7203 - Bank Records &  Net Worth Increases 2 p3

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Articles by Alvin Brown
Tax Preparation
Offer In Compromise
State Offers in Compromise
Levy
IRS Tax Liens
IRS Tax Liens - continued
IRS Tax Liens - continued 2
Levy - continued
IRS Audits
Audit Techniques Guide
Congressional Contacts
Criminal Investigation
D.O.J Criminal Tax Manual
Tax Litigation
Penalty
Installment Agreements
Statute of Limitations
Frivolous Tax Argument
Interest Abatement
IRS Misconduct
IRS Abuses
Tax Fraud
Fraud Statutes
Bankruptcy
Tax Reform Legislation
Tax Shelters
Tax Court
Trust Fund Penalty
Legislation
Innocent Spouse Relief
Important Links


Fraud Statutes 

Additional Information:

 

7203 - Accountant-Client Privilege
7203 - Accrual Basis
7203 - Admissibility 1 p1
7203 - Admissibility 1 p2
7203 - Admissibility 1 p3
7203 - Admissibility 1 p4
7203 - Admissibility 1 p5
7203 - Admissibility 1 p6
7203 - Admissibility 2 p1
7203 - Admissibility 2 p2
7203 - Admissibility 2 p3
7203 - Admissibility 2 p4
7203 - Admissibility 2 p5
7203 - Admissibility 3 p1
7203 - Admissibility 3 p2
7203 - Admissibility 3 p3
7203 - Admissibility 3 p4
7203 - Admissibility 3 p5
7203 - Admissibility 4 p1
7203 - Admissibility 4 p2
7203 - Admissions p1
7203 - Admissions p2
7203 - Advice of Counsel p1
7203 - Advice of Counsel p2
7203 - Amendment
7203 - Appeal Right to
7203 - Appeal Timeliness
7203 - Appeal Waiver
7203 - Appeal without merit
7203 - Arrest
7203 - Fraudulent Return
7203 - Defeat & Evade Income Taxes p1
7203 - Defeat & Evade Income Taxes p2
7203 - Defeat & Evade Income Taxes p3
7203 - Defeat &  Evade Income Taxes p4
7203 - Attorney Disqualified
7203 - Attorney's Testimony p1
7203 - Attorney's Testimony p2
7203 - Attorney's Testimony p3
7203 - Attorney's Testimony p4
7203 - Bail
7203 - Bank Records &  Net Worth Increases 1 p1
7203 - Bank Records &  Net Worth Increases 1 p2
7203 - Bank Records &  Net Worth Increases 1 p3
7203 - Bank Records &  Net Worth Increases 1 p4
7203 - Bank Records &  Net Worth Increases 1 p5
7203 - Bank Records &  Net Worth Increases 1 p6
7203 - Bank Records &  Net Worth Increases 2 p1
7203 - Bank Records &  Net Worth Increases 2 p2
7203 - Bank Records &  Net Worth Increases 2 p3
7203 - Bank Records &  Net Worth Increases 2 p4
7203 - Bank Records &  Net Worth Increases 2 p5
7203 - Bank Records &  Net Worth Increases 3 p1
7203 - Bank Records &  Net Worth Increases 3 p2
7203 - Bank Records &  Net Worth Increases 3 p3
7203 - Bank Records &  Net Worth Increases 3 p4
7203 - Bank Records &  Net Worth Increases 3 p5
7203 - Bank Records &  Net Worth Increases 4 p1
7203 - Bank Records &  Net Worth Increases 4 p2
7203 - Bank Records &  Net Worth Increases 4 p3
7203 - Bank Records &  Net Worth Increases 4 p4
7203 - Bank Records &  Net Worth Increases 4 p5
7203 - Bank Records &  Net Worth Increases 5 p1
7203 - Bank Records & Net Worth Increases 5 p2
7203 - Bank Records & Net Worth Increases 5 p3
7203 - Bank Records & Net Worth Increases 5 p4
7203 - Bank Records & Net Worth Increases 5 p5
7203 - Base Sentence p1
7203 - Base Sentence p2
7203 - Base Sentence p3
7203 - Base Sentence p4
I7203 - Bill of Particluar Conspiracy
7203 - Bill of Particulars
7203 - Books and Records
7203 - Burden of going forward with evidence
7203 - Burden of Proof
7203 - Carryback Offset
7203 - Changing Plea
7203 - Character witness p1
7203 - Character witness p2
7203 - Circumstanial Evidence p1
7203 - Circumstanial Evidence p2
7203 - Circumstanial Evidence p3
7203 - Circumstanial Evidence p4
7203 - Collateral Estoppel
7203 - Collection
7203 - Commitment by U.S. Commissioner
7203 - Communication to Jury
7203 - Compromise
7203 - Consolidation
7203 - Conspiracy p1
7203 - Conspiracy p2
7203 - Conspiracy 1 p1
7203 - Conspiracy 1 p2
7203 - Conspiracy 1 p3
7203 - Conspiracy 1 p4
7203 - Conspiracy 1 p5
7203 - Conspiracy 1 p6
7203 - Conspiracy 1 p7
7203 - Conspiracy 1 p8
7203 - Conspiracy 2 p1
7203 - Conspiracy 2 p2
7203 - Conspiracy 2 p3
7203 - Constitutional Grounds 1 p1
7203 - Constitutional Grounds 1 p2
7203 - Constitutional Grounds 1 p3
7203 - Constitutional Grounds 1 p4
7203 - Constitutional Grounds 1 p5
7203 - Constitutional Grounds 2 p1
7203 - Constitutional Grounds 2 p2
7203 - Constitutional Grounds 2 p3
7203 - Constitutional Grounds 2 p4
7203 - Constitutional Grounds 2 p5
7203 - Constitutional Grounds 3 p1
7203 - Constitutional Grounds 3 p2
7203 - Constitutional Grounds 3 p3
7203 - Constitutional Grounds 3 p4
7203 - Constitutional Grounds 3 p5
7203 - Constitutional Grounds 4 p1
7203 - Constitutional Grounds 4 p2
7203 - Constitutional Grounds 4 p3
7203 - Constitutional Grounds 4 p4
7203 - Constitutional Grounds 5 p1
7203 - Constitutional Grounds 5 p2
7203 - Constitutional Grounds 5 p3
7203 - Constitutional Grounds 5 p4
7203 - Constitutional Grounds 5 p5
7203 - Constitutional Grounds 6
7203 - Contempt Finding Ag. Defendant's Counsel
