Sam (Salvatore) Dipiazza v. United States, William Clyde Deming v. United States ( 1969 )

PHILLIPS, Circuit Judge.

DiPiazza and Deming appeal from their convictions under 18 U.S.C. §§ 371 and 1952 on seven counts of use of interstate telephone facilities for carrying on a business enterprise of gambling in violation of state law and one count of conspiracy so to carry on that business. They were found guilty on all counts by a jury after a lengthy trial before District Judge David S. Porter.

The voluminous evidence introduced by the Government established a large scale interstate illegal bookmaking and layoff gambling operation. This operation was carried on by telephone between Cincinnati, Ohio, Fort Thomas, Kentucky, New Orleans, Louisiana, and other points. According to the evidence DiPiazza primarily was based in New Orleans and Deming in Cincinnati. The gambling enterprise between these two defendants was shown to have exceeded $400,000 in one month. ^

Appellants challenge the Government’s obtaining certain telephone company long distance toll call records, the Government’s use of the toll records, and the sufficiency of search warrants under which the bulk of the evidence against the appellants was seized. Other errors alleged will be mentioned later in this opinion.

In January 1966 special agents of the Internal Revenue Service at Cincinnati received a communication from the Internal Revenue Office at Las Vegas, Nevada, requesting that a telephone number be checked, information having been received that it was being called by Las Vegas bookmakers. The number was determined to be located in the basement apartment at 3808 Woodford Road, Silverton, Ohio, a Cincinnati suburb.

In June, 1966 a special IRS agent at Louisville informed the Cincinnati office that an undercover agent had placed bets with a certain person who had been using two telephones in Lexington, Kentucky. From the toll records of the Woodford Road telephone it was determined that calls had been placed from that number to the two Lexington numbers.

The telephone at 3808 Woodford was listed to Harry Acker, a fictitious listing. Surveillance by IRS agents disclosed Deming to be a frequenter of the Wood-ford premises. Examination of telephone company toll records, obtained by IRS summons, revealed that the telephone at 3808 Woodford and the telephone at Deming’s residence in Fort Thomas, Kentucky, had been and were being used to make numerous toll calls to persons known to be prominent bookmakers in various cities.

Based upon the affidavits of Special Agent Guy I. Wetherell, IRS Intelligence Division, search warrants were issued. The warrant for the 3808 Woodford address was issued by a United States Commissioner for the Southern District of Ohio. The warrant for Deming’s residence at Fort Thomas was issued by a United States Commissioner for the Eastern District of Kentucky.

The raid on the Woodford Road property was led by Special Agent Frank Car-rington, who at the time of the trial was on a Ford Foundation grant and assigned as a legal advisor to the vice squad of the Chicago Police Department. He is a licensed attorney and a graduate of the University of Michigan Law School.

Deming was present at the Woodford address when the search warrant was executed there. A paper sack was seized containing betting records that had been torn into thousands of small pieces. More than 20,000 pieces of paper were reassembled by Carrington and agents under his control. Carrington identified these reassembled documents, testifying that they included bet slips, balance sheets and “recap” sheets, all pertaining to the bookmaking and lay-off horse betting operation between Deming and other individuals, including DiPiazza. Deming conceded that each one of these reconstructed slips was written solely in his own handwriting.

A raid on Deming’s residence at Fort Thomas also produced racing forms, telephone toll records and gambling paraphernalia.

The FBI raided DiPiazza’s hotel room in New Orleans on January 8,1966, which was within the period of the conspiracy charged in the indictment. Papers taken off DiPiazza contained Deming’s telephone numbers in Fort Thomas and on Woodford Road. Deming’s Fort Thomas telephone had an unlisted number. It was shown in DiPiazza’s papers as the equivalent of the Woodford Road telephone number. This established, in conjunction with other evidence, a connection between DiPiazza and Deming.

