Years earlier, the IRS started Operation Trade Winds to gather information about financial activities of American citizens in the Bahamas. As part of the program, agent Richard Jaffe of the Jacksonville, Fla., office wanted a customer list from the Castle Bank and Trust Company of the Bahamas. The IRS suspected drug dealers and other tax evaders used the bank.

To accomplish this job, Jaffe realized he needed a crafty operator. He called on his reliable informant, Norman Casper. Casper and an attractive detective Sybol Kennedy went to the Bahamas. There Casper introduced her to Casper's acquaintance Michael Wolstencroft, a vice president at the bank. The informant knew Wolstencroft frequently traveled to the U.S. with a briefcase filled with bank documents.

On schedule, a week later Wolstencroft went to the U.S. As arranged, at 7:30 p.m., he picked up Kennedy at her apartment for a dinner date.

Meanwhile, the Government gumshoes sprang into action. Earlier, Kennedy had given Casper a key to her apartment. He picked up the briefcase Wolstencroft had left there. Five blocks away a locksmith fashioned a key for the briefcase. Jaffe, Casper and an IRS photography expert started their job. They worked feverishly copying the 400 documents. Then the phone call came. They had no more time. At 9:00 p.m., Casper rushed the briefcase to the apartment and left. Thirty minutes later, the couple returned.

Not good enough, said Jaffe. After examining copies of the documents, he decided the IRS needed more information. The ruse this time was less complicated. Kennedy alone flew to the Bahamas. While visiting Wolstencroft, she saw it on his desk -- a Rolodex file with phone numbers and addresses. When he left the room, she stole it.

The project was over. Casper received $7,000; Kennedy received $1,000, and Jack Payner received a summons. Payner's name was on one of the documents. He was indicted for falsely answering the question on his tax return that he didn't have a foreign bank account. He had one with $100,000 in it.

In court, Payner challenged the IRS participation in an unlawful seizure of Castle Bank's records. Unbelievably, the IRS said it had nothing to do with it. It said this was Casper's caper, adding that the informant acted alone without the agent's knowledge.

The Court agreed with Payner. The judge called the agent's behavior "outrageous." "Criminal acts by Government employees," he said, "will not be tolerated." The judge held that the IRS violated Fourth Amendment privacy rights of one individual to obtain evidence against others. As to the evidence obtained from the briefcase, the judge ordered it suppressed.

But the case didn't end here. The IRS refused to accept the decision and appealed to the U.S. Supreme Court. With three justices dissenting, the majority ruled against the lower court's analysis of the Constitution. The nation's highest court said the evidence should be included unless the search violated rights of the defendant. It didn't. Here the defendant, Payner, had no privacy rights in the briefcase or the Rolodex. These were owned by the bank, not him. The Supreme Court allowed the government to use the briefcase evidence against the defendant.

The Moral: To the IRS: A big pay off from a brief case.

A.J. Cook is a lawyer and CPA. His tax column appears weekly in numerous newspapers. Why isn't it published in your hometown newspaper? Ask its Business Editor to subscribe.

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Released 2-17-97