Offer in Compromise
7206- Fraud and False Statements: Offer
in Compromise
[77-1 USTC ¶9128]
United States of America
, Plaintiff-Appellee v. Leon A. Cohen, Defendant-Appellant
(CA-5),
U. S. Court of Appeals, 5th Circuit, No. 75-3966, 544 F2d 781,
1/3/77
, Affirming an unreported District Court decision
[Code Sec. 7206--result unchanged by '76 Tax Reform Act]
Crimes: Fraud and false statements: Offer in compromise: Form 656.--The
Court of Appeals upheld the taxpayer's conviction for filing a Form 656,
Offer in Compromise, that contained materially false statements. The
taxpayer had signed such form on February 13, but had failed to include
in his financial statement assets of $30,000 received by him on February
5 because the statement was "as of" January 30. The taxpayer's
contention that there was a variance between the facts proved and the
offense charged because the checks were properly excludable was found to
be without merit. The taxpayer's further claim that he was misled as to
the nature of the charges against him because of a last minute change in
the wording of the indictment also was rejected by the court. Finally,
the taxpayer's assertions that the trial court abused its discretion by
allowing into evidence a ten-year-old mail fraud charge and a
five-year-old letter relating to the taxpayer's state of mind with
respect to the discharge of his tax liability were found to be without
merit.
John W.
Stokes, United States Attorney, 56 Forsyth St., N. W., Atlanta, Ga.
30303, Scott P. Crampton, Assistant Attorney General, Gilbert E.
Andrews, Robert E. Lindsay, Daniel W. Schermer, Department of Justice,
Washington, D. C. 20530, for plaintiff-appellee. Taylor W. Jones, 250
Piedmont Ave., N. E., Atlanta, Ga. 30308, Ernest Morgan, P. O. Box 1288,
San Marcos, Tex. 78666, for defendant-appellant.
Before
AINSWORTH and RONEY, Circuit Judges, and ALLGOOD, District Judge.
RONEY, Circuit
Judge:
Defendant Leon
A. Cohen appeals his conviction for filing with the Internal Revenue
Service a Department of the Treasury Form 656, entitled "Offer in
Compromise," containing materially false statements, in violation
of 26 U. S. C. A. §7206(1). Defendant asserts four errors on this
appeal: (1) that there was a fatal variance between the proof offered
and the offense alleged in the indictment and that the evidence was
insufficient to show that his statements as to his assets were false;
(2) that a last minute substitution of indictments worked an unfair
deprivation of his right to be informed of the charges against him; (3)
that the district court abused its discretion in ruling that a
thirteen-year-old mail fraud conviction would be admissible to impeach
the defendant if he chose to testify; and (4) that a five-year-old
letter received in evidence was irrelevant and should have been
excluded. Finding these claims without merit, we affirm.
On
February 13, 1970
, Cohen who was over $150,000 delinquent in federal income tax payments,
completed an Offer in Compromise form for submission to the Internal
Revenue Service. He signed that document under a declaration stating
that "I have examined this offer, including accompanying schedules
and statements, and to the best of my knowledge and belief, it is true,
correct, and complete." With that document he also filed a
Statement of Financial Condition, which stated it was "as of"
January 30, 1970
. Neither document listed as assets three checks dated
February 5, 1970
and payable to Cohen, in a total amount of $30,000. Defendant stated on
the Offer in Compromise "I have no assets."
In September
of 1974, a five-count indictment was returned against the defendant. The
first four counts charged perjury in connection with false statements
made on various income tax returns. The fifth count charged perjury in
connection with the omission from the Offer in Compromise of various
assets supposedly in defendant's possession. Approximately a week and a
half before trial commenced, the Government, with the district court's
permission, substituted a new count five, alleging solely the omission
of the $30,000 in checks from the Offer in Compromise. Before the trial
actually began, the Government then dismissed the four counts pertaining
to false income tax returns. Defendant was tried and convicted solely
for omitting the three checks worth $30,000 from the Offer in
Compromise.
Variance
Between Indictment and Proof
The indictment
on which Cohen was tried alleged that:
[O]n or about
the 13th day of February, 1970 . . . Leon A. Cohen . . . did wilfully
and knowingly make and subscribe a Department of the Treasury Form 656
entitled "Offer in Compromise," . . . together with an
attached and accompanying Department of the Treasury Form 433, entitled
"Statement of Financial Condition and Other Information," . .
. [which] said "Officer in Compromise" and attachments thereto
stated that he had total assets having a cost of $12,502 and a fair
market value of $1,619.50, whereas, as he then and there well knew, he
had substantial assets in addition thereto, to wit: $30,000 consisting
of three Federal Reserve Bank drafts . . ..