Toll records of the Cincinnati and Suburban Bell Telephone Company were subpoenaed and put into evidence. These are records which were maintained by the telephone company in the ordinary and normal course of its business for the Deming telephones at Woodford Road and at Fort Thomas. These records disclosed hundreds of calls, often as many as five per day, to premises occupied by Di Piazza in New Orleans, and calls to the Hilton Hotel in New York at times when DiPiazza was registered there. The search of Deming’s apartment, residence and automobile produced duplicates of most of these same toll records.

We find no reversible error in the record and affirm the convictions.

1) The Toll Records

The principal issue on this appeal is whether the Government’s evidence of the telephone calls in question was secured by the wrongful procurement of the telephone records in violation of Section 605 of the Communications Act, 47 U.S.C. § 605. This question arises first with respect to whether there was probable cause for the issuance of the search warrants. It is further contended that the evidence was unlawfully introduced and received at the appellants’ trial.

A.

Appellants contend that the toll records of long distance telephone calls constitute an “interception” of a message in violation of section 605.

The toll records obtained by IRS in its investigation are the same type of long distance records kept by the telephone company for all telephones. These records contain substantially the same information that is furnished each month to the customer as a part of his billing, i. e., the date of the call, the destination called, the telephone number to which each call is placed, the telephone number where the call originated, and the amount of the charge for the service. These records contain no information as to the persons participating in the call or the subject matter of the conversation.

A telephone subscriber or user authorizes the telephone company to intercept his calls to the extent reasonably necessary for purposes of computing his telephone charges. See Brandon v. United States, 382 F.2d 607 (10th Cir.); United States v. Gallo, 123 F.2d 229 (2d Cir.); United States v. Russo, 250 F.Supp. 55 (E.D.Pa.).

“To hold that recording by the company of the fact of a call between two of its telephones is an unauthorized interception of a communication would require a construction of the statute extending it beyond either its purpose or its words. The statute was not intended to proscribe long-standing, reasonable business practices of communication companies. When a person takes up a telephone he knows that the company will make, or may make, some kind of a record of the event, and he must be deemed to consent to whatever record the business convenience of the company requires. If by any stretch of language the making of such a record could be termed an “interception” of the communication, it is one which the sender has authorized. Hence it is not within the ban of the statute.” United States v. Gallo, 123 F.2d 229, 231 (2d Cir.).

We find nothing in the language or legislative history of 47 U.S.C. § 605 indicating any congressional purpose to preclude the telephone company from making records of long distance toll calls.

Therefore we hold that the maintenance of toll records in the routine course of business does not constitute “interception” of wire communications in violation of § 605 and is not wiretapping.

B.

Having held that the maintenance of the toll records and the making of the records does not constitute an “interception” forbidden by § 605, we now deal with the appellants’ contention that the submission of the records to the IRS was a “divulgence” forbidden by § 605.

Only the first clause of 47 U.S.C. § 605 could be construed as prohibiting the telephone company from turning its records over to the Government since there was no interception of a message in violation of section 605’s later clauses. The clause is as follows:

“No person receiving or assisting in receiving, or transmitting, or assisting in transmitting, any interstate or foreign communication by wire or radio shall divulge or publish the existence, contents, substance, purport, effect, or meaning thereof, except through authorized channels of transmission or reception, to any person other than the addressee, his agent, or attorney, or to a person employed or authorized to forward such communication to its destination, or to proper accounting or distributing officers of the various communicating centers over which the communication may be passed, or to the master of a ship under whom he is serving, or in response to a subpena issued by a court of competent jurisdiction, or on demand of other lawful authority; * * (Emphasis supplied) .

