Saturday, March 28, 2015

Judge Suppresses Statements During Coercive Interview in Home by Agents While Execution of Search Warrant in Progress (3/28/15)

In United State v. Faux, 2015 U.S. Dist. LEXIS 37051 (D Ct. 2015), here, the defendant was investigated for health care fraud based significantly on a confidential witness.  In the investigation, based on the reported claims of the confidential witness and other matters, the agents obtained a search warrant to search the defendant's home.

The agents executing the search warrant showed up early in the morning, catching the defendant and her husband as they were about to leave for a vacation to Mexico with their son and his family.  "Approximately ten to fifteen agents from three agencies -- the FBI, HHS-OIG and the Criminal Investigations Division of the Internal Revenue Service ('IRS-CID')" executed the search warrant, apparently all having guns which, apparently also, were not drawn during the execution of the search warrant.  The defendant claimed that the agents told her that she was not going anywhere; the agents denied the claim.  The defendant did, in any event, cancel her plans, and the agents heard her do so without correcting her as to whether cancelling the plans was necessary.

Two of the agents -- an FBI agent and an HHS-OIG agent -- questioned Faux in her living room during the execution of the search warrant.  The interview lasted about 2 hours. They did not give her Miranda or even modified Miranda warnings.

The defendant was then indicted for "health care fraud, in violation of 18 U.S.C. § 1347, obstruction of a federal audit, in violation of 18 U.S.C. § 1516, filing a false statement on a tax return, in violation of 26 U.S.C. § 7206, and aiding and abetting under 18 U.S.C. § 2."  The defendant moved to suppress the statements made in the interview.  In deciding the issue, the court make the inquiry as to whether the situation was sufficiently coercive that the Miranda warnings -- which were not given -- were required to be given.  Under the circumstances the court found this particular interview to be in a coercive setting.  While normally, an interview in the home would not be a type of coercive setting such as an arrest and detention, "[U]nder certain circumstances, however, the home may be transformed into a custodial setting."  The court then made the determination that it was:
Although there are factors pointing in both directions, after considering the totality of the circumstances, I find Faux was in custody during the interrogation. Several mitigating factors weigh against a finding of custody in this case. Faux was questioned in the "familiar surroundings" of her home, was not handcuffed during the interrogation, and was not arrested at its conclusion. McPhillips [FBI] and Fontes [HHS-OIG] did not display their weapons or otherwise threaten physical force. Faux was never told that she was not free to leave, and there is no indication that she asked to terminate the interrogation, to leave the residence, or to be questioned in the same room as her husband. And, the tone of the questioning was largely conversational; there is no indication that McPhillips or Fontes raised their voices or made threatening statements in order to elicit responses to their questions. See, e.g., Falso, 293 F. App'x at 839; Berschansky, 958 F. Supp. 2d at 382-83; Groezinger, 625 F. Supp. 2d at 158. 
Yet, there are numerous aggravating factors that, in combination, distinguish this case from others where courts in this Circuit have held that an interrogation was not custodial. First, Faux was interrogated while about a dozen agents from three federal agencies executed a search warrant at her home. Faux did not invite a couple of officers into her home for a friendly chat; she was compelled to admit the officers in numbers they chose. Moreover, Faux's affidavit indicates that she knew or believed that the agents were armed. This is a documents case, not one involving weapons, drugs or other contraband, or a dangerous suspect. A reasonable person would not expect that so many armed officers would be needed to execute a search. The presence of a dozen armed officers would have been intimidating and would have communicated a show of force to a reasonable person, even if weapons were not drawn. Cf. Newton, 369 F.3d at 675 (presence of six officers would not "by itself, have led a reasonable person in [defendant's] shoes to conclude that he was in custody," because "[a]s a parolee, [defendant] was accustomed to parole officers coming to his home to ask questions," and defendant recognized some of the officers present during search).
Second, Faux was physically separated from her husband, who was questioned by agents in another room. Although the agents testified that they would have accommodated a request by Faux to see Corwin, they did not communicate that to Faux. Without that information, Faux had no reason to believe that she would be allowed to see Corwin when the agents had intentionally separated them from each other for questioning. Thus, Faux effectively was denied the comfort, support and advice of her husband during the interrogation. 
Third, Faux was not permitted to move freely in her home during the two-hour interrogation; agents accompanied her to the bathroom and to her bedroom to obtain a sweater. But unlike Corwin, who was told to remain in one place during the search for his own and the agents' safety, Faux was never informed that the rationale for restricting her movements was officer safety. See Faux. Aff. ¶¶ 8-11; Hr'g Tr. 22, 39, 59. Faux would have had no reason to believe the officers were concerned about their safety in her home. Importantly, the officers had no rational basis for believing Faux or Corwin would harm them or would flee — indeed, if the couple were truly free to leave there was no legitimate concern of flight whatsoever. n10 A reasonable person in Faux's situation, who has no prior criminal record or history of violent conduct, would have understood this restriction as a marker of custody. Compare, e.g., Griffin, 922 F.3d at 1354 (defendant in custody where officers accompanied him around house and required him to remain in sight without explaining that monitoring was for officer-safety purposes), with Lifshitz, 2004 WL 2072468, at *2, 7-8 (defendant not in custody where officers asked defendant not to move around for safety reasons).
