(concurring and dissenting):

I concur with the majority’s opinion with the exception of its treatment of the 18 U.S.C. § 1001 issue. From that I respectfully dissent.

It is critical to observe at the outset that the majority reaffirms the continuing validity of United States v. Bedore, 455 F.2d 1109 (9th Cir. 1972) by attempting to distinguish it. Bedore , as the Ninth Circuit observed in United States v. Ratner, 464 F.2d 101,105 (1972), is an “ ‘exculpatory no’ — policeman case,” meaning, that under the principles of Bedore , § 1001 typically does not apply where an accused falsely denies his guilt to the police. 1 Thus, in the routine case, if an agent of the F.B.I. questions a suspect and the suspect falsely denies guilt, the suspect cannot be properly charged under § 1001. That section does not usher a heads we win — tails you lose philosophy into the criminal justice system. (“If you tell our version of the truth, we will call it an admission and use it against you on the substantive offense; If you tell us something which materially varies from our version of the truth, we will charge you with a § 1001 felony”). 2 Bedore stands for the *822 proposition that an accused may plead not guilty, in or out of court, without fear of additional criminal sanctions.

Without specific reference to the facts, the majority purports to distinguish Bedore on the ground that here the defendant’s statement “related” to a claim of the declarant to a privilege from the United States. I cannot agree with the assumption that Congress intended § 1001 to apply to confrontations between police officer and citizen in circumstances where the false statement fortuitously bears an attenuated relationship to a claim of privilege. The facts clearly indicate that the statement was not made in pursuit of a privilege and that the agents were pursuing a criminal investigation of anyone and everyone involved in a drug ring, independent of whether or not the participants happened to claim a privilege from the United States.

1. In July, 1973, the Seattle office of the D.E.A. became aware that extraordinary amounts of controlled substances were being ordered at the Goldfine drug stores.

2. In August, a D.E.A. agent in Seattle contacted the D.E.A. office in Minneapolis and asked its help in setting up a trace of a shipment of controlled substances to Seattle from Minneapolis.

3. From October 4 to October 25, D.E.A. agents occupied an apartment across the street from the defendants’ Service Rexall Drugs store and kept it under surveillance.

4. On October 16 and October 19, two separate shipments from Minneapolis to Seattle were mailed under the control of Minneapolis D.E.A. agents. These orders were observed by investigators to be delivered by United Parcel Service on October 24 to the Seattle drug store.

5. On October 24, Seattle police joined with D.E.A. agents in surveilling the customers of the Service Rexall Drugs store.

6. Two customers were arrested; controlled substances were found on their persons; the drug store records did not reflect sales to them.

7. On October 25, pursuant to the authority of a warrant issued by a United States magistrate, D.E.A. compliance investigators commenced what they termed “an accountability audit.”

8. Darrell Goldfine was given Miranda warnings. When asked whether he made any out-of-state purchases, he stated that he had not. To put it another way, he pled not guilty to a serious set of criminal charges. 3

Clearly the agents in the case were not present as tax collectors, privilege conferrers, or regulators- — they were policemen. And just as clearly, Darrell Goldfine responded as an accused, not as a person seeking a privilege from the government. To be sure, the answer related superficially to the administrative concerns of the agency, but when Drug Enforcement Agents are obviously in the midst of a criminal investigation, it is unfair to characterize them as administrators and unrealistic to characterize the defendant as a privilege seeker. The “administrators” were police, and the “privilege-seeker” was a suspect refusing to admit guilt.

But the majority appears to be saying more than that Bedore shall be distinguished in circumstances where the statement “relates” to a claim of privilege— however insubstantial that relationship may be.

