Tuesday, October 4, 2016

District Court Rejects Suppression for Interview of Target of Grand Jury Investigation Without Notifying His Counsel (10/4/16)

In United States v. Sabean, 2016 U.S. Dist. LEXIS 136658 (D ME 2016), here, the district court declined to suppress made by the target of a grand jury investigation to IRS agents when the agents knew that he was represented by an attorney on tax matters without going through the the attorney.  The facts are unusual, so I will just summarize the key facts.

First, the indictment, here, that was ultimately handed down in October 2015 charged tax evasion (Counts 1-5) and Unlawful Distribution of Controlled Substances (Counts 6-57).  I don't know what inferences might be drawn from the tax charged appearing first in the indictment.

Now, turning to the key facts.

The grand jury investigation in which Dr. Sabean was targeted had commenced prior to January 15, 2014.  The scope of the grand jury investigation as of that date is not stated.  IRS agents had been assigned to assist the grand jury.  From the tax charges in the ultimate indictment and the presence of IRS agents, it might be inferred that tax crimes were among those being considered by the grand jury.  But, that is an inference and not a compelled inference because IRS agents are used in some nontax grand jury investigations.  At any rate, whether the scope of the grand jury investigation included tax crimes at the key times here relevant does not appear to be important.

The interview in question was conducted on January 29, 2014 by IRS agents assigned to assist the grand jury.  This is the key interview in issue.

Before that interview, on January 15, 2014, the agents had appeared at the residence of owners of a bookkeeping company used by Dr. Sabean,  to serve a grand jury subpoena.  They advised the owners of the company that "they were conducting an investigation of Dr. Sabean and had questions for the Kuhls [the owners of the bookkeeping service] in this regard." They then interviewed the Kuhls for about 2 hours.  No indication came up in the interview that Dr. Sabean was represented on his tax matters.  They left with some boxes of documents and requested that the Kuhls not advise Dr. Sabean of the visit and grand jury subpoena.

The IRS agents determined on preliminary review of the documents that some of the documents might be subject to privilege as to Dr. Sabean with an attorney named Sheehan, a tax attorney, who had engaged a private investigator on Dr. Sabean's tax matters.  As typical, an AUSA taint team was created to review the documents potentially subject to privilege.

On January 21, 2014, the IRS agents conducted another interview of the Kuhls and obtained additional documents  responsive to the subpoena.  They discussed the attorney and the hiring of the investigator.  In obtaining the additional documents, the IRS agents asked the Kuhls to segregate out items potentially privileged so that they could then be submitted to the taint team.

On January 29, 2014, the IRS agents went to Dr. Sabean's offices to interview him.  The opinion suggests, but does not state, that Dr. Sabean was not aware of the investigation until the agents showed up.  The agents did not advise Dr. Sabean of any rights he might have.  Readers of this blog know that IRS agents conducting CI administrative investigations are required by the IRM to give the noncustodial statement of rights.  See the IRM provisions quoted and linked at the bottom of this blog entry.  The reason was that they were not conducting a CI administrative investigation.  The AUSA had advised them that they were not subject to that requirement because they were conducting the interview pursuant to a grand jury investigation.  (See IRM provision cited and quoted at the end of this blog entry.)

The attorney then advised the agents that further communications should be through him rather than through Dr. Sabean.

In ensuing criminal case then brought by indictment in October 2015, Dr. Sabean moved to suppress any statements he had made in the January 29 interview.  The issue was whether the agents' interview of Dr. Sabean on January 29, 2014 had violated the Maine Rules of Professional Conduct, made potentially applicable by the Citizens Protection Act, 28 U.S.C. § 530B(a) (referred to as the “McDade Amendment”).  The applicable Maine Rule 4.2 was:

a lawyer shall not communicate about the subject of the representation with a person the lawyer knows to be represented by another lawyer in the matter, unless the lawyer has the consent of the other lawyer or is authorized to do so by law or a court order.
After a hearing, the Court denied the motion to suppress.  The Court made findings of fact based on a preponderance of the evidence which permitted its findings to be unaffected by who bore the burden of proof (see slip op. 2, n. 1).  I have summarized the key facts, as found, above.

The Court first found that the IRS agents knew or had reason to know by the start of the interview that Dr. Sabean "was represented in connection [by an attorney] with the matter being investigated." (Slip op. 7.)  Presumably this was the tax matters with respect to which the attorney had been engaged by Dr. Sabean.
Having found that the Government knew that Dr. Sabean was represented by Attorney Sheehan in connection with at least some of the matters under investigation, the Court still must consider the Government’s argument that the contact was authorized by law. On the record presented, and despite Defendant’s argument to the contrary, the Court concludes that the overt, preindictment, noncustodial interview of Dr. Sabean was authorized by law. 
The Court then analysis the Maine Rules that permit the contact with a represented party for
Communications authorized by law may also include investigative activities of lawyers representing governmental entities, directly or through investigative agents, prior to the commencement of criminal or civil enforcement proceedings. 
Basically, the Court held that the state of the law was that this particular contact was prior to the commencement of the investigation and thus not subject to the rule.

The Court then held that, in any event, suppression was not the appropriate remedy for this type of alleged violation, discussing the Caceres rule [violations of agency internal operating rules do not require suppression], and noting that grand jury requirements supersede any requirement of those internal rules in the IRM.  In the course of the discussion, the Court distinguished a case where the grand jury investigation had progressed from "investigative to prosecutorial."  (Slip Op. 12.)

In short, the Court concluded:
any McDade no-contact violation was untethered to a violation of Dr. Sabean’s Fifth Amendment rights. On the totality of the record presented, it is apparent that Dr. Sabean’s statements were made knowingly,  intelligently, and voluntarily in the context of a preindictment, non-custodial interview, which took place at Defendant’s place of business and at his convenience.
Relevant IRM provisions are here:

  • IRM  (02-01-2005), Subject of Investigation

2, Advise the subject of the investigation as follows: "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?"

  • IRM  (02-01-2005), Subject of Grand Jury Investigation

IRS procedures for non-custodial advice of rights does not apply to grand jury investigations. The attorney for the government will provide instructions for advising subjects of their rights. Further, though IRS employees may use their credentials for identification purposes, they should advise those contacted that they are acting as assistants to the attorney for the government in conjunction with an investigation.

No comments:

Post a Comment

Please make sure that your comment is relevant to the blog entry. For those regular commenters on the blog who otherwise do not want to identify by name, readers would find it helpful if you would choose a unique anonymous indentifier other than just Anonymous. This will help readers identify other comments from a trusted source, so to speak.