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[2001-2 USTC ¶50,535] United States of America , Plaintiff-Appellee v. Rob ert G. Bremner, Defendant-Appellant

(CA-4), U.S. Court of Appeals, 4th Circuit, 00-4895, 7/16/2001, 2001 U.S. App. LEXIS 15924. Affirming, per curiam, an unreported District Court decision

[Code Secs. 7201 and 7203 ]

Crimes: Attempt to evade tax: Failure to file return: Sufficiency of evidence.--A nonfiler who concealed commissions he earned as a sales representative using nominee names on bank accounts was properly convicted of tax evasion and failure to pay income tax. The government's uncontroverted evidence established that he received unreported income that resulted in a substantial tax deficiency. Moreover, the IRS did not have to assess taxes owed in order to establish that a tax deficiency existed.

[Code Secs. 7201 and 7203 ]

Crimes: Attempt to evade tax: Failure to file return: Jury instructions: Willfulness.--A nonfiler who concealed commissions he earned as a sales representative using nominee names on bank accounts was properly convicted of tax evasion and failure to pay tax. His proposed jury instructions regarding the element of willfulness was properly denied because the instructions as given by the court clearly established the standard by which that element could be proven.

[Code Secs. 7201 and 7203 ]

Crimes: Attempt to evade tax: Failure to file return: IRS employees: Cross-examination, scope of.--A nonfiler who concealed commissions he earned as a sales representative using nominee names on bank accounts was properly convicted of tax evasion and failure to pay income tax. The taxpayer was properly denied the opportunity to cross-examine an IRS agent on the exact amount of the taxes he owed. The issue for establishing liability under Code Sec. 7201 was merely whether the evidence supported a conclusion that he owed a "substantial" amount of tax.

[Code Secs. 7201 and 7203 ]

Crimes: Attempt to evade tax: Failure to file return: Evidence: Relevancy: Abuse of discretion.--The district court did not abuse its discretion in preventing a sales representative who was convicted of tax evasion and failure to pay tax from introducing in evidence the Internal Revenue Code and a copy of Form 2555, Foreign Earned Income. Given that the taxpayer was allowed to introduce various laws, regulations and documents in an attempt to prove that he did not have to file tax returns or pay tax, these documents would likely have confused the jury.

Steven Dwain Goodwin, Goodwin, Sutton & Duval, P.L.C., Richmond , Va. , for appellant. Kenneth E. Melson, United States Attorney, John S. Davis, Assistant United States Attorney, Richmond, Va., for appellee.

Before: WILLIAMS, MOTZ, and KING, Circuit Judges.

è Caution: This court has designated this opinion as NOT FOR PUBLICATION. Consult the Rules of the Court before citing this case.ç

OPINION

Per Curiam"

EC: Rob ert Bremner was convicted by a jury of four counts of willfully evading income taxes in violation of 26 U.S.C.A. §7201 (West 1989 & Supp. 2000), and sentenced to eighteen months imprisonment. He appeals, claiming that: (1) the district court improperly limited his cross-examination of an IRS Agent; (2) the district court abused its discretion by disallowing the introduction of certain statutory and regulatory materials; (3) the district court erred in rejecting his proposed jury instruction regarding "willfulness"; and (4) the evidence was insufficient to sustain his convictions.

The evidence presented at Bremner's trial, viewed in the light most favorable to the Government, United States v. Burgos, 94 F.3d 849, 854 (4th Cir. 1996) (en banc), established the following. For the tax years at issue (1993 through 1996), Bremner received compensation as a sales representative for Consumers Buyline, Inc., and Health Technologies Network, as well as commissions from insurance companies for policies he had sold in prior years. Based upon income reported to the IRS from those companies and on Bremner's bank records, the IRS determined that Bremner received taxable income of: $33,332 in 1993, $35,000 in 1994, $141,054 in 1995, and $233,245 in 1996. Bremner did not file income tax returns or pay any taxes for any of those years.

Bremner first claims that the district court erred in limiting his cross-examination of an IRS agent. Restrictions on the scope of cross-examination are within the sound discretion of the trial court, which has wide latitude to set reasonable limits to prevent harassment, prejudice, or confusion of the issues or where the information sought is of marginal relevance. United States v. Turner, 198 F.3d 425, 429 (4th Cir. 1999), cert. denied, 529 U.S. 1061, 146 L.Ed.2d 475, 120 S.Ct. 1573 (2000); see Delaware v. Van Arsdall, 475 U.S. 673, 679, 89 L.Ed.2d 674, 106 S.Ct. 1431 (1986). Here, Bremner was allowed to question the agent at some length about his reasoning in determining Bremner's gross income. The district court then limited Bremner's continued cross-examination regarding whether the income at issue was "taxable income" because the legal definition of income to be applied to Bremner's receipts was not at issue in the case; instead, the case concerned only whether substantial taxes were due and not the amount due as "taxable income." Therefore, the agent's proffered testimony would have been irrelevant. Accordingly, we conclude that the district court did not abuse its discretion in limiting Bremner's cross-examination of the IRS agent.

Next, Bremner claims that the district court erred in refusing to allow him to admit into evidence copies of unspecified portions of the Internal Revenue Code or a copy of IRS Form 2555 (reporting of foreign earned income). The district court's evidentiary ruling is reviewed for abuse of discretion. United States v. Aramony, 88 F.3d 1369, 1377 (4th Cir. 1996). Bremner was allowed to describe in detail his research into the tax laws and to display on an overhead projector various laws, regulations, and tax forms, which he claimed supported his belief that he did not need to file returns or pay taxes. The district court only excluded a copy of the Internal Revenue Code and Form 2555 from being admitted into evidence. Given the potential to confuse the jury, the district court's decision was not an abuse of discretion. See United States v. Hairston [87-1 USTC ¶9356], 819 F.2d 971, 973 (10th Cir. 1987) (affirming exclusion of tax protest literature and noting that the district court did not prevent the defendant "from mounting a defense, as the appellate brief suggests, but rather exercised its discretion regarding the form in which such evidence should be admitted so as to minimize jury confusion").

Bremner argues that the district court erred in rejecting his proposed jury instruction regarding "willfulness." The inclusion of a particular instruction and the content of that instruction are reviewed for an abuse of discretion. United States v. Whittington, 26 F.3d 456, 462 (4th Cir. 1994); United States v. Russell, 971 F.2d 1098, 1107 (4th Cir. 1992). The district court's refusal to give a requested jury instruction is reversible error only if, among other things, the instruction "was not substantially covered by the court's charge to the jury." United States v. Patterson, 150 F.3d 382, 388 (4th Cir. 1998), cert. denied, 525 U.S. 1086, 142 L.Ed.2d 691, 119 S.Ct. 835 (1999).

Bremner contends that the jury should have been instructed that willfulness is a subjective state of mind. See United States v. Cheek [91-1 USTC ¶50,012], 498 U.S. 192, 202-03, 112 L.Ed.2d 617, 111 S.Ct. 604 (1991) (holding that a good-faith misunderstanding of the law or a good-faith belief that one is not violating the law negates willfulness, whether or not the belief is objectively reasonable). While willfulness in a tax case includes a subjective determination, the use of the word "subjective" in the instructions is not a requirement, so long as the nature of the standard is clear. Id. at 201-02; United States v. Hauert [95-1 USTC ¶50,045], 40 F.3d 197, 202-03 (7th Cir. 1994). We hold that the jury accurately was instructed as to the subjective nature of the standard and that Bremner's proposed instruction was "substantially covered by the court's charge to the jury." Patterson, 150 F.3d at 388. Therefore, the district court did not abuse its discretion in refusing Bremner's proposed instruction.

Finally, Bremner claims that the evidence was insufficient to support his convictions. To establish a violation of §7201, the Government must prove willfulness, a substantial tax deficiency, and an affirmative act constituting attempted tax evasion. United States v. Goodyear [81-1 USTC ¶9423], 649 F.2d 226, 227-28 (4th Cir. 1981). The Government's uncontroverted evidence established that Bremner received taxable income for the years in question, resulting in a substantial tax deficiency, and that he willfully failed to report the income or pay any taxes on that income. The Government also showed that Bremner attempted to evade any tax due by means of nominee names on his bank accounts and other property. Bremner argues that, because there were no valid assessments, there was no tax deficiency. Bremner is incorrect. A tax deficiency is independent of an assessment, which is merely a step in the admin istrative process of collecting a deficiency. See 26 U.S.C.A. §§6203, 6211 (West 1989 & Supp. 2000); see also United States v. Silkman [98-2 USTC ¶50,724], 156 F.3d 833, 836-37 (8th Cir. 1998) (holding that proof of a valid assessment is not an essential element of criminal tax evasion). Therefore, the evidence was sufficient to support Bremner's convictions.

Accordingly, we affirm Bremner's convictions. We dispense with oral argument because the facts and legal contentions are adequately presented in the materials before the Court and argument would not aid the decisional process.

AFFIRMED

 

 

[91-1 USTC ¶50,164] United States , Appellee v. Joseph Lussier, Defendant, Appellant

(CA-1), U.S. Court of Appeals, 1st Circuit, 90-1389, 3/29/91, Affirming an unreported District Court decision

[Code Secs. 6103 and 7203 ]

Confidentiality of returns: Information disclosure actions: Failure to file return: Evidence: Not admissible: Exercise of privilege-exclusion from courtroom.--A taxpayer's motion for release of a jury panel list one month before trial was properly denied where the process used by the court avoided any unfairness or statutory noncompliance. Before swearing the jury in, the court questioned each prospective juror as to whether he had been audited and allowed either party to disqualify those answering affirmatively. Also, the IRS confirmed the jurors' answers. Further, there was no error in allowing the government's witness to remain in court where his testimony summarized, and was consistent with, the evidence presented at trial. Finally, evidence offered by the taxpayer to show a lack of willfullness regarding a failure to pay taxes was properly excluded where the exhibits lacked a proper foundation or offer of proof.

Lincoln C. Almond, United States Attorney, Margaret E. Curran, Assistant United States Attorney, Providence, R.I. 02901, for appellee. Joseph R. Lussier, pro se.

Before CAMPBELL, SELYA and CYR, Circuit Judges.

Per Curiam"

EC: The appellant, Joseph R. Lussier, was convicted by a jury of three counts of failure to file a federal income tax return in violation of 26 U.S.C. §7203 . The evidence presented at trial showed (a) that Lussier owed federal income taxes for 1983, 1984 and 1985, and (b) that in each year Lussier failed to file an income tax return. The evidence also was sufficient to support an inference that Lussier acted willfully.

Lussier does not attack the sufficiency of the evidence. Instead, he challenges the manner in which the proceedings against him were carried out. Each of his arguments, however, falls short of its mark, and we affirm the conviction.

Jurisdiction

Because Lussier refused to appear willingly in response to a summons from the government, he was arrested and brought before the magistrate for arraignment. He contends that the arrest was invalid because it was performed "outside the territorial limits and jurisdiction of the United States" (that is, not on land actually owned and admin istered by the federal government, "such as a post office or a fort"), and that the district court consequently lacked jurisdiction over both his person and the subject matter of the prosecution. Many courts have rejected this "silly claim." United States v. Koliboski [85-1 USTC ¶9251 ], 732 F.2d 1328, 1329 (7th Cir. 1984) and cases cited therein. We join them. It is well settled that a district court has personal jurisdiction over any party who appears before it, regardless of how his appearance was obtained. United States v. Stuart [82-2 USTC ¶9602 ], 689 F.2d 759, 762 (8th Cir. 1982); United States v. Warren, 610 F.2d 680, 684 n. 8 (9th Cir. 1980). 18 U.S.C. §3231 , moreover, gives the district court subject matter jurisdiction over "all offenses against the laws of the United States ." This category of offenses obviously includes the crimes defined in Title 26. See United States v. Studley [86-1 USTC ¶9390 ], 783 F.2d 934, 937 (9th Cir. 1986).

Self-Incrimination

After his arrest, Lussier refused to provide the government with routine "booking" information regarding his name, age, address and so forth. At the arraignment, the magistrate acknowledged that Lussier had a constitutional right to remain completely silent, but notified him that without the booking information he found it impossible to determine whether Lussier should be released on bail. Consequently, the magistrate remanded Lussier to the custody of the federal authorities. Twenty-two days later, when Lussier relented and provided the requisite information, he was granted bail and released. Lussier challenges what he characterizes as an attempt to "coerce" him to waive his Fifth Amendment right against self-incrimination. The magistrate, he says, should neither have threatened him with incarceration if he did not provide the booking information, nor actually jailed him when he stood on his constitutional right to silence.

Whatever the constitutional propriety of the magistrate's actions, the issue is now moot. When Lussier provided the requested booking information, the magistrate released him, and the information was not thereafter used against Lussier in any way. Lussier currently has no need for or entitlement to bail, and no claim that the magistrate's actions in any way affected the fairness of his trial. See Murphy v. Hunt, 455 U.S. 478, 481-82 (1982) (a case becomes moot when the issues presented are no longer alive or the parties lack a legally cognizable interest in the outcome); United States v. Vachon, 869 F.2d 653, 656 (1st Cir. 1989).

Nature and Cause

Lussier argues that the district court failed to inform him of the "nature and cause" of the charges against him, but does not identify the omission specifically. The claim, in any case, is specious. Lussier was provided with a copy of the criminal information issued by the United States Attorney, a document that apprised him of the offense charged and the elements thereof, including the amount of taxes due and owing, and the actions alleged to constitute willful failure to file a return. The Sixth Amendment requires nothing more. See United States v. Serino, 835 F.2d 924, 929 (1st Cir. 1987), citing Hamling v. United States, 418 U.S. 87, 117 (1974) (an indictment satisfies the Sixth Amendment if it contains the elements of the offense charged and fairly informs the defendant of the charge against which he must defend); United States v. Little, 321 F.Supp. 388 (D. Del. 1971) (same for criminal information).

Counsel of Choice

Lussier contends that he was deprived of his right to the "effective assistance of his counsel of choice." He does not, however, make a coherent argument in support of his claim. The record shows that Lussier chose to represent himself, but that the court nevertheless appointed "stand by" counsel to assist him as he desired. The record also suggests that Lussier wanted, but was denied, the right to use lay "counsel" to assist him in some manner before or during trial.

We see no infirmity in the district court's exclusion of lay counsel from the proceedings. The right to effective assistance of counsel is a fundamental Sixth Amendment right, but the right to choose counsel is not absolute. United States v. Machor, 879 F.2d 945, 952 (1st Cir. 1989). A criminal defendant has no right to lay counsel. See Tyree v. United States, 892 F.2d 958, 959 (10th Cir. 1989); United States v. Turnbull, 888 F.2d 636, 638 (9th Cir. 1989); United States v. Tedder [86-1 USTC ¶9426 ], 787 F.2d 540, 543 (10th Cir. 1986); United States v. Schmitt, 784 F.2d 880 (8th Cir. 1986); United States v. Brown [79-2 USTC ¶9523 ], 591 F.2d 307 (5th Cir. 1979); United States v. Wilhelm, 570 F.2d 461, 465 and n. 9 (3d Cir. 1978) and cases cited therein.

Continuance

At a hearing before the magistrate on January 5, 1990, the government agreed to allow Lussier and a family member to inspect the government's documents relating to the case. The magistrate issued an order directing that this inspection take place on January 19, but the order apparently was lost and Lussier did not appear for the inspection. On January 26 he called the prosecutor, who invited him to come and inspect the government's records on January 31. When Lussier insisted on bringing a "friend" rather than a family member, however, the prosecutor refused him access, citing the specific terms of the court's order.