The
defendant alleges that the only document which definitely sets forth his
assets is the Statement of Financial Condition, which was "as
of"
January 30, 1970
. The defendant's position is that the checks dated
February 5, 1970
, were properly excludable from that document, and that when he
certified on
February 13, 1970
that the accompanying statement of Financial Condition was "true,
correct and complete," he was merely certifying that it reflected
his financial position as of the 30th of January, which he maintains it
did.
The
uncontested facts show that on
February 13, 1970
, the date of the Offer in Compromise, the defendant was in possession
of $30,000 in checks. Defendant did not disclose his possession of those
checks on the Offer in Compromise form. This failure to indicate
possession of those checks as of the date of the compromise offer was a
material omission, making the form something other than "true,
correct and complete." The Government proved precisely what was
alleged when it demonstrated that on
February 13, 1970
, Cohen "then and there well knew" that he had $30,000 in
Federal Reserve checks, which he failed to disclose. The omission of a
material fact renders such a statement just as much not "true and
correct" within the meaning of 26
U. S.
C. A. §7206(1), as the inclusion of a materially false fact. See United
States v. Jernigan [69-1 USTC ¶9397], 411 F. 2d 471 (5th Cir.), cert.
denied, 396
U. S.
927, 90 S. Ct. 262, 24 L. Ed. 2d 225 (1969); Siravo v. United States
[67-1 USTC ¶9446], 377 F. 2d 469 (1st Cir. 1967). Thus there is no
force to the contention that there was a variance between facts proved
and the crime alleged, and the evidence was sufficient to support the
conviction.
Substitution
of Indictments
The defendant
contends that he was misled as to the nature of the charges against him
because of the last minute change in the wording of the indictment, and
that therefore he should be afforded a new trial. The defendant
particularly protests what he conceives to be the change in the
operative date of the perjury count from
January 30, 1970
to
February 13, 1970
.
Since the same
offense was charged in both the original and substituted indictments,
the question of permitting the dismissal of the original indictment and
the related substitution was, in the first instance, for the trial
court. See F. R. Crim. P. 48;
United States
v. Perkins, 383 F. Supp. 922, 931 (N. D. Ohio 1974). Since the
various forms filed by the defendant were all part of one continuous
course of dealing with the Internal Revenue Service, and since the
original indictment made reference to the date of
February 13, 1970
, as well as
January 30, 1970
, the district court's determination that the substitution was not
prejudicial was not in error. United States v. Arradondo, 483 F.
2d 980, 983 (8th Cir. 1973), cert. denied, 415
U. S.
924, 94
S. Ct.
1428, 39 L. Ed. 2d 480 (1974).
Furthermore,
when the substitution was requested by the Government, the accompanying
motion explicitly stated "[t]he new indictment also contains some
clarifying language with respect to the date of the offense." The
new indictment was read aloud in open court to the defendant. At the
close of the Government's case, when the defendant claimed he learned of
the true import of the change, he did not request a continuance or the
opportunity to recall and reexamine any of the Government witnesses.
There is no indication that there was any secret or surprise involved in
the substitution. Given these factors, there was no prejudice to the
defendant resulting from the change in indictments which would warrant a
new trial.
Admissibility
of Prior Conviction
The trial of
this case commenced six days after the new Federal Rules of Evidence
became effective. Because there was no showing by either party that the
"application of the rules would not be feasible, or would work
injustice," the rules were applicable to the proceedings below. See
Rules of Evidence, Pub. L. No. 93-595, §1, 88 Stat. 1926 (1975). Rule
609 provides that a prior conviction cannot be admitted without special
court determination of probative value, if more than 10 years have
elapsed since the date of conviction or release, whichever is the later
date. The Rule provides:
(a)
General Rule. For the purpose of attacking the credibility of a
witness, evidence that he has been convicted of a crime shall be
admitted if elicited from him or established by public record during
cross-examination but only if the crime . . . (2) involved dishonestly
or false statement, regardless of the punishment.
(b)
Time Limit. Evidence of a conviction under this rule is not
admissible of a period of more than ten years has elapsed since the date
of the conviction or of the release of the witness from the confinement
imposed for that conviction, whichever is the later date, unless the
court determines, in the interests of justice, that the probative value
of the conviction supported by specific facts and circumstances
substantially outweighs its prejudicial effect. . . .
In the instant
case, the government notified the defendant that, should he choose to
testify, it intended to use a previous conviction for the crime of mail
fraud to impeach him during cross-examination. That conviction was the
result of a guilty plea by the defendant in connection with the very
same activities which gave rise to the tax liability which he was trying
to settle through his Offer in Compromise. Defendant had been sentenced
to three years imprisonment for the crime of mail fraud, and had served
from
April 10, 19
61 until
May 15, 19
62. Since the trial commenced in July of 1975, the time elapsed from the
date of release was just under 13 years, 2 months. Nonetheless, the
trial court ruled that this conviction would be admissible to impeach
the defendant if he testified, thus invoking the provisions of Rule
609(b).
