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7203: Willful Failure to File Return, Supply Information, or Pay Tax: Trial: Continuance

 

[89-2 USTC ¶9478] United States of America , Plaintiff-Appellee v. Charles A. Blandina, Defendant-Appellant

(CA-7), U.S. Court of Appeals, 7th Circuit, 87-3120, 7/12/89, Affirming an unreported District Court decision

[Code Sec. 7201 ]

Criminal penalties: Tax evasion: Trial.--A store owner who was found guilty of income tax evasion was not prejudiced by being denied a continuance to prepare a rebuttal to the damaging testimony of a witness. The taxpayer had sufficient time to prepare for the testimony and future alternative dates for trial were rejected by defense counsel. Testimony regarding large, illegal drug purchases by the taxpayer was relevant to show a likely source of income. The direct examination of an IRS agent did not produce hearsay evidence regarding his conversations with coin dealers but merely showed the diligence of the investigation. Finally, the evidence supported the net worth figures calculated by the IRS, and the government was not required to further investigate business records that the taxpayer refused to turn over which may have reflected a likely source of income.

Before CUMMINGS, COFFEY and MANION, Circuit Judges.

COFFEY, Circuit Judge:

Defendant-appellant Charles A. Blandina appeals his conviction on two counts of income tax evasion for the years 1983 and 1984 in violation of 26 U.S.C. §7201 . We affirm.

I. FACTS

Defendant Blandina was the owner of the State Liquors package store in Indianapolis , Indiana . He purchased the package store in the fall of 1983 for a price of $108,203.40, $94,203.40 of which he paid in cash. ¹ An Internal Revenue Service ("IRS") task force investigating large cash transactions at that time became aware of Blandina's sizeable cash downpayment, and, after reviewing Blandina's 1983 tax return in which he reported taxable income of only $66,190.00, decided that a criminal investigation into Blandina's financial affairs was warranted, assigning Agent Charles Vonderschmitt to conduct the investigation.

During the course of the criminal investigation, Agent Vonderschmitt analyzed Blandina's expenses and purchases of assets, such as real estate and automobiles, examined bank records, and reviewed probate records to determine, among other things, the amount he inherited from his father, who died in 1979. Vonderschmitt interviewed Blandina in April 1985, informing him that he had been assigned to investigate the discrepancy between his stated taxable income and the large amount of cash he used to purchase the package store. Blandina told Vonderschmitt that he had a cash hoard from two sources of non-taxable income which were not reflected on his tax returns. First, Blandina stated that in 1979 his father gave him a large amount of cash resulting from the investment of a $19,000 settlement for injuries Blandina sustained in a 1958 car accident. Blandina stated that he hid the cash in a basement bathroom in his stepmother's house. Blandina also stated that prior to the death of his father, he received his father's coin collection. Vonderschmitt investigated both of these "leads" into possible sources of cash and determined that neither could be verified.

Blandina was indicted in the Southern District of Indiana on February 18, 1987 , on two counts of income tax evasion for the years 1983 and 1984. The indictment charged Blandina with understating his 1983 income by $103,291.20 and his 1984 income by $162,164.83, resulting in a total tax deficiency of $103,923.41. The trial was originally scheduled for April 27, 1987 , but was continued to June 15, 1987 , on motion of the defendant. Prior to the rescheduled court date, the parties engaged in extensive discovery culminating on June 5 when the defendant delivered to the government the remnants of his alleged coin collection given to him by his late father, an appraisal of the remaining coins in the collection, as well as the statement of a defense witness who was scheduled to testify about accompanying Blandina when he sold portions of the collection to various coin dealers in Bloomington, Indiana, and Chicago, Illinois.

Based on its obligation to investigate all leads reasonably susceptible of being checked which might establish Blandina's non-taxable sources of income, ² the government, on June 8, filed a motion to continue the trial for another 90 days. Over Blandina's objection, the trial court granted the government's motion on June 10 and set the trial for September 8, 1987 . On June 11, 1987, the defendant filed a motion asking the court to reconsider its continuation of the case, requesting a hearing on the matter, and petitioning the court for an order to compel the government to provide the defense with various statements of prosecution witnesses under the Jencks Act, 18 U.S.C. §3500.

The court conducted a hearing and after considering the defendant's objections to the continuance based on the Speedy Trial Act, 18 U.S.C. §3161 et seq., reaffirmed its previous decision to continue the trial until September 8. The court specifically found that the defendant would not be prejudiced by the continuance and that the interests of justice and judicial economy would be served by granting the government sufficient time to comply with its obligation to investigate Blandina's alleged sources of nontaxable income. The court also found that the defendant was not entitled to the Jencks material requested until one week prior to trial. The defendant renewed his opposition to the continuance in a motion to dismiss filed on September 4, which the court denied based on its findings at the hearing on the motion to reconsider.

On September 7, the day prior to the scheduled trial date, the government informed defense counsel that it planned to call Richard Aaron as a government witness for the purpose of eliciting testimony concerning marijuana transactions between Aaron and Blandina in 1984. Jury selection began on September 8, but due to a problem in the selection procedure, the jury was discharged and the trial was rescheduled for September 15. On September 10, the defendant orally requested a 90-day continuance in light of the damaging testimony the government planned to elicit from Aaron. The court held a hearing on this motion and offered the defendant two alternate trial dates: October 5, 1987 , or November 9, 1987 , both of which defense counsel rejected due to scheduling conflicts. The court then denied the motion and trial commenced on September 15.

At trial, the government used the net worth method of proving that Blandina willfully understated his taxable income for the years 1983 and 1984.

"In a typical net worth prosecution, the Government, having concluded that the taxpayer's records are inadequate as a basis for determining income tax liability, attempts to establish an 'opening net worth' or total net value of the taxpayer's assets at the beginning of a given year. It then proves increases in the taxpayer's net worth for each succeeding year during the period under examination and calculates the difference between the adjusted net values of the taxpayer's assets at the beginning and end of each of the years involved. The taxpayer's nondeductible expenditures, including living expenses, are added to these increases, and if the resulting figure for any year is substantially greater than the taxable income reported for that year, the government claims the excess represents unreported taxable income."

Holland v. United States [54-2 USTC ¶9714 ], 348 U.S. 121, 125 (1954). The government's summary expert, IRS Agent Rob ert Bennett, concluded that Blandina's net worth on December 31, 1982 , was $50,074.00, none of which was attributable to cash on hand. The government then presented numerous witnesses and exhibits regarding Blandina's expenditures during 1983 and 1984. The government also presented the testimony of Richard Aaron, who stated that he had delivered 30 to 40 pounds of marijuana to Blandina on two occasions in 1984. Aaron stated that Blandina paid for the first delivery in cash at a price of $300 to $400 a pound, but returned the second quantity of marijuana without paying for it because it was unacceptable, being of inferior quality. Based on this evidence, the government concluded that Blandina had taxable income of $159,434.25 in 1983, and $105,439.46 in 1984. Because Blandina reported income of $66,190.00 in 1983, and a loss of $8,978.00 in 1984, the government alleged that Blandina owed $74,965.35 in unpaid taxes.

Blandina did not dispute the government's summary of his expenditures during 1983 and 1984; rather, he attacked the accuracy of the opening net worth figure, arguing that Agent Bennett failed to give him credit for a "cash hoard" in existence prior to the years in question. Blandina claimed that this "cash hoard" consisted of proceeds from the accident settlement which his father initially invested and later turned over to him, as well as the proceeds from the sale of his father's coin collection. Although members of Blandina's family testified as to the existence of the accident settlement, no one could testify as to the amount or what became of the proceeds. With regard to the coin collection, defense witness Beth Greene, Blandina's former girlfriend, testified that just prior to the death of the defendant's father, he received several boxes of coins and that she accompanied him when he sold some of the coins for cash.

The government attempted to rebut Greene's testimony with the testimony of IRS Agent Vonderschmitt. Vonderschmitt stated that after he received the remnants of the alleged coin collection during pre-trial discovery, he and other members of his staff interviewed 61 coin dealers from Indianapolis, Indiana, Bloomington, Indiana, and Chicago, Illinois, and that none of the coin dealers had purchased coins from Blandina and one, Rolland Kontak, had actually sold coins to him. Kontak, a coin dealer from Indianapolis , testified that sometime after 1984, he sold Blandina a roll of twenty silver dollars which were included in the group of coins which the defendant had represented to the government as the remnants of his father's coin collection. The government also called Paul Edmonds, another coin dealer from Indianapolis , as a witness. Edmonds testified that although he had never dealt with the defendant, he recognized various coins in the purported collection as coins he had in his own collection until sometime after 1981--two years after Blandina's father passed away.

The jury convicted Blandina on both counts, returning a verdict of guilty on September 25, 1987 . On December 15, 1987 , the court sentenced Blandina to two years' imprisonment on Count One (1983) and three years' probation on Count Two (1984). On appeal, the defendant argues that his conviction should be reversed because: (1) the district court erred in denying Blandina's motion to dismiss based on violations of his rights under the Speedy Trial Act; (2) the district court abused its discretion in denying his motion for continuance; (3) the district court abused its discretion in admitting (a) the testimony of Richard Aaron regarding marijuana transactions between Aaron and Blandina, and (b) the testimony of IRS Agent Vonderschmitt concerning his conversations with various coin dealers during his investigation of Blandina's coin collection; and (4) the government failed to present sufficient evidence to establish tax evasion under the net worth method of proof.