Lussier appeared in court for a calendar call on February 5, having filed a motion for a continuance of trial the day before. The district court sorted out the discovery issue, directed that Lussier be allowed to inspect the government's documents that afternoon, denied the motion for a continuance, and appointed stand-by counsel. The jury was empaneled the next day, and the trial took place on February 12, 13 and 14. Lussier claims that by denying the motion for continuance, the district court deprived him of adequate time to prepare for his trial. We disagree.

The district court has broad discretion to grant or deny continuances. Only an "unreasoning and arbitrary insistence upon expeditiousness in the face of a justifiable request for delay" will abuse it. United States v. Torres, 793 F.2d 436, 440 (1st Cir. 1986), citing Morris v. Slappy, 461 U.S. 1, 11-12 (1983). In deciding whether denial of a continuance is an abuse of discretion, we must evaluate each case on its own facts, paying particular attention to the reasons presented to the trial judge at the time the request was denied. Id. Other factors may also be relevant, including (1) the amount of time available for preparation, (2) the likelihood of prejudice from the denial, (3) the defendant's role in shortening effective preparation time, (4) the degree of complexity of the case and (5) the availability of discovery from the prosecution. United States v. Uptain, 531 F.2d 1281, 1286 (5th Cir. 1976).

The reason Lussier gave for his motion for a continuance was his inability to gain access to the government's evidence. It is quite clear, however, that this was a circumstance at least in part of his own making, and that the district court rectified the situation on the same day that Lussier argued his motion. Lussier had nearly sixty days overall to prepare for trial, including a full week after he saw the government's evidence. The issues in this case, moreover, were far from complex. We see no prejudice resulting from the district court's decision, and no abuse of discretion.

Jury Panel Information

On February 2, Lussier filed a "Motion for Order of Court Directing Jury Clerk to Divulge Jury Panel Information in Advance of Trial." By this motion he sought a list of the names, addresses and Social Security numbers of the prospective jurors in his case, for use in securing information under 26 U.S.C. §6103(h)(5) . When the United States is a party to a judicial proceeding, 26 U.S.C. §6103(h)(5) directs the Secretary of the Treasury to divulge, to any party to the proceeding who inquires, whether "an individual who is a prospective juror . . . has or has not been the subject of any audit or other tax investigation by the Internal Revenue Service. The Secretary shall limit much response to an affirmative or negative reply . . . ." Citing this statute, Lussier asked that he be provided with information regarding the makeup of the entire jury panel at least one month before trial began, so that he would have time to approach the IRS before jury selection began.

Instead, on February 5, the day before the jury was chosen, the district court took a more practical approach. It indicated that it would ask each prospective juror, as he or she was empaneled, whether he or she had ever been the subject of an audit or tax investigation, and to allow either party to disqualify those who answered affirmatively. It appears that the jurors actually selected all responded negatively to those inquiries. Once the jury had been seated, the court directed the prosecutor to verify their negative answers by making a §6103(h)(5) request to the Internal Revenue Service relative to each of the chosen jurors. The prosecutor did so, and before the jurors were sworn on February 12, reported that the answers of all jurors had been verified by the Secretary, except that the IRS could not locate the records of one juror because of a mistaken Social Security number. As to this juror, the government later advised the court, just before it charged the jury, that the IRS had at last located her records and verified her negative answer as well.

Relying on United States v. Hashimoto [89-2 USTC ¶9432 ], 878 F.2d 1126 (9th Cir. 1989), Lussier insists that the district court committed reversible error. In Hashimoto, the district court ignored the defendant's request that he be provided with the jury panel list several months before trial. Pursuant to local procedures, the defendant received such a list seven days before trial, but did not then make a request under §6103(h)(5) . At voir dire, according to the majority opinion, the court failed to inquire sufficiently about the jurors' past dealings with the IRS.

A majority of the Hashimoto panel ruled that the mandatory language of §6103(h)(5) gave the defendant an "absolute right" to juror information. Reasoning that, "as a general rule, seven days will not be sufficient time in which to file and receive a response to a written request submitted pursuant to §6103(h)(5) ," the panel decided that "the defendant should be permitted to receive the jury list as soon as it has been drawn." 878 F.2d at 1130.

Having found an error, the Hashimoto majority then decided that the error was reversible. It noted two alternative standards for determining whether denial of §6103(h)(5) information was reversible error: (1) the "standards used to evaluate whether a trial court's restrictions on voir dire require reversal," that is, whether the denial raised "a significant risk of prejudice and examination of the jurors failed to negate that inference," or (2) an absolute standard under which reversal would be required in all cases in which juror tax information was improperly denied, "inasmuch as Congress thought the right important enough to create, by statute, an unqualified right to such information in tax cases." Id. at 1133.

The Hashimoto majority did not have to choose between the alternative standards, since it found that even under the first, less stringent, test, reversal was necessary. This was because "none of the questions asked during voir dire was sufficient to counter the presumption of risk of prejudice that, at a minimum, arises from a violation of the statute." Id. at 1134.

The Fifth Circuit has also considered the issue, but has rejected Hashimoto's result. In United States v. Masat [90-1 USTC ¶50,156 ], 896 F.2d 88 (5th Cir. 1990), the defendant received a list of jurors and made inquiry to the IRS, but had yet to receive complete information before voir dire. The district court denied the defendant's motion for a continuance, but asked the prospective jurors whether or not they had been the subject of an audit or controversy with the IRS.

The Fifth Circuit stated that the court should have allowed Masat time to obtain from the IRS the juror information he sought, but held that any error committed by the district court was not prejudicial, "for the jurors were [subsequently] asked the relevant questions by the trial judge." Id. at 95.

We do not think that §6103(h)(5) requires a tax defendant to receive the names of the venire a month or more in advance of trial, as the Hashimoto majority held. The statute itself makes no provision for such an extreme alteration of normal trial arrangements. It merely directs the Secretary of the Treasury to make certain information available upon request. Subject only to review for abuse, the district court retains discretion to ascertain the relevance and need for such information in a given case, and the proper measures to accommodate a §6103(h)(5) request. In a tax prosecution such as this, we encourage the district court to take reasonable and feasible steps to enable a defendant, who makes a clear and timely request, to procure §6103(h)(5) information prior to the swearing of the jury. But we do not lay down a hard and fast rule.

In the circumstances of the present case, we hold that the approach taken by the district court--winnowing the juror pool through questions on voir dire, directing the prosecutor to verify the empaneled jurors' answers by obtaining §6103(h)(5) information about them from the IRS, and in fact obtaining such verification before the jury was sworn--adequately enforced both the letter and spirit of the statute. The process failed only insofar as the Secretary's response concerning one of the jurors was not obtained before proceeding to trial. Any error, however, was harmless since when the information as to the last juror was received, it fully confirmed the juror's response on voir dire. In the present case, unlike in Masat, all of the information obtained on voir dire was thus confirmed by the Secretary pursuant to §6103(h)(5) . This clearly avoided any question of unfairness or statutory non-compliance. We need not determine to what extent other, less sedulous, efforts to ensure that the defendant received the statutory information would still suffice for affirmance.

Failure to Sequester

Pursuant to Fed. R. Evid. 615, the district court sequestered all trial witnesses except (1) the government's case agent, who served as the government's designated representative under Fed. R. Evid. 615(2) and therefore was entitled to remain in court, and (2) an IRS agent named Gary Soares, who testified at the end of the government's case to his calculation of the taxes due and owing by Lussier, based on "the testimony and documents in evidence." Lussier objects to Soares' presence, but there was no error in the district court's decision to allow him to remain. Whether one denominates Soares as a "fact" or "expert" witness, it is clear that his testimony was based on, summarized, and was consistent with the evidence presented at trial, and that there would have been "little, if any reason" to sequester him. Morvant v. Construction Aggregates Corp., 570 F.2d 626, 629-30 (6th Cir. 1978) (little if any reason to sequester a witness who is to testify in an expert capacity only and not to the facts of the case). Lussier was not prejudiced by the decision to allow Soares to remain in court, which consequently was not an abuse of the district court's discretion. See United States v. Jewett, 520 F.2d 581, 584 (1st Cir. 1975).

Exclusion of Exhibits

In a supplemental brief, Lussier called attention to the recent Supreme Court decision in Cheek v. United States [91-1 USTC ¶50,012 ], -- U.S. --, 111 S.Ct. 604, 112 L.Ed.2d 617 (1991). In Cheek, the Court overturned a tax evasion conviction where the district court had instructed the jury that a defendant's good-faith misunderstanding of the requirements of the law would negate willfullness only if the misunderstanding was "objectively reasonable." The inquiry, the Court said, should properly focus on what the defendant actually believed; the reasonableness or unreasonableness of a purported belief is relevant only inasmuch as it casts light on the credibility of the defendant's claim. 111 S.Ct. at 610-12. This has long been the rule in this circuit, see United States v. Aitken [85-1 USTC ¶9209 ], 755 F.2d 188, 191-93 (1st Cir. 1985), and the district court's instructions to the jury followed the law exactly.

Lussier contends, however, that the district court violated Cheek when it excluded three proffered exhibits: (1) a copy of the 1946 Federal Register, which contained a long-superseded regulation saying that a W-2 form can be filed in lieu of a Form 1040 tax return, (2) a copy of the tax code, and (3) a copy of the United States Constitution. Lussier says that he wanted to introduce the exhibits to show that he actually believed that he was not required to file a tax return.

Since the critical element in a tax case is often the defendant's mental state, many courts have given the accused "wide latitude" in the introduction of evidence which may tend to show a lack of willfulness or specific intent. United States v. Sternstein [79-1 USTC ¶9338 ], 596 F.2d 528, 530 (2d Cir. 1979). See also United States v. Brown [69-2 USTC ¶9479 ], 411 F.2d 1134 (10th Cir. 1969). In Cheek, the Supreme Court noted that the district court erred when it instructed the jury to disregard evidence (in that case, the defendant's own testimony) that the defendant was not required to file a return or to pay income taxes, "as incredible as such misunderstandings of and beliefs about the law might be." 111 S.Ct. at 611.

The evidence at issue here, however, was properly excluded because the exhibits lacked a foundation of evidence or offer of proof to link them to the willfulness issue. The exhibits would have been relevant only insofar as they supported other evidence offered to negate the element of willfulness, for example, testimony that Lussier knew of the 1946 regulation and relied on it when he decided not to file a tax return, or that he attempted to consult the tax code and was led astray by its bulk and confusing language. But no evidence to that effect was introduced or proffered. Absent such a foundation, the exhibits could only have confused the jury. See United States v. Wilson , 798 F.2d 509, 515-16 (1st Cir. 1986).

Affirmed.

 

 

[83-1 USTC ¶9349] United States of America , Plaintiff-Appellee v. Kenneth V. Stillhammer and Laverne B. Stillhammer, Defendants-Appellants

(CA-10), U. S. C.ourt of Appeals, 10th Circuit, Nos. 81-2139, 81-2140, 706 F2d 1072, 5/5/83

[Code Secs. 7203 and 7205]

Crimes: Failure to file returns: Fraudulent withholding statement.--A trial court properly exercised its discretion in striking a prospective juror for cause, since it appeared that he may have been biased, and in finding that returns filed with fifth amendment objections to disclosure of information did not constitute properly filed returns, since there was no information upon which the IRS could compute the taxpayers' tax liabilities. Although the IRS made calculations computing the taxpayers' liabilites, they were not excused from filing returns. Thus documents containing these calculations were properly excluded from evidence, the documents being irrelevant in demonstrating that returns did not have to be filed. Also, there was no fifth amendment privilege permitting general withholding of information on returns, and the sixteenth amendment allowed taxation of individuals, not just corporations. Finally, convictions for filing false withholding exemption statements were affirmed, since the taxpayers realized that their incomes were subject to tax liability.

William L. Lutz, United States Attorney, Wayne G. Chew, Assistant United States Attorney, Albuquerque, New Mexico 87103, for plaintiff-appellee. Kenneth Stillhammer, Thoreau, New Mexico, pro se. Lynn Allan, 2613 Espanola, Albuquerque, New Mexico, Frank O. Westerfield, Jr., 1607 Western Bank Building, Albuquerque, New Mexico 87120, for defendants-appellants.

Before HOLLOWAY, MCWILLIAMS and BARRETT, Circuit Judges.

HOLLOWAY, Circuit Judge:

This is a direct appeal by defendants, husband and wife, who were each convicted on four counts (Counts I through IV) of failure to file income tax returns under 26 U. S. C. §7203 and one count of filing a false or fraudulent withholding exemption certificate (Form W-4), in violation of 26 U. S. C. §7205. Count V charged Laverne Stillhammer with the latter offense; Count VI similarly charged Kenneth Stillhammer. The first four counts covered the tax years 1976 through 1979. The charges under §7205 alleged submission of false certificates in 1978 for use in that year.

Defendants were found guilty after a three day jury trial. Laverne Stillhammer was sentenced to imprisonment of one year and a fine of $2,000 on each of Counts I-IV; the confinement was suspended and she was placed on three years' probation. On Count V she was also sentenced to one year of imprisonment, with that sentence also suspended. Kenneth Stillhammer was sentenced to one year's confinement on each of Counts I-IV, with the sentences to be served concurrently. He was sentenced to three years' probation on Count VI, to begin after completion of the one year of imprisonment. He was also fined $2,000 on each of the first four counts and $500 on the conviction on Count VI.

I. At this point after verdicts of guilty, we must view the record in the light most favorable to the Government. Considered in this way the Government's evidence showed that both defendants were employed during the relevant years and earned incomes exceeding the minimum amounts necessary to impose the duty to file income tax returns. Tax returns and withholding certificates from previous years were introduced in evidence to show that defendants understood the requirements of the law.

The purported returns for the years 1976 through 1979 contained the defendants' names and address, their Social Security numbers, and their signatures. No other information was given; on most other blanks defendants had entered comments indicating their intention to claim a Fifth Amendment privilege not to give incriminating information. Both defendants filed withholding certificates in 1978 stating that they had incurred no tax liability in 1977 and anticipated none in 1978.

II. Defendants' first contention is that the district court abused its discretion in striking a prospective juror for cause. In response to a general question about preexisting attitudes, one venireman entered into the following colloquy with the judge:

THE COURT: Do any of you have any strong feelings concerning the tax laws of the United States ? I guess it depends on the time of year whether you have them or not. Do you have any feelings in favor of or against the Defendants because of the nature of the accusation here or for any other reason? Do you have any opinion that the offenses with which the Defendants are charged should be pursued with extraordinary vigor or that the offenses should not be an offense?

If you were the United States attorney prosecuting this case, do you know of any reason why you would not want to have the case tried by someone in your frame of your (sic) mind? If you were the defendant on trial here today, or the defense attorney, do you know of any reason why you would not want to have the case tried by someone in your frame of mind? Would you be unwilling to return a verdict based solely--excuse me. Yes, sir?

A JUROR: Your Honor, my own personal beliefs are that in some circumstances--I'm not talking about legally, but I think in some circumstances I would believe that withholding of a certain proportion of one's taxes as conscientious objection or civil disobedience would be, for me, morally justified. It would depend on the reasons why.

THE COURT: You would want to hear the facts before you made a decision?

A JUROR: Well, I'm not sure that in the process of hearing the facts, my feelings might be quite strongly one way or the other.

THE COURT: Do you have any feeling that that would color your opinion in this particular action?

