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[81-1 USTC ¶9196] United States of America , Plaintiff-Appellee v. Leo Quimby, Defendant-Appellant

(CA-5), U. S. Court of Appeals, 5th Circuit, Unit A, No. 79-5572, Summary Calendar, 636 F2d 86, 2/2/81

[Code Sec. 7203]

Crimes: Willful failure to supply information: Defective arrest warrant: Lack of jurisdiction: Motion to disqualify trial judge: Insufficient evidence: Jury instructions.--The court affirmed the taxpayer's jury conviction for two counts of willfully failing to supply information regarding gross income, having filed forms containing no financial information and a statement protesting the tax laws. His arrest warrant was not supported by a showing of probable cause but this procedural defect did not void his subsequent conviction. His contention that the trial judge should have been disqualified was rejected because the alleged sources of bias or prejudice were prior judicial actions rather than personal actions. The court found that there was sufficient evidence of willfulness, including a letter from the IRS, to which he had replied, informing him of possible criminal penalties related to an improper return for a prior year, and sufficient identification evidence. The jury instructions on the issue of good faith were legally adequate and substantially the same as acceptable portions of the requested instructions. His allegation that the district court lacked personal jurisdiction was without merit because the action was instituted in the district where he was required to file his return, which is the district a violation of §7203 in considered to occur, and the venue was transferred upon the taxpayer's motion.

John H. Hannah, Jr. United States Attorney, M. Lawrence Wells, Assistant United States Attorney, Tyler, Tex. 75710, for plaintiff-appellee. John W. O'Dowd, 723 Main St. , Houston , Tex. 77002 , for defendant-appellant.

PER CURIAM:

Defendant, Leo Quimby, appeals judgment entered on a jury conviction for two counts of willfully failing to supply information regarding gross income to the Internal Revenue Service (IRS), in violation of 26 U. S. C. §7203. He asserts on appeal (i) his arrest warrant was not supported by a showing of probable cause under oath pursuant to F. R. Crim. P. 9(a), (ii) the Eastern District of Texas lacked jurisdiction to try his case, (iii) denial of his motion to disqualify the trial judge constituted error, (iv) the evidence presented was insufficient to support a finding of guilt against him, and (v) District Court erred in refusing to give his requested jury charge. Finding all his contentions without merit, we affirm.

I. Quimby had filed a valid tax return for 1972. In 1974, however, Quimby was notified by the IRS his Form 1040 submitted for 1973 was not acceptable as an income tax return and failure to file the required return would subject him to prosecution. Quimby again failed to file a valid Form 1040 for the tax year 1974.

For the tax years of 1975 and 1976, Quimby earned a gross income of $7,524 and $7,992, respectively, while employed at the Rusk State Hospital in Rusk, Texas, which after subtracting his wife's community portion showed Quimby earned a gross income of $3,762 in 1975 and $3,996 in 1976. These amounts of gross income required him to file federal income tax returns for 1975 and 1976.

Quimby submitted an IRS Form 1040 for both 1975 and 1976. The 1975 form, however, contained no financial information from which his tax liability could be computed. Rather, the form disclosed only his name, address, and other basic identifying information before revealing the words "Fifth Amendment Claimed Against Self-Incrimination" in the blank for filling in wages. In addition, attached to the form with various other materials was a statement with Quimby's signature protesting the tax laws. Similarly, the Form 1040 submitted for 1976 was not signed but contained the following statement at the bottom of the first page:

I refuse to sign this instrument, which it is believed that nobody understands, because it would tend to incriminate me or my property, therefore, I claim the Fifth Amendment in declining to do so . . .

Consequently, Quimby was charged by information in the Northern District of Texas with two counts of willfully violating 26 U. S. C. §7203 for the calendar years 1975 and 1976. The information was neither verified nor supported by affidavit. It contained a brief statement of the facts underlying the crimes charged and was signed by an Assistant United States Attorney. On August 3, 1978, Quimby filed a motion to dismiss the information on many grounds, one of which was that neither the arrest warrant nor the information was supported by probable cause. In response, the government filed an affidavit executed on July 19, 1978, summarizing the information derived from the special agent's investigation of Quimby's tax liability for 1975 and 1976.

Meanwhile, on August 14, 1978, Quimby filed a motion requesting the Court to transfer the case from the Northern District to the Eastern District where Quimby allegedly resided. The government did not oppose Quimby's motion to change venue and it was subsequently granted by the Court.

Prior to trial, Quimby filed a motion to dismiss for lack of jurisdiction, arguing among several other grounds, that since the alleged offense occurred in the Western District, and Quimby resided in the Eastern District, the Northern District was an improper court to institute the prosecution. Since Quimby filed the complained of tax forms in Dallas , Texas , which is within the jurisdiction of the Northern District of Texas, the motion was orally denied.

Also prior to trial, Quimby filed a motion to disqualify Judge Steger on the basis Judge Steger had a bias and prejudice against him because he had filed three lawsuits against Judge Steger. Judge Steger requested Chief Judge Woodward of the Northern District to rule on the motion. Chief Judge Woodward denied the motion because (i) it was unsupported by affidavit, and (ii) the ground alleged did not show Judge Steger had any bias and prejudice against Quimby.

Quimby then filed a second motion to disqualify Judge Steger. Attached to the motion was an exhibit indicating on May 5, 1978, Judge Steger had recused himself from a civil suit filed by Quimby. In the affidavit, Quimby swore he was not currently suing Judge Steger but he was not pleased with Judge Steger's actions in other proceedings and "[Judge] Steger holds prejudice and bias against . . . Defendant for reasons known only to himself." Quimby then filed a second affidavit complaining of Judge Steger's actions in the criminal proceeding. Judge Steger denied the motion on May 3, 1979.

On September 4, 1979, Quimby filed an amended motion to disqualify, without alleging any new grounds for disqualification. This motion was denied first orally and subsequently by a signed formal order.

The matter went to trial before a jury on September 4, 1979. A courtroom identification of Quimby was made by Rusk State Hospital co-employees who had seen him at the hospital the past seventeen years. In his defense, Quimby called several character witnesses who testified they believed Quimby did not intend to violate the law when he filed the 1040 forms for 1975 and 1976 because he believed his actions were lawful.

At the close of all the evidence, Quimby requested an elaborate, extended charge on good faith. The District Court refused, however, issuing the following instruction:

You may not treat the Defendant's belief of the unconstitutionality of the income tax as a possible negation of criminal intent. The Defendant's motivation in this case, the fact that he was engaged in a protest in his sincere belief that he was acting in good cause, is not an acceptable legal defense as justification.

and

. . . an act or omission is not willful if it was the result of negligence, inadvertence, accident or reckless disregard for the law, or due to a good faith misunderstanding by the taxpayer as to his legal obligation to supply information on a tax return.

After the jury returned a verdict of guilty, judgment was entered against Quimby on September 6, 1979. Quimby, appealed twelve days later on September 18, 1979, requesting to proceed in forma pauperis. On September 21, 1979, the District Court issued an order stating it was unnecessary for the court to grant Quimby's request for appointed counsel and authorized him "to proceed on appeal in forma pauperis without authorization by this Court."

Subsequently, Quimby filed a motion for summary reversal with this Court on the ground the criminal information filed in his case, and the arrest warrant based on the information, were not based on probable cause or supported by an affidavit pursuant to F. R. Crim. P. 9(a). This Court denied the motion on March 4, 1980.

II. Quimby's notice of appeal is untimely since it should have been filed within ten days of entry of the judgment of conviction, but was filed within eleven days. F. R. App. P. 4(b). The requirement of 4(b) is jurisdictional. Sanchez v. Board of Regents, 625 F. 2d 521, 523 (5th Cir. 1980). Upon a showing of excusable neglect, the District Court may, with or without motion and notice, extend the time for filing a notice of appeal. Id. at 523. Although the Court did not explicitly state it was making a finding of excusable neglect for extending the time for filing a notice of appeal, we conclude its ruling on the motion to appoint counsel and allow appeal in forma pauperis constituted such a finding.

With regard to the contention that F. R. Crim P. 9(a) requires an arrest warrant issued on the basis of a criminal information and be "supported by a showing of probable cause under oath." This error has nothing to do with his conviction since it is "clear that defects in the procedures through which [a] defendant was brought before the court do not void his subsequent conviction." United States v. Millican [79-2 USTC ¶9543], 600 F. 2d 273, 275 (5th Cir. 1979), cert. denied, 445 U. S. 915, 100 S. Ct. 1274, 63 L. Ed. 2d 598 (1980) (citing Gerstein v. Pugh, 420 U. S. 103, 119, 95 S. Ct. 854, 43 L. Ed. 2d 54 (1975). A defendant cannot upset his conviction on the argument no probable cause was previously shown. Id. at 277-78.

Quimby's allegation that the District Court lacked jurisdiction over him is similarly without merit. Quimby was required to file his income tax returns in Dallas which is located in the Northern District. The Northern District of Texas was the proper venue to institute the prosecution since the commission of a 26 U. S. C. §7203 violation is considered to occur in the judicial district in which the taxpayer is required to file. United States v. Calhoun [78-1 USTC ¶9203], 566 F. 2d 969, 973 (5th Cir. 1978). Once venue was transferred to the Eastern District upon Quimby's motion, the right to be tried in the district in which the crime was committed was waived.

Nor does Quimby's contention the trial judge should have been disqualified require reversal of his conviction. Quimby's pleadings indicate the source of any bias or prejudice Judge Steger might have had against him was because of judicial actions rather than personal. In order "to be disqualified, the alleged bias or prejudice must stem from an extrajudicial source." United States v. Serrano, 607 F. 2d 1145, 1150 (5th Cir. 1979).

Quimby contends the evidence was not sufficient to show he was the person who committed the crimes charged in the information nor that he willfully failed to supply the necessary tax information. Both of these arguments lack merit.

At trial, Quimby was identified unequivocally as an employee of Rusk State Hospital for the past seventeen years. No other Leo Quimby worked at the hospital. Identity of a criminal defendant may be proven by inference and circumstantial evidence.

"The elements of an offense under Section 7203 involve proof of failure to file and willfulness in doing so." United States v. Buckley [79-1 USTC ¶9290], 586 F. 2d 498, 503 (5th Cir. 1978), cert. denied, 440 U. S. 982, 99 S. Ct. 1792, 60 L. Ed. 2d 242 (1979). A defendant's "good motive" is not relevant in determining whether his act was willful under §7203. United States v. Douglas [73-1 USTC ¶9334], 476 F. 2d 260, 263 (5th Cir. 1973). Section 7203 "only requires that the act be purposefully done with an awareness of the action and not just negligently or inadvertently." Id.

Drawing all reasonable inferences in a light most favorable to support the verdict, the evidence reveals in 1974 Quimby had received and replied to a letter from an IRS employee informing him his 1973 return did not comply with tax laws and would subject him to criminal penalties unless corrected. This and other evidence amply support a finding Quimby knew the law required him to file a proper tax return and he intentionally failed to do so. See United States v. Wade, 585 F. 2d 573, 574 (5th Cir. 1978), cert. denied, 440 U. S. 928, 99 S. Ct. 1264, 59 L. Ed. 2d 484 (1979). Even accepting Quimby's blanket claim that the Fifth Amendment privilege was in good faith, it did not automatically and completely insulate him from prosecution. Id. (citing United States v. Johnson [78-2 USTC ¶9642], 577 F. 2d 1304 (5th Cir. 1978)).

As a final contention, Quimby charges the District Court erred in not giving his requested instruction on the issue of good faith. The instruction given was legally adequate and substantially the same as the acceptable portions of the charge as requested.

The conviction on two counts of willfully failing to supply information about gross income to the IRS was correct.

AFFIRMED.

 

 

[76-2 USTC ¶9804] United States of America , Plaintiff-Appellee v. Karl J. Bray, Defendant-Appellant

(CA-10), U. S. Court of Appeals, 10th Circuit, No. 75-1932, 546 F2d 851, 12/6/76, Rev'g and rem'g an unreported District Court decision

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

Crimes: Attempt to evade or defeat tax: Reconstruction of income: Bank deposit method: Evidence.--The Court held that the utilization of the bank deposit method of reconstructing taxpayer's income was proper where the evidence demonstrated the existence of substantial unreported income.

