On appeal from the Superior Court of New Jersey, Law Division, Mercer County.
Michels, Shebell and Arnold M. Stein. The opinion of the court was delivered by Arnold M. Stein, J.s.c. (temporarily assigned).
We granted leave to appeal from the trial court's order: suppressing as evidence certain records seized from the business office of defendant Altenburg Piano House, Inc., pursuant to a search warrant, and dismissing counts one and two of the indictment. Defendants also obtained leave to appeal from two rulings by the trial court dealing with the admissibility of certain statements made by defendant Otto Altenburg.
We affirm the order of the trial judge as to the above rulings, but for different reasons than expressed by her in deciding the suppression motion. We conclude that the affidavit submitted in support of the application for a search warrant (R. 3:5-3(a)) did not demonstrate probable cause for its issuance. We also affirm the trial judge's admissibility rulings on defendants' cross-motion for leave to appeal.
Defendant Altenburg Piano House, Inc., is a retail seller of pianos and organs. The State alleges a criminal scheme by this defendant and its president, Otto Altenburg, to violate the New Jersey Sales and Use Tax Act, N.J.S.A. 54:32B-1, et seq. (hereafter Sales Tax Act). The State contends that, at its various locations, Altenburg Piano House would make sales to New Jersey residents, then falsely report these transactions as exempt, either as deliveries to non-residents in another state (N.J.S.A. 54:32B-11), or to tax-exempt organizations (N.J.S.A. 54:32B-9), thereby depriving the State of sales tax revenues on each falsely reported transaction. A twenty-seven-count indictment was returned, charging the following offenses:
Count 1 -- theft by failure to make required disposition of property, in violation of N.J.S.A. 2C:20-9 (both defendants).
Count 2 -- misapplication of entrusted property and property of government, in violation of N.J.S.A. 2C:21-15 (both defendants).
Count 3 -- keeping of false and fraudulent books, records and accounts, in violation of N.J.S.A. 54:52-4 (both defendants).
Count 4 -- falsifying or tampering with records in violation of N.J.S.A. 2C:21-4 (both defendants).
Counts 5 to 16 -- filing of false and fraudulent reports and statements, in violation of N.J.S.A. 54:52-1 (both defendants).
Counts 17 to 27 -- false swearing, in violation of N.J.S.A. 54:52-2 (Altenburg Piano House only).
The disputed search warrant was issued on July 30, 1984, and was executed on August 1, 1984, at Altenburg Piano House's main office in Elizabeth. Books and records of the company were seized pursuant to a search conducted by members of the Division of Criminal Justice, assisted by staff from the Division of Taxation. The affidavit in support of the motion was executed by Kenneth A. Bacsik, a sixteen year employee of the Division of Taxation and an auditor with the Division for the last twelve years. We repeat the factual allegations set forth in paragraphs five through eight of the Bacsik affidavit.
5. I was assigned to conduct an investigation and audit into the business operations of Altenburg Piano House, Inc. in December 1983 after an initial inquiry was begun in March 1982 based on information developed through an informant.
6. Information gathered by myself from two informants who wish to remain anonymous revealed fraudulent acts of sales tax evasion in which false records ...