A JUROR: Quite possibly.

THE COURT: You would have reservations until you heard all of the testimony, that you are not sure whether you would be in favor or against?

THE JUROR: That's correct.

II R. 18-19.

The district judge subsequently struck this juror for cause on the Government's challenge.

Defendant's argument that this ruling was an abuse of discretion is unsound. The contention is based on the distinction, drawn by some courts, between actual and implied bias. Defendants assert that the responses quoted above are insufficient to show actual bias; further, they contend that bias should not have been implied, basing this portion of their argument solely on the general principle of law, not shown to be relevant to this issue, that bias or prejudice ordinarily should not be inferred but shown directly.

Defendants do not dispute that this is a matter committed to the trial court's discretion. See e.g., United States v. Redmond , 546 F. 2d 1386, 1389 (10th Cir. 1977); United States v. Porth [70-1 USTC ¶9329], 426 F. 2d 519, 523 (10th Cir.), cert. denied, 400 U. S. 824 (1970). Defendants clearly fail to show any abuse of discretion in the trial judge's ruling. Defendants do not even assert that the jury was not impartial, nor do we see how such an assertion could fairly be made on the basis of this record. This is the proper point of application of the rule cited by defendants that prejudice will not be inferred. There was no abuse of discretion in this ruling.

III. In the course of their investigations, IRS agents prepared forms which calculated the defendants' tax liabilities for the years 1976, 1977, and 1978. Defendants attempted to introduce these papers in evidence to show that the Service had adequate information to assess the amount of tax owed by the Stillhammers. The district judge ruled this evidence inadmissible. The Stillhammer now make two related arguments regarding these calculations. First, they claim that the court erred in excluding the documents. Second, they argue that the forms 1040 filed by them did constitute tax returns so that they should not have been convicted on the first four counts. This second contention is based on the fact that the Government did indeed acquire sufficient information to assess the tax liability. Because these points are related, we address them together.

The flaw in defendants' argument is readily apparent from the very authorities on which they rely. Defendants maintain that the issue in determining whether proper returns have been filed is whether the Service has the necessary information from which to calculate the tax. This assertion implies that the source of the information is not material. The defendants' brief cites the following quotation, a statement which itself refutes their argument: "The acid test for determining whether a document constitutes a valid tax return is whether it contains sufficient data from which [the I.R.S.] can compute and assess a tax liability." White v. C. I. R. [CCH Dec. 36,334], 72 T. C. 1126, 1129 (1979) (emphasis added). Thus the test is whether the defendants' returns themselves furnished the required information for the IRS to make the computation and assessment, not whether the information was available elsewhere.

The forms filed by the Stillhammers contained no information about income or deductions. The record is clear that the tax calculations in question were prepared only after IRS agents obtained copies of defendants' W-2 forms from their employers. We often have held that purported returns which do not contain information from which the IRS can assess the taxpayer's tax liability are not returns within the meaning of the Internal Revenue Code of the tax regulations. See, e.g., United States v. Lawson [82-1 USTC ¶9197], 670 F. 2d 923, 927 (10th Cir. 1982); United States v. Brown, 600 F. 2d 248, 251 (10th Cir.), cert. denied, 444 U. S. 917 (1979); see also cases cited in Brown, 600 F. 2d at 251 n. 1.

Thus it is clear that there is no merit to defendants' contention that they filed returns which were adequate to preclude guilt under §7203. It also follows that the trial court did not err in excluding the IRS calculations. What defendants sought to establish through this evidence simply is no defense to the charges. Therefore, the proffered documents were not shown to have any relevance to the case. Rules 401 and 402, Federal Rules of Evidence.

IV. The arguments considered thus far are all contentions made in the briefs filed by defendants' counsel. Further issues have been presented in a pro se brief accepted by the court as supplemental authority. The defendants devote most of their effort in their pro se supplemental brief to arguing that the intent of the draftsmen of the Sixteenth Amendment to the United States Constitution was to authorize the taxation of the income of corporations and other business organizations, and not that of individuals. Before turning to that argument we will briefly address the other points made in the pro se brief.

First, defendants argue that no offense under §7203 was committed because they did file returns. This is, of course, merely a restatement of the argument considered and rejected in Part III, supra. The purported returns filed were not valid returns and their filing did not comply with the law.

Second, defendants, contend that no offense was committed under §7205 because they were merely following the W-4 form's instructions in swearing that they had incurred no tax liability in 1977 and anticipated none in 1978. The argument is disingenuous and untenable. Defendants clearly were award of their duty to file returns and knew that their income would be such as to subject them to tax liability in 1978. ¹ That they anticipated again filing a "Fifth Amendment return," leaving the amount of their tax liability uncertain until after I. R. S. action, cannot be equated with a good faith belief that there would be no tax liability.

Third, the defendants assert a Fifth Amendment privilege to file returns as they did. This argument has also been rejected repeatedly by this court. The Fifth Amendment does not serve as a defense for failing to make any tax return, and a return containing no information but a general objection based on the Fifth Amendment does not constitute a return as required by the Code. United States v. Moore [79-2 USTC ¶9676], 695 F. 2d 95, 97 (10th Cir. 1979); United States v. Lawson [82-1 USTC ¶9197], 670 F. 2d 923, 927 (10th Cir. 1982); United States v. Brown, 600 F. 2d 248, 251-52 (10th Cir.), cert. denied, 444 U. S. 917 (1979). Such a general objection under the Fifth Amendment as defendants asserted on their returns is not a valid claim of the constitutional privilege which must be made as to specific items of information. Moore , 692 F. 2d at at 97; United States v. Irwin [77-2 USTC ¶9627], 561 F. 2d 198, 201 (10th Cir. 1977), cert. denied, 434 U. S. 1012 (1978). ² These cases all follow the principles laid down by the Supreme Court in Garner v. United States [76-1 USTC ¶9301], 424 U. S. 648, 650 (1976), and United States v. Sullivan [1 USTC ¶236], 274 U. S. 259 (1927).

Finally we consider the argument, made at some length in the pro se brief and repeated at oral argument, that the income tax statutes cannot be construed to apply to defendants because Congress intended the Sixteenth Amendment to authorize taxation of the income of business enterprises only. Lengthy portions of legislative history are quoted in which taxation of corporations, insurance companies, and other organizations is discussed.

Such a limited purpose of taxing only such business organizations is not apparent from the language of the Amendment. Its text, in full, is this: "The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration."

Following retification of the Sixteenth Amendment, the Supreme Court observed that the Amendment granted no new power to Congress, but merely freed it to exercise the taxing power granted in Article I, Section 8, in taxing income without the restriction of apportioning the tax among the states, and without regard to any census or enumeration, a condition placed on direct taxes by Article I, Section 9. Brushaber v. Union Pacific R. R. [1 USTC ¶4], 240 U. S. 1, 17-19 (1916). Prior to the ratification of the Amendment, an income tax act had been held partially invalid because of the Article I conditions, based on a finding that the tax was a direct tax as applied to income, such as rents, derived from real property. Pollock v. Farmers' Loan & Trust Co., 157 U. S. 429 (1895). It is unnecessary to delve into the difficult question of the distinction between direct and indirect taxes because even a cursory study of these early cases teaches that the power of Congress to impose an income tax on salaries and wages has never been seriously doubted. In Pollock the Court stated:

[T]he power of Congress to tax is a very extensive power. It is given in the Constitution, with only one exception and only two qualifications. Congress cannot tax exports, and it must impose direct taxes by the rule of apportionment, and indirect taxes by the rule of uniformity. Thus limited, and thus only, it reaches every subject, and may be exercised at discretion.

157 U. S. at 557 (quoting The License Tax Cases, 72 U. S. (5 Wall.) 462, 471 (1866)).

Thus, prior to ratification of the Sixteenth Amendment Congress could tax the earnings of individuals. The Amendment was passed to overrule Pollock (see Brushaber, 240 U. S. at 18) and to remove the apportionment limitation with respect to the laying and collection of taxes on income. "Congressional power to tax rests in Article 1, Section 8, clause 1 of the Constitution and embraces all conceivable powers of taxation including the power to lay and collect income taxes.' United States v. Lawson, 670 F. 2d at 927. It is thus too late to argue that the Amendment did not permit taxation of the income of individuals. See Eisner v. Macomber [1 USTC ¶32], 252 U. S. 189, 207 (1920) ("income," as used in the Sixteenth Amendment, includes "gain derived from capital, from labor, or from both combined," quoting Doyle v. Mitchell Bros. Co. [1 USTC ¶17], 247 U. S. 179, 185, provided it be understood to include profit gained through a sale or conversion of capital assets); Metcalf & Eddy v. Mitchell [1 USTC ¶157], 269 U. S. 514 (1926) (constitutionality of taxation of income of a private contractor with a state upheld against a challenge to the constitutional power of Congress to tax instrumentalities of a state government). We feel it is clearly implicit in these decisions that Congress has the power to tax the income of individuals.

V. In sum, no error has been demonstrated in the trial of the case or in the rulings made. Accordingly the judgments are

AFFIRMED.

¹ As previously noted, through introduction of defendants' tax returns for earlier years it was shown that defendants were aware of the duty to file returns and of the fact that their income in those years was sufficient to incur tax liability. III R. 242-245. In 1977 Mr. Stillhammer received $17,125.92 in wages from one employer; in 1978 he received $19,117.69 from one employer. III R. 240. For those same years Mrs. Stillhammer had earnings of $9,058.00 and $10,440.68, respectively. II R. 52.

² The defendants' joint federal individual income tax returns for the calendar years 1976, 1977, 1978 and 1979 were introduced in evidence. From our examination of them we are satisfied that they do not make a proper Fifth Amendment claim to the protection of the privilege against self-incrimination, in accord with the decisions cited in the text, and particularly United States v. Irwin [77-2 USTC ¶9627], 561 F. 2d 198, 200-201.

For 1976, the defendants filed two returns Government Exhibit 18A was a Form 1040A dated September 6, 1977, which stated the names, address and occupations of the defendants and claimed two exemptions. A refund was claimed on line 24 for $2,782.31. On line 9, in response to the question calling for wages, salaries, tips and other employee compensation, the defendants stated "Object: Self incrimination." The objection was stated on line 10a and 11 and repeatedly on the following lines of the Form 1040A. On line 20a it was stated that total Federal income tax withheld was $2,782.31, which was repeated on other lines. The figure of $70.00 also appeared on line 17a and 17c for exemptions ($35.00 times two).

A second 1976 return was also filed by defendants on Form 1040, dated December 30, 1977 (Government Exhibit 18B). The return stated the defendants' names and Social Security numbers and occuptations. Then commencing with the lines dealing with the taxpayers' filing status and dependents, the response was repeatedly "Object." The same response, "Object," was entered throughout both pages of the Form 1040. On line 23a defendants did state that total federal income tax withheld was $2,782.31 and that the amount overpaid was $2,782.31. Attached to this Form 1040 were lengthy exhibits, including an explanation that where the word "Object" appeared, the defendants were claiming in good faith a right to decline to furnish information on grounds of the First, Second, Third, Fourth, Fifth, Sixth, Seventh, Eighth, Nineth, Tenth, Thirteenth, Fourteenth, and Sixteenth Amendments and all other rights under the Constitution, such as equal treatment under the law, inter alia.

For 1977, defendants filed a joint Form 1040 dated December 22, 1978 (Government Exhibit 19). It followed closely the Form 1040 filed for 1976. The names of the taxpayers were both stated and then commencing with the line for the Social Security numbers, the word "Object" was entered repeatedly throughout as an answer to questions on the first and second pages of the form. This included a response, "Object," to line 8 inquiring as to wages, salaries, tips and other compensation. Again attached to this Form 1040 for 1977 there were numerous exhibits. They included the same explanation of the use of the word "Object," namely that they were claiming their rights under the First Amendment and all the other amendments cited in the preceding paragraph.

For 1978, the defendants filed a joint Form 1040 return dated December 29, 1979 (Government Exhibit 20). It again stated the names of the taxpayers, that it was a joint return by married parties, and then it answered to question on the Social Security numbers "object 5th amend." Similar answers were given repeatedly to questions down both pages of the Form 1040, including the inquiry as to wages, salaries, tips and other employee compensation. On this form the line concerning possible overpayment and refund had a response "object." Attached to this Form 1040 were several pages of legal discussion in support of the defendants' position on claiming the privilege against self-incrimination, citing Garner v. United States [76-1 USTC ¶9301], 424 U. S. 648.

For 1979, defendants again filed a Form 1040 joint return with the repeated Fifth Amendment objection as a response (Government Exhibit 21.) The defendants respondent to the question on their Social Security numbers "Object 5th Amendment" and a similar objection was entered line after line throughout the return. The objection was thus made to the question on wages, salaries, tips and other employee compensation, to other questions on income and deductions, and the objection was also made on the lines concerning overpayment and refund. Again the the return was accompanied by legal arguments and authorities on the Fifth Amendment.

From our examination of these returns we are satisfied that they come within the ruling of the Irwin case where the taxpayer similarly answered all questions dealing with Irwin's income with the entry "Object-Self-incrimination." 561 F. 2d at 200.

 

 

[81-2 USTC ¶9809] United States of America , Appellee v. Carmen J. Civella, Appellant

(CA-8), U. S. Court of Appeals, 8th Circuit, No. 81-1160, 666 F2d 1122, 12/4/81, Affirming an unreported District Court opinion

[Code Secs. 7203 and 7602]

Crimes: Willful failure to file corporate tax return: Evidence of willfulness: Challenges to indictment: Miscellaneous defenses: Conduct of trial.--The court affirmed the taxpayer's conviction for willful failure to file a corporate tax return. There was sufficient evidence of willfulness to sustain the jury's verdict where willfulness could have been inferred from evidence of underreported income, even though the taxpayer asserted that he did not file based on his attorney's advice. The existence of a criminal investigation did not preclude the use of admin istrative summonses by the IRS where they preceded the recommendation of criminal prosecution. The court determined that the trial court did not commit any reversible errors in conducting the trial and rejected challenges to the indictment.

Robert E. Larsen, Assistant United States Attorney, Kansas City , Mo. 64106 , for appellee. James R. Wyrsch, 1050 Home Savings Bldg., Kansas City, Mo. 64106, for appellant.

Before BRIGHT, Circuit Judge, GIBSON, Senior Circuit Judge, and Ross, Circuit Judge.

GIBSON, Senior Circuit Judge:

Defendant-appellant Carmen J. Civella appeals from his conviction in the United States District Court for the Western District of Missouri ¹ for willful failure to file a corporate tax return. 26 U. S. C. §7203. We affirm his conviction.

I. Civella was the president, principal owner, and chief operating officer of CMS, Inc., the owner of a nightclub named "Mother's." A grand jury issued a three-count indictment against Civella in his capacity as president of CMS, based on violations of the income tax laws regarding the operation of Mother's. The first count charged Civella with filing a false return for the fiscal year ending October 31, 1974, in violation of 26 U. S. C. §7206(2). The second count charged him with tax evasion for the fiscal year ending October 31, 1975, in violation of 26 U. S. C. §7201. The third count charged him with willful failure to file a return for the year ending October 31, 1976, in violation of 26 U. S. C. §7203. The first two counts were based on a failure to report "door income," which was collected as an admission or cover charge. As to the third count, there is no dispute the return was not filed, and the Government's evidence showed that Mother's had gross income of $341,478. The only question is whether the failure to file was willful.