[Code Secs. 7203 and 7205--result unchanged under the '76 Tax Reform Act]

Criminal penalties: Failure to file return: False returns: Willfulness: Evidence: Conviction: Motion for new trial.--The Court of Appeals granted taxpayer's motion for a new trial from a jury conviction of willful failure to file an income tax return and willful falsification of a tax withholding statement. The Court granted the motion since the case was tried before the same judge twice and, under the totality of facts and circumstances of the case, there was a real likelihood that the same trial judge's impartiality might reasonably be at issue under the terms of 28 U. S. C. 455(a), which disqualifies any judge from presiding in any proceeding in which his impartiality might reasonably be questioned.

[Code Sec. 7602--result unchanged under the '76 Tax Reform Act]

Examination of books and records: Administrative summons, enforcement of: Records not in taxpayer's possession: Tax liability investigation: Proper purpose: Taxpayer's right to intervene in summons proceedings: Self-incrimination.--An admin istrative summons may be issued in aid of an income tax investigation if it is issued in good faith to determine the tax liability of any person for any internal revenue tax. The taxpayer was without standing to challenge their issuance since the summonses were issued to taxpayer or aimed at individuals doing business with taxpayer, and none were issued to taxpayer or aimed at records in taxpayer's possession. Furthermore, the Court held that the taxpayer could not assert the Fifth Amendment privilege since compelled production of such documents, no matter how incriminating, was not violative of whatever Fifth Amendment privilege against self-incrimination the taxpayer might have enjoyed if the summons had been directed against him, because the act of disclosing such records does not constitute the giving of incriminating testimony.

Ramon M. Child, United States Attorney, Max D. Wheeler, Assistant United States Attorney, Salt Lake City, Utah 84110, for plaintiff-appellee. James N. Barber, Meredith, Barber and Day, 455 S. 3rd E., Salt Lake City , Utah , for defendant-appellant.

Before SETH, BREITENSTEIN and BARRETT, Circuit Judges.

BARRETT, Circuit Judge:

Karl J. Bray (Bray) appeals from a jury conviction of violating 26 U. S. C. A. §7203 (wilful failure to file an income tax return) and 26 U. S. C. A. §7205 (wilful falsification of a tax withholding statement).

Bray is a tax protester. He authored a booklet entitled "Taxation and Tyranny," which is, allegedly, "the complete guide to the tax rebellion." It "describes the tactics that particular Americans are using to stop the unjust, unconstitutional, and tyrannical practices of the I. R. S."

Bray's 1972 federal income tax return did not contain any relevant information of his earnings. Rather, the return was inscribed: "5th Amendment. Go to Hell; do not pass go; do not collect $200 dollars." On appeal Bray admits that he did not comply with the general filing requirements of the Internal Revenue Code (Code) and that he claimed 15 exceptions, even though he was entitled only to one.

The Government introduced an overwhelming quantity of evidence relative to Bray's taxable income for the year 1972. The parties stipulated that $2,050 was the amount of gross income required as a precondition of Bray's duty to file. In proving Bray's 1972 income the Government introduced payroll records, bank account identification cards, bank account statements and numerous copies of cancelled checks. These records and documents were utilized to reconstruct Bray's income in accordance with the "bank deposits and cash expenditures" method of proof.

Bray testified in his defense. He contended that he was justified in not filing a proper return and in inflating the number of his exemptions because: he thought he was under investigation for criminal violations of the Code and that filing a return would tend to incriminate him in violation of his Fifth Amendment rights; he was not satisfied that he had taxable income in excess of $2,050; he felt that the only way he could require the United States Government to stop withholding taxes was to inflate the number of his claimed exemptions; his personal filing with the Internal Revenue Service "had been designed as political protests designed as good faith challenges" of that which he view as unconstitutional and "bad laws."

On appeal Bray contends that the Court erred in: (1) refusing to suppress evidence secured by admin istrative summons; (2) permitting the Government to establish his 1972 income by the "bank deposits and cash disbursements" method of proof; and (3) in refusing to disqualify itself for personal bias and prejudice.

I. Bray contends that the Court erred in refusing to suppress evidence procured by the Internal Revenue Service (IRS) by admin istrative summonses issued pursuant to 26 U. S. C. A. §7602, which provides in pertinent part:

For the purposes of ascertaining the correctness of any return, making a return where none has been made, determining the liability of any person for any internal revenue tax or the liability at law or in equity of any transferee or fiduciary of any person in respect of any internal revenue tax, or collecting any such liability, the Secretary or his delegate is authorized . . .

(1) To examine any books, papers, records, or other data which may be relevant or material to such inquiry;

(2) To summon the person liable for tax or required to perform the act . . . or any person having possession, custody, or care of books of account containing entries relating to the business of the person liable for tax or required to perform the act, . . .

Bray concedes that Section 7602 may be properly utilized for the joint purpose of acquiring information for the establishment of civil tax liability or collection as well as the possibility of criminal prosecution. Bray contends, however, that in this case the sole purpose of the summons was aimed at the procurement of evidence against him for purposes of criminal prosecution. On this predicate, Bray argues that the summons is not enforceable. We agree that an admin istrative summons may not be enforced if the sole purpose therefor is that of obtaining evidence for purposes of criminal prosecution. We hold, however, that based upon the facts presented in this record, the summonses were properly employed. No abuses occurred.

The record clearly demonstrates that the IRS investigation of Bray and the Service's related use of admin istrative summonses were not undertaken for the sole purpose of obtaining evidence for criminal prosecution of Bray. Bray's cross-examination of Special Agent Harkness is significant to this dispute:

Q. What is the purpose of your job?

A. Well, my purpose of my job is to determine the tax liability of an individual and also determine if there are possible criminal violations of the Internal Revenue Code.

Q. It is a fact, is is not, that these two aspects of your job are integrally related and that the purpose of determining tax liability as far as your job is concerned, is to determine criminal liability, is that true?

A. I have to determine tax liability before I can determine whether there is a criminal violation, yes.

Donaldson v. United States [71-1 USTC ¶9173], 400 U. S. 517 (1971), supports our holding that the summonses were properly utilized in the case at bar:

We note initially that . . . the courts of appeals in opinions . . . appear uniformly to approve the use of summonses in an investigation that is likely to lead to civil liability as well as to criminal prosecution. . . . On the other hand, it has been said, . . . that where the sole objective of the investigation is to obtain evidence for use in a criminal prosecution, the purpose is not a legitimate one and enforcement may be denied. This, of course, would likely be the case where a criminal prosecution has been instituted and is pending at the time of the issuance of the summons.

400 U. S. , at 532-533.

* * *

We hold that under §7602 an internal revenue summons may be issued in aid of an investigation if it is issued in good faith and prior to the recommendation for criminal prosecution.

400 U. S. , at 536.

Although not directly raised by Bray, the Government contends that not only were the summonses properly authorized and executed, but that Bray was without standing to challenge their issuance and usage. The Government contends that inasmuch as the summonses were issued to corporations or individuals doing business with Bray, and that none were issued to Bray or aimed at records in Bray's possession, that Bray has no standing to assert the Fifth Amendment privilege. The proposition that the Fifth Amendment prevented compelled production of documents over the objection of the rightful claimant that such production might incriminate him had its origin in Boyd v. United States, 116 U. S. 616 (1886). The application of the Boyd rule was laid to rest in the recent United States Supreme Court opinion entitled Fisher, et al. v. United States, et al.; United States, et al. v. Kasmir and Candy [76-1 USTC ¶9353], Nos. 74-18 and 74-611, 44 U. S. L. W. 4514 (April 21, 1976) where the Court upheld admin istrative summonses directing attorneys for the respective taxpayers to deliver over certain documents such as accountants' analyses of the taxpayers' income and expenses, work papers, retained copies of prior income tax returns, reports, correspondence, and other records of the accountants which had been delivered to the respective attorneys by the accountants employed by the taxpayers, at the specific direction of the taxpayers. In each case, the Internal Revenue Service had interviewed the taxpayers in connection with an investigation of possible civil or criminal liability under the federal income tax laws before the documents were delivered to the taxpayers' attorneys. The taxpayers invoked the Fifth Amendment privilege against self-incrimination and the attorney-client privilege. The Supreme Court rejected both contentions in holding that the subpoenae are enforceable and that directing a taxpayer to produce his accountant's documents, etc. relating to his tax affairs would not involve incriminating testimony within the protection of the Fifth Amendment because (a) under such circumstances the taxpayer-accused is not compelled to make any testimonial communication and (b) the accountants' documents, etc., are not the "private papers" of the taxpayers but are the contents of the accountants' work papers and do not, therefore, involve testimonial self-incrimination, however incriminating the contents may be.

By analogy, we have held that there is no violation, per se, of one's Fifth Amendment privilege against self-incrimination by reason of the proper execution by special agents of the IRS of a valid search and seizure warrant seeking fiscal and business records relating to income and expenses in the possession of taxpayers in the course of an IRS investigation of their income tax liabilities before any criminal charges had been filed. Shaffer v. Wilson , 523 F. 2d 175 (10th Cir. 1975). In Shaffer we referred with favor to United States v. Blank, 459 F. 2d 383 (6th Cir. 1972), cert. denied, 409 U. S. 887 (1972), where the Court made these observations relative to the element of "compulsion" in relation to records, etc. obtained from the taxpayer by admin istrative summons (subpoena) as distinguished from those obtained via a valid search warrant:

. . . The subpoena compels the person receiving it by his own response to identify the documents delivered as the ones described in the subpoena. The search warrant involved no such element of compulsion upon an actual or potential defendant.

459 F. 2d, at 385.

The summonses were properly issued and executed herein. See also United States v. Hansen Niederhauser Co., Inc., 522 F. 2d 1037 (10th Cir. 1975) and United States v. Richardson, [72-2 USTC ¶9765] 469 F. 2d 349 (10th Cir. 1972).

II. Bray contends that the court erred in permitting the Government to prove his 1972 income by the "bank deposit and cash disbursements method of proof" (bank deposit). The "net worth method of proof" approved in Holland v. United States [54-2 USTC ¶9714], 348 U. S. 21 (1954) preceded the bank deposit method of proof approved in United States v. Lacob [69-2 USTC ¶9616], 416 F. 2d 756 (7th Cir. 1969), cert. denied 396 U. S. 1059 (1970) and re-affirmed in United States v. Stein [71-1 USTC ¶9209], 437 F. 2d 775 (7th Cir. 1971), cert. denied 403 U. S. 905 (1971). Bray acknowledges that the court properly stated the rule in instructing the jury.

Bray argues that the bank deposit method of proof is no longer proper under the dictates of Mullaney v. United States, -- U. S. -- (1975). He specifically contends that the method is not proper herein because some of the information utilized in the implementation of the method should have been suppressed. Mullaney, supra, struck down as unconstitutional a Maine statute which shifted the burden of proving that a homicide was committed in the heat of passion under sudden provocation to the accused, in order to reduce a criminal homicide from murder to manslaughter. By analogy, Bray contends that the bank deposit method of proof unconstitutionally shifts the burden of proof to defendants in tax cases. We hold that the utilization of the bank deposit method of proof was proper and was not violative of Bray's constitutional rights.

Independent of the evidence introduced by the bank deposit method of proof, the Government introduced direct evidence that Bray had earned commissions of $5,580.00 in 1972.

Bray contends that the bank deposit type of evidence creates a presumption that must be rebutted. However, the court properly instructed that simply an inference could be drawn that certain figures constitute income. We recognize that the bank deposits method of proof is not an exact science. In our judgment, however, its utilization has established a substantial degree of certainty which might otherwise be unknown. In United States v. Stein, supra, the court upheld the exclusive use of the "bank deposit" method to establish a wilful attempt to evade and defeat income taxes. The court observed:

In tax evasion cases, a not uncommon attribute seems to be a lack of precise and clear recordation and documentation. . . . Whether the scarcity, murkiness, or ambiguity of supporting data in any particular case is purposeful or merely inadvertent is no doubt often a matter to which the trier of fact gives some determinative consideration.