7203 - Continuance p1
7203 - Continuance p2
7203 - Continuance p3
7203 - Conviction Required
7203 - Copies of Records p1
7203 - Copies of Records p2
7203 - Corporation Officer
7203 - Costs
7203 - Credit for Time Served
7203 - Criminal Contempt
7203 - Cross-Examination PART 1 p1
7203 - Cross-Examination PART 1 p2
7203 - Cross-Examination PART 1 p3
7203 - Cross-Examination PART 1 p4
7203 - Cross-Examination PART 1 p5
7203 - Cross-Examination PART 2
7203 - DefendantHaving Facts Available p1
7203 - DefendantHaving Facts Available p2
7203 - DefendantHaving Facts Available p3
7203 - Degree of Proof p1
7203 - Degree of Proof p2
7203 - Depositions
7203 - Different Statute Cited
7203 - Discovery, Scope Of
7203 - Documentary Evidence in Jury Room
7203 - Double Jeopardy 1 p1
7203 - Double Jeopardy 1 p2
7203 - Double Jeopardy 1 p3
7203 - Double Jeopardy 1 p4
7203 - Double Jeopardy 1 p5
7203 - Double Jeopardy 2 p1
7203 - Double Jeopardy 2 p2
7203 - Double Jeopardy 2 p3
7203 - Double Jeopardy 2 p4
7203 - Enhanced Sentence Sophisticated Means p1
7203 - Enhanced Sentence Sophisticated Means p2
7203 - Enhanced Sentence p1
7203 - Enhanced Sentence p2
7203 - Entrapment
7203 - Erroneous calculation of tax
7203 - Exclusion of Oral Testimony
7203 - Exercise Privilege-Exclusion from Courtroom
7203 - Expert Witness p1
7203 - Expert Witness p2
7203 - Expert Witness p3
7203 - Expert Witness p4
7203 - Extenuating Circumstances
7203 - Fact Finding p1
7203 - Fact Finding p2
7203 - Fact Finding p3
7203 - Fact Finding p4
7203 - Fact Finding p5
7203 - Failure of IRS to File Return
7203 - Failure to Assess Tax
7203 - Failure to Prosecute p1
7203 - Failure to Prosecute p2
7203 - Failure to Prosecute p3
7203 - Failure to Prosecute p4
7203 - Failure to Prosecute p5
7203 - Failure to Report Income 1 p1
7203 - Failure to Report Income 1 p2
7203 - Failure to Report Income 1 p3
7203 - Failure to Report Income 1 p4
7203 - Failure to Report Income 1 p5
7203 - Failure to Report Income 1 p6
7203 - Failure to Report Income 2 p1
7203 - Failure to Report Income 2 p2
7203 - Failure to Supply Information
7203 - False Return
7203 - Fictitious names
7203 - Fraud Case Procedures p1
7203 - Fraud Case Procedures p2
7203 - Fraud Case Procedures p3
7203 - Fraud Case Procedures p4
7203 - General Exception
7203 - Good Faith p1
7203 - Good Faith p2
7203 - Good Faith p3
7203 - Good Faith p4
7203 - Government Agent Prosecuting Claim
7203 - Grand Jury 1 p1
7203 - Grand Jury 1 p2
7203 - Grand Jury 1 p3
7203 - Grand Jury 1 p4
7203 - Grand Jury 1 p5
7203 - Grand Jury 2 p1
7203 - Grand Jury 2 p2
7203 - Hearsay Evidence p1
7203 - Hearsay Evidence p2
7203 - Hearsay Evidence p3
7203 - Hearsay Evidence p4
7203 - Hearsay Evidence p5
7203 - Hostility of the Court p1
7203 - Hostility of the Court p2
7203 - Hostility of the Court p3
7203 - Hypnosis
7203 - Identification
7203 - Ignorance of Law
7203 - Immunity p1
7203 - Immunity p2
7203 - Immunity p3
7203 - Impeachment p1
7203 - Impeachment p2
7203 - Improper Comment PART 1 p1
7203 - Improper Comment PART 1 p2
7203 - Improper Comment PART 1 p3
7203 - Improper Comment PART 1 p4
7203 - Improper Comment PART 1 p5
7203 - Improper Comment PART 2 p1
7203 - Improper Comment PART 2 p2
7203 - Improper Comment PART 2 p3
7203 - Improper Comment PART 2 p4
7203 - Improper Comment PART 2 p5
7203 - Improper Comment PART 3
7203 - Improper Question
7203 - Incrimination 1 p1
7203 - Incrimination 1 p2
7203 - Incrimination 1 p3
7203 - Incrimination 1 p4
7203 - Incrimination 1 p5
7203 - Incrimination 2 p1
7203 - Incrimination 2 p2
7203 - Incrimination 2 p3
7203 - Incrimination 2 p4
7203 - Incrimination 2 p5
7203 - Incriminaton Before Grand Jury p1
7203 - Incriminaton Before Grand Jury p2
7203 - Instructions to Jury 1 p1
7203 - Instructions to Jury 1 p2
7203 - Instructions to Jury 1 p3
7203 - Instructions to Jury 1 p4
7203 - Instructions to Jury 1 p5
7203 - Instructions to Jury 2 p1
7203 - Instructions to Jury 2 p2
7203 - Instructions to Jury 2 p3
7203 - Instructions to Jury 2 p4
7203 - Instructions to Jury 2 p5
7203 - Instructions to Jury 3 p1
7203 - Instructions to Jury 3 p2
7203 - Instructions to Jury 3 p3
7203 - Instructions to Jury 3 p4
7203 - Instructions to Jury 3 p5
7203 - Instructions to Jury 4 p1
7203 - Instructions to Jury 4 p2
7203 - Instructions to Jury 4 p3
7203 - Instructions to Jury 4 p4
7203 - Instructions to Jury 4 p5
7203 - Instructions to Jury 5 p1
7203 - Instructions to Jury 5 p2
7203 - Instructions to Jury 5 p3
7203 - Instructions to Jury 5 p4
7203 - Instructions to Jury 5 p5
7203 - Instructions to Jury 6 p1
7203 - Instructions to Jury 6 p2
7203 - Instructions to Jury 6 p3
7203 - Instructions to Jury 6 p4
7203 - Instructions to Jury 6 p5
7203 - Instructions to Jury 7 p1
7203 - Instructions to Jury 7 p2
7203 - Instructions to Jury 7 p3
7203 - Instructions to Jury 7 p4
7203 - Instructions to Jury 7 p5
7205 Convictions p1
7205 Convictions p2
7205 Convictions p3