Although the jury returned guilty verdicts on all three counts, Civella was convicted only on the third, receiving two years' probation and a $1,000 fine. The court acquitted Civella on the first count because the evidence did not sufficiently show he was responsible for the false return. The court ordered a new trial on the second count because the statistical evidence used to estimate unreported income was deemed unreliable by the court.

II. On appeal, Civella urges reversal of the trial court, both as to the law and as to the sufficiency of the evidence. The most important of these claims goes to the question of whether the evidence was sufficient to show that Civella's failure to file a return was willful.

Civella and his attorney-accountant testified that the return was initially delayed because Mother's business records mistakenly were placed at another nightclub in which Civella had an interest. They were discovered almost a year after the January 15, 1977, deadline for filing the return. The records were given to the Internal Revenue Service early in 1978, and they were returned to Civella on or around October 31, 1978. Civella did not thereafter file the return, based on his attorney's advice.

Civella views his testimony and that of his attorney as only demonstrating inadvertence or negligence. Circumstances like the advice of counsel or the inefficiency of an accountant can negate willfulness, but they do not constitute an absolute defense. ² United States v. Conforte [80-1 USTC ¶9417], 624 F. 2d 869, 876 (9th Cir. 1980), cert. denied, 449 U. S. 1012 (1980). See also United States v. Wilson [77-1 USTC ¶9331], 550 F. 2d 259, 260 (5th Cir. 1977). However, in light of cross-examination, the jury could have rejected the testimony asserting inadvertence or negligence.

Also, there was other evidence before the jury which allowed it to infer that Civella's failure to file was willful. The jury could have found willfulness from testimony that CMS records underreported door income. Concealment of income is evidence of an attempt to evade taxes, Spies v. United States [43-1 USTC ¶9243], 317 U. S. 492, 499 (1943), and the jury could have concluded the attempt was made by failing to file. See United States v. Platt [70-2 USTC ¶9719], 435 F. 2d 789, 793 n. 6 (2d Cir. 1970).

When reviewing the sufficiency of evidence, our function is to determine whether a reasonable person could fairly find the elements of the crime beyond a reasonable doubt. United States v. Quinn, 467 F. 2d 624, 627 (8th Cir. 1972), cert. denied, 410 U. S. 935 (1973). There was sufficient evidence of willfulness on Civella's part to allow the jury to render a guilty verdict on Count III.

III. Civella attacks his conviction on numerous other grounds regarding the indictment and trial.

A. As to the indictment, he first argues that it should have been dismissed because of media identification of his father and uncle as underworld figures. However, the mere existence of publicity does not warrant dismissal of an indictment. If such were the case, no well-known person could be charged with a crime. United States v. Hoffa, 205 F. Supp. 710, 717 (S. D. Fla. 1962), cert. denied, 371 U. S. 892 (1962). See also 8 Moore 's Federal Practice (2d ed.) 6-97 ¶6.04[9]. Even prejudicial publicity generated by the Government would not affect the validity of the indictment, although contempt sanctions could be in order in such a case. Id. at 6-97-98. In Civella's case, publicity was about his relatives, not himself, and the trial court found no reason to believe the publicity was generated by the Government. Therefore, the publicity presents no grounds for dismissing the indictment.

B. Civella contends the problems with the publicity were exacerbated by prejudicial remarks made by the Assistant United States Attorney. The Assistant U. S. Attorney identified defendant as the son of Carl Civella and the cousin of Nicholas Civella, ³ both of whom have been identified in the media as underworld figures. Brief of Appellant at 11. Defendant argues that such identification made the Assistant U. S. Attorney a witness before the grand jury (contrary to his duties as an attorney) and was unfairly prejudicial.

In fact, the conduct of the Assistant U. S. Attorney was entirely proper. The relationship was pointed out to the grand jury to show that defendant was not the subject of the great media attention. The prosecutor did not become a witness simply by making clear to the grand jurors which person was the subject of the investigation.

C. Civella accuses the prosecution of additional misconduct in not presenting exculpatory evidence to the grand jury. The grand jury was not told that statistical extrapolations were the basis of the IRS estimates of underreported income; nor was the grand jury given evidence of Civella's explanations for the irregularities.

The prosecutor is normally not under a duty to disclose facts which would be the basis of a defense at the trial. A grand jury proceeding is not constituted to be an adversary hearing; its function is to assess probable cause to believe that the suspect committed the offense in question. A grand jury hearing is not a mini-trial. United States v. Ciambrome, 601 F. 2d 616, 622 (2d Cir. 1979); United States v. Ruyle, 524 F. 2d 1133, 1136 (6th Cir. 1975), cert. denied, 425 U. S. 934 (1976); 8 Moore 's Federal Practice (2d ed.) 6-60 ¶6.03[2]. The general rule is that an indictment returned by a legally constituted and unbiased grand jury is enough to call for a trial of the charge on the merits. Costello v. United States [56-1 USTC ¶9321], 350 U. S. 359, 363 (1956).

D. The last challenge to the indictment is based on the prosecutor's presenting a signed indictment to the grand jury. Civella argues that knowledge by the grand jurors that the Government had already approved the indictment unduly influenced the grand jury.

A valid indictment must be signed by an attorney for the Government. Fed. R. Crim. P. 7(c)(1). When the Government shows a signed indictment to the grand jury, it runs a risk of presenting an issue of undue influence. Nevertheless, we see no reason to assume that such a practice necessarily constitutes undue influence. A pre-signed indictment alone does not show undue influence on the grand jury. United States v. Frantze, 655 F. 2d 128, 131 (8th Cir. 1981). United States v. Levine, 457 F. 2d 1186, 1189 (10th Cir. 1972); United States v. Climatemp, Inc., 482 F. Supp. 376, 386 (N. D. Ill. 1979); United States v. Tedesco, 411 F. Supp. 1336, 1342 (M. D. Pa. 1977). In the only case that found a pre-signed indictment improper, United States v. Gold, 470 F. Supp. 1336, 1355 (N. D. Ill. 1979), the prosecutors had engaged in other improper action. In Gold, undue influence was evidenced by the grand jury's deliberating for ten to twenty minutes over evidence accumulated for eighteen months on an elevencount indictment with seven defendants named in various counts. Furthermore, even though Gold was not appealed, the Seventh Circuit, in a companion case, called it "an unusual decision." In re November 1979 Grand Jury, 616 F. 2d 1021, 1023 (7th Cir. 1980).

IV. Civella's next point is that the trial court should have severed the trial of the three counts against him. He argues that the jury accumulated the evidence from the three counts and was influenced by the inadmissible statistical evidence in finding him guilty on the third count.

Two or more offenses can be charged against a defendant in an indictment if they are of the same or similar character or constitute parts of a common scheme. Fed. R. Crim. P. 8(a). All three counts were similar in that they related to income tax reporting and payment obligations of the corporation and its chief corporate officer in consecutive years. Even when the offenses are properly joined in the indictment, the trial court has the option of severing the counts to avoid prejudice. Fed. R. Crim. P. 14. Severance under that rule is a matter of discretion for the trial court. United States v. Shearer, 606 F. 2d 819 (8th Cir. 1979); United States v. Bowman, 602 F. 2d 160, 163 (8th Cir. 1979).

In light of the weight of the evidence against Civella on Count III, see section II ante, and the similarity of the charges, we hold that the trial court did not abuse its discretion in denying Civella's motions for severance and a new trial based on the failure to sever.

V. The next argument made by Civella is that he was entitled to a hearing on the question of whether he was the subject of illegal electronic surveillance. The United States had a duty to affirm or deny Civella's allegations that certain evidence was inadmissible as the primary product of an unlawful act. 18 U. S. C. §3504(a)(1) (1976). Civella argues that the Government's denials were so conclusory that he was entitled to suppression and disclosure of evidence of electronic surveillance.

The Government admitted that Civella was the subject of electronic surveillance by agencies other than the IRS on two occasions. In the first, the other party to the conversation consented to the surveillance. The second was made pursuant to a court order. Three IRS investigators submitted affidavits stating that the IRS did not conduct electronic surveillance of Civella and that the IRS did not receive information as a result of electronic surveillance by any other governmental agencies. In the absence of more specific allegations by Civella, the Government's response was reasonably specific. Civella was not entitled to a hearing on this issue.

VI. Another challenge made by Civella is aimed at the use of administrative summonses by the IRS. He argues that since such summonses are for determining civil liability, they are improper when the IRS is conducting a criminal investigation.

The IRS began its investigation of Civella in 1974. A civil agent was assigned to the case in October 1976, although his work was suspended until completion of the criminal prosecution. The first summons was issued in October 1977. Authority for the summons apparently rested in 26 U. S. C. §7602.

Civella's assertion that a criminal investigation precludes the use of administrative summonses is incorrect. All that §7602 requires is that the summons not be issued solely for a criminal purpose. United States v. LaSalle National Bank [78-2 USTC ¶9501], 437 U. S. 298, 316 n.18, 318 (1978). Abandonment of the civil investigation is conclusively presumed to have occurred when the IRS recommends criminal prosecution to the Justice Department. Id. at 311-13. The summonses preceded such a recommendation in Civella's case. Abandonment of a civil purpose can be shown by other means, but the burden is a heavy one, id. at 316, and "[t]he Government does not sacrifice its interest in unpaid taxes just because a criminal prosecution begins." Id. at 311-12. A defendant would have to show, for instance, that the IRS had delayed a recommendation of prosecution to the Justice Department simply to take advantage of §7602. Id. at 317. The fact that an IRS special agent is interested only in a criminal prosecution does not show abandonment of a civil purpose. Id. at 314-15.

VII. The last group of Civella's objections goes to the testimony and cross-examination of the Government's undercover agents.

A. At trial, two Government witnesses testified as to the door income at Mother's. The witnesses were Charles Carpenter, an undercover informant who worked as a doorman and manager at Mother's, and Beth Ruona, an IRS special agent who worked as a waitress and "hat check girl." Carpenter periodically transmitted door income counts to an IRS agent, who recorded the counts in memoranda. Carpenter routinely reviewed the memoranda to ensure that the information was properly recorded. Ruona gave the IRS memoranda which contained her door income counts. Summaries of the door income counts were admitted into evidence as recorded recollection.

A record concerning a matter about which a witness once had knowledge but cannot recall when asked to testify can be admitted into evidence if the record was made or adopted by the witness when the matter was fresh in his memory and it correctly reflects his knowledge. Fed. R. Evid. 803(5). The trial court was satisfied that the summaries complied with the rule, and we perceive no reason to disagree with that conclusion.

B. Civella claims that informant Carpenter was paid according to the quality of the information he produced, and that such an arrangement was an impermissible contingency fee.

Civella relies on Williamson v. United States, 311 F. 2d 441 (5th Cir. 1962), cert. denied, 381 U. S. 950 (1965). The court in that case reversed a conviction because the informant had been promised a payment for producing admissible evidence against a defendant. Id. at 444. The reason for reversal was that such an arrangement constituted entrapment. Id. In United States v. Russell, 411 U. S. 423 (1973), the Supreme Court noted that lower courts had gone beyond its mandate in applying the entrapment defense, and that the entrapment defense is "relatively limited." Id. at 435. The test for the entrapment defense is whether the Government "actually implants the criminal design in the mind of the defendant . . .." Id. at 436. There is no evidence that Carpenter did anything to encourage Civella to violate the tax laws. There is no bona fide issue of entrapment in any phase of this case.

C. Civella complains of the district court's restricting the cross-examination of Carpenter. After Carpenter testified that he had not made required child support payments, the defense counsel wanted to ask Carpenter whether he knew that nonpayment was a crime. The purported purpose was to find out whether the IRS had intervened with state authorities on Carpenter's behalf and whether he had taken money from Mother's to pay the child support.

The district court had a duty to determine if the probative value was substantially outweighed by the danger of unfair prejudice and confusion of issues. Fed. R. Evid. 403, 608(b) (Advisory Comm. Note (2)). The court did not abuse its discretion in restricting the cross-examination.

D. Civella next argues that Carpenter's taking of records from Mother's without a search warrant was an unreasonable search and seizure.

None of the material taken by Carpenter was introduced into evidence; the IRS agent working on the case testified that the records were not used at all. Even if the search were unconstitutional, the decision of which we forego, the fact that the records were not introduced into evidence would make the denial of Civella's motion to suppress harmless error.

E. Civella's final complaint is that the district court should have allowed him to see the informant file of Carpenter, the tax returns of Carpenter, and the personnel file of Carpenter while he was a police officer. Civella argues that he needed those items for cross-examination of Carpenter.

A prosecutor is required to disclose material evidence favorable to the accused. Brady v. Maryland , 373 U. S. 83 (1963). A combining of the prosecutor's files need not be permitted. Evans v. Janing, 489 F. 2d 470, 474 (8th Cir. 1973). Civella was allowed to interview Carpenter regarding his income tax returns. The district court inspected, in camera, the informant and police personnel files and determined that no Brady material had been withheld. We have no reason to dispute that determination.

VIII. After carefully reviewing the thirteen issues and subissues reised by appellant, we hold that the trial court did not commit any reversible errors in conducting the trial. The conviction of Civella is affimed.

¹ The Honorable Russell G. Clark, Chief Judge , United States District Court for the Western District of Missouri .

² The fact that a completed return would incriminate a taxpayer does not relieve him of his duty to file under §7203. At a minimum, he must assert his fifth amendment right against self-incrimination as to specific items of requested information on the tax return, and the return must be filed. United States v. Sullivan [1 USTC ¶236], 274 U. S. 259, 263 (1927). See also Garner v. United States [76-1 USTC ¶9301], 424 U. S. 648, 651 n. 3 (1976); Grosso v. United States [68-1 USTC ¶15,801], 390 U. S. 62, 72-73 (1968) (Brennan, J., concurring). A mere assertion of a fifth amendment claim, even on a tax return, will not be a defense to a §7203 prosecution. United States v. Miller [80-2 USTC ¶9796], 634 F. 2d 1134 (8th Cir. 1980), cert. denied, -- U. S. --, 101 S. Ct. 2026 (1981). Civella did not file a return at all. His only assertion of a fifth amendment privilege was to refer an IRS investigator to his lawyer. Appellant's Brief at 20 n. 2.

³ In fact, defendant is Nicholas Civella's nephew. Brief of Appellant at 11.

 

 

 

 

[81-2 USTC ¶9621] United States of America , Plaintiff-Appellee v. Raymond L. Ness, Defendant-Appellant

(CA-9), U. S. Court of Appeals, 9th Circuit, No. 80-1530, 652 F2d 890, 8/7/81, Affirming unreported district court decision

[Code Sec. 7205]

Filing of false withholding certificate: Selective prosecution: Failure to prove: Sufficiency of jury instructions: Exclusion of evidence.--The taxpayer's conviction for willfully filing a false withholding exemption certificate was affirmed. His claim of selective prosecution was rejected because he failed to establish that others similarly situated were not prosecuted and that his prosecution was based on an impermissible motive. The taxpayer's other allegations of error regarding the sufficiency of the jury instructions and the exclusion of evidence were also rejected as being without merit.

Morgan C. Taylor, 567 San Nicolas Dr. , Newport Beach , Calif. , for plaintiff-appellee. Frederick M. Flam, Paul H. Rochmes, Assistant United States Attorneys, Los Angeles , Calif. 90012 , for defendant-appellee.

Before NELSON and CANBY, Circuit Judges, and WILKINS, ^* District Judge.