II. SPEEDY TRIAL ACT

Blandina initially contends that the district court erred in refusing to dismiss his case pursuant to the Speedy Trial Act, 18 U.S.C. §3161, et seq.

"The Speedy Trial Act generally requires that trials in criminal cases commence within 70 days of the filing date of the information or indictment, or from the date of initial appearance, whichever last occurs. 18 U.S.C. §3161(c)(1). However, the Act provides that several periods of time may be excluded from this 70-day period. 18 U.S.C. §3161(h). Among the permitted exclusions is delay 'resulting from a continuance granted . . . on the basis of . . . findings that the ends of justice served by [the continuance] outweigh the best interest of the public and the defendant in a speedy trial.' 18 U.S.C. §3161(h)(8)(A)."

United States v. Vega, 860 F.2d 779, 786 (7th Cir. 1988). The main thrust of the defendant's argument under the Speedy Trial Act is that the district court improperly granted the government's motion for a 90-day continuance to further investigate Blandina's sources of non-taxable income and excluded the delay from the 70-day period allowable under the Act. At the outset we note that Blandina's burden on this issue is indeed a heavy one. As we stated in Vega: " 'The decision to grant a continuance under the Speedy Trial Act, and [the] accompanying decision to exclude the delay under [§3161](h)(8)(A) is addressed to the discretion of the trial court. To obtain a reversal of the court's decision a defendant must show actual prejudice.' " 860 F.2d at 787 (quoting United States v. Tedesco, 726 F.2d 1216, 1221 (7th Cir. 1984)).

Initially, we hasten to point out that the defendant has failed to make the required showing of actual prejudice due to the delay resulting from the continuance. Further, our review of the record reveals that at the time the government filed its motion for continuance, the trial was scheduled to commence on June 15, 1987 . The evidence upon which the government premised its motion--namely, remnants of Blandina's coin collection, an appraisal thereof and the statement of a defense witness who planned to testify about the collection--was not presented to the government until June 5, 1987, and then only in response to a court order mandating the defendant's production of this material. Thus, the government would have had only 10 days to complete the investigation of this evidence, which was directly relevant to the defendant's contention that he had accumulated a "cash hoard" from, among other things, the sale of his late father's coin collection--a potential source of non-taxable income the government was required to investigate under Holland v. United States [54-2 USTC ¶9714 ], 348 U.S. 121 (1954). Based on these factors, the district court concluded:

"The information concerning possible non-taxable income having been peculiarly within the knowledge of the Defendant until being delivered to counsel for the Government on June 5, 1987, and an investigation of same being necessary for a full and truthful factfinding during trial, the court finds that the Motion is made consistent with judicial economy and is premised on Defendant's right to a speedy and just trial. It appears, therefore, that a continuance is mandated to ensure a speedy and just trial."

Order of June 10, 1987 , at 2. In light of the defendant's delay in providng the government with this information and the government's investigatory obligations under Holland, which notably resulted in a two-state investigation of coin dealers and other witnesses, we are convinced that the district court did not abuse its discretion in granting the continuance and excluding the resulting delay from the Speedy Trial Act's 70-day time period. Accordingly, we hold that the defendant's rights under the Speedy Trial Act were not violated and thus, the district court's refusal to dismiss the case based thereunder was proper.

III. DENIAL OF MOTION FOR CONTINUANCE

Blandina's second allegation of error is that the district court improperly denied his motion for a continuance, which he filed on September 10, 1987 , after being notified on September 7 that the government intended to elicit testimony from Richard Aaron regarding marijuana transactions occurring between Aaron and Blandina in 1984. As noted above, this court will overturn a trial court's disposition of a motion to continue only for an abuse of discretion and a showing of actual prejudice. See Vega, supra. See also United States v. Rodgers, 755 F.2d 533, 539-40 (7th Cir.), cert. denied, 473 U.S. 907 (1985). Nonetheless, Blandina argues that in view of the limited time he had to prepare a rebuttal to Aaron's damaging testimony, coupled with the trial court's grant of the government's motion to continue based on a need to investigate the evidence pertaining to his "cash hoard" defense, the trial court did in fact abuse its discretion in this instance. We disagree.

This court has previously stated that the factors listed in United States v. Uptain, 531 F.2d 1281 (5th Cir. 1976), are "highly relevant" when a trial court considers a motion for a continuance based on an allegation of insufficient time to prepare a defense. See United States v. Zambrana, 841 F.2d 1320, 1327 (7th Cir. 1988). The Uptain court stated:

"We have deemed the following factors highly relevant in assessing claims of inadequate preparation time: the quantum of time available for preparation, the likelihood of prejudice from denial, the accused's role in shortening the effective preparation time, the degree of complexity of the case, and the availability of discovery from the presecution."

531 F.2d at 1286 (footnotes omitted).

Upon reviewing the trial court's denial of Blandina's motion to continue in light of these factors, we are of the opinion that the denial was proper. First, the defendant had eight days before the trial commenced on September 15, 1987 , to prepare a rebuttal to Aaron's testimony. It is also important to note that Aaron did not actually testify until September 21, 1987 ; thus, Blandina had an additional 6 days of preparation time (14 days total) before the jury heard Aaron's testimony. Second, although Aaron's testimony was no doubt damaging to Blandina, any prejudice resulting solely from the denial of the continuance motion is, at best, speculative. Further, our review of the record reveals that defense counsel had an opportunity to, and did, extensively cross-examine Aaron regarding his association with the defendant, his recollection of the marijuana transactions, his other drug dealings, and his plea agreement with the government. Finally, the court conducted a hearing on Blandina's motion and offered him two alternate trial dates: October 5, 1987 , and November 9, 1987 , both of which defense counsel rejected. Although it appears from the record that defense counsel had plausible reasons for rejecting both dates, the fact remains that it was the defense who rejected the trial court's attempt to accommodate their request.

Finally, we reject Blandina's contention that the trial court improperly denied his motion for an adjournment based on the fact that the court previously granted a similar motion filed by the government. Blandina's argument overlooks the fact that the district court granted the government's motion based on its obligation under Holland , supra, to investigate Blandina's evidence pertaining to possible sources of non-taxable income. This contention also overlooks the fact that the trial court had previously granted Blandina's motion or continuance to conduct further discovery filed on April 13, 1987 . In light of these facts, particularly the defendant's rejection of the two alternate trial dates offered by the court as well as his previous adjournment, we hold that the district judge was well within his broad discretion in denying Blandina's motion to again continue the trial.

IV. EVIDENTIARY ERRORS

Blandina next contends that the trial court committed reversible error in admitting the testimony of Richard Aaron regarding marijuana transactions between Aaron and Blandina and the testimony of IRS Agent Vonderschmitt concerning his discussions with various coin dealers about Blandina and his alleged coin collection. Specifically, Blandina alleges that Aaron's testimony was evidence of acts other than those charged in the indictment which were inadmissible because its prejudicial effect greatly outweighed its probative value. With regard to Agent Vonderschmitt's testimony, Blandina argues that it was hearsay not admissible under any of the exceptions to the hearsay rule. Blandina carries a heavy burden in challenging a trial court's evidentiary rulings. As we stated in United States v. Kaden, 819 F.2d 813, 818 (7th Cir. 1987): "[A] reviewing court gives special deference to the evidentiary rulings of the trial court. We shall only overrule such rulings on a showing that the trial court has abused its discretion."

A.

Blandina initially challenges the district court's admission of Richard Aaron's testimony. Aaron stated that in 1984 he sold between 30 and 40 pounds of marijuana to Blandina on credit. Approximately one week later, Blandina paid Aaron a price of $300 and $400 a pound for the marijuana. Aaron also stated that he delivered another 30 to 40 pounds of marijuana to Blandina, but Blandina returned it to him approximately one month later because it was of inferior quality for resale. Blandina argues that this testimony is evidence of "other acts" not charged in the indictment. The admission of "other acts" evidence is governed by Fed.R.Evid. 404(b), which provides:

"Evidence of other crimes, wrongs, or acts is not admissible to prove the character of a person in order to show action in conformity therewith. It may, however, be admissible for other purposes, such as proof of motive, opportunity, intent, preparation, plan, knowlege, identity, or absence of mistake or accident."

Further in order to be admissible under Rule 404(b), evidence of "other acts" must satisfy the following four-part test:

"(1) The evidence is directed toward establishing a matter in issue other than the defendant's propensity to commit the crime charged, (2) The evidence shows that the other act is similar enough and close enough in time to be relevant to the matter in issue, (3) The evidence is sufficient to support a jury finding that the defendant committed the similar act, and (4) The probative value of the evidence is not substantially outweighed by the danger of unfair prejudice."

United States v. Zapata, 871 F.2d 616, 620 (7th Cir. 1989).

However, we agree with the government's contention that Rule 404(b) and its corresponding four-part test are not applicable to Aaron's testimony. Aaron's marijuana transactions with Blandina are directly related to the question of Blandina's likely sources of taxable income--one of the core issues at trial, not an act collateral to those charged in the indictment. Thus, the proper inquiry is whether the evidence is relevant to the tax evasion charges, and, if relevant, whether Fed. R. Evid. 403 bars the admission of Aaron's testimony because its probative value is "substantially outweighed by the danger of unfair prejudice."

