UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

TO ALL PARTIES AND THEIR ATTORNEYS OF RECORD:

I.........Background

...........Defendant was served with an IRS summons ordering him to appear before an IRS agent on March 9, 1993. He was also ordered to bring all documents and records he possessed or controlled that reflect income he earned or received for the years 1986, 1987, 1988, 1989, 1990 and 1992. The government moved the Court for an order compelling defendant's compliance. The order was granted on December 6, 1993 and Defendant was interviewed on January 14, 1994.

..... .....At the interview, Defendant, invoking his Fifth Amendment privilege against self-incrimination, refused to produce documents or to answer a series of questions put forth by the government, On March 24, 1995, this Court reluctantly held that Ninth Circuit precedent created a "Tax-Crime Exception" to the Fifth Amendment and ordered Defendant to comply with the IRS Summons. The Court stayed enforcement of the order pending review on appeal and urged the Ninth Circuit to overturn its previous decisions and permit the defendant to invoke his Fifth Amendment privilege in this case.

..... .....On appeal, the Ninth Circuit vacated the Court's order, holding that "the Fifth Amendment may be validly invoked when the taxpayer fears prosecution for tax crimes." United States v. Troescher, 99 F.3d 933, 936 (9th Cir. 1996). The Court now considers whether the Fifth Amendment was properly invoked in this case.

...........The Fifth Amendment protects a person against being incriminated by his own compelled testimonial communications. Fisher v. United States, 425 U.S. 391 409 (1976), a communication is testimonial if it would directly or indirectly reveal the defendant's knowledge of facts relating him to the offense or require the defendant to share his thoughts and beliefs with the government. Doe v. United States, 487 U.S. 201, 213 (1988) ("Doe 2"). While the contents of voluntarily prepared documents are not privileged, the act of producing documents may be testimonial and thus could be privileged. United States v. Doe, 465 U.S. 695, 617 (1984) ("Doe 1").

..........."Whether a compelled communication is testimonial for purposes of applying the Fifth Amendment often depends on the facts and circumstances of the particular case." Doe 2, 487 U.S. at 214-15. In Doe 2, for example, the Court held a defendant could be compelled to sign a form permitting consenting to the production of records by "any bank or trust company at which I [the defendant may have a bank account of any kind ..." Id. at 204, n.4. Signing the form was not a testimonial act because it neither acknowledged that the defendant had an account at any institution or admitted the authenticity of any records that may be produced. Id. at 216.

...........In contrast, Doe 1 involved, inter alia, subpoenas for business records for a specific company owned by the defendant and bank statements and canceled checks for two of the defendant's companies that had accounts with foreign banks. Doe 1, 465 U.S. at 607. The Court held that by producing these documents the defendant would, in effect, be admitting that the records exist, are in the defendant's possession and are authentic. Id. at 613.

...........Ultimately, the court must look at each individual question or document request posed by the IRS and determine whether Defendant is "faced with substantial hazards of self incrimination that are real and appreciable not merely imaginary and unsubstantial." Troescher, 99 F.3d at 935 (internal citations omitted). If a direct answer would support a conviction or provide a link in the chain of evidence leading to a conviction Defendant cannot be compelled to answer the question. Troescher, 99 F.2d at 934-35 (citing Hoffman V. United States, 341 U.S. 479, 486 (1951).

............Defendant has identified thirty three questions which he believes he may validly assert his Fifth Amendment right These questions can be divided into three categories. ///

...........A. ......Personal questions

...........Information may be either incriminating on its face, Hoffman, 341 U.S. at 487, or, the person asserting the privilege may demonstrate that otherwise innocent information has incriminating potential within the context of the particular questioning. United States v, Sharp, 920 F.2d 1167, 1170 (4th Cir. 1990) (citing United States v. Rylander, 460 U.S. 752, 758-59 (1983)) . Many of the questions posed at the IRS interview asked the Defendant for personal information, which would normally not be subject to Fifth Amendment protection. Because Defendant is alleged not to have filed tax returns for a number of years, however, these answers could lead investigators to find unreported income. For example, questions regarding Defendant's marital status and the names and social security numbers of his children - information which normally would not be incriminating -- may properly be objected to in this context.

