Opinion ID: 280190
Heading Depth: 1
Heading Rank: 4

Heading: The Denial of the Motion to Suppress

Text: 18 Appellants contend that the trial court erred in denying their motion to suppress certain books and records of Charters which were obtained by the Securities Exchange Commission during a civil injunction proceeding and which were later turned over to the United States Attorney's Office. It is undisputed that appellants consented to the removal and examination of the books by the Securities Exchange Commission, and this consent was given with the advice of counsel. Nor is it denied that the documents seized were 'public records' which were required to be kept and made available to the Securities Exchange Commission. 15 U.S.C. 78g(a); 17 C.F.R. 240.17a-3-4; SEC v. Olsen, 354 F.2d 166, 170 (2d Cir. 1965). The thrust of the argument is that by turning the records over to the United States Attorney, the Securities Exchange Commission exceeded the consent given and the subsequent use of the records, in the absence of a warrant, was illegal. 19 A similar argument was rejected by this Court in United States v. Sclafani, 265 F.2d 408 (2d Cir.1959), cert. denied, 360 U.S. 918, 79 S.Ct. 1436, 3 L.Ed.2d 1534 (1959). There a routine audit of a taxpayer's records was commenced by the Internal Revenue Service and books and documents were voluntarily turned over to the Revenue Agent. As a result of the discovery of certain discrepancies, the investigation was referred to a Special Agent of the Intelligence Division who obtained further evidence from the taxpayer without informing him of the increased likelihood of criminal prosecution. The defendant's motion to suppress these records was denied and this Court affirmed on the theory that the ordinary taxpayer is aware that a routine tax audit carries with it the inherent possibility that if criminal liability is discovered, it will be turned over to the proper authorities for prosecution. Similarly, in the case of a Securities Exchange Commission investigation the broker-dealer must be aware that the discovery of evidence of criminality could lead to prosecution. Indeed, the Securities Exchange Act expressly provides that such evidence may be turned over to the Attorney General. 6 We see no distinction between the situation presented in Sclafani and that existing here. In either case, once records have been voluntarily turned over to a government agent, the government is not guilty of fraud or deceit in failing to apprise the subject of a charge in the character of the investigation, for he is made aware of the risks attendant upon a voluntary disclosure by the warning inherent in the request. 20 Appellants are not aided by their contention that the Securities Exchange Commission allegedly violated its agreement to return the books and records on request and not make them available to anyone else. The investigators obtained the records for inspection by lawful means and even assuming, arguendo, that their delivery to the United States Attorney was a violation of this agreement, the Fourth Amendment would not bar their admission into evidence in the absence of a showing that they were obtained through fraud and deceit in the first instance. Zap v. United States, 328 U.S. 624, 629-630, 66 S.Ct. 1277, 90 L.Ed. 1477 (1946). 21 v. The Admission of the Guilty Pleas of the Co-Defendants 22 Appellants claim serious prejudice from the cumulative effect of the testimony of four co-defendants who stated on direct examination that they had pled guilty to various counts of the indictment and the testimony of a co-conspirator that he had pleaded guilty to conspiracy to give false testimony before the SEC. We see no reason to overturn our long standing rule that a party may elicit from a co-defendant or co-conspirator, on direct examination, that he had pled guilty to the crime charged in the indictment so long as the jury is cautioned that the testimony is no evidence of the guilt of the defendant on trial. United States v. Graziane, 376 F.2d 258, 259 (2d Cir.1967); United States v. Mahler, 363 F.2d 673, 678 (2d Cir.1966); United States v. Aronson, 319 F.2d 48, 51 (2d Cir.1963), cert. denied, 375 U.S. 920, 84 S.Ct. 264, 11 L.Ed.2d 164 (1963); United States v. Freeman, 302 F.2d 347 (2d Cir.1962), cert. denied, 375 U.S. 958, 84 S.Ct. 448, 11 L.Ed.2d 316 (1962); United States v. Pagano, 224 F.2d 682, 684 (2d Cir.1955), cert. denied, 350 U.S. 884, 76 S.Ct. 137, 100 L.Ed. 779 (1955). The jury here was properly instructed that they should draw no inference of appellants' guilt from the pleas of the co-conspirators. Judgment affirmed.