In a net worth tax evasion prosecution the government is required to prove a likely source of income or negate all non-taxable sources of income. Holland , supra. A defendant's possession of a controlled substance in a quantity sufficient for resale is relevant and admissible to show a likely source of income. United States v. Chu [86-1 USTC ¶9113 ], 779 F.2d 356, 366 (7th Cir. 1985). Thus, under Chu Aaron's testimony concerning Blandina's purchase of 30 to 40 pounds of marijuana--a quantity sufficient for resale--is clearly relevant in this case.

Relevant evidence is not inadmissible under Rule 403 unless its probative value is substantially outweighed by the danger of unfair prejudice. The fact that evidence is prejudicial or damaging to the defendant does not of itself classify the evidence as inadmissible. United States v. Medina , 755 F.2d 1269, 1274 (7th Cir. 1985). Indeed, "[r]elevant evidence is inherently prejudicial; but it is only unfair prejudice, substantially outweighing probative value, which permits exclusion of relevant matter under Rule 403." United States v. McRae, 593 F.2d 700, 707 (5th Cir.), cert. denied, 444 U.S. 862 (1979).

The trial transcript reflects that the trial judge conducted a hearing outside the presence of the jury in which Aaron testified about his marijuana transactions with Blandina. Only after the judge had determined that Aaron was a credible witness did he permit Aaron to testify in the presence of the jury. Further, immediately after the jury heard Aaron's testimony, the trial judge carefully instructed the jury as follows:

"You just heard a witness, Richard Aaron, testify that he sold marijuana to the defendant, Charles Blandina. This testimony concerns things that happened outside what is charged in the indictment. As you are aware, the indictment has to do with two charges of evading taxes in 1983 and 1984. I would like to remind you at this point that this evidence should be considered only so far as it goes to show law violations pertaining the indictment which we have here under consideration. No consideration should be given by the jury as to whether the defendant is guilty of violating any other criminal law. Such would be improper and unduly prejudicial to the defendant."

We are convinced that the trial judge's preliminary finding regarding Aaron's credibility combined with his cautionary instruction immediately following Aaron's testimony abated any possible unfair prejudicial effect Aaron's testimony might have had on the jury's decision-making process. Absent evidence to the contrary, "[w]e make the crucial and valid assumption the jurors carefully follow instructions given them by the court." United States v. Stern, 858 F.2d 1241, 1250 (7th Cir. 1988). Accordingly, we hold that the district court did not abuse its discretion in admitting Aaron's testimony.

B.

 

Blandina also contends that the district court improperly admitted the testimony of Agent Vonderschmitt relating the results of his interviews with various coin dealers regarding Blandina's alleged coin collection because the testimony was hearsay. Under Fed. R. Evid. 801, hearsay is defined as "a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted."

During his testimony Agent Vonderschmitt stated that after Blandina delivered the alleged remnants of the coin collection to the government, he and other IRS agents commenced an investigation of the collection. Regarding their investigation, Agent Vonderschmitt testified as follows:

"Q. What . . . did you do in response to that coin collection being turned over to you?

A. I and several agents from our office interviewed--contacted and interviewed 61 coin dealers from Indianapolis , Bloomington and dealers from Chicago .

Q. Did you attend any coin shows to accomplish that?

A. Yes, we attended coin shows in Indianapolis on two successive weekends.

Q. And what were you doing at those coin shows and [sic] coin dealers?

A. We were showing them photographs of the coins, and also showed them a photograph of Mr. Blandina's face.

Q. Did you find anyone who had sold coins--or pardon me, bought coins from Charles Blandina?

A. No."

The defendant argues that this testimony was offered to establish that Blandina never sold coins to any coin dealers in Indianapolis , Bloomington or Chicago , thus contradicting Beth Greene's testimony that she accompanied Blandina when he sold some of the coins at a gun shop in Bloomington and at various coin shops in Chicago . As such, the defendant contends, this testimony is hearsay, and was improperly admitted by the district court. We disagree. The trial transcript reveals that Agent Vonderschmitt made the statements to which the defendant objects in the context of his testimony regarding his attempt to verify the leads on Blandina's coin collection--an investigation he was obligated to make under Holland , supra. The results of Vonderschmitt's investigation of the coin collection were within his personal knowledge, which is independent of the truth of the coin dealers' statements concerning their lack of familiarity with Blandina or his coins. As one commentator aptly stated:

"It is hard to prove a negative. If someone . . . conducts a fruitless investigation, he may, of course, testify that he did not find whoever or whatever he was looking for. But the significance of this testimony depends on the thoroughness of the investigation. To whom did the witness make inquiry? What responses did he get?

The responses that the witness received would be hearsay if offered to prove their truth. But the theory here is that the responses are offered, not for their truth, but only to prove how diligent the investigation was, so that the trier of fact can determine how much weight to place on the negative results."

D. Binder, Hearsay Handbook 466 (2d. ed. 1983). It is clear that the coin dealers' negative responses to Vonderschmitt's question concerning whether they had ever dealt with Blandina were offered not to prove the truth of the responses; rather, they were offered only as evidence of Agent Vonderschmitt's diligence in investigating Blandina's allegations and the negative results of his investigation. Because Vonderschmitt's testimony was not offered to prove the truth of the coin dealers' statements, but rather only to establish that he had conducted a most thorough investigation and the results thereof, the testimony is not subject to a hearsay objection under Fed. R. Evid. 801. Thus, we hold that the trial court did not abuse its discretion in admitting in evidence Vonderschmitt's testimony concerning the results of his investigation.

V. SUFFICIENCY OF THE EVIDENCE

 

Blandina's final argument on appeal is that the government's evidence at trial was insufficient to support a conviction for tax evasion under the net worth method of proof. The standard for reviewing challenges to the sufficiency of the evidence is well established. We must determine "whether, after reviewing the evidence in the light most favorable to the government, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." Jackson v. Virginia, 443 U.S. 307, 319 (1979) (emphasis in original); United States v. Chu [86-1 USTC ¶9113 ], 779 F.2d 356, 361 (7th Cir. 1985).

As noted above, the government employed the net worth method of proof during its investigation of the defendant. In Chu this court set forth three elements the government must establish under the net worth method. First, the government must establish with reasonable certainty " 'an opening net worth to serve as a starting point from which to calculate future increases in the taxpayer's assets.' " 779 F.2d at 361 (quoting Holland , 348 U.S. at 132). Second, the government must demonstrate that it investigated all " 'relevant leads furnished by the taxpayer--leads reasonably susceptible of being checked, which, if true, would establish the taxpayer's innocence.' " 779 F.2d at 365 (quoting Holland , 348 U.S. at 135-36). Finally, the government must establish " '[e]ither a "likely source" of the illegally unreported income represented by the calculated increase in net worth plus non-deductible expenditures in the year in question . . . or all possible sources of non-taxable income must be negated.' " 779 F.2d at 366 (quoting United States v. Grasso [80-2 USTC ¶9593 ], 629 F.2d 805, 808 (2d Cir. 1980)). Blandina challenges the government's opening net worth figure because he was given no credit for cash on hand. Further, the defendant contends that the government failed to prove a likely source of income because it did not attempt to audit the records from Blandina's liquor store and construction business.

Although cash on hand in an opening net worth figure is "only one of several and varied financial assets and is of no greater significance, aside from its liquidity, than other assets," United States v. Goldstein [82-2 USTC ¶9507 ], 685 F.2d 179, 181 (7th Cir. 1982), it is of increased importance in this case because the defendant's primary defense at trial was that he had accumulated a substantial amount of cash--the alleged "cash hoard"--prior to the years under investigation. "While the source and existence of cash-on-hand need not be proved with mathematical exactitude, the amount must be established with reasonable certainty."United States v. Terrell [85-1 USTC ¶9249 ], 754 F.2d 1139, 1146 (5th Cir.), cert. denied, 472 U.S. 1029 (1985).

At trial, the government presented and the trial court allowed IRS Agent Rob ert Bennett to tesify as an expert witness regarding the government's calculations of Blandina's income, expenditures and cash on hand. Bennett testified that in his opinion the defendant had virtually no cash on hand for the years 1980 through 1984. He based his conclusion on the following facts: Carol Smith, a witness for the government, testified that she lived with the defendant from 1979 through 1984 and that there were not large sums of money available; Blandina's former landlord testified that the defendant was continually late in making his rental payments and was eventually evicted from his apartment in September 1981; and Blandina took out two small loans during this time period. Agent Bennett stated that these attributes were inconsistent with those of someone with a large amount of cash on hand. Bennett also performed a cash flow analysis of the defendant for the years 1980, 1981 and 1982--and three years immediately preceding the tax years under investigation--demonstrating that all of Blandina's available income for those years would have been consumed for the assets the government proved Blandina acquired and the living expenses he incurred, thus leaving no extra cash available to accumulate during these years. Further, IRS Agent Vonderschmitt testified that when he interviewed Blandina in April of 1985, Blandina told him that he did not let his money sit around, he made it work for him by investing it--a statement directly contradicting Blandina's assertions at trial that he maintained a "cash hoard" prior to 1983.

