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7203: Willful Failure to File Return, Supply Information, or Pay Tax: Bill of Particulars: Amendment

 

[54-1 USTC ¶9430] United States of America , v. Isidore Wolrich, Defendant

In the United States District Court for the Southern District of New York, No. C. 138-193, May 25, 1954

Criminal prosecution: Motion to amend bill of particulars.--Defendant was indicted for willfully attempting to evade income tax by filing a false and fraudulent return in which he knowingly understated his income. (In a previous proceeding, 54-1 USTC ¶9276, 119 Fed. Supp. 538, defendant's motion for the return of certain papers was denied.) The Government, seeking to claim that certain commissions were not included in his gross income, moved to amend its original and supplementary bills of particulars. Motion was granted on the ground that the source and amount of the concealed income were only evidentiary of the allegation that defendant had received income not reported in his return.

J. Edward Lumbard, United States Attorney, United States Courthouse, New York 7, N. Y. (Thomas W. Hill, Jr., of counsel), for plaintiff. Corcoran & Kostelanetz, 52 Wall Street, New York, N. Y., Arthur Block, 30 Broad Street, New York, N. Y., Louis Bender, 160 Park Row, New York, N. Y., for defendant.

Memorandum

SUGARMAN, District Judge:

In a prosecution for attempted evasion of income tax, the Government moves to amend its original and supplemental bills of particulars.

The Government seeks by the proposed amendment to claim that the defendant failed to include an item of $22,769.53, income from commissions, in computing gross income for the year 1945.

In its original bill of particulars, the Government claimed that the defendant's gross income was comprised of unreported sales, including an "adjustment" thereto in an unspecified amount. On defendant's motion a supplemental bill was ordered to clarify the composition of this adjustment. Such a bill was furnished and it appeared therein that the Government claimed that one item of the adjustment was the above-mentioned amount of unreported commissions income.

The defendant moved to strike this from the supplemental bill and the motion was granted without prejudice to the instant motion to amend.

The indictment in pertinent part charges:

"On or about the 15th day of May, 1946, in the Southern District of New York, ISIDOR WOLRICH, the defendant, did wilfully and knowingly attempt to defeat and evade a large part of the income tax due and owing by him to the United States of America for the calendar year 1945, by filing and causing to be filed with the Collector of Internal Revenue for the Third Collection District of New York a false and fraudulent income tax return, wherein he stated that his net income for said calendar year was the sum of $202,589.74, and that the amount of tax due and owing thereon was the sum of $163,640.16, whereas, as he then and there well knew, his net income for the said calendar year was the sum of $602,263.92, upon which said net income he owed to the United States of America an income tax of $539,333.90. (Title 26, Section 145(b), United States Code)."

In opposition to the motion to amend, the defendant contends (and it is not disputed) that the alleged failure to report the item of $22,769.53, income from commissions, as taxable income was not known to the Government until some time after the indictment was returned. Therefore, he argues, it was not included in the accusation by the Grand Jury embodied in the indictment and the Government ought not to be allowed to prove the receipt of such income at the trial since this motion to amend is in effect an attempt to try the defendant for a crime not presented to the Grand Jury. ¹

The defendant's position is not well taken. He is charged with attempting to evade part of his income tax by filing a return known to be falsely and fraudulently made.

The substance of the indictment charges defendant with filing a return, false and fraudulent in that he knowingly understated his taxable income with intent thereby to evade a substantial part of his income tax. The filing of such a false return is the "attempt" charged by the Grand Jury, not, as defendant claims, unreported sales, unreported commissions, or any other of defendant's financial transactions standing alone. ²

The source and amount of the concealed income is only evidentiary of the allegation that defendant had received income not reported in his 1945 return.

Were defendant to prevail on the theory offered in opposition to the instant motion, the Government would be precluded from offering any evidence in support of the essential elements charged in an indictment of this type unless such evidence had been presented to the Grand Jury prior to the return of the indictment. Such is not the law.

