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B. Failure To Investigate Leads Provided By The Taxpayer. Chu next argues that the government failed to investigate or follow up leads provided by the defendants which might have led to non-taxable sources of income, and this failure of the government to investigate the leads renders the government's case insufficient to go to the jury under the decisions of Holland, supra, Scott, supra, and United States v. Keller [75-2 USTC ¶9729 ], 523 F.2d 1009 (9th Cir. 1975). Chu focuses on the government's failure to investigate suggestions that members of the defendants' extended family, including relatives residing in mainland China , allegedly loaned and entrusted the defendants with significant sums of money to "buy a house and create a safe sanctuary for members of the extended family." The government contends that the trial court properly instructed the jury that "they have to find from the evidence that the government had met its burden of investigating any lead or explanation supplied by the taxpayer and that Holland only requires the government to investigate leads 'reasonably susceptible of being checked.' " The government contends that it investigated every lead reasonably susceptible of being checked brought to its attention. Further, the government notes that during the trial it revised the defendants' opening net worth figures upward to take into account nontaxable sources of income supplied by the taxpayers.

In Holland , the United States Supreme Court stated that "When the government fails to show an investigation into the validity of such leads, the trial judge may consider them as true and the government's case insufficient to go to the jury." 348 U.S. at 136. But the Holland court also stated that the government need not investigate all leads. The court in Holland limited the scope of the government's required investigation to "relevant leads furnished by the taxpayer--leads reasonably susceptible of being checked, which, if true, would establish the taxpayer's innocence." Id. at 135-36. Thus, the issue is not whether the government fully investigated each and every lead furnished by the defendants, but whether the government failed to investigate any "relevant leads . . . reasonably susceptible of being checked." Agent William Schroer testified that the government investigated all leads concerning certain bank accounts and other records of the defendants and where appropriate, increased its net worth calculation in favor of the defendants. Our attention, then, focuses on whether the government adequately investigated the proffered leads suggesting that additional non-taxable income may have been realized from certain loan transactions within the defendants' extended family.

In 1982, the defendants provided the government with letters written in Chinese dated in 1979, 1980 and 1981, allegedly from family members in China , and allegedly discussing loans given to the defendants in previous years. Agent Hinkle testified that he had the letters translated, requesting the originals of the letters to have a lab verify their authenticity and also requested supporting documentation for the purported loans. The defendants have failed to provide either the original letters much less any supporting documentation for the purported loans. In United States v. Goldstein, 685 F.2d 179 (7th Cir. 1982), the defendant in a net worth tax prosecution argued that his increase in net worth was attributable to a non-taxable cash inheritance that he received. In holding that the evidence was sufficient to support the jury's guilty verdict, this court stated, "There was not a probated will or other record of any inheritance, and the testimony of the inheritance came from [the defendant's] relatives. The jury was under no duty to accord face value to this self-serving, undocumented testimony." Id. at 182. Similarly in the present case, there is no documentation or record of any loans to the defendants other than the copies of alleged letters from the defendants' relatives, and the jury was under no duty to accord face value to the defendants' self-serving claim of having received loans from family members.

Furthermore, Agent Schroer testified that if the alleged family loans that Chu contends were received before January 1, 1977 (the first tax year under examination) were invested prior to January 1, 1977 and were reflected as assets in the defendants' opening net worth statement, the existence of the loans would have no bearing on the defendants' net worth computation. According to Schroer, the existence of the family loans would benefit the defendants' net worth computation only if the alleged loans were held as cash on January 1, 1977 and were converted into assets during 1977 and 1978. Since, as noted above, the record discloses that the defendants engaged in a pattern of investing available funds and the record is silent of any evidence of any significant cash on hand on December 31, 1976 not included in the government's calculation of the defendants' opening net worth, the jury had ample evidence to conclude that if the defendants in fact received loans from various family members, the funds were invested prior to January 1, 1977 and thus had no bearing on the defendants' net worth during 1977 and 1978.

