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United States v. Trupin

United States District Court, Southern District of New York

May 20, 1999


The opinion of the court was delivered by: Mckenna, D.J.



Defendant's request for a suppression hearing regarding evidence obtained in Canada is denied.

Defendant has not shown that he has standing to challenge the manner in which evidence was obtained from Messrs. David and Ben Levinson, Koniczek or Parkinson.

"It has long been the rule that a defendant can urge the suppression of evidence obtained in violation of the Fourth Amendment only if that defendant demonstrates that his Fourth Amendment rights were violated by the challenged search or seizure." United States v. Padilla, 508 U.S. 77, 81 (1993). See also United States v. Payner, 447 U.S. 727, 731 (1980). Nor does defendant have standing to challenge the complained of conduct by way of appeal to the Fifth Amendment's Due Process Clause, id. at 737 n. 9, or to the Court's supervisory power. Id. at 735-37. Nor, finally, will the violation of its own regulations by an executive agency-such as the Department of Justice or the Internal Revenue Service-lead to suppression in the absence of a constitutional violation (which, as noted, defendant does not have standing to assert). United States v. Caceres, 440 U.S. 741, 754-55 (1979).*fn1

That the conduct of the government is claimed to have violated one or both of two treaties between the United States and Canada-the Treaty on Mutual Legal Assistance and the United States-Canada Tax Convention-does not affect the result. A treaty, of course, is law, Const. Art. VI, and is therefore binding on the government. The Court is not aware, however, of any authority for the proposition that the requirement of standing to seek suppression is somehow relaxed when the government is claimed to have violated a treaty instead of a constitutional provision, nor can the Court perceive any reason why it should be. In Payner, the Supreme Court made it clear that the considerations underlying the requirement of standing to seek suppression are the same whether the illegality asserted involves a Fourth Amendment violation or a due process violation or "gross illegalities that did not infringe the defendant's constitutional rights," 447 U.S. at 733, as was the case in Payner. See 447 U.S. at 733-37 & n. 9. In view of the Supreme Court's analysis, this Court can only conclude, in absence of the citation of cases directly in point, that the Supreme Court would not make an exception to the standing requirement in a case where the request for suppression is premised on the violation of a treaty.

The argument made in defendant's counsel's letter to the Court dated May 12, 1999-that the Court should adopt, for purposes of the motion for suppression, the government's position that Moneyline, Inc. ("Moneyline") is the alter ego of defendant, so that defendant (who is thus Moneyline) has standing to seek suppression of documents illegally obtained from Moneyline's agents or employees (like David Levinson, according to the letter)-is not persuasive. Assuming, arguendo, that the Court could proceed in the hypothetical manner suggested ( but see In re Coppola, 810 F.Supp. 429, 433 (E.D.N.Y.1992)), defendant, even if Moneyline is his alter ego, "cannot object where corporate books and records are involved.") United States v. Neves, 269 F.Supp. 158, 161 (S.D.N.Y.1967). If, on the other hand, the documents sought to be suppressed are, as the letter suggests, defendant's personal records, then personal standing certainly must be shown.


Defendant's motion for dismissal of the indictment, on the ground that the indictment was filed after the six-year statute of limitations had expired, is denied.

The indictment charges in Count One that defendant violated 26 U.S.C. § 7201 in that, "[c]ommencing in or about 1992," he executed a scheme designed to evade payment of more than $6,000,000 in personal income taxes that he owed for the years 1980 through 1986. (Indictment, ¶ 6.) The indictment, in Count One, charges, in other words, an attempt to "evade or defeat" the "payment" of tax. The indictment does not charge a failure to file a return or the filing of a false return.

Defendant relies on a dissenting opinion in a Sixth Circuit evasion of payment case. United States v. Hook, 781 F.2d 1166, 1174 (6th Cir.1986) (Merritt, J., dissenting), cert. denied, 479 U.S. 882 (1986). Judge Merritt there said that "under the general rule, the statute begins to run on the date the offense is first committed, i.e., whenever acts of affirmative concealment or willful nonpayment occur after the April 15 due date." 781 F.2d at 1174 (emphasis added).

