Jury Verdict
Disregarded
7206- Fraud and
False Statements: Jury Verdict Disregarded
[83-2
USTC ¶9730]
United States of America
, Appellee-Cross-Appellant v. Patrick J. Cunningham,
Defendant-Appellant-Cross-Appellee and John J. Sweeney,
Defendant-Appellant
(CA-2),
U. S. Court of Appeals, 2nd Circuit, Docket Nos. 83-1046, 83-1052,
82-1402, 723 F2d 217,
11/28/83
, Affirming, reversing and remanding an unreported District Court
decision
[Code Secs. 7201 and 7206]
Crimes: Tax evasion: False returns.--The convictions of an
attorney for filing a false income tax return for the year 1974 and for
violating various non-tax criminal statutes related to the cover up of a
tax evasion scheme were affirmed. Various allegations of error in the
conduct of the trial, including jury instructions and the use and weight
of certain evidence, were found to be without merit. The trial curt
judge's order and judgments setting aside the jury's guilty verdicts on
two counts of tax evasion (for the years 1974 and 1975) and on one court
of filing a false income tax return (for the year 1975) were reversed
and remanded for sentencing and judgments of conviction. The trial court
judge was not justified in setting aside the guilty verdicts because the
evidence was sufficient for the jury to determine guilt. The non-tax
convictions of the taxpayer's former law partner were also affirmed.
John
S. Martin, Jr., United States Attorney, Gerard E. Lynch, Assistant
United States Attorney,
New York
,
New York
, for appellee-cross-appellant. Michael E. Tigar, Samuel J. Buffone,
John J. Privitera, Tigar & Buffone, Washington, D. C., for
defendant-appellant-cross-appellee. Taylor R. Briggs, Donald J. Greene,
Kim Hoyt Sperduto, Leon E. Roday, LeBoeuf, Lamb, Leiby & MacRae, New
York, New York, for defendant-appellant.
Before
MANSFIELD
, KEARSE and WINTER, Circuit Judges.
MANSFIELD,
Circuit Judge:
Experience
teaches that unlawful cover-up offenses are often more heinous than the
crime sought to be concealed. This case falls squarely within that
maxim. Patrick J. Cunningham and John J. Sweeney appeal from judgments
of the Southern District of New York entered by Judge Charles L.
Brieant, Jr. after a jury convicted them of offenses related to income
tax evasion, obstruction of investigations by the Internal Revenue
Service (IRS) and a grand jury, and making false statements to the IRS,
the U. S. Attorney, a grand jury and a federal district court. 1 The jury
found Cunningham guilty of conspiracy, 18 U. S. C. §371 (Count 1), tax
evasion for the years 1974 and 1975, 26 U. S. C. §7201 (Counts 2 and
4), filing false returns for 1974 and 1975, 26 U. S.C. §7206(1) (Counts
3 and 5), inducing John Spain to make false statements to IRS agents, 18
U. S. C. §§ 1001 and 2 (Counts 6 and 7), making false statements to
agents of the IRS and the U. S. Attorney, 18 U. S. C. §1001 (Count 11),
and giving false testimony before a United States district court, 18 U.
S. C. §1623 (Count 13). Sweeney was found guilty of conspiracy, 18 U.
S. C. §371 (Count 1), making false statements in testimony before a
federal grand jury on July 10, 1980, and July 17, 1980, 18 U. S. C. §1623
(Counts 9 and 10), and making false statements to agents of the IRS and
the U. S. Attorney, 18 U. S. C. §1001 (Count 12). 2
Following
the trial, Judge Brieant granted Cunningham's motion to set aside the
guilty verdicts on Counts 2, 4 and 5 and enter a judgment of acquittal
on those counts, from which the government appeals. We affirm the
convictions, reverse the district court's order and judgments acquitting
Cunningham on Counts 2, 4 and 5, and remand these counts for sentencing
and entry of judgments of conviction.
The
record, viewed as it must be in the light most favorable to the
government, Glasser v. United States, 315
U. S.
60, 80 (1942), reveals the following. From 1964 to September 1971
Cunningham and Sweeney, his brother-in-law, practiced law under a loose
partnership arrangement in
New York City
with James F. O'Donoghue. Thereafter until 1978 they ceased to be
partners but practiced separately in the same office suite. From
September 30, 1978
through September 1981 they resumed law practice together with Marc
Krieg in a professional corporation.
In
1974 and 1975, when Cunningham and Sweeney were practicing law
separately, Sweeney made a series of payments in an unusual manner to or
for the benefit of Cunningham. The payments were made not be checks
draws on Sweeney's regular business checking account but by means of
bank checks drawn on an Irving Trust Company escrow savings account into
which Sweeney normally deposited funds belonging to his clients (e.g.,
settlement proceeds, tenants' funds, or payments toward closings). There
was no requirement that the bank checks be reported to any authority.
Nor were the payments, with one exception, recorded in Cunningham's
ordinary personal or business records or bank accounts. In 1974, for
instance, Sweeney drew four bank checks totalling $9,436 on the escrow
account, one to Cunningham and three to schools attended by his
children. In 1975 Cunningham received similar checks totalling $6,062
made out to schools in payment of his children's tuition bills. In
addition, Sweeney paid $13,870 in connection with Cunningham's purchase
of a new home.
There
was evidence from which the jury could reasonably infer that the
payments were made from the escrow account rather than from Sweeney's
regular business account and not recorded on Cunningham's records in
order to conceal the fact that Cunningham, who was at various times
Chairman of the Bronx and New York State Democratic Committees and a
member of the National Committee of the Democratic Party, was receiving
a portion of fees resulting from state court appointments in probate and
guardianship matters in which Cunningham did no work. Disclosure of the
income or its source would have embarrassed him as a political leader by
giving the appearance that the appointments were the result of his
exercise of political influence with respect to the appointing judges
and would also have required him to pay income taxes on the monies
received. 3
Sweeney
kept a careful private accounting of these payments through pencilled
notations in his own handwriting on his copies of monthly escrow account
statements received from Irving Trust Co. The pencilled notations showed
that after deduction of certain expenses the amounts paid to or for the
benefit of Cunningham represented roughly half of the sums Sweeney
received from court-appointed matters. That Sweeney and Cunningham were
trying to conceal these payments could further be inferred from
Sweeney's efforts to avoid turning over his copies of the escrow account
statements to a federal grand jury convened in January 1979 to
investigate Cunningham's possible tax evasion Sweeney initially advised
the grand jury on
April 5, 1979
, that he was not producing the statements because IRS Agent Glenn Ripa
had told him that they were not needed and he was later acquitted of the
charge (Count 8) that this statement was perjurious. However, after it
became clear that his copies of the statements were being subpoenaed he
refused to comply. On
July 10, 1980
, when he appeared before the grand jury for a second time, he expressly
refused to turn over the statements, now claiming that they were
protected by the attorney-client privilege. After that hearing, when he
was ordered to show cause why he should not be held in contempt, Sweeney
agreed to produce the statements. Yet when he returned to the grand jury
on July 17, he did not do so. The statements finally were turned over by
his attorney while Sweeney was out of the country; by that time, the
pencilled notations--which were at the heart of the government's
case--had been erased. It was only through infrared enhancement that the
FBI was able to restore the notations and uncover the secret accounting.