...........The Court concludes, therefore, that Troescher has properly objected to the following questions:

1. ...... Have you ever used Social Security Number 567-44-3458?¹

2. ...... Do you know who is assigned Social Security number 567-44-3458?

3. .......What is your date and place or birth?

4. .......Have you used any other names?

5. .......How long have you lived at your current address?²

6. .......Do you have any plans to move from your current address?

7. .......Are you a U.S. Citizen?

8. .......What is your date, place and name of court if naturalized?

9. .......What is your marital status? Are you single, married, divorced or separated?

10. .....What is your wife's maiden name, date and place ofmarriage?

11. .....What are the names, dates of birth and Social Security Numbers of your children?

12. .....What is the extent of your education, year of high school graduation, college, trade schools attended, diplomas obtained, .professional certifications held, etc.?

...........The Court notes that the assertion of the privilege as to questions 5 and 6, which pertain to Defendant's tenure at his current residence and relocation plans (or lack thereof) is questionable. However, Defendant's tenure at his current residence is easily obtainable from other sources, including public records. Therefore, even if Defendant could be compelled to answer this question, the government is not prejudiced by Defendant's refusal to answer.

...........Similarly, the Court fails to see the relevance of Defendant's relocation plans to this investigation. Thus, Defendant will not be compelled to answer either question, despite legitimate arguments as to whether they fall within the scope of the Fifth Amendment privilege.

____________________

......1 This number is not Defendant's social security number, which he is willing to provide.

... ² Defendant provided his address.

...........As with the questions pertaining to Defendant's personal life, questions seeking information regarding Defendant's occupation may also lead to incriminating evidence, The answers to each of the following questions could conceivably lead to the discovery of evidence showing that Defendant received income which he has not, to date, reported to the IRS.

...........Accordingly, Defendant properly asserted the Fifth Amendment privilege as to the following questions:

13. .....What is your occupation?

14. .....Have you had any other occupations in previous years?

15......Did you file tax returns for the years 1986 through 1991?

16. .....Did you file any federal income tax returns for any Partnership, joint venture, corporation or fiduciary, which was also known as a trust, both foreign or domestic for the 1986 through 1991 tax periods?

17. .....Have you ever engaged in a business as a sole proprietor?

18. .....Have You ever owned any interest in any Partnership, foreign or domestic, as a general or limited partner?

19. .....Have you ever owned any interest in any corporation both foreign or domestic?

20......Have you engaged in any other business or any joint ventures since the periods mentioned. above?

...........C. .......Financial Questions

...........Finally, Defendant objects to questions pertaining to his assets, banking practices and production of business records, These questions are clearly subject to Fifth Amendment protection:

21......What banks were business and personal accounts maintained by you and your related businesses for the 1986 through 1991 tax Periods?

22. .....What was the largest amount of cash or currency which you had at any time at your home, in a safe deposit or place other than on deposit in a bank?

23. .....Do you keep your cash or other assets hidden in a mattress, buried in a backyard or kept in other non conventional Places?

24. .....Please list all assets purchased during the 1986 through 1991 tax periods. These purchases should include but not be limited to real estate, stocks, bonds, personal property exceeding $1,000?

25......Have you ever submitted a statement of your assets and liabilities to any bank concern or individual?

26. .....Have you ever loaned any money to any person or firm during the 1986 through 1991 tax periods?

27. .....Please disclose all sources of income during the 1986 through 1991 tax periods that you received and/or earned,including income from taxable and non-taxable sources.

28. .....Have you or your spouse made any investments or acquired any assets in the 1986 through 1991 tax Periods which have not been discussed during this interview?

29......Have you or your spouse received any income from any source during the 1986 through 1991 tax periods which has not been discussed during this interview?

30. .....Has anyone as a favor to you or in any way, held for you any real property, personal property, cash, currency or anything of value?

31. .....Will your books and records and the books and records of your related entities be made available for examination by any agent of the IRS?

32. .....Will you agree to submit a statement of your assets and liabilities as of the beginning of 1986 through the end of 1991?

33......Will you agree to submit a statement of estimated personal and family living expenses for the 1986 through 1991 tax periods?

............The Court has considered each of the questions and document requests put to Defendant and concludes that Defendant properly invoked his Fifth-Amendment privilege in each instance. Accordingly, the government's motion to compel Defendant's answer is DENIED.