Subsequently, in United States v. Dandy, 998 F.2d 1344 (6th Cir.1993), cert. denied, 510 U.S. 1163 (1994), the Sixth Circuit adopted the approach of the First and Eleventh Circuits, "that it is the date of the latest affirmative act of evasion that triggers the statute of limitations." 998 F.2d at 1355 (emphasis added) (citing United States v. Winfield, 960 F.2d 970, 973 (11th Cir.1992), and United States v. Ferris, 807 F.2d 269, 271 (1st Cir.1986), cert. denied, 480 U.S. 950 (1987)).

The Second Circuit (in dictum, perhaps) has adopted the same approach. United States v. DiPetto, 936 F.2d 96 (2d Cir.) ( per curiam ), cert. denied, 502 U.S. 866 (1991). "[W]e are in accord with several other courts which have held that a section 7201 prosecution involving the failure to file income taxes is timely if commenced within six years of the day of the last act of evasion, whether it is the failure to file a return or some other act in furtherance of the crime." 936 F.2d at 98 (emphasis added) (citing Ferris, 807 F.2d at 271; other citations omitted.).

In United States v. Trownsell, 367 F.2d 815 (7th Cir.1966) ( per curiam ), the Seventh Circuit decided a case reasonably analogous, on the limitations issue, to the present one. The defendant was charged, in an indictment returned in 1964, with an attempt to evade and defeat payment of taxes due for the years 1946-1953 by transferring funds to a Swiss bank in 1961. The court found that the statute of limitations had not run before the indictment was returned. "[The indictment] charged a violation of 26 U.S.C.A. § 7201 based on defendant's conduct ending on February 2, 1961." 367 F.2d at 816.

In the present case, the indictment alleges that the specific crime with which defendant is charged-the execution of a scheme designed to evade the payment of taxes-began in 1992. (Indictment ¶ 6.) Acts in furtherance of that scheme are alleged to have taken place as late as the date of the filing of the indictment. ( Id. ¶ 8.) The actual crime charged in this case was thus not commenced until 1992, and is alleged to have continued until 1997. Even if the statute of limitations began to run sometime in 1992, it had not yet run when the indictment was filed in 1997.

Whether the Court looks to the general statement of the rule in Dandy, Winfield, Ferris and DiPetto, or its particular application in Trownsell, it is clear that the present indictment is not barred by the six-year statute of limitations.


Defendant's request that the government produce the grand jury testimony of Harvey Fisher and Myles Schumer together with memoranda and notes of interviews of those persons is denied.

By letter dated March 17, 1997, the government, pursuant to Brady v. Maryland, 373 U.S. 83 (1963), advised defendant that he might wish to speak to those persons, defendant's accountants. That advice to defendant satisfies the government's obligations under Brady, and the government is not required to produce copies of the grand jury testimony, or memoranda or notes of interviews, of Fisher and Schumer.*fn2 United States v. Grossman, 843 F.2d 78, 85 (2d Cir.1988), cert. denied, 488 U.S. 1040 (1989).

As noted at the May 17, 1999 conference, the Court will consider authority, if available, for the proposition that the Court may require the government to advise defendant as to the nature of such exculpatory evidence as it believes Fisher and Schumer may have. If the matter is debatable, the government might consider the wisdom of the uncompelled disclosure of such information.