The Government maintains that the IRS summons was issued under 26 U.S.C. § 7602 and constituted “other lawful authority” for the divulgence of the toll records revealing the existence of the telephone calls. In an addendum to his findings of fact and conclusions of law on the defendants’ suppression motions prior to the trial the District Judge held that the obtaining of the toll slips under the summons was obtaining them under “other lawful authority” within the meaning of section 605. Implicit in that holding is a finding that obtaining evidence for a criminal prosecution was not the sole purpose of the investigation. We find no evidence in the record to support a contention that this finding is in error. The appellants have not pointed out to this Court or to the District Court any evidence that the summonses were improper. The agent who authorized the issuance of the summons testified as a witness at the suppression hearing, but on cross-examination the appellants did not even undertake to develop any facts to show that the summonses were issued for an unlawful purpose.

Where the investigation may produce both civil and criminal evidence, the summons under section 7602 is a proper device for obtaining records. See United States v. Powell, 379 U.S. 48, 85 S.Ct. 248, 13 L.Ed.2d 112; Ryan v. United States, 379 U.S. 61, 85 S.Ct. 232, 13 L.Ed.2d 122, aff’g 320 F.2d 500 (6th Cir.). The burden is on the party objecting to the summons to show that it was used for an unlawful purpose. See United States v. Powell, supra at 58, 85 S.Ct. 248; United States v. Nunnally, 278 F.Supp. 843 (D.C. Tenn.). That burden is not met by merely showing that the agent issuing the summons is a special agent of the IRS. See Powell v. United States, supra, (summons to appear before special agent); Tillotson, Special Agent, IRS v. Boughner, 225 F.Supp. 45, motion denied, 327 F.2d 982, aff’d 333 F.2d 515 (7th Cir.), cert. denied, 379 U.S. 913, 85 S.Ct. 260, 13 L.Ed.2d 184 (Special Agent summons with unknown taxpayer); Mullins, Special Agent, IRS v. Angiulo, 227 F.Supp. 524, aff’d 338 F.2d 820 (1st Cir.), cert. denied, 380 U.S. 963, 85 S.Ct. 1108, 14 L.Ed.2d 154 (Special Agent summons). But see United States v. Kleckner, 273 F.Supp. 251 (S.D.Ohio), appeal dismissed on motion of appellants, 382 F.2d 1022.

It should be remembered that when the earlier summons was issued the IRS had no knowledge that Deming or DiPiazza were involved. The first name disclosed in the investigation was that of Harry Acker, who was listed as the subscriber of the Woodford Road telephone number with which the investigation was begun. At the time this summons was issued IRS could not have known what kind of violations would be disclosed by the investigation. There was a possibility that there would be a finding of civil tax liability.

In our view the record establishes that the telephone company divulged its records to IRS in response to a demand of lawful authority as expressly authorized by 47 U.S.C. § 605. The summonses were issued in conformity with and pursuant to the authority of 26 U.S.C. § 7602. A finding that the furnishing of the toll records for Deming’s telephones at Woodford Road and at his residence at Fort Thomas constituted a violation of 47 U.S.C. § 605 cannot be supported on this record.

In our opinion the decision in United States v. Caplan, 255 F.Supp. 805 (E.D. Mich.), relied upon by appellants, is distinguishable from the present case in at least two particulars: (1) that case involved the use of an unauthorized pen register, which, unlike making long distance toll records, is not an activity of the telephone company consented to by the subscriber and (2) the District Judge in that case found as a fact that the IRS summons was issued to investigate possible criminal violations and not to determine civil liability. In the present cases District Judge Porter, in the addendum to his findings of facts and conclusions of law on the motion to suppress, affirmatively found that the obtaining of the long distance toll slips in response to IRS summons was pursuant to “demand of lawful authority” as that phrase is used in 47 U.S.C. § 605.

C.

