Bank Records and Net Worth Increases
2 Page3
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
