Opinion ID: 502266
Heading Depth: 2
Heading Rank: 1

Heading: The Corporate Tax Crimes

Text: 29 With regard to the suspected corporate tax crimes, the district court found that the warrant was overbroad because the affidavit did not establish probable cause with respect to the universe of files that were to be searched and the items that were to be seized. In so finding, the court relied on Klitzman, stating that here, as in Klitzman, the warrant makes no attempt to distinguish those closed files with incriminating evidence from those without such evidence. The law firm agrees with the district court, asserting that the affidavit did not establish probable cause to believe that all of the law firm's members were participating in the alleged tax crimes. The government counters that the seizure of the financial documents was unobjectionable under the fourth amendment because any document likely to show actual amounts received can properly be seized whenever there is probable cause to suspect that the crime of tax evasion or the crime of underreporting of gross income has been committed. 30 On this record, we need not adopt the broad proposition tendered by the government. Rather, we conclude that under the facts and circumstances of this case, the authorized seizure comported with the requirements of the fourth amendment. In reaching this conclusion, we note that the affidavit pointed to specific types of financial documents that reflected amounts received in lawsuits as well as costs attributed to those lawsuits. Additionally, we note that the affidavit stated that the firm's failure to deposit its shares of settlements was a regular and continuing practice. The allegation of this practice, coupled with the law firm's alleged use of its bank deposits as its gross income figure, supports the scope of the authorized seizure with respect to the alleged corporate tax crimes. 31 The law firm contends that the warrant was overbroad as to the scope of materials seized because the affidavit did not contain the names of the attorneys and clients involved in the instances in which the law firm allegedly retained its settlement share in cash and failed to deposit the entire share in the law firm bank account. In light of the showing made in this case, we reject the law firm's contention. It would be unrealistic to require an informant to provide such detailed information under the circumstances. More important, the amount of detail that the law firm would require is simply not mandated by the fourth amendment. 32 Furthermore, we find the district court's reliance on Klitzman misplaced. In Klitzman, one attorney in a law firm was a target of a grand jury investigation of suspected mail fraud. The warrant that was invalidated in Klitzman authorized a wholesale search and seizure of the business records of the law firm, whether or not those documents were related to the information sought by the grand jury. By way of contrast, the affidavit in the instant case alleged a continuing pattern of underreporting of corporate gross receipts and specified the types of and location of documents that could be used to reconstruct the actual gross receipts of the law firm. We have reviewed the law firm's arguments attacking the affidavit and the warrant, and find those arguments meritless. Accordingly, we hold that the affidavit was sufficient to support the magistrate's issuance of the warrant authorizing the seizure of the lined ledger sheets, the 8 1/2' X 11' pieces of paper and the photocopies of checks received by way of settlement of personal injury cases. Thus, the warrant was not overbroad with respect to those items.