The diligence of the government in investigating all of the leads which were reasonably verifiable, the lack of the defendants' cooperation in failing to provide originals of letters, the defendants' failure to provide any loan documentation combined with Agent Schroer's testimony that the defendants' net worth would not be affected by any loans invested prior to January 1, 1977 provides sufficient evidence from which a reasonable person would conclude that the government investigated "all leads reasonably susceptible of being checked, which if true, would establish the taxpayer's innocence." Chu's argument that the IRS should follow leads to mainland China is as ridiculous as suggesting that the IRS must follow like leads into the Soviet Union, Poland, Afghanistan, Iran, Iraq, Africa, or other similar, troubled, and/or distant countries. A lead that requires world-wide investigation to be verified can hardly be characterized as "reasonably susceptible of being checked."

C. Likely Source of Unreported Income. Chu contends that the government not only failed to establish a reasonably certain opening net worth and failed to negate all possible sources of non-taxable income, but also failed to provide a likely source for additional unreported income. Chu believes the government failed in this regard because: (1) the government offered no evidence of the number of Phendimetrazine ⁴ actually dispensed rather than stolen, not included in records, or discarded due to damage; (2) the government offered no evidence showing the percentage of Phendimetrazine dispensed for money as opposed to dispensed without charge; and (3) even if each of the 700,000 allegedly missing Phendimetrazine had been dispensed at $.07 a piece, the total income of $49,000 was more than accounted for in the earnings reported by the Southeastern Medical Center for the two years in question.

In net worth tax prosecution, the government must establish "[e]ither a 'likely source' of the illegally unreported income represented by the calculated increase in net worth plus non-deductible expenditures in the year in question . . . or all possible sources of non-taxable income must be negated." United States v. Grasso [80-2 USTC ¶9593 ], 629 F.2d 805, 808 (2nd Cir. 1980). See also United States v. Massei [58-1 USTC ¶9326 ], 355 U.S. 595, 595 (1958). "The government could win its case without even introducing evidence of a likely source of income. . . . Proving a likely source of income is merely one of the ways that the Government can prove that the increased net worth resulted from taxable sources." United States v. Goldstein [82-2 USTC ¶9507 ], 685 F.2d 179, 183 (7th Cir. 1982). Thus, contrary to Chu 's contention, the government need not both prove a likely source and negate all possible sources of non-taxable income. In the present case, the government presented evidence from which a reasonable jury could find that the government had established "a reasonably certain" opening net worth and that the government investigated all "relevant leads . . . reasonably susceptible of being checked," thus negating possible sources of non-taxable income.

In addition to negating sources of non-taxable income, DEA Compliance Inspector Joel Fries testified that his review of the defendants' dispensing records of controlled substances, their account book and their purchases of Phendimetrazine revealed a total of over 698,000 Phendimetrazine units unaccounted for during the years 1977 and 1978, and the defense introduced testimony that the Phendimetrazine tablets were generally dispensed at a cost of $.07 per unit. Thus, the record contained sufficient evidence to allow a reasonable juror to conclude that unrecorded sales of the Phendimetrazine constituted a likely source of unreported taxable income. Chu relies on United States v. Grasso, supra, and United States v. Bethea, 537 F.2d 1187 (4th Cir. 1976), both of which are clearly distinguishable from the present case. In Grasso, the government investigation yielded "no factual basis for identifying a 'likely source' ", 629 F.2d at 808, and in Bethea "not one shred of evidence was introduced at trial to show [the defendant] had any dealings in narcotics or was in partnership with his brother [who dealt in narcotics]." 537 F.2d at 1191. In contrast, the jury in the instant case had sufficient evidence before it to conclude that the government negated all possible sources of non-taxable income and also established that unrecorded sales of the unaccounted-for Phendimetrazine provided a likely source of unreported taxable income.

III.

We turn now to Chu's contention that the trial court erred in admitting the statements made by the defendants to IRS agents into evidence as the agents contacted and interviewed the defendants without the presence of their counsel in violation of Massiah v. United States, 377 U.S. 201 (1964), requiring that indicted individuals be questioned concerning the charges pending in the indictment only in the presence of counsel, and because the defendants did not waive their constitutional rights intelligently, knowingly, and voluntarily. The government argues that the defendants had no right to counsel under Massiah since the indictment charging a violation of the controlled substance statutes had been dismissed before the IRS ever contacted the defendants, and the defendants obviously had not been indicted before the investigation for the income tax evasion was completed. Further, the government contends that the defendants did, in fact, waive any constitutional rights that they retained when they were interviewed by the IRS agents.