PER CURIAM:

Appellant Ness was charged with willfully filing a false W-4 form, in violation of 26 U. S. C. §7205. The evidence showed that Ness filed an exempt W-4 claiming, under penalty of perjury, that he had had no income tax liability in the prior year, and expected none for the year in which he filed the W-4. That claim was false. The evidence further showed that Ness renewed his claim for exemption from withholding even after the Internal Revenue Service notified him that he was ineligible, and that he could be criminally prosecuted for falsifying his W-4.

We find all of Ness 's arguments on this appeal to be without merit and, therefore, affirm.

I. Selective Prosecution

Ness contends that, at a pretrial hearing, he made a nonfrivolous prima facie showing that he was a victim of selective prosecution, but was improperly denied the discovery and hearing necessary to prove his claim. Hence, Ness argues that his case should be remanded for an evidentiary hearing on that issue. See United States v. Oaks [75-1 USTC ¶9157], 508 F. 2d 1403 (9th Cir. 1974). Ness is mistaken both as to the sufficiency of his showing and as to the adequacy of the pretrial procedures afforded him.

To succeed on a claim of selective prosecution a defendant has the burden of establishing that others similarly situated have not been prosecuted and that the allegedly discriminatory prosecution of the defendant was based on an impermissible motive. See United States v. Wilson [81-1 USTC ¶9194], 639 F. 2d 500, 503-04 (9th Cir. 1981). Ness failed to make an adequate prima facie showing on either prong of that test.

While he showed that similarly situated members of his tax protest group had also been prosecuted, Ness did not show a single instance of a similarly situated but nonprotesting violator who had not been prosecuted. See United States v. Steele, 461 F. 2d 1148, 1151-52 (9th Cir. 1972). The fact that access to the Government's files might be helpful to a defendant seeking to prove discriminatory prosecution does not relieve him of the burden of making an initial showing, nor does that fact, in itself, entitle every defendant raising such a claim to discovery. ¹ See United States v. Murdock [77-1 USTC ¶9289], 548 F. 2d 599, 600 (5th Cir. 1977); United States v. Berrios, 501 F. 2d 1207, 1211-12 (2d Cir. 1974); Steele, 461 F. 2d at 1151-52. See also Fed. R. Crim. P. 16(a)(1)(C).

Ness also failed to suggest any discrimination in the decision to prosecute him. To make out a prima facie case of selective prosecution a defendant must show evidence of impermissible motive at some crucial stage in the procedures leading to the initiation of prosecution. Compare Steele, 461 F. 2d at 1151-52 (discriminatory investigation taints prosecution where normal procedures for selecting cases for prosecution have apparently been bypassed), with United States v. Erne [78-1 USTC ¶9402], 576 F. 2d 212, 216-17 (9th Cir. 1978) (discriminatory investigation does not taint prosecution where prosecutor's decision is independent and based on nondiscriminatory policies). Ness made no showing that the Government focused its investigation on him because of first amendment protest activites. Nor did he show any discriminatory policies underlying the selection of cases for prosecution. Tax violations are not a protected form of political dissent. Insofar as a protest group engages in such violations, it is obvious that proper prosecutorial considerations, such as deterrence of widespread tax evasion, will inevitably lead to the prosecution of numerous protest violators. See United States v. Catlett [78-2 USTC ¶9775], 584 F. 2d 864 (8th Cir. 1978); United States v. Gardiner [76-1 USTC ¶9300], 531 F. 2d 953, 954 (9th Cir.), cert. denied, 429 U. S. 853, 97 S. Ct. 145, 50 L. Ed. 2d 128 (1976).

Moreover, the record before us reveals that at the hearing on his motion Ness was granted an opportunity to present evidence on his claim but declined to do so, contending that he needed more time to prepare. The requirement that a defendant must make a nonfrivolous showing before becoming entitled to an evidentiary hearing on a selective prosecution claim is not to be employed as a tactical device to delay orderly prosecution. See also, Murdock, 548 F. 2d at 600. Ness was granted a hearing. No reason appears to justify his failure even to attempt to subpoena witnesses or to request discovery of documents that he believed might aid his claim. Hence, we need not consider whether, in the event that he had done so and had also made out a prima facie case, it would be error not to grant a continuance if the Government resisted proper efforts to assemble the evidence necessary to carry his burden of proof.

II. Other Issues

Ness complains that evidence of a slide show, that allegedly misled him into believing he was eligible to claim exemption from withholding, was improperly excluded. Both Ness and the lecturer testified as to the content of the slide show. Hence, presentation of the slide show was properly excluded as cumulative. See Fed. R. Evid. 403. Moreover, Ness 's request to introduce that content by way of such a presentation was properly denied as potentially confusing to the jury. See Cooley v. United States [74-2 USTC ¶9718], 501 F. 2d 1249 (9th Cir. 1974), cert. denied, 419 U. S. 1123, 95 S. Ct. 809, 42 L. Ed. 2d 824 (1975).

The judge's comments on the theories Ness claimed to rely on for his belief that he was entitled to an exemption from withholding were not inaccurate. Insofar as the judge's colorful language may have been inappropriate, his curative instruction was sufficient to offset any prejudicial inferences his comments might have suggested. See generally Smith v. United States [62-2 USTC ¶9815], 305 F. 2d 197, 205 (9th Cir.), cert. denied, 371 U. S. 890, 83 S. Ct. 189, 9 L. Ed. 2d 124 (1962).

Ness was not entitled to have the jury instructed in precisely the form he requested. The instructions that were given were correct, adequate and fair. See United States v. Buras [81-1 USTC ¶9126], 633 F. 2d 1356 (9th Cir. 1980); United States v. Pallan [78-1 USTC ¶9361], 571 F. 2d 497, 501 (9th Cir.), cert. denied, 436 U. S. 911, 98 S. Ct. 2249, 56 L. Ed. 2d 411 (1978). The instruction, that a political belief that the law is wrong will not suffice to negate a finding of willfulness, was entirely appropriate in this case. The mistaken belief that a statute is unconstitutional and that one has the right to violate it is not a "mistake of law" such as will provide a defense to a charge of willful violation. See United States v. Kelley [76-2 USTC ¶9489], 539 F. 2d 1199, 1204 (9th Cir.), cert. denied, 429 U. S. 963, 97 S. Ct. 393, 50 L. Ed. 2d 332 (1976). Finally, it was not error to refuse to instruct the jury that recklessness is not the equivalent of willfulness. See United States v. Pomponio [76-2 USTC ¶9695], 429 U. S. 10, 12, 97 S. Ct. 22, 23, 50 L. Ed. 2d 12 (1976); Pallan, 571 F. 2d at 501; Cooley, 501 F. 2d at 1253 n.4; United States v. Bengimina [74-2 USTC ¶9513], 499 F. 2d 117 (8th Cir. 1974).

The judgment is AFFIRMED.

^* Hon. Philip C. Wilkins, District Judge for the Eastern District of California, sitting by designation.

¹ We note further that in this case the record does not contain any motion for discovery adequate under Fed. R. Crim. P. (16)(a)(1)(C). Discovery could properly be denied on that basis alone.

 

 

[80-2 USTC ¶9842] United States of America , Appellee v. John D. Miller, Appellant

(CA-8), U. S. Court of Appeals, 8th Circuit, No. 80-1548, 634 F2d 1134, 12/1/80, Affirming an unreported District Court decision

[Code Sec. 7203]

Crimes: Trial: Evidence: Jury instructions.--In a criminal trial for failure to file, the District Court did not err with respect to its jury instructions, and its discretion in the admission of evidence at trial was affirmed. The "good faith" defense was not available to the taxpayer, as he alleged, since he did not file a return. Moreover, it was not error for the court to deny the admission into evidence of charts designed to aid in the taxpayer's testimony, since the admission of such evidence was within the court's discretion.

Roxanne Barton Conlin, United States Attorney, Amanda M. Dorr, Assistant United States Attorney, Des Moines, Ia. 50209, for appellee. John D. Miller, 2140 W. 4th St., Davenport, Ia. 52802, pro se, Mark W. Bennett, Allen, Babich & Bennett, 5835 Grand Ave., Des Moines, Ia. 50312, for appellant.

Before GIBSON, Senior Circuit Judge, and HEANEY and BRIGHT, Circuit Judges.

HEANEY, Circuit Judge:

Appellant John D. Miller was convicted on April 30, 1980, of two counts of violating 26 U. S. C. §7203. A jury found that Miller had willfully failed to file income tax returns for the years 1976 and 1977, and he was sentenced to six-month prison terms on each count, to run concurrently. Miller's primary arguments on appeal are that the jury was erroneously instructed, and that the trial court erred in refusing to allow the defendant to use certain demonstrative evidence at trial. We affirm the district court's rulings.

Miller, who filed no income tax return in 1976, and a "Fifth Amendment" return in 1977, requested the following "good faith" instruction at trial:

You are instructed that even if the defendant erroneously or mistakenly asserted his Fifth Amendment rights in his 1040 Form for the calendar year in 1977 that if he did so in good faith then you must find that the defendant did not act willfully.

The trial court refused the requested instruction, and gave the following ones instead:

An act is done knowingly if it is done voluntarily. The purpose of adding the word "knowingly" in indictment is to insure that no one would be convicted for an act done because of mistake, accident, or other innocent reason.

Willfulness is an essential element of the crime of failure to file an income tax return. The term "willfully" used in connection with this offense means a voluntary intentional violation of a known legal duty, in order to prevent the Government from knowing the extent of and knowing the facts material to the determination of one's tax liability.

Defendant's conduct is not "willful" if he acted through negligence, even gross negligence, inadvertence, justifiable excuse, or mistake, or due to his good faith misunderstanding of the requirements of the law. However, mere disagreement with the law in and of itself does not constitute good faith misunderstanding of the requirements of the law, because it is the duty of all persons to obey the law whether or not they agree with it. Also, a person's belief that the tax laws violate his constitutional rights does not constitute a good faith misunderstanding of the requirements of the law. Furthermore, a person's disagreement with the Government's monetary system and policies does not constitute a good faith misunderstanding of the requirements of the law.

The defendant has introduced evidence of advice he heard given by speakers at meetings, tape recorded lectures, essays, pamphlets, court opinions, and other material that he testified he relied on in concluding that he was not a person required to file income tax returns for the years 1976 and 1977.

This evidence has been admitted solely for the purpose of aiding you in determining whether or not the defendant's failure to timely file tax returns for 1976 and 1977 was knowing and willful and you should not consider it for any other purpose. You are not to consider this evidence as containing any law that you are to apply in reaching your verdicts, because all of the law applicable to this case is set forth in these instructions.

We find that the court properly refused to give the requested instruction, and that those given were proper. The good faith defense was not available to the appellant because his IRS forms contained no income information and, thus, he had made no return at all, and there was no evidence in the record to prove that he believed filing a proper return would subject him to possible prosecution.

The appellant also argues that the trial court erred in refusing to admit defendant's Exhibit W1-17, a series of charts which he contends would have allowed the jury to "visually see the points to which Mr. Miller was about to testify." Admission of such evidence, however, is within the discretion of the trial court, and we do not find that this discretion was abused. ¹

Finally, the appellant contends that the IRS abused its power by unlawfully subpoenaing records of the defendant without notification to him, and by using the results of "illegal political surveillance" against him. We will not deal substantively with these claims as they have been raised for the first time with the filing of Miller's brief on appeal.

Affirmed.

¹ Defendant's Exhibit W1-17 consisted of seventeen large posterboard "charts," each containing one statement of defendant's theories of money and taxation. These statements were as follows: "Mr. Foote McBrearty, Baxter and Porth said Federal Reserve Notes are not dollars" (W-1); "And unless I have received 750 dollars or more, I'm not required to file." (W-2); "I did not receive 750 dollars" (W-3); "The United States Supreme Court has clearly defined the term income within the constitutional sense." (W-4); "Income may be defined as the gain derived from capital, from labor, or from both combined, provided it be understood to include profit gained through a sale or conversion of capital assets, . . ." (W-5); "Only gains are taxed." (W-6); "The Supreme Court says that labor is property." (W-7); Exchanging one property for another property with no gain, results in no taxable income. The source, my wages, is not taxed." (W-8); "Wages are an even exchange of one form of property for another form of property, my labor." (W-9); "Compensation for labor is not a gain." (W-10); "A gain from labor would result only by someone hiring labor and making a profit on it" (W-11); "Within the constitutional sense, 'income' is not everything that comes in--" (W-12); "But is only that gain which is derived from property." (W-13); "Only be employing property, capital or labor, can income be derived from the source." (W-14); "The right to work and exchange ones labor for wages or any form of property even-up, was not a subject to be taxed under the 16th Amendment." (W-15); "The Supreme Court says: The 16th Amendment did not confer any new power of taxation on Congress nor extend the power of taxation to subjects previously excepted." (W-16); "For the years in question here, I had no taxable income." (W-17) (Emphasis included.). The theories advanced by the defendant are utterly without merit.

 

 

 

[77-1 USTC ¶9127] United States of America , Appellee v. John J. Afflerbach, Appellant

(CA-10), U. S. Court of Appeals, 10th Circuit, No. 75-1795, 547 F2d 522, 12/30/76, Affirming unreported District Court decision

[Code Sec. 7201-result unchanged under the '76 Tax Reform Act]

Evasion or avoidance of income tax: Evidence: Contempt.--The taxpayer's conviction for the willful attempt to evade or defeat income tax was affirmed on appeal. The court found that there was ample evidence showing that the taxpayer attempted to conceal his true income. Also, the required elements for evading or defeating tax were satisfied. There was a substantial deficiency. The taxpayer failed to file a return for 1972 or pay income tax due, and he filed a purported tax return containing no information relating to income from which a tax could be computed. The court also upheld the taxpayer's contempt conviction since his conduct constituted a defiance and a obstruction of justice. Finally, the court rejected taxpayer's various other arguments, as well, and upheld the conviction.

James P. Castberg, United States Attorney, Frederick C. Reed, Jerome F. Statkus, Assistant United States Attorneys, Cheyenne, Wyo. 82001, for appellee. John J. Afflerbach, Casper , Wyo. , pro se.

Before SETH, MCWILLIAMS and BARRETT, Circuit Judges.

SETH, Circuit Judge:

Defendant was convicted under 26 U. S. C. A. §7201 of a willful attempt to evade or defeat income tax. It was charged in the indictment that the defendant received taxable income of some $32,153.00 in 1972 on which he owed $12,797.02 in income tax. The Government alleged that the overt acts were a failure to file declaration of estimated tax for 1972, concealing and attempting to conceal his true and correct income, failure to pay the income tax due, and filing a purported income tax return showing a tax in the amount of $10.75 for 1972 and an amended return showing $312.67 (both returns contained no information relating to income from which a tax could be computed and were not valid returns). The defendant was found guilty and sentenced to three years imprisonment. He was also sentenced to thirty days for contempt of court. The defendant appeals.

On appeal, the defendant claims that the trial court erred in refusing to instruct the jury as he requested regarding the elements of a section 7201 offense, especially as to willfulness and good faith. In United States v. Swallow [75-1 USTC ¶9267], 511 F. 2d 514 (10th Cir.), this court stated that the elements of such an offense are a substantial income tax deficiency, willfulness, and some affirmative act constituting an attempt to evade or defeat the tax. The instructions given clearly covered these elements. As to "willfulness," the defendant asserts error because the court did not give the exact instruction he submitted. This stated that there must be a "bad purpose" and "evil motive." However, the definition of "willfulness" in this context does not include "bad purpose" or "evil motive." We held in Swallow and in United States v. Dowell [71-2 USTC ¶9642], 446 F. 2d 145 (10th Cir.), that "willfully" be defined as "voluntarily" and "intentionally" done with specific intent to evade the taxes. This definition was included in the instructions given in this case. No particular form is essential for the wording of an instruction so long as it conveys as a whole a correct statement of the applicable law. Draeger v. Grand Central, Inc., 504 F. 2d 142 (10th Cir.). The instructions here given did present a correct statement of the law when considered as a whole.