In
October 1975 Cunningham filed his federal income tax return for the year
1974, which did not report as income $9,436 received in 1974 from the
Sweeney escrow account. If disclosure had been made he would have had to
pay an additional $5,057 in taxes over the $37,539 paid. In October
1976, by which time Cunningham knew he was under IRS investigation,
Cunningham filed his federal tax return for income received in the year
1975, which reported the $6,062 received in 1975 from the escrow account
but did not report the $13,870 received from Sweeney in April 1975. If
reported as income the $13,870 would have increased his tax liability by
$9,709.
There
was additional evidence supporting the jury's verdict that Cunningham,
acting in concert with Sweeney, attempted to evade reporting the $9,436
income received from Sweeney in 1974 and at least part of the $13,870
received from Sweeney in 1975. They engaged in conduct designed to
obstruct government investigations into the nature and source of these
payments and to cover up the evasion. In December, 1975, Cunningham
learned that he was under IRS investigation. His 1974 return had been
filed and little could be done to alter his failure to report the $9,436
of covert income he received that year from Sweeney. However, Sweeney's
Irving Trust escrow account statements made it plain that Cunningham
would in 1976 be obligated to report as income payments totalling
$19,932 received in 1975 from Sweeney (including the $6,062 paid as
tuition for Cunningham's children) as a division of legal fees. Instead
of reporting this income and the sources on his federal income tax
return for 1975, however, Cunningham decided to report only the $6,062
and to claim that $13,870 represented a non-taxable loan.
With
respect to the $13,870, Sweeney corroborated Cunningham's account by
advising Cunningham's tax lawyer, Barry London, that $10,000 of this sum
represented part of a non-taxable $45,000 "gap" loan needed by
Cunningham to purchase a new house, $35,000 of which had been borrowed
from the Sterling National Bank, and that the balance of $3,870
constituted the portion of the non-taxable advance from Sweeney that had
yet to be repaid. Recognizing that this story could be refuted by his
pencilled notations on his copies of the Irving Trust escrow account
statements, Sweeney made repeated efforts to avoid turning over his
copies of these bank records. As noted above, his pencilled computations
showing the actual nature of the payments to Cunningham were erased and
his copies were not turned over to the government until he was
threatened with contempt.
In
the meantime Sweeney testified before the grand jury that he loaned
Cunningham nearly $13,900 in 1975 whereas his obliterated notations
together with other evidence showed that the payments represented a
division of legal fees from 1974-75 court appointments. 4 In 1980
Sweeney also falsely advised the U. S. Attorney's office and testified
before the grand jury that other payments made by him to or for
Cunningham (e.g., tuition for the latter's children) were from legal
fees due in connection with the 1971 dissolution of their former law
firm whereas in fact they were from later state-court appointments. 5 Upon being
interviewed by the U. S. Attorney's office in 1980 Cunningham conceded
that the $9,436 received in 1974 from Sweeney (some directly and some to
schools for his children) "probably" represented reportable
income overlooked by him but that the $13,870 received in 1975
constituted non-taxable loans not yet repaid.
As
another step designed to conceal the income received from Sweeney in
1975 Cunningham, after he learned in December, 1975, that he was under
IRS investigation but before he filed his 1975 return, decided to create
some fictitious cash receipts that he could report on his 1975 income
tax return as received that year from other sources, which would serve
to account for otherwise unexplained cash in his possession. His
reporting of cash income from other sources could mislead the IRS into
abandoning its investigation into his 1975 income. Whatever the motive,
he induced a friend, John Spain, to agree to falsely tell the IRS that
Spain
had in 1975 paid him $2,000 cash for legal services. He similarly
induced another friend, Joseph Cioccolanti, to agree to falsely advise
the IRS that he had given Cunningham $4,000 cash. Cunningham then
included on his 1975 return $8,000 cash legal fees received (he later
claimed that this included, in addition to the $6,000 from
Spain
and Cioccolanti, $2,000 from George Steinbrenner). In January 1978
interviews requested by the IRS Spain, living up to his promise to
Cunningham, falsely advised IRS Agent Glenn Ripa and another agent that
in 1975 he had paid a $2,000 cash legal fee to Cunningham. However, when
Spain
was later called before the grand jury on two occasions in July 1980 and
asked about the payment he twice testified that he had never paid a
$2,000 legal fee to Cunningham and he denied under oath that he had so
told Agent Ripa.
Sweeney's
testimony before the grand jury and Cunningham's statements in
interviews by the U. S. Attorney's office regarding the nature of the
payments received by Cunningham or made for his benefit in 1974 and 1975
were belied by the government's restoration of Sweeney's erased
pencilled accounting on his copies of the Irving Trust escrow account
statements. These revealed that the payments were taxable shares of
legal fees from state court appointments, not loans or pre-1972 legal
fees. In January 1981 Cunningham and Sweeney were given the opportunity,
in tape-recorded government interviews later introduced at their trial
in the present case, once again to explain the payments and the source
of the $8,000 cash legal fees reported by Cunningham as received in
1975. Essentially they stuck to the outlines of their earlier version
that the $13,870 represented loans. Both continued to state that $10,000
of the $13,870 was borrowed to complete a $45,000 "bridge"
loan needed to finance Cunningham's purchase of a new home after Sweeney
had been told by the bank that it would not loan more than $35,000.
However, Cunningham could not now recall receiving $2,000 from
Spain
as the source of a portion of the $8,000 listed as cash receipts.
Although he admitted that the $9,436 received from Sweeney in 1974
represented legal fees he did not remember whether he had reported it on
his income tax return. Nor could Cunningham recall whether he had paid
back the loan from Sweeney for purchase of the house or still owed this
amount to Sweeney.