Blandina's only challenges to Bennett's conclusion that he had no cash on hand prior to 1983 are his allegations that he received the proceeds from the accident settlement which his father invested and later turned over to him and that he had excess cash from the sale of his father's coin collection. Blandina presented neither bank records nor deposit statements concerning the accident settlement, nor did he present any receipts from the sale of coins. Moreover, Agent Vonderschmitt testified that he investigated Blandina's alleged sources of cash and determined that neither could be verified. Specifically, Vonderschmitt asked Shelby Federal Savings and Loan in Indianapolis--the institution where Blandina's father allegedly invested the accident settlement proceeds--to determine whether any member of the Blandina family had an interest-bearing account in 1977 or 1978--the two years prior to when Blandina stated he received the sum of money resulting from the invested settlement proceeds. The bank located only two accounts, and neither of them were large enough to represent the proceeds from the alleged $19,000 settlement--the amount of the settlement according to Blandina. Vonderschmitt thereafter interviewed Blandina's mother, stepmother, and brother, none of whom could corroborate Blandina's representation as to the $19,000 settlement figure.

With regard to the coin collection, Vonderschmitt's initial investigation revealed that Blandina failed to file a gift tax return after the alleged receipt of the coin collection. Finally, probate records revealed that the coin collection was not listed as an asset of the estate of Blandina's father. Vonderschmitt's subsequent investigation after the remnants of the coin collection were obtained from the defendant included interviews with 61 coin dealers from Indianapolis , Bloomington and Chicago , none of whom could recall purchasing coins from the defendant. More importantly, Vonderschmitt discovered one coin dealer during his investigation, Rolland Kontak, who testified under oath that he recognized coins represented by Blandina to be part of his father's collection as coins he sold to the defendant sometime after 1984. Vonderschmitt found a second coin dealer, Paul Edmonds, who testified that although he never engaged in coin transactions with Blandina, he recognized coins among the purported remnants of Blandina's collection as coins he kept in his own collection until sometime after 1981--two years after Blandina allegedly obtained the collection from his father.

The government's meticulous analysis of Blandina's income and expenditures, coupled with the overwhelming proof rebutting Blandina's claimed sources of cash on hand, when viewed in the light most favorable to the government, convince us that a rational trier of fact could reasonably conclude that Blandina had no cash on hand from 1980 to 1984. Because Blandina challenges the government's opening net worth figure only in the sense that it erroneously concluded that he had no cash on hand, our analysis need go no further. Thus, we hold that the opening net worth figure was established with the required degree of certainty beyond a reasonable doubt.

Blandina next argues that the government failed to establish a likely source of income because it failed to audit the records of his liquor store as required under the Supreme Court's opinion in Holland, supra. We need not be long detained with this contention. This court has previously stated that "[t]he court in Holland limited the scope of the government's required investigation to 'relevant leads furnished by the taxpayer--leads reasonably susceptible of being checked.' " Chu, 779 F.2d at 365 (emphasis added and citation omitted). The defendant concedes that when Agent Vonderschmitt asked him for his business records, he refused to supply them based on his fifth amendment right against self-incrimination. Thus, the business records were not a lead furnished by the taxpayer, a prerequisite under Chu to requiring a governmental investigation. Blandina contends that the government should have subpoenaed the business records despite his refusal to turn them over to the government. Our research reveals no such requirement. In addition, such a requirement would directly contradict the Supreme Court's clear and unambiguous language in Holland. The defendant has no one to blame but himself for the government's failure to examine his business records. As we stated in United States v. Marrinson, another tax evasion case also prosecuted under the net worth method: "The defendant, of course, has a right to remain silent, but in these circumstances he assumes some risk by doing so." [87-2 USTC ¶9610 ], 832 F.2d 1465, 1473 (7th Cir. 1987). The jury obviously determined that the government agents exhausted all reasonably verifiable leads furnished them by Blandina. In light of Blandina's refusal to cooperate with the investigating agents, we refuse to set aside that determination. Thus, we hold that the government fulfilled its obligation to investigate all relevant leads concerning a likely source of income furnished by the defendant that were reasonably susceptible of being checked.

VI. CONCLUSION

The defendant's arguments in favor of reversing his conviction are without merit. The district court properly granted the government's motion for continuance and excluded the delay from the 70-day time period under the Speedy Trial Act based on the government's obligations under Holland to investigate Blandina's evidence regarding his coin collection. Next, the court did not abuse its discretion in denying the defendant's motion to continue based on the proposed testimony of Richard Aaron. Defense counsel rejected both of the alternate trial dates which the court offered and, in any case, the defense had two weeks to prepare for Aaron's testimony. Nor did the court err in admitting both Aaron's testimony and the testimony of Agent Vonderschmitt into evidence. Aaron's testimony regarding his marijuana transactions with the defendant was directly relevant to one of the core issues at trial--namely, whether Blandina's drug dealings were a likely source of unreported taxable income during the years in question. Further Vonderschmitt's testimony regarding his interviews with the coin dealers was not inadmissible hearsay as the defendant contends; rather, the trial court properly admitted it to show the diligence and results of the investigation of Blandina's coin collection. Finally, Blandina's challenges to the sufficiency of the evidence are unconvincing. The evidence supported the government's conclusion that no part of Blandina's opening net worth was attributable to cash on hand. Moreover, the government was not required to investigate Blandina's business records because Blandina explicitly refused to provide them during the government's investigation. Accordingly, the judgment of the district court is

Affirmed

¹ Blandina tendered the remaining $14,000 of the purchase price in the form of a cashier's check.

² See Holland v. United States [54-2 USTC ¶9714 ], 348 U.S. 121 (1954), discussed in Sections II and V, infra.

 

 

[87-2 USTC ¶9568] United States of America, Plaintiff-Appellee v. Glenn G. Goetz, Defendant-Appellant

(CA-11), U.S. Court of Appeals, 11th Circuit, 86-8222, 9/8/87, Affirming an unreported District Court decision

[Code Sec. 7203 --Result unchanged by the Tax Reform Act of 1986 ]

Crimes: Willful failure to file return: Trial: Challenge based on Speedy Trial Act: Miscellaneous assertions of error.--Following an appellate court's order mandating a retrial for willfully failing to file tax returns, the government did not violate the defendant's rights under the Speedy Trial Act (18 U.S.C. §3161) by obtaining an initial extension of 180 days and a subsequent continuance of 80 days. The trial court did not abuse its discretion in granting the government's ex parte motion to extend the initial period for retrial because the extension was justified in light of the government's continuing investigation into similar and related Code violations by the same defendants and was expressly permitted by that Act. Furthermore, the subsequent continuance obtained by the government was excluded from the 180-day statutory period since the continuance was necessary due to the defendant's lack of counsel. In addition, the court rejected other miscellaneous objections to the trial court's jury instructions because the challenges were not timely made.

W. Louis Sands, Assistant United States Attorney, Macon, Ga. 31202, for plaintiff-appellee. Jeffrey L. Shrom, 1001 S. 4th West, Missoula, Mont. 59807, for defendant-appellant.

Berfore HILL and JOHNSON, Circuit Judges, and HENLEY, ^* Senior Circuit Judge.

Per Curiam"

EC: Appellant Glen Goetz was tried by a jury and convicted of seven counts of willful failure to file a federal income tax return, in violation of 26 U.S.C. §7203 . Goetz raises four issues in this direct appeal, the most important of which being whether an extension and subsequent continuance obtained by the government violated his rights under the Speedy Trial Act, 18 U.S.C. §3161 et seq. We reject all of appellant's claims, and affirm the judgment of the district court.

I. BACKGROUND

Goetz was charged in two separate indictments with seven counts of violating 26 U.S.C. §7203 . The first indictment, number 83-13-MAC, alleged that he and a codefendant willfully failed to file tax returns for the years 1977 and 1978. Goetz was originally tried and convicted on indictment 83-13-MAC in August of 1983, but that conviction was overturned on appeal to this court. United States v. Goetz [84-2 USTC ¶9947 ], 746 F.2d 705 (11th Cir.1984).

This court's mandate ordering a new trial on indictment 83-13-MAC was filed in the district court on January 16, 1985. On March 26, 1985, the government moved ex parte and under seal to extend the period for retrial to 180 days from the filing of the mandate, as provided in 18 U.S.C. §3161(e). The district court granted the government's motion, thus effectively requiring that the government commence Goetz' retrial on or before July 15, 1985.

On June 20, 1985, the district judge before whom this action was originally tried made an intra-district transfer of the case to another district judge. Shortly thereafter, on June 24, the United States Attorney wrote a letter to the district court noting the approaching time limitation for retrial and indicating his willingness to accommodate the court's schedule in setting a retrial date. The letter also mentioned that he had unsuccessfully tried to contact Kenneth Musgrove, Goetz' counsel of record at the time, regarding this matter. The U.S. Attorney sent a copy of this letter to Musgrove. Two days later, the government attorney wrote directly to Musgrove inquiring whether he still represented Goetz, and if so, asking him to contact the district judge regarding a date for retrial. On July 2, the U.S. Attorney finally contacted Musgrove by telephone and learned that he no longer represented Goetz.

After discovering that Goetz was without counsel, the government moved on July 5, for a continuance and the exclusion of 80 days in order to allow Goetz the opportunity to obtain counsel or have counsel appointed, and to give new counsel a reasonable time to prepare for trial. Goetz filed a pro se motion in opposition to the requested continuance, and also moved to dismiss indictment 83-13-MAC for alleged violation of the Speedy Trial Act. On July 15, the district court granted the government's motion for a continuance and excluded 80 days pursuant to 18 U.S.C. §3161(h)(8), making the express finding that the ends of justice served by granting the continuance outweighed the interest of the public and the defendant in a speedy trial. ¹ The district court also ordered Goetz to appear at a hearing one month later to inform the court of his counsel status. At the August 15 hearing, Goetz indicated that he still had not retained an attorney, and he requested that the court appoint attorney Jeffrey Shrom of Missoula, Montana to represent him. The district court agreed to appoint Shrom, provided that the attorney formally request the court to do so and with the understanding that the government would not be required to pay his travel expenses.

