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7206- Fraud and False Statements: Constitutionality

 

[57-1 USTC ¶9446]Alvin Kaplan, Appellant v. United States of America , Appellee

(CA-5), U. S. Court of Appeals, 5th Circuit, No. 16129, 241 F2d 521, 3/1/57, Affirming an unreported decision of the District Court

[1954 Code Sec. 7206(2)--similar to 1939 Code Sec. 3793(b)]

Crimes: Aiding and assisting in preparation of false income tax returns: Constitutionality of statute: Competence of defendant to conduct own trial.--The defendant was convicted by a jury of the charge of aiding and assisting in the preparation and presentation of false and fraudulent income tax returns. At the trial he waived assistance of counsel and conducted his own case. On appeal, counsel for defendant alleged that defendant was incompetent to waive the assistance of counsel and that the trial court failed to hear defendant's motion on the unconstitutionality of Sec. 7206(2), the statute under which he was convicted. The record showed that competent professional evidence was offered by defendant that he was competent to conduct his own case. Also, the record did not show any motion urging the unconstitutionality of the statute. Nor did counsel for defendant on brief cite any cases in opposition to those cited by the government on brief in support of the validity, scope, application and effect of the statute. Having failed to show prejudicial error, the judgment was affirmed.

Jacob L. Amato, Gretna , La. , for appellant. M. Hepburn Many, New Orleans, La., Charles K. Rice, Assistant Attorney General, Fred G. Folsom, Jr., Department of Justice, Washington, D. C., for appellee.

Before HUTCHESON, Chief Judge, and CAMERON and JONES, Circuit Judges.

PER CURIAM:

Convicted by a jury on the three counts of an indictment charging him with aiding and assisting in the preparation and presentation of false and fraudulent income tax returns, in violation of Sec. 7206(2) Title 26, and sentenced to imprisonment for one year on each count, the sentences to run concurrently, defendant has appealed, presenting five questions. ¹

The first, second, and fourth together make up the question most urged and argued, that the defendant, though insisting upon conducting his own trial, ² and conducting it through some 600 pages of testimony, did not have the capacity to understand the nature and seriousness of the charges against him and to properly conduct the trial, and that he should, therefore, have had counsel to assist him.

[Constitutionality of Sec. 7206(2)]

The other two claims, (1) of the denial of his request for a continuance of twenty days to prepare a defense, and (2) of the failure of the court to hear defendant's motions, urging the unconstitutionality of the statute under which he was convicted, may be disposed of by saying that the record does not support them. The continuance sought was not for the purpose of preparing a defense. It was, as shown in the record, to consider a motion to be filed for hearing exceptions to criminal jurisdiction and to the indictment, and the record does not show any motion urging the unconstitutionality of the statute under which he was charged or that the court failed or refused to consider and determine all of the matters presented to him. Besides, neither the record nor appellant's brief, points out any prejudicial error in any action of the court, including his refusal to grant any of the defendant's motions. As the government's brief points out, the validity, scope, application, and effect of the statute have been determined adversely to appellant's contentions in cases cited by it, State v. Borgis, 182 Fed. (2d) 274 [50-1 USTC ¶9330] and U. S. v. Kelley, 105 Fed. (2d) 912 [39-2 USTC ¶9621], and no cases holding to the contrary are cited by appellant.

[Competence to Conduct Own Case]

We come then to his counsel's primary contention, that appellant was incompetent to waive the assistance of counsel and conduct his own case, to find that the question of mental competency of the defendant was decided in favor of his contention that he was competent, by the district judge on competent professional evidence offered by the defendant; ³ that the record is replete with evidence that plaintiff had had considerable acquaintance with and experience in regard to legal matters; that throughout the long record he exhibited an understanding of the proceedings, a thoroughness in examination, and a pertinacity which belies the claim his counsel is now making that he was ignorant, inexperienced, and gullible, a lamb among wolves; and that the court therefore erred in permiting him, at his request, to conduct his own case. ⁴

Throughout the trial, in the sentence imposed, and in the proceedings subsequent thereto, including his advising the defendant to appeal his case and authorizing his appeal in forma pauperis, the district judge evidenced patience and forbearance and a recognition of the defendant's age and frailties, together with solicitude of a rare order, to assure to the defendant every rightful protection. On this record, it is impossible for us to view the case, as defendant's counsel asks us to do, as one in which defendant had been denied due process or subjected in any way to a deprivation of his rights or suppose other than that the court will, under Rule 35, Federal Rules of Criminal Procedure, "Correction or Reduction of Sentence", give careful consideration to a reduction of the sentence, including placing the defendant on probation.