*823 In the paragraph following its disposal of Bedore , the majority proceeds in dictum to consider the exculpatory-no doctrine treating it as if it were an argument entirely separate from the defendant’s reliance on Bedore . There the majority states that the exculpatory-no doctrine does not apply to exculpatory denials “given to agents of a regulatory agency conducting a criminal investigation legitimately within its purview.” Apparently the majority is suggesting that false exculpatory denials made to Drug Enforcement Agents violate § 1001 whether or not they significantly relate to a claim of privilege and, therefore, whether or not they significantly relate to the regulatory functions of the agency. Thus, under the majority’s analysis, false denials of crime made to an F.B.I. agent are not covered by § 1001 unless they bear some unspecified. degree of relationship to a claim of privilege from the United States or to a claim against the United States. False denials of crime made to D.E.A. agents within the jurisdiction of the agency are covered by § 1001 whether or not the regulatory functions of the agency are substantially involved.

The majority does not even attempt to support its view with references to the legislative history. Instead it supposes that this awkward scheme is required by the prior law of this circuit. The majority position, however, finds no support in the language of the statute, its legislative history, or prior precedent.

As is recounted in United States v. Gilliland, 312 U.S. 86 , 61 S.Ct. 518 , 85 L.Ed. 598 (1940), the relevant language of 18 U.S.C. § 1001 was supplied by an act of Congress in 1934 amending § 35 of the Criminal Code. 4 Prior to that amendment, the statute imposed criminal penalties against anyone who

The 1934 amendment in substance retained the knowledge and willfulness requirements but removed the “purpose” requirement. Thus the relevant provision imposed criminal sanctions against anyone who

Bedore recognized that this amendment could only be understood in light of the legislative history, for if one merely looked at the words themselves, one would have to suppose that

The focus of the congressional concern is • clearly evidenced in the report of the Senate Committee on the Judiciary. 5 S.Rep. No. 1202, 73d Cong. 2d Sess. (1934). There *824 the Committee authors indicated that the amendment’s purpose was to reach

The purpose of the amendment was explained to the Senate in similar terms. 6 Senator King in the course of a brief explanation of the bill maintained that:

Although there was no discussion in the committee reports or in the debates on the floor of Congress as to why the provisions of the bill extended to “any matter within the jurisdiction of any department or agency of the United States . . . .” there is a firm basis for discerning the reason for inclusion of the language. Earlier in the same session of Congress, a bill had been passed to curb the same abuses. That bill, which contained the “any matter” language, was vetoed by President Roosevelt because a portion of it duplicated then existing legislation (in § 35 of the Criminal Code) which carried higher (the President thought more appropriate) penalties. 78 Cong.Rec. 6778-79 (1934). Congress, therefore, borrowed the “any matter” language from the earlier bill and made its amendment part of § 35 so that the President would be satisfied with the level of sanctions.

Given the absence of any later contrary discussion, therefore, the best evidence of congressional intent with respect to the “any matter” language can be found by referring to the Report of the House Committee on the Judiciary, the committee which authored the language. H.R.Rep. No. 829, 73d Cong.2d Sess. (1934). That committee had been concerned with the same abuses. It had heard testimony from Louis R. Glavis, Director of Investigations of the Department of the Interior, who complained of the difficulty of prosecuting cases involving

Thus the Secretary of the Interior “transmitted a draft of a bill to penalize such acts with reference to matters within the jurisdiction of the Secretary of the Interior, Administrator of Public Works, and Administrator of the Code of Fair Competition for the Petroleum Industry . . . .” Id. at 2 (emphasis added). Instead of confining the bill to those agencies, the “committee was of the opinion that the proposed legislation should be broadened to punish such acts committed before any department or agency of the Government, as, for example, the Reconstruction Finance Corporation. It therefore rewrote the bill to meet that object.” Id. at 2 (emphasis added).

Since a literal interpretation of 18 U.S.C. § 1001 is obviously foreclosed, and since Senate Report 1202 read in conjunction with House Report 829 makes it clear that the section is designed to combat certain types of abuses, it is appropriate to discuss the abuses which prompted the legislation.