Defendant's motion to quash the government's subpoena served on defendant's principal counsel, Thomas Puccio, Esq., is granted (with leave to renew, however, at the close of defendant's case, if any). On the present record, the arguable probative value of the evidence is substantially outweighed by the danger of unfair prejudice to defendant and confusion of the issues. Fed.R.Evid. 403. On the one hand, the payment for legal fees in question occurred subsequent to the indictment (only after which did Mr. Puccio commence representation of defendant) and is therefore only inferentially relevant to the conduct charged; on the other hand, evidence of a very substantial payment for legal fees in a tax payment evasion case, if made known to the jury, would present a very substantial danger of severe prejudice to defendant. (The jurors might well ask themselves, irrelevantly: "If defendant can pay that much for lawyers, why can't he pay the taxes we all have to pay?".) The Court does not believe that redaction of the documents, or a stipulation if one could be formulated, would solve the problem. In the first place, the timing of the payment, the amount of the payment and the fact that it was paid to a lawyer would probably lead to the inference that the lawyer was Mr. Puccio. Nor would it be possible to keep from the jury that the payment was to a lawyer, since defendant would be entitled to show that the payment represents an advance under Section 145(e) of the Delaware Corporation Code. Consideration of the indemnification provisions of the Delaware Corporation Code would, also, result in confusion of the issues.

The record by the end of defendant's case, on the other hand, may change the present Rule 403 balance, or may call for admission under Fed.R.Evid. 404(b).


The government's applications dated May 7 and 10, 1999 for leave to amend its bill of particulars are granted without opposition, but without concession of relevance or the admissibility of any evidence.


The Court finds that the government's bill of particulars (as amended) adequately complies with defendant's demand.


The government's application for disqualification of Sarah Gold, Esq., or to hold a hearing with respect to her assistance in the representation of defendant pursuant to United States v. Curcio, 680 F.2d 881 (2d Cir.1982) is denied on the present record at this time for the reasons set forth on the record on May 17, 1999. Should facts heretofore not presented suggesting a potential conflict on Ms. Gold's part come to the attention of the government or the defense, they are to be brought to the Court's attention as soon as possible.


The Court finds no basis in anything argued by defendant at the May 10, 1999 conference or elsewhere for the disqualification of Assistant United States Attorney Lynn Neils, Esq. Assuming, arguendo, that the trespassing episode described in defendant's letter brief dated April 9, 1999, at 8 n. 7, occurred as described, it is not relevant, and the Court would therefore not allow her to be called to testify to it. For the reasons set forth in § 1 of this Memorandum and Order, above, defendant does not have standing to seek suppression of the evidence obtained in Canada on the grounds urged by defendant. As to the trial, the alleged conduct is not, assuming its truth, a "fact that is of consequence to the determination of the action," Fed.R.Evid. 401, since it has nothing to do with whether or not defendant did or did not engage in the conduct alleged in the indictment. To the extent that defendant might seek to introduce evidence of the episode as impeachment of Agent Scudero, should he testify, even if evidence of the episode were probative of untruthfulness, Ms. Neils' testimony regarding the episode would be extrinsic evidence inadmissible under Fed.R.Evid. 608(b).

The arguments of May 10, 1999 surrounding that on the issue of Ms. Neils' disqualification, regarding the government's conduct before and after indictment were very imprecise, and no specific evidence was proffered (other than the episode referred to in connection with the issue of Ms. Neils' disqualification).

The Court must, however, make the following observation. First, as noted in the Court's Memorandum and Order of April 30, 1999, at 7, "[a] motion for dismissal for outrageous government conduct presents a question of law for the court," (citing United States v. Cuervelo, 949 F.2d 559, 567 (2d Cir.1991)), and, while a hearing is generally appropriate, in this case such a hearing, if one is to be had, will be held after trial, if necessary. ( See Mem. & Order, Apr. 30, 1999, at 7-8.) Evidence adduced at trial, relevant to the issue of the guilt or not of defendant, can later be considered on the issue of the government's conduct; that does not mean, however, that evidence of the government's conduct not relevant to the guilt or not of defendant can also be considered at trial. The latter category of evidence can be heard only at a post-trial hearing.

Evidence of defendant's state of mind, i.e., evidence negating the scienter elements of the crimes charged in the indictment,*fn3 may, of course, be offered, to the extent otherwise admissible.


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