The defendant on this same point urges that it was error for the trial court to refuse to instruct that a failure to make a proper return and pay a tax is not a violation of section 7201. We hold that such refusal to instruct was not error. There was evidence introduced that the defendant knew he had taxable income during the year in question, and that he intentionally filed a purported return which did not contain enough information upon which a tax could be computed. The proof showed an intentional act to evade the law, and the affirmative act of filing the type of return he did. See United States v. Porth [70-1 USTC ¶9329], 426 F. 2d 519 (10th Cir.). We held in United States v. Dowell [71-2 USTC ¶9642], 446 F. 2d 145 (10th Cir.), that a violation of section 7201 occurs when an attempt is made voluntarily and intentionally, with specific intent accompanied with some affirmative act. See also United States v. Swallow [75-1 USTC ¶9267], 511 F. 2d 514 (10th Cir.).

The instructions given by the trial court covered all the elements of the offense, and we find no error.

In an argument somewhat related to the foregoing, the defendant urges that he should have been permitted to introduce into evidence certain treaties, tracts, briefs, an opinion of a layman, and some similar documents to show what he relied on. These were for the most part matters of law, and in any event we cannot say that the trial court abused its discretion in refusing to admit these documents, and proffered testimony, as immaterial. Young v. Anderson , 513 F. 2d 969 (10th Cir.). The evidence showed that the defendant knew that the income tax statutes required that a proper return be filed and a tax paid. The defendant does not agree with the income tax laws nor the general fiscal system of the Government, and he apparently believed this strongly, but this is not a defense. The acts charged were intentionally done with knowledge of the statutory requirements.

The defendant sought here and in a separate action to establish immunity from prosecution. There is no basis for the introduction of the separate action into these proceedings. The defendant has confused rights concerning a source of income with what he asserts is a right to refuse to account for income. See United States v. Sullivan [1 USTC ¶236], 274 U. S. 259.

The defendant sought to disqualify the trial judge on the ground that the defendant and others had brought suit against nearly all the federal judges in the country, including the judge who tried this case. The matter was completely unrelated to this prosecution, and had been dismissed before this trial started. The attempt to disqualify the trial judge did not raise any proper grounds, and it was properly denied.

The defendant stated to the court that he wanted to be represented at trial and asked that a layman so represent him. This was properly refused by the trial court. United States v. Grismore, -- F. 2d -- (10th Cir.) (Tenth Circuit, No. 75-1880, filed November 8, 1976). The court permitted defendant to consult with this person for a time in the court room and later only outside during recesses. The court appointed an attorney to be available to defendant and who was present during the trial, but defendant did not consult with him. The rights of defendant under the Sixth Amendment were fully protected and fulfilled. Rice v. Olson, 324 U. S. 786; Shawan v. Cox, 350 F. 2d 909 (10th Cir.).

The charge, as indicated above, was under section 7201. The defendant urges that the wording of the indictment showed or should be construed to charge only a misdemeanor under section 7203. This contention is without merit. The indictment clearly charges an offense under section 7201, and the proof was more than adequate to establish the violation. The distinction in Spies v. United States [43-1 USTC ¶9243], 317 U. S. 492, was observed by the trial judge and some of the instructions contained language from the Spies case. The indictment was proper as were the instructions under Spies.

The defendant sought a change of venue, but it was properly denied. Wheeler v. United States , 382 F. 2d 998 (10th Cir.).

The defendant was sentenced for contempt when, contrary to several warnings by the trial judge, he persisted in reading from documents he had sought to introduce in evidence, but which had been denied. On at least three occasions, the trial judge warned the defendant that his conduct in regard to the documents offered was improper. The defendant had repeated arguments with the trial judge regarding the layman as counsel, as to his court-appointed attorney, and the exclusion of his exhibits. The trial judge made every allowance for a defendant who was representing himself, but the record shows that the defendant's conduct constituted a defiance and an obstruction of justice. Since it was committed in the presence of the court, it was proper to punish the defendant summarily under Rule 42(a), Fed. R. Crim. P. It was required as a corrective step to restore and maintain the dignity and authority of the court. United States v. Peterson, 456 F. 2d 1135 (10th Cir.). We find no error in the contempt citation and its disposition.

AFFIRMED.

 

 

[76-1 USTC ¶9233] United States of America , Plaintiff-Appellee v. Martin J. Hodas, Defendant-Appellant, Herbert J. Levin, Defendant

(CA-2), U. S. Court of Appeals, 2nd Circuit, 75-1333, 12/16/75, Affirming District Court decision, 76-1 USTC ¶9232

[Code Secs. 7201 and 7203]

Crimes: Evasion of tax: Motion to suppress: Admissibility of evidence.--The Court of Appeals affirmed the finding of the District Court that business papers obtained pursuant to a general search warrant for books and records were admissible as evidence. Because the papers seized were directly related to an illegal business, the taxpayer's First Amendment rights, which prohibit mass seizure of business records where operations of a legitimate concern are impaired, were not violated.

Paul J. Curran, United States Attorney, New York , N. Y., for plaintiff-appellee. Herbert Kassner, Kassner & Detsky, 122 E. 42nd St. , New York , N. Y., for defendant-appellant.

Present Hon. Walter R. MANSFIELD, James L. OAKES, Ellsworth VAN GRAAFEILAND Circuit Judges.

This cause came on to be heard on the transcript of record from the United States District Court [76-1 USTC ¶9232] for the Southern District of New York, and was argued by counsel.

ON CONSIDERATION WHEREOF, it is now hereby ordered, adjudged, and decreed that the judgment of said District Court be and it hereby is affirmed.

 

 

[75-2 USTC ¶9696] United States of America , Plaintiff-Appellee v. Leonard K. Hays, Defendant-Appellant

(CA-7), U. S. Court of Appeals, 7th Circuit, No. 74-1820, 9/4/75, Affirming unreported District Court decision

[Code Sec. 7203]

Crimes: Failure to file returns: Willfullness: Data compilations: Certified public accountant: Admissibility of evidence.--The taxpayer, a certified public accountant, was properly convicted of failing to file 1967-1969 income tax returns. The Court did not err in refusing to allow taxpayer to introduce into evidence certain "home environment" evidence pertaining to the disorganization of his home, where he worked, since the government's proof was overwhelmingly substantiated by computer data print-outs showing the taxpayer's failure to file during each of the three years charged. Nor was it error to permit the government to introduce evidence that the taxpayer had failed to file in other years, since evidence of related offenses was admissible. The showing of the taxpayer's conviction on similar charges for earlier tax years buttressed the proof that the violation charged was willful. However, in any event the introduction of this evidence was harmless, in view of the fact that the taxpayer was a certified public accountant of 30 years' standing with 35 years' income tax experience.

Donald B. Mackay, United States Attorney, Frederick Weingarten, Assistant United States Attorney, Springfield, Ill., for plaintiff-appellee. L. Keith Hays, Jr., 2803 Alton Dr., Champaign, Ill., Steven C. Spencer, 201 N. Wells, Rm. 814, Chicago, Ill., for defendant-appellant.

Before CLARK, Associate Justice, ^* STEVENS, Circuit Judge, and GRANT, Senior District Judge. ^**

PER CURIAM.

Appellant, a certified public accountant, was convicted by a jury of wilfully failing to file his income tax return for the years 1967-1969, inclusive. He asserts the commission of two errors: (1) The court's refusal to permit him to introduce into evidence certain "home environment" evidence; and (2) the introduction of evidence on cross-examination of his conviction for the same offense for the years 1954-1956, inclusive. We affirm.

The proof of appellant's guilt was overwhelming. He admitted not filing his 1969 return but offered the excuse that he feared that by so doing he might jeopardize his daughter's application for a loan. The government's proof was by official computer data compilations, United States v. Farris [75-1 USTC ¶9497], No. 74-1822 (7th Cir., decided May 30, 1975) and showed failure to file during each of the three years charged. The government proved further that appellant's income exceeded $8,000 each year.

Appellant testified that he prepared his tax returns for the years in question but did not remember depositing them in the mail; he worked in one room of his house and kept his records in several brief cases; the room was a jumbled mess; that he could not furnish the government agents any of his records because he could not spend the time going through all of the papers; that he later found some papers but could not ascertain the years to which they were applicable but that he did find one year's computations. On cross-examination he testified that the "jumbled mess" in his house continued from 1961 through 1973; that he arrived at tax calculations for the years 1965-1969, inclusive, and 1960 (sic) and filed his returns for the years 1961-1966, inclusive, and thought that he had filed for the years 1967-1970, inclusive; that he had been a certified public accountant for 30 years and had been preparing other peoples returns for 35 years; that while he kept copies of his client's returns, he never kept copies of his own. Appellant offered to prove that his house had been razed subsequent to the time involved here and that "a portion of its contents" were destroyed along with it; that there was no place within the house where he could maintain an office or facilities to maintain records as are conventionally available; that his records were mixed with newspapers, etc., and that he was unable to keep careful account of his personal papers and belongings, and those relating to his clients on many occasions he lost as a result of those conditions. This evidence was refused. We find no error in this regard. At most it was cumulative of that already received.

As to the introduction by the government on appellant's cross-examination of his conviction for the identical offenses for the years 1954-1956, inclusive, we find no error. There was proof that appellant had filed his returns for the period 1961-1966, inclusive, which proved that he "knew the law required him to file returns and that he deliberately failed to file . . ." United States v. McCabe [69-2 USTC ¶9622], 416 F. 2d 957, 958 (7th Cir. 1969). The conviction on the earlier tax years buttressed the proof that the violation charged here was wilfull. United States v. Farris, supra, at 7. There was little hiatus between the intervening years, United States v. Ming [72-1 USTC ¶9449], 466 F. 2d 1000, 1009 (7th Cir. 1971). In any event the evidence was harmless in light of appellant's confusion as to the 1969 year and the overwhelming proof as to all years. Especially is that true since the appellant was a certified public accountant of 30 years standing with 35 years income tax experience.

Affirmed.

^* Associate Justice Tom C. Clark (Retired) of the Supreme Court of the United States is sitting by designation.

^** Senior District Judge Robert A. Grant of the United States District Court for the Northern District of Indiana is sitting by designation.

 

 

 

[75-2 USTC ¶9516] United States of America , Plaintiff-Appellee v. Norman L. Ordoneaux, Defendant-Appellant

(CA-5), U. S. Court of Appeals, 5th Circuit, No. 74-2987, 4/28/75

[Code Sec. 7201]

Criminal penalties: Evidence: Government's duty to produce.--The taxpayer's conviction for tax evasion was affirmed on appeal. The taxpayer contended that if the government had produced an envelope its postmark would have impeached the credibility of the government's material witness. However, the court concluded that the envelope would not have served as impeachable evidence and that the government did not breach its duty to produce evidence materially favorable to the taxpayer.

Richard V. Burnes, Camille F. Gravel, Jr., 711 Washington St. , Alexandria , La. , for defendant-appellant. Donald E. Walter, United States Attorney, R. Perry Pringle, Assistant United States Attorney, Shreveport, La., Joseph S. Cage, Jr., 500 Fannin St., Shreveport, La., for plaintiff-appellee.

Before WISDOM and DYER, Circuit Judges, and KRAFT, District Judge.

KRAFT, JR., District Judge:

Norman L. Ordoneaux (appellant) was charged in a single indictment, with three counts of tax evasion ¹ and three counts of using the mail to defraud. ² On appellant's motion the tax evasion counts were severed for trial from the mail fraud charges. He was first tried and adjudged guilty on Counts 1, 2 and 3, which charged evasion of income taxes for the calendar years 1968, 1969 and 1970, respectively. Twelve days later he was tried and adjudged guilty of the mail fraud charges on Counts 4, 5 and 6. He was sentenced upon each of the six counts to imprisonment for three years, the terms to run concurrently. On each of Counts 1, 2 and 3 he was also sentenced to pay a fine of $3,000, a total of $9,000.

Appellant challenges his conviction on the tax evasion charges upon the ground that the government failed to produce, before or during the trial, an envelope the postmark date on which would have contradicted the stated recollection of a material government witness and, so, impeached his credibility. Appellant concedes that the government's omission was inadvertent rather than deliberate, but urges, nonetheless, that the omission reached the constitutional dimension of a denial of due process. We disagree.

Appellant's contention essentially relates to Count 2, the charge of tax evasion for the calendar year 1969. Edsel Broussard, the owner of Lee's Insurance Agency and a government witness, testified he received a check, dated June 17, 1969, payable to his agency and issued by the Bushnell Agency. He testified he held the check for approximately a week after its receipt before he turned it over to Lee Molezun, the former owner of Lee's Agency, who endorsed and retained the check. Other evidence disclosed that Molezun cashed the check, retained $500 and turned $4,500 over to appellant.

The envelope which was not produced by the government bore a June 17, 1969 postmark and was the envelope in which the check had been mailed by the Bushnell Agency. We fail to see how production of this envelope could show more than the fact of and the date of its mailing. Clearly it was insufficient to contradict Broussard on the question of how long he kept the check before giving it to Molezun. Moreover, John Reed of the Bushnell Agency testified the check was mailed on the date it bore. The Bushnell Agency ledger confirmed the date of issue of the check. Appellant admitted receipt of $4,500 of the proceeds of the check. If appellant desired to attack the credibility of Broussard or to assail the reliability of his recollection on the score appellant now urges, real opportunity to do so was afforded by the check itself, which was in evidence. The reverse side of the check unmistakenly established that it was cashed on June 18, 1969, one day after its date.

We adhere to our statement in Williams v. Dutton (5 Cir. 1968), 400 F. 2d 797, 800, that the government has an affirmative duty

". . . (t)o produce at the appropriate time requested evidence which is materially favorable to the accused either as direct or impeaching evidence."

The government did not breach that duty here and the judgments on Counts 1, 2 and 3 are affirmed.

Since the sentences imposed on Counts 4, 5 and 6 are concurrent with each other as well as with those imposed on the counts which we have reviewed and upon which we have affirmed appellant's conviction, we decline to review appellant's conviction on Counts 4, 5 and 6, envisioning no significant adverse consequences to appellant from our election to apply the concurrent sentence rule. ³

¹ 26 U. S. C. §7201.

² 18 U. S. C. §1341.

³ Hirabayashi v. United States , 320 U. S. 81, 63 S. Ct. 1375, 87 L. Ed. 1774 (1942); Benton v. Maryland , 395 U. S. 784, 89 S. Ct. 2056, 23 L. Ed. 2d 707 (1969); United States v. Easterly (5 Cir. 1971), 444 F. 2d 1236; United States v. Stone (5 Cir. 1973), 472 F. 2d 909.

 

 

[74-2 USTC ¶9718]Marvin L. Cooley, Defendant-Appellant v. United States of America , Plaintiff-Appellee

(CA-9), U. S. Court of Appeals, 9th Circuit, No. 73-3532, 501 F2d 1249, 8/2/74

[Code Sec. 7203]

Criminal penalties: Failure to file return: Constitutional considerations.--Taxpayer's conviction for willfully failing to file tax returns for the years 1968, 1969 and 1970 was affirmed on appeal. The taxpayer's waiver of counsel was knowingly and voluntarily made. The instructions to the jury with respect to whether the act was willful were correct. There was no reversible error in not admitting immaterial matters to the evidence. Finally, the sentence imposed on the taxpayer, which was within the limits of the statute, was not so excessive as to be cruel and unusual punishment.