*825 The Congress was not merely attempting to protect the federal treasury. The concern with the false claims to the Public Works Administration was a reaction to that need, but the concern over “hot oil” was unrelated to pecuniary loss to the government. United States v. Gilliland, supra. The National Industrial Recovery Act purported to confer power upon the executive branch to prohibit the transportation of oil or petroleum in excess of amounts proscribed by state law or federal regulations. 48 Stat. 195 (1933). The Secretary of the Interior, pursuant to authorizing legislation, in an effort to assure compliance with the Act, issued regulations requiring every producer of petroleum to file monthly statements detailing inter alia the quantities of petroleum shipped. 8 Congress wanted to insure that criminal sanctions would accompany the filing of intentionally false reports.

The congressional desire to prevent and/or punish the filing of statements designed to frustrate a regulatory scheme is understandable. Federal functions cannot be easily effectuated if individuals without fear of criminal sanction can file false claims, support applications for privileges with false statements, or deliberately mislead regulators with intentionally misleading submissions. But nothing in the legislative history supports the hypothesis that government prosecutors are entitled to tack on an 18 U.S.C. § 1001 violation (with its attendant provisions for five years in prison and/or $10,000 in fines) every time an accused falsely denies guilt. Although federal regulatory schemes cannot adequately function if deterrents to the providing of false information are not provided, it is a fundamental premise of our criminal justice system that the detection of crimes does not depend on assuring that the accused individuals be forced to tell the truth to law enforcement agents. As the Supreme Court observed in Escobedo v. Illinois, 378 U.S. 478, 488-89 , 84 S.Ct. 1758, 1764 , 12 L.Ed.2d 977 (1964):

This is not to imply that the privilege against self-incrimination or the right to counsel is violated by the majority’s ruling. 9 It is to say that there is no basis for the majority’s assumption that Congress, in enacting the false statements statute, intended to proscribe the false denial of guilt to police agents in those circumstances when the criminal investigation can be conceptually related to regulatory functions of the government. There is no evidence that Congress intended even partially to revolutionize our criminal justice system. If it had, the measure would surely have been subjected to serious, impassioned, and prolonged debate. Instead the legislative history is that which one would expect to accompany a non-controversial bill designed to punish those who would seek to frustrate a regulatory scheme, unfairly acquire a *826 privilege, or pirate the federal treasury. The majority’s ruling simply discards congressional intent and creates a criminal law never passed by the Congress.

Neither the prior decisions of the Supreme Court nor of this circuit require acceptance of the majority’s reading of § 1001. The Supreme Court has yet to face the question of whether exculpatory statements to policemen are embraced by § 1001. See, e. g., Bryson v. United States, 396 U.S. 64 , 90 S.Ct. 355 , 24 L.Ed.2d 264 (1969); United States v. Bramblett, 348 U.S. 503 , 75 S.Ct. 504 , 99 L.Ed. 594 (1955); United States v. Beacon Brass Co., 344 U.S. 43 , 73 S.Ct. 77 , 97 L.Ed. 61 (1952); United States v. Gilliland, supra. In fact, in Bryson the Court specifically left open the question of whether any statements to the F.B.I. can fall within the scope of the statute. 396 U.S. 64 , at 71 n.10, 90 S.Ct. 355 , citing Friedman v. United States, 374 F.2d 363 (8th Cir. 1967) (§ 1001 does not apply to the making of false statements to the F.B.I. in an effort to initiate a federal prosecution). 10

The Ninth Circuit has given limited acceptance to the exculpatory-no exception. In Brandow v. United States, 268 F.2d 559 (1959) the court refused to apply that exception to an internal revenue investigation and in dictum indicated its disapproval of these cases which had applied it to F.B.I. investigations. Id. at 564 , disapproving United States v. Levin, 133 F.Supp. 88 (D. Colo. 1953); United States v. Stark, 131 F.Supp. 190 (D. Md. 1955). Bedore , however, held contrary to the Brandow dictum (at least with respect to oral unsworn statements ( 455 F.2d at 1110 n.l)) and applied the exculpatory-no doctrine to a false statement made to an F.B.I. agent. Thus this circuit in Ratner did not find Bedore controlling in yet another internal revenue case because of the “several previous Ninth Circuit eases holding answers to Internal Revenue Service investigations to be outside the ‘exculpatory-“no”-police-officer’ holdings.” 464 F.2d at 105 .