   n10 Under Michigan v. Summers, 452 U.S. 692 (1981), law enforcement officials are permitted to detain occupants of a residence during the execution of a search warrant. Summers "recognized three important law enforcement interests that, taken together, justify the detention of an occupant who is on the premises during the execution of a search warrant: officer safety, facilitating the completion of the search, and preventing flight." Bailey v. United States, 133 S. Ct. 1031, 1038 (2013). Although Summers permits the government to detain occupants of a residence during the execution of a search warrant, the rationales underlying its holding is not well applied in a case like this. Here, the agents were seizing computer and paper records, not contraband. They had no cause to believe that the occupants of the house were armed and dangerous. And, if Faux and Corwin truly were "free to leave" as the government argues they were, the agents had no reason at all to be concerned with flight. 
Fourth, unlike the majority of cases involving noncustodial interrogations, Faux was never told that she was free to leave or that she had a choice whether to respond to questioning. McPhillips did not even tell Faux that she was not in custody until twenty minutes into the interrogation. Hr'g Tr. 15, 23, 30, 35, 68; cf., e.g., Badmus, 325 F.3d at 139 (officers immediately told defendant that they were "guests" in his house, that he was not under arrest, and that he could ask them to leave at any time); Bershchansky, 958 F. Supp. 2d at 382-83 (officers informed defendant he was not under arrest at outset of search); Groezinger, 625 F. Supp. 2d at 158 (same); Lifshitz, 2004 WL 2072468, at * 6 (same). Faux would have realized that she was under suspicion when the agents informed her why they were searching her home. Absent an explanation to the contrary, a reasonable lay person in her shoes could have felt that the search warrant required her not only to admit the officers and submit to a search but also to answer questions posed by the searching officers. Thus, an agent informing her that she was not in custody and/or that she was free to leave at the outset of the search would have been particularly significant to a reasonable person's understanding that she was not in custody. 
Finally, Faux and Corwin had somewhere to be when the agents arrived at their home. Although the sun was just coming up, they were already dressed and ready to leave, because they were on their way to the airport for vacation with Corwin's son and his family. That mitigates the early hour of the interview, but it significantly increases the coercive nature of the interrogation. Faux asserts that when she informed the agents of her vacation plans, McPhillips told her she was "not going anywhere." Faux Aff. ¶ 6. Whether or not McPhillips made that statement, that is the message that would have been communicated to a reasonable person in Faux's situation. It is impossible to believe that Faux voluntarily chose to answer questions for two hours rather than choosing to go on a vacation with relatives — particularly when she had no means to tell the others traveling that the vacation had been interrupted. No reasonable person would submit to the inconvenience and expense of missing a flight and cancelling a vacation to be taken with others if she thought she had the choice of answering questions at another time. Significantly, when Faux informed Corwin that they would have to cancel their vacation, the agents never corrected her. Instead, they asked her questions for two hours. Cf. Groezinger, 625 F. Supp. 2d at 158 (agents informed defendant he was going to be late for court appearance, indicating he would be free to leave once the search was completed). Faux clearly did not feel free to terminate the police encounter in question, and that feeling was objectively reasonable. 
Under the totality of the circumstances presented here, a reasonable person in Faux's situation also would have understood her freedom of action to be "curtailed to a 'degree associated with a formal arrest.'" Berkemer, 468 U.S. at 440 (quoting Beheler, 463 U.S. at 1125); Newton, 369 F.3d at 671 (citing Berkemer). Accordingly, I find that Faux was in "custody" during the interrogation at her home. Because Faux did not receive Miranda warnings, the motion to suppress statements she made during that interrogation is granted.
That was the holding and, in most cases, the court would have left it at that.  But this judge felt it appropriate to comment further as follows:
IV. Comment on the Government's Conduct 
The basis for my ruling on the motions to suppress is set forth in full above. What follows is an afterword to that ruling that comments on a routine government practice that I believe is unfair and that should be held to violate the constitutional protections afforded to criminal suspects. 
Faux was the sole subject of an eighteen-month, targeted investigation. By the time she was interrogated, a grand jury had been issuing subpoenas for her bank and billing records for over a year. A confidential informant working for the government had recorded countless hours of conversations with Faux in an effort to obtain admissions from her and the government had sent an undercover agent to snoop around at Faux's business to uncover additional evidence of wrongdoing. The goal of these sustained efforts was not to investigate who was committing a crime, but rather to prove that Faux was committing a crime. Indeed, if a crime had been committed, Faux is the only person who could have committed it. 
The fruits of the government's investigation enabled it to obtain a judicial determination of probable cause the very day before the interrogation of Faux. Although the government did not seek a warrant for Faux's arrest at that time, McPhillips' search warrant affidavit established probable cause that evidence of a crime would be found at Faux's home and business - and probable cause supporting a search warrant could exist only if there was probable cause to believe that Faux had committed a crime. (This is not a situation, for example, in which Faux's home was believed to be a stash house for someone else's Medicare billing records). In questioning her that morning, the government was not looking for a suspect; it was simply trying to make its case easier to prove at trial by pressuring her into a confession. 
