CORE TERMS: seized,
kickback, exclusionary rule, defendant-appellee, suppression,
objectively reasonable, interlocutory appeal, suppression hearing,
evidentiary hearing, particularity, subpoena, seizure, vacate,
vice-president, warrant authorizing, suppressed evidence, evidence
obtained, suppression order, police officers, probable cause, rule
announced, defendants-appellees, particularize, executing, deficient,
searched, facially, presume, motion to suppress, health care
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COUNSEL: Stanley Marcus, U.S. Attorney; Karen L. Atkinson,
Miami, Florida, for Plaintiff-Appellant, Cross-Appellee.
John M. Owens; William D. Hyatt; Martha P. Rogers, U.S. Dept. of
Justice, Miami, Florida, for Appellant.
Robert J. Erickson, Washington, District of Columbia, for
Plaintiff-Appellant, Cross-Appellee.
Carl Walsh, Chicago, Illinois, for Anthony Accardo.
Edward M. Kay, Fort Lauderdale, Florida, for Appellee.
Leonard A. Sands, Miami, Florida, for Appellee.
Joseph Beeler, Atty. Miami, Florida, for Paul A. DiFranco.
Thomas Foran, Chicago, Illinois, for Appellee.
Wm. P. Cagney, III, Miami, Florida, for Angelo Fosco.
David K. Schmitt; Sam Betar, Chicago, for Paul Fosco.
William T. Laswell, Ft. Lauderdale, Florida, for Appellee.
Alvin E. Entin, North Miami Beach, Forida, for Appellee.
Arnold Kanter; Barry J. Freeman, Chicago, Illinois, for James Pinckard.
Thomas D. Decker, Chicago, Illinois, for James Norton.
Joseph Minceberg, Miami, Florida, for Appellee.
Leonard Steiner, Steiner & Unterman, New York, New York, for Louis
Ostrer.
Martin Shacht, North Miami Beach,
[**2] Florida,
for Appellee.
Edward Calihan, Chicago, Illinois, for Appellee.
E. David Rosen, Rosen & Rosen, Miami, Florida, for Alfred
Pilotto.
Barry Fallick, New York, New York, for Bernard Rubin.
Lewis S. Kimler, Deerfield Beach, Florida, for Appellee.
Henry Gonzalez, Tampa, Florida, for Appellee.
Howard Zeidwig, Ft. Lauderdale, Florida, for Appellee.
Anthony Cardinale, Boston, Massachusetts, for Appellee.
Kenneth P. Ross, Chicago, Illinois, for Pinckard.
JUDGES: Godbold, Chief Judge, Hill, Circuit Judge, and
Thornberry, * Senior Circuit Judge. Thornberry, Senior Circuit Judge,
sitting by designation, concurring specially.
* Honorable Homer Thornberry, U.S. Circuit Judge for the Fifth Circuit,
sitting by designation.
OPINIONBY: HILL
OPINION: [*1478]
JAMES C. HILL, Circuit Judge.
This appeal requires us to consider the good faith exception to the
fourth amendment exclusionary rule, recently established by the Supreme
Court in
United States v. Leon, 468 U.S. 897, 82 L. Ed. 2d 677, 104 S. Ct.
3405 (1984),
and
Massachusetts v. Sheppard, 468 U.S 981, 82 L. Ed. 2d 737, 104 S.
Ct. 3424 (1984).
In light of these 1984 decisions, we vacate the 1982 district court
order,
[**3] which
suppressed evidence seized by officers under a warrant held by the
district court to have been insufficiently particular to meet fourth
amendment standards, and remand this case to the district court to
determine whether those officers acted in good faith.
We briefly summarize the material facts considered by the district court
in deciding whether to grant the motion to suppress. Federal agents in
Chicago suspected several health care services companies of labor
racketeering activities. Their investigation led them to Daniel G.
Milano, Jr., a former officer of one of the companies under suspicion,
Consultant and Administrators, Inc. (C & A). Milano, whose father was
executive vice-president of C & A, told FBI agents that C & A paid labor
union officials kickbacks to ensure that all C & A bids for union health
services contracts were approved. According to Milano, C & A officials
formed two companies, Pinckard and Associates, Inc. (Pinckard), and
Fortune Services, to divert revenue from C & A into a kickback fund from
which labor leaders were paid. Although Pinckard and Fortune primarily
served as conduits for the payoff scheme, the companies also performed
the task of
[**4]
verifying eligibility for coverage under the C & A contracts with the
unions. Milano fully described the billing procedures used by Pinkard
and Fortune, the manner in which illegal payments were made, and the
collection of monthly cash contributions from C & A officers for
distribution to union officials.