7205 Convictions p4
7205 Convictions p5
7205 Double Jeopardy
7205 Exemption Certificates
7205 Hostility of the Court
7205 Indictment
7205 Information
7205 Intent to Deceive Lacking
7205 Right to Counsel
7205 Trial, Timeliness
7205 Variance
7205 Venue
7205 Willfulness
7206 False Returns 1 p1
7206 False Returns 1 p2
7206 False Returns 1 p3
7206 False Returns 1 p4
7206 False Returns 1 p5
7206 False Returns 2 p1
7206 False Returns 2 p2
7206 False Returns 2 p3
7206 False Returns 2 p4
7206 False Returns 2 p5
7206 False Returns 3 p1
7206 False Returns 3 p2
7206 False Returns 3 p3
7206 False Returns 3 p4
7206 Basis for Allegation of Fraud
7206 Concealment of Assets p1
7206 Concealment of Assets p2
7206 Conspiracy 1 p1
7206 Conspiracy 1 p2
7206 Conspiracy 1 p3
7206 Conspiracy 1 p4
7206 Conspiracy 2 p1
7206 Conspiracy 2 p2
7206 Constitutionality p1
7206 Constitutionality p2
7206 Constitutionality p3
7206 Costs
7206 Disclosure of Returns
7206 Estoppel p1
7206 Estoppel p2
7206 Estoppel p3
7206 Evidence 1 p1
7206 Evidence 1 p2
7206 Evidence 1 p3
7206 Evidence 1 p4
7206 Evidence 1 p5
7206 Evidence 2 p1
7206 Evidence 2 p2
7206 Evidence 2 p3
7206 Evidence 2 p4
7206 Evidence 2 p5
7206 Evidence 3 p1
7206 Evidence 3 p2
7206 Evidence 3 p3
7206 Evidence 3 p4
7206 Evidence 3 p5
7206 Evidence 4 p1
7206 Evidence 4 p2
7206 Evidence 4 p3
7206 False Claims Against U.S.
7206 False Documents p1
7206 False Documents p2
7206 False Statements in Return 1 p1
7206 False Statements in Return 1 p2
7206 False Statements in Return 1 p3
7206 False Statements in Return 1 p4
7206 False Statements in Return 1 p5
7206 False Statements in Return 2 p1
7206 False Statements in Return 2 p2
7206 False Statements in Return 2 p3
7206 False Statements in Return 2 p4
7206 False Statements in Return 3 p1
7206 False Statements in Return 3 p2
7206 False Statements in Return 3 p3
7206 False Statements in Return 3 p4
7206 False Statements in Return 3 p5
7206 False Statements in Return 4 p1
7206 False Statements in Return 4 p2
7206 False Statements in Return 4 p3
7206 False Statements in Return 4 p4
7206 False Statements in Return 4 p5
7206 False Statements in Return 5 p1
7206 False Statements in Return 5 p2
7206 False Statements in Return 5 p3
7206 False Statements in Return 5 p4
7206 False Statements to IRS Agents p1
7206 False Statements to IRS Agents p2
7206 False Statements to IRS Agents p3
7206 Forgery
7206 Grand Jury
7206 Guilty Plea p1
7206 Guilty Plea p2
7206 Immunity
7206 Indictment 1 p1
7206 Indictment 1 p2
7206 Indictment 1 p3
7206 Indictment 1 p4
7206 Indictment 1 p5
7206 Indictment 2 p1
7206 Indictment 2 p2
7206 Instructions to Jury 1 p1
7206 Instructions to Jury 1 p2
7206 Instructions to Jury 1 p3
7206 Instructions to Jury 1 p4
7206 Instructions to Jury 1 p5
7206 Instructions to Jury 2 p1
7206 Instructions to Jury 2 p2
7206 Instructions to Jury 2 p3
7206 Instructions to Jury 2 p4
7206 Instructions to Jury 2 p5
7206 Instructions to Jury 3 p1
7206 Instructions to Jury 3 p2
7206 Instructions to Jury 3 p3
7206 Instructions to Jury 3 p4
7206 Instructions to Jury 3 p5
7206 Jury Verdict Disregarded
7206 Jury p1
7206 Jury p2
7206 Jury p3
7206 Lesser Included Offense p1
7206 Lesser Included Offense p2
7206 Motion For Continuance
7206 Motion to Sever
7206 Motion to Transfer
7206 Motion to Vacate Sentence
7206 Net Worth Statement
7206 Offer in Compromise
7206 Perjury
7206 False or Fraudulent Returns p1
7206 False or Fraudulent Returns p2
7206 False or Fraudulent Returns p3
7206 False or Fraudulent Returns p4
7206 False or Fraudulent Returns p5
7206 Prior Convictions
7206 Prior Law
7206 Probation
7206 Prosecutor's Comment p1
7206 Prosecutor's Comment p2
7206 Restitution
7206 Right to Counsel p1
7206 Right to Counsel p2
7206 Sentence p1
7206 Sentence p2
7206 Sentence p3
7206 Sentence p4
7206 Sentencing Guidelines 1 p1
7206 Sentencing Guidelines 1 p2
7206 Sentencing Guidelines 1 p3
7206 Sentencing Guidelines 1 p4
7206 Sentencing Guidelines 1 p5
7206 Sentencing Guidelines 2 p1
7206 Sentencing Guidelines 2 p2
7206 Sentencing Guidelines 2 p3
7206 Statute of Limitations p1
7206 Statute of Limitations p2
7206 Venue
7206 Willfulness Defined p1
7206 Willfulness Defined p2
7206 Willfulness Defined p3
7206 Willfulness Defined p4
7207 Conviction
7207 Defenses
7207 Motion to Dismiss
7207 Sentencing
7207 Willfully Defined
7210 Willful Failure to Obey Summons
7212 Assault
7212 Bribery
7212 Constiutionality
7212 Indictment
7212 Interference p1
7212 Interference p2
7212 Interference p3
7212 Interference p4
7212 Jury Instructions
7212 Rescue of Seized, Levied Property p1
7212 Rescue of Seized, Levied Property p2
7212 Sentence p1
7212 Sentence p2
7212 Statute of Limitations
7212 Suppresion of Evidence
7215 Constitutionality
7215 Conviction
7215 Corporation
7215 Defenses
7215 Evidence
7215 Intent
7215 Speedy Trial
7216 Consent
7216 Preparer Defined
7216 Scope of Statute
7217 IRS Employees

