7203 - Bank Records &  Net Worth Increases 2 p5

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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 Page5

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12. At another point in his testimony concerning the transactions with President Biow, Samish testified as follows: "I recall some kind of a conversation wherein he stated that he wanted to compensate me or something of that sort and I very definitely told him that under no circumstances can I accept any compensation. I had no objection if he wanted to put me on his payroll or anything, but as Mr. Lyon stated, and I stated to Mr. Lyon at the time, that I explained to Mr. Biow that--* * * I told Mr. Biow at the time during that conversation that under no circumstances could I receive any compensation from him for the help of securing any account, or--and he further stated to me during some conversation, during the talk with Mr. Lyon, and I reiterated, that while I couldn't receive any compensation, if he wanted to make some political contributions or some gifts to some friends of mine who I would indicate, that that was entirely up to him."

13. If further appears from the Samish testimony that Treasurer Zinneman did not know any of the live payees, and that Zinneman showed no interest in the identity of the payee. Further, in the early stages of the series of check transactions, Samish furnished all of the names of the payees.

14. Samish was asked if he remembered any political campaigns in which the Biow Company had any interest whatsoever. He replied, "What would they have an interest in campaigns for?" Then he was asked, "These were political contributions that were to be made for the Biow Company, were they not?" His response was, "Not to my knowledge." Then, to the question, "They were political contributions to be made by you, is that correct?" he responded, "They were political contributions. I don't say the year 1944, but whenever they were made, given to me to use at my discretion." Then, following the question, "In any way that you saw fit, is that right?" he answered, "Well, I would think so, having in mind they had a full knowledge that I was concerned about political contributions."

15. Again, Samish was asked, "Do you know of any campaign in California in 1944 in which the Biow Company had an interest?" To this he replied, "I would say no."

16. Again concerning the earlier checks, Samish said, "Well, I believe that Zinneman would call me and ask me for some names and I would give them to him." Samish, however, contends that all amounts were fixed by the Biow Company.

17. Later on, Samish testified that many names he supplied Biow were the names of persons that "I had some knowledge of, that I was sure wouldn't have any objection to their name being used." At another time Samish says, "The Biow money, the Biow political contributions, made it possible for me to be more generous at times with political contributions than I could ordinarily be."

18. To the question, "Did you feel there was anything wrong about the fact that you were taking money from the Biow Company," Samish replied, "No, sir."

19. Again, the Biow money "was just an accumulation of money that was there [in Samish's safe] to be used for political purposes--political campaigns."

[Effect of Testimony]

This court is of the opinion that Samish's own testimony concerning all of the checks except four shows almost conclusively that the money (the four checks excepted) received from the controversial checks was taxable income. One begins with the business background. Samish, without question, had done Biow a huge business favor. Biow offers to pay Samish. Can Samish avoid tax liability by saying, "You can't pay me. But you can make some gifts to friends of mine [not yours]. Give me the checks. Let me present them. And you can also give me some political money"? Someone owned the checks at the moment they were in Samish's hands. That man was Samish. Someone owned the proceeds of the political checks while he held the proceeds. That owner was Samish until he disbursed them. See Old Colony Trust Co. v. C. I. R., 279 U. S. 716 [1 USTC ¶408]. The facts might admit of some other conclusion if Biow had any knowledge or affection for any of those whom Samish describes as his "fine friends" who received some of the "gift" checks. As to the "political" checks, the result might be otherwise if Samish had not stated that Biow had no interest in Samish's political operations. It is negatived that Biow had any political objectives, either generally or specifically, in California or anywhere else. Biow did not even say, "You know what we believe in. Put our money where you think it will generally vindicate what we believe in."

It well may be that the testimony of Samish as to the "whys" and "hows" of the Biow checks is untrue. Certainly it stretches human credence to believe that he knew so little as he said he did about the proceeds of any given "political" checks. And it amazes one to hear that he would be able time after time to cash checks made to fictitious payees without a word of explanation to the person cashing as to the lack of endorsement.