These holdings of the circuit (although open to serious question (see United States v. Bush, 503 F.2d 813 (5th Cir. 1974); Paternostro v. United States, 311 F.2d 298 (5th Cir. 1962)) at least can be reconciled with Bedore on a principled basis. Materially false statements made to internal revenue agents are given for the purpose of depriving the government of revenue to which it is entitled. Cooper v. United States, 282 F.2d 527, 530 (9th Cir. 1960). Thus even when false statements to treasury agents come within the context of a criminal investigation, they substantially implicate the concerns which led to the passage of § 1001. On the other hand false denials of guilt to F.B.I. agents obviously do not implicate the concerns which led to the passage of § 1001. So understood, Brandow and Bedore are in a state of uneasy reconciliation. The majority dictum, however, stretches the internal revenue cases to support the broad proposition that false exculpatory denials made to any agency with regulatory functions are automatically covered by the section whether or not regulatory functions are involved. Unlike the internal revenue cases, this extension cannot be harmonized with the legislative history or with Bedore . Moreover, Darrell Goldfine’s denial of guilt in this case in no wise can be said to substantially involve the concerns of the section. The question of his continued status as a registrant was wholly peripheral to the criminal investigation. The attenuated factual relationship of his statement to a claim of privilege is a frail reed upon which to base this felony conviction.

Nor should it be thought that the majority’s rewriting of § 1001 is in any way necessary to protect our citizenry from the serious problems presented by illegal traffic in narcotics. Congress has passed a series of statutes designed to control drug trafficking. Pursuant to these statutes, the *827 government has secured nine felony convictions against Darrell Goldfine — only one of which is questioned in this dissent. There is no evidence that the government’s attack on drug crime will be thwarted if prosecutors cannot charge § 1001 violations against individuals who falsely deny criminal charges to criminal investigators. If the federal criminal code needs further amendments to combat drug crimes, then Congress should pass a statute. But § 1001 is torn from its context when it is applied here. Darrell Goldfine’s denial of guilt in this case in no wise can be said to substantially involve the concerns of the section.

But even if the concerns of the section were properly deemed to be implicated, I could not and cannot agree that the statement given by the defendant was a materially false statement. In United States v. Cole, 469 F.2d 640, 641 (9th Cir. 1972), quoting Robles v. United States, 279 F.2d 401, 404 (9th Cir. 1960), the Ninth Circuit stated the test of materiality as follows:

Thus the materiality requirement refers to the state of mind of the audience, not the state of mind of the speaker. See United States v. Deep, 497 F.2d 1316, 1324 (9 Cir. 1974) (Hufstedler & Ely, JJ., dissenting). As the majority recognizes, the agents in this case could not possibly have been influenced by the defendant’s denial of criminal conduct. The agents knew that the defendant had made out of state purchases. His denial, then, had no material tendency to influence. The statement simply does not meet the test of materiality stated in Cole and Robles . Instead the majority relies on the test applied in Brandow v. United States, supra, 268 F.2d at 565 , quoting United States v. Quirk, 167 F.Supp. 462, 464 (E.D. Pa. 1958), aff’d, 266 F.2d 26 (3d Cir. 1959):

T-his test was adopted on the ground that what “ ‘Congress intended to prevent by § 1001 was the willful submission to federal agencies of false statements calculated to induce agency reliance or action, irrespective of whether actual favorable agency action was, for other reasons, impossible.’ ” Id. This purported reliance on congressional intent was not accompanied by a single reference to the legislative history.

