United States v. Payner

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1980 United States Supreme Court case

United States v. Payner, 447 U.S. 727 (1980), is a United States Supreme Court case in which the Court reversed a district court's suppression of evidence in the criminal prosecution of an Ohio businessman charged with tax evasion . The case concerned both issues of criminal procedure and the application of the exclusionary rule derived from the Fourth Amendment . By a 6–3 margin the Court both reaffirmed its earlier rulings' holding that only the party whose Fourth Amendment protections may have been violated has standing to challenge the evidence seized in the search, and barred lower courts from exercising their supervisory power to exclude such evidence at the trial of third parties.

The case had been brought as the fruit of Operation Trade Winds, a lengthy Internal Revenue Service (IRS) investigation into the use of offshore accounts in tax havens by American citizens attempting to evade tax liability and hide assets, some of which were believed to have been derived from criminal activities. At one point, a private investigator working with a Florida IRS agent had taken the executive's briefcase for the IRS to open and duplicate the documents within, then returned the briefcase. (This aspect was described by the district judge as the "briefcase caper", a sobriquet which has subsequently become attached to the case as a whole). Subpoenas based on the information in those documents yielded the documents used in a prosecution later of Ohio businessman Jack Payner.

Lewis Powell wrote for the majority that prior case law gave Payner no reasonable expectation of privacy in the documents used to build the case against him. While the Court, too, was outraged by the IRS agent's disregard for the law, the judicial branch 's supervisory power was meant to be used only against its own excesses, and Congress was better equipped to remedy such breaches of the Constitution since there were no ways to limit how a court might apply such a rule. Thurgood Marshall 's dissent noted not only the extent to which the IRS had gone in planning the briefcase caper but that its agents had purposely been instructed to take advantage of the loophole created by the court's standing rule. Later commentators read the case as expanding the standing rule, and indicating a shift to focusing on the deterrence effect of applying the exclusionary rule instead of the courts' supervisory role.

Initial investigation

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In 1965 the IRS initiated "Operation Trade Winds", a broad investigation into the use of offshore tax havens by American citizens, some of whom had links to organized crime . Agents in the Jacksonville office, where the investigation was headquartered, began to focus on Castle Bank & Trust , in Nassau, Bahamas , when they learned a suspected drug trafficker had opened an account there. Richard Jaffe, one of the special agents involved in Trade Winds, asked Norman Casper, a private investigator he sometimes used as a source, to look into Castle.

Casper made the acquaintance of Michael Wolstencroft, one of Castle's vice presidents. He introduced Wolstencroft to Sybol Kennedy, a former employee of his who also did private investigative work. In 1973 Wolstencroft came to Miami for a few days, and Casper came up with a plan to get information on who Castle's depositors were. Jaffe approved the basic outline.

Upon Wolstencroft's arrival in Miami, he went to Kennedy's apartment and took her out for a dinner date. While they were out, Casper entered the apartment with a key Kennedy had given him and took Wolstencroft's briefcase to Jaffe. A locksmith created a duplicate key to the briefcase. Once it was opened Jaffe and other IRS personnel microfilmed 400 of the documents within. They were replaced and returned to Kennedy's apartment before she and Wolstencroft returned from dinner.

The documents revealed extensive cooperation between Castle and the Bank of Perrine in Florida. Later, at Casper's instruction, Kennedy stole a rolodex from Castle's office in Nassau during a visit to Wolstencroft. Among those with contact information in it was Cleveland -area businessman Jack Payner. The IRS let him know that it was investigating his tax returns for four years. Subpoenas were issued to the Bank of Perrine. In response to one the bank produced a 1972 letter from Payner pledging the $100,000 in his Castle account as collateral for a loan. Since Payner had said he did not have any offshore accounts on his tax return for that year, the case was referred to the United States Attorney for the Northern District of Ohio . Based on that evidence, Payner was indicted in 1976 on a charge of filing a false tax return, a felony .

Trial

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A year after the indictment, Payner moved to suppress the government's evidence against him as fruit of the poisonous tree , developed from evidence obtained in violation of the Fourth Amendment 's prohibition of unreasonable search and seizure. Federal prosecutors argued in response that the evidence was developed from sources other than the documents in Wolstencroft's briefcase, and that even if those had been the only source Payner had no standing to invoke the exclusionary rule because his rights had not been violated when the documents were copied. With the agreement of both parties, Judge John Michael Manos conducted the proceedings as a bench trial , with himself as sole trier of fact , considering both the government's case on the merits and the defendant's motion to suppress concurrently, in order to determine whether or not any of the government's evidence was obtained independently of the contents of Wolstencroft's briefcase or the rolodex.

After both parties had presented their cases, Manos granted the motion to suppress. Prosecutors appealed to the United States Court of Appeals for the Sixth Circuit . A three-judge panel headed by the circuit's chief judge, Harry Phillips , dismissed the appeal for lack of jurisdiction . Phillips wrote that the federal statute limiting the government's right of appeal in criminal prosecutions was explicit that rulings suppressing evidence could only be appealed before trial, not afterwards. He criticized Manos's handling of the case, saying that the motion to suppress should have been heard first in any event, in order to preserve the government's right of appeal.

With the case before him again, Manos amended his rulings accordingly. He first found Payner guilty, then granted the motion to suppress and, on his own initiative, set aside the verdict. In a memorandum opinion on the suppression, he set forth his reasoning.

"This Court finds that the United States, through its agents, Richard Jaffe, and others, knowingly and willfully participated in the unlawful seizure of Michael Wolstencroft's briefcase", Manos declared. He did not accept the government claim that Casper had acted on his own, since Jaffe had been not only involved and aware but h

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