On the whole, this court deems that the Samish "alibi" is almost a judicial admission from the witness stand that the checks (four excepted) were income. Certainly the defendant is not entitled to a better set of facts than he unmistakably claims them to be.

Judicial admissions from the stand are something to be accepted cautiously as concluding an issue. For example, if testimony of a defendant as to a fact is essentially one of opinion, such as speed, the time a car entered an intersection, the point of impact, undoubtedly a party is entitled to have the jury consider more favorable testimony than his own.

However, here had Samish paid his taxes, sued the collector for his taxes back, as he tells the story a trial judge might have been justified in instructing the jury that these particular "gifts" and "contributions" to Samish or through Samish were Samish's income. It appears that the opinion of Mr. Justice Douglas in Rob ertson v. United States , 343 U. S. 711, 713 [52-1 USTC ¶9343], almost goes this far. 3 However, this court is not sure that the opinion positively eliminates the element of intent on the part of the payor, Biow. Therefore, this decision will assume that the intent of Biow remained material to the issue of income or gift. But this court does not hold that one who has performed services of value to another for which he is entitled to be paid--which the recipient proposes to pay--can remove the payments from income to gift by his uniliateral act of saying, "Don't pay me. Just give me some sizable gifts."

Even if the trial court would have been justified in telling the jury that the checks (four excepted) represented reportable income, that would not amount to a directed verdict in favor of the government. Even when there are no issues left for a defendant, a jury has the power to find the defendant not guilty.

And if Samish's own testimony proved the payments were taxable, he would not be stripped of defenses. The question of wilfully attempting to defeat and avoid payment would be still wide open. For example, Samish says his tax consultant had all the facts as to the checks from Biow. He relied on the tax consultant, now dead. He paid no attention to the returns, he said, except to look for the "X" on the signature line where he was supposed to sign. If the jury believed this portion of the alibi, certainly there was nothing wilful about his failure to report and pay.

[Gambling Activities]

Defendant's first major assignment of error concerns the fact that the United States attorney in his opening statement told the jury that he would prove that appellant gambled a million and a half dollars in the year 1949 and won $25,000 which he failed to report in his income tax return. In aggravation of this statement, says the defendant, three witnesses laid a foundation (or attempted to) for the admission of certain gambling house records which tended to connect Samish with certain betting transactions. Countering this, the government says the records were admissible and were improperly excluded. Whether the records were admissible will not be here decided beyond saying that the records presented a very close question as to whether they should be received. A very important consideration in determining whether the defendant had a fair trial is to ascertain if the government was overreaching. An examination of the record indicates that the records were such that the United States attorney had a duty to try his level best to get the records in evidence. If he failed, should that result in a mistrial? One necessarily must read the whole record. First, with respect to the residual effect in the jury's mind after the foundation testimony of the three witnesses was stricken, it is doubtful under all the circumstances if there was any prejudice to the defendant. The trial judge considered whether any prejudice had been done and instructed the jurors to disregard the testimony. The collapse of the government's witnesses probably inflicted damage only on the government. Generally the defense so quickly and successfully moved the case back into the yard of Biow for so much of the time and the issues for days after left this matter of the "gambling income" so far behind that only a captious appraisal of the case would hold that these early incidents of the case were prejudicial.

[Summary of Checks]

Defendant complains of a schedule prepared by a revenue agent summarizing the evidence concerning the many Biow checks sent to Samish. Items of the summary listed the check number, date of check, Samish's whereabouts on date of issue, what evidence (Samish's travel record or hotel record) pointed to Samish's whereabouts on the date in question, the amount of the check, the name of the drawee bank, the date cashed or deposited, the record as to Samish's whereabouts on the latter date, and a list of endorsements on the various checks. The receipt of the summary as to the checks seems entirely proper. Wigmore on Evidence, 3d Ed., Sec. 1230. Papadakis v. United States , 9 Cir., 208 Fed. (2d) 945 [54-1 USTC ¶9137]; United States v. Kelley, 2 Cir., 105 Fed. (2d) 912 [39-2 USTC ¶9621]. But assuming arguendo that the exhibit was improperly admitted, it cannot be said that the summary in any way weakened Samish's two main points that the checks were gifts and that his failure to report the payments, if they were reportable, was the fault of his tax consultant.