In
October 1980
Spain
was indicted on the charge that he committed perjury in denying to the
grand jury that he told Agent Ripa that he had paid $2,000 to
Cunningham. Thereupon he consulted Cunningham, whose secretary, Marie
Falco, presented to
Spain
what purported to be a contemporaneous memorandum typed by her on the
same day as
Spain
's interview with Agent Ripa 21/2 years previously (January 25, 1978).
The memo reported
Spain
as denying to Falco that he had told Ripa that he had paid any cash to
Cunningham. The memorandum was introduced by
Spain
at his February 1981 trial on the perjury charge after authentication by
Ms. Falco. Suspecting that it was fabricated, the government obtained
from Judge Wyatt of the district court a subpoena ordering Cunningham's
law firm to produce "forthwith" any typewriters in its
possession of the model used to type the purported memorandum of
January 25, 1978
. The government planned to examine the typewriter ribbons (which were
carbon film ribbons that could be used only once and would reveal what
had been typed on them) to determine whether the memorandum had recently
been fabricated, i. e., typed in November 1980.
Following
service of the subpoena by government agents at 4:30 P. M. on the
afternoon of
February 12, 1981
, Marc Krieg, one of the three partners in the firm, asked the agents to
leave. Krieg then ascertained that there were two typewriters of the
kind subpoenaed, one of which was located on the office's reception
desk. At 5:20 P. M. Krieg saw Sweeney carrying the typewriter from the
reception desk to his office and closing the door behind him. When the
typewriter was examined by government agents that night it was found to
have a new, virtually unused ribbon on it. 6 That evening
Krieg advised an Assistant U. S. Attorney that he had seen Sweeney
remove the typewriter to his office that afternoon after the subpoena
had been served but before the typewriter was turned over to the
government. Krieg apparently confirmed this statement in testimony given
the next day, February 13, before the grand jury.
On
the same date,
February 13, 1981
, Judge Inzer B. Wyatt, who was presiding at the
Spain
trial, granted the government's motion for a hearing, which was then
held by Judge Edmund Palmieri, to determine whether anyone had tampered
with the subpoenaed typewriter before surrendering it to the government.
At a continuation of the hearing on February 17, Gay McCreery,
receptionist at the Cunningham-Sweeney firm, testified that she had used
the subpoenaed typewriter on
February 12, 1981
, to type addresses on envelopes which Cunningham planned to use in a
personal campaign mailing to members of the Democratic National
Committee. However, the ribbon on the typewriter turned over by
Cunningham and Sweeney in response to the subpoena did not show the
imprints of this typing, as it would if it were the ribbon used by Ms.
McCreery. When the typed envelopes were then subpoenaed and Krieg and
McCreery were unable to find them, Cunningham testified on
February 19, 1981
, before Judge Palmieri that after deciding to withdraw from his
political race on Monday,
February 16, 1981
, he stuffed the typed envelopes into his pocket and disposed of them in
a street trash basket. This conduct indicated that the typed envelopes
had been concealed or destroyed because, if produced, they would prove
that the ribbon had been changed on February 12. That in turn would
support the government's contention that the tell-tale ribbon bearing
typing imprints of Cunningham's envelopes would also bear imprints of
the
Spain
memorandum, proving it to be a recent fabrication.
Obviously
concerned that this important subpoenaed evidence be produced or that
its concealment or destruction in defiance of the subpoena be
established, Judge Palmieri permitted the government to inquire into the
surrounding circumstances. One of these circumstances was revealed by
Krieg's testimony that on the night of February 13th, after he had
testified that day before a grand jury to facts indicating that Sweeney
had changed the ribbon, Falco and Cunningham had telephoned him at his
Long Island home from a New York restaurant to find out whether he had
given any harmful testimony about the ribbon. Falco testified in the
Spain
trial before Judge Wyatt that she could not recall such a telephone
conversation with Kreig. When asked about the matter on February 19th
before Judge Palmieri, Cunningham testified that he could not recall the
restaurant he visited on the night of February 13th. Disclosure of the
name of the restaurant (which the government did succeed in obtaining
from other sources) would have enabled the prosecution to obtain toll
call records corroborating Krieg's testimony regarding the phone calls
from Falco and Cunningham. All of this evidence provided the basis for
the perjury charge against Cunningham alleged in Count 13.
Thus
there was overwhelming proof that Cunningham and Sweeney sought to
obstruct the
Spain
trial by concealing or destroying the typewriter ribbon that they feared
would have revealed the recent fabrication of the purported
January 25, 1978
,
Spain
memorandum and that Cunningham then sought to cover up this obstruction
by giving false testimony at the hearing before Judge Palmieri.
Although
Cunningham and Sweeney testified in their own defense at the trial of
the present case, their efforts to explain incriminating facts were
clearly refuted by other evidence and rejected by the jury as
incredible. Indeed, Cunningham had no explanation for his failure to
report his 1974 income. While he sought to explain the $8,000 cash
income reported on his 1974 return as coming from
Spain
($2,000), Cioccolanti ($4,000) and George Steinbrenner, owner of the New
York Yankees ($2,000), his testimony was inconsistent in material
respects with his statements in earlier government interviews and with
other proof. For instance, he described in detail a $2,000 payment
purportedly received from Steinbrenner at Yankee Stadium during a 1975
ball game, only to be faced with the fact that that Stadium was
undergoing renovation and was inoperative at that time.
Sweeney's
testimony that his payments in 1975 to Cunningham did not represent a
sharing of state-court appointment fees but a repayment of old firm
debts was refuted by his handwritten accountings on the Irving Trust
bank statements. His effort to label the payments of $13,870 in 1975 to
Cunningham as loans was likewise shown on cross-examination to be
riddled with inconsistencies, entitling the jury to reject his testimony
as incredible.
After
the jury on
June 18, 1982
returned its verdict finding Cunningham guilty of 9 counts and Sweeney
guilty of 4 counts, Judge Brieant on
October 25, 1982
, granted Cunningham's motion for a judgment of acquittal on Counts 2
(evasion of $5,057 tax due for the year 1974), 4 (evasion of income tax
due for the year 1975), and 5 (filing of a false federal income tax
return for the year 1975). Judge Brieant reasoned that the amount of
income tax evaded for the year 1974 was not "substantial"
enough to violate 26 U. S. C. §7201. With respect to Counts 4 and 5 the
court, although conceding that the evidence established that Cunningham
and Sweeney had conspired to evade payment of the former's income tax
due for the year 1975, concluded that since Cunningham knew he was under
IRS investigation he had decided not to evade payment of the taxes due
on the $13,870 income received from Sweeney in 1975.