In Massiah, the Supreme Court held that an accused "was denied the basic protections of the [Sixth Amendment] [when the government introduced the defendant's own statement against him] which federal agents had deliberately elicited from him after he had been indicted and in the absence of his counsel." Id. at 206. Thus, if in fact Chu had been indicted on the income tax evasion charges at the time of his interview with IRS agents Hinkle or Schroer, any statements made by Chu without the presence of legal counsel would have been inadmissible against him on the tax evasion charges as Massiah prohibits the admission of statements against a defendant when "deliberately elicited from him after he had been indicted and in the absence of counsel." During the period Hinkle and/or Schroer interviewed Chu , the controlled substance indictment had been dismissed and was no longer pending, and he was a free man, not as yet having been indicted on the tax evasion charges. Consequently, Chu 's counsel in a novel but not too clever way seeks to expand upon the protection Massiah affords one under indictment to cover statements made after the dismissal of that indictment. Neither Chu nor his counsel have provided any authority to support this position, but contend in another novel argument that the DEA investigation and the IRS investigation should be considered as one investigation since the DEA was the source of information concerning the defendants, and also argues that the dismissal of the DEA indictment did not terminate the defendants' Massiah rights.

We need not discuss whether the defendants' Massiah rights terminated with the dismissal of the DEA indictment as Chu 's argument fails because the subsequent indictment and conviction involved an entirely different offense--income tax invasion.

"Massiah offers no immunity from liability for uncounseled, and post-indictment statements that involve different criminal acts. Such statements, even though deliberately elicited by government agents after indictment and in the absence of counsel, may form the basis for a separate indictment and may be offered to prove such additional charges. . . . Massiah is limited to holding that incriminating statements made by indicted defendants out of the presence of counsel may not be admitted at trial to prove the charge in the pending indictment."

United States v. Grego, 724 F.2d 701, 703 (8th Cir. 1984) (emphasis added). In Grego, a conversation between two defendants in the absence of counsel was recorded after the defendants had been indicated by a federal grand jury in Georgia on a charge of importation of marijuana. The defendants were subsequently indicted by a federal grand jury in Arkansas for conspiracy to possess marijuana and the trial court admitted evidence of the conversation recorded after the return of Georgia indictment. The court concluded:

"Although both indictments involve marijuana, the acts on which they were based were separate and distinct and did not amount to a single criminal offense. . . .

When the tape of the conversation was made [the defendants] had not been indicted on any offense for which the tape was later used against them; therefore, we affirm the district court's refusal to apply Massiah to exclude the tape."

Grego, 724 F.2d at 703.

The court in United States v. Lisenby, 716 F.2d 1355 (11th Cir. 1983) (en banc) (per curiam), was presented with a similar fact situation and reached a similar conclusion. In Lisenby the defendant had been arrested and charged with possession of marijuana. The government recorded conversations involving the defendant after he had been released (while the possession charge was still pending) and subsequently indicted the defendant for conspiraccy and possession with intent to distribute marijuana. The trial court admitted the taped conversation into evidence at the trial for conspiracy and possession with intent to distribute marijuana. The Eleventh Circuit upheld the admission of the recorded conversation, reasoning that, "The Sixth Amendment right to counsel attaches once adversary proceedings have been commenced, but it attaches as to those adversary proceedings and not other offenses. . . . The admission of statements made after the initial arrest in the trial for a subsequently charged offense is not contrary to Massiah." 716 F.2d at 1359 (emphasis in original) (citation omitted).