[Exclusion of Testimony]

Samish assigns as error the fact that he was not permitted to impeach, by the witness Lyon, Biow's version of a telephone conversation, Biow on one end and Lyon and Samish successively on the other. Biow and Samish told diametrically opposite stories as to whether in certain conversations Biow admitted he had wronged Samish by certain statements he and Zinneman had given to internal revenue agents. The statements generally were in accord with the Biow testimony given later upon the trial. It appears that the Biow testimony was probably of such materiality as to be impeachable by contradictory statements. Even the alleged statements of Biow might have furnished affirmative evidence for Samish. (The latter point is not decided.) But a reading of the testimony and the record of the colloquy of court and counsel leaves this court with an abiding doubt as to whether the trial court did reject the testimony on the ground an inadequate foundation had been laid or other grounds. A trial judge in determining the sufficiency of a foundation necessarily must be permitted considerable latitude. 4 While the court was rather firm in its rulings on the testimony, it would not be appropriate to find error in the rulings unless there were a better showing of a foundation. For example, counsel for appellant, while interrogating Lyon , apparently misspoke and used the wrong date by two months as the date of the conversation. Perhaps the court knew what conversation counsel meant, and again, it might not have. Hence, in the condition of the record, a contention of error cannot be sustained.

Furthermore, assuming the exclusion was error, it is to be pointed out that Samish had on many points impeached Biow. The testimony, if admitted, does not produce the belief that it would have tended to swing the scales. The whole evidence of the case is so overwhelming against Samish and particularly his own story, so difficult of belief, was so damning that it doesn't appear that Samish was hurt by a ruling which limited him to showing on one more point that Biow was unworthly of belief. Little doubt can there be that if the jury had had Biow within its reach it would have found him guilty of most any charge selected at random.

[Handwriting Expert]

Error is assigned in permitting the noted handwriting expert, Clark Sellers, to present opinion testimony on rebuttal that three checks, the receipt of which was questioned by Samish, had been endorsed in the handwriting of associates of Samish. It may be assumed that the testimony would have been proper for the case in chief. But certain testimony may be proper both in chief and in rebuttal. The offering of the testimony at the beginning may not seem necessary at the moment, and while prosecutors have a duty to play fair with defendants, it is not unfair to offer testimony on rebuttal which is proper rebuttal, although it might have been offered in chief. Also, whether the point was to be proved by Sellers or by other witnesses is within the prosecutor's discretion. The contention that Sellers' testimony was not material is without merit. Much of the complaint of Samish about Sellers is that Sellers was a great showman. But no indication appears in the record of any impropriety on the part of the witness. How could a rule be sustained excluding a witness because he is a good actor? Such a rule might also be extended to good actors who are defense attorneys or prosecutors.

[Prosecutor's Comment]

