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UNITED STATES v. CRANS

April 6, 1981

UNITED STATES of America and Richard J. Collery, Special Agent, Internal Revenue Service, Petitioners,
v.
C. Edward CRANS, as Manager of the Inter-County Savings Bank, Respondent, Johanan Vigoda, Taxpayer-Intervenor



The opinion of the court was delivered by: FOLEY

MEMORANDUM-DECISION and ORDER

The United States of America and Richard J. Collery, Special Agent of the Internal Revenue Service (IRS), filed a petition in this proceeding on November 17, 1980, for an order directing the respondent, C. Edward Crans, as Manager of the Inter-County Savings Bank, to show cause why said respondent should not be compelled to obey the IRS summons served upon him. This proceeding was commenced pursuant to Title 26 U.S.C. § 7402(a), (b) and § 7604(a), (b). The administrative summons was issued under the authority of 26 U.S.C. § 7602.

 The petitioner, Special Agent Collery, is conducting an investigation of the personal federal income tax liabilities of Johanan Vigoda for the calendar years 1974, 1975, 1976, and 1977. Pursuant to his investigation, Special Agent Collery caused an administrative summons to be served upon Respondent Crans. This summons directed him to appear, testify, and produce for examination certain books, records, papers, and other data.

 In accordance with 26 U.S.C. § 7609(a)(1)(B), the petitioner furnished the taxpayer, Johanan Vigoda with notice of the summons directed toward respondent Crans, as Manager of the Inter-County Savings Bank. And pursuant to his legal right under 26 U.S.C. § 7609(b)(2), the taxpayer gave notice to respondent Crans not to comply with the summons. The taxpayer's motion to intervene pursuant to 26 U.S.C. § 7609(b)(1) was granted on January 5, 1981 by order of this court.

 Intervenor-taxpayer Vigoda has filed an answer to the government's petition to enforce the summons. Vigoda asserts two affirmative defenses against the enforcement of the summons with the request for a hearing.

 The underlying facts that form the basis of the first affirmative defense are as follows: Vigoda states that on January 11, 1980, Special Agent Collery and another agent of the IRS came to his home in Woodstock, New York. Vigoda claims that at this time he was extremely fatigued, ill and confused as to the tax matters the agents questioned him about. He claims that he believed that the agents wanted to discuss the tax liabilities of one of Vigoda's clients, who was being investigated at that time. It is uncontested that at this meeting the IRS agents gave Miranda warnings to Vigoda.

 The intervenor further claims that the agents interrogated him while he was in this fatigued, ill, and confused condition. Due to this mental and physical condition, it is asserted he was: (1) unable to resist the interrogation; (2) unable to understand or assert his Fifth Amendment rights; (3) incapable of making a "knowing and intelligent" waiver of his Fifth Amendment rights, thereby causing the interrogation to be in violation of his constitutional right against self-incrimination.

 As a product of this alleged illegal interrogation, these agents became aware of information regarding bank accounts and records of Vigoda with Inter-County Savings Bank, whose manager is the respondent herein. The intervenor claims that absent the illegal interrogation, the information necessary to serve the summons in the above matter would not have been obtained by the IRS agents. The intervenor asks:

 
that the instant summons on the Inter-County Bank should therefore be quashed, since it is a direct product of the illegal interrogation of the Intervenor's rights under the Fifth Amendment ... and the enforcement thereof would be an abuse of the processes of this court.

 (Intervenor's Answer P 21).

 The intervenor's second affirmative defense is that confidential information was improperly disclosed to Special Agent Collery internally by another IRS agent in violation of 26 U.S.C. § 6103. The intervenor claims that the illegal disclosures made to the IRS led directly to the issuance of the present summons to the respondent. Intervenor Vigoda contends that due to this illegal disclosure the summons should be quashed.

 The petition and accompanying affidavits of Special Agent Collery state that the testimony and records sought are not in the possession of the IRS; that the testimony and material sought is essential to a correct determination of the tax liabilities of the individual taxpayer; and, that no recommendation for prosecution has been made by the Service to the Department of Justice.

 After oral argument and consideration of the memoranda of law filed by the attorneys for the parties herein, it is my judgment that the summons in the present proceeding should be ...


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