At the conclusion of this investigation, an FBI agent swore out an
affidavit in which he recounted Milano's description of the alleged
kickback scheme. The affidavit detailed the completeness of the fraud
that permeated the business dealings between the companies involved.
Based on that affidavit, a federal magistrate in Chicago issued
[*1479]
warrants authorizing the search of the administrative offices of C & A
and Pinckard. Federal agents conducted such a search and seized several
volumes of documents from both companies.
Racketeering charges were then filed in the District Court for the
Southern District of Florida against various labor leaders and officers
of C & A and Pinckard. n1 Shortly after they were indicted, defendants
n2 moved to suppress all materials seized in the C & A and Pinckard
searches. The district court conducted a suppression hearing, and,
finding
[**5] the
warrant issued by the Chicago magistrate "unconstitutionally general,"
suppressed the corporate records seized from the offices of C & A and
Pinckard. At the hearing, the district court did not consider whether
there was a good faith exception to the fourth amendment exclusionary
rule, nor whether the FBI agents had acted in good faith. The United
States subsequently brought this interlocutory appeal pursuant to
18 U.S.C. § 3731
(1976), challenging the district court's suppression order on the ground
that the officers had acted in good faith. n3 We now vacate and remand.
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n1 An independent federal investigation in Miami apparently led
authorities there to suspect several of the figures under investigation
in Chicago of similar criminal activity in Florida. Indeed, a federal
grand jury in Miami issued subpoenas
duces tecum to various C & A
and Pinckard officers and defendant-appellee Di Franco, requiring them
to produce most of the materials seized in the search now under attack.
The district court ruled that the documents obtained by the subpoena
were not tainted by the illegal searches and denied suppression motions
as to that evidence. Whether the materials seized in the challenged
search are thus subject to the "independent source" rule,
see
Segura v. United States, 468 U.S. 796, 104 S. Ct. 3380, 82 L. Ed.
2d 599 (1984),
or the "inevitable discovery" doctrine,
see
United States v. Kroesser, 731 F.2d 1509 (11th Cir.1984),
are questions we need not decide.
We also see no reason to consider whether defendants-appellees can
invoke the interlocutory appeal provisions of
18 U.S.C. § 3731,
see
United States v. Moody, 485 F.2d 531, 534 (3d Cir.1973)
(allowing cross-appeal), to challenge the district court's refusal to
suppress the evidence obtained by subpoena. Since we vacate the order
suppressing the records seized in the C & A and Pinckard searches, the
order defendants-appellees seek to appeal may be unnecessary to the
district court's disposition of the suppression motions. Whether this is
the case depends on how the district court resolves the good faith issue
on remand.
See infra slip op. 1406, . This court therefore
will wait for resolution of that issue and not address herein the
question involving invocation of the interlocutory appeal provisions of
18 U.S.C § 3731. [**6]
n2 At the time these charges were filed, defendant-appellee Pinckard was
president of Pinckard and Associates, Inc.; defendant-appellee Fosco was
president of PF Insurance Agency and vice-president of C & A, Inc.; and
defendant-appellee Norton was president of C & A, Inc,; and
defendant-appellee Di Franco was vice-president of Dental and Vision
Care Centers, Inc., a company that allegedly provided kickback monies to
receive union health care business.
See Supp. Record on Appeal at
1-14.
The district court found that among the twelve named codefendants only
Pinckard, Fosco, Norton and Di Franco had standing to challenge the
searches. Therefore, they are the only parties to the government's
appeal.
n3 The Government did not originally challenge the district court's
conclusion that the warrants were impermissibly general,
see
Stanford v. Texas, 379 U.S. 476, 481-86, 85 S. Ct. 506, 509-12,
13 L. Ed. 2d 431 (1965),
instead urging this court to extend our ruling in
United States v. Williams, 622 F.2d 830 (5th Cir.1980)
(en banc),
cert. denied,
449 U.S. 1127, 101 S. Ct. 946, 67 L. Ed. 2d 114 (1981),
to encompass the officers' actions in this case.
See Brief for
Appellant at 13-26.
Shortly before this case was orally argued, however, the government
submitted authorities that supported the validity of broad warrants
covering searches of businesses permeated with fraud.
See, e.g.,
United States v. Offices Known As 50 State Distributing Co., 708
F.2d 1371 (9th Cir.1983).