Next the defendant complains that the prosecutor commented in argument to the jury that Dorothy Ready was Samish's secretary and he had not called her as a witness. Actually she was held throughout the trial on a subpoena issued at the request of plaintiff. Defendant promptly complained about the remarks, but the court did nothing about the complaint. Reliance is placed upon Himmelfarb v. United States, 9 Cir., 175 Fed. (2d) 924 [49-1 USTC ¶9313]. In Himmelfarb it appears the witnesses not called probably were witnesses with no particular connection with either side of the case. Practically and legally the witnesses in Himmelfarb were available to either side of the case. Here in the context of the district attorney's reference to Miss Ready there appears that little damage could have been done to the defendant. Furthermore, it would seem that any rules restricting comment on failure to produce witnesses should be restricted to those who are available both legally and practically to one side. Wigmore on Evidence, 3d Ed., Sec. 288. To say that Miss Ready was equally available to both sides is to ignore plain facts. Miss Ready was the faithful secretary to Samish for years. He so testified. It is not to reflect on her integrity to say that she undoubtedly continued to see events through his eyes. The relationship here is like that in United States v. Beekman, 2 Cir., 155 Fed. (2d) 580, where a party's employee was held not equally available to his opponent as a witness and the court found no error in his opponent's comment on the failure to call him. Also, Samish's failure to call his secretary well could have been because he feared her testimony under cross-examination might increase the evidence that the creation of the check payees was a farcical deception making clearer the payments to Samish as income to him and possibly show to the jury her belief in his guilt.

[Court's Instructions]

The court gave the following instruction:

"The law does not require that any taxpayer segregate his deductible expenses in any way, nor that any deductible expenses be carried on the taxpayer's books under any particular account name. If an item of expense, such as commissions, is included in the total deductible expenses on any taxpayer's books, it is immaterial under which particular deductible expense account it might appear. All ordinary and necessary expenses incurred in carrying on a business, including compensation for personal services rendered, are allowed as a deduction." (Italics added.)

The defendant complains vigorously of the giving of this instruction.

Better would it have been if the instruction had not been given. It does seem to pass lightly over the keeping of dishonest books.

Looking for a moment at the fact issues involved, it seems that the books were admissible at the outset to show the intent of Biow in the matter. The false books show an intent to treat the payment as business expense. Possibly they are also susceptible of some inference that Biow intended to make Samish presents of the questioned checks. It is doubtful if any juryman, instructions notwithstanding, would still think Biow kept his books honestly or that the court had told him that Biow did. At any event, in view of the overwhelming testimony of the whole case, it is not to be said that the instructions were prejudicial to the defendant. But under the instructions as a whole, it appears that the jury was still entitled to use the false books as evidence of an intent to make a gift. Read in the right of all the instructions, the one in particular complained of now has been overemphasized by appellant. Further, the interpretation of defendant begs the question. Read the instruction closely. The effect is: No harm is done if a taxpayer puts a deductible item under the wrong class of deductions, it is still deductible. The instruction does not purport to say the checks were not gifts or that it cannot be inferred from the false bookkeeping that the items were gifts. The instruction begins, "If an item of expense such as commissions, etc." This did not tell the jury that the checks were properly entered as commissions. The defendant exploited to the Nth degree the disdeeds of Biow. This instruction did not stop him or seriously cramp him.

Also, complaint is made of this instruction:

"If you find it to be a fact that the Biow Company charged to business expenses any payments that you may find to have been made to the defendant, you may consider that fact among other facts in determining whether or not the Biow Company intended such payments to be gifts."

This instruction permits the jury to consider how the entries were made. If the books were admissible, as they were, the instruction was proper. A close reading of the instruction would indicate that the instruction lets the jury find either "gift" or "no gift." Furthermore, the instruction looks far more appropriate in context, which always must be considered.

The court failed to give three instructions suggested by defendant. As to these instructions, defendant gave no ground for his exception when he excepted. Disregarding this failure, the court's choice was correct. One instruction was adequately covered elsewhere. The giving of the instruction would have placed emphasis on certain testimony to which emphasis defendant was not entitled. The other two instructions concerned matters which were not real substantial issues in the case.

Lastly, the defendant complains that the indictment was insufficient and, alternatively, that he was entitled to a bill of particulars. In essence, the indictment charged how much taxable income the defendant failed to report each year in question but did not specify the source or detail of particular income omitted. Defendant is concluded on this matter by this court's decision upholding a similar indictment in the Himmelfarb case, supra.

On the whole record, it appears that defendant had a fair trial. If there be slight error in the record, it could not have changed the outcome in this case, in this court's view.