The defendants in the case at bar were initially indicted on drug-related charges. Only after the drug-related charges were dismissed and the defendants were free of any criminal charges did the IRS elicit the statements from the defendants that were subsequently introduced at their income tax evasion trial. The income tax evasion charge was completely separate and distinct from the charge of improper record keeping and improper distribution of a controlled substance recited in the prior indictment. Following the reasoning of Grego and Lisenby, the defendants' statements are admissible since at the time the statements were made, the defendants "had not been indicted on any offense for which the [statements were] later used against them." Grego, 724 F.2d at 703. Furthermore, Chu 's argument for suppressing the statements to the IRS agents in this case is even weaker than that rejected by the Eighth and Eleventh Circuits in Grego and Lisenby respectively since at the time of the defendants' statement to the IRS agents in the instant case, no indictment was pending against them. Thus, we hold that the trial court properly admitted the statements the defendants made to IRS agents prior to their indictment for income tax evasion.

Chu also contends that he and Cheng did not waive their constitutional rights when they made statements to the IRS agents. Chu fails to delineate or explain what, if any, constitutional rights the defendants had not waived, much less which of their constitutional rights they did not understand. As we have just concluded, Massiah does not apply to the statements the defendants made to the IRS agents since, at the time of the defendants' statements, they had not as of that date been indicted for income tax evasion. Since the defendants were not in custody at the time of other statements to IRS agents, Miranda v. Arizona , 384 U.S. 436 (1966), does not require that the defendants be admonished of their rights before questioning. Beckwith v. United States [76-1 USTC ¶9352 ], 425 U.S. 341, 347 (1976); United States v. Mapp [77-2 USTC ¶9607 ], 561 F.2d 685, 688 (7th Cir. 1977); United States v. Fitzgerald [76-2 USTC ¶9756 ], 545 F.2d 578, 581 (7th Cir. 1976). Chu contends that because he and Cheng did not understand that the IRS was conducting a criminal investigation, they did not intelligently, knowingly, and voluntarily consent to make statements to the IRS.

The Supreme Court recognized in Beckwith that "noncustodial interrogation might possibly in some situations, by virtue of some special circumstances, be characterized as one where 'the behavior of . . . law enforcement officials was such as to overbear the petitioner's will to resist and bring about confessions not freely self-determined. . . .' " 425 U.S. at 347-48. In the case before us, Hinkle testified that before asking the defendants any questions, he read aloud to the defendants from an IRS warning card:

"[O]ne of my functions is to investigate the possibility of criminal violations of the Internal Revenue laws. . . . Under the Fifth Amendment to the Constitution of the United States I cannot compel you to answer any questions or to submit any information. . . . [A]nything which you say may be used against you in any criminal proceeding which may be undertaken, [and] you may, if you wish, seek the assitance of an attorney before responding."

Chu testified at the suppression hearing held before trial that he is a naturalized citizen of the United States, that he began to learn the English language in his grade school years in China, that he took post-graduate courses at New York University in English after his arrival in the United States, and that he had been practicing psychiatry in this country for more than 20 years. Chu also conceded it was of the utmost importance for him in the practice of medicine, and particularly psychiatry, to understand a patient in order that he might make a proper diagnosis. Further, it seems obvious that the State of Indiana would require that medical doctors be able to fully understand and converse in the English language before granting a license to practice medicine in Indiana . The record also reveals that the defendants were knowledgeable in the field of financial affairs, with sophisticated investments in stocks, real estate, and a medical partnership. Chu acknowledged that he understood the language Hinkle used when explaining the defendants' rights, and after Hinkle recited the standard IRS statement advising the defendants of their rights, the defendants both responded "Yes" to Hinkle's question whether they understood their rights. Before going further with the interview, the defendants discussed whether it was advisable for them to obtain an attorney at this juncture in the investigation. Thus, there is ample evidence in the record supporting the conclusion that the defendants clearly, knowingly and intelligently understood the elements of the warnings read to them by Hinkle, the nature of the investigation, the nature of their rights, and thus that no "special circumstances"existed which would make defendants' statements anything but voluntary. We hold it was not error for the trial court to admit the statements the defendants made to the IRS agents.

IV.