 

Bank Records and Net Worth Increases 2 Page3

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We have carefully read that transcript. At no time did DeLucia make any statement, sworn or otherwise. Though there are several references to a $300,000 cache, which the Government claims is non-existent, such references can not be considered averments. Actually this meeting amounted to little more than verbal fencing between DeLucia's attorneys and the Internal Revenue Agents. It is highly improbable that a layman such as DeLucia would understand half of what transpired. We quote the following relevant portion from the transcript which illustrates the inefficacy of the conference:

"Mr. Smith: I don't want to be in the position where you gentlemen bring this witness in and you are going to sit here and testify for him.

"Mr. Stewart: He is not bound by what we say here. That goes both ways. Mr. DeLucia is not bound by what you gentlemen say here either. We are not testifying for him. We are trying to straighten matters out and arrive at some understanding in this conference."

Thus there is a total failure to prove that DeLucia made or caused to be made any false statement on September 1, 19 54 as alleged in Counts I and II of the indictment.

[Hearsay]

The second alleged false statement was supposedly made when Bulger, together with Bernstein, DeLucia's tax attorney, appeared before Revenue Agent King on November 19, 19 54 and testified that he had counted $300,010 in the possession of DeLucia shortly prior to the prosecution years. DeLucia was not present when Bulger so testified. DeLucia contends that in the absence of competent evidence that he procured, knew of, or ratified Bulger's testimony it can not be attributed to him for the purpose of sustaining Counts I and II.

The Government in order to establish a connection between Bulger's testimony and DeLucia's intent to defraud relies on two points. The first is that at the Grand Jury hearing on DeLucia Bulger testified that he had given the testimony before King at the request of DeLucia. DeLucia was not present at this hearing. A transcript of this was read into evidence in the trial below. DeLucia's counsel objected to the admission of this evidence in that it was not competent as to DeLucia. With this we agree. This evidence was perfectly proper as to Bulger under Count IV but as to DeLucia under Counts I and II it was nothing more than hearsay.

Therefore, ignoring all that took place at the Grand Jury hearing we turn to the Government's second point. Here it is argued that inasmuch as Bernstein had Power of Attorney to do all things in relation to DeLucia's tax matters that DeLucia could himself do when Bernstein brought Bulger before Agent King it had the same legal import as if DeLucia himself had done so. This argument fails in several respects. There is no showing that Bernstein was aware that Bulger would tell a false story, as we assume he did. Hence Bernstein was not culpable in any manner and there is nothing of an illegal nature that we may import to DeLucia.

Secondly while it is probable DeLucia would have known Bulger's story to be false there is absolutely no competent evidence showing that DeLucia knew Bulger was to testify or had testified before Agent King. While it is true that Bernstein had been DeLucia's tax attorney for a number of years this does not prove that DeLucia was informed of all that Bernstein did in relation to the former's tax matters. As to whether DeLucia told Bulger what to say and whether he intended that the story should be related to Agent King or at any other time is, from the competent evidence in the record, mere speculation.

[Attorney's Act as Act of Client]

The Government cites several cases to sustain its argument that the action of an attorney may be chargeable to the client. However, in the first case cited, Banks v. United States, 8 Cir., 1953, 204 Fed. (2d) 666 [53-1 USTC ¶9402], the attorney there did nothing more than relay to the Government agents written answers furnished by his client to specific questions tendered by the agents.

In the second case, United States v. Bender, 7 Cir., 1955, 218 Fed. (2d) 869 [55-1 USTC ¶9142], this court merely held that where an attorney submitted an auditor's work sheet to explain discrepancies in his client's tax return, the Government had not obtained the work sheet improperly and it could be admitted in evidence.

In Gariepy v. United States , 6 Cir., 1955, 220 Fed. (2d) 252 [55-1 USTC ¶9267], the defendant at the trial identified the income tax return, supposedly submitted by others, as his own. In addition the court charged the jury that it could not find the defendant guilty unless it found beyond a reasonable doubt that he had knowledge of the falsity of the returns filed.

The defendant in the case of United States v. Albanese, 2 Cir., 1955, 224 Fed. (2d) 879 [55-1 USTC ¶9494], had admitted that the returns submitted were his and that he had given permission to others to sign them for him.

Therefore, in three out of the four cases there was substantial proof, through admissions, or otherwise, that defendant was aware of the relevant act committed by others in his name. In the Bender case, while it was not directly shown that the defendant knew his attorney was submitting the auditor's work sheet, the submission thereof did not constitute the gravamen of the offense complained of, as it does here.

This Court is not now holding that circumstantial evidence could not supply the connection between Bulger's testimony and DeLucia's intent. Such undoubtedly could be done, Canton v. United States, 8 Cir., 1955, 226 Fed. (2d) 313 [55-2 USTC ¶9705]. What we do say is that where, as here, an attorney acting in good faith offers a witness who gives false testimony before Internal Revenue agents and there is no showing, circumstantial or otherwise, that the client knew that such testimony was given, the attorney's act can not be imputed to the client to constitute willful fraud.

We, therefore, hold that there was a total failure to prove a necessary element of the offense charged in both Count I and Count II; that the evidence is clearly insufficient to support the verdict of guilty as to those two counts; and the District Court erred in denying DeLucia's motion for judgment of acquittal on Counts I and II.