On September 27, 1985, the government filed a second indictment, number 85-28-MAC, charging Goetz with five more counts of failure to file a tax return covering the years 1979-83. Goetz later filed a motion to dismiss both indictments on the ground that the court did not have jurisdiction over criminal violations of the Internal Revenue Code. The district court denied this motion and consolidated the two indictments for trial. On January 29, 1986, the district court ordered the clerk to draw a petit panel of jurors for trial on February 24, 1986. A copy of this order was publicly posted on January 30, and the panel was drawn in open court on February 7. Goetz filed a motion challenging the selection of jurors on February 24, immediately prior to the commencement of voir dire. The court dismissed this motion because Goetz failed to comply with the requirements of 28 U.S.C. §1867, which govern challenges to jury selection procedures. The trial began on February 25, and the next day the jury returned a verdict of guilty on all counts. This appeal followed.

II. SPEEDY TRIAL ACT CLAIM

Goetz' primary contention on appeal is that the March 26 extension and the July 15 continuance granted by the district court violated the Speedy Trial Act. Section 3161(e) of the Act provides in pertinent part:

If the defendant is to be tried again following an appeal or a collateral attack, the trial shall commence within seventy days from the date the action occasioning the retrial becomes final, except that the court retrying the case may extend the period for retrial not to exceed one hundred and eighty days from the date the action occasioning the retrial becomes final if unavailability of witnesses or other factors resulting from the passage of time shall make trial within seventy days impractical.

This section also provides that the exclusion provisions of section 3161(h) apply in computing the time within which retrial must commence. We note that the district court has broad discretion in deciding whether to grant an extension or a continuance under the Speedy Trial Act. United States v. Norton, 755 F.2d 1428, 1429 (11th Cir.1985). To prevail on a claim that the district court erred in granting or denying an extension or continuance under the Act, appellant must show an abuse of discretion which resulted in specific, substantial prejudice. United States v. Bergouignan, 764 F.2d 1503, 1508 (11th Cir. 1985); United States v. Smith, 757 F.2d 1161, 1166 (11th Cir.1985).

The mandate from this court requiring that Goetz be retried was filed in the district court on January 16, 1985; hence the original 70 day period for retrial extended through March 27, 1985. ² Section 3161(e) expressly provides, however, that the trial court may extend the period for retrial for up to 180 days, or 110 days beyond the original 70 day limit. The district court in this case granted such an extension based upon the government's motion filed on March 26, 1985, prior to the expiration of the original 70 days. Because the government filed its motion within the initial time limit provided in section 3161(e), Goetz cannot complain that this extension violated the express terms of the Speedy Trial Act.

Goetz argues that the extension was improperly granted because the government made its motion under seal and ex parte, giving him no notice or opportunity to respond. The ex parte nature of the extension by itself, however, does not constitute reversible error. See United States v. Bourne, 743 F.2d 1026, 1031 (4th Cir.1984) (ex parte continuance granted due to unavailability of essential witness not reversible error "simply because defense counsel could not object and try to argue that the witness was not essential"). In this case, the government and the district court had good reason to proceed ex parte and without notice to the defendant. During the running of the original 70 days, the U.S. Attorney, with the approval of the Department of Justice, was engaged in an extended investigation of Goetz and his codefendant regarding tax code violations during the five years subsequent to the period covered by the original indictment. This continuing investigation into similar and related tax code violations by the same defendants was a sufficient basis upon which to grant the government's ex parte motion for an extension of time as expressly provided for in the statute. Cf. United States v. Golomb, 754 F.2d 86, 88 (2d Cir. 1985) (district court properly granted continuance to allowance completion of grand jury investigation into complex transactions); United States v. Ruggiero, 726 F.2d 913, 925 (2d Cir.) (same), cert. denied, 469 U.S. 831, 105 S.Ct. 118, 83 L.Ed.2d 60 (1984). Therefore, we hold that the district court did not abuse its discretion in granting the March 26 extension.

Goetz also objects to the 80 day continuance granted on July 15, 1985. He argues that the government was dilatory in preparing for retrial and sought the continuance merely for its own convenience. This argument, however, ignores the important and undisputed fact that Goetz was not represented by counsel at the time the government sought to make arrangements for the retrial, which it attempted to do well before the statutory 180 days expired on July 15.

Shortly after the U.S. Attorney became aware that the case had been transferred to another district judge, he attempted to contact Goetz' attorney of record in order to arrange for a retrial date. Not until July 2 did the government learn that Musgrove, Goetz' original counsel, no longer represented the defendant. Upon discovering that Goetz was without counsel, the government promptly moved for a continuance on July 5 to allow Goetz to obtain counsel or have the court appoint counsel for him, and to give his new counsel a reasonable opportunity to prepare for trial. Section 3161(h)(8)(B)(iv) mandates that the time occasioned by a continuance granted so that the defendant may seek counsel is properly excludable from the statutory calculation. United States v. Studnicka, 777 F.2d 652, 659 (11th Cir.1985); see also United States v. Elkins, 795 F.2d 919, 924 (11th Cir.) (upheld continuance granted due to confusion over appointment of defense counsel and to allow counsel adequate time to prepare for trial), cert. denied, -- U.S. --, 107 S.Ct. 443, 93 L.Ed.2d 391 (1986). ³ The district court in this case explicitly relied on this subsection and made the required finding that the ends of justice served by granting the continuance outweighed the interest of the public and the defendant in a speedy trial. The facts in the record support the trial court's finding that this continuance was necessary in light of the defendant's lack of counsel during this crucial time period.

Clearly, the district court was not required to choose between dismissing the charges on July 15 or forcing Goetz to trial either without counsel or without allowing new counsel reasonable time to prepare. ⁴ We further note that Goetz himself exhibited no particular enthusiasm to proceed with the retrial. He must have been aware, long before the government, at least of the possibility that his original counsel would no longer be representing him; yet he made no effort prior to the expiration of the statutory 180-day period to obtain new counsel or have the court appoint counsel for him. Indeed, by the August 15 hearing Goetz still had not retained new counsel himself or asked the court to appoint counsel, even though he obviously had a particular attorney in mind (who the court eventually appointed). We refuse to allow Goetz to "creat[e] ambiguities concerning his representation and then attempt to reap the benefits of a Speedy Trial Act violation." United States v. Studnicka, 777 F.2d at 659 (11th Cir.1985). We therefore hold that the district court properly exercised its discretion in granting the July 15 continuance. ⁵

III. REMAINING CLAIMS

Goetz further argues that the indictments against him should have been dismissed because the jury panel did not represent a cross-section of the judicial district. Specifically, he claims that the jury panel in his case included no farmers or farming-related persons, nor did it include any residents from several predominantly rural counties in the district. This claim fails on two grounds. First, Goetz' motion in the district court was untimely under 28 U.S.C. §1867(a), which provides that a defendant may move to dismiss an indictment for failure to comply with jury selection procedures either "before the voir dire examination begins, or within seven days after the defendant discovered or could have discovered, by the exercise of diligence, the grounds therefor, whichever is earlier." The record shows that the 40-member jury panel was drawn in open court on February 7, 1986, but Goetz did not file his motion until February 24, seventeen days after he could have discovered the geographic and occupational makeup of the panel. Moreover, Goetz' motion contained only conclusory allegations of discrimination, unsupported by a sworn statement of specific facts as required by section 1867(d). Because Goetz completely failed to comply with the requirements of section 1867, the district court properly denied his motion without a hearing.

In addition, Goetz argues that the district court erred in failing to charge the jury with his requested "advice of counsel" instruction. ⁶ The record reveals, however, that Goetz made no request for such an instruction at any time prior to trial or during trial, but only after the trial judge had already charged the jury. Further, Goetz never filed a written request for instructions as required by Fed.R.Crim.P. 30. His oral request merely referred to "the advice of an attorney as a defense," and therefore was not specific enough to provide a sufficient basis for claiming error on appeal. Nevertheless, we find that the trial court's charge taken as a whole adequately instructed the jury regarding Goetz' reliance defense; thus, there was no plain error.

Finally, Goetz argues that United States district courts do not have jurisdiction over crimes enumerated in the Internal Revenue Code, and therefore the trial court improperly denied his motion to dismiss the indictments for lack of jurisdiction. This claim is patently frivolous, as this court previously noted in United States v. Evans, 717 F.2d 1334, 1334 (11th Cir.1983).

For the foregoing reasons, the judgment of the district court is AFFIRMED.

^* Honorable J. Smith Henley, Senior U.S. Circuit Judge for the Eighth Circuit, sitting by designation.

¹ Goetz appealed the district court's July 15 order to this court, but the appeal was dismissed for lack of jurisdiction on September 27, 1985.

² January 16, the day that triggered the running of the speedy trial time limits, is excluded from the 70-day calculation. United States v. Elkins, 795 F.2d 919, 922 (11th Cir.), cert. denied, -- U.S. --, 107 S.Ct. 443, 93 L.Ed.2d 391 (1986); United States v. Severdija, 723 F.2d 791, 793 (11th Cir.1984).

³ The relevant portion of section 3161(h)(8) reads as follows:

(B) The factors, among others, which a judge shall consider in determining whether to grant a continuance under subparagraph (A) of this paragraph in any case are as follows:

. . .