Since the
effective date of the Rules, this Court has not had occasion to consider
the type of determination a district court must make under Rule 609(b)
to admit into evidence a conviction over ten years old. On questions
involving the impeachment of a witness, the determination of the
district court is to be tested on review by the abuse of discretion
standard. Goddard v. United States, 131 F. 2d 220 (5th Cir.
1942); United States v. Allison, 414 F. 2d 407 (9th Cir.), cert.
denied, 396
U. S.
968, 90 S. Ct. 449, 24 L. Ed. 2d 433 (1969); S. Rep. No. 1277, 93d
Cong., 2d Sess., Rule 609(b) (1974). Under Rule 609, discretion must be
exercised by a specific standard. The Rule requires a finding on
specific facts and circumstances that prejudicial effect will be
outweighed by probative value.
In evaluating
the admissibility of the conviction the district court noted the nature
of the prior crime, the similarity between the offense for which he was
presently being tried and the offense for which he previously entered a
guilty plea, and that both the events to be testified to by the
defendant and the acts which constituted the crime he was currently
alleged to have committed occurred within ten years of his release from
confinement for the earlier crime.
Although the
trial judge did not explicitly so state, each of these factors goes to
the probative value of the prior conviction as impeachment evidence.
That the nature of the crime was one involving dishonesty indicates that
defendant might be the type of person who would not take the judicial
oath seriously. That the offenses were similar suggests that his denials
of current misconduct might not be as trustworthy as they normally would
in the absence of previous misconduct of the same kind. Because
defendant would be recounting events and acts relevant to the crime of
perjury that transpired during a period within ten years after his
release from confinement for mail fraud, the jury might believe that his
version of those events was colored by his still recent dishonest
conduct and was thus less than truthful.
In United
States v. San Martin, 505 F. 2d 918, 923 (5th Cir. 1974), this Court
observed that "prior crimes involving deliberate and carefully
premeditated intent--such as fraud and forgery--are far more likely to
have probative value with respect to later acts than prior crimes
involving a quickly and spontaneously formed intent." Similarly
such crimes are more probative on the issue of propensity to lie under
oath than more violent crimes which do not involve dishonesty. See
Ladd, Credibility Trends, 89 U.
Pa.
L. Rev. 166 (1940). Since mail fraud is within this category of
offenses, its probative value is enhanced.
Of course, the
assumption that a prior conviction demonstrates a propensity on the part
of the defendant to have acted on the present occasion in conformity
with the criminal character suggested by the previous conviction is
impermissible. See Fed. R. Evid. 404(b). This is because our
system of criminal justice focuses solely on the commission of specific
forbidden acts, rather than the punishment of those persons who have a
criminal or evil character. Unfortunately, the trial court seemed to
engage, at least partially, in this improper assumption, while otherwise
property [properly] focusing on the likelihood that the previous
conviction indicated a probable lack of veracity. Nonetheless, in
reviewing the factors relied on by the district court, it is apparent
that they all were relevant to the impeachment inquiry. Having isolated
these factors, the district judge then found on the record that they
formed "a basis for an exception and that justice would not be
counterbalanced against the defendant."
The provisions
of Rule 609 require that the court find that probative value
"substantially outweigh" prejudicial effect. Since the court
had the Rule before it when it made the determination that the prior
criminal activity of the defendant was admissible, the finding of the
district court can be interpreted as concluding that the usefulness of
this past criminal conviction substantially outweighed the possible
prejudice to defendant. That the court neither analyzed on the record
the nature of possible prejudice to defendant nor used the explicit
words of the Rule in terms of "substantially outweighing" is
not crucial. Sufficient evidence in the record indicates that the trial
judge made a thorough and thoughtful analysis of the issue and based his
conclusion upon various factors which were then before him. While Rule
609(b) may envision a more explicit proceeding with full findings
setting forth the quality and nature of any possible prejudice to the
defendant, we are satisfied that the district court acted within the
confines of the Rule and did not abuse its discretion in admitting the
prior conviction.
Admissibility
of a Five-Year-Old Letter
Defendant's
final contention concerns the admissibility of a five-year-old letter
which the Government offered in evidence to prove defendant's
willfulness. Because of the age of the letter the defendant claimed it
was irrelevant and inadmissible. The determination of relevancy is for
the trial judge, and will not be disturbed in the absence of a clear
showing of abuse of discretion. United States v. 110 Bars of Silver,
508 F. 2d 799 (5th Cir. 1975); United States v. Watts, 505 F. 2d
951 (5th Cir. 1974), vacated on other grounds, 422
U. S.
1032, 95
S. Ct.
2648, 45 L. Ed. 2d 688 (1975). Since there was ample indication that the
letter did in fact bear on defendant's state of mind, vis-a-vis the
matter of discharging his past tax liability, the district court did not
err in determining that the letter was relevant and admissible in
evidence.
AFFIRMED.