Defendant's representation below and here was exceptionally good. Defendant, as most defendants must, made the hard choice as to whether he would take the witness stand. He elected to do so. If his story is true, objectively he almost admits guilt. He pretty well discredited Biow and he was able to exploit almost without limit the providential (for him) circumstance of Biow's false books.

Primarily this decision rests upon this court's belief that there was no error below, but secondarily it rests upon the conclusion that if there was error in the rulings on any or all of plaintiff's three main contentions 5 then it was harmless under the standards laid down in Kotteakos v. United States, 328 U. S. 750. The main debatable issue really was the matter of wilfulness. This the jury, properly instructed, found against Samish.

The defendant has been fairly convicted.

The judgment is affirmed.

1 Samish, a resident of California , filed separate returns for himself and his wife, Merced C. Samish, for the years 1946 and 1947, splitting community income between the returns. For the years 1948, 1949, 1950 and 1951 he filed joint returns. Each of the eight returns was the subject of one count in the indictment.

2 The total of all checks proved was about $90,000.

3 See also Noel v. Parrott, 4 Cir., 15 Fed. (2d) 669 [1 USTC ¶184].

4 United States v. Angelo, 3 Cir., 153 Fed. (2d) 247; Atlantic Greyhound Corporation v. Eddins, 4 Cir., 177 Fed. (2d) 954.

5 The subjects of these contentions were:

(a) The references to gambling activities of Samish in the prosecutor's opening statement and the foundation testimony to show gambling activities (later stricken);

(b) Exclusion of some testimony of the witness Lyon which might have further impeached Biow;

(c) The court's instructions which doubtless referred to Biow's books.

 

 

[55-1 USTC ¶9400]Samuel R. Beard, Appellant v. United States of America , Appellee

(CA-4), In the United States Court of Appeals for the Fourth Circuit, No. 6902, 222 F2d 68, 222 F2d 84, April 15, 19 55

Appeal from the United States District Court for the District of Maryland, at Baltimore.

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

Tax evasion: Trial: Gambling operations: Proof under net worth method: Admission of evidence: Jury instructions.--The defendant was convicted of violating 1939 Code Sec. 145(b) in failing to disclose income from the operation of a gambling business with intent to evade tax. The Government computed the defendant's taxable income by the net worth method by ascertaining the extent of his assets from ledgers and records of the bank, an investment counsellor of defendant, his borrowers, the contents of a safe deposit box, land records, and the records of automobile dealers. The liabilities were obtained from records of mortgagees and depreciation was calculated at a definite percentage per annum based on cost. The following assignments of error by defendant were overruled: (1) that such proof was legally insufficient to sustain the verdict of guilty, (2) that the Court improperly instructed the jury that (a), in determining the issue as to whether the defendant falsely filed the return, the jury might take into consideration his failure or refusal to produce his books and records for inspection when requested to do so by the Government agents and (b), in arriving at their verdict, the jury might consider the failure of defendant to offer an explanation of the discrepancy between his tax returns and his income, (3) that the Government's attorney exceeded the proper bounds of advocacy in his closing argument to the defendant's detriment, (4) that the Court improperly admitted testimony to show the nature and extent of the defendant's operations for a certain year, and (5) that transcripts of defendant's checks taken from the microfilm of the bank were improperly admitted.

Thomas J. Kenney and Michael Gould (Joseph O. Kaiser on brief), for appellant. George Cochran Doub, United States Attorney, and Walter E. Black, Jr., Assistant United States Attorney, for appellee.

Before PARKER, Chief Judge, and SOPER and DOBIE, Circuit Judges.