* * *

Defendant first argues that the government's use of the bank deposit method was insufficient to show substantial unreported income in 1963. While unexplained deposits in excess of reported income is not alone proof of unreported income, it is "a rather convincing circumstance in support of the charge." . . . "Of course, proof under the bank deposit theory is circumstantial in nature, but we know of no reason why such deposits may not be considered in determining income when there is no evidence they represent anything other than income."

437 F. Supp., at 778.

We have consistently approved the principle underlying the bank deposit method of proof theory. In United States v. Ramsdell [71-2 USTC ¶9627], 450 F. 2d 130 (10th Cir. 1971) we held that circumstantial evidence, including complete failure to maintain adequate records, was sufficient to establish a defendant's wilful intent to evade and defeat income taxes owing. We have held that the existence of unexplained funds in the hands of a taxpayer establishes a prima facie case of understatement of income rendering if incumbent on the taxpayer to overcome logical inferences to be drawn from such facts. United States v. Garcia [64-2 USTC ¶9600], 412 F. 2d 999 (10th Cir. 1969); Graves v. United States [51-2 USTC ¶9431], 191 F. 2d 579 (10th Cir. 1951). We have recognized proof of tax evasion by the "specific items method" under which it is shown that contrary to usual practices a defendant received certain payments in cash from particular customers which were not in turn reported on income tax returns. United States v. Merrick [72-2 USTC ¶9572], 464 F. 2d 1087 (10th Cir. 1972), cert. denied 409 U. S. 1023 (1972). By these standards we hold that the Government properly utilized the "bank deposit and cash disbursement method of proof" to reconstruct Bray's income for 1972.

III. Bray alleges that the district court judge erred in refusing to disqualify himself, and that he should have disqualified himself prior to trial. Bray's brief on appeal argues that "Judge Ritter's conduct of this trial was atrocious." However, he recanted, at least in part, when he observed ". . . the court's conduct in the presence of the jury during October 16th was not only free of substantial error, but almost exemplary."

Bray moved for disqualification pursuant to 28 U. S. C. A. §144 which provides, in part:

Whenever a part to any proceeding in a district court makes and files a timely and sufficient affidavit that the judge before whom the matter is pending has a personal bias or prejudice either against him or in favor of any adverse party, such judge shall proceed no further therein, but another judge shall be assigned to hear such proceeding.

The simple filing of an affidavit does not automatically disqualify a judge. United States v. Townsend, 478 F. 2d 1072 (3rd Cir. 1973). A trial judge has as much obligation not to recuse himself when there is no reason to do so as he does to recuse himself when the converse is true. United States v. Ming [72-1 USTC ¶9449], 466 F. 2d 1000 (7th Cir. 1972), cert denied 409 U. S. 915 (1972); United States v. Diorio, 451 F. 2d 21 (2nd Cir. 1971), cert. denied 405 U. S. 955 (1972). An affidavit must comply with §144 before it can effectively disqualify a judge. United States v. Anderson , 433 F. 2d 856 (8th Cir. 1970). And although a court must pass on the legal sufficiency of an affidavit, [Wolfson v. Palmieri, 396 F. 2d 121 (2d Cir. 1968)], all factual allegations must be taken as true [Action Realty Co. v. Will, 427 F. 2d 843 (7th Cir. 1970)], notwithstanding a judge's desire to challenge the validity of the affidavit. Wounded Knee Legal Defense/Offense Committee v. Federal Bureau of Investigation, 507 F. 2d 1281 (8th Cir. 1974).

Bray's affidavit of prejudice alleged, inter alia, that he had obtained 2000 signatures of persons desiring the removal of the judge; that he had written an article calling for the impeachment of the judge; that he had a prior case dismissed by the judge; that he had written a protest telegram against the judge; and that he had filed a brief with the court accusing the judge of bribery, conspiracy, and the obstruction of justice. Bray argues that these actions prejudiced the judge against him or that they "must have" so prejudiced the judge.

Affidavits of disqualification must allege personal rather than judicial bias. United States v. Thompson, 483 F. 2d 527 (3rd Cir. 1973), cert. denied 415 U. S. 911 (1974). They must contain more than mere conclusions. They must show facts indicating the existence of a judge's personal bias and prejudice. Knoll v. Socony Mobil Oil Company, 369 F. 2d 425 (10th Cir. 1966), cert. denied 386 U. S. 977 (1967); Inland Freight Lines v. United States, 202 F. 2d 169 (10th Cir. 1953). Motions alleging bias and prejudice on the part of a judge which establish simply that the affiant does not like a particular judge are not adequate to require disqualification. United States v. Goeltz, 513 F. 2d 193 (10th Cir. 1975), cert. denied -- U. S. --.

We hold that Bray's affidavit in support of his motion to disqualify the judge was insufficient. The mere fact that a judge has previously expressed himself on a particular point of law is not sufficient to show personal bias or prejudice. Antonello v. Wunsch, 500 F. 2d 1260 (10th Cir. 1974). Nor are adverse rulings by a judge grounds for disqualification. Martin v. United States, 285 F. 2d 150 (10th Cir. 1960), cert. denied 365 U. S. 853 (1961). Prior written attacks upon a judge are likewise legally insufficient to support a charge of bias or prejudice on the part of a judge toward an author. In United States v. Garrison, 340 F. Supp. 952 (E. D. La. 1972), the Court observed:

Movant's second ground alleged to support the motion for recusal--his own press release denouncing the federal judiciary and this court's opinion in the Shaw case--is similarly inadequate. It is well settled that prior written attacks upon a judge are legally insufficient to support a charge of bias or prejudice on the part of the judge toward the author of such a statement. In re Union Leader Corp., 292 F. 2d 381, 389 (1st Cir.), cert. denied, 368 U. S. 927, 82 S. Ct. 361, 7 L. Ed. 2d 190 (1961), noted in 8 Utah L. Rev. 75 (1962); United States v. Fujimoto, 101 F. Supp. 293, 296 (D. Hawaii 1951), motion for leave to file petition for writ of prohibition or mandamus denied, Fujimoto v. Wiig, 344 U. S. 852, 73 S. Ct. 102, 97 L. Ed. 662 (1952).

The reasoning behind these decisions is not difficult to ascertain. As one jurist in a similar case stated:

"Only a psychic pleader could allege that because a defendant has published uncomplimentary statements concerning a judge, the latter will be unable to give his critic a fair and impartial trial. If such a fantastic procedure were permitted, a defendant could get rid of a judge by the simple expendient of publishing a scurrilous article, truthfully alleging that the article was published, and clinching the matter by asserting the bald conclusion that, since the article was uncomplimentary, the judge must of necessity be prejudiced against the publisher!"

United States v. Fujimoto, supra, 101 F. Supp. at 296. The mere fact that a defendant has made derogatory remarks about a judge is insufficient to convince a sane reasonable mind that the attacked judge is biased or prejudiced, the standard used to test the sufficiency of an affidavit for recusal under section 144. Berger v. United States, supra, 255 U. S. at 33-35, 41 S. Ct. at 233, 65 L. Ed. at 485; United States v. Hoffa, 245 F. Supp. 772, 778 (E. D. Tenn. 1965). To allow prior derogatory remarks about a judge to cause the latter's compulsory recusal would enable any defendant to cause the refusal of any judge merely by making disparaging statements about him. Such a bizarre result clearly is not contemplated in section 144.

340 F. Supp., at 957.

We hold that Bray's affidavit was inadequate to establish prejudice and bias warranting recusal by the trial judge.

Bray refers to certain colloquies which took place out of the presence of the jury ¹ which he contends show that the judge was prejudiced and should have recused himself and that by reason of his participation, he was denied a fair trial. The comments cited, although admittedly not models of judicial restraint and decorum, do not give rise to reversible error. A trial court has the power to direct a trial along recognized lines of procedure in a manner reasonably thought to bring about a just result; and nonprejudicial comment may be made by the court during trial. Lowther v. United States, 455 F. 2d 657 (10th Cir. 1972), cert. denied, 409 U. S. 857 (1972). Even though not condoned and certainly not encouraged we have nevertheless held: that a judge's remark characterizing defense counsel's statement as "ridiculous" did not give rise to reversible error, Cooper v. United States, 403 F. 2d 71 (10th Cir. 1968); that a judge's comment on the "pathetic" nature of a witness was not prejudicial, Whitlock v. United States, 429 F. 2d 942 (10th Cir. 1970); and that a judge's request that counsel examine his witness "without beating around the bush" did not constitute plain error or prejudice the defendants. United States v. MacKay, 491 F. 2d 616 (10th Cir. 1973), cert. denied, 429 U. S. 1047 (1974). The complaints made by Bray do reflect the judge's attitude and reactions to specific incidents occurring at trial. They involve comments by the judge, when goaded, which were unjudicial. To sustain disqualification under §144, supra, there must be demonstrated bias and prejudice of the judge arising from an "extrajudicial source" which renders his trial participation unfair in that it results in an opinion formed by the judge on the merits on some basis other than that learned from his participation in the case. United States v. Grinnell Corporation, 384 U. S. 563 (1966); Davis v. Cities Service Oil Company, 420 F. 2d 1278 (10th Cir. 1970).

While the trial court's comments in the cases cited above, made in the presence of the jury, were generally deemed improper, they were not seen as plain error requiring new trial or reversal. See: 34 A. L. R. 3d 1313; 14 A. L. R. 3d 723; 62 A. L. R. 2d 166; 84 A. L. R. 1172; 65 A. L. R. 1270.

We hold that the appendixed colloquies did not deny Bray a fair trial.

IV. Bray contends that the court erred in setting his bail in the presence of the jury at the conclusion of the first day of trial. The Government "agree[s] that this conduct in front of the jury was improper." The entire colloquy relating to the matter is:

THE COURT: Is this fellow, Bray, in custody?

MR. BARBER: He is not, your Honor.

THE COURT: Why isn't he?

MR. BARBER: At this time he is at liberty on his own recognizance on this charge, your Honor.

MR. WHEELER: He was brought in pursuant to a summons, your Honor. Bail was never set at that time.

THE COURT: Well, bail is set now. $50,000 bail. If you can put up 10 percent of that with the clerk, you can be released. Otherwise, lock him up.

[R., Vol. I, pp. 93, 94.]

We hold that the court committed plain error in setting Bray's bail in the presence of the jury. The record is devoid of any justification for conducting the bail proceeding in the presence of the jury. There is nothing to indicate that the action was necessary to avoid "the danger of significant interference with the progress or order of the trial." The proceedings lent nothing to the truth finding function. By setting bail within the jury's presence and admonishing the marshals to "lock him up" if bail was not met, the court effectively vitiated the presumption of innocence. We are unaware of any reported decision upholding such proceedings in the presence of the jury. A trial judge has both great responsibility and discretion in conducting the trial of a case. He should be the exemplar of dignity and impartiality. He must exercise restraint over his conduct and statements in order to maintain an atmosphere of impartiality. We are cognizant of the strain and emotional stress imposed upon a trial judge who is endeavoring to conduct the trial in a firm, dignified and restrained manner when he is confronted by a litigant who, like Bray, treats him with disrespect and who openly insults and humiliates him. Even so, it is prejudicial error for the judge to make remarks that clearly import his feelings of hostility toward the defendant. The remarks of the trial judge relative to Bray's bond, with the inferences which must be drawn, cannot be justified or rationalized as fair and impartial. These remarks constitute plain error. Fed. Rules Crim. Proc., Rule 52(b), 18 U. S. C. A.; United States v. MacKey, supra; United States v. Wheeler, 444 F. 2d 385 (10th Cir. 1971). Bray's motion for mistrial, filed the day following the first day of trial, complains of prejudicial remarks of the trial judge made during the course to the first day of proceedings. That motion was ignored by the trial court. We hold that it should have been heard and granted.

The standard for revocation of bail is set forth in Britten v. United States, 389 U. S. 15 (1967):

A trial judge undisputably has broad powers to ensure the orderly and expenditious progress of a trial. For this purpose, he has the power to revoke bail and to remit the defendant to custody. But this power must be exercised with circumspection. It may be invoked only when and to the extent justified by danger of significant interference with the progress or order of the trial. ^* . . .

* * *

* It does not appear whether defendant was at large on bail at the time of the order remitting him to custody. But the same principle would apply if he had been at liberty on his own recognizance.