At the very least, it was truly unfair for the government to interrogate Faux without telling her that she was targeted for indictment. The government should be commended for the success of its investigation, but that very success should impose prudential limits on the government's interrogation of a person it had all but formally accused of a crime. In order to avoid "the appearance of unfairness," the Department of Justice has a "longstanding policy to advise grand jury witnesses who are known 'targets' of the investigation that their conduct is being investigated for possible violation of Federal criminal law." United States Attorneys' Manual §§ 9-11.150, 151. In addition to being informed of their "target" status, such witnesses are told that they have a right to refuse to answer potentially incriminating questions, that anything they say may be used against them by the grand jury or in a subsequent legal proceeding, and that they have the right to consult with retained counsel. Id. 
That policy should have been followed in this case even though the interrogation occurred outside the grand jury room. Faux was certainly a "target," i.e., "a person as to whom the prosecutor or the grand jury has substantial evidence linking him or her to the commission of a crime and who, in the judgment of the prosecutor, is a putative defendant." Id. Under these circumstances, it was unjust for the government not to advise Faux of her rights to remain silent and to have counsel present during the questioning at her home. 
I further believe that the interrogation of a target during the execution of a search warrant should be unconstitutional unless the target is advised of her rights. The Fifth Amendment ought to apply, and Miranda warnings should be required, once "the adversary process has begun, i.e., when the investigative machinery of the government is directed toward the ultimate conviction of a particular individual." Beckwith v. United States, 425 U.S. 341, 350 (1976) (Brennan, J., dissenting) (quoting United States v. Oliver, 505 F.2d 301, 304-05 (7th Cir. 1974)). As discussed above, the Supreme Court has confined Miranda's holding to custodial interrogation. Oregon v. Mathiason, 429 U.S. 492, 495 (1977) ("Miranda warnings are required only where there has been such a restriction on a person's freedom as to render him 'in custody.'"). Yet, the "custody" analysis required by the current state of the law ignores the fundamental difference between the questioning of a mere witness or potential suspect and "the interrogation of an accused for the purpose of securing [her] conviction." Beckwith, 425 U.S. at 350 (Brennan, J., dissenting). 
In my view, there are two fundamental ways in which the power of government can be brought to bear on an individual in the criminal investigatory process: one can be held in custody and one can be a putative defendant the government intends to prosecute. At present, constitutional law protects the former, but not the latter; yet both exercises of government power should give rise to constitutional protections. This should be accomplished either by extending Miranda to noncustodial interrogation of targets or by recognizing Sixth Amendment rights for targets of a criminal investigation. 
The current state of the law leaves a huge loophole in the constitutional protections afforded criminal suspects - and the government routinely exploits that loophole by carefully planned interrogations during executions of search warrants. The government well knows that the Fifth Amendment will not apply, so long as the interrogation can be described as noncustodial, and that the Sixth Amendment right to counsel will not kick in until the government decides to formally charge the individual it has targeted for indictment. See, e.g., Kirby v. Illinois, 406 U.S. 682, 688 (1972) ("[I]t has been firmly established that a person's Sixth and Fourteenth Amendment right to counsel attaches only at or after the time that adversary judicial proceedings have been initiated against him."); United States v. Mandujano, 425 U.S. 564, 579-83 (1976) (target of grand jury proceedings has no constitutional right to counsel, because witness has yet to be formally charged and is not in custody for Miranda purposes). 
By the time an individual becomes a target, that is a "putative defendant," the government generally has all of the information it needs to arrest or indict, but it can choose not to do so before questioning, thereby preventing the target's Sixth Amendment rights from attaching. Agents can wait until they have probable cause to obtain a search warrant and then conduct a planned interrogation of the suspect under the guise of executing the warrant. The agents assigned to interrogate the target can wear street clothes and keep their weapons hidden, in hopes of minimizing the risk a court will find the suspect was in custody. Meanwhile, a multitude of agents can swarm the scene, unsettling the target and putting pressure on her to talk. 
It is true that "[a]ny interview of one suspected of a crime by a police officer will have coercive aspects to it, simply by virtue of the fact that the police officer is part of a law enforcement system which may ultimately cause the suspect to be charged with a crime." Mathiason, 429 U.S. at 495. But the government's practice of conducting interrogations during the execution of a search warrant is designed to manufacture coercion in fact that will not be recognized as coercion under the law. 
Questioning an individual targeted for indictment during the execution of a search warrant at her home without advising her of her rights is wrongful conduct that should not be condoned, either ethically or constitutionally. Courts should stop turning a blind eye to the reality that this practice can render the questioning a coercive, custodial interrogation. Any interrogation of a target, whether or not "custodial" as defined by current case law, should occur only after a waiver of rights. Once the adversary process has begun and the "investigative machinery of the government is directed toward the ultimate conviction of a particular individual," Beckwith, 425 U.S. at 350 (Brennan, J., dissenting), that individual deserves the constitutional protection of Miranda warnings. 
JAT Comments:

