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UNITED STATES v. SNEEKY THEEF RECORDS

September 3, 1981

UNITED STATES of America and Richard J. Collery, Special Agent, Internal Revenue Service, Petitioners,
v.
SNEEKY THEEF RECORDS, INC., and Johanan Vigoda, individually and as President of Sneeky Theef Records, Inc., Respondents



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 the above proceeding on June 15, 1981, for an order directing the respondents, a corporation and its President, Johanan Vigoda, who is also named individually, to show cause why said respondents should not be compelled to obey IRS summonses served upon them. This order to show cause was personally served upon the respondents, Sneeky Theef Records, Inc. and Johanan Vigoda on June 23, 1981. At this time the order to show cause was not served upon the law firm of Silets and Martin, who represented respondent Vigoda in many other summons enforcement proceedings.

 On July 9, 1981, the petitioners served a motion seeking an order granting enforcement of the summonses on the basis of the pleadings or in the alternative, by default judgment. On the return date of the order to show cause, July 20, 1981, the respondent Vigoda appeared without counsel and requested a continuance of the return date until August 10, 1981. This request was granted. On August 6, 1981, the respondent, through his attorneys, filed a response to petitioners' motion. On August 10, 1981, during oral arguments on the petition in Chambers, the government agreed that the response of the respondents would be deemed the answer in the summons enforcement proceedings. At that time, the motion for a default judgment was withdrawn.

 The summonses sought to be enforced were issued by Special Agent Collery in connection with the investigation to determine the correctness of the taxpayer's 1974, 1975, 1976 and 1977 income tax returns and liabilities. Originally the respondent was to appear before a Special Agent in Los Angeles, California. At the request of respondents' counsel, the time and place to appear was changed to New York City, New York. On June 6, 1980, Vigoda appeared at the offices of the Internal Revenue Service in New York City, but failed to testify, or to produce books, records, papers and other data demanded by either of the two summonses served upon him.

 The summons served on Vigoda in his individual capacity requested:

 
Workpapers, memoranda, correspondence and any and all other records and documents prepared by the accounting firm of Teichner-Swerlin in connection with the preparation of your Federal and State income tax returns for the years 1974, 1975, 1976 and 1977.

 The summons directed towards Vigoda as President of Sneeky Theef Records, Inc. requested:

 
1. Workpapers, memoranda, correspondence and any and all other records and documents prepared by the accounting firm of Teichner-Swerlin in connection with the preparation of the Federal and State corporate income tax returns of Sneeky Theef Records, Inc. ...
 
2. All bank statements, cancelled checks, deposit tickets, savings account passbooks and certificates of deposit pertaining to any and all accounts maintained by Sneeky Theef Records, Inc. during the period 7/1/73 through 5/30/78.
 
3. All contracts entered into by Sneeky Theef Records, Inc. during the period 7/1/73 through 6/30/78.

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

 Respondents' answer contains four separate defenses to the enforcement of the summonses. The defenses are that there was improper service because their counsel was not served with the order to show cause; that there is no subject matter jurisdiction or personal jurisdiction in this district; that the Fifth Amendment privilege against self-incrimination is a bar to enforcement of the summonses; and that some of the material sought in the summonses is already in the possession of the Internal Revenue Service. The petitioners seek the enforcement of the summonses with modification by this court. They seek to have the summons served on Sneeky Theef Records, Inc., to include the period July 1, 1973 to June 30, 1978 for materials reflecting transactions with banks and other financial institutions. The summons as served requests these items only through May 30, 1978.

 DISCUSSION

 The respondents' first defense is directed towards the motion for a default judgment. Since petitioners no longer seek a default judgment, respondents' defense that their counsel was not served need no longer be considered. Furthermore, a continuance was granted by this court so that respondents' counsel could be served and after ...


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