Surely there is nothing in the legislative history that supports this hypothesis. The legislative history, detailed supra, reveals an unmistakable purpose to protect the government. There is not a line in the legislative history that indicates Congress intended to root out sin independent of its capacity to injure government. Indeed the assumption runs contrary to the underlying purposes of criminal law. As one commentator has cogently observed:

Here federal agents already aware of multiple felony drug violations set the defendant up for a false statement violation. They had a right to ask the .question, but a system of law which attaches criminal liability to an answer which can cause no harm is unfair, overreaching, low in credi *828 bility, and unworthy of respect. 11 A congressional intent to enact such a system should not be lightly assumed. I would follow the Cole statement of the test, rather than the Brandow version. The § 1001 conviction should be reversed.

. In Bedore , the defendant made a false statement of identity to an F.B.I. agent attempting to serve a subpoena. Its protections thus extend to individuals who have not been accused as well.

. The coin fortunately is three sided. The accused can say nothing or plead the fifth amendment and that action cannot be used against him in a federal proceeding. United States v. Hale, 422 U.S. 171 , 95 S.Ct. 2133 , 45 L.Ed.2d 99 *822 (1975); Scarborough v. Arizona, 531 F.2d 959 at 961 (9th Cir., 1976). Nonetheless any appreciation of the communicative realities must lead to the recognition that standing mute in the face of questions is an exceedingly unnatural response and that “taking the fifth” has been so often accompanied by social ostracism that it is an unwholesome option. Americans traditionally have assumed that without fear of sanctions they could deny guilt and wait for the government to prove otherwise. If the majority is correct, some of those Americans are mistaken.

. Moreover it is instructive to recognize that the defendant claimed no privilege to possess or sell the contraband involved. He denied that he had made any out-of-state purchases.

. The statute .was codified in its present form in 1948. The 1948 changes were purely cosmetic except that the maximum term of imprisonment under the section was reduced from ten years to five years. 62 Stat. 749 .

. The amendment was added in the Senate after the House had reported the bill. The House Report, therefore, does not speak to the issue. H.Rep. No. 1463, 73d Cong. 2d Sess. (1934).

. The Senate amendments were passed on the House side without discussion. 78 Cong.Rec. 11513 (1934).

. Another portion of the bill dealt with the destruction of government property. The destruction of government property was also a part of the “class of cases” referred to by Senator King.

. As the Supreme Court ruled in United States v. Gilliland, supra, 312 U.S. 86, at 95 , 61 S.Ct. 518 , it is of no moment for purposes of interpreting the false statements statute that “principles of constitutional government” prevailing in 1935 caused the Supreme Court to invalidate these regulations. Panama Refining Co. v. Ryan, 293 U.S. 388, 433 , 55 S.Ct. 241 , 79 L.Ed. 446 (1935).

. The Miranda warnings provide adequate safeguards for the protection of fifth and sixth amendment rights. Miranda warnings provided adequate notice to this defendant that false statements by him could be used against him on the substantive offense, but it is by no means clear that they provided fair notice that such statements could also constitute an independent felony violation.

The question of whether or not the Miranda warnings provided fair notice to the defendant, however, has little bearing on the question of whether or not the Congress intended the defendant’s statements to be covered by the statute in question. The question of whether or not the defendant has been told that a future course of conduct would be subject to criminal penalties is quite different from the question of whether or not that conduct is in fact subject to criminal penalties.

. In Bedore , this circuit indicated by way of dictum that it was unwilling to go as far as the Friedman court. The Bedore court stated that false reports of crime are “[tjypical of the kinds of statements that are within the purview of section 1001.” 455 F.2d at 1111 . The Bedore conclusion is consistent with the legislative history which indicates that the legislature intended to combat certain types of abuses independent of the agency affected.

. Moreover the Brandow position is difficult to confine. If a loquacious defendant continued in the face of overwhelming evidence to deny guilt on multiple occasions, under the Brandow theory each incident would constitute a separate offense. The majority does not speak to this issue because the facts do not present the problem, but it is clear that the Brandow test has a capacity for mischief which cannot be easily cabined.