While we chose to dispose of this appeal as it was briefed by all
parties, we note that the affidavit supporting the C & A and Pinckard
search warrants alleged that Pinckard was incorporated solely as a
conduit for the flow of kickback monies. Thus, at least with respect to
Pinckard, the magistrate who issued these warrants might have had reason
to authorize the seizure of "all corporate records."
See, e.g.,
United States v. Brien, 617 F.2d 299, 305-09
(1st Cir.) (approving warrant authorizing seizure of materials that made
up "most of the business records" of investment firm),
cert. denied,
446 U.S. 919, 100 S. Ct. 1854, 64 L. Ed. 2d 273 (1980);
see generally
United States v. Wuagneux, 683 F.2d 1343, 1348-51 (11th Cir.
1982)
(collecting cases on warrants in context of complex, fraudulent business
schemes),
cert. denied,
464 U.S. 814, 104 S. Ct. 69, 78 L. Ed. 2d 83 (1983).
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
[**7]
Since the district court issued the suppression order in 1982, the
Supreme Court
[*1480] has
held that there is a good faith exception to the exclusionary rule. In
United States v. Leon the Supreme Court considered "whether the
Fourth Amendment exclusionary rule should be modified so as not to bar
the use in the prosecution's case-in-chief of evidence obtained by
officers acting in reasonable reliance on a search warrant issued by a
detached and neutral magistrate but ultimately found to be unsupported
by probable cause."
104 S. Ct. at 3409.
The Court answered that question by taking yet another look at the
remedial objectives thought served by the exclusionary rule.
Id.
at 3413-16. Concluding that the rule remains viable only as a deterrent
to police misconduct, the Court held that the costs to the
administration of justice of excluding highly probative evidence
outweighed any benefits from the rule's deterrent effect where police
officers have acted in objectively reasonable reliance on a warrant
later found to be defective.
Id. at 3419-21. With certain
well-defined limitations, n4 the rule announced by the Court required
suppression "only if the officers were
[**8]
dishonest or reckless in preparing their affidavit or could not have
harbored an objectively reasonable belief in the existence of probable
cause."
Id. at 3423. Then, turning to the facts before it, the
Court found the officers' reliance on the magistrate's determination of
probable cause to be reasonable; the warrant was supported by much more
than a "bare bones" affidavit and was not seriously challenged by any of
the defendants. Under those circumstances, the Court discerned no reason
for applying the "extreme sanction of exclusion."
Id. at 3423.
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n4 The Court explained three instances where, although the officer has
acted in good faith, suppression remains an appropriate remedy:
The exception we recognize today will also not apply in cases where
the issuing magistrate wholly abandoned his judicial role in the
manner condemned in
Lo-Ji Sales, Inc. v. New York, 442 U.S. 319, 99 S. Ct. 2319,
60 L. Ed. 2d 920 (1979);
in such circumstances, no reasonably well-trained officer should
rely on the warrant. Nor would an officer manifest objective good
faith in relying on a warrant based on an affidavit "so lacking in
indicia of probable cause as to render official belief in its
existence entirely unreasonable."
Brown v. Illinois, 422 U.S. [590] at 610-611, 95 S. Ct.
[2254] at 2265-2266 [45 L. Ed. 2d 416 (1975)]
(POWELL, J., concurring in part); see
Illinois v. Gates, supra, 462 U.S. [213] at 246, 103
S. Ct. [2317] at [2336], [76 L. Ed. 2d 527 (1983)]
(WHITE, J., concurring in the judgment). Finally, depending on the
circumstances of the particular case, a warrant may be so facially
deficient -- i.e., in failing to particularize the place to
be searched or the things to be seized -- that the executing
officers cannot reasonably presume it to be valid. Cf.
Massachusetts v. Sheppard, U.S., at , 104 S. Ct., at .
104 S. Ct. at 3422.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
[**9]
Massachusetts v. Sheppard presented a situation seemingly
analogous to the case before this court. In
Sheppard the trial
judge suppressed evidence seized during the execution of a warrant that
failed to describe with particularity the items to be seized.
104 S. Ct. at 3428.
The Supreme Judicial Court of Massachusetts refused to recognize a good
faith exception to the exclusionary rule and affirmed. The Supreme Court
reversed, emphasizing that the officers had evidenced their good faith
by submitting an affidavit to a judge, who then drafted a warrant
authorizing the search.
Id. at 3429. Any error in failing to meet
the particularity requirement of the fourth amendment, the Court held,
was committed by the judge, not the police officers.
Id.
Therefore, the officers' conduct was objectively reasonable and well
within the bounds of the rule announced in
Leon.