The indictment is couched in broad terms. The Grand Jury did not limit its indictment by charging that defendant had unreported income ³ from any particular source. Therefore, no prejudice to defendant appearing to result, the motion to amend the Government's original and supplemental bills of particulars is granted. ⁴

Settle order.

¹ Const. Amendment V.

² Spies v. U. S. , 317 U. S. 492 [43-1 USTC ¶9243].

³ Battjes v. U. S. , 6 Cir., 172 Fed. (2d) 1 [49-1 USTC ¶9149].

⁴ F. R. Crim. P. 7(f); U. S. v. Rosenblum, 7 Cir., 176 Fed. (2d) 321 [49-1 USTC ¶9314].

 

 

[61-1 USTC ¶9354] United States of America v. Ian Woodner, Defendant

U. S. District Court, So. Dist. N. Y., C 153-225, C 156-333, 189 FSupp 355, 11/28/60

[1939 Code Sec. 145(b)--similar to 1954 Code Sec. 7201]

Criminal prosecution: Motion to amend bill of particulars.--The defendant was indicted for attempted evasion of income taxes. The Government's motion for permission to amend its original bill of particulars was granted. The amendment did not change the charges against the defendant but rather merely set out additional evidence which the Government would use to sustain the charges.

S. Hazard Gillespie, Jr., United States Attorney, United States Courthouse, Foley Square, New York 7, N. Y. (Sherman J. Saxl, Assistant United States Attorney, United States Courthouse, Foley Square, New York 7, N. Y., of counsel), for plaintiff. Louis Bender, 170 Broadway, New York 38, N. Y., for defendant.

Opinion

SUGARMAN, District Judge:

The United States of America moves "for an order under Rule 7(f) of the Federal Rules of Criminal Procedure, permitting the plaintiff [sic] to amend its original bills of particulars herein".

In support of its motion, the government shows inter alia, that the defendant has been indicted for attempted evasion of income taxes due and owing for the years 1950-1953 inclusive.

On July 17, 1957, the Grand Jury filed an indictment charging that:

"1. On or about the 18th day of July, 1951, in the Southern District of New York, IAN WOODER, the defendant, did wilfully and knowingly attempt to defeat and evade a large part of the income tax due and owing by him to the United States of America for the calendar year 1950 by filing and causing to be filed with the Collector of Internal Revenue for the Third Internal Revenue Collection District of New York, in the Borough of Manhattan, City of New York, a false and fraudulent income tax return, wherein he stated that his net loss for said calendar year was the sum of $14,775.58 and that there was no tax due and owing thereon, whereas in truth and in fact, as he then and there well knew, his net income for the said calendar year was the sum of $46,117.60, upon which said net income he owed to the United States of America an income tax of $21,453.33. (Section 145(b), Internal Revenue Code of 1939; Title 26, U. S. Code, Section 145(b))."

On September 12, 1958, the Grand Jury filed another indictment charging in the first court that:

"On or about the 15th day of September, 1952, in the Southern District of New York, IAN WOODNER, the defendant, did wilfully and knowingly attempt to evade and defeat a large part of the income tax due and owing by him to the United States of America for the calendar year 1951 by filing and causing to be filed with the Director of Internal Revenue, Upper Manhattan District, New York, New York, a false and fraudulent income tax return, wherein it was stated that he had incurred a net loss for the said calendar year in the sum of $23,314.65 and that there was no tax due and owing thereon, whereas in truth and in fact, as he then and there well knew, his net income for the said calendar year was the sum of $31,491.30, upon which said net income there was owing to the United States of America an income tax of $13,370.78. [Section 145(b), Internal Revenue Code of 1939; Title 26, United States Code, Section 145(b)]."

On July 11, 1958 and on December 5, 1958, the government filed bills of particulars relating to the charges contained in the indictments, in which it itemized unreported salary, capital gains, interest payments, rental income and constructive dividends allegedly received by defendant.

The bill of particulars addressed to indictment C 153-225 itemizes the unreported gross income as follows:

"1. For the calendar year 1950, the defendant had a gross income of $77,387.81, deductions of $31,270.21 and exemptions of $600.