[Statute of Limitations]

DeLucia next contends that the offense charged in Count III was barred by the six year statute of limitations. The indictment was returned and filed on March 4, 19 57 charging in Count III that DeLucia had filed a false and fraudulent return on or about March 5, 19 51. Government's Exhibit No. 22 is a photostatic copy of DeLucia's 1950 return. There is on the face of the return a stamp bearing the legend: "Received Mar. 5, 19 51 Coll. Int. Rev. 1st Dist. Ill. No. 8."

Moreover, when counsel for the Government offered Government's Exhibit No. 22 in evidence pursuant to agreement and stipulation of the parties it was stated to the jury and for the record that it was "filed with the Collector of Internal Revenue in the First District of Illinois on March 5, 19 51." DeLucia first raised the question as to whether the date on the stamp was correct on his motion for a new trial. He offered no evidence to prove the date was not affixed when the return was received by the Internal Revenue Department. His objection now is not well taken.

[Refusal to Furnish Data]

DeLucia also objects to the refusal of the trial court to direct the submission to him of certain memoranda in the possession of the Government. The Court reviewed the memoranda in camera and correctly decided only one had any relation to the testimony of Agent Smith, the author of the memoranda. This one was turned over to the defendants. It is now contended that such refusal was in violation of the mandate laid down in Jencks v. United States, 1957, 353 U. S. 657.

The District Court was, however, following the provisions of 18 U. S. C. A. §3500 and as was said in United States v. Spangelet, 2 Cir., 1958, -- Fed. (2d) --:

"However, the defendant argues that the mandate in the Jencks case is a constitutional edict and that Sec. 3500, if it narrows the holding of the Jencks decision in any regard, is unconstitutional. We cannot agree. As we read the Jencks case, its rule is an exercise by the Supreme Court of its supervisory power over the ' admin istration of criminal justice in the federal courts'. See McNabb v. United States , 318 U. S. 332, 340-42. We find no indication in Jencks that the standards it set forth were constitutionally required. It follows that once Congress has entered the field its determination of proper federal criminal procedure is controlling. We conclude that Sec. 3500 in that it fails to apply the Jencks procedure * * * is not unconstitutional."

We agree with the Second Circuit and hold that DeLucia's contention that 18 U. S. C. A. §3500 is unconstitutional is without merit.

As DeLucia's complaint concerning instructions relates solely to Counts I and II of the indictment what we have heretofore held dispenses with necessity for any comment thereon.

[Net Worth Method]

DeLucia also contends that where he himself kept a set of books and records the District Court erred in permitting use of the net worth method of proof. This would mean that simply because taxpayer has kept a set of books, the veracity of which is in question, the Government is estopped from going beyond those books to prove their falsity or inaccuracy. This is absurd. Holland v. United States, 1954, 348 U. S. 121, 131-132 [54-2 USTC ¶9714].

DeLucia's main thrust is delivered at the Government's evidence sustaining the net worth method of proof. He claims that the Government not only changed its position from time to time but in failing to prove his net worth at any particular date it left it to the jury to speculate and guess as to his guilt. With this we can not agree.

The Government undertook to prove what assets defendant had on hand at the beginning of 1948 by means of showing his entire preceding financial history. Much of this evidence was admitted by stipulation. The first step was to show what income DeLucia had received from all sources from 1920 to December 31, 19 47. The Government then proceeded to introduce evidence of all known expenditures during this same period.

The Government also checked the income tax filing record of DeLucia's wife, Nancy, under both her maiden and married names for all prior years. A check was made of Internal Revenue Gift and Estate tax records, probate records, bank accounts, brokerage houses and insurance company records. As a result of this investigation the Government contended that DeLucia could not have had more than $48,697.01 at the beginning of 1948.

The cash on hand at that date was the central issue in the case, the defense position being that there was at least $300,000 on hand and the Government's position that there was no more than $48,697.01. The jury resolved the issue against DeLucia and we can not say that in doing so the verdict is not adequately supported by the evidence. In Holland v. United States, 1954, 348 U. S. 121, 133-134 [54-2 USTC ¶9714], the Court said:

"The Government also negatived the possibility of petitioners' accumulating such a sum by checking Mr. Holland's income tax returns as far back as 1913, showing that the income declared in previous years was insufficient to enable defendants to save any appreciable amount of money. The jury resolved this question of the existence of a cache of cash against the Hollands , and we believe the verdict was fully supported."

With this as a starting point the Government went on to show that DeLucia had made large expenditures that far exceeded any reported income.

It was stipulated at trial that during the years 1948, 1949 and 1950 and until March 1954 DeLucia was on parole as a result of a previous conviction. Parole reports filed by him during the prosecution years were admitted into evidence by stipulation. These reports show personal and farm expenditures in the amounts of $217,107.37 for 1948; $120,933.14 for 1949 and $118,770.76 for 1950. These amounts are in substantial agreement with the expenditures shown on DeLucia's books also in evidence. The defendant's income tax returns for the same years showed no net income and, in fact, reported losses as follows: 1948, --18,944.71; 1949, --2,282.95; 1950, --9,838.82.

In addition to the proof of expenditures exceeding the reported income the Government also shows a possible likely source of this unreported income.

During the period 1944 to March 1954 DeLucia was either imprisoned or on parole and his returns for that period disclosed no income that can not be readily accounted for upon the face of the returns. However, his return for the year 1954, which was the first year he was free of parole, reported $76,512 from "Personal wagering at tracks, etc." His 1955 return reported $86,050.92 from the same source and his 1956 return reported $78,460 from "miscellaneous". We think the jury could very easily have believed that DeLucia simply did not report his income from such illicit activities during the period that he was on parole, but did continue to receive such income out of which he made the large expenditures during the years in question. In United States v. Frank, 3 Cir., 1957, 245 Fed. (2d) 284, 287 [57-1 USTC ¶9675], the Court said:

"It was also shown that the defendant on several of his income tax returns had reported a gain from 'sporting enterprises,' an euphemistic term for gambling profits. He did not return any for 1948 and it is suggested that this form of activity was another possible source of income. This point was quite thoroughly developed and the defendant's method of bookkeeping, or lack of bookkeeping, for his sporting enterprises was shown. This was all relevant and its weight for the jury."

We hold that the above evidence, in so far as it relates to Count III, was sufficient for the jury to find that DeLucia had failed to report income during the taxable year 1950.