(iv) Whether the failure to grant such a continuance . . . would deny the defendant reasonable time to obtain counsel, would unreasonably deny the defendant or the Government continuity of counsel, or would deny counsel for the defendant or the attorney for the Government the reasonable time necessary for effective preparation, taking into account the exercise of due diligence.

⁴ Section 3161(h)(8)(B)(i) mandates that the trial judge shall consider whether the failure to grant the requested continuance "would be likely to make a continuation of such proceeding impossible, or result in a miscarriage of justice." Because either of the options discussed above would likely have resulted in a fundamental miscarriage of justice, this subsection also provides support for the district court's decision to grant the continuance.

⁵ Goetz' only motion to dismiss which relied on Speedy Trial Act grounds related to the government's failure to commence the retrial on or before July 15, 1985. Prior to trial, he made no other motions to dismiss based on alleged violations of the Act. Thus, Goetz has waived any other violations he might have alleged which occurred after the granting of the July 15 continuance. See 18 U.S.C. §3162(a)(2) ("Failure of the defendant to move for dismissal prior to trial . . . shall constitute a waiver of the right to dismissal under this section.").

⁶ This requested instruction related to the testimony of defense witness Parham, a tax lawyer, who testified that he advised Goetz that Goetz was not required to give the IRS any information while he was the subject of an IRS investigation.

 

 

[77-2 USTC ¶9627]United States of America, Plaintiff-Appellee v. Donald C. Irwin, Defendant-Appellant

(CA-10), U. S. Court of Appeals, 10th Circuit, No. 76-1933, 561 F2d 198, 8/8/77, Affirming unreported District Court decision

[Code Sec. 7203--result unchanged by '76 Tax Reform Act]

Failure to file return: Willfulness: Miscellaneous assertions of error.--The Tenth Circuit affirmed the taxpayer's conviction for willfully and knowingly failing to file an income tax return for the year 1974. The court rejected the taxpayer's arguments that: (1) his Sixth Amendment right to counsel had been violated since his request to be represented by a lay counsel was denied; (2) the judge was prejudiced; (3) the lower court erred in not compelling the disclosure of jury selection materials; (4) the judge erred in instructing the jurors to decide the factual questions on the evidence presented but to apply the law as the judge explained it to them; and (5) the requirement that an income tax return be filed violated his Fifth Amendment rights.

Donald C. Irwin, Green River, Wyo., pro se. Toshiro Suyematsu, United States Attorney, Jerome F. Statkus, Frederic C. Reed, Assistant United States Attorneys, Cheyenne, Wyo., for plaintiff-appellee.

Before HILL, SETH, and MCWILLIAMS, United States Circuit Judges.

HILL, Circuit Judge:

Donald C. Irwin appeals his conviction by a jury in the United States District Court for the District of Wyoming for willful failure to make an income tax return for the calendar year 1974, in violation of 26 U. S. C. §7203.

The facts are brief and are not in dispute. The government presented evidence to establish that Irwin had income during 1974 in excess of $22,000. Irwin's 1974 income tax return was introduced into evidence. It contained Irwin's name, address, and an entry indicating Irwin was entitled to a refund of $4,694. The return otherwise showed only Irwin's constitutional objections to the questions asked. In response to all questions dealing with Irwin's income for 1974 was the entry "Object-Self-incrimination." We will set forth additional facts as they are pertinent to our discussion of the issues Irwin raises on appeal.

The first issue Irwin raises concerns his request for representation by lay counsel. Irwin represented himself at trial as he does on this appeal. He argues that the trial judge's denial of his request violated his Sixth Amendment right to counsel. We have previously addressed such a contention and determined that the Sixth Amendment does not provide the right to representation by a lay person. "Counsel" refers to a person authorized to practice law. United States v. Afflerbach [77-1 USTC ¶9127], 547 F. 2d 522 (10th Cir. 1976); United States v. Grismore, 546 F. 2d 844 (10th Cir. 1976). The trial court did not err in denying Irwin representation at trial by a layman.

Irwin next argues that the trial judge erred in failing to recuse himself on the basis of Irwin's affidavit of prejudice. Section 144, Title 28 U. S. C., provides that a trial judge against whom a timely and sufficient affidavit is filed in good faith by a party demonstrating bias or prejudice against him or in favor of his adversary shall not hear the proceeding. The bias charged must be of a personal nature and must be such as would likely result in a decision on some basis other than what the judge learned from his participation in the case. United States v. Grinnell Corp., 384 U. S. 563 (1966); Davis v. Cities Service Oil Co., 420 F. 2d 1278 (10th Cir. 1970).

Irwin's affidavit of bias stated that he had previously filed an action for declaratory judgment on the question of whether he could refuse to answer questions on his 1974 income tax return on the basis of his Fifth Amendment privilege. That action came on for hearing before the same trial judge and was resolved against Irwin.

The fact that a judge has previously rendered a decision against a party is not sufficient to show sufficient to show prejudice. United States v. Goeltz, 513 F. 2d 193 (10th Cir. 1975), cert. denied, 423 U. S. 830; Knoll v. Socony Mobil Co., 369 F. 2d 425 (10th Cir. 1966), cert. denied, 386 U. S. 977. Further, it appears from the record that Irwin's declaratory judgment action was resolved not on the merits but on the threshold consideration that he failed to demonstrate the existence of a justiciable controversy. Irwin's affidavit fell short of the required showing of bias, and the trial judge committed no error in failing to withdraw from the proceeding.

Irwin sought to challenge the jury array pursuant to 28 U. S. C. §1867(a). On August 2, 1976, he moved to compel disclosure of the jury selection materials and to obtain a continuance pending his examination of the materials. His motion for disclosure of the documents was granted; his motion for continuance was denied, and the trial proceeded August 3. He seeks reversal for the trial court's refusal to grant the requested continuance. His argument is that he was effectively denied an opportunity to examine the jury selection materials and prepare his motion for stay or dismissal of the information.

Irwin must make a clear showing that the trial court's refusal to grant the continuance constituted an abuse of discretion and resulted in manifest injustice in order to obtain a reversal on that ground. United States v. Hill, 526 F. 2d 1019 (10th Cir. 1975), cert. denied, 425 U. S. 940. We do not believe he has made such a showing. At best, had the continuance been granted, Irwin could have filed his motion. His ground for challenge in the district court as well as on appeal is that the use of voter registration lists as a source for prospective jurors systematically excludes large segments of the populace, in derogation of the policy of the Jury Selection and Service Act of 1968, 28 U. S. C. §1861 et seq. Although Irwin did not file a proper motion challenging the jury array, the trial judge considered his contention regarding the use of voter registration lists and correctly rejected it. United States v. Grismore, supra; United States v. Smaldone, 485 F. 2d 1333 (10th Cir. 1973), cert. denied, 416 U. S. 936. We must assume Irwin has now had an ample opportunity to examine the jury selection material. He cites no additional ground upon which to challenge the jury. He cannot have been prejudiced by the court's refusal to grant his continuance.

Irwin next argued that the trial judge erred in informing the jurors, by means of a pamphlet regularly mailed to prospective jurors before trial and also by jury instructions, that they were to decide the factual questions on the evidence presented but were to apply the law as the judge explained it to them. He contends the jurors should be free to decide the pertinent questions of law as well. His contention is simply contrary to the law. United States v. Grismore, supra; Tyler v. Dowell, Inc. 274 F. 2d 890 (10th Cir. 1960), cert. denied 363 U. S. 812; Jones v. United States, 251 F. 2d 288 (10th Cir. 1958), cert. denied, 356 U. S. 919.

Irwin argues that he committed no crime in filing the 1974 tax return as he did, and therefore the judge improperly denied his motion to dismiss. Irwin's argument is that he is protected by the Fifth Amendment from disclosing the information requested and may not be subjected to criminal prosecution for the exercise of that right. Irwin places primary reliance on Garner v. United States, 424 U. S. 648 (1976), in which the Court held that a claim of privilege, if valid, could be made as to specific items of information requested on an income tax return. Garner dealt with a nontax prosecution for violation of federal gambling laws. The government sought to introduce the defendant's income tax return on which he listed his occupation as a gambler. Irwin misreads Garner to stand for the proposition that no information need be supplied on a tax return. A valid claim of privilege must be based upon a real possibility that submitting answers will subject the taxpayer to criminal prosecution. Irwin has made no showing which would approach justifying his claim of privilege in not supplying any information upon which the IRS can determine his tax liability.

The requirement that an income tax return be filed does not violate the Fifth Amendment because the information is requested in a non-accusatorial setting. Pauldino v. United States [74-2 USTC ¶9653], 500 F. 2d 1369 (10th Cir. 1974); United States v. Smith, 484 F. 2d 8 (10th Cir. 1973), cert. denied, 415 U. S. 978. It is possible that a valid claim of privilege could be asserted as to specific items of information requested. Garner v. United States, supra. If such claim were valid, the taxpayer could not be prosecuted for violating 26 U. S. C. §7203. However, it is well established that the Fifth Amendment cannot be stretched so far as to absolve a taxpayer's duty to file a return. United States v. Sullivan [1 USTC ¶236], 274 U. S. 259 (1927). Irwin's return, containing no information upon which his tax liability could be determined, constituted no return at all. United States v. Porth [70-1 USTC ¶9329], 426 F. 2d 519 (10th Cir. 1970), cert. denied, 400 U. S. 824. We find no merit in the contention that the present prosecution violates Irwin's privilege against self-incrimination. California v. Byers, 402 U. S. 424 (1971); United States v. Sullivan, supra; United States v. MacLeod [71-1 USTC ¶9174], 436 F. 2d 947 (8th Cir. 1971), cert. denied, 402 U. S. 907; United States v. Porth, supra.

