Opinion ID: 588111
Heading Depth: 2
Heading Rank: 1

Heading: Events Prior to the Unlawful Search

Text: 4 In February 1989, Eng came under investigation by the Drug Enforcement Administration and the Internal Revenue Service (IRS) for suspected narcotics and money laundering violations. The investigation began after informants indicated that Eng was importing large quantities of narcotics from the Far East and laundering money through various businesses and properties in the United States. As is customary following commencement of narcotics and money laundering investigations, the IRS began a tax evasion investigation of Eng in August or September 1989. The investigation was conducted by IRS Agent Thomas Interdonato. Interdonato used the expenditures method of proof, which premises a tax evasion case on a comparison between the taxpayer's income and non-taxable resources, such as gifts and loans, and the taxpayer's expenditures. The government is constrained under this method to show that non-taxable sources of funds spent by the taxpayer did not exist, a burden that involves a thorough search of assets, sources of money, and cash inflows and outflows. See generally United States v. Bianco, 534 F.2d 501 (2d Cir.), cert. denied, 429 U.S. 822, 97 S.Ct. 73, 50 L.Ed.2d 84 (1976). Prior to the unlawful search, the following items had been identified by Interdonato:
5 It appears that Interdonato began his investigation with Eng's personal tax returns, which were prepared by Wang F. Luk, an accountant. The interest income information reported on Eng's tax returns indicated that Eng had personal bank accounts in New York at Manhattan Savings Bank, Hang Seng Bank, National Westminster Bank, and Bowery Bank. However, Interdonato had no account numbers. Bowery Bank was subpoenaed for account records but responded (erroneously, as it later turned out) that it had no account for Eng.
6 Eng's tax returns indicated that Eng resided at 134 Gauldy Avenue, in Staten Island, New York. As regards this property, Interdonato performed a title search which revealed the identity of a mortgagee, Long Island Savings Bank. In response to a subpoena, the mortgagee produced Eng's mortgage application, payment history and the amount due on the mortgage.
7 Interdonato had confidential information that Eng owned a condominium at 141 Division Street in New York City.
8 The government possessed confidential information that Eng was President of Chinese Moon Palace Restaurant, Inc., located in the 26 Bowery building in New York City. Interdonato performed a title search on the 26 Bowery building and discovered that the building had been sold in December 1986, by a corporation called 26 Bowery Corp., to a corporation called Bowery Mansion, Inc. The title search also revealed that the selling corporation's attorney was Ronald De Petris, Esq., and that Eng was President of Bowery Mansion. Interdonato then obtained the certificate of incorporation and tax returns for Bowery Mansion, and the corporate tax returns for Chinese Moon, which confirmed much of the foregoing information. The Chinese Moon tax returns listed a bank account at National Westminster Bank. Interdonato subpoenaed National Westminster Bank for Chinese Moon account records, obtaining monthly statements and information on deposits. These documents showed that cashier's checks, totalling $140,000 and issued by Hang Seng Bank, had been deposited to Chinese Moon's account in June and September of 1987. Through the government's Treasury Enforcement Communication System, Interdonato further learned of two large cash deposits of $20,000 and $12,000 to Chinese Moon's account.