Finally, Chu contends that he was denied a fair trial due to the Assistant United States Attorney's imputation of uncharged, unsupported criminal misconduct on the part of the defendants in closing argument in spite of the government's pledge not to offer evidence of uncharged criminal activity. During its closing argument, the government stated:

"Well, you have heard about the results of that [DEA] audit. You heard that they purchased during that period of January 1, '77 through February 23 of '78, before any returns were filed, that they had purchased 830,000, thousand capsules of--831,000 capsules in Logansport , or wherever they lived. Why? I didn't know there were that many people in Logansport or the other town that were so overweight that needed that kind of weight reduction. You heard they were mild uppers. These speckled birds, these robins eggs, what happened to the 698,000 pills that are missing? You think they don't have a value? You think they don't produce money? You would use your common sense and you can use you experience in life, and you can ask that question."

According to Chu, this argument "addressed no material issue in this tax case, was without evidentiary support, and violated repeated prosecutorial pledges on which the defendant relied," and the denial of the defendant's motion for mistrial on the basis of this argument was reversible error under Berger v. United States, 295 U.S. 78 (1935), and United States v. Meeker [77-2 USTC ¶9604 ], 558 F.2d 387 (7th Cir. 1977).

"Although inflammatory argument may be grounds for reversal, the government should not be restricted to a sterile recitation of uncontroverted facts." United States v. Scott [81-2 USTC ¶9663 ], 660 F.2d 1145, 1177 (7th Cir. 1981) (citing United States v. Falk [79-2 USTC ¶9597 ], 605 F.2d 1005 (7th Cir. 1979), cert. denied, 445 U.S. 903 (1980)). Further we note that "we are to consider the prosecutor's conduct not in isolation, but in the context of the trial as a whole, to determine if such conduct was 'so inflammatory and prejudicial to the defendant . . . as to deprive him of a fair trial. . . .' " United States v. Chaimson, 760 F.2d 798, 807 (7th Cir. 1985) (quoting United States v. Zylstra, 713 F.2d 1332, 1339 (7th Cir.), cert. denied, 464 U.S. 965 (1983)); see also United States v. Young, 105 S.Ct. 1038, 1045 (1985); Jentges v. Milwaukee County Circuit Court, 733 F.2d 1238, 1242 (7th Cir. 1984). It is unquestioned that the prosecutor "may prosecute with earnestness and vigor--indeed, he should do so. But, while he may strike hard blows, he is not at liberty to strike foul ones." Berger v. United States, 295 U.S. 78, 88 (1935); see also United States v. Young, 105 S.Ct. at 1042; United States v. Chaimson, 760 F.2d at 809.

The prosecutor's statement concerning the missing Phendimetrazine clearly was material and proper to provide a possible source for additional taxable income as discussed in Section II.C. above. DEA Compliance Officer Joel Fries testified without objection that approximately 698,000 capsules of Phendimetrazine, known on the street as "speckled birds" or "robins eggs," were unaccounted for in the defendants' records, thus providing evidentiary support for the government's argument. Contrary to Chu 's contention, the quoted passage of the prosecutor's argument does not claim that the defendants engaged in any criminal misconduct other than the tax evasion charges they were convicted of. Rather, the prosecutor merely noted that nearly 700,000 Phendimetrazine tablets were unaccounted for and suggested that they had value and could produce income; the prosecutor never even inferred, much less stated that unrecorded sales of Phendimetrazine might be illegal. Viewed in the context of the trial as a whole, we conclude that the quoted passage of the prosecutor's argument was not "so inflammatory and prejudicial to the defendant . . . as to deprive him of a fair trial." Chaimson, 760 F.2d at 809. While the prosecutor may have struck a "hard blow," in the context of the trial it was not a "foul blow." Accordingly, we hold that the prosecutor's closing argument was proper, and the district court's denial of the defendants' motion for a mistrial was not error.

V.

The judgment of the district court is AFFIRMED.

^* The Honorable Floyd R. Gibson, Senior Circuit Judge of the United States Court of Appeals for the Eighth Circuit, is sitting by designation.

¹ The evidence introduced at trial revealed that Chu and Cheng evaded $11,141 in federal income tax for tax year 1977 and $29,933 for tax year 1978.

² After the filing of this appeal defendant Dr. Sylvia Cheng Chu, M.D., died, and the district court set aside and deemed abated defendant Cheng's convictions.