Irwin's final contentions concern comments made by the trial judge in ruling on evidence. We have examined his contentions, and we find them to be without merit.

AFFIRMED.

 

 

[75-2 USTC ¶9685]United States of America, Plaintiff-Appellee v. James L. Allen, Defendant-Appellant

(CA-6), U. S. Court of Appeals, 6th Circuit, No. 74-1959, 522 F2d 1229, 9/2/75, Affirming unreported District Court decision

[Code Sec. 7201]

Criminal penalties: Willful attempt to evade taxes: Various allegations of error: Conviction upheld.--Taxpayer's conviction, entered upon a jury verdict of guilty on two counts of willfully attempting to evade income taxes, was affirmed. The District Court judge's denial of the taxpayer's motion for a continuance due to the illness of one of his attorneys was not prejudicial error. Also, the taxpayer was not entitled to the Miranda-type warnings because he was not in custody when he responded to questions asked by IRS representatives. The failure to order production of the IRS agent's report referring the case to the Intelligence Division was harmless error. Various other alleged errors were also found to be without merit.

Frederick M. Coleman, United States Attorney, Cleveland, Ohio, Rob ert E. Lindsay, Charles E. Brookhart, Scott P. Crampton, Assistant Attorney General, Department of Justice, Washington, D. C. 20530, for plaintiff-appellee. James L. Allen, Pro se, P. O. Box 8380, Canton, Ohio.

Before WEICK, MCCREE and MILLER, Circuit Judges.

WEICK, Circuit Judge.

Allen has appealed from his judgment of conviction entered upon a jury verdict of guilty on two counts of an indictment charging him with willfully attempting to evade income taxes for the years 1967 and 1968 in violation of 26 U. S. C. §7201. He was sentenced to two five year concurrent terms of imprisonment, the first six months of which were to be served in a jail-type institution and he was placed on probation for the balance of the sentence. He was fined $2,500 on each count or a total of $5,000. Count I of his indictment was dismissed.

Although he was represented in the District Court by two retained trial lawyers, his brief in this court, as well as his oral argument, were pro se.

At the trial, the government used the net worth and expenditures' method of proof. Its evidence tended to prove that although Allen and his wife, in joint income tax returns, reported a taxable income of $11,225.56 for 1967 and $16,580.79 for 1968, their net worth increased $18,402.37 during 1967 and an additional $35,436.96 during 1968. The Allens' actual taxable income was computed to be $26,415.68 for 1967 and $44,036.54 for 1968. A technical adjustment, adjusting the 1968 income $10,000 downward to $34,036.54, was made to allow for an error discovered in one of the adding machine tapes used in preparation of the 1968 return. This adjustment allowed in full the deduction claimed by Allen in his original return.

Allen had been employed, prior to 1967, by various magazine circulating companies supervising the activities of magazine salesmen.

Late in 1966 Allen started his own business, calling it National Organization Sales. He was a subfranchises under a regional franchisee in the magazine subscription sales business. He acted as a clearinghouse for salesmen and others, who were independent contractors, and processed subscriptions to various publishers.

Revenue Agent Tracy described Mr. Allen's business:

Mr. Allen explained to me that most of his sales were through a sponsor, and these sponsors usually consisted of VFW posts or volunteer fire departments or organizations similar to these.

The sales campaign would be in a given locale, where they would advertise a sales campaign and explain that they were benefiting the sponsor, and the sponsor would take the proceeds they made, the profits, and use this money either for their organization or to buy hospital equipment. And he explained to me that the hospital equipment was free for public use and this was part of the campaign, to build up good will and so forth. This was publicized and the people that were sold subscriptions hopefully were aware of this fact, which would induce their sales.

The sponsoring organization would receive 8 percent of the gross sales for the campaign.

Allen admits that the volume of his business in 1967 totalled $596,087.30 and $711,988.14 for the year 1968.

National Organization Sales was operated primarily out of an office in the basement of the Allen home. During the years in question, the business records were kept in a single entry system, which Revenue Agent Tracy, who was assigned to perform a field audit of the taxpayers described as "unique." Tracy testified:

To summarize my opinion, in areas where I felt he should have records he didn't have records; in other areas I felt he had to many records.

It was not possible to make an accurate accounting of all of Allen's income.

The Allens' tax returns for 1967 and 1968, and for many years prior to that time, were prepared by Hubert Howes, an attorney, and his wife, Shirley Howes, a certified public accountant. The returns were prepared primarily on the basis of information furnished by Allen. Mrs. Howes testified that in January, 1968 Allen discussed with her the advisability of setting up a bookkeeping system. Mrs. Howes finally set up such a system in 1970 for Allen. One of the theories of the case presented to the jury by the defense in argument was that Allen simply was inadequate to the task of starting and running his own business and keeping the records for that business. In other words, the defense argued that if some income was not reported, it was the result of the inadequate records, and not the result of a willful attempt to evade income taxes. The defense also attacked the accuracy of the government's opening and closing net worth figures.

Much of the prosecution's evidence concerning willfulness was presented through the testimony of Internal Revenue Agent, James Tracy.

Agent Tracy testified concerning his audit of the returns and investigation of the Allens' income. Tracy was assigned to conduct a field audit of the Allens' 1967 return on November 14, 1969. He visited the office in the basement of the Allen home many times from December 11, 1969 through April 15, 1970. He decided to audit both 1967 and 1968 income tax returns.

Tracy's testimony was important in establishing the accuracy of the net worth computations. He also testified that Allen at first denied and, later in the investigation, admitted receiving reimbursement for expenses from the Veterans of Foreign Wars for which expenses he had taken deductions in his returns.

During 1967 and 1968, Allen served as junior vice commander, senior vice commander and commander of the Ohio Veterans of Foreign Wars. Such payments by the veterans of Foreign Wars could have been a source of unreported income and the initial denial of such payment was strong evidence of willfulness. Tracy also testified that Allen denied making a profit on hospital equipment which sponsoring organizations order in lieu of receiving cash for sponsoring a sales campaign. Other evidence in the case tended to show that Allen did make a profit on the sale of such equipment. Again, the profit could be a source of unreported income and the denial would be evidence of willfulness in the evasion of income tax.

I Allen contends that the District Judge committed prejudicial error in denying his motion for continuance which was sought because of the illness of one of his attorneys, Edward Lebit. The motion asserted that Mr. Lebit, a former employee of the Internal Revenue Service, was primarily responsible for the accounting and tax aspects of the case and was to testify as an expert for the defense and to serve as cocounsel. The motion further recited that it would be a month before Mr. Lebit would be well enough to even have business visitors. Trial counsel wished to discuss the case with Mr. Lebit before deciding whether to employ substitute counsel. The motion did not indicate how much of a continuance would be necessary.

The government opposed the motion on the grounds that trial counsel, Rob ert J. Rotatori, had been connected with the case since March 20, 1973, which was over ten months prior to the filing of the motion for continuance; that the defense possessed the government's tentative net worth schedule and almost all documents which would be introduced at trial; that the case had previously been continued several times at Allen's request, and that there was no showing why attorneys associated with Mr. Lebit, who also were former employees of the Internal Revenue Service, would be unavailable to replace him in the fifteen days remaining before trial.

Mr. Rotatori was present for the status call of the case on March 20, 1973 and signed the motion and order for discovery. He represented Allen at the hearing on the motion to suppress. He had sought and obtained several continuances. The case had been assigned for trial on a standby basis on May 1, 1973 but the trial did not commence until February 25, 1974. The record discloses that Allen's defense was ably conducted by Mr. Rotatori.

In addition, Allen was represented at the trial by Edward Kleinman who served as associate counsel. Mr. Kleinman was a former employee of the Internal Revenue Service and had assisted Mr. Lebit during various pretrial matters. He was familiar with the case and was available to assist Mr. Rotatori on any technical matters.

The grant or denial of a continuance is within the sound discretion of the trial judge and will be disturbed on appeal only where there has been a clear abuse of discretion. United States v. Ploeger, 428 F2d 1204 (6th Cir. 1970). In our opinion, there was no abuse of discretion in the denial of the motion under the circumstances as presented to the trial judge. Giacalone v. Lucas, 445 F2d 1238 (6th Cir. 1971), cert. denied 405 U. S. 922 (1972).

II Allen further contends that the District Court erred in denying his motion to suppress statements made by him to representatives of the Internal Revenue Service, and for return of all documents obtained from him or his accountant. He claims that he was entitled to the Miranda warnings. Miranda v. Arizona, 384 U. S. 436 (1966). The Allens were not in custody and the Miranda warnings, in our opinion, were not required. United States v. Carter, 462 F2d 1252 (6th Cir. 1972), cert. denied 409 U. S. 984; United States v. Stribling [71-1 USTC ¶9210], 437 F2d 765, 771 (6th Cir. 1971), cert. denied 402 U. S. 973.