[Separation of Counts]

DeLucia originally asserted in his briefs herein that there was inconsistency between the verdicts of guilty and of not guilty and quoted from the dissenting opinion in Dunn v. United States, 1932, 284 U. S. 390. However, the majority opinion in that case said on page 393:

"Consistency in the verdict is not necessary. Each count in an indictment is regarded as if it was a separate indictment. Latham v. The Queen, 5 Best & Smith 635, 642, 643. Selvester v. United States , 170 U. S. 262."

This Court said in United States v. Bazzell, 7 Cir., 1951, 187 Fed. (2d) 878, 884:

"As to the argument that the verdict is inconsistent, it will be enough to say that where a defendant is charged by two or more counts in an indictment, consistency between the verdicts on the several counts is not necessary. Dunn v. United States , 284 U. S. 390, 52 S. Ct. 189, 76 L. Ed. 356; United States v. Denny, 7 Cir., 165 Fed. (2d) 668; and United States v. Coplon, 2 Cir., 185 Fed. (2d) 629, 633. A verdict of acquittal on one count does not invalidate a verdict of guilty on another count, although the same evidence is offered in support of each. Garrison v. Hunter, 10 Cir., 149 Fed. (2d) 844, 845. See also United States v. Pandolfi, 2 Cir., 110 Fed. (2d) 736."

Moreover, counsel for DeLucia conceded in oral argument in this Court, and correctly so, that there is no inconsistency between the verdicts of not guilty on Count IV and of guilty on Count III. As we are now concerned only with Count III what has been said is completely dispositive of any vestige of inconsistency.

[Source of Income]

DeLucia also contends that the Government switched its positions in regard to the alleged hoard of money that he had. However, with this we cannot agree inasmuch as it appears from the record that the Government has always contended that DeLucia did receive a large sum through extortion and that it has been taken into account in the itemization of DeLucia's income. If anybody is changing positions it is the defendant who has at times denied that he received the money and on other occasions claims by innuendo that this constituted the sum from which he made the various expenditures in the years in question.

Defendant's last objection goes to the supplemental instruction given to the jury on the second day of deliberation. Counsel for both the Government and defendant presented instructions to the Court based on the holding of the United States Supreme Court in Allen v. United States, 1896, 164 U. S. 492. Defense counsel made certain objections to the version of the Allen charge submitted by the Government and the Court acceded to some of these objections and refused others. The supplemental instruction as thereafter given by the Court has been approved by this Court almost in haec verba. United States v. Furlong, 7 Cir., 1952, 194 Fed. (2d) 1.

We, therefore, hold that the Court did not err in giving the supplemental instruction.

[Conclusions]

The portion of the judgment based upon Counts I and II is reversed and cause remanded with instructions to grant the motion of the defendant for judgment of acquittal thereon.

The portion of the judgment based upon Count III is Affirmed.

 

 

[59-1 USTC ¶9327]Frank David, Appellant v. United States of America , Appellee

(CA-6), U. S. Court of Appeals, 6th Circuit, No. 13,605, 264 F2d 248, 2/2/59, Aff'g the District Court, 59-1 USTC ¶9326, 168 F. Supp. 269

[1939 Code Sec. 41--similar to 1954 Code Sec. 446(b); 1939 Code Sec. 145(b)--similar to 1954 Code Sec. 7201]

Reconstruction of income: Net worth increase: Cash on hand at year's beginning.--A trial court should be and is affirmed where a case was fairly tried and correctly submitted to the jury.

James C. Herndon, Sam D. Bartle, Sheck & Herndon, Akron, Ohio, for appellant. Sumner Canary, James C. Sennett, United States Attorney, Cleveland , Ohio , for appellee.

Before ALLEN, Chief Judge, SIMONS, Circuit Judge, and KENT, District Judge.

Order

ALLEN, Chief Judge:

The judgment of the District Court is hereby affirmed upon the grounds and for the reasons stated in the memorandum opinion of the United States District Court upon motion for acquittal or, in the alternative, for new trial. 168 Fed. Supp. 269 [59-1 USTC ¶9326].

 

 

 

 

[59-1 USTC ¶9326]Frank David, Appellant v. United States of America , Appellee

U. S. District Court, No. Dist. Ohio, No. 21511, 168 FSupp 269, 2/7/58

Reconstruction of income: Net worth increase: Cash on hand at year's beginning.--Where, in the course of reconstructing taxpayer's net income, the Government allowed year-beginning cash balances in excess of amounts submitted by the taxpayer in financial statements, and calculated cash accumulations upon the basis of reported income, the reconstruction was proper.

Sam Bartlo, James C. Herndon, 430 Second National Bldg., Akron , Ohio , for appellant. Russell E. Ake, United States Attorney, James C. Sennett, Assistant United States Attorney, 400 Federal Bldg., Cleveland 14, Ohio, for appellee.

WEICK, Judge:

The defendant stands convicted on two counts of an indictment charging him with wilful evasion of income taxes for the years 1948 and 1949.

He has filed his motion for judgment of acquittal, or in the alternative, for a new trial.

[Three Evidentiary Questions]

Complaint is first made that during the trial the Court permitted the Government attorney to distribute to the jury photostatic copies of stipulated net worth computations for the years 1947, 1948 and 1949, the original of which, except as to items of cash in dispute, had already been received in evidence as Joint Exhibit "1A." The purpose was to permit the jury to intelligently follow the testimony of the witness Keller as to his computations without being confused over a lot of figures.

No objection to this procedure was made at the time by defendant's counsel. After the photostats had been handed the jury defendant's counsel then objected and the Court instructed the jury that they were merely photostats of an exhibit already received in evidence by stipulation of the parties, except as to said cash items which represented what the Government contended. The Court further instructed the jury that the photostats were for explanatory and illustrative purposes.

The jury could not see the figures on the admitted Exhibit "1A." It is not understandable how defendant could be prejudiced by permitting the jury to follow the witnesses' testimony by permitting them to use a photostatic copy of the exhibit which the parties had jointly offered in evidence, particularly since the Court explained the purpose and that the cash items represented only what the Government contended he had on hand. Holland v. United States, 348 U. S. 121 [54-2 USTC ¶9714]. During the course of Mr. Keller's testimony the figures were explained in detail and the exhibit was later received in evidence as Gov't. Ex. 17 for explanatory and illustrative purposes.