On the facts considered by the district court at the suppression
hearing, the pending appeal is within the good faith exception
articulated in
Leon and
Sheppard. The agents here "took
every step that could reasonably be expected of them."
Id. As in
Sheppard, the agents submitted a detailed
[**10]
affidavit to a magistrate in order to secure the search warrants. The
affidavit alleged a pervasive fraud that had resulted in the
incorporation of a sham business to channel kickback monies to labor
officials. In addition, the affidavit was reviewed by several attorneys
in the U.S. Attorney's office before it was presented to a magistrate,
who found probable cause and issued the warrants. It is not relevant
that here, unlike in
Sheppard, the magistrate
[*1481] did
not make changes in the warrant or expressly assure the agents that the
warrant was adequate. Since the agents here did not use, and did not
know that they used, an improper form, they had no reason to expect the
magistrate to make changes in the warrant or to especially assure them
of its adequacy.
Moreover, the warrant's authorization to seize "all corporate records"
does not transgress the limitation on the good faith exception described
by the Supreme Court as cases involving warrants "so facially deficient
--
i.e., failing to particularize the place to be searched or the
things to be seized -- that the executing officers cannot reasonably
presume it to be valid."
104 S. Ct. at 3422.
Arguably, "all
[**11]
corporate records" is significantly more general than the "any
controlled substance" language contained in the
Sheppard warrant.
104 S. Ct. at 3427 & n. 2.
Even so, this is not dispositive. The question here is not the legal
validity of the warrant but the reasonableness of the officers' reliance
on it. This is not an instance in which "it is plainly evident that a
magistrate or judge had no business issuing a warrant,"
id. at
3429 n. 7 (quoting
Illinois v. Gates, 462 U.S. 213 at 264, 103 S. Ct. 2317 at 2345,
76 L. Ed. 2d 527).
In addition, the investigating officers were told by a former C & A
executive that Pinckard was a sham corporation. Every indication was
that C & A officials were extensively involved in the kickback scheme.
This type of complex financial fraud, sometimes referred to as the
"paper puzzle," has been held to justify a more flexible reading of the
fourth amendment particularity requirement.
See, e.g.,
United States v. Wuagneux, 683 F.2d 1343, 1348-50 (11th Cir.
1982)
(citing cases),
cert. denied,
464 U.S. 814, 104 S. Ct. 69, 78 L. Ed. 2d 83 (1983).
n5
- - - - - - - - - - - - - - Footnotes - - - - - - - - - - - - - - -
n5 In
Wuagneux the court upheld a warrant that in part authorized
the seizure of records of "the receipt and disbursement of kickback
funds."
Waugneux, 683 F.2d at 1350-51.
The court emphasized that despite the generality of this description, it
was properly construed as referring to a very special detailed kickback
scheme in view of the affidavit that accompanied it.
Id. This
reasoning reinforces the conclusion in the present case.
- - - - - - - - - - - - End Footnotes- - - - - - - - - - - - - -
[**12]
On the facts considered by the district court in deciding whether to
grant the motion to suppress, the good faith of the officers would be
established. However, we are mindful that at the time of the suppression
hearing
Leon and
Sheppard had not been decided, and that
the district court did not hold an evidentiary hearing on, nor in any
way consider, the issue of the officers' good faith. Although the
ultimate question of good faith
vel non is a legal issue, which
this court may resolve, the ascertainment of the facts upon which to
base a determination regarding good faith is for the district judge. In
Leon, the Supreme Court said that in determining whether a police
officer acted in good faith, "all of the circumstances . . . may be
considered."
104 S. Ct. at 3421 n. 23.
It is not clear that we have had the opportunity to consider all the
circumstances in this case, as no evidentiary hearing was held on the
good faith issue. Both parties should be given an opportunity to present
evidence touching upon the conduct of the officers. We therefore feel it
best to remand the case to the district court, where the parties shall
be afforded a hearing on the good faith
[**13] issue.
The district court, guided by
Leon and
Sheppard, and this
opinion, then may determine whether the officers acted in good faith.
Accordingly, the order of the district court is VACATED and this case is
REMANDED for proceedings consistent with this opinion.
CONCURBY: THORNBERRY
CONCUR: THORNBERRY, Senior
Circuit Judge, sitting by designation, concurring specially:
Since "it is not clear that we have had an opportunity to consider all
the circumstances in this case, as no evidentiary hearing was held on
the good faith issue," and "we therefore feel it is best to remand the
case to the district court, where both parties shall be afforded a
hearing on the good faith issue," I concur only in that portion of the
court's opinion which supports the decision to remand the case to the
district court.