Discussion
Cunningham.
Cunningham first argues that his conviction of perjury committed during
the hearing before Judge Palmieri (Count 13) must be set aside on the
grounds that the Palmieri court lacked jurisdiction to hold a hearing to
determine whether Cunningham's firm had fully complied with the subpoena
issued in the Spain case and that Cunningham's testimony was
immaterial. He further contends that his conviction of conspiracy (Count
1) must also be reversed because certain criminal objectives and overt
acts alleged in Count 1 were the subject of substantive counts that were
dismissible as a matter of law (Count 13), dismissed by Judge Brieant
after the guilty verdicts (Counts 2, 4 and 5), or no longer sustainable
in view of Judge Brieant's withdrawal of certain specifications of false
testimony alleged in Counts 1 and 11. We disagree.
Count
13 charged Cunningham with violation of 18
U. S.
C. §1623, which prohibits the making of false statements under oath
"in any proceeding before . . . any court . . . of the
United States
." The proceeding at which Cunningham testified was conducted by
the district court to determine whether Cunningham or anyone else in his
law firm had failed to comply with a valid subpoena, and to enforce
compliance with the subpoena by such civil contempt orders as might
become necessary. Non-production of records by the possessor in open
court in defiance of the court's order would clearly provide the basis
for a coercive civil contempt order.
Cunningham
contends that the district court lacked authority to conduct a hearing
for the purpose of determining whether there had been compliance with
its Rule 17(c) subpoena. He argues that no "case or
controversy" existed within the meaning of Art. III, §2, of the
Constitution and that the court was therefore relegated to an
adversarial proceeding under Fed. R. Crim. P. 42(b). We disagree. Trial
courts have the "inherent power to enforce compliance with their
orders through civil contempt. . . . And it is essential that courts be
able to compel the appearance and testimony of witnesses." Shillitani
v.
United States
, 384
U. S.
364, 370 (1966); 28 U. S. C. §1826(a). The same principle governs the
court's authority to compel production of documents or records
subpoenaed by it.
An
appropriate step toward compelling production is an evidentiary hearing
to ascertain the whereabouts of the subpoenaed materials and to give the
person charged an opportunity to explain why they have not been
produced. See In re Grand Jury Investigation, 545 F. 2d 385 (3d
Cir. 1976); In re Bianchi [77-1 USTC ¶9270], 542 F. 2d 98 (1st
Cir. 1976); In re Bonk, 527 F. 2d 120 (7th Cir.), stay denied,
423 U. S. 942 (1975). To relegate the court to slower, more protracted
proceedings would unduly hamper its conduct of an on-going trial and
encourage non-compliance. Moreover, in its compliance hearing the court
should be accorded broad latitude to uncover facts with respect to the
concealment or destruction of the subpoenaed evidence. Under 28 U. S. C.
§1826(a) the court is empowered to issue a coercive contempt order
provided basic due process procedures are observed, In re Kitchen,
706 F. 2d 1266, 1271 (2d Cir. 1983); In re Rosahn, 671 F. 2d 690,
697 (2d Cir. 1982). There was no denial of such due process by Judge
Palmieri in the compliance hearing in this case.
Decisions
relied upon by Cunningham for the proposition that the court is
powerless to hold such a hearing are clearly distinguishable. In Brown
v. United States, 245 F. 2d 549 (8th Cir. 1957), the grand jury of
the District of Nebraska obviously lacked authority to investigate a
crime committed in the Eastern District of Missouri. Similarly, courts
lack authority to compel parties to continue the conduct of property
settled litigation, Hunger v. Andrus, 476 F. Supp. 357, 360 (D.
S. D. 1979), to force a United States Attorney to sign an indictment, United
States v. Cox, 342 F. 2d 167 (5th Cir.), cert. denied, 381 U.
S. 935 (1965), or to adjudicate non-existent cases. See, e.g., Jett
v. Castaneda, 578 F. 2d 842, 845 (9th Cir. 1978) ("Without an
indictment or other charge bringing a defendant before the court . . . a
district court has no general supervisory jurisdiction over the course
of executive investigations."). It is in situations such as these
that the "case or controversy" requirement bars judicial
proceedings. No such situation obtains here where the district court had
a pending criminal trial in progress for which the materials had been
subpoenaed.
The
ribbon subpoenaed from Cunningham's office was a crucial piece of
evidence needed in the on-going Spain trial for the reason that
the ribbon probably would have revealed that the Spain memorandum was a
recent fabrication. Examination of the typewriter indicated that a new
ribbon had just been installed. This and other evidence (e.g.,
Krieg's
Feb. 12, 1981
, description of his having seen Sweeney remove the typewriter from the
receptionist's desk to his office in the short period after the subpoena
was served and before the machine was surrendered) provided grounds for
reasonable belief that the telltale ribbon had been removed and a
substitute installed. Under these circumstances Judge Wyatt acted within
his authority in ordering an immediate hearing to determine the facts
and to use the court's coercive civil contempt power, if necessary, to
secure compliance with the subpoena, including production of the ribbon
and any other related materials bearing on its replacement. Since Judge
Wyatt was actively engaged in trial of the Spain case and could
not conduct two proceedings at the same time, he properly had another
Article III judge of the same court conduct the compliance hearing. See,
e.g., United States v. Teresi, 484 F. 2d 894 (7th Cir. 1973).
Once that hearing got under way Judge Palmieri was entitled to explore
fully the surrounding circumstances, including evidence bearing on the
credibility of Falco, and on her February 13th phone call to Krieg to
determine what he had testified regarding the typewriter.
Cunningham's
next argument, that his testimonial inability on February 19th to recall
the restaurant to which he and Falco went on the night of February 13th
was immaterial to the Palmieri hearing, must likewise be rejected.
Materiality is ordinarily to be determined by the court by a
preponderance of the evidence. United States v. Berardi, 629 F.
2d 723, 727-28 (2d Cir.), cert. denied, 449 U. S. 995 (1980); United
States v. Marchisio, 344 F. 2d 653, 665 (2d Cir. 1965). Here
Cunningham's perjured testimony was adjudged to be material both by the
trial judge and by the jury, to which Judge Brieant delegated the issue
with directions that the government must establish materiality by proof
beyond a reasonable doubt, thus giving Cunningham a dual advantage
(determination of materiality by the jury as well as by the judge and
imposition of a higher standard of proof) to which he was not entitled. United
States v. Berardi, supra.