Thomas C. Kleinschmidt, Federal Public Defender, Phoenix , Ariz. , for defendant-appellant. Thomas N. Crowe, Assistant United States Attorney, Phoenix , Ariz. , for plaintiff-appellee.

Before CHAMBERS and BROWNING, Circuit Judges, and TAYLOR, District Judge. ^*

Opinion

TAYLOR, District Judge:

The appellant, Marvin L. Cooley, was convicted of wilfully and knowingly failing to file a federal income tax return for each of the years 1968, 1969 and 1970 in violation of Title 26, U. S. C., §7203. ¹ Appellant was sentenced to a term of imprisonment of one year and fined in the amount of $2,000.00 on each count.

[Waiver of Counsel]

The appellant voluntarily chose to represent himself at all times in the trial court, but on this appeal he is represented by counsel appointed at his request subsequent to the conclusion of the proceedings in the lower court. The issues, which have been raised and presented here, will be considered seriatim.

One of the contentions now made by appellant is that the trial court erred in allowing him to represent himself without first determining whether the waiver of counsel was competently and intelligently made. We find this contention has no merit.

[Taxpayer Well Informed]

The record reveals that appellant was and is a mature, intelligent and well-informed inidvidual; that he was especially well informed in regard to income tax matters, the charges against him and the possible consequences if convicted in regard thereto. Also, it appears that appellant was knowledgeable, experienced and competent in regard to the legal proceedings in connection with the charges against him. It clearly appears from the record that appellant not only refused the court's offer to appoint counsel for him, but that he knew of his right to represent himself and insisted on doing so. ² The court could not properly deny him that right. Title 28 U. S. C. §1654; Hodge v. United States , 414 F. 2d 1040, 1042 (9th Cir. 1969).

We are then confronted with the question of whether the appellant competently and intelligently asserted the right to represent himself. ³ In Hodge, a majority of this court, in banc, stated at p. 1042:

"In this context we take this to mean whether he was sufficiently informed of the consequences of his choice."

Also, in Hodge at p. 1043, the court asserted:

"The question was simply whether the defendant understood the charges against him and was fully aware of the fact that he would be on his own in a complex area where experienced and professional training are greatly to be desired."

In our opinion, that question in this case must be answered in the affirmative. In reaching this conclusion, we have examined and relied upon the record as a whole, as we may properly do. Hodge, supra, at 1043 n. 4.

[Record of Waiver]

The appellant relies principally on United States v. Dujanovic, 486 F. 2d 182 (9th Cir. 1973) as his authority for the proposition that his waiver of counsel is not adequately reflected in the record. We do not believe that Dujanovic is dispositive of this case since the factual situation in that case was inapposite to the one here. Appellant contends that under Dujanovic, it is not sufficient that waiver appear from the record as a whole. Appellant relies upon two statements in the Dujanovic opinion: (1) that it is a "minimal requirement" that the district court "shall not grant a request to waive counsel and proceed pro se without addressing the accused personally and determining on the record that the demand to waive counsel and proceed pro se is competently and intelligently made with understanding of the nature of the charge and the penalties involved"; and (2) that "[n]othing whatsoever can thereafter occur during the pilotless journey which will evidence the state of mind of the accused or information at hand upon which he at that time intelligently waived his constitutional right of counsel." 486 F. 2d at 186.

The first statement is obviously admonitory rather than a rule of decision. See 486 F. 2d at 188 n. 2. While the procedure described may be preferred, its omission is not, per se, reversible error, where it appears from the whole record that the defendant knew his rights and insisted upon representing himself. We understand the second statement to mean only that the manner in which the defendant conducts his defense cannot conclusively establish his state of mind at the time of waiver.

It should be noted that even in Dujanovic, the panel examined three distinct portions of the record for the purpose of determining whether there had been a waiver of counsel. Also, the panel recognized the rule as announced in Hodge, supra, at 1042 n. 2, that the determination of whether there has been an intelligent waiver of the right to counsel must depend, in each case, upon the particular facts and circumstances surrounding that case, including the background, experience and conduct of the accused.

[Instructions on Willfulness]

The appellant contends that the instructions on the issue of wilfulness were inadequate and incorrect for the reason that the court did not include the words "bad intent" or "evil motive" as requested. He argues that United States v. Bishop [73-1 USTC ¶9459], 412 U. S. 346 (1973) required the trial court to include the requested language. We do not agree. The court clearly instructed the jury in regard to the applicable law and the meaning of "wilful" even though the language used did not include "bad intent" or "evil motive". ⁴ The instructions given by the court were in substantial compliance with Bishop and appellant's requested instruction would not have added anything. Numerous courts have rejected claims that wilfulness instructions must include the terms "bad intent" or "evil motive", the most recent pronouncement being by a panel of this court in United States v. Hawk, -- F. 2d -- (May 15, 1974, Opinion No. 73-2800). In Hawk, the court stated:

"While the use of such terms is often helpful, all that is required are instructions which communicate the proper notion of specific intent in understandable terms."

The instructions given in this case were indeed adequate for this purpose.

[Immaterial Letter]

Appellant next argues that the trial court committed reversible error in refusing to admit in evidence a copy of a letter appearing in the Congressional Record, an Internal Revenue Service Training Manual, and several opinions of the United States Supreme Court in support of appellant's position at trial that he did not act "wilfully". The thrust of his argument is that he relied on these matters in determining that he was not required to file 1040 income tax returns as required by the statute. After considerable discussion with the court, at the bench and during the absence of the jury, the court at recess reviewed the material offered and concluded that they did not contain any relevant information on the issue of whether the appellant should or should not file completed tax returns. We agree that the offered material was immaterial and should not have been admitted as evidence. In the orderly trial of a case, the law is given to the jury by the court and not introduced as evidence. It is the function of the jury to determine the facts from the evidence and apply the law as given by the court to the facts as found by them from the evidence. Obviously, it would be most confusing to a jury to have legal material introduced as evidence and then argued as to what the law is or ought to be.

Haigler v. United States [49-1 USTC ¶9171], 172 F. 2d 986 (10th Cir. 1949), relied on by appellant, is not authority on the question of whether copies of court decisions are admissible as evidence. It is also distinguishable in that the defendant there was prevented from testifying in regard to his understanding of the law and the jury was instructed that his ignorance of the law was no excuse. The record here shows that appellant was permitted to testify in regard to his conversations with employees of the Internal Revenue Service and in regard to his understanding of his rights under the law and Constitution. In addition, the trial court carefully instructed the jury in regard to appellant's good faith reliance upon his own interpretation of the law.

[Cruel and Unusual Punishment]

Finally, appellant claims that the sentence imposed was so excessive as to be cruel and unusual, even though within the statutory limits.

"It is well settled that a sentence within a valid statute cannot amount to 'cruel and unusual punishment', and that when a statute provides for such punishment, the statute only can be attacked. It is equally clear that the appellate court has no power to modify or reduce the sentence." `If there is one rule in federal criminal practice which is firmly established, it is that the appellate court has no control over a sentence which is within the limits allowed by statute." Gurera v. United States , 8 Cir. 1930, 40 F. 2d 338, 340.'" Pependrea v. United States, 275 F. 2d 325, 329, 330 (9th Cir. 1960); see also: Bowman v. United States, 350 F. 2d 913, 917 (9th Cir. 1965).

We are confident that the experienced sentencing judge gave due consideration to all the facts and circumstances involved in this case before imposing the sentence on appellant. We do not find the sentence so excessive as to be cruel and unusual.

After carefully reviewing the record in this case, we are of the opinion that appellant was accorded a fair and impartial trial and that he represented himself as intelligently and completely as he might have been by an experienced attorney.

Having found no reversible error in the record, the judgment is AFFIRMED.

^* Of The District of Idaho, sitting by designation.

¹ That section provides in pertinent part:

"Any person required under this title to pay any estimated tax or tax, or required by this title or by regulations made under authority thereof to make a return . . ., keep any records, or supply any information, who willfully fails to pay such estimated tax or tax, make such return, keep such records, or supply such information, at the time or times required by law or regulations, shall, in addition to other penalties provided by law, be guilty of a misdemeanor. . . ."

² The record shows:

The appellant first appeared before the district court, Judge Craig presiding, on July 17, 1972 at which time he asserted that he intended to represent himself. The court advised appellant that in the event he did not have sufficient funds with which to hire an attorney, he would appoint one for him. Appellant then stated that he had not decided just what he would do in that area, but at the moment he wished to represent himself. Prior to his appearance on this date, he had filed a motion to disqualify Judge Craig on the basis of bias and prejudice, which motion was assigned to Judge Muecke for hearing, and further proceedings on the motion were continued for 30 days. At this time, appellant requested 30 days within which to file a motion to dismiss the information which was granted by the court and no plea was required at that time. The matter was continued until September 18.

On September 25, 1972, appellant again appeared in court before Judge Craig, at which time he was given a copy of the three count information and advised of the consequences in the event he was convicted on the charges. Appellant stated that he understood what he was charged with and stated to the court that before he entered his plea, he would like to have the matter presented to a grand jury because of the possible penalties involved. The court advised appellant that the charge in each count was a misdemeanor, but appellant argued that because of the three counts, he was facing three years in prison and a possible $30,000 fine in addition to the cost of prosecution. At that time, the court asked the Assistant U. S. Attorney to refer the matter to the grand jury and the matter was continued to November 20.

On November 20, 1972, appellant again appeared before Judge Craig for arraignment and for hearing on his motion for inspection of grand jury minutes and discovery. After considerable discussion in regard to discovery, appellant was assured the government would show him what evidence it had and the names of the witnesses it intended to have at trial. Having been furnished with a copy of the indictment, appellant stated to the court that he planned to file a motion to dismiss after he viewed the District Attorney's file. The court assured him that he would be granted time to do so, but requested that he enter his plea at that time. Appellant stated that he preferred to stand mute and after some colloquy between the court and appellant, the court entered a plea of not guilty for him.

Appellant's motion to disqualify Judge Craig came on for hearing before Judge Muecke on September 5, 1972. The motion was based upon the alleged criticism and dissatisfaction expressed by Judge Craig in regard to allowing other defendants to represent themselves in similar tax cases. Appellant sought to establish that Judge Craig assigned a public defender to Victor George Peterson in another case without listening to Peterson trying to assert that he wanted to defend himself. He stated that he personally witnessed the proceedings in connection with Peterson and that if he (Cooley) wanted to defend himself in Judge Craig's court, he did not want to be harassed and intimidated and virtually called a fool because he elected to do so.

Again, at the continued hearing on appellant's motion to disqualify Judge Craig held on September 27, he expressed his intention to represent himself and stated that he should have extended to him the same courtesies extended to other or regular attorneys in these matters. The court again advised appellant that he was in an area where he needed professional competence. The court further observed that appellant and other persons similarily situated misunderstood, in his opinion, the legal issues involved. The motion to disqualify Judge Craig was denied.

Prior to trial, appellant sought to suppress as evidence certain statements previously made to law enforcement agents. The court indicated its displeasure with the untimeliness of the motion by stating: "See, you choose to represent yourself and you are entitled to have a lawyer". The defendant acknowledged his understanding of that fact as well as his right to make the motion. The Honorable W. D. Murray, Senior United States District Judge, presided at and during the trial.

On the hearing of appellant's motion for a new trial and proceedings on sentencing, the appellant restated his understanding of and his insistence to proceed pro se by stating: "Your Honor, as to proceeding pro se, I guess there is no doubt that I have the right to do that and I submit that I would probably be in jail before now if I had gone any other way".

It should also be noted, from the record in this case, that the defendant filed almost every conceivable motion permitted under the F. R. Cr. P. in the trial court and that he intelligently and competently presented the same to the court.

Although appellant was advised of and knew of his right to counsel, he never, at any time, expressed any desire for assistance of counsel. The record clearly indicates that he knowlingly and intelligently waived his right to counsel and emphatically asserted his right to represent himself.

Also, the record indicates that the district court was quite familiar with appellant's background and experience in regard to similar proceedings pending against other individuals in the same court.

³ As set out in Johnson v. Zerbst, 304 U. S. 458, 464, 58 S. Ct. 1019, 1023, 82 L. Ed. 1461, 1466 (1938):

"A waiver is ordinarily an intentional relinquishment or abandonment of a known right or privilege. The determination of whether there has been an intelligent waiver of the right to counsel must depend, in each case, upon the particular facts and circumstances surrounding that case, including the background, experience, and conduct of the accused."

⁴ The trial court's instructions on wilfulness:

"As stated before, with respect to offenses such as charged in this case, specific intent must be proved before there can be a conviction. You will note that the failure to act charged in the indictment must be proved beyond a reasonable doubt to have been willfully. An act or failure to act is done willfully if done or failed to be done voluntarily and purposely and with the specific intent to do that which the law forbids.

"The specific intent of willfulness is an essential element of the crime of failure to file an income tax return. The word 'willfully' used in connection with this offense means deliberately and intentionally, and without justifiable excuse, or with the wrongful purpose of deliberately intending not to file a return which the defendant knew he should have filed, in order to prevent the Government from knowing the extent of his tax liability or facts material to the determination of his tax liability.

"Defendant's conduct is not willful if he acted through negligence, inadvertence, or mistake, or due to good faith, misunderstanding of the requirements of the law.

"If you find from all of the evidence that the defendant Marvin L. Cooley was honestly mistaken in his belief, you must find him not guilty as to the charges made in the indictment.

"If a person in good faith believes that he has done all that the law requires, he cannot be guilty of the criminal intent to willfully fail to file a tax return. But if a person acts without reasonable ground for belief that his conduct is lawful, it is for the jury to decide whether he acted in good faith or whether he willfully intended to fail to file a tax return.

"This issue of intent as to whether the defendant willfully failed to make an income tax return is one which the jury must determine from a consideration of all the evidence in the case bearing on the defendant's state of mind.

"The defendant has introduced evidence showing that he relied on the advice of a Treasury employee, if you believe this evidence, or if this evidence raises a reasonable doubt in your mind as to the guilt of the defendant, then you will acquit the defendant and say by your verdict Not Guilty.

"In connection with the charges made, you are instructed that the statutory requirement to file an income tax return does not violate a taxpayer's right against self-incrimination. But if you find that the defendant in good faith believed that it did violate his right against self-incrimination then you may consider that in connection with the charge of failure to file, and if as a result you find that he did not act knowingly and intentionally and willfully, then you must find a verdict of Not Guilty for the defendant."

 

 

[74-1 USTC ¶9465] United States of America , Plaintiff-Appellee v. Richard E. Hawk, Defendant-Appellant

(CA-9), U. S. Court of Appeals, 9th Circuit, No. 73-2800, 497 F2d 365, 5/15/74, Aff'g unreported District Court decision

[Code Sec. 7203]

Crimes: Failure to file: Defenses.--An attorney was properly convicted of willfully failing to file returns for four years. The trial judge was not required to instruct the jury that the failure had to be due to bad purpose and/or evil motive. Evidence of reporting discrepancies was relevant on the issue of willfulness. Any impropriety in a comment made by the prosecutor, was cured by the trial judge's instruction to disregard it.

