveillance. Id.

 Mr. Ostrer has not proven that the government's investigation or trial evidence was tainted by the illegal wiretap. Mere allegations "on information and belief" by defendant's attorney that the IRS agents investigating Mr. Ostrer saw the seized materials and that other investigators who had seen the materials passed information onto the IRS Strike Force do not satisfy defendant's burden of proving that a substantial portion of the government's case was tainted. United States v. Nardone, 127 F.2d 521, 523 (2d Cir.), cert. denied, 316 U.S. 698, 62 S. Ct. 1296, 86 L. Ed. 1767 (1942).

 In addition, I cannot accept defendant's contention that the IRS was barred from examining his records, regardless of their discovery by legal means. Defendant claims that the records were tainted because they had been earlier seized in connection with an illegal wiretap by another governmental agency. In essence, defendant is asking the court to find that he is entitled to a lifetime exoneration from prosecution for future tax evasion in any general category of deductions or income touched upon in the records seized in connection with the illegal surveillance. Reason and common sense preclude such a far-fetched finding. Any such rule would "increase to an intolerable degree interference with the public interest in having the guilty brought to book." United States v. Blue, 384 U.S. 251, 255, 86 S. Ct. 1416, 1419, 16 L. Ed. 2d 510 (1966).

 Evidence developed through the examination of defendant's business records by federal agents is not tainted merely because those documents, at the time they were examined, were in the unlawful custody of the New York District Attorney. In Re Grand Jury Subpoena of William Kilroy, M11-188 (WCC), (S.D.N.Y. Aug. 17, 1976). It is only when "the evidence to which the instant objection is made has been come at by exploitation of the illegality ..." that it must be excluded from the government's case. Maguire, Evidence of Guilt, 221 (1959). The exclusionary rule has no application where the government learned of the evidence "from an independent source." Silverthorne Lumber Co. v. United States, 251 U.S. 385, 392, 40 S. Ct. 182, 64 L. Ed. 319 (1920). Mr. Ostrer has not offered any proof that the investigative agents took an illicit look at the records seized in connection with the wiretap.

 Even assuming that the defendant had demonstrated the requisite possibility of taint, the government has satisfactorily shown through credible witnesses, internal IRS memoranda and other documents that its case was not ...


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