The appellants contend that the toll records could only be obtained under a search warrant, citing Katz v. United States, 389 U.S. 347, 88 S.Ct. 507, 19 L.Ed.2d 576, and Hanna v. United States, 393 F.2d 700 (5th Cir.). We find this contention without merit. Katz was an electronic surveillance case in which the Government eavesdropped on telephone conversations. The Court said, “One who occupies [a telephone booth] * * *, shuts the door behind him, and pays the toll that permits him to place a call is surely entitled to assume that the words he utters into the mouthpiece will not be broadcast to the world.” 389 U.S. at 352, 88 S.Ct. at 511. He. is not entitled to assume that the fact that he is making a call will be a secret. Similarly one who uses a telephone to make long distance calls is not entitled to assume that the telephone company will require a warrant before submitting its records in response to an IRS summons.

The Supreme Court recently held that Katz v. United States is “to be applied only to cases in which the prosecution seeks to introduce the fruits of electronic surveillance conducted after December 18, 1967.” Desist v. United States, 394 U.S. 244, 254, 89 S.Ct. 1030, 1036, 22 L.Ed.2d 248. Any eavesdropping in the present cases occurred well before that date.

Hanna v. United States, supra, was a case of wiretapping by the telephone company and, although the appellants did not mention it in their briefs, was written in three opinions including a dissent. The same panel reversed itself in a unanimous opinion at 404 F.2d 405.

We find no Fourth Amendment right of the appellants violated in the summoning of the toll records.

We hold that the toll records were properly obtained by the Government and were usable both as a basis for the search warrants and as evidence at trial against the appellants.

2) Sufficiency of the search warrants

Appellant Deming challenges the search warrants on the grounds that they are invalid under Spinelli v. United States, 393 U.S. 410, 89 S.Ct. 584, 21 L.Ed.2d 637, and Aguilar v. Texas, 378 U.S. 108, 84 S.Ct. 1509, 12 L.Ed.2d 723; that they are supported by differing statements; and that there is a discrepancy between a date alleged in the statements and what was subsequently proved by the evidence. We find that the warrants were issued on a showing of probable cause and were in no way defective. The statement which is challenged recites the qualifications of the Special Agent making the statement and then recites the following facts on which probable cause was found by the District Court: The Cincinnati office of the IRS was informed in February 1966 (the date is discussed below) that suspected bookmakers in Las Vegas, Nevada were calling a Cincinnati telephone number. The Cincinnati IRS determined the name of the subscriber to the number and examined the toll records discussed above. In June 1966 the affiant was informed by another named Special Agent that a third named Special Agent had been making bets with a person in Lexington, Kentucky by calling two numbers there. Calls had been placed from the Lexington numbers to the Cincinnati number. Calls had also been placed between the Cincinnati number and that of Sam DiPiazza, who was a nationally known bookmaker, and that of an address in Louisville, Kentucky, for which a federal wagering stamp had been issued. The affiant concluded that these telephone calls, in his judgment as an experienced investigator, showed a pattern of a bookmaking operation at the Cincinnati number on Woodford Road.

The statement further recited that the Woodford Road building had been put under surveillance and that a certain automobile, registered to Deming’s mother at Deming’s address in Fort Thomas, Kentucky, had been observed on eight occasions outside the building and Deming had been observed driving it. Deming was known to the affiant as a bookmaker and had been arrested for wagering law violations and had at one time had a wagering stamp. The toll records revealed a number of calls from Deming’s home number to the two Lexington numbers at which the Special Agent had placed wagers.

Deming urges that this Court hold that there was not probable cause because the statement did not recite the name of the informer who told the IRS in Cincinnati in early 1966 that gamblers were calling the Cincinnati number.

In both Aguilar v. Texas, 378 U.S. 108, 84 S.Ct. 1509,12 L.Ed.2d 723, and Spinelli v. United States, 393 U.S. 410, 89 S.Ct. 584, 21 L.Ed.2d 637, the informant’s information was central to the finding of probable cause. In the present case the information from the unknown informant could have been left out of the statement altogether without affecting the determination of probable cause. The information from the informant here was merely the tip which first aroused the curiosity of the IRS. The investigation did not really begin until the Cincinnati number was tied in with the telephone numbers in Lexington used by the person with whom the Special Agent was placing wagers.