SOPER, Circuit Judge:

After a lengthy trial in the District Court [54-1 USTC ¶9196], Samuel R. Beard was convicted of violating Title 26 §145(b) of the Internal Revenue Code under an indictment which charged that he wilfully and knowingly attempted to defeat and evade a large part of the federal income tax due by him for the year 1944 by filing a false and fraudulent return wherein he stated that his net income for the year was $16,751.76 and the tax thereon $5,555.88, whereas he knew that his net income was actually $542,216.27 and the tax thereon $483,563.30. At the same time he was acquitted of similar charges in another indictment with respect to the years 1946 and 1947. Prosecution of similar charges as to 1945 was held to be barred by limitations. He was sentenced to serve a term of five years in prison and to pay a fine of $10,000. He appeals to this court on the grounds (1) that the trial court erred in admitting certain testimony; (2) that if this evidence had been excluded, the proof was legally insufficient to sustain the verdict of guilty; (3) that erroneous instructions were given to the jury, and (4) that the United States Attorney exceeded the proper bounds of advocacy in his closing argument to the detriment of the defendant.

[Sources of Information]

The Government undertook to compute the taxable income of the defendant first by showing his receipts and disbursements and second by showing his net worth in each of the years covered by the indictments. The evidence offered by the Government tending to sustain the charge with reference to the year 1944 may be summarized as follows: Beard was a resident of Washington, D. C. On March 15, 19 45 he filed a joint income tax return with his wife for the year 1944 with the Collector of Internal Revenue in Baltimore . This return disclosed a gross income of $17,337.07 consisting of $5,005.43 in dividends and interest, $3,754.30 in rents and $8,577.34 from the business of the Lincoln Athletic Club in which Beard was a partner; and it showed a net income of $16,751.56 on which a tax of $5,555.58 was paid. The return was based on records maintained on behalf of the taxpayer relating to legitimate transactions on his part, and it is conceded by the Government that these records were substantially correct and that the taxpayer correctly reported his income from these sources.

The tax return for 1944 contained no information as to income from any other business under the caption "profit or loss from business or profession." In other words, the return disclosed no income from any source other than those above mentioned. It was shown, however, by extensive undisputed testimony that during the year 1944 and subsequent years Beard conducted a gambling business on a vast scale as a bookmaker, dealing directly with the betting public, and also as a "lay-off" man for other bookmakers who placed "hedging" bets with him. For this purpose he maintained establishments at 307 9th Street, N. W., Washington, D. C., and 3701 Bladensburg Road, Colmar Manor, Maryland, and another at 3603 38th Street, Colmar Manor, Maryland, which he used in case of interference by the police. The Bladensburg Road location was equipped with a battery of telephones and Western Union ticker service for prompt racing returns and other purposes of the business.

The revenue agents who investigated the case repeatedly requested Beard to produce the records of his gambling operations. At first he agreed to do so but later, on the advice of counsel, he refused to furnish them while the criminal aspect of the charges was pending. Nevertheless the Government agents were able to show that Beard deposited large sums of money in joint bank accounts in the name of himself and his wife in the Bank of Commerce and Savings in Washington , D. C. Therein he separately maintained an investment account, a commercial account and two savings accounts, as well as two safe deposit boxes. The deposits in the investment account in 1944 amounted to $26,308.54 and the deposits and withdrawals in this account were consistent with the figures on his tax return. The deposits in 1944 in the commercial account amounted to $203,225.44 consisting of $44,149.44 in checks, $150,773.45 in currency and $8,302.55 in coin. The deposits in this account, 85 in number in 1944, were made continuously throughout the year. The total deposits were more than ten times the gross income reported in his tax return for this year. 1 The Government agents were unable to identify withdrawals from this account since they did not have access to the returned checks of the defendant. In addition to the deposits in the investment account and the commercial account, $15,377.70 was deposited in Beard's savings account and $3,231.75 in his wife's savings account.