No prejudicial error having been made to appear, ⁵ the judgment is affirmed.

¹ (1) The question of the mental capacity of the appellant to fully comprehend and understand the nature of the proceedings against him.

(2) The lack of knowledge on the part of the appellant as to the seriousness of the charge against him and the possible consequences or sentence that could be imposed if found guilty.

(3) The denial of the appellant's request for a continuance prior to trial in order to prepare a defense.

(4) The admission into evidence of certain inadmissible or objectionable evidence without any objection being made on the part of the appellant.

(5) The failure of the court to hear the motions filed by the appellant urging the unconstitutionality of the statute under which he was charged.

² The Court: "Is the defendant ready?"

Mr. Kaplan: "The defendant is ready, your Honor."

The Court: "And the court is advised that counsel appointed by the court is not representing the defendant, is that correct?"

Mr. Kaplan: "I would like to have a trial by jury, and I represent myself. I would like to represent myself, and I have represented myself the last four years in this open court." (TR p. 17)

³ Prior to trial, on motion of the United States Attorney, a hearing was conducted before his Honor, the trial judge, to determine the mental competency of the appellant. Dr. Edmund Connely, a psychiatrist testified that he had examined the appellant in 1955 and that at that time he considered the appellant to be suffering from manic depression insanity, and that he further believed that the appellant was still in that state and could not stand trial.

Upon motion of the appellant, through his attorney, Carl Shumacker, the hearing was continued in order that the appellant could be examined by a psychiatrist of his choosing. Thereafter, the hearing was resumed, this psychiatrist testified categorically to defendant's mental competency and, the hearing ended, the trial judge ruled that the appellant was mentally able to stand trial.

⁴ Adams v. U. S. , 317 U. S. 269; Johnson v. Zerbst, 304 U. S. 458.

⁵ U. S. v. Herskovitz, 209 Fed. (2d) 881 [54-1 USTC ¶9182]; U. S. v. Brewster, 231 Fed. (2d) 213 [56-1 USTC ¶9399].

 

 

[69-2 USTC ¶9584] United States of America , Plaintiff-Appellee v. Jose Escobar, Defendant-Appellant

(CA-5), U. S. Court of Appeals, 5th Circuit, No. 26764, 410 F2d 748, 4/11/69, Aff'g unreported District Court case

[Code Secs. 7206(1) and 7207]

Criminal penalties: Felony v. misdemeanor under overlapping penal laws: Maximum sentence: Lesser-offense rule: Unconstitutionally broad discretion.--The statutes do not overlap; either the taxpayer is guilty of willful attempt to evade taxes or he is innocent of the charge.

Harry Lee Hudspeth, United States Attorney, Romualdo C. Caballero, Assistant United States Attorney, El Paso , Tex. , for plaintiff-appellee. J. Edwin Smith, 1401 South Coast Bldg., Houston , Tex. , for defendant-appellant.

Before AINSWORTH and SIMPSON, Circuit Judges, and MITCHELL, District Judge.

PER CURIAM:

After the mandate from the direct appeal ¹ herein went down, Escobar filed his motion below under Title 28, U. S. C., Section 2255, to set aside his sentence as illegal. The district court denied this motion by memorandum order, reproduced in the margin. ² We find no error, and affirm.

We add the following observation. The thrust of appellant's argument before us largely is that the two statutes overlap and that the U. S. Attorney is vested with unconstitutionally broad discretion to determine whether to proceed under the Misdemeanor Statute, Title 26, §7207, or the felony statute, Title 26, §7206(1), so that only a sentence as a misdemeanant could lawfully have been imposed. The district court's quotation from our opinion on the former appeal [Footnote 1] demonstrates that this is fallacious. Even if it were not, we consider binding the opinion of this Court in Grady Welton Black v. U. S., 5 Cir. 1968, -- F. 2d -- [No. 25661, December 19, 19 68]. In Black, we rejected the argument advanced here, which is based upon the dissents in Berra v. United States [56-1 USTC ¶9480], 351 U. S. 131, at 138-140 (1955) and Hutcherson v. U. S., D. C. Cir. 1965, 345 F. 2d 964, at 972-977.