389 U. S. , at 16.

This case has been before the same trial judge twice. We do not challenge or question the integrity of the judge. However, under the totality of the facts and circumstances of this case, there is a real likelihood that the same trial judge's impartiality might reasonably be at issue under the terms of 28 U. S. C. §455(a) which, as revised in 1974, disqualifies any judge from presiding in ". . . any proceeding in which his impartiality might be reasonably questioned." We conclude that the demands of justice require that the cause be retried before another judge.

Reversed and remanded for new trial in accordance with the foregoing views with direction that the cause be retried before another judge.

¹ See Appendix.

Appendix

The following colloquy occurred prior to trial, out of the presence of the jury:

MR. BRAY: Excuse me, your Honor. May I address the Court?

THE COURT: No, you may not.

MR. BRAY: Have you read my motions, your Honor?

THE COURT: You bet.

MR. BRAY: Thank you.

THE COURT: I also read the charge you have against me that I accepted a $20,000 bribe.

MR. BRAY: Did you?

THE COURT: Yes.

MR. BRAY: Accept the bribe?

THE COURT: Keep that jury out there. You're a damned impertinent bird. You come forward. You have just gotten yourself in contempt of this court.

MR. BRAY: I didn't mean any disrespect, your Honor.

THE COURT: No, you didn't mean any disrespect saying that I received a $20,000 bribe?

MR. BRAY: I truly believe that you did, your Honor. And that is why I made the allegation.

THE COURT: Yes, all right.

MR. BRAY: That is also why I filed an affidavit of prejudice. And I wish you had recused yourself in this matter.

THE COURT: Oh, you did.

MR. BRAY: Yes.

THE COURT: Let me tell you, you are in contempt of this court. And moreover, I am going to sue you now on the criminal side of the court and have somebody else try it. And I am going to sue you for criminal contempt. But I am going to have a civil contempt against you right here and now. As soon as this case is over, I am going to give you the business on that.

It is about time that somebody took this fellow, Karl Bray, and put him where he belongs. And I am going to do it. He has the effrontery to come here in my own courtroom and repeat it, repeat it.

MR. BRAY: Well, I would respectfully move that--

THE COURT: You just don't talk to me about respect. You take your seat over there, and we will try it. You, too.

MR. BARBER: Thank you, your Honor.

THE COURT: Bring that jury in.

Don't hold any conference there about that matter.

MR. BARBER: We are not, your Honor. We are talking about other matters.

THE COURT: I have had about enough of you, too, Barber. While I am cleaning up the situation around the federal courthouse here, I want to take you with it.

All right.

The following colloquy occurred after trial out of the presence of the jury and prior to verdict:

THE COURT: All right. Motion denied to both the close of the government's proof and the other. I don't think you are entitled to a judgment of acquittal. I do think the evidence is overwhelming. I don't think he has a defense. If this had been a civil case, I would have directed the verdict on the subject. I don't think he has any defense.

Now this is an unfortunate young man, going around raising Hell the way he has been doing one way and another.

Now I direct the United States Attorney to proceed to prosecute this man for criminal contempt based upon his charge that this judge accepted a $20,000 bribe from somebody.

You see, he puts his foot in his mouth. He stated that again in front of me in the presence of the court here yesterday. That is what we will base it upon. That is contemptuous conduct of a criminal character in the presence of the court.

Now, I want that done. And that isn't all that is going to be done. He had the effrontery to say to me yesterday, "You took a bribe; didn't you?" Well, I have not felt it worth denying. I let the Tribune editorial take care of that. I was kind of pleased with that. I didn't invite it, none of my friends invited it.

The Salt Lake Tribune ran a nice editorial and said, "Not Judge Ritter. He didn't accept any money or bribe."

And you are damn right he didn't. And you are going to have an opportunity to talk about your Constitutional rights. You are not only going to have an opportunity, you are going to have to.

MR. BRAY: That is all I ever wanted was an opportunity to get into court.

THE COURT: Well, all right. You will get into court. You are damn right you will get into court. And if you could fly to the moon on your toothpick, you will succeed in proving that I took a bribe of 20 cents from anybody, anytime, anywhere.

I have been on this bench 27 years, and to have a whipper-snapper like you come along and make a groundless charge of that kind, an utterly groundless charge, you won't be in court soon, however. I will take care of that as soon as I get this jury's verdict. You are going to be in the penitentiary for as long as I can give you, I will tell you that.

MR. BRAY: Why don't we go to court before I go to jail and get it over with?

THE COURT: Thank you very much for such a generous suggestion. Young man, you would be damn well advised to keep your mouth shut. Just damn well advised to keep your mouth shut. Now, you are getting some other people in trouble, too. I am going to join everybody that published that in any way. So you can count on that. Chew on that for awhile.

Take that fellow into custody.

 

 

[73-2 USTC ¶9635] United States of America , Appellee v. Gus Sclafani and Ben Ross, Appellants

(CA-2), U. S. Court of Appeals, 2nd Circuit, Docket Nos. 73-1017, 73-1048, 6/27/73, Aff'g unreported District Court decision

[Code Secs. 7201 and 7206]

Crimes: Tax evasion: False returns: Defenses: Trial judge's conduct.--The taxpayer Sclafani was properly convicted on two counts of tax evasion, and the taxpayer Ross was properly convicted on three counts of filing false returns. Both were also guilty of several non-tax offenses. Certain remarks made by the trial judge did not preclude them from calling a co-defendant to the stand and, in any event, the co-defendant could not have testified to anything that could have aided them. Moreover, the trial judge properly denied a motion to disqualify himself, his conduct of the trial was proper and the charge he gave was a fair one.

Whitney North Seymour, Jr., United States Attorney, John Nields, Jr., Assistant United States Attorney, New York, N. Y., William I. Aronwald, Department of Justice, Washington, D. C. 20530, for appellee. Henry J. Boitel, 233 Broadway, New York, N. Y., for G. Sclafani, appellant, Roy M. Cohn, Gretchen White Oberman & Saxe, Bacon, Bolan & Manley, 39 E. 68th, New York, N. Y., for B. Ross, appellant.

Before SMITH, MULLIGAN and TIMBERS, Circuit Judges.

TIMBERS, Circuit Judge:

Appellants Gus Sclafani and Ben Ross appeal from judgments of conviction entered upon jury verdicts returned October 6, 1972 after a nineteen day trial before Edmund L. Palmieri, District Judge, in the Southern District of New York.

Sclafani was convicted on three counts of loansharking, in violation of the Extortionate Credit Transaction Act of 1968, 18 U. S. C. §§ 893 and 894 (1970); on one count of conspiring to finance an extortionate credit transaction, in violation of 18 U. S. C. §371 (1970); on two counts of income tax evasion, in violation of 26 U. S. C. §7201 (1970); and on one count of making a false statement, in violation of 18 U. S. C. §1001 (1970). On December 4, 1972, an effective sentence of ten years imprisonment and a $30,000 fine was imposed on Sclafani.

Ross was convicted on two counts of loansharking, in violation of the Extortionate Credit Transaction Act; on one count of conspiring to finance an extortionate credit transaction; on three counts of income tax evasion; and on three counts of filing false and fradulent income tax returns, the latter in violation of 26 U. S. C. §7206(1) (1970). On December 11, 1972, an effective sentence of fifteen years imprisonment and a $90,000 fine was imposed on Ross. ¹

The chief claim of error raised on appeal by both appellants is that they were precluded from calling a co-defendant as a witness at their trial because of certain remarks made by the trial judge in accepting the co-defendant's change of plea and in sentencing him several months before the trial began. Other subordinate claims of error are raised by both appellants.

We affirm.

I. Events Leading to Indictment

In view of the issues raised on appeal, a summary description of the loansharking scheme of considerable dimensions which constituted the core of this case, and the conduct for which appellants were convicted, will suffice.

The scheme in substance was that appellants loaned ever increasing sums of money to two borrowers at enormous rates of interest. They proceeded to collect the interest and other payments by threats of death, maiming and other violence. The exorbitant interest rates and other terms of extortion, rather than alleviating the borrowers' financial difficulties, forced them to borrow additional amounts. This continued to compound the plight of the victims. Eventually, faced with still further threats of physical injury and death, the victims turned to the F. B. I.

The sequence of events that led to the instant indictment began with the financial problems of Morton Kanof and Herbert Hurwitz, two contractors specializing in ghetto building reconstruction. In July 1968, Kanof and Hurwitz, who were then in need of $25,000, were put in touch with defendant Joseph Randazzo. He agreed to lend them the sum on these terms: interest at 3% per week; principal repayment in amount of $100 per week; two bogus payroll checks, each in amount of $125 per week, one of which was to go to defendant Joseph Maida; and a $2,000 bonus to Randazzo.

By October 7, Randazzo had delivered $10,000 of the $25,000 promised. Nevertheless, Kanof and Hurwitz were required to make payments pursuant to the original agreement. Subsequent deliveries of money and revisions of the loan resulted in the borrowers making payments in amount of $930 per week by the end of 1968.

Beginning February 1969, the borrowers' payment checks started to bounce. They encountered increasing difficulty in making the required payments. Randazzo began threatening them at gunpoint, purportedly on orders from higher up.

In June 1969, Randazzo introduced Hurwitz to appellant Sclafani as the person who was to receive all further payments. Hurwitz was informed by Sclafani that he "breaks legs, arms and heads" when necessary.

By late July 1969, Kanof and Hurwitz were in need of an additional $50,000. They had a meeting with Randazzo and Maida, at which it was agreed that this further sum would be loaned on these terms: the total principal would be computed as $100,000; interest at 3% per week would be paid on that principal amount; and four bogus payroll checks per week, each in amount of $175, would be required. The additional $50,000 was delivered to the borrowers by Sclafani and Maida in three installments by October 24, 1969. At that point the required weekly interest payments were in amount of $3,000.

In December 1969, Kanof and Hurwitz again encountered difficulty in making payments. Maida informed them that he was in trouble with his people. He introduced Kanof and Hurwitz to defendant Vincent Lore who made some direct threats and ordered prompt payment of the arrearage.

At a subsequent meeting between Maida, Lore and the two borrowers the latter requested a further $10,000 loan with which to make their back-payments. The loan was arranged at $4,000 interest to be paid over a four week period.

In March 1970, payments by Kanof and Hurwitz again became sporadic. This led to further threats from Lore. At Lore's direction, a subcontract was entered into between the borrowers' company and C & P Painting. The latter was controlled by defendant Angelo Tuminaro and appellant Ross' son-in-law, among others. The company was identified by Lore as "my friends". The subcontract turned out to be a no-profit contract for the borrowers. After one week, the subcontract was breached by C & P. Lore arranged several meetings between the principals at C & P's offices; and at each meeting Lore left the borrowers to converse with Ross.

From that point on, there were frequent defaults in payments on the part of Kanof and Hurwitz. On May 4, Lore instructed the borrowers to deliver the payment for that week at a specified site or they would be killed. That payment was made as directed.

Shortly thereafter, Kanof and Hurwitz obtained some stock upon which they hoped to be able to obtain a loan. They informed Lore. He directed them to go to a particular bank branch and to inform a specified officer that they had been sent by Ross. The instructions were followed, but the bank refused to make a loan on the stock.

In June, in addition to the weekly payments, Lore demanded and received from the borrowers some $500 worth of plumbing fixtures. Also during June, Lore directed Kanof to determine the feasibility of converting a certain Brooklyn building into a drug rehabitation or day care center in satisfaction of the back-payments due. It was later learned that the building was owned by a corporation of which Ross and Tuminaro were the principals. When the proposed conversion proved unfeasible, Lore told the borrowers to forget they had ever seen the building.

The demands upon the borrowers continued. At one point Lore actually bit Kanof's hand and threatened to gouge out Hurwitz's eyes. Gunpoint confrontations followed. At another time, Lore stabbed Kanof's hand with a table fork and bit Kanof's face.

On August 11, following some further inquiries into the value of a Brooklyn building owned by the borrowers, Lore directed that the mortgage on that building be transferred to Ross' daughter. Sometime around that date the borrowers met Tuminaro for the first time. At this meeting, Tuminaro told them that Lore had been too easy on them and that if they were really having trouble raising money they should rob a bank. Tuminaro said that he and Lore would supply a gun.