[Other Investigative Sources]

Strong light was thrown on the source of the deposits in Beard's commercial account by an investigation of the amount of the out-of-town checks and money orders received by him which he deposited or cashed at the Bank of Commerce and Savings. This bank cleared through the Lincoln National Bank in Washington . The microfilm records of the latter bank for the years 1944 to 1947, representing hundreds of thousands of items, were meticulously examined by the Government agents, and the items originating with Beard were tabulated. The examination showed that during 1944 Beard received 854 checks and money orders drawn on out-of-state banks, and 1746 such items during the four year period. They were drawn on 250 different banks in 150 cities in 36 states, including New Hampshire , New York , Pennsylvania , Florida , Louisiana , Texas , Illinois , Ohio , Montana , Nebraska , Nevada and California . The money orders were drawn in 19 cities located in 12 states. The last endorser on all of these checks was the defendant Beard. The agents prepared a tabulation of each one of the items showing the name of the bank, the drawer, the payee and the amount; and the tabulations were submitted to the defendant's attorneys two years before the trial. The Beard items on the microfilm were photographed and were made available to the defendant's attorneys long before the trial. The microfilms were retained in the bank but they were produced in court at the time of the trial.

All of the checks and money orders were either deposited or cashed at the National Bank of Commerce. They amounted in 1944 to $717,384.50, in 1945 to $169,849.80, in 1946 to $217,610.83 and in 1947 to $109,504.71.

In addition to the large number of out-of-town checks and money orders cashed or deposited at the Bank of Commerce, it was shown that Beard handled large sums of cash and local checks during 1944 and subsequent years. It was his custom to bring or send to the Bank of Commerce two or three days each week checks, currency and coins, the latter in a canvas bag, and to exchange the proceeds for $100 bills or other bills of large denomination. The sum total of these transactions for the entire year 1944 was not shown because no record of such items was kept by the Bank until June 15, 19 45 when records were set up under Treasury Regulations with respect to abnormal currency transactions. These transactions amounted to $443,593.69 for the period from June 15 to December 31, 19 45, $925,379.84 for the year 1946, and $408,611.35 for the year 1947, or a total of $1,777,584 for the two-and-a-half-year period.

A summary taken from the records of the Bank of Commerce and Savings shows that during the year 1944 Beard received the sum of $975,238.81, which included deposits in the investment account $26,308.54, commercial account $203,225.44, savings account $15,377.70, Building Association $50.35, Mrs. Beard's savings account $3,235.98, out-of-town clearances $717,384.50, local checks $9,656.30. This total does not include the currency transactions in this year, of which there are no records, in which Beard exchanged checks and currency for bills of large denomination.

It was obvious to the Government agents that the sums of money which passed through the defendant's hands in 1944 did not fairly represent his net income; and therefore they undertook an exhaustive search to ascertain what deductions should be made for possible duplications, business expenses and amounts not attributable to the defendant's gambling operations. For this purpose the agents took the following steps: after first obtaining his known expenses from the records of Frank Owings, an investment counsellor of the defendant, the agents analyzed and investigated Beard's investments and out-of-town clearances to determine what, if any, duplication there might be between the two, and further to find, as well as they could without access to Beard's gambling records and books, what portion of the funds which passed through his hands constituted taxable income.

Having found for the four years a total of 1746 out-of-town clearance items on the microfilm of the Lincoln National Bank, upon which Beard was the last endorser, the Government agents attempted to locate all the drawers, endorsers and remitters thereof and were successful as to 1200 of them, some of whom appeared on more than one item and for large amounts. By virtue of this search out-of-town items in the sum of $247,100.07 were eliminated from the total for the year 1944 because the remitters claimed that the checks were cashed by Beard for their accommodation, and the agents accepted their statements.

The agents also strove to eliminate duplications. It was the custom at the Bank of Commerce and Savings for the teller to place a stamp on checks which were cashed but not on checks which were deposited. Guided by this circumstance the Government eliminated the deposits from the total of out-of-town clearances since it was obvious that they had already been included as deposits in one of Beard's accounts at the bank. In addition, in order to eliminate possible duplications, a comparison was made of the dates of all the checks which had been cashed with the dates of currency deposits. Where, in any instance, the two coincided, it was assumed that the proceeds of the check had been deposited and the amount of the check was deducted to the extent it was represented by a deposit on the same day. Additional deductions were made for business expenses and gambling losses when they could be ascertained.

