refuses to turn these records over to the Internal Revenue Service, basing his refusal to do so on his Fifth Amendment right against self-incrimination. He likewise, and for the same reason, declines to disclose the names of the representatives of those of his clients to whom records had previously been returned. During the course of the hearing, and against objection made by counsel for respondent, petitioner attempted to expand the allegations of his petition to include production of records for years in addition to the 1962-1964 period specified in the summonses. For the purposes of this case, it may be assumed that the petition covered these additional years.
Petitioner claims that the records sought by the twelve summonses are necessary for the determination of respondent's income tax liabilities for the years 1960 through 1966. Petitioner testified that respondent deposited in his bank account, refund checks issued to respondent's clients; that respondent allowed some of the clients to use his credit card; that respondent would loan money to his clients; and that respondent would recommend a particular broker to take care of his clients' insurance needs. All such transactions, according to petitioner, may have generated unreported taxable income, or, as stated by his counsel, "we at least believe", that the records would show income taxable to respondent, and not reported.
It is well settled that before a court will enforce summonses issued pursuant to 26 U.S.C.A. § 7602, the person seeking such enforcement must establish a legitimate purpose for his investigation. United States v. Powell, 379 U.S. 48, 85 S. Ct. 248, 13 L. Ed. 2d 112 (1964). If the sole purpose of the investigation is to obtain information for use in a criminal prosecution, the summonses will not be enforced. Wild v. United States, 362 F.2d 206 (9 Cir. 1966). But even if the information sought may be used in a criminal prosecution, the purpose of the investigation may still be legitimate if a "proper civil purpose" is present. United States v. DeGrosa, 405 F.2d 926 (3 Cir. 1969). It is also well settled that the Fifth Amendment privilege against self-incrimination can be invoked in civil and criminal proceedings, including investigations. In Re Groban, 352 U.S. 330, 77 S. Ct. 510, 1 L. Ed. 2d 376 (1957); McCarthy v. Arndstein, 266 U.S. 34, 45 S. Ct. 16, 69 L. Ed. 158 (1924). And in Reisman v. Caplin, 375 U.S. 440, 84 S. Ct. 508, 11 L. Ed. 2d 459 (1964), there is specific recognition that constitutional claims may be asserted in proceedings under Section 7602 of the Internal Revenue Code.
In evaluating a claim of privilege against self-incrimination, a court must consider the circumstances surrounding the assertion of the privilege and the likelihood that disclosures made by the witness, if compelled, would tend to incriminate him, or lead to incriminating evidence. See In Re U.S. Hoffman Can Corp., 373 F.2d 622 (3 Cir. 1969).
The documents in respondent's possession, with respect to which he seeks to claim his Fifth Amendment privilege, admittedly belong to his clients. Some question was raised at the hearing that respondent's right to assert the privilege against self-incrimination might depend upon his ownership of, or title to, the documents in question. Such is clearly not the law. Mere possession, in a personal capacity, is enough. United States v. White, 322 U.S. 694, 64 S. Ct. 1248, 88 L. Ed. 1542 (1944); United States v. Cohen, 388 F.2d 464 (9 Cir. 1967); Application of House, 144 F. Supp. 95 (N.D. Calif.1956). It is not disputed in this case that the records which petitioner wishes to examine and copy were given to respondent by his clients, and that respondent still holds them in his personal capacity. Since, as previously stated, respondent is under indictment in the United States District Court for the Southern District of New York for alleged illegal conduct arising out of his work in the tax field, this Court, upon a consideration of the record as a whole, finds that compelling respondent to produce at this time the documents sought by petitioner may tend to incriminate respondent, or lead to incriminating evidence.
Additionally, there is some question as to the sufficiency of the connection between respondent's tax liability and the Rysanek and Sereni records which, as previously indicated, consist principally of receipted bills and cancelled checks. There was no tie-up of these specific records with the tax investigation of respondent. There must be a showing that the records sought to be examined are relevant and material to the matter under investigation. It is clear, of course, that the test of relevancy in such cases is broad. But it is equally clear that there must be the requisite nexus between the taxpayer and the records of some other person in order to justify compliance with the summonses. United States v. Powell, 379 U.S. 48, 85 S. Ct. 248, 13 L. Ed. 2d 112 (1964); United States v. DeGrosa, 405 F.2d 926 (3 Cir. 1969); United States v. Harrington, 388 F.2d 520 (2 Cir. 1968); Foster v. United States, 265 F.2d 183 (2 Cir. 1959).
At the conclusion of the hearing in this case, the Court expressed a tentative view that the summonses should be judicially enforced. However, upon reflection and a review of the record as a whole, the Court concludes that enforcement should be denied because of an insufficient nexus between the records in question and respondent's tax liability, and also because of the Fifth Amendment right against self-incrimination asserted by respondent. For the reasons herein stated, the application for an order to judicially enforce the internal revenue summonses in this case will be denied, and it is so ordered, this 10th day of November, 1969.