Lore subsequently suggested to Kanof that he take out an insurance policy on Hurwitz's life in the amount owed and that Lore and his people would arrange for Hurwitz's death.

On October 15, Lore directed the borrowers to execute the mortgage assignment on their Brooklyn building to appellant Ross, not to his daughter. The assignment was executed accordingly and was recorded.

On November 3, Kanof and Hurwitz were given an ultimatum by Lore that unless they came up with $10,000 they would both be killed. Kanof and Hurwitz went to the FBI. On November 4, a conversation was taped in which Lore repeated his threats of the day before. On the following day, the borrowers met Maida and Lore while under FBI surveillance. Maida and Lore thereupon were arrested.

By July 1971, Sclafani and Randazzo also had been arrested. The original extortion indictment was returned against those four, as well as against Tuminaro who at that time was a fugitive.

In August 1971, the four who had been arrested were released on bail. Lore and Tuminaro met with Ross. The FBI investigation was the topic of discussion. Ross referred to the $50,000 that "we" had loaned to Hurwitz. A meeting with the borrowers was then sought in an attempt to change at least Hurwitz's testimony. This resulted in a separate indictment returned September 16, 1971 charging Lore, Ross and Tuminaro with obstruction of justice (the "obstruction of justice indictment").

The instant extortion indictment against Lore, Maida, Randazzo, Tuminaro, Sclafani and Ross was returned in November 3, 1971.

At the trial of the extortion indictment, Sclafani did not testify and called no witnesses. Ross did testify and he called three witnesses. His defense in substance was a denial of any knowledge of the scheme or any connection therewith, together with the assertion that one Hymie Rabinowitz (who was dead at the time of trial) was the kingpin and not Ross.

There was a great deal of other evidence adduced at the four week trial. The evidence of course must be viewed in the light most favorable to the government at this stage of the case. United States v. D'Avanzo, 443 F. 2d 1224, 1225 (2 Cir.), cert. denied, 404 U. S. 850 (1971). Ross does not challenge the sufficiency of the evidence at all, as his counsel made very clear to us at the argument of this appeal. Nor does Sclafani, with the exception of certain claims with respect to the income tax evasion counts and counts 3 and 4 which charge violations of 18 U. S. C. §893.

We hold that the evidence overwhelmingly and conclusively established the guilt of both appellants on all counts upon which they were convicted.

II. Claim That Appellants Were Precluded From Calling Co-Defendant Lore as a Trial Witness

We turn directly to the chief claim of error raised on appeal by both appellants: that they were precluded from calling co-defendant Lore as a witness at their trial because of certain remarks made by the trial judge--some three to five months before the trial--in accepting Lore's change of plea and in sentencing him. A summary of the proceedings in the trial court involving this claim is necessary to an understanding of our ruling thereon.

On November 16, 1971, a not guilty plea had been entered by the court on behalf of Lore to each of the nine counts in which he was named in the extortion indictment.

On April 3, 1972, ² accompanied by counsel, Lore appeared before Judge Palmieri, withdrew his not guilty pleas and pled guilty to count 3 (conspiracy to finance an extortionate credit transaction) and to count 11 (income tax evasion). At the same time, he pled guilty to one count of conspiracy to obstruct justice as charged in the separate indictment returned September 16, 1971 against Lore, Ross and Tuminaro. Before accepting Lore's guilty pleas, Judge Palmieri conducted an exhaustive voir dire by personally addressing Lore, pursuant to Fed. R. Crim. P. 11, to determine whether there was a factual basis for the pleas and whether they were made voluntarily with understanding of the nature of the charges and the consequences of the pleas. During the course of the voir dire, Lore acknowledged the correctness of transcripts of tape recordings squarely implicating him in many of the essential transactions involved in the counts to which he was pleading guilty. A presentence report was ordered and sentencing was tentatively scheduled for May 17.

On the same day, April 3, another co-defendant, Maida, pled guilty to counts 3 and 7 of the extortion indictment which charged him with the same corresponding offenses as those to which Lore pled guilty. Judge Palmieri conducted a similar voir dire of Maida. Sentencing of Maida also was tentatively scheduled for May 17. ³

At the conclusion of the change of plea proceedings on April 3, Judge Palmieri, at the request of government counsel, cautioned both Lore and Maida to stay away from any prospective witness in the case. ⁴

Following the death of Lore's father and the postponement of Lore's sentencing, counsel for Lore moved on June 12 for imposition of sentence before the end of the month, without waiting for the conclusion of the trial of Sclafani and Ross which in the meanwhile had been further postponed. Lore had written a letter to Judge Palmieri on May 27 stating that the death of his father had left him responsible for his mother as well as his wife and two children; and that he was anxious to straighten out his by paying whatever penalty he had to pay and getting it over with. Judge Palmieri was "very deeply impressed by this young man's desire to square himself with God and family . . .." He indicated that he was inclined to grant Lore's motion for imposition of sentence.

The government initially opposed having Lore sentenced before the trial was concluded. Government counsel pointed out that the court would be in a better position to sentence Lore after it had heard the trial evidence; and that, if Lore should testify at the trial, the court could take that into consideration in imposing sentence, including any false testimony.

Judge Palmieri then made this proposal:

"THE COURT: I have a way out of that. I can impose a sentence that I think he ought to have on one of the counts and I can leave the other count open with a reservation that if he takes the stand and commits perjury I would take into account all of the subsequent conduct with respect to the other count.

If I had no reason to suspect this man was acting in bad faith, but was trying to unburden his soul of his problem, then I would just make the sentence concurrent with the other count."

After some further colloquy, the court indicated that it intended on June 28 to sentence Lore on the two counts in the extortion indictment to which he had pled guilty, and to defer imposition of sentence on the obstruction of justice count until after the trial was concluded. Counsel for the government and counsel for Lore agreed to this procedure. The case was continued to June 28 for sentencing. ⁵

On June 28, Lore was sentenced, pursuant to 18 U. S. C. §4208(a)(2) (1970), to concurrent four year terms of imprisonment on each of the extortion indictment counts to which he had pled guilty. Judge Palmieri then said, "The sentence on the obstruction of justice indictment . . . will remain open, and I postpone sentence sine die on that, to abide the disposition of the trials and pleas of the other co-defendants." On motion of the government, the remaining seven counts of the extortion indictment were dismissed as against Lore.

In his remarks to the court on June 28 before sentence was imposed, Lore's counsel stated:

". . .. I know it is my feeling that in any trial here Mr. Lore should stay absolutely as far away from participating as the law would permit. If Mr. Aronwald or anybody else feels that a subpoena is appropriate, to have him come, we will come and he will testify and he will tell the truth. But other than that, your Honor, he has no intention of being a voluntary participant for anybody. I don't think that this is at all inappropriate, given the circumstances, and I don't think that it should weigh one way or the other. If Mr. Aronwald wants to subpoena him and put him on the stand, he is going to tell the truth, but it is not his intention to come for anybody."

In like vein, Judge Palmieri said to Lore immediately before imposing sentence:

"Your attorney told me that he hopes that you will stay as far away as possible from the unfinished cases, and I hope that will be true. I hope that you will have the courage and the strength to tear out the roots that you have in this community, because I think that they are like an infected sore. I think that you have been brought up, up to this point, exposed to crime and with people involved in crime, and as long as you stay within shouting distance or even communication distance of these people your future is going to be tainted and infected. I think that you ought to find new horizons in a new community, far away from the one in which you have lived and to find new strength and new rewards far away from the people who have poisoned your existence and placed you on the road of delinquency."

Based on the foregoing, both appellants argue that they were precluded from calling co-defendant Lore as a trial witness and consequently were denied due process of law in violation of the Fifth Amendment and their right to compulsory process in violation of the Sixth Amendment. We disagree.

[No Intimidation]

First, with respect to the procedure followed by Judge Palmieri in leaving open the imposition of sentence on Lore on the obstruction of justice count until "the disposition of the trials and pleas of the other co-defendants", this clearly was within the discretion of the trial judge. Postponement of sentencing a defendant who pleads guilty until the conclusion of the trial of remaining co-defendants is done as a matter of course by trial judges, especially when requested by the government. Here Judge Palmieri was confronted with competing claims: the government requested that sentencing on all counts be deferred until the conclusion of the trial; Lore's counsel requested immediate imposition of sentence on all counts. For the reasons stated by Judge Palmieri on the record, we hold that his accommodation of the competing interests by imposing sentence on the two extortion indictment counts and leaving open the imposition of sentence on the obstruction of justice indictment count was not an abuse of discretion.

Second, the record shows that Lore at all times was available to be subpoenaed as a witness by appellants, but that they chose not to do so. At the sentencing of Lore on June 28, his counsel said to the court: "If Mr. Aronwald or anybody else feels that a subpoena is appropriate, to have him come, we will come and he will testify and he will tell the truth." At the proceedings on June 12, Judge Palmieri had stated: "I don't want to deprive anybody of the right to call witnesses. It is a Godgiven right. The government could call him, just as [the defendants] could." On the first day of trial, September 11, Lore's counsel came to the courtroom at Judge Palmieri's request and stated it was Lore's position "that if he were subpoenaed he would tell the truth but other than that he doesn't want anything to do with it." In response, Judge Palmieri said:

"THE COURT (addressing Lore's counsel): Have you advised him that he is not immune from the service of subpoena and that he can be brought to court and questioned and has no right to claim immunity in this case and if counsel chooses to question him without prior conference, they have a right to do so?

Does he realize he is under the Sword of Damocles?

MR. OWEN (Lore's counsel): He knows he can be subpoenaed and brought here. Whether he has certain Fifth Amendment rights given the nature of the questioning, I don't know.

THE COURT: To the extent that any question would relate to this case, I don't see how he can claim Fifth Amendment rights.

* * *

THE COURT (addressing appellant Ross' counsel): Now, we have the same problem with this defendant [Lore]. It is not an unusual problem. He has pleaded guilty to the very charges leveled against your client and it is surprising to me that you feel he is your hope for exculpation. If you want him, his body will be produced but I can't force him to confer with you."

Despite the availability of Lore to be subpoenaed as a witness and the emphatic indication by Judge Palmieri that he would be required to testify if subpoenaed, neither Sclafani nor Ross ever subpoenaed him. And there was no doubt as to Lore's whereabouts, for he had been incarcerated since his surrender on July 5, following the imposition of sentence on June 28.

Third, the record demonstrates, both directly and by strong inference, that there were compelling reasons (other than Judge Palmieri's remarks) why neither appellant chose to call Lore as a trial witness. As a co-defendant, Lore had pled guilty to the charge of having conspired with both Sclafani and Ross to finance an extortionate credit transaction, and of having conspired with Ross to obstruct justice. Experience on the trial bench has taught that rarely if ever do defendants charged with conspiracy call as a witness on their behalf a co-defendant who has pled guilty to the very conspiracy for which defendants are on trial. That inhibition would appear to have been particularly strong here since appellants knew that at the time of Lore's change of plea on April 3 he had acknowledged, during the voir dire conducted by the court, the correctness of transcripts of tape recordings squarely implicating him in many of the essential transactions involved in the counts to which he was pleading guilty. The summary set forth above of the loansharking scheme at the core of this case indicates the depth of Lore's involvement, and particularly his dominant role in committing acts of violence. ⁶ It is understandable therefore that Sclafani's trial counsel, after listening to tape recorded conversations between Lore and the government's key witness, felt that it would be harmful to Sclafani's case if Lore were called on his behalf; and, accordingly, on the first day of the trial, September 11, he advised Judge Palmieri that "I had decided that, under no circumstances, would I call Vincent Lore, a co-defendant, as a witness for, or on behalf of, my client." ⁷ Ross' trial counsel, on the sixth day of the trial, September 19, informed Judge Palmieri that Lore's counsel had told him that Lore would be willing to confer with Ross' counsel and that he "would testify to exculpate Ross." The record is silent as to whether Ross' trial counsel ever did confer with Lore. But Lore was not called as a witness by either Sclafani or Ross. As we recently observed in a closely analogous situation, `[i]f any general inference is to be drawn from the entire transcript . . . it would be that if either side had been disposed to call [the] witness it would have been the Government and that the probability that, after interview, the defendants would have decided not to call [the] witness is all but overwhelming.'" United States v. Mosca, 475 F. 2d 1052, 1059 (2 Cir.), cert. denied, -- U. S. -- (1973), 41 U. S. L. W. 3657 (U. S. June 18, 1973). ⁸