³ Rob in Zeldin analyzed the defendants' net worth for the tax years 1977 and 1978 based on the exhibits received into evidence and the testimony offered at trial. Zeldin prepared charts which summarized the evidence and his analysis of the defendants' financial affairs for 1977 and 1978.

⁴ Phendimetrazine is included on Schedule III of the federal government's list of controlled substances. 21 C.F.R. §1308.13 (1985).

 

 

[78-2 USTC ¶9628] United States of America , Plaintiff-Appellee v. Rob ert Meyer Boulet, Defendant-Appellant

(CA-5), U. S. Court of Appeals, 5th Circuit., No. 76-4442, 577 F2d 1165, 8/8/78 , Aff'g unreported District Court decision

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

Crimes: Tax evasion: Bank deposits method: Opening cash on hand.--A doctor was properly convicted of tax evasion through use of the bank deposits-cash expenditure method. Because the government established the amount of cash on hand at the start of the period with reasonable certainty and performed the duties incumbent on it in attempting to separate taxable income from other sources in the doctor's gross bankdeposits and cash expenditures, the question of guilt or innocence was properly submitted to the jury.

John P. Volz, United States Attorney, Mary Williams Cazalas, Assistant United States Attorney, Duro J. Duplechin, Jr., Assistant United States Attorney, John H. Musser, IV, Assistant United States Attorney, New Orleans, Louisiana 70130, for plaintiff-appellee.

Michael Fawer & Matthew H. Greenbaum, 1220 First NBC Building, New Orleans, Louisiana 70112, for defendant-appellant.

Before WISDOM, GOLDBERG and RUBIN, Circuit Judges.

ALVIN B. RUBIN, Circuit Judge:

The conviction in this criminal prosecution for willful evasion of income taxes ¹ was based entirely on the government's evidence that it had reconstructed the medical doctortaxpayer's income during the years in question by means of the bank deposits or cash expenditures method. Because the prosecution established the amount of cash on hand at the start of the period with reasonable certainty and performed the duties incumbent on it in attempting to separate taxable income from other sources in the doctor's gross bank deposits and cash expenditures, the question of guilt or innocence was correctly submitted to the jury by the trial court. Therefore, the judgment of conviction is affirmed. ²

[Background]

I. The defendant, a general practitioner of medicine, whose office was in LaRose , Louisiana , was charged with willful evasion of income taxes for the years 1969, 1970, 1971 and 1972. Dr. Boulet was on a calendar year basis. To prove its charges, the government relied upon one of the two traditional indirect methods of proof, analysis of the taxpayer's bank deposits and cash expenditures. Under this method, all deposits to the taxpayer's bank and similar accounts in a single year are added together to determine the gross deposits. An effort is made to identify amounts deposited that are non-taxable, such as gifts, transfers of money between accounts, repayment of loans and cash that the taxpayer had in his possession prior to that year that was deposited in a bank during that year. This process is called "purification." It results in a figure called net taxable bank deposits.

The government agent then adds the amount of expenditures made in cash, for example, in this case, cash the doctor received from fees, did not deposit, but gave to his wife to buy groceries. The total of this amount and net taxable bank deposits is deemed to equal gross income. This is in turn reduced by the applicable deductions and exemptions. The figure arrived at is considered to be "corrected taxable income." It is then compared with the taxable income reported by the taxpayer on his return. ³

In asking the jury to rely on this analysis, as a basis for deciding that the taxpayer willfully underestimated his true income, the government necessarily relies on circumstantial evidence. United States v. Marshall [77-1 USTC ¶9581], 5 Cir. 1977, 557 F. 2d 527, 530, note 3; United States v. Slutsky [73-2 USTC ¶9733], 2 Cir. 1973, 487 F. 2d 832, 839, cert. denied, 1974, 416 U. S. 937, 94 S. Ct. 1937, 40 L. Ed. 2d 287; United States v. Penosi [72-1 USTC ¶9103], 5 Cir. 1971, 452 F. 2d 217, 219-220, cert. denied, 1972, 405 U. S. 1065, 92 S. Ct. 1495, 31 L. Ed. 2d 795; United States v. Doyle [56-1 USTC ¶9553], 7 Cir. 1956, 234 F. 2d 788, 793, cert. denied, 1956, 352 U. S. 893, 77 S. Ct. 132, 1 L. Ed. 2d 87.