Spinelli is no authority for the proposition that the search warrant is invalid because an investigation is begun as a result of a tip. Weak, anonymous and even untrustworthy information may serve as the opening clue to uncovering criminal acts. The District Judge was correct when he stated in the course of the proceedings on the motion to suppress, that: “They can get a lead in any way [so long as it is not illegal]; and if it is followed by investigation which turns up all kinds of probable cause for such as there was in this affidavit * * it will support a judicial finding of probable cause.”

In the case of United States v. Nicholson, 303 F.2d 330 (6th Cir.), cert. denied 371 U.S. 823, 83 S.Ct. 43, 9 L.Ed.2d 63, where this Court was faced with affidavits alleging facts similar to those in this ease, we held:

“Probable cause exists where the facts and circumstances within the officer’s knowledge and of which they had reasonably trustworthy information are sufficient in themselves to warrant a man of reasonable caution in the belief that an offense has been or is being committed. Brinegar v. United States, supra, 338 U.S. 160, 175-176, 69 S.Ct. 1302, 93 L.Ed. 1879; Draper v. United States, 358 U.S. 307, 79 S.Ct. 329, 3 L.Ed.2d 327. Whether probable cause exists requires an act of judgment formed in the light of the particular situation and with account taken of all the circumstances. Because many situations are more or less ambiguous, a determination that probable cause exists should be accepted by this Court unless it is shown that the Commissioner’s judgment was arbitrarily exercised. Brinegar v. United States, supra, 338 U.S. 176, 69 S.Ct. 1302; Merritt v. United States, 249 F.2d 19, 20, C.A.6th.” 303 F.2d at 332.

We hold that probable cause under this standard was established by the factual allegations of the statements in the affidavits.

Appellant Deming complains that the statements in support of the five search warrants were not identical, that the District Court upheld the warrants on the basis of the affidavit which contained additional allegations, and that without the additional allegations there is no showing of probable cause.

The affidavits are identical except that some additional allegations appear in some of them. In our discussion above we have dealt with the most limited of the affidavits. The additional statements enhance the showing of probable cause but are not necessary to establish it.

In United States v. Nolan, 413 F.2d 850 (6th Cir.), this Court said:

“We believe that consistent with the Fourth Amendment the facts supplied the Commissioner by both affidavits could be taken into account by him in determining probable cause in relation to each.”

The District Court was well aware of the differences in the affidavits and did not make its decision on the basis of the fullest alone. We concur with the conclusion of the District Court that probable cause was shown in all of the affidavits.

Appellant places emphasis upon a small variation in dates between the affidavits and proof. The affidavits state that the information first was received from Las Vegas in February 1966. The evidence indicates that the Las Vegas IRS office requested in January 1966 that the telephone at 3808 Woodford Road be checked. The District Judge made no specific finding as to the date the information first was received by the Cincinnati Office from Las Vegas. In his findings of fact on the motion to suppress, he said:

“An IRS intelligence agent in Las Vegas had. a suspected bookmaker

under eyeball surveillance, observing him to make a number of calls from a certain phone, obtained the records regarding such calls from the telephone company, discovered one to be Cincinnati 791-4793, listed under the name of Harry Acker, 3808 Woodford Road, Silverton, Ohio.

“Investigation followed, and the case was put on the shelf until June, 1966, when it was reopened when an IRS agent from Louisville, Kentucky, advised the Cincinnati Office that the same number was being called by Lexington telephone numbers under surveillance.

“Investigation and eyeball surveillance followed * * * ”

We find no possible prejudice to appellants growing out of the conflict in dates as between January and February 1966. This variation could not be construed to constitute reversible error.

We hold that the warrants were based on probable cause and that the material seized under them was admissible in evidence.