AFFIRMED.

¹ Escobar v. United States , 5 Cir. 1968, [68-1 USTC ¶9125] 388 F. 2d 661, cert. denied 390 U. S. 1024, 88 S. Ct. 1411, 20 L. Ed. 2d 282 (1968).

² "The defendant in the above styled and numbered cause has moved this Court to correct the sentence imposed by this Court in said case, alleging that the sentence imposed is illegal. The defendant contends that 'the Misdemeanor Statute, 26 U. S. C. §7207, overlaps with §7206(1),' of Title 26, and that hence the defendant should have been sentenced under the Misdemeanor Statute, §7207, rather than under §7206(1).

'[Defendant] . . . was charged in a four count indictment with willfully making and subscribing false income tax returns for the years 1957, 1958, 1959, and 1960. He was acquitted on Count 1 and found guilty on the other three counts.' (Footnotes omitted)

Escobar v. United States [68-1 USTC ¶9125], 388 F. 2d 661, 663 (5th Cir. 1968).

He was sentenced to two (2) years imprisonment, six (6) months to serve, the remainder suspended for two years, plus $1,000.00 fine on each count, the sentences to run concurrently. His conviction was affirmed in Escobar v. United States , supra. On his appeal, defendant contended, inter alia, and the Court found as follows:

'Appellant contends that the court erred in refusing to charge that the jury could find him guilty under 26 U. S. C. A. §7207 (misdemeanor) even though he was indicted for violating 26 U. S. C. A. §7206(1) (felony). There is an element in §7206(1) which is not in §7207, i. e., the document must contain a statement that it is "made under the penalties of perjury".

'. . . [T]he question narrows to whether there is "a disputed factual element" in §7206(1) which is not present in §7207. As pointed out the only difference between the two statutes is in the "made under the penalties of perjury" requirement in §7206(1). If there was any question for the jury concerning whether some or all of the returns involved here were or were not "made under the penalties of perjury" appellant would have been entitled under Sansone [Sansone v. United States [65-1 USTC ¶9307], 380 U. S. 343 (1965)], to the requested charge. However, appellee contends, and appellant does not dispute, that all returns involved here contain the "perjury declaration". Therefore, there was no factual dispute concerning the charged greater offense to be submitted to the jury, ergo appellant was not entitled to his requested charge. See Sansone v. United States at 354-355, 85 S. Ct. 1004.' 388 F. 2d at 666 (Footnote omitted)

In other words, defendant was either guilty of a violation of §7206(1) or he was innocent of violating either §7206(1) or §7207. The jury found that he was guilty as charged, i. e., that he was guilty of acts and/or omissions which constituted a violation of §7206(1). Congress has declared that anyone guilty of such acts of omissions should be punished as a felon. This court could not and can not sentence him otherwise. Especially, the Court could not sentence the defendant under a statute which he could not have lawfully been found guilty of violating.

While this precludes the relief sought; the Court would point out that even if the defendant were correct in his contention that a prosecutor cannot constitutionally be empowered to choose the more onerous of overlapping statutes under which to prosecute, it would not help him here. In the particular facts of this case, the statutes do not overlap. As pointed out above, the defendant was either guilty of a violation of §7206(1) or he was not guilty of any violation, felony or misdemeanor.

Furthermore, the practical effect of the sentence given this defendant, assuming the period of probation is successfully served, as this Court did not must assume, would be the same had he been sentenced under the statutory provision for misdemeanors. In other words, the actual sentence, again assuming no probation revocation, could have, and probably would have been the same under either sentence, his having six (6) months to serve, a $1,000.00 fine to pay, and a two (2) year period of probation.

Treating the motion both as a request to correct an illegal sentence and/or to reduce a valid sentence, the Court having reviewed the motion, files and records of the case, finds, for the foregoing reasons, that it should be, and the same is hereby, in all things, DENIED, and IT IS SO ORDERED.

Entered this 2nd day of September, 1968."