Fourth, Judge Palmieri's remarks at the proceedings on June 12 that ". . . I think from his standpoint it would be better if he had as little to do with the case as possible", ⁹ under the circumstances were neither threatening nor harassing nor did they effectively drive Lore as a witness off the stand. Such remarks, considered fairly and in context, obviously were intended to caution Lore against further association with those who had gotten him into trouble in this case--"the people who have poisoned your existence and placed you on the road of delinquency." See Judge Palmieri's sentencing remarks on June 28, supra. Earlier, at the time of Lore's change of plea on April 3, both Lore and Maida had been instructed "to stay away from any witness or prospective witness in this case." See note 4, supra. Such cautionary remarks and instructions clearly were justified by Lore's record of having intimidated government witnesses subsequent to the original extortion indictment, see note 5, supra, and of having attempted to talk to one of the victim witnesses "about cooperating with Mr. Lore and his co-defendants in changing his testimony in this case." See note 6, supra. But balanced against these cautionary remarks were Judge Palmieri's repeated and emphatic statements that Lore was available as a witness to either side and that he would be required to testify if subpoenaed. And Lore's own counsel made it abundantly clear that, while Lore had "no intention of being a voluntary participant for anybody", nevertheless "[i]f [government counsel] or anybody else feels that a subpoena is appropriate, to have him come, we will come and he will testify and he will tell the truth." See remarks by Lore's counsel at the sentencing of Lore on June 28, supra. In short, the record demonstrates beyond any doubt whatsoever in our minds that this is not a case where "the judge's threatening remarks, directed alone at the single witness for the defense, effectively drove that witness off the stand." Webb v. Texas, 409 U. S. 95, 98 (1972) (per curiam). ¹⁰ Rather, this is a case where Lore did not appear as a witness because neither appellant chose to call him--for compelling reasons wholly aside from Judge Palmieri's remarks.

[Harmless Error]

Finally, for essentially the reasons discussed in detail above, we are satisfied that no substantial right or interest of either appellant was prejudiced by the remarks of Judge Palmieri to co-defendant Lore at his change of plea proceedings in April or at his sentencing proceedings in June. Even assuming arguendo--contrary to our holding--that appellants were precluded from calling Lore as a trial witness because of the remarks of the trial judge, our careful examination of the entire transcript of this mineteen day trial convinces us that Lore's testimony could not conceivably have been helpful to appellants and it most assuredly would not have changed the result. Thus, "we are left with the firm conviction that [his] testimony . . . would have had no effect on the outcome of the case, except possibly to strengthen the government's evidence . . .." United States v. Mosca, supra, 475 F. 2d at 1060. The evidence of both appellants' guilt in this case is not only overwhelming; it is conclusive. Appellant Ross does not challenge the sufficiency of the evidence at all. ¹¹ Appellant Sclafani challenges its sufficiency only in respects which are here immaterial. We hold that Judge Palmieri's remarks, if error at all, were harmless, for we can say with fair assurance, "after pondering all that happened without stripping the erroneous action from the whole, that the judgment was not substantially swayed by the error . . .." Kotteakos v. United States , 328 U. S. 750, 765 (1946). See Cohen v. Franchard Corp., -- F. 2d --, -- (2 Cir. 1973), slip op. 2819, 2838 (April 11, 1973); United States v. Mosca, supra, 475 F. 2d at 1058; United States v. McCarthy, 473 F. 2d 300, 308 (2 Cir. 1972); United States v. Ellis, 461 F. 2d 962, 970 (2 Cir.), cert. denied, 409 U. S. 866 (1972).

III. Claim of Misconduct by Trial Judge

The only other claim of error which warrants brief mention--primarily in fairness to the trial judge--is the contention by both appellants that misconduct by the trial judge precluded a fair trial. This claim focuses upon three aspects of the proceedings below: (1) denial of a motion to disqualify the judge; (2) conduct of the trial itself; and (3) the charge. We find no merit in any aspect of this claim.

(1) Motion To Disqualify

On August 30, 1972--twelve days before the trial was scheduled to begin--appellant Ross filed a motion to disqualify Judge Palmieri pursuant to 28 U. S. C. §144 (1970). The motion was accompanied by a seven page affidavit by Ross' attorney and a one paragraph affidavit by Ross himself which adopted "[e]verything set forth in Mr. Goldberg's affidavit." The motion sought to disqualify the judge on the ground that remarks made by him at the sentencing of Lore two months earlier had manifested a personal bias against Ross. Judge Palmieri denied the motion in a written memorandum filed August 30. We hold that the motion was properly denied.

Disqualification is warranted and appropriate only if the alleged bias and prejudice stems from an extrajudicial source and has resulted in the formulation of an opinion on the merits not based upon what the judge has learned by his participation in the proceedings before him--a situation totally absent here. United States v. Grinnell Corp., 384 U.S. 563, 583 (1966).

A judge is duty-bound not to disqualify himself upon such a legally insufficient ground as that urged by Ross below. Rosen v. Sugarman, 357 F. 2d 794, 797 (2 Cir. 1966); In re Union Leader Corp., 292 F. 2d 381, 391 (1 Cir.), cert. denied, 368 U. S. 927 (1961); United States ex rel. Rogers v. Richmond, 178 F. Supp. 44, 48 (D. Conn. 1958); Town of East Haven v. Eastern Airlines, Inc., 293 F. Supp. 184, 189 (D. Conn. 1968).

(2) Conduct of Trial

Appellant Ross, joined to some extent by appellant Sclafani, has mounted a massive attack upon the conduct of the trial by Judge Palmieri. The claim in essence is that the judge so interfered with the course of the trial and demonstrated such bias against appellants as to preclude a fair trial.

In view of the nature of appellants' claimed error in this regard and the vehemence with which the claim is asserted, we have carefully examined the entire trial transcript of more than 3200 pages covering this nineteen day trial. Daley v. United States, 321 F. 2d 123, 128 (1 Cir.), cert. denied, 351 U. S. 964 (1956).

Based on our scrutiny of the record from cover to cover, we have reached the following conclusions:

(1) The conduct of the trial judge complained of was far from unprovoked by defense counsel. ¹²

(2) The trial judge's remarks admonishing counsel for conduct which he believed to be improper were made, with very few exceptions, out of the presence of the jury--a distinction which unfortunately the briefs on appeal fail to make clear. See United States v. Boatner, -- F. 2d --, -- (2 Cir. 1973), slip op. 3307, 3313 (May 4, 1973).

(3) In every instance complained of, where the judge either questioned a witness himself or interrupted counsel's questioning of a witness, we are satisfied that the judge was doing his very best to clarify the issues and assist the jury in understanding the evidence. In short, the judge did precisely what we sanctioned in United States v. DeSisto, 289 F. 2d 833, 834 (2 Cir. 1961):

"A trial judge in criminal, as in civil cases, may, indeed must, be more than a mere moderator or umpire in a contest between two parties in an arena before him. He should take part where necessary to clarify testimony and assist the jury in understanding the evidence and its task of weighing it in the resolution of issues of fact."

(4) We have not found a single instance of conduct on the part of the judge in this voluminous record covering the four week trial which, considered in context and in fairness to all parties, in any way prejudiced either appellant or displayed the slightest bias toward them.

We hold that the conduct of the trial judge did no deprive appellants of a fair trial. Cohen v. Franchard Corp., supra, -- F. 2d at --, slip op. 2819 at 2837-38; United States v. McCarthy, supra, 473 F. 2d at 307-08; United States v. D'Anna, 450 F. 2d 1201, 1206 (2 Cir. 1971); United States v. DeSisto, supra, 289 F. 2d at 834; Daley v. United States , supra, 231 F. 2d at 130.

(3) The Charge

Appellants' attack upon the charge is based essentially on the claim that it was slanted in favor of the government and displayed bias against appellants. We have scrupulously examined the entire charge which occupies 130 pages of the transcript. We find no merit in appellants' claim.

The judge's summary of the evidence was entirely in keeping with our repeated suggestions to trial judges, particularly in a conspiracy case with multiple counts and multiple defendants. In summarizing the evidence and in commenting upon it, the judge exercised great care in reminding the jury that it was their recollection that controlled and not that of the court.

The instructions on the credibility of witnesses were in accordance with standards uniformly approved by us and, in our view, were especially appropriate in this case, including the instruction by which the credibility of a defendant who takes the stand is to be evaluated. See United States v. Mahler, 363 F. 2d 673, 678 (2 Cir. 1966), and authorities cited.

In short, upon the entire record, we hold that the trial judge did "remain the judge, impartial, judicious, and, above all, responsible for a courtroom atmosphere in which guilt or innocence [was] soberly and fairly tested." United States v. Brandt, 196 F. 2d 653, 655-56 (2 Cir. 1952).

IV. Other Claims

Finally, we have carefully considered each of appellants' other claims of error. We find no merit in any of them either separately or cumulatively.

Appellants were convicted of serious crimes after a fair trial on the basis of overwhelming evidence.

Affirmed.

¹ The indictment was returned November 3, 1971 (the "extortion indictment", to be distinguished from the "obstruction of justice indictment", referred to below). It charged defendants Vincent Lore, Joseph Maida, Joseph Randazzo and Angelo Tuminaro, as well as the two appellants, with various violations. Prior to trial, Lore, Maida and Randazzo entered pleas of guilty. Tuminaro was a fugitive. The trial proceeded against Sclafani and Ross as defendants.

² At this time, the trial was scheduled to begin on April 17.

³ Maida later was sentenced, on November 21, 1972, to consecutive three-year terms of imprisonment on each of counts 3 and 7 of the extortion indictment. He was fined a total of $5,000.

⁴ The government's request and Judge Palmieri's instructions to Lore and Maida were as follows:

"Mr. Aronwald: Your Honor, I would ask your Honor just one thing, and that is to reiterate your previous instructions to the defendant Lore and also to the defendant Maida, that although they have now entered pleas of guilty, they are still to stay away from any witness or prospective witness in this case, most particularly Hurwitz and Kanof.

The Court: Yes, I instruct you both, Joseph Maida and Vincent Lore, to stay away from anybody connected with these cases.

This case is going to go to trial on April 17, and any approaches you make, friendly or otherwise, will be construed to your prejudice. So just stay away from them like poison.

You understand that, Joseph Maida?

Defendant Maida: Yes, sir.

The Court: You understand that, Vincent Lore?

Defendant Lore: Yes, sir.

The Court: All right."

⁵ At the June 12 hearing, Judge Palmieri asked Lore's counsel whether he had "any idea what [Lore's] disposition is with respect to testifying at this trial as a witness for the defendants?" Counsel said, "I don't know. I have not conferred with him." Judge Palmieri then stated:

"The Court: It would be better if he had nothing to do with it. I don't want to deprive anybody of the right to call witnesses. It is a God-given right. The government could call him, just as they could. But I think from his standpoint it would be better if he had as little to do with the case as possible."

Lore's counsel responded, "That would be true from his point of view."

This colloquy immediately followed a statement by government counsel reminding the court of Lore's conduct, subsequent to the return of the first extortion indictment, of intimidating government witnesses: "With respect to the two witnesses in this case, the government witnesses, only because of Mr. Lore's overt acts of intimidating, has the government been forced since that time to place both of those people and the respective members of their families in protective custody at tremendous cost to the government. If Mr. Lore had not approached either one of them, that would not have been necessary." See note 3, supra.

⁶ At the sentencing of Lore on June 28, government counsel, in urging the imposition of maximum consecutive sentences, informed the court:

". . . I tell your Honor that it is Mr. Lore and Mr. Lore predominantly that displayed acts of violence to these two victims. Mr. Lore on several occasions inflicted bodily injury and physical harm to these victims.

Mr. Lore, and Mr. Lore only, inflicted fear in the hearts of Mr. [Kanof's] wife by going out to her home after this indictment had been returned and intimidating or placing fear in the heart of her daughter, who was in the house alone when her mother and father were out, by coming to the house to talk to her father, to talk to him about what? To talk to him about cooperating with Mr. Lore and his co-defendants in changing his testimony in this case."