It is next contended that the Court erred in refusing to order the Government to produce a transcribed unsigned statement of the defendant, Frank David, when the witness Keller was on the stand.

Jencks v. United States, 353 U. S. 657 (1957) and Title 18 U. S. C. A. §3500 are cited as authority.

The statute (Title 18 U. S. C. A. §3500) was in force at the time of trial and, therefore, governs. Lohman, Jr. v. United States , No. 13189 (CA 6, 1958).

Under this statute, the Government would be required to produce the statement of the witness Keller at the end of his direct examination. Defendant was granted permission to interrogate the witness Keller and he established that the witness had made a written report of his investigation of the case which report the Government produced and handed to defense counsel for their examination and inspection. Defendant did not offer this report in evidence.

Defendant claims that, under this statute, the Court should, in addition, have ordered production of the transcribed unsigned statement of the defendant David taken on September 25, 19 50.

The statute will bear no such interpretation as it requires only the production of the statement of a witness of the Government who has completed his direct examination. It does not require production of the statement of any other person.

The Court would have no right to extend the operation of the statute beyond what its plain language requires.

In any event, the point is without merit because the statement was later given to defendant's attorney during the cross-examination of defendant and it was received in evidence as Gov't. Exhibit 21.

On page 28 of defendant's brief is contained the following:

"The statement was admitted as Gov't. Exhibit 21 over the objection of defendant's counsel."

The record does not support this claim, but on the contrary shows that defense counsel consented to the admission of the exhibit in evidence.

In his reply brief, defendant further charges as error the admission in evidence, over his objection, of the statement of the witness Spilker. The record does not support this claim, but shows that the statement originally was received in evidence as a Joint Exhibit "1-c," without objection, and the numbering was later changed to Gov't. Exhibit "1-c."

When it was offered by the Government attorney, he addressed defense counsel, "if you have no objection."

Defense counsel made no objection. Later when the exhibit was remarked Gov't. Exhibit "1-c" defense counsel stated: "other than that, we don't object to it." This referred to some pencil marks on the exhibit which were removed.

It is further contended that the Court erred in not admitting testimony of the witnesses Spilker and Correll concerning their conversations with the defendant.

These conversations were hearsay evidence and, therefore, inadmissible, but notwithstanding this fact the record will show that most of the conversations related to defendant's alleged recovery of about $12,300 from Mae Wise and were in fact admitted in evidence without objection.

Furthermore, defendant took the witness stand and gave direct testimony on this subject.

[Main Issue: Reconstruction of Net Worth]

We now come to the consideration of defendant's motion for judgment of acquittal.

The rule applicable in this case was laid down by the Court of Appeals in Ross v. United States, 197 Fed. (2d) 660 (CA 6, 1952) and requires the Court to consider the evidence in the most favorable light to the Government. There must, however, be substantial evidence to support the verdict of the jury.

The Government's case was based solely on the "net woth" method of computation to prove the claimed understatements for the years 1948 and 1949.

The parties agreed to all the items on the defendant's net worth statements for the years 1943 to 1949, inclusive, except cash on hand and living expenses for the years 1943 to 1947, inclusive.

There were substantial increases in defendant's net worth during the indictment years not reflected in the income shown on his income tax returns.

The question for determination by the jury was whether these increases in net worth resulted from taxable income received by the defendant during the years in question as claimed by the Government or from use of cash on hand which he had accumulated prior thereto.

As is usual in cases involving net worth computations, defendant claimed he had a large amount of cash on hand which the Government did not take into account.

It was the contention of the Government that defendant had cash on hand as of December 31, 19 47 in the amount of $17,500, $18,634.72 on December 31, 19 48 and $15,957 on December 31, 19 49.

Defendant, on the other hand, claimed that he had cash on hand of $28,000 to $30,000 on December 31, 19 47.

After the tax investigation started in this case, defendant's attorney Chas. K. Correll on December 21, 19 50 sent to the Government, seven financial statements of defendant as of December 31st for the years 1943 to 1949, inclusive. Each of the statements showed cash in safe deposit box of $12,500. These statements had been prepared by defendant's auditor Spilker.

The Government in its net worth computations as of December 31, 19 47, gave defendant credit for $5,000 more cash than was shown in his statement as of the same date which he had furnished to the Government. This inured to his benefit, as without this credit, his increase in net worth for 1948 would have been much larger.

In his statement, which was given to Agents Keller and Kaufman on September 25, 19 50, defendant stated that the largest amount of cash which he had on hand since 1942 was $16,000 to $18,000 in 1949. Agents Keller and Kaufman actually counted the money in defendant's safe deposit box on August 11, 19 50 in the amount of $15,957.00.

Furthermore, in November 1948 defendant furnished George D. Harter National Bank of Canton a financial statement, for use in connection with a loan, which showed cash on hand of $18,634.22.

The Government used the figure of $18,634.22 shown as cash on hand in the Harter Bank statement of November 1948 to establish the beginning cash on hand December 31, 19 48, which was very close in point of time. Also the actual cash in the amount of $15,957.00 counted on August 11, 19 50 was used by the Government to establish the amount of the cash on hand on December 31, 19 49.

Defendant's auditor Lawrence testified that the only accurate way to establish cash on hand on a given date is to count it.

If this were required under the law, there never could be a conviction for income tax evasion where the net worth method of calculation is used, because only the defendant is in a position to count the money and the jury would have to believe whatever he said.

In my judgment, there was substantial evidence to justify the verdict of the jury with respect to Count Number two of the indictment.

In order to establish the beginning cash figure of $17,500 as of December 31, 19 47, involved in the first count of the indictment, the Government subtracted from the cash of $18,634.22 shown on the Harter Bank statement of November 1948 the amount of $12,500 cash on hand shown on the statements defendant furnished to the Government for the years 1943 to 1947, inclusive, and obtained the figure of $6,134 which it distributed prorata as additional income to defendant over those years.

It also calculated that from defendant's reported income over those years he had a possible cash accumulation of $5,362. It added this amount of $5,362 to the amount of $12,300 which defendant, in his written statement made on June 25, 19 42, admitted he had on hand, to obtain the approximate beginning figure of $17,500 for December 31, 19 47.