James L. Browning, Jr., United States Attorney, John M. Youngquist, Assistant United States Attorney, San Francisco , Calif. , for plaintiff-appellee. Jerrold M. Ladar, Suite 310 , 507 Polk St. , San Francisco , Calif. , for defendant-appellant.

Before MOORE, ^* BROWNING and CHOY, Circuit Judges.

Opinion

CHOY, Circuit Judge:

Hawk was charged with willfully failing to file federal income tax returns for the years 1966, 1967, 1968, and 1969 in violation of 26 U. S. C. §7203. ¹

Hawk, an experienced attorney, admitted knowledge of his obligation to file returns and failure to do so. His excuse was that in the first years he was confronted with serious personal problems which left his affairs in disarray; thereafter, he said he "had a mental block about it" and that "he just sort of stuck his head in the sand." The jury found him guilty on the counts covering 1968 and 1969 and acquitted him as to the two previous years. We affirm.

Instructions on Willfulness

The trial judge instructed the jury that the defendant's failure to file would be willful if the "failure to act was voluntary and purposeful and with the specific intent to fail to do what he knew the law requirese (sic) to be done; that is to say, with the bad purpose to disobey or disregard the law . . .." ² This followed word for word an instruction requested by Hawk except for one omission: in the last clause, Hawk's requested instruction read, "that is to say, with the bad purpose and/or evil motive either to disobey or disregard the law." (Emphasis added.) Hawk argues that United States v. Bishop [73-1 USTC ¶9459], 412 U. S. 346 (1973), required the trial court to include this "evil motive" language. We do not agree.

In reversing a decision of this court, [72-1 USTC ¶9252] 455 F. 2d 612 (1972), the Bishop Court overturned a line of decisions of this circuit ³ which had established two levels of willfulness applicable separately to felony and misdemeanor offenses under 26 U. S. C. §§ 7201-07 of the criminal tax statutes. Where the crime charged was a felony, as is, for example, a willful evasion of tax under §7201, we had required that there be a specific intent to commit the illegal act knowing of the legal obligation. On the other hand, where the crime charged was a misdemeanor, as is, for example, a failure to file under §7203, a looser instruction was required in which willful was defined as, among other things, "capriciously or with a careless disregard whether one has the right to act." E.g., Abdul v. United States [58-1 USTC ¶9453], 254 F. 2d at 294. Though confining itself to this issue, the Court, in a concluding statement, gave rise to Hawk's argument here. Justice Blackmun, writing for the Court, stated that "Until Congress speaks otherwise, we . . . shall continue to require, in both tax felonies and tax misdemeanors that must be done 'willfully,' the bad purpose or evil motive described" in Murdock v. United States [3 USTC ¶1194] 290 U. S. 389 (1933). United States v. Bishop, 412 U. S. at 361 (emphasis added).

The Government contends that Bishop does not compel an instruction using the "evil motive" language on the narrow ground that the Court's decision was limited to the two criminal tax statutes before it--§7206 (1), the felony of willfully subscribing to a false return, and §7207, the misdemeanor of willfully "delivering" a false statement. But as the quoted statement above indicates, and as the remainder of the opinion makes crystal clear, ⁴ the Court's opinion extends to the definition of willfulness in the other criminal tax statutes in which it is an element, §§ 7201-07, including, of course, the provision under which Hawk stands accused, §7202. The reason Bishop does not compel inclusion of the term "evil motive" is much simpler: an issue concerning the necessity of employing that language was not presented in Bishop. The Court was confronted only with the permissibility of the two-level definition of willfulness, and beyond that nothing in the case related to the precise form of words necessary to convey the meaning of willfulness.

Still, a nagging question remains as to Justice Blackmun's reference to "evil motive"; was it the unstated intent of the opinion to require inclusion of those exact words? We think not. The statement in the opinion is that willfulness is to be uniformly defined to require the bad purpose or evil motive described in Murdock v. United States [3 USTC ¶1194], 290 U. S. 389 (1933). In Murdock the defendant had declined to answer certain questions relating to his tax liability on Fifth Amendment grounds. He was prosecuted for "willfully" failing to supply information to revenue officials. During the course of the prosecution it was determined that he had not been justified in asserting his Fifth Amendment privilege. Murdock defended arguing that his refusal was not willful. The Supreme Court held he was entitled to an instruction that if his refusal was in good faith--that is, with an honest belief in the protection of the Fifth Amendment--it could not be willful. The thrust of the opinion is that willfulness requires proof that the act was done with knowledge it was wrongful. The Court discussed a number of ways of expressing this type of specific intent, and among the terms mentioned were "bad purpose" and "evil motive." Id. at 394. See also Spies v. United States [43-1 USTC ¶9243], 317 U. S. 492 (1943).

However, neither bad purpose nor evil motive is an independent element of a willful failure to file under §7203. The term "evil motive" is merely a "convenient shorthand expression to distinguish liability based on conscious wrongdoing from liability based on mere carelessness or mistake." Boardman v. United States [70-1 USTC ¶9210], 419 F. 2d 110, 114 (1st Cir. 1969), cert. denied, 397 U. S. 991 (1970). Thus the term expresses, in a brief way, the more cumbersomely stated concept of specific intent in Murdock, a concept the instructions must ultimately convey. See United States v. Platt [70-2 USTC ¶9719], 435 F. 2d 789, 793-95 (2d Cir. 1970); United States v. Matosky [70-1 USTC ¶9210], 421 F. 2d 410, 412 (7th Cir.), cert. denied, 398 U. S. 904 (1970) ("the only bad purpose or bad motive necessary for the government to prove is a deliberate intention not to file returns which the defendant knew ought to be filed."); Hayes v. United States [69-1 USTC ¶9204], 407 F. 2d 189, 195 (5th Cir.), petition for cert. dismissed, 395 U. S. 972 (1969); cf. United States v. Smith [74-1 USTC ¶9120], 487 F. 2d 329 (9th Cir. 1973); Haskell v. United States [57-1 USTC ¶9553], 241 F. 2d 790, 794 (10th Cir.), cert. denied, 354 U. S. 921 (1957). This, we think was all that Murdock--and Bishop--meant by the use of that term.

A number of cases, in accord with this reasoning, have rejected claims that willfulness instructions must include the terms bad purpose or evil motive ⁵ In United States v. DiVarco [73-2 USTC ¶9607], 484 F. 2d 670 (7th Cir. 1973), cert. denied, -- U. S. -- (Feb. 19, 1974), for example, the jury instructions, in a prosecution for willfully subscribing to a false return under §7206(1), omitted reference to either bad purpose or evil motive. The instructions were upheld because they adequately conveyed the notion of mens rea without the need of the shorthand terms. Id. at 673-74. Similarly, in United States v. Malinowski [73-1 USTC ¶9199], 472 F. 2d 850 (3d Cir.), cert. denied, 411 U. S. 970 (1973), the defendant, who deliberately overstated the number of his dependents on his withholding form as a protest against the Viet Nam war, was prosecuted for a §7205 willful misstatement of information. He requested a bad purpose instruction so as to provide the jury with an opportunity to acquit based on his anti-war beliefs. A panel of the Third Circuit affirmed the trial court's rejection of the proffered instruction, reasoning that what was central to willfulness was that the act be done with "the specific intent to do something [the defendant] knew the law forbade." Id. at 855. `[B]ad purpose' and 'evil purpose' are not 'magic words' which must be included in a jury charge on willfulness." Id. See United States v. Douglass [73-1 USTC ¶9334], 476 F. 2d 260, 263-64 (5th Cir. 1973); cf. United States v. Simpson, 460 F. 2d 515, 518 (9th Cir. 1972); Boardman v. United States, 419 F. 2d at 114; United States v. Moylan, 417 F. 2d 1002, 1004 (4th Cir. 1969), cert. denied, 397 U. S. 910 (1970); United States v. Clearfield, 358 F. Supp. 564, 574-75 (E. D. Pa. 1973).

Here, too, the inclusion of the two words "evil motive" in the instructions was unnecessary. While the use of such terms is often helpful, all that is required are instructions which communicate the proper notion of specific intent in understandable terms. The instructions here were adequate to that purpose.

Evidence of Reporting Discrepancies

After being informed that he was under investigation, Hawk had returns prepared and filed by an accountant for the years in which he was delinquent. The accountant was given most, but not all, of Hawk's records and computed Hawk's gross income ⁶ on the basis of deposit slips for Hawk's commercial checking account plus an additional amount that Hawk estimated he received in cash and did not deposit. Subsequent investigation revealed his gross income to be substantially greater than had been reported, largely for two reasons: (1) because Hawk's estimate of cash received but not deposited was less than his books showed; and (2) because certain of his income was withdrawn from a different account, a trustee account, and was not reported--probably because the accountant was never given the records for this account. Evidence of these discrepancies was introduced at trial over the objection of Hawk's attorney. Hawk complains that since he was accused of a failure to file, not tax evasion, the evidence was irrelevant.

The evidence, though not very relevant, was material nonetheless on the issue of willfulness. See United States v. MacLeod [71-1 USTC ¶9174], 436 F. 2d 947, 950 (8th Cir.), cert. denied, 402 U. S. 907 (1971). First, it showed a pattern of increasing gross income not so clearly reflected in his initially-filed returns. That bore on his motive for failing to file. Second, his continued failure to fully disclose his income was relevant to show that the original failures to file may have been prompted by a desire to escape taxation. This, too, bore on willfulness. Cf. United States v. Magnus [66-2 USTC ¶9660], 365 F. 2d 1007, 1011 (2d Cir. 1966), cert. denied, 386 U. S. 909 (1967); Lumetta v. United States [66-2 USTC ¶9492], 362 F. 2d 644, 645-46 (8th Cir. 1966). Moreover, cautionary instructions emphasizing the limited relevance of this evidence were repeatedly given by the trial judge, thereby minimizing any prejudicial effect the evidence might have had. ⁷

Hawk's argument that he merely gave the records to an accountant and thus could have had no knowledge of the understatements is unpersuasive. He failed to adequately inform the accountant of or supply the necessary records relating to the understatements, and the jury could have inferred that this was intentional. We conclude the evidence was properly admitted.

Prosecutor's Comment

At one point during the trial, the prosecutor, in discussing an evidentiary point with the judge, asked the court to reserve its ruling "and strike it if it is not tied up, if the defendant goes on the stand." The comment was obviously inadvertent, and the judge immediately instructed the jury to disregard it. Even assuming it was a prejudicial comment on the accused's right to remain silent--which we doubt, see United States v. Altavilla, 419 F. 2d 815, 817 (9th Cir. 1969)--the judge's instruction fully cured it. See e.g., United States v. Dana [72-1 USTC ¶9227] 457 F. 2d 205, 209-10 (7th Cir. 1972); United States v. Haili, 443 F. 2d 1295, 1300 (9th Cir. 1971); Hayes v. United States, 407 F. 2d at 195.

Appellant's other contentions are without merit.

Affirmed.

^* The Honorable Leonard P. Moore, United States Senior Circuit Judge for the Second Circuit, sitting by designation.

¹ That section provides in pertinent part:

Any person required under this title to pay any estimated tax or tax, or required by this title or by regulations made under authority thereof to make a return . . ., keep any records, or supply any information, who willfully fails to pay such estimated tax or tax, make such return, keep such records, or supply such information, at the time or times required by law or regulations, shall, in addition to other penalties provided by law, be guilty of a misdemeanor. . . .

² The charge as relevant to willfulness was:

Now, we come to specific intent and willfulness. The specific intent of willfulness is an essential element of the crime of failing to make an income tax return. The term "willfully" used in the statute . . . means voluntary, purposeful, deliberate, and intentional as distinguished from accidental, inadvertent, or negligent. Mere negligence, even gross negligence, is not sufficient to constitute willfulness under this criminal law.

. . . The failure to make a timely return is willful if the defendant's failure to act was voluntary and purposeful and with the specific intent to fail to do what the law requires (sic) to be done; that is to say, with the bad purpose to disobey or disregard the law that requires him to disclose to the Government facts and (sic) material to the determination of his income tax liability. . . .

There is no necessity that the Government prove that the defendant had the intention to defraud it or to evade the payment of any taxes for the defendant's failure to file to be willful under this provision of law. That is, the intention to avoid the law or to pay the taxes constitutes the crime charged by each of these counts as long as it is willful and knowing as I have defined the term for you. On the other hand, the defendant's conduct is not willful if you find that he failed to file a return because of negligence, inadvertence, accident, or due to his good faith misunderstanding of the requirements of the law, if there was such misunderstanding.

³ United States v. Haseltine [70-1 USTC ¶9140], 419 F. 2d 579, 581 (9th Cir. 1969) (§§ 7201 and 7203); Martin v. United States [63-2 USTC ¶9502], 317 F. 2d 753 (9th Cir. 1963) (§7203); Abdul v. United States [58-1 USTC ¶9453], 254 F. 2d 292 (9th Cir. 1958), cert. denied, 364 U. S. 832 (1960) (§§ 7202 and 7203); cf. United States v. Fahey [69-2 USTC ¶9450], 411 F. 2d 1213 (9th Cir.), cert. denied, 396 U. S. 957 (1969) (§7203); Edwards v. United States [67-1 USTC ¶9356], 375 F. 2d 862 (9th Cir. 1967) (§§ 7201, 7203, and 7206(2)).

⁴ The opinion broadly disapproves of our decisions applying the two-level definition of willfulness, see 412 U. S. at 347, 348 n. 2, 351 & n. 3, and those decisions, as the opinion noted, have concerned criminal tax provisions other than those before the Bishop Court. See note 3 supra. Indeed, the Court's discussion centers on a rejection of the reasoning of Abdul v. United States , supra, which concerns §§ 7202 and 7203. See 412 U. S. at 351-56. Moreover, the Court read its earlier decision in Sansone v. United States, 380 U. S. 343 (1965), as "clearly implying" that "the word 'wilfully' possesses the same meaning in §§ 7201, 7203, and 7207" thereby "foreclosing" the argument that `willfully' was to be given one meaning in the tax felony statutes and another meaning in the tax misdemeanor statutes." 412 U. S. at 356. As the Court stated, "Congress used the word 'willfully' to describe a constant rather than a variable in the tax penalty formula." Id. at 359-60 (emphasis added).

⁵ A few cases, it is true, have quoted lower court instructions using, or themselves employed, both the "bad purpose" and "evil motive" language. See, e.g., United States v. Klee [74-1 USTC ¶9412], -- F. 2d -- (9th Cir., March 27, 1974); United States v. Palermo [58-2 USTC ¶9850], 259 F. 2d 872, 881 (3d Cir. 1958); Abdul v. United States, 254 F. 2d at 293-94. But none of these cases raised the question of whether the term "evil motive" must be used in the instruction. That "evil motive" is a shorthand expression in these cases is illustrated by the many other cases in which the language does not appear, see e.g., United States v. Gurtner [73-1 USTC ¶9228], 474 F. 2d 297, 299 (9th Cir. 1973); United States v. Lachmann [72-2 USTC ¶9766], 469 F. 2d 1043, 1044-45 (1st Cir. 1972), cert. denied, 411 U. S. 931 (1973); Martin v. United States, 317 F. 2d at 754.

⁶ Gross income is the only figure relevant since it is the measure of who must file. See 26 U. S. C. §6012.

⁷ We add a note of caution. Evidence of such limited relevance must be admitted with care. In some instances, the potential for prejudice as well as the dangers of consuming undue time and confusing the jury may be so great as to warrant its exclusion.