The Second Circuit recently addressed the custody issue in a nontax investigation. United States v. Faux, ___ F.3d ___, 2016 U.S. App. LEXIS 12577 (2d Cir. July 8, 2016), here, reversing United States v. Faux, 94 F. Supp. 3d 258 (D CN 2015), here. The Second Circuit panel's decision is important potentially applicable in some criminal tax investigations.
The decision commences with a good overall summary:
The United States appeals from an order suppressing statements made by defendant Danielle Faux during a two‐hour interview that was conducted in her home while a search warrant was being executed. The underlying allegation is that Faux fraudulently submitted bills for physical therapy sessions (which would be insurable) that were in fact (uninsured) sessions with personal trainers. The United States District Court for the District of Connecticut (Underhill, J.) ruled that the circumstances of the interview amounted to a custodial interrogation and that the statements must be suppressed because Miranda warnings were not given. It can hardly be denied that the conditions of the interview exerted coercive pressure on Faux: armed law enforcement personnel entered her home at dawn, her vacation plans were abruptly canceled, and she was accompanied by an agent when she moved about her home; however, the circumstances did not rise to the level of a “custodial interrogation,” which is defined narrowly in our case law as circumstances akin to formal arrest. The Government stepped right up to the limits of constitutionally permissible conduct and, based on the facts accepted by the district court, just managed to toe the line. Accordingly, we vacate the order of the district court and remand for further proceedings not inconsistent with this opinion.Also, similarly helpful as a summary is the conclusion (pp. 20-21 of the slip opinion:
Under our precedents, the circumstances of Faux’s interrogation militate against a finding of custody. Faux was questioned in the familiar surroundings of her home. See FNU LNU, 653 F.3d at 153. She was seated at her own dining room table. See Beckwith v. United States, 425 U.S. 341, 342 (1976). She was not handcuffed during the interrogation and was not arrested at its conclusion. See Newton, 369 F.3d at 663. The agents did not display their weapons or otherwise threaten or use any physical force. See Badmus, 325 F.3d at 136. n8 Faux claims the agents “held her arm” as they escorted her to her dining room for the interview; but the agents denied this, the district court made no finding one way or the other, and the gesture is not described as being forceful. In short, there is no evidence that physical force was used, or threatened.
n8 This distinguishes our case from the “police‐dominated environment” that led to a custody finding by the Ninth Circuit in Craighead. There, the agents unholstered their weapons in the presence of the defendant several times. 539 F.3d at 1084‐88. The interrogation took place in a “back storage room” where the door was closed behind the defendant and one of the armed officers stood blocking the door, silently. Id. There is no indication in this case that any of the agents physically imposed themselves to prevent Faux from leaving the dining room; in fact, she was permitted to move throughout the house, albeit accompanied by an agent.
On this record, and given our precedents, it must be concluded that Faux was not in custody. True, the two‐hour interview was conducted while officers swarmed about her home. But she was told 20 minutes into the interview that she was not under arrest; she was never told that she was not free to leave; she did not seek to end the encounter, or to leave the house, or to join her husband; the tone of the questioning was largely conversational; there is no indication that the agents raised their voices, showed firearms, or made threats. Her movements were monitored but not restricted, certainly not to the degree of a person under formal arrest. She was thus never “completely at the mercy of” the agents in her home.
The Court of Appeals assessed the facts differently than did the district court, Judge Underhill. The Court of Appeals did not have to address Judge Underhill's concluding section which I will quote below (Judge Underhill's opinion cited above is here). I simply say that, since the Court of Appeals found him wrong (but not egregiously wrong) on the merits. So his general comments should be considered. Note that the boldface other than the IV caption is supplied by me, along with a bracketed comment.
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, 96 S. Ct. 1612, 48 L. Ed. 2d 1 (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, 97 S. Ct. 711, 50 L. Ed. 2d 714 (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. [Note that IRS criminal agents do give modified Miranda warnings in such cases, at least most of the time.]
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, 92 S. Ct. 1877, 32 L. Ed. 2d 411 (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, 96 S. Ct. 1768, 48 L. Ed. 2d 212 (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.
This comment can do nothing to change the state of the law, but I hope it helps bring about a change in law enforcement practice.