⁷ Counsel for both appellants have addressed numerous communications to us urging that we strike from the record an affidavit sworn to March 26, 1973 by Sclafani's trial counsel, Jack Evseroff, Esq., confirming this statement to the trial judge. We decline to do so, for the reasons (1) that the affidavit in question was certified and transmitted to this Court in accordance with Fed. R. App. P. 10(e), including an order of Judge Palmieri entered April 6, 1973 directing that the affidavit be docketed and made part of the record in this Court; and (2) that we would reach the same conclusion, absent the Evseroff affidavit, since it does no more than confirm what the record shows anyway--that Lore was not called as a witness for the compelling reasons stated above.

⁸ In Mosca, we rejected appellants' claims that they had been denied due process and the right to compulsory process resulting from the government's failure upon request to make available at trial a potential witness whose whereabouts was known to the government but not to appellants.

⁹ We consider these remarks in conjunction with the judge's similar remarks at the sentencing of Lore on June 28: "Your attorney told me that he hopes that you will stay as far away as possible from the unfinished cases, and I hope that will be true."

¹⁰ In our view, appellants' massive reliance upon Webb is misplaced. All else aside, unlike "The sole witness for the defense" in Webb, Lore was a co-defendant who had pled guilty to the very conspiracy for which appellants were on trial. And, unlike the "threatening and harassing" remarks of the trial judge in Webb in "coercing the only defense witness into refusing to testify", our careful reading of Judge Palmieri's remarks in the instant case in context leaves us with the firm conviction that they in no way threatened or harassed the witness, nor can they fairly be construed as having coerced the witness into refusing to testify.

Although the Supreme Court decided Webb on December 4, 1972--the day upon which Sclafani was sentenced in the instant case--the principle which is controlling here has long been recognized in this Circuit. See, e.g., United States v. Marzano, 149 F. 2d 923, 926 (2 Cir. 1945) (L. Hand): "It is true that a person who has pleaded guilty and has not yet been sentenced may testify; it is also true that such a witness always hopes that by testifying he will lessen his punishment; but he is not told that his testimony must be satisfactory to the court to secure any favor; and it would be altogether intolerable, if he were."

We agree; and we hold that by no stretch can Judge Palmieri's remarks be construed as having told Lore "that his testimony must be satisfactory to the court to secure any favor."

¹¹ We regard as little short of fanciful Ross' assertion on appeal that, if Lore had been called as a trial witness, he would have testified that one Hymie Rabinowitz (who was dead at the time of trial), rather than Ross, had loaned the money to Kanof and Hurwitz. True, Lore had made a statement to this effect at the time of his change of plea on April 3. But co-defendant Maida had made a similar statement on the same occasion; indeed, Maida was even more specific in stating that he had received $50,000 from Rabinowitz, that he delivered that sum to Kanof and Hurwitz, and that he and Lore were responsible for collecting the interest and repayments of principal from the borrowers.

"Significantly, Maida was not called as a defense witness at trial. And it is not claimed that he was deterred from testifying by any remarks of the trial judge.

¹² Both appellants were represented at trial by counsel other than their counsel on appeal.

 

 

[68-1 USTC ¶9312] United States of America , Plaintiff-Appellee v. Richard E. Gorman, Defendant-Appellant

(CA-7), U. S. Court of Appeals, 7th Circuit, No. 16018, 393 F2d 209, 4/5/68

[1954 Code Sec. 7203]

Crimes: Failure to file tax returns: Willfulness: Miscellaneous defenses: Evidence: Trial court's rulings.--Taxpayer's conviction for willfully failing to file tax returns for the years 1959 through 1963 was sustained. It was unnecessary for the trial court to give a jury instruction on insanity where there was no evidence of insanity presented and the jury was properly instructed to consider the taxpayer's mental condition (including any emotional stress caused by a subornation of perjury charge) when determining whether failure to file the returns was willful. In addition, taxpayer was not deprived of effective assistance of counsel because the District Court threatened his lawyers (who were attempting to prejudice the jury) with contempt, nor were trial court rulings finding certain evidence inadmissible in error.

[1954 Code Sec. 7203]

Crimes: Failure to file tax returns: Defenses: Venue.--The taxpayer was properly tried for failing to file tax returns in the Northern District of Illinois since this district encompassed the internal revenue district where taxpayer lived and also conducted his business.

Edward V. Hanrahan, United States Attorney, Chicago , Ill. , for plaintiff-appellee. Anna R. Lavin, Edward J. Calihan, Jr., Suite 1112 Monadnock Bldg., 53 W. Jackson Blvd., Chicago, Ill., for defendant-appellant.

Before CASTLE, FAIRCHILD and CUMMINGS, Circuit Judges.

CUMMINGS, Circuit Judge:

A jury found defendant guilty of failing to file federal income tax returns with the District Director of Internal Revenue in Chicago, Illinois, in the years 1959-1963, inclusive, in violation of Section 7203 of the Internal Revenue Code (26 U. S. C. §7203). Sentences totaling three years were imposed under the five counts of the indictment.

The evidence showed that although defendant filed income tax returns for the years 1954 through 1958, he failed to do so for the five ensuing years.

During the summer of 1959 defendant was accused of subornation of a juror in the January 1959 criminal trial of his client, Gerald Covelli. Gorman's defense in this action was that the resulting mental stress caused him to neglect filing the tax returns in question. His indictment for subornation of a juror occurred in June 1960. He was acquitted of that offense in December 1962.

In response to a hypothetical question, psychiatrist Dr. Marvin Ziporyn testified that defendant had "a psychoneurotic reaction, depressive type," but that his ability to reason logically was unimpaired. Dr. Ziporyn also testified that such a psychoneurotic "is aware of reality," and that defendant "knew right from wrong" and was not psychotic. He described Gorman's condition as "not uncommon."

Defendant's principal argument is that the District Court erroneously refused to give the following insanity instruction:

"A person is not responsible for criminal conduct if at the time of such conduct as a result of mental disease or defect he lacks substantial capacity either to appreciate the wrongfulness of his conduct or to conform his conduct to the requirements of law."

When applicable, such an instruction is to be given in this Circuit in trials commenced after August 1967. ¹ However, a defendant must introduce some evidence of insanity before he is entitled to any insanity instruction. Tatum v. United States , 190 F. 2d 612 (D. C. Cir. 1951); Smith v. United States , 272 F. 2d 547, 548 (D. C. Cir. 1959); Hall v. United States , 295 F. 2d 26 (4th Cir. 1961). Our review of this record fails to reveal any such proof, so that an insanity instruction was properly denied. Idiosyncratic behavior and irresponsibility are insufficient to warrant such an instruction. Smith v. United States, 272 F. 2d 547 (D. C. Cir. 1959); Smith v. United States, 353 F. 2d 838 (D. C. Cir. 1965), certiorari denied, 384 U. S. 974. In reality, defendant's theory advanced to justify acquittal was lack of willfulness. Such a theory is frequently used in failure to file tax return cases, as distinct from an insanity defense. As Justice Jackson observed in Spies v. United States [43-1 USTC ¶9243], 317 U. S. 492, 493, "Petitioner's testimony related to * * * lack of willfulness in his defaults, chiefly because of a psychological disturbance, amounting to something more than worry but something less than insanity." Here too lack of willfulness, not insanity, was Gorman's theory.

It is true that defendant did portray his emotional stress, apparently intensified by the subornation of perjury charge, but no evidence was introduced to show that he was insane during these five years. The District Court took account of Gorman's mental condition in instructing the jury as follows:

"Now, you have heard some considerable evidence in this case introduced relating to the defendant's mental and physical condition. Such testimony was introduced or permitted in this trial solely for one purpose and one purpose only and that purpose is so that you may consider whether or not the defendant's mental and physical condition caused the defendant to inadvertently or negligently fail to make his income tax returns for the years 1959 through 1963."

That instruction properly told the jury to consider defendant's "mental condition" before rendering its verdict. It was then for the jury to decide whether the evidence of Gorman's mental condition merited acquittal. Kalven & Zeisel, The American Jury (1966) pp. 301-305.

During the cross-examination of Gorman, the prosecutor attempted to examine on the issue of insanity, but the defendant successfully objected that such an issue was irrelevant because "We are only going to the state of mind." Likewise, Gorman's counsel's opening and closing statements did not advance the defense of insanity. A search of the record indicates that this defense was never presented, perhaps because of defendant's expert witness' testimony that Gorman was not psychotic. Since Gorman never tendered the issue of insanity, it was unnecessary for the Government to prove his sanity beyond a reasonable doubt. Smith v. United States, 353 F. 2d 838, 843 (D. C. Cir. 1965), certiorari denied, 384 U. S. 974.

Because of the absence of evidence of insanity and because the defendant objected to any insanity inquiry by the Government, the District Court was justified in concluding that said defense had not been raised. Therefore, the insanity instruction was properly refused.

Gorman also observes that the District Court improperly refused to receive proffered testimony (1) of United States District Judge Perry, who presided at the Gerald Covelli trial and testified for Gorman in his ensuing subordination trial and (2) of George Callaghan, counsel for Gorman's codefendant in the subornation case, concerning the perjurious character of Covelli. Gorman sought to introduce such testimony to show his lack of willful intent to omit filing his income tax returns during these five years. It would tend to show that Gorman was innocent of the subornation offense, but this had already been shown by Gorman's testimony that he was acquitted in December 1962. The fact that Judge Perry testified for Gorman in his subornation trial and agreed with the acquittal verdict would not show that the indictment had a deleterious effect on Gorman, nor would Callaghan's testimony that Covelli was a self-confessed perjurer. Furthermore, the jury had already heard Gorman's testimony that Covelli had testified in a Texas trial that he would commit perjury to avoid trouble.

We agree that the District Court could properly conclude that the offered testimony had insufficient probative value to be admitted. It was of course the trial court's duty to exclude remote evidence. United States v. Maryland & Virginia Milk Producers Association, 20 F. R. D. 441, 442 (D. D. C. 1957). As noted in McCormick on Evidence §152, three factors justifying exclusion of evidence are: danger of jury prejudice, danger of jury distraction by creation of side issues, and consumption of undue amounts of trial time. All these factors were present here. Juror Laux was personally acquainted with Judge Perry and could have been prejudiced by Judge Perry's appearance as a witness. A retrial of the suborning perjury charges would certainly be a confusing side issue. It would also consume unnecessary time. In our view, the District Court's action in excluding this evidence was well within its power to keep out remote evidence. Continental Ore Co. v. Union Carbide & Carbon Co., 370 U. S. 690, 710.

Relying on Carter v. United States [67-1 USTC ¶9260], 373 F. 2d 911, (9th Cir. 1967), Young v. United States, 346 F. 2d 793 (D. C. Cir. 1965), and United States v. Kelley [63-1 USTC ¶15,482], 314 F. 2d 461 (6th Cir. 1963), Gorman asserts that he was deprived of the effective assistance of counsel because the District Court threatened his lawyers with contempt. In Carter, the conviction was affirmed. In both Young and Kelley, the prejudicial effect on the jury of the trial judges' remarks occasioned the reversals, but here the warning was given outside the presence of the jury. Moreover, in Kelley the trial court had incorrectly limited defense counsel's cross-examination, whereas here defense counsel persisted in attempting to bring before the jury evidence that the District Court had already properly ruled to be inadmissible. It was entirely appropriate for the District Judge to warn Gorman's lawyers of the consequences of their persistence in attempting to prejudice the jury by showing that Judge Perry had appeared as a witness for Gorman in his subornation trial. United States v. Bolden, 355 F. 2d 453, 457 (7th Cir. 1965), certiorari denied, 384 U. S. 1012. ²

Gorman was not permitted to introduce certain of his cancelled 1959-1963 checks, one series of which was payable to the order of cash and the other series payable to the order of specific payees. These were offered to show his business expenses. Under the statute (26 U. S. C. §7203), the Government had to show that defendant was required to file a return, that he did not do so, and that his failure to file was willful. Yarborough v. United States [56-1 USTC ¶9295], 230 F. 2d 56, 61 (4th Cir. 1956), certiorari denied, 351 U. S. 969. The Government was not required to prove that Gorman owed the Government any tax.