3) Electronic surveillance

Appellant DiPiazza frames the question with respect to electronic surveillance as:

“Did The Judge Deny To The Accused An Open Court Determination Of The Nature And Admissibility Of ‘Findings’ And ‘Conclusions’ Resulting From Some Ninety Hours Of Illegal Electronic Eavesdropping ?”

We hold that DiPiazza had the opportunity to show infirmities in the Government’s case resulting from electronic surveillance and that none was revealed.

A thorough pre-trial evidentiary hearing was conducted by the District Judge on defendants’ motion to suppress. There was no evidence of any electronic surveillance of Deming or his telephones at the 3808 Woodford Road address or his residence at Fort Thomas. The United States filed notice, prior to the hearing, that DiPiazza had been subjected to electronic surveillance in the past and produced 35 tapes for inspection of counsel for defendants. Defendants introduced five tapes into the record. The District Court made a finding of fact that there was no connection between the earlier electronic surveillance of DiPiazza and the investigation which led up to the indictment in the present case.

After the trial a hearing was held on the problem of electronic surveillance on the appellants’ petition and motion to suppress. No evidence was taken and none was offered. Counsel argued evidence which was already before the Court and declined to bring on either new witnesses or otherwise to show taint in the Government’s case from illegal surveillance. The District Judge reaffirmed his previous ruling.

Thus the defendants were afforded an opportunity both before and after trial to show any taint of the Government’s case, including the search warrants, ' by’ electronic surveillance. The Government demonstrated the basis of its case to be independent of electronic surveillance. The appellants failed to demonstrate taint. See Alderman v. United States, 394 U.S. 165, 183, 89 S.Ct. 961, 22 L.Ed. 2d 176; Nardone v. United States, 308 U.S. 338, 341, 60 S.Ct. 266, 84 L.Ed. 307.

We hold that the District Court did not deny the appellants any opportunity for a hearing to which they were entitled with respect to the question of surveillance of an illegal nature.

4) Marchetti and Grosso

Deming urges that Marchetti v. United States, 390 U.S. 39, 88 S.Ct. 697, 19 L.Ed.2d 889, and Grosso v. United States, 390 U.S. 62, 88 S.Ct. 709, 19 L.Ed. 2d 906, require the exclusion of the evidence against him which was seized under the search warrants, because he was charged initially in an information with violation of the wagering tax laws by willful failure to pay the tax imposed by 26 U.S.C. § 4411. Subsequent to the return of the indictment on which Deming and DiPiazza were tried, the information was abandoned.

Marchetti and Grosso, decided after Deming’s trial, do not hold that the wagering tax laws are unconstitutional. United States v. One 1965 Buick, 392 F.2d 672 (6th Cir.), petition for cert. filed, 37 U.S.L.W. 3221 (No. 619). They hold that if a criminal defendant charged with violating the wagering laws properly asserts his privilege against self-incrimination the Fifth Amendment is a bar to the criminal prosecution. Thus, Deming could have pled the Fifth Amendment in bar of prosecution for the wagering tax violation. It does not follow that the evidence seized under the warrants must be excluded since the warrants were proper authority for the searches at the time they were issued and executed. Washington v. United States, 402 F.2d 3 (4th Cir.), petition for cert. filed, 37 U.S.L.W. 3287 (No. 831). Since the evidence was obtained under valid search warrants, there was no basis for excluding it. This conclusion also disposes of Deming’s claim that he was improperly denied a hearing on a suppression motion prior to the indictment — he cannot have been prejudiced by not having a hearing at which he could not have prevailed in his motion.

We intimate no opinion on whether warrants issued after Marchetti and Grosso for wagering tax violations are valid. We hold only that Marchetti and Grosso do not require the exclusion of evidence seized prior to the decisions in those cases under otherwise valid search warrants when the evidence is introduced to show the commission of crimes other than wagering tax violations.

5) Conclusion

Other contentions made by the appellants have been considered, and we are of the opinion that they are without merit. The District Court made no error in overruling the various motions to suppress.

Affirmed.