Regardless
of the scope of the proceeding in which testimony is given, see United
States v. Byrnes, 644 F. 2d 107, 111 (2d Cir. 1981) (grand jury); United
States v. Freedman, 445 F. 2d 1220, 1226-27 (2d Cir. 1971) (SEC
hearing on alleged securities law violation), the test of materiality is
essentially whether a truthful answer would have aided the inquiry. United
States v. Berardi, supra, 629 F. 2d at 728. In the present case the
inquiry was with respect to the existence of the typewriter ribbon used
to type the Spain memorandum and Cunningham's political campaign
envelopes, both of which had been subpoenaed by the court. If Cunningham
had truthfully disclosed the restaurant he and Falco visited on February
13th the government would, by obtaining that restaurant's toll calls for
that date, have had the opportunity to establish that they had called
Krieg at his Long Island home. Along with all the other suspicious
circumstances, this would have been one more piece of evidence
indicating that they were trying to prevent disclosure of Sweeney's
removal of the ribbon and thereby avoid Cunningham's being compelled to
produce the envelopes or face a civil contempt order. Truthful testimony
would thus have confirmed Judge Palmieri's earlier impression that the
missing evidence existed within Cunningham's control and that he had
failed to furnish a reasonable explanation for his failure to produce
it. See Sigety v. Abrams, 632 F. 2d 969, 974-75 (2d Cir. 1980)
(an inference of continuing possession may be drawn by the court with
respect to materials known to be in the possession of a subpoenaed
witness shortly before service of a subpoena). Cunningham's movements
with Falco on the night of February 13th were therefore material to
Judge Palmieri's inquiry.
Cunningham
next contends that his conviction of conspiracy (Count 1) must be set
aside because some of the objectives which are charged as substantive
counts (income tax evasion (Counts 2 and 4) and filing of a 1975 false
income tax return (Count 5)) were dismissed by Judge Brieant after the
trial and another objective (perjury (Count 13)) should be reversed.
Relying principally on United States v. Natelli, 527 F. 2d 311
(2d Cir. 1975), cert. denied, 425 U. S. 934 (1976), he argues
that the jury might not have reached a guilty verdict in the broad
conspiracy charge if these objectives had been eliminated before the
case was submitted to it.
Since
we here affirm the perjury conviction (Count 13) (see supra) and
reverse the dismissal of Counts 2, 4 and 5 (see infra), the
essential premises upon which Cunningham bases his argument evaporate.
Even aside from this fatal defect, however, since conspiracy is a
separate crime from the substantive offenses which may be its aims,
proof that the defendants failed to achieve their unlawful objectives
would not entitle them to a dismissal or retrial of the conspiracy
charge. United States v. Frank, 520 F. 2d 1287, 1290-91 (2d Cir.
1975), cert. denied, 423 U. S. 1087 (1976). Indeed where, as
here, some objects of a conspiracy have clearly been achieved, we will
not normally upset the conspiracy conviction because others have not. United
States v. Sindona, 636 F. 2d 792, 799 n. 5 (2d Cir. 1980), cert.
denied, 451 U. S. 912 (1981).
For
similar reasons the court's post-verdict withdrawal from Count 11 of one
of the specifications of Cunningham's false statemets (that Sweeney told
him that the maximum loan he could obtain from the Sterling National
Bank was $35,000) does not affect the jury's guilty verdict on that
count. Cunningham now contends that the Count 11 conviction should not
stand because it is possible that the jury was unanimous only as to the
dismissed specification. See United States v. Natelli, supra, 527
F. 2d at 325. However, his failure to object at trial to multiple
specifications precludes his raising the issue on appeal. See United
States v. Bonacorsa, 528 F. 2d 1218, 1222 (2d Cir.), cert.
denied, 426 U. S. 935 (1976).
Regardless
of the waiver of the issue the district court in our view erred in
dismissing the falsity specification for lack of direct evidence that
Sweeney had not told Cunningham that $35,000 was the maximum that
the bank would loan. There was ample circumstantial evidence permitting
the jury to make such a finding. Evidence was introduced to the effect
that Sweeney did not in fact seek a $45,000 loan from Mr. Hugh Malloy of
the Sterling National Bank. Given Sweeney's demonstrated willingness to
transfer to Cunningham his share of fees from court appointments and the
absence of any motive for Sweeney to deceive Cunningham as to the true
facts or to require him to accept a loan rather than a distribution of
fees, the jury could reasonably infer that Sweeney told Cunnigham the
truth, namely, that Cunningham needed to borrow only $35,000, not
$45,000, because he was entitled under their agreement to a distribution
of $10,000 in fees from the escrow bank account.
Nor
do we find any merit in the claim that the district court erred in
failing to instruct in its second supplementary charge to the jury that
it might convict Cunningham of conspiracy only if it found that an overt
act had been committed within the pertinent limitations periods, namely,
after
July 1, 1975
, in the case of acts in furtherance of tax evasion objectives, 26 U. S.
C. §6531, and after
July 1, 1976
, as to all other overt acts, 18 U. S. C. §3282. Judge Brieant
originally charged without request or objection by the defendants that
the jury could only find the defendants guilty of conspiracy as charged
in Count 1 if it found "that persons were committing overt acts in
furtherance thereof after
July 1, 1976
." In response to a later jury request he instructed that the
government must prove that the conspiracy existed after
July 1, 1976
, and that if it found that an overt act had been committed after that
date it might infer that the conspiracy existed after that date. This
instruction was proper under the circumstances. In any event the jury's
verdicts finding Cunningham guilty of substantive crimes occurring after
July 1, 1976
, which were alleged as overt acts, eliminate any doubt about the
matter.
Cunningham
also questions his conviction of making false statements to IRS agents
and members of the United States Attorney's office on
January 15, 1981
, in violation of 18 U. S. C. §1001, on the ground that admission of
his statements violated Fed. R. Evid. 410 and Fed. R. Crim. P. 11(e)(6)
because they were made in the course of plea negotiations. However,
since no objection to admission of these statements was made at trial
the issue, absent a showing of plain error, cannot be raised at this
late date. United States v. Ruffin [78-1 USTC ¶9269], 575 F. 2d
346, 355 (2d Cir. 1978). Moreover, the tape recordings of the interview
demonstrate beyond doubt that no error was committed in admitting them.