1.  My experience is that, when IRS-CID agents lead the investigation, the modified Miranda warnings are given scrupulously (maybe not always, but almost always, so that failure to do so is a rare outlier).  The typical setting for the IRS-CID is early on in the investigation when the IRS makes a surprise visit at an unexpected time -- often early in the morning as in this case -- to seek to interview the target (I mean that in a looser sense than in the judge's opinion, because the IRS-CID may not have determined that he is a target in that sense and certainly no DOJ prosecutor has made the determination.  There will be two IRS-CID agents.  One will give the modified Miranda warnings appropriate to a noncustodial setting (which, as noted, is the normal environment for in-home interviews) as follows (IRM  (02-01-2005), Subject of Investigation, here):
In connection with my investigation of your tax liability (or other matter), I would like to ask you some questions. However, first I advise you that under the Fifth Amendment to the Constitution of the United States, I cannot compel you to answer any questions or to submit any information if such answers or information might tend to incriminate you in any way. I also advise you that anything which you say and any documents which you submit may be used against you in any criminal proceeding which may be undertaken. I advise you further that you may, if you wish, seek the assistance of an attorney before responding. Do you understand these rights?
This is the type of warning that was not given in a far more coercive setting than IRS-CID agents normally encounter when they routinely give the warning.

2.  Judge Underhill's analysis is spot-on.

3.  By way of aside, Judge Underhill is the district judge that attempted on repeated occasions to let GE get away with a bullshit tax shelter, only to be swatted down by the Second Circuit.  Then, when the Second Circuit closed the door on his benevolence to GE on the merits of its bullshit shelter, Judge Underhill then relieved GE of the accuracy related penalty.  The Government has appealed yet again.  The case has been fully briefed on appeal.  The current scheduling for oral argument is on 4/13/15.  For more see GE Ducks Any Penalty for Its Bullshit Tax Shelter -- For Now (Federal Tax Crimes Blog 4/17/14), here.  The judge's shenanigans in the GE case, however, should not take away from this decision in Faux.

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