If Gorman had offered evidence that his failure to file was not willful because only a minimal tax was due, the checks would have been admissible. Cf. Womack v. United States , 336 F. 2d 959 (D. C. Cir. 1964). However, he testified that he was knowledgeable in the field of tax law and knew he was obligated to file a tax return if he had gross income in excess of $600, whether or not any tax was due. Therefore, proof that he owed a minimal tax was not relevant. See Silverstein v. United States [67-1 USTC ¶9445], 377 F. 2d 269, 270-271 (1st Cir. 1967).

To support the admissibility of the checks, defendant relies on Lumetta v. United States [66-2 USTC ¶9492], 362 F. 2d 644 (8th Cir. 1966). There the Government was permitted to show the corporate income of Stephens Cement Contractors, Inc., of which Lumetta was president, to show "that Stephens was a going concern dealing in substantial amounts of money and operating at a profit; and that had Lumetta filed a return [for Stephens] it would have shown a tax owing to the government." 362 F. 2d at pp. 645-646. The evidence was admitted to combat the "defenses interposed," one probably being that no tax was due. 362 F. 2d at p. 646. Here the testimony shows that the amount of tax owing was not the reason Gorman did not file his tax returns, so that proof of tax liability was irrelevant.

Defendant also complains that it was unfair to receive testimony from a bookkeeper as to the amount of his paid office rent. Since defense counsel elicited the amounts of the annual payment from this witness, Gorman can hardly object to their receipt. Furthermore, there were no suggestions to the jury that these were Gorman's only deductible expenses.

Defendant's principal brief complains of the phrase "in order to prevent the government from knowing the extent of his tax liability" in the willfulness instruction given. ³ Because this phrase was added by the District Court at the suggestion of Gorman, he cannot now complain of its inclusion. United States v. Echeles, 222 F. 2d 144, 152 (7th Cir. 1956), certiorari denied, 350 U. S. 828. Similarly, he cannot in his reply brief raise the deletion of "without justifiable excuse" from the same instruction. See Rule 17(a) of this Court.

Defendant's final point, first asserted in his post-trial motion for acquittal, is that there was no venue in the Northern District of Illinois. Defendant's residence was either in Chicago or suburban Oak Park , Illinois , and his place of business was in Chicago . Therefore, there was venue below if his returns had to be filed with the District Director of the Internal Revenue District in Chicago .

Section 6091 of the Internal Revenue Code of 1954 (26 U. S. C. §6091) requires individuals to file their income tax returns in the internal revenue district of their legal residence or place of business. Defendant contends that there is no venue on the ground that neither the President nor his delegate, the Secretary of the Treasury, has established any internal revenue districts under Section 7621 of said Code (26 U. S. C. §7621), which provides:

"§7621. Internal revenue districts.

"(a) Establishment and alternation.--The President shall establish convenient internal revenue districts for the purpose of admin istering the internal revenue laws. The President may from time to time alter such districts.

"(b) Boundaries.--For the purpose mentioned in subsection (a), the President may subdivide any State, Territory, or the District of Columbia , or may unite into one district two or more States or a Territory and one or more States."

This contention ignores Section 7851(b)(2) of the Code (26 U. S. C. §7851(b)(2)), which provides:

"§7851. Applicability of Revenue Laws.

* * *

"(b) Effect of Repeal of Internal Revenue Code of 1939.--

* * *

"(2) Existing offices.--The repeal of any provision of the Internal Revenue Code of 1939 shall not abolish, terminate, or otherwise change--

"(A) any internal revenue district." (Emphasis supplied.)

In 1946 the Secretary of the Treasury divided Illinois into two collection districts, with Cook County, in which Chicago and Oak Park are situated, in the First District (11 F. R. 177A, p. 28). Except for changes in nomenclature, Illinois has subsequently retained the same two collection districts. Inasmuch as Chicago and Oak Park are in the First Collection District (now entitled "District Director, Internal Revenue Service, Chicago, Illinois" ⁴), venue was properly laid in the Northern District of Illinois. To hold otherwise would mean that no one could be prosecuted for failure to file tax returns anywhere in the United States . Congress intended no such ludicrous result.

AFFIRMED.

¹ United States v. Shapiro, 383 F. 2d 680, 687 (7th Cir. 1967). The present trial occurred in September 1966. The history of insanity instructions in this Circuit is contained in Shapiro and United States v. Williams, 372 F. 2d 76 (7th Cir. 1967), certiorari denied, 389 U. S. 880.

² Defendant's attack on three other rulings of the District Court in no way shows that he was deprived of effective assistance of counsel and merits no discussion.

³ The willfulness instruction was as follows:

"The word 'wilfully' used in connection with this offense means deliberately, intentional or with wrongful purpose of deliberately intending not to file a return which the defendant knew he should have filed in order to prevent the government from knowing the extent of his tax liability."

⁴ See 18 F. R. 3499.

 

 

[54-2 USTC ¶9545]Irving M. Rubenstein, also known as Irving M. Ruby, Appellant v. United States of America, Appellee

(CA-10), In the United States Court of Appeals for the Tenth Circuit, No. 4808--May Term 1954, 214 F2d 667, August 4, 1954

Appeal from the United States District Court for the District of Colorado.

Criminal penalties: Sufficiency of evidence.--Taxpayer was indicted for aiding and assisting in the preparation of his wife's allegedly fraudulent return. There was no evidence at the trial that taxpayer did give any assistance to the accountant who prepare the wife's return from returns of a partnership in which both taxpayer and his wife were involved. Therefore, the Circuit Court reversed taxpayer's conviction on this count.

Criminal penalties: Hostile attitude of judge at trial.--Taxpayer contended that the trial judge was hostile at taxpayer's trial for tax evasion, and that such behavior influenced the jury to find against taxpayer. The Circuit Court found that the record did not substantiate taxpayer's contention, and affirmed the conviction on one count.

Isaac Mellman (Gerald N. Mellman was with him on brief) for appellant. Donald E. Kelley, United States Attorney, Clifford C. Chittim, Assistant United States Attorney, for appellee.

Before PHILLIPS, Chief Judge, PICKETT, Circuit Judge, and KENNEDY, District Judge.

KENNEDY, District Judge:

The appellant, as defendant in the court below, was indicted for violation of 26 U. S. C., 145(b), for the attempt to evade and defeat income taxes, and for violation of 26 U. S. C., 3793(b)(1), for aiding and assisting in the preparation and presentation of a false and fraudulent return, the latter charge referring to the personal return of the defendant's wife, Zelda Rubenstein. The appellant and his wife were engaged in a copartnership, out of whose operations the controversy in this case arises.

The cause was tried to a jury, resulting in a verdict of guilty on both counts, upon which the defendant was sentenced to pay a fine of ten thousand dollars upon each count and have execution therefor and to imprisonment for a period of three years upon each count of the indictment, the term of imprisonment on such counts to run concurrently. The appeal here is from such sentence and judgment.

The points upon which appellant bases his charges of error by the trial court are eight in number, which in abbreviated form are as follows: (1) the Court erred in denying the appellant's motion for a bill of particulars; (2) the trial Court did not properly define "willfully" and "knowingly" as contained in the statute; (3) there was not sufficient evidence presented showing that the appellant aided and assisted in the preparation of the false returns of his wife; (4) there was not a proper instruction to the jury that from a proven situation the tax followed as a matter of law; (5) the jury was not properly instructed upon the essential elements of proof required to be established under the net worth theory; (6) the Court failed to instruct the jury upon the elements of the crime charged in each count of the indictment; (7) the Court erred in admitting certain exhibits on behalf of the government; and (8) the comments and actions of the trial Court were such as to prejudice and inflame the jury against the appellant so as to prevent him having a fair and impartial trial.

As to points 1, 2, 4, 5, 6 and 7 it would plainly appear that these alleged errors have been fully and completely ruled adversely to the appellant either jointly or separately by this court in the cases of Holland v. United States, 209 Fed. (2d) 516 [54-1 USTC ¶9177], and Hooper v. United States, 213 Fed. (2d) 30 [54-1 USTC ¶9381], which, together with the cases cited in those opinions, make it seem unnecessary to further add to the legal literature of this Circuit upon the subjects therein discussed.

As to the point that the Court erred in refusing a bill of particulars it might be mentioned that in addition to such matter being largely within the discretion of the trial judge as stated in the above cited cases, the record shows that the appellant upon two different occasions voluntarily appeared before revenue agents and fully discussed his returns as to his own figures and theirs concerning his 1946 return and those of previous years so that in advance of the trial he was fully advised as to the nature of the government's claim, thereby eliminating any element of surprise upon the trial.

[Hostile Attitude of Judge]

Concerning point 8--that the attitude of the trial Court was such as to prejudice and inflame the jury against the appellant so as to prevent him from having a fair and impartial trial--the record seems to disclose more than the ordinary activity of the trial judge in the taking of the evidence, but it likewise shows that it was apparently inspired by the desire of the judge to expedite the trial rather than to take sides with either the plaintiff or the defendant. The principal complaint of the appellant accentuated along this line is with regard to the attitude of the Court criticizing a witness and counsel involving testimony of a brother of the appellant who testified that the appellant handed him a sealed envelope and told him that there was money in it. The Court informed the witness that his testimony in regard to what the appellant told him was hearsay and should be excluded and the witness either having misunderstood or in attempting to get the matter of the money being in the sealed envelope before the jury again attempted to repeat this testimony. The trial judge in a very firm manner criticized the witness and counsel in which he was undoubtedly justified for its was inadmissible as hearsay and if allowed to stand would be prejudicial to the appellee's case.

While counsel for appellant complains bitterly of the attitude of the Court in showing prejudice against the appellant, the record shows that the trial was conducted in a manner which is in general harmony with the statement made by this Court in the case of Inland Freight Lines v. United States, 191 Fed. (2d) 313-316:

* * * "The trial court is not a mere moderator. The court has the power and is charged with the duty of directing the trial along paths of recognized procedure in a manner reasonably calculated to bring about a just result."

This view is substantially strengthened by the instructions of the Court which undoubtedly disabused the minds of the jury of any idea they may have had of any prejudice against the appellant or his counsel when he said:

"Ladies and gentlemen of the Jury, sometimes folks in the Courtroom during the course of a trial think they see in what the Judge does or says an indication of the Court's views of the facts or of the remarks of counsel in the case. The Court charges you, ladies and gentlemen of the Jury, that you are to disregard wholly and to lay out of your consideration in this case all such considerations, if you think there were any, for, ladies and gentlemen of the Jury, the Court has not intended to give you any such indications, and, moreover, ladies and gentlemen of the Jury, you are the sole judges of the questions of fact in this case bearing upon the guilt or the innocence of this defendant."

[Count Two Reversed]

There remains for consideration point 3 based upon the second count of the indictment to the effect that there was no evidence presented to the jury that the appellant aided and assisted in the preparation of the wife's income tax return for the year 1946. In this respect the record shows that this return of the wife was prepared by an accountant (Ginsberg) and was made up from the partnership returns representing cash which she had received during the year from that source. Upon that phase of the question this appears to be by itself a true report of what she did receive through the operations of the partnership and therefore cannot be considered as a false report but if it should be considered as a false report, in order to connect the appellant it would be necessary to show that he had a criminal agency in causing such report to be made as a false report rather than reflecting a true return of what the wife-taxpayer received from the partnership during the taxable year; but in addition an examination of the record shows that the accountant who made up the return testified that he made it up from the partnership return and that he did not get information from any other source except to say that "if there were any other I would have to get it from Mr. Rubenstein". Neither at this time, as found in the printed record at page 62, nor at another time when he was questioned, as shown by the record on page 221, did he affirmatively say that he got any information in regard to the return of the wife from the appellant. Under both of these situations it is indeed questionable if there is sufficient evidence to show that the defendant was guilty under this count beyond a reasonable doubt; first, because the report made for the wife was evidently a true report as made up from the partnership records, and second, because the evidence is clearly insufficient to show that the appellant had anything to do with the action of the accountant in making up such return.

For the reasons stated the sentence and judgment of the Court upon the first count of the indictment should be and is affirmed and upon the second count should be and is reversed.