At the outset of the interview Cunningham, himself a lawyer, and his
counsel, an experienced criminal lawyer, stipulated that anything he
said could be used against him by a grand jury or in any subsequent
proceeding and that if he made a false statement of fact he could be
prosecuted for perjury. These stipulations confirm that the interview
was not a plea bargaining conference but an effort by him to convince
the government that he was not guilty of any crime. The rules invoked by
him are inapplicable to such an interview.
We
have examined the other claims of error advanced by Cunningham and find
them to be totally lacking in merit. 7 There was
ample evidence of his guilt of Count 3 (filing of false 1974 tax return)
and Counts 6 and 7 (inducing John Spain to make false statements to IRS
agents on two occasions in January 1978). Although Cunningham's
counseling of Spain may have occurred at an earlier date, the crime
aided and abetted was not committed until January 1978 when Spain
carried out his agreement to falsely tell the agents that he had paid
$2,000 to Cunningham. United States v. Ruffin, 613 F. 2d 408, 412
(2d Cir. 1979). Finally, the suggestion that Cunningham must have
intended and instructed Spain to lie to a federal or IRS agent,
as distinguished from some other authority, borders on the frivolous.
There is no requirement that the aider and abettor have had a
jurisdictional intention. United States v. Feola, 420 U. S. 671
(1957); Barnes v. United States, 412 U. S. 837, 847 (1973).
Sweeney.
Sweeney's first contention is that, although the indictment charged a
single conspiracy (Count 1), two conspiracies were proved, amounting to
a fatal variance requiring a new trial. United States v. Bertolotti,
529 F. 2d 149, 154 (2d Cir. 1975); see Kotteakos v. United States,
328 U. S. 750 (1946). Count 1 charges a conspiracy by Cunningham and
Sweeney from on or about
January 1, 1972
to July 1981, joined in by Falco and Spain as co-conspirators, to evade
Cunningham's 1974 and 1975 taxes and file false income taxes for those
years, to obstruct investigation of these crimes by the IRS and the
grand jury, to impede the perjury trial of Spain for denying that in
1978 he told IRS agents that he paid a $2,000 cash legal fee to
Cunningham, to make false statements to government departments and to
give false testimony to the grand jury. Sweeney claims that the evidence
showed, first, a tax evasion conspiracy from 1974 to 1976 and, second, a
later separate conspiracy to conceal the first. He argues that the
government improperly tried to extend the life of the first, which is
barred by the Supreme Court's decisions in Grunewald v. United States
[57-1 USTC ¶9693], 353 U. S. 391, 399 (1957), Lutwak v. United
States, 344 U. S. 604, 616-17 (1953), and Krulewitch v. United
States, 336 U. S. 440, 443-44 (1949). We disagree.
Since
the question of whether there were multiple conspiracies rather than the
single conspiracy charged is one of fact for a properly charged jury
(and there was no error in Judge Brieant's charge on that issue) we are
normally unwilling in the absence of a showing of plain error to set
aside the jury's finding of the single conspiracy charged. United
States v. Alessi, 638 F. 2d 466, 472 (2d Cir. 1980); United
States v. Murray, 618 F. 2d 892, 902 (2d Cir. 1980); United
States v. McGrath, 613 F. 2d 361, 367 (2d Cir. 1979), cert. denied,
446 U. S. 967 (1980). Moreover, even if two conspiracies were shown the
variance would not entitle Sweeney to a new trial in the absence of a
showing that it prejudiced his substantial rights. United States v.
Alessi, supra, 638 F. 2d at 474-75.
Here
the evidence reveals one continuous conspiracy between Cunningham and
Sweeney, joined in by lesser co-conspirators (Spain, Cioccolanti,
Falco), to enable Cunningham to evade payment of substantial federal
taxes on his 1974 and 1975 taxable income and to take such steps as
might become necessary to defraud the government into the belief that
all income taxes due for those years had been paid. Sweeney became a
member of that conspiracy at the outset when he agreed to conceal his
payments to Cunningham of a share of fees in state court-appointed
matters by funneling them to Cunningham through the special Irving Trust
escrow account. This device was designed to minimize the chances that
the unreported income would be detected by the IRS. The aim of the
conspiracy, which was to defraud the federal government of the taxes due
on Cunningham's reportable income, would not be completed until the
government (if it audited his 1974 and 1975 returns as might be
anticipated) had been satisfied that all taxes due had been paid. In
this respect this case differs sharply from Grunewald, Lutwak,
and Krulewitch, supra, where cover-up or concealment was not an
actual part of the basic conspiracy but merely an implied consequence.
Here, in contrast, the success of the scheme to defraud depended on the
parties' deceit of federal authorities, before and after the filing of
the returns, as to the amount of income tax due from Cunningham.
In
furtherance of the scheme, when Cunningham came under IRS investigation
in 1976, Sweeney sought to carry out their objective by telling Barry
London, Cunningham's tax adviser, that $13,870 of the money paid out of
the escrow account in 1975 represented non-taxable loans when in fact he
knew, as his subsequently restored pencilled accounting later confirmed,
that the payments represented taxable income to Cunningham, i. e., a
share of fees received in court-appointed matters. Thereafter Sweeney
continued to further the conspiracy's objective by refusing to obey a
subpoena to produce his copies of the special escrow account statements
with their incriminating pencilled notes until he was threatened with
contempt, by his erasing the pencilled notations on them, and by his
falsely telling IRS agents, prosecutors and the grand jury that the
$13,780 payment was a loan and that the tuition payments were from
pre-1972 legal fees earned before the dissolution of the former
Cunningham-Sweeney-O'Donoghue partnership. Thus, since Sweeney
participated in the unlawful activities from the beginning to the end,
he would not be able, even if multiple conspiracies had been shown, to
demonstrate any resulting prejudice to himself. United States v.
Alessi, supra, 638 F. 2d at 474-75.
Nor
do we find any merit in Sweeney's argument that he cannot be found
guilty of a conspiracy that involved activities and persons unknown to
him (Cunningham's arrangement with Spain and Cioccolanti). To be
convicted, a member of a conspiracy need not know the identity of every
co-conspirator or all of the means employed to achieve the agreed-upon,
unlawful objective, as long as he is aware of the essential nature of
the plan. United States v. Gleason, 616 F. 2d 2, 16-17 (2d Cir.