2. The gross income of the defendant for the calendar year 1950 was received from the following sources:

Salary

Jonathan Woodner Co. .................         $30,000.00

Constructive Dividends

Jonathan Woodner Co.

Payment to Detectives ................          48,257.74

Refund of Filing Fee .................           9,720.00

Fenwood Corporation

Rental Income ........................           2,915.44

Rental Income

Dwellings--Washington, D. C. and

Darby
, 
Pa.

 ...........................             666.07

Loss on Partnership

Pinebrook Woods Co. (14,171.44)"

resulting in the balance of $46,117.60 alleged in the indictment.

The bill of particulars addressed to the first count of indictment C 156-333 itemizes the unreported gross income as follows:

"1. For the calendar year 1951, the defendant had an adjusted gross income of $39,811.30, deductions of $8,320 and exemptions of $600.

2. The adjusted gross income of the defendant for the calendar year 1951 was made up of the following items:

Salary

Jonathan Woodner Co. ...................           $30,000.00

Sale

 of Capital Assets .................             5,000.00

Constructive Dividends

Jonathan Woodner Co.

Payments to Detectives .................            47,065.50

Income Arising From Interest Payments

of Chanute Gardens Corp.

and Chanute Apartments Corp. ...........             7,740.45

Net Loss from Land and Dwellings

Washington, D. C., Upper

Darby
, 
Pa.
 and 

Cincinnati
, 
Ohio

 ........         ($49,994.65)

Adjusted Gross Income ..................         $39,811.30"

resulting in the balance of $31,491.30 alleged in that count of the indictment.

The government now seeks to increase the unreported income by including additional sources and amounts by amendment of its bills of particulars to sums 70% and 60% greater than the $46,117.60 and $31,491.30 respectively.

The proposed amended bills would put the defendant on notice that the government was prepared to prove that the defendant had received constructive dividends during the years in question which had not been mentioned in the prior bills.

The defendant opposes the motion, essentially on the ground that by its bills of particulars and the proposed amended bills, the government seeks in effect to amend the indictments as found by the Grand Jury.

Preliminarily, it is noted that the instant motion is not specifically sanctioned by the rules and the government could have filed the amended bill ad libitum, subject to defendant's motion to strike. F. R. Crim. P. 7(f) provides in pertinent part:

"A bill of particulars may be amended at any time subject to such conditions as justice requires."

However, the motion will be deemed one which properly puts in issue the government's right to go to trial on the amended bill.

The defendant's position is not well taken.

As this court has held: ¹

"The substance of the indictment charges defendant with filing a return, false and fraudulent in that he knowingly understated his taxable income with intent thereby to evade a substantial part of his income tax. The filing of such a false return is the 'attempt' charged by the Grand Jury, not, as defendant claims, unreported sales, unreported commissions, or any other of defendant's financial transactions standing alone."

There is some authority for the proposition that if the indictment itself particularizes the source of unreported income, evidence of other unreported income may be received only to prove an intent to evade but not to prove the alleged failure to report. ²

The instant indictments do not identify the source of unreported income nor do they state how the net income and tax were computed.

Accordingly, the court will not restrict the proof as defendant seeks to have it do.

Defendant's reliance on Stirone v. United States, 361 U. S. 212, is misplaced. In Stirone, the defendant was convicted of a crime different from the crime for which he was indicted. This conviction, of course, could not stand.

Stirone would be analogous here, if the government sought to convict the defendant on proof that he attempted to evade his income taxes for years other than those set forth in the indictment. Such is not the case.

The amendment of the instant bills of particulars does not change the charges made by the Grand Jury; it simply delineates the proof which the government will use to sustain those charges.

The motion is granted. It is so ordered.

¹ U. S. v. Isidore Wolrich, C 138-193, S. D. N. Y., May 25, 1954, Opinion #21138 [54-1 USTC ¶9430].

² See Battjes v. U. S. [49-1 USTC ¶9149], 172 F. 2d 1, 4 (6th Cir. 1949).