It is part of the government's burden of proof to establish beyond a reasonable doubt that the expenditures and deposits come from taxable income for the very year in question. Because our income tax system is on an annual basis, failure to report income must be charged for a specific year. The statute of limitations applicable to prosecutions penalizes only failure to report income for specific years. Moreover, the indictment charges an offense for a specific year, and the proof must conform to the indictment.

There is always the possibility that the taxpayer deposited cash that he received from a non-taxable source or from income taxed in a prior year but kept on hand as cash or even from unreported income from a prior year kept on hand in cash. Such events are common human occurrences, and this possibility may of itself create reasonable doubt. Therefore, the government must establish in some fashion the amount of cash the taxpayer had on hand at the start of the period. This is part of the government's duty to negate the possibility that bank deposits or cash expenditures in the year under investigation originated from non-taxable sources. United States v. Penosi, supra, 452 F. 2d at 219-220. See United States v. Bianco [76-1 USTC ¶9351], 2 Cir. 1976, 534 F. 2d 501, 507, cert. denied, 1976, 429 U. S. 822, 97 S. Ct. 73, 50 L. Ed. 2d 84, suggesting that, in a cash expenditure case, proof of a likely taxable source does not suffice to relieve the prosecution of its duty to negate probable sources of non-taxable income. Compare United States v. Massie [58-1 USTC ¶9326], 1958, 355 U. S. 595, 78 S. Ct. 495, 2 L. Ed. 2d 517 (networth method).

We, therefore, review the record "bearing constantly in mind the difficulties that arise when circumstantial evidence as to guilt is the chief weapon of a method that is itself only an approximation." Holland v. United States [54-2 USTC ¶9714], 1954, 348 U. S. 121, 129, 75 S. Ct. 127, 132, 99 L. Ed. 150. The government must prove a full and adequate investigation in a bankdeposits case just as it must in a net-worth case. Holland v. United States, supra. "Such investigation must establish a guarantee of essential accuracy in the circumstantial proof at trial as an element of the government's burden of proving guilt beyond a reasonable doubt. . . ." Slutsky, supra, 487 F. 2d at 840.

[Contentions]

II. It is contended that, in investigating Dr. Boulet, the government failed in two particulars: (a) it did not establish with reasonable certainty the amount of cash that he had in his personal possession, as currency, at the start of each year; these funds were substantial and, when later deposited in a bank account, were erroneously considered income; (b) among his deposits were other items that were not income, such as checks he cashed for patients; failure to delete and exclude these distorted his apparent income. The case does not present the typical problem of an unknown source of income: Dr. Boulet collected his fees in cash. The source of unreported income is contended to be fees paid Dr. Boulet in cash and not reported as income that were detected because they eventually found their way into his bank account.

Because the government did not, and, perhaps, could not, analyze each deposit separately to prove that it was from a taxable source, it is the government's dual burden to establish with reasonable certainty the cash on hand at the beginning of each of the years in question and to negate all other sources of non-taxable income during each of those years. United States v. Marshall, supra. The latter requirement may be satisfied by proof of an adequate investigation that did not disclose non-taxable sources. United States v. Penosi, supra, 452 F. 2d at 219; see also United States v. Mackey, 7 Cir. 1965, 345 F. 2d 499, 506, cert denied, 1965, 382 U. S. 824, 86 S. Ct. 54, 15 L. Ed. 2d 69.

With respect to both non-taxable sources and cash on hand, the government must prove its case beyond reasonable doubt. However, "once the Government has established its case, [in this fashion], the defendant remains quiet at his peril." Holland, supra, 348 U. S. at 138-139, 75 S. Ct. at 137.

Having established that it conducted a thorough investigation "the government is not required to negate all possible non-income sources of the deposits, particularly where the source of the income is uniquely within the knowledge of the taxpayer. At the