In the absence of a clear showing that the taxpayer has been tricked or deceived by the government agents into providing incriminating information, the documents and statements obtained by the Internal Revenue agents are admissible United States v. Marra [73-2 USTC ¶9578], 481 F2d 1196, 1203 (6th Cir. 1973), cert. denied 414 U. S. 1004. The District Court's factual findings that there was no such showing are supported by substantial evidence and are not clearly erroneous.

III Allen's next contention is that the District Court erred in permitting Internal Revenue agents to testify, over objection, that they investigated certain accounts receivable "leads" furnished to the government by Allen and that they were unable to verify the amounts set out on the accounts receivable list.

Since Allen computed his income by the accrual method, accounts receivable in existence prior to the opening net worth date would constitute a possible source of non-taxable income with respect to the tax years in question. The government is required to investigate leads reasonably susceptible of being checked concerning possible sources of non-taxable income. Holland v. United States [54-2 USTC ¶9714], 348 U. S. 121, 135-136 (1954).

The defense objection was made on the theory that the testimony was hearsay. An agent's testimony that he was unable to verify the account receivable amount allegedly due from a named person as the result of his investigation is not hearsay. The agent is simply stating the result of his investigation. He is not recounting the out-of-court statement of the person who allegedly owes the account. The agent must testify concerning his inability to verify the amount if he is to negate the possible source of non-taxable income, or, in other words, the validity of the "lead."

IV Allen further contends that the District Court erred in allowing the prosecution to impeach one of its witnesses, Daniel Pagnotta, by the use of his prior inconsistent statements. This court has already rejected "as unsound and illogical the rule that prohibits a party from impeaching a witness whom he calls." United States v. Bryant, 461 F2d 912, 918 (6th Cir. 1972).

Allen also contends that the government's expert summary witness, Adele Kihlken, improperly commented upon the credibility of Mr. Pagnotta's testimony. The statement complained of was made in answer to a question by defense counsel as to why Mr. Pagnotta's testimony was not reflected in the accounts receivable figures. The witness explained that she had to accept one figure or another for her summary. She further explained that she understood Mr. Pagnotta's testimony to be that he made payments to Allen during the period in question, but yet the amount of his debt to Allen remained the same. Trial counsel brought out in further cross-examination that Mrs. Kihlken's understanding of Mr. Pagnotta's testimony may have been wrong. It is important to note, however, that on redirect examination Mrs. Kihlken testified concerning the effect including the payments testified to by Mr. Pagnotta would have on the net worth summary. All of the facts were before the jury for the jury's resolution. We find no error in this contention.

V We find no error in the court's failing to record the testimony of Special Agent Pope before the Grand Jury. United States v. Battisti, 486 F2d 961 (6th Cir. 1973).

The court did not err in admitting the summary prepared by the government's expert witness as it was based on facts established by evidence in the record. United States v. Bartone [68-2 USTC ¶9564], 400 F2d 459 (6th Cir. 1968), cert. denied 393 U. S. 1027 (1969).

VI During IRS Agent Tracy's direct testimony, the defense moved the court for an order requiring the government to produce his Referral Report, which is the form used for referring the case to the Intelligence Division and his Revenue Agent's Report. The defense did not ask for the production of Special Agent Pope's criminal Reference Report. It was the claim of the defense that both these Reports of Agent Tracy were statements required to be produced under the Jencks Act, 18 U. S. C. §3500.

Attached to the Referral Report were six schedules containing net worth computations which were the basis for the Report. The District Court ordered the government to produce the schedules but not the Report itself which he concluded was merely an inter-departmental communication and not producible. Thus, with the exception of the two page Report itself and one preliminary computation which did not relate to Agent Tracy's testimony, the defense was given everything in the Report. The court also ruled that the Revenue Agent's Report was not producible. The Report consisted merely of net worth schedules of use in computing Allen's income tax liability for civil purposes. It is dated a year after the date of the Referral Report. Both Reports were sealed and transmitted to this court.

The defense offered in evidence the schedules Report and a few other exhibits and then rested at the close of the government's case in chief without offering any evidence except the schedules and other exhibits.

There was extensive cross-examination of Agent Tracy concerning his net worth computations and also of Adele Kihlken, the government's expert who testified concerning the summary which she prepared. As previously stated, the defense did not even move for the production of Special Agent Pope's Criminal Reference Report.

It is our opinion that even though the entire reports could have been considered producible under the Jencks Act, the failure to order production was harmless error. United States v. Ball, 428 F2d 26 (6th Cir. 1970).

VII The government was not required to prove the exact amount of Allen's income for the tax years in question. It was required to prove beyond a reasonable doubt that Allen's tax returns contained a substantial understatement of income for the years in question and that the understatement was willful for the purpose of attempting to evade the payment of his income taxes. United States v. Johnson, 319 U. S. 503 (1943).

The jury could take into account that by his own admission the volume of Allen's business for 1967 was $596,087.30 and $711,988.14 for the year 1968; that with this large volume of business for the two years in question, Allen did not keep adequate records so that the amount of his income could be accuratley ascertained; that he took deductions for expenses on his income tax returns notwithstanding the fact that he had received reimbursement for the expenses from VFW and that he did not report profits he made on the sale of hospital equipment to his sponsors.

We also note Allen's claim that he was not adequately represented by counsel at his trial which the record shows is without merit.

We are of the opinion that the jury's verdict is supported by substantial evidence and that no prejudicial error intervened.

Allen has submitted as an appendage to his brief, two volumes of material not contained in the record. The record cannot be enlarged in this manner and we cannot consider the material. United States v. Collins, 349 F2d 296, 298 (6th Cir. 1965); United States v. Young, 301 F2d 298 (6th Cir. 1962). We have considered other alleged errors claimed in Allen's brief which in our opinion have no merit and do not need to be discussed.

Affirmed.

 

 

[64-1 USTC ¶9164]United States of America, Plaintiff-Appellee v. Herman Klein, Defendant-Appellant

(CA-2), U. S. Court of Appeals, 2nd Circuit, Docket No. 28535, 325 F2d 283, 12/12/63, Reversing unreported District Court

[1954 Code Sec. 7203]

Tax evasion: Mentally incompetent: Order of commitment.--The Second Circuit reversed the District Court's order committing to an institution a mental incompetent charged with tax evasion. The District Court was not faced with the determination of whether the taxpayer was competent to stand trial--it was agreed that he was not. The Court was asked to determine which method of therapy was most beneficial, a determination which it should not have been called upon to make.

James E. Birdsall, Warner & Birdsall, 11 Broadway, New York, N. Y., for defendant-appellant. Harold Baer, Jr., Assistant United States Attorney, New York, N. Y. ( Rob ert M. Morgenthau, United States Attorney, New York, N. Y., Charles A. Stillman, Assistant United States Attorney, on the brief), for plaintiff-appellee.

Before MOORE, FRIENDLY and KAUFMAN, Circuit Judges.

KAUFMAN, Circuit Judge:

Herman Klein appeals from a judgment and order of commitment, entered pursuant to 18 U. S. C. §4246. In April of 1962, Klein was indicted for income tax evasion. After four separate hearings and extensive examinations by three different psychiatrists, he was found mentally incompetent to stand trial under 18 U. S. C. §4244. Although the psychiatrist who had treated him for more than thirty years insisted that institutionalization would prove catastrophic, Klein was committed to the custody of the Attorney General until "he shall be mentally competent to stand trial, or until the charges in the indictment pending against him are disposed of according to law." ¹

Certain essential facts are not in dispute. Klein is said to be suffering from a manic-depressive psychosis, and has been so afflicted for the better part of his sixty years. His father committed suicide when Klein was an adolescent, and pronounced suicidal tendencies have been discovered in appellant. The medical reports further revealed that Klein is a diabetic, suffering from high blood pressure and is presently recuperating from a major rectal operation.

At the final competency hearing, the inquiry was directed towards selecting that method of treatment most likely to ameliorate Klein's admittedly deteriorating mental condition. Dr. Dudley Shoenfeld, the appellant's treating psychiatrist, testified in response to questions by the court that Klein's physical ailments would preclude the extensive pharmacological treatment or shock therapy recommended by one of the government's psychiatrists. Relying on his more than thirty years of close observation of the appellant, he emphasized the dangers of disrupting Klein's normal way of life, and urged that he not be summarily removed from his home environment and a familiar pattern of therapy. Dr. Shoenfeld insisted that to a manic-depressive with suicidal tendencies, the impact of institutionalization could be drastic; he warned that commitment would be "tantamount to signing Klein's death warrant."

Dr. Doniald B. Douglas, a psychiatrist retained by the government who had examined Klein on three occasions, disagreed. Disassociating himself from Dr. Shoenfeld's "psychoanalytic" approach, Dr. Douglas persisted in his opinion that immediate institutionalization would be beneficial. ² Disparaging the drastic consequences cited by Dr. Shoenfeld, the government psychiatrist asserted that the appellant would respond well and promptly to both pharmacological and shock treatment. Relying on these assurances, the court signed the order appealed from and suggested that Klein be confined in the Medical Center of the Bureau of Prisons, located at Springfield, Missouri.

Despite the government's argument to the contrary, we find the order of commitment clearly appealable. Higgins v. United States, 205 F. 2d 650 (9th Cir. 1953). In view of the dire consequences predicted as a result of Klein's institutionalization and the indefinite period of his commitment, we feel that appellant is plainly entitled to review of the judgment at this juncture.

Although recognizing the discretion afforded the District Court by §4246, we feel that the record does not furnish sufficient grounds for commitment. There is no issue here as to Klein's mental