[Summary of Facts]

As the result of the information revealed by their searches, the agents made the following deductions: (1) deposits in the defendant's investment account in the bank comprising the sum of $16,436.34 which represented monies received by Beard in payment of loans by him, and $4,775 from the proceeds of bonds sold during the year; (2) a deposit of $532 in the bank account of the defendant's wife; (3) out-of-town items in the amount of $26,809 deposited in Beard's commercial account; (4) $32,936.09 representing a possible duplication of the amount of out-of-town checks cashed by the defendant and money deposited in the defendant's commercial account; (5) the sum of $3,123.41 in out-of-town items found to be a payment of loans made by Beard; (6) the sum of $247,100.07 of out-of-town items which, according to statements made by the drawers to the agent, represented checks cashed by Beard for their accommodation; (7) deductions for business expenses for wire service rental, bad checks and gambling losses in the sum of $35,279.05. The aggregate of these items reduced the amount of the income chargeable to Beard to the sum of $608,246.75.

This amount was further reduced as the result of developments during the trial. The Government produced a number of witnesses who had given out-of-town checks in varying amounts to Beard in payment of gambling losses. On cross examination some of these witnesses testified that on occasion they has won bets with Beard and they identified certain of his checks in payment, which his attorneys produced. These items were accordingly deducted and, together with other corrections, reduced the unreported income of Beard in 1944 to the sum of $517,383.89. From this amount an exemption of $1,000 was deducted and after making allowance for the sum of $5,555.88 previously paid by Beard as the tax of the year, a deficiency of $454,664.98 was ascertained.

Net Worth Method

The Government, however, in proving its case did not rely entirely upon the calculation which showed the monies passing through Beard's hands in the course of his gambling business, and the deductions and eliminations therefrom which the revenue agents were able to find. There was also an earnest effort to ascertain the financial status and taxable income of the defendant by comparing his net worth at the beginning and at the end of each of the years covered by the indictments. The computation was made by Samuel W. Ford, a revenue agent of the Treasury Department with twenty years' experience, and E. Russell Kennedy, a special agent of the Internal Revenue Service for 27 years. In making their investigations the agents checked the land records of the District of Columbia and the nearby counties in Maryland and Virginia , visited over 80 banks and checked motor vehicle registries and automobile dealers' records. They also examined the records of the investment counsellor of Beard, and made contact with numerous persons who had had transactions with the defendant. The purpose was to ascertain the defendant's assets consisting of real estate, stocks, bonds, bank accounts, currency, &c., and also his liabilities such as mortgage liens, obligations to banks and brokers, personal loans and debts.

The computation as to 1944, except as to depreciation, was based on evidence taken at the trial. It showed assets at the end of 1943 of $289,754.57, consisting of cash in bank, loans receivable, war savings bonds, automobiles, real estate, furniture and fixtures in a hotel and a partnership interest in a barber shop; and liabilities of $45,260.77 consisting of deeds of trust or mortgages on real estate and depreciation on buildings, furniture and fixtures, or a net worth of $244,493.80. The corresponding figures at the end of 1944 showed assets of $365,543.36 and liabilities of $43,485.91, or a net worth of $325,057.45. Thus the increase in net worth during the year was $80,563.65, to which was added income taxes of $9,241.21 paid during the year, making a total increase in net worth in the sum of $89,804.86 for the year 1944. The money spent for living expenses during the year, usually added in a net worth statement, was not taken into consideration since the figures were not available. The computation also showed a progressive increase in net worth for the succeeding years, that is, $58,723.42 in 1945, $61,355.17 in 1946 and $132,188.50 in 1947.

The sources from which the figures were taken were explained. The asset