1979), cert. denied, 444 U. S. 1082 (1980). The evidence of Sweeney's
knowledge of the fraudulent scheme and that the obstruction of the Spain
trial was in furtherance of the scheme is overwhelming.
Sweeney's
claim that the trial court abused its discretion in denying him a
severance of his trial from that of Cunningham must likewise be
rejected. Since Sweeney participated in a series of acts that were part
of the conspiracy, joinder was permissible under Fed. R. Crim. P. 8(b); United
States v. Bernstein, 533 F. 2d 775, 789 (2d Cir.), cert. denied, 429
U. S. 998 (1976). A trial court's denial of a severance sought under
Fed. R. Crim. P. 14, which is addressed to that court's discretion, Opper
v. United States, 348 U. S. 84, 95 (1954), will be reversed only
upon the appellant's successfully assuming the heavy burden of showing
that he suffered substantial prejudice due to the joint trial. United
States v. Carson, 702 F. 2d 351, 366 (2d Cir.), cert. denied, 103 S.
Ct. 2456 (1983); United States v. Losada, 674 F. 2d 167, 171 (2d
Cir.), cert. denied, 457 U. S. 1125 (1982); United States v.
Sotomayor, 592 F. 2d 1219, 1228 (2d Cir.), cert. denied, 442 U. S.
919 (1979). No such showing is made here.
Sweeney's
claim that he was prejudiced by the "spillover" effect of
evidence introduced with respect to Cunningham, including the testimony
of Spain and Cioccolanti, is unsupportable since all of the evidence
would have been admissible against him in a separate trial of him alone
as a member of a single conspiracy. Nor are we dealing here with a trial
in which there was a strong likelihood of confusion because of the
number of counts, the number of defendants, see e.g., Katteakos v.
United States, supra, 328 U. S. at 766 (32 defendants), or the
length of the proceedings. There were only two defendants and the jury
was quite capable of giving individual consideration to each, see e.g., United
States v. Carson, supra, 702 F. 2d at 362 (four defendants not
enough to confuse jury), as it demonstrated by acquitting Sweeney on
Count 8 (false statement to grand jury on
April 5, 1979
). Lastly, Judge Brieant protected Sweeney against any possible
confusion by carefully instructing the jury to consider separately the
charges and evidence against each defendant. Thus Sweeney received a
fair trial and his conviction must be affirmed.
The
Government's Cross-Appeal. In
ruling upon Cunningham's post-trial motion under Fed. R. Crim. P. 29(c)
to set aside guilty verdicts and enter a judgment of acquittal on Counts
2 (1974 tax evasion), 4 and 5 (1975 tax evasion and filing of false
return) the trial judge was required to view the evidence in the light
most favorable to the government, and to determine
"whether
upon the evidence, giving full play to the right of the jury to
determine credibility, weigh the evidence, and draw justifiable
inferences of fact, a reasonable mind might fairly conclude guilt beyond
a reasonable doubt. If he concludes that upon the evidence there must be
such a doubt in a reasonable mind, he must grant the motion . . .. If he
concludes that either of the two results, a reasonable doubt or no
reasonable doubt, is fairly possible, he must let the jury decide the
matter." United States v. Rodriguez, 706 F. 2d 31, 41 (2d
Cir. 1983) (quoting United States v. Lieberman, 637 F. 2d 95,
104-05 (2d Cir. 1980)).
Similarly,
upon our review of the district court's decision we apply the same
standard, without need for deference to the trial judge's decision. See United
States v. Artuso, 618 F. 2d 192, 195 (2d Cir.), cert. denied,
449 U. S. 861 (1980). Applying this test to the present case we conclude
that the district court did not follow these principles and that his
decision granting the motion must be reversed.
The
district court directed entry of a post-verdict judgment of acquittal as
to Count 2, which charged Cunningham with evading taxes for 1974, on the
ground that the amount evaded, which it calculated at $2,617 rather than
the $5,057 asserted by the government, was not "substantial"
within the meaning of that term as used in 26 U. S. C. §7201. However,
"substantiality" is a question for the jury. United States
v. Siragusa, 450 F. 2d 592, 595 (2d Cir. 1971), cert. denied,
405 U. S. 974 (1972). The jury in this case could reasonably have found
on the evidence before it that the tax evaded by Cunningham was
substantial, and indeed it did so find. The evidence was overwhelming
that Cunningham had intentionally failed to report $9,436 of taxable
1974 income. An expert witness called by the government testified that
following the same methods used by Cunningham to calculate his 1974 tax
liability the additional income would have increased his liability by
$5,057 for that year. No contrary testimony was offered by Cunningham
for the year 1974. Nevertheless, the trial judge, applying post-trial
tax arguments not addressed to the jury, in effect decided that income
averaging based on Cunningham's receipt of $12,500 in an earlier year
should not have been used even though Cunningham's counsel had stated at
trial that he did not dispute its use. Using his own method, the trial
judge concluded that the amount of tax evaded would thereby be reduced
by $1,440. 8 The judge
further concluded that Cunningham had been entitled to an additional
1974 tax credit of $1,660 by reason of an imputed interest deduction
that Cunningham had neither claimed nor made the subject of proof at
trial. In substituting his methodology and calculations, based on
assertions not before the jury, the trial judge erred. Since a
reasonable jury could, on the evidence it found to be credible, have
determined that the 1974 tax evaded was $5,057 the trial court was bound
by the jury's verdict.
Even
if the amount evaded is assumed to have been the $2,617 found by the
court, it was error on this record to conclude as a matter of law that
it was insubstantial. 9 While it is
true that at some point a court may as a matter of law find that the
liability was insubstantial, the threshold is a low one, and the court
must look to all the circumstances. As we stated in United States v.
Nunan, [56-2 USTC ¶9876], 236 F. 2d 576, 585 (2d Cir. 1956), cert.
denied, 353 U. S. 912 (1957):
"But
[substantially] is not measured in terms of gross or net income nor by
any particular percentage of the tax shown to be due and payable. All
the attendant circumstances must be taken into consideration . . .. [A]
few thousand dollars of omissions of taxable income may in a given case
warrant criminal prosecution, depending on the circumstances of the
particular case. Otherwise the rich and powerful could evade the income
tax law with impunity."