 

 

[71-2 USTC ¶9739] United States of America , Plaintiff-Appellee v. Archie J. Jackson, Defendant-Appellant

(CA-7), U. S. Court of Appeals, 7th Circuit, No. 18798, 452 F2d 144, 10/20/71 , Affirming unreported District Court decision

[Code Sec. 7206-Result unchanged by '69 Tax Reform Act]

Crimes: Fraud and false statements: Aiding and assisting in preparation of false returns: Constitutionality: Jencks Act.--The taxpayer's conviction for willfully aiding and assisting other taxpayers in the preparation of false and fraudulent income tax returns was affirmed. The provision of the Jencks Act, Title 18, U. S. C. A. §3500(a) and (b), was not unconstitutional as alleged by the taxpayer since it afforded recess provisions during trial for post-direct examination of witness' statements, and its validity has been upheld by the Supreme Court and lower courts in a wide variety of cases. Further, there was no violation of due process under the Fifth Amendment by allowing production of witness' statements before direct examination since such action afforded treatment more favorable than the Act itself. Lastly, there was no denial of due process in that taxpayer's prosecution depended upon testimony of witnesses who may escape criminal liability since under the Code the crime is committed by one who knowingly assists another in the preparation of a false return despite the guilt or innocence of a taxpayer.

William J. Bauer, United States Attorney, Donald C. Shine, Assistant United States Attorney, Chicago, Ill., for plaintiff-appellee. Louis V. Kiefor, 684 State Line Ave. , Calumet City , Ill. , for defendant-appellant.

Before HASTINGS, Senior Circuit Judge, KERNER and SPRECHER, Circuit Judges.

PER CURIAM:

Following a trial by jury, defendant Archie J. Jackson was found guilty on each of ten counts of an indictment charging him with willfully and knowingly aiding and assisting taxpayers in the preparation and presentation of fraudulent federal income tax returns in violation of Title 26, U. S. C. A. §§ 7206(a), Internal Revenue Code of 1954. ¹ Upon a judgment of conviction, defendant was sentenced to serve eighteen months on each count, the sentences to run concurrently with each other. He has been represented on appeal by court-appointed counsel. Defendant appeals. We affirm.

Each count of the indictment charged that the tax return involved falsely represented that the taxpayer named therein was entitled to itemized deductions and exemptions in amounts in excess of his proper entitlements. At trial, twelve taxpayer witnesses testified they went to defendant and paid him a fee to prepare their tax returns for the year 1965 as he had done for some in prior years. Each further testified that he had signed his tax return, acknowledging he had read it, when in fact he had not read it. Typical of such testimony was that of taxpayer Killgrove who told defendant he had nothing to claim except "myself and my union dues." However, his tax return contained medical deductions of $470, charitable deductions of $175, special work clothes costing $150, interest expense of $410, and gasoline taxes of $120 when he did not own or drive an automobile. All such deductions were fictitiously supplied by defendant who told taxpayer he would receive a refund.

Prior to trial, defendant moved for the production of statements of Government witnesses which was denied by the trial court. Pretrial discovery of such statements is expressly precluded by the provisions of the so-called Jencks Act, Title 18, U. S. C. A. §3500(a) ², with provision for post-direct examination production in subsection (b) ³. Defendant's counsel was furnished with the requested statements prior to the direct examination of each such witness.

On appeal, defendant makes no claim that the judgment of conviction is not sustained by sufficient evidence. Defendant seeks to overturn his conviction on strained constitutional grounds which do not withstand close scrutiny.

Defendant first asserts that Section 3500, supra, is unconstitutional in that the denial of pretrail production of statements of Government witnesses deprived him of the right of confrontation secured by Sixth Amendment of the Federal Constitution. This claim is without merit.

The record shows that the subject income tax returns were made available to defendant's trial counsel more than two months prior to trial and that the false entries were pointed out to him. Further, the recess provisions for post-direct examination of producible statements under Section 3500(c) ⁴ of the Jencks Act alleviates any prejudice that defendant might suffer from denial of earlier production.

Defendant next asserts deprival of due process guaranteed him by the Fifth Amendment of the Federal Constitution. This strange contention that the trial court abused its discretion under the Jencks Act by allowing production of the statements in question immediately before direct examination, but not before trial, is frivolous. As above stated, such production under the Act is required only after direct examination. Defendant may not be heard to complain that he was given more favorable treatment than the Act itself required.