The jury was carefully instructed as to the law applicable to the case in accordance with the cases of Holland , Friedberg, Smith and Calderon reported in 348 U. S. at pages 121, 142, 147 and 160 respectively. No claim is made here that the charge was erroneous in any respect.

The jury was not compelled to believe the testimony of the defendant that he had $28,000 to $30,000 cash on hand on December 31, 19 47, but could, in determining his credibility, take into account his previous plea of guilty, in this Court, to the charge of income tax evasion for the years 1941 and 1942, and the fact that each year thereafter he understated his income except the year 1947.

[Proper Matters for Jury]

The jury also had a right to consider, in determining his guilt or innocence, his admission that he had $12,300 in cash in 1942; the seven financial statements which he furnished the Government for the years 1943 to 1949, inclusive, each showing cash on hand in the amount of $12,500; his admission in 1950 that the largest amount of cash he had on hand since the year 1942 was $16,000 to $18,000 in 1949; the actual count of the cash on August 11, 19 50 in the amount of $15,957; his financial statement to George D. Harter Bank in November 1948 showing $18,634.22 on hand; the testimony of Mae Wise that defendant did not report all of his sales; that he threw away a portion of the cash register tape on which his daily sales were recorded and told her to mind her own business, when she remonstrated; the stipulation of assets and liabilities which included all items except cash on hand on the critical dates and living expenses for some of the years.

Under all the evidence in this case the jury court find that the beginning cash of $17,500 for the year 1948 was reasonably accurate.

Defendant complains that the Government computations did not reflect any credit for his understatements during the pre-indictment years. The testimony of Mr. Keller is to the contrary as he testified that the difference in cash amounting to over $6,000 was prorated as additional income over those years. Defendant had paid taxes on $3,269 additional income, and the Government also took into account his living expenses during those years.

Nor was the jury bound to believe defendant's story about the alleged theft of $12,300 of his money by Mrs. Mae Wise. He sued Mrs. Wise to recover this money and lost the case. He claims that later, at different times, he found the money in Mrs. Wise's home, but did not tell her about it. During part of this time he was either rooming or visiting at the Wise home and had a garden there and Mrs. Wise worked on occasions at his restaurant.

When Mrs. Wise testified against him in this trial he did not ask her a single question about the alleged theft of his money or its recovery.

The verdict of the jury is supported by substantial evidence.

The motion for judgment of acquittal or in the alternative for a new trial is overruled.

 

 

[56-2 USTC ¶9810]T. C. Risinger, Appellant v. United States of America , Appellee

(CA-5), U. S. Court of Appeals, 5th Circuit, No. 15901, 236 F2d 96, 8/3/56, Affirming District Court

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

Criminal tax evasion: Admissibility of evidence.--In upholding a conviction of willful tax evasion, based upon a net worth analysis, the Court refused to consider on appeal, for the first time, taxpayer's objections to testimony of the Government witness as to theory and content of a net worth analysis. It found that the District Court's instructions as to weight and sufficiency of evidence were substantially proper, containing no prejudicial error; and determined, finally, that there was insufficient evidence in the record considered as a whole to substantiate the claim that taxpayer did not have a fair trial.

Mack Taylor, Frank B. Potter, Fort Worth , Tex. , for appellant. Heard L. Floore, United States Attorney, Fort Worth , Tex. , for appellee.

Before TUTTLE, CAMERON and JONES, Circuit Judges.

CAMERON, Circuit Judge:

This is an appeal from a conviction on a jury verdict finding appellant Risinger guilty on all five counts of an indictment charging wilful evasion of income taxes for the years 1948, 1949 and 1950 based upon appellant's action in filing false and fraudulent tax returns for himself and his wife in violation of 26 U. S. C. A. (1939) §145(b). Appellant claims that the Court below committed certain errors in admitting testimony, in failing to charge the jury accurately and adequately, and in failing to acquit appellant because of insufficiency of the evidence to sustain the verdict. Appellant is laboring under the handicap of having failed to take the steps in the Court below which are necessary to permit reliance upon most of the errors charged.

[One Set of Books for Two Enterprises]

During the years 1948, 1949 and 1950 appellant was engaged primarily in the hotel business. The income tax returns filed by him were made from the books and records kept in connection with this business, but did not include income received from any other business or activity. A large amount of testimony was introduced by the Government from which the jury could determine that the porters and bellboys working in appellant's hotels had, by prior agreement with appellant, split the income received by them from the illicit businesses of prostitution and sale of intoxicating liquors carried on by them as an adjunct to the hotel business.

[Net Worth Analysis]

This direct proof of receipt of unreported income was supplemented by a large volume of proof establishing, under the net worth method, that appellant had made expenditures during the years in question considerably in excess of the income available to him from all legitimate sources. The Government used a large number of witnesses whose testimony, when recapitulated by the Government's experts, showed that, during 1948, appellant's expenditures exceeded his available income by $7,522.67; in 1949 by $12,273.00; and in 1950 by $8,347.20.

In connection with developing this character of proof the Government followed the usual custom of having one of its experts analyze the testimony of the large number of witnesses with whom appellant had had dealings and placing the expert on the stand to gather together the various fragments of testimony and present to the jury the picture resulting therefrom in an understandable and convincing manner.

[Three Claims of Error]

The specifications of error chiefly argued by appellant relate to the evidence given by the porters of money received from the illicit businesses, it being claimed that said evidence was inadmissible and highly prejudicial; and that appellant's motion for mistrial based upon its receiption should have been sustained; and to the claim that the Court below committed error in failing to charge the jury with respect to the rule that the unsupported testimony of an accomplice is insufficient to sustain a conviction.

[Answer to First Claim]

The testimony of the porters was not hearsay and was clearly admissible to show that appellant received from them large amounts of money which were not reported as income. Cf. Ford v. United States , 5 Cir., 1956, 233 Fed. (2d) 56 [56-1 USTC ¶9473]. There was sufficient direct proof, backed up by circumstantial evidence, that this split was made under prior arrangement with appellant. The Court below was careful to limit the effect of this evidence by charging the jury that it should be considered only as it tended to establish that appellant had received income and that the jury should not consider the illicit or immoral character of its source. 1

[Answer to Second Claim]

Appellant requested orally, after the Court's charge had been completed, that if the jury should believe that the porters and