Among
the other relevant circumstances in the present case were the existence
of a scheme under which portions of Cunningham's income for two years
were not reported, the prolonged attempt to cover up the income, the
making of false statements to IRS agents and the U. S. Attorney's
office, and perjury before a grand jury and the court. Yet Judge Brieant
concluded that the $2,617 was not substantial solely by comparing it to
Cunningham's total tax due of $33,539. Such a ruling cannot stand in
light of Nunan.
The
district judge's decision setting aside the jury's guilty verdict on
Counts 4 and 5, which alleged tax evasion and filing of a false tax
return by Cunningham for the year 1975, is likewise erroneous. The judge
decided that although "[t]he proof was more than adequate to show a
conspiracy to evade income taxes due from Cunningham for 1974 and
1975" a jury was nevertheless obligated to have a reasonable doubt
as to whether Cunningham continued in October 1976, when he filed his
1975 return, intentionally to omit any taxable income. Thus, in effect
the judge found that an intent to evade existed in 1974 and 1975 but
that it must have been abandoned by October 1976.
The
court's decision that a reasonable doubt must necessarily exist was
based on Cunningham's knowledge by October 1976 that he was already
under IRS investigation, which would in Judge Brieant's view lead him to
make a "scrupulous effort' to be careful in preparation of his 1975
return, and on Cunningham's consultation of a tax attorney (Barry
London) whom he referred to Sweeney for information about the $19,932
paid by him to Cunningham. With respect to the latter, the trial judge
concluded that the failure to report the $13,870 "loan" was
attributable to error or wrongdoing on Sweeney's part.
Here
again, however, the jury had evidence before it entitling it to find
that Cunningham intentionally filed a false 1975 return even though he
knew he was under investigation. First, Cunningham lied to his tax
attorney about the source of $8,000 of the income reported by him.
Secondly, Sweeney had all along cooperated with Cunningham to evade
payment of income taxes and was not likely, in view of his careful
pencilled accounting notes, to have mistaken the $13,870 payment for a
loan instead of a sharing of court-appointment legal fees. Given this
evidence, including the credibility of Cunningham and Sweeney as
witnesses, the jury could have reasonably found beyond a reasonable
doubt that, while Cunningham felt forced by the pending investigation to
report the $6,062 tuition payments made out of the escrow account as
income, he and Sweeney were willing to take a chance on evading taxes on
the $13,870 by labelling the payment a loan. Under these circumstances
the trial judge was not entitled to set aside the guilty verict simply
because he would have reached a different result if he had been the
fact-finder. See United States v. Rodriguez, supra, 706 F. 2d at
41.
The
judgments of conviction are affirmed. The order and judgments setting
aside the jury's guilty verdicts on Counts 2, 4 and 5 are reversed, and
the case is remanded for sentencing and judgments of conviction on those
counts.
1
John Spain and Marie Falco were named as co-conspirators. Their
participation is described later herein.
2
A portion of Count 1 of the indictment, charging conspiracy to evade
Cunningham's 1972 income tax, was stricken by the district court before
trial as barred by the statute of limitations. Count 14, which charged
Cunningham with violation of 18 U. S. C. §1510 was dismissed before
trial with the government's consent.
The
jury acquitted Sweeney of Count 8, which charged him with perjury before
the grand jury on
April 5, 1979
, in violation of 18 U. S. C. §1623.
3
Cunningham was in 1975 the subject of an investigation by New York State
Special Prosecutor Maurice Nadjari who was looking into charges that he
had exercised improper political infiuence in the selection of state
judges.
4
Even if one assumes, because Cunningham had only a $5,500 credit in the
escrow account in April 1975 when Sweeney paid $10,000 toward
Cunningham's purchase of a house, that the payment was partly a loan,
that loan was soon converted into taxable income. In July 1975 Sweeney
credited Cunningham with $15,675 in the escrow account for more legal
fees from court appointments, in addition to which Sweeney made $6,062
in tuition payments for Cunningham's benefit and $3,870 more toward the
purchase of the house. Thus, regardless how the April 1975 payment is
characterized, Cunningham received from Sweeney in 1975 $13,870 which
was not reported on Cunningham's return.
5
Since Cunningham reported his income on a cash basis he was in any event
obligated to pay a tax on legal fees received in 1975, whether or not
attributable to an earlier year.
6
At the trial of Cunningham there was other evidence, including expert
testimony, enabling the jury to find that the ribbon had been changed
between the service of the subpoena on February 12 and the delivery of
the typewriter to the agents on the same date. That the ribbon was
replaced in order to conceal the recent fabrication of the memorandum
was further supported by Spain's testimony that he had never had the
conversation with Falco which she testified to having typed on
January 25, 1978
.
Sweeney
argues that the ribbon on the typewriter had been charged by a service
man sometime in late December 1980, or early January 1981--after the
Spain memorandum appeared in November 1980--so that in fact the ribbon
that was removed from the typewriter on the afternoon of
February 12, 1981
, would not have contained imprints from that memorandum. Moreover,
Sweeney claims that he was aware of this before the typewriter was
turned over to the government on the evening of February 12, so that he
had no incentive to change the ribbon that day. While there was
testimony that when questioned by Sweeney, Ms. McCreery told him that
the ribbon had been changed in December or January, the jury could well
have concluded the Sweeney doubted the accuracy of the undocumented
information provided by McCreery (indeed, Sweeney conceded that he
called McCreery at home on the evening of February 13 to question her
further) and decided to take no chances in the matter. Certainly there
can be no dispute but that the ribbon was changed after the subpoena was
served
7
Cunningham has abandoned his argument that the Spain compliance
hearing violated his Fifth Amendment rights, in view of the Supreme
Court's recent decision in United States v. Rylander [83-1 USTC
¶9300], 103 S. Ct. 1548 (1983).
8
The government contends that the trial judge's calculations are
erroneous and, even accepting his premise that income averaging should
not be applied, the reduction of the deficiency would be $52 instead of
the $1,440 figure found by the court. Since the judge's determination of
insubstantiality must be reversed on other grounds we need not resolve
this issue.
9
Comparable tax deficiencies have been substantial. See United States
v. Siragusa, supra ($3,956, $900 and $2,209 for three successive
years, respectively); United States v. Gross [61-1 USTC ¶9222],
286 F. 2d 59 (2d Cir.), cert. denied, 366 U. S. 935 (1961) ($2,500 in unreported
income). In 1974 the year of Cunningham's tax evasion, the average
federal income tax liability of all persons paying income taxes was
$1,836. U. S. Bureau of the Census, Statistical Abstract of the United
States: 1982-83 (103 ed. 1982) at 256.