Finally, the constitutional validity of the Jencks Act has been upheld by the Supreme Court and lower courts in a wide variety of cases among which we need only cite Palermo v. United States [59-2 USTC ¶9532], 360 U. S. 343 (1959); Scales v. United States, 367 U. S. 203 (1961); United States v. De Lucia, 7 Cir., [59-1 USTC ¶9161] 262 F. 2d 610 (1959), cert. denied, 359 U. S. 1000; United States v. Simmons, 2 Cir., 281 F. 2d 354 (1960); Peek v. United States, 9 Cir., 321 F. 2d 934 (1963), cert. denied, 376 U. S. 954 (1964).

As best we can divine defendant's final constitutional objection, he contends he has been denied due process because his prosecution under Section 7206(a), supra, is unfair. He argues this is so because his prosecution depends upon the testimony of a taxpayer who may escape criminal liability by maintaining lack of knowledge of the false claims in the tax returns. The obvious purpose of the Act is to make it a crime for one to knowingly assist another in preparation and presentation of a false and fradulent income tax return. The innocence or guilty knowledge of a taxpayer is irrelevant to such a prosecution. See, e.g., United States v. Hainowitz, 2 Cir., 404 F. 2d 38 (1968); United States v. Gisehaltz, D. S. C. D. N. Y., [67-2 USTC ¶9616] 278 F. Supp. 434, 438 (1967). Cf. Driscoll v. United States , 1 Cir., [67-1 USTC ¶9430] 376 F. 2d 254 (1967); Strangeway v. United States, 9 Cir., [63-1 USTC ¶9183] 312 F. 2d 283, 286 (1963).

For the foregoing reasons, the judgment of conviction appealed from is affirmed.

Affirmed.

¹ "§7206. Fraud and false statements

Any person who--

* * *

(2) Aid or assistance.--Willfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a return, affidavit, claim, or other document which is fraudulent or is false as to any material matter, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim, or document; or

* * *

shall be guilty of a felony and, upon conviction thereof, shall be fined not more than $5,000, or imprisoned not more than 3 years, or both, together with the costs or prosecution. Aug. 16, 19 54, c. 736, 68A Stat. 852."

² §3500. Demands for production of statements and reports of witnesses

(a) In any criminal prosecution brought by the United States, no statement or report in the possession of the United States which was made by a Government witness or prospective Government witness (other than the defendant) to an agent of the Government shall be the subject of subpoena, discovery, or inspection until said witness has testified on direct examination in the trial of the case."

³ "(b) After a witness called by the United States has testified on direct examination, the court shall, on motion of the defendant, order the United States to produce any statement (as hereinafter defined) of the witness in the possession of the United States which relates to the subject matter as to which the witness has testified. If the entire contends of such statement relate to the subject matter of the testimony of the witness, the court shall order it to be delivered directly to the defendant for his examination and use."

⁴ §3500

"(c) * * * Whenever any statement is delivered to a defendant pursuant to this section, the court in its discretion, upon application of said defendant, may recess proceedings in the trial for such time as it may determine to be reasonably required for the examination of such statement by said defendant and his preparation for its use in the trial."

 

[74-1 USTC ¶9421] United States of America , Plaintiff v. Robert M. Sullivan, Defendant

U. S. District Court, Dist. Mont. , Helena Div., Criminal No. 4518, 4/3/74

[Code Sec. 7206]

Crimes: Fraud and false statements: Aid or assistance: Selective enforcement: Constitutionality: Arbitrary.--A program which singled out attorneys, CPA's and Enrolled practitioners as targets for fraud prosecutions was not unconstitutional. The Court held that the classification was not unreasonable since it was made to insure the integrity of those who filed tax returns for others.

Roy E. Murray, Jr., Assistant United States Attorney, Butte , Mont. , for plaintiff. I. James Heckathorn, One Main Bldg., Kalispell , Mont. , for defendant.

Opinion and Order

SMITH, District Judge:

I assume, although I think it highly unlikely in view of the timing, that the fact that the defendant was a certified public accountant was a factor in selecting him as a target for prosecution. There is an ACE Project (IRS Manual Supplement, 91G-26, 49G-19, Feb. 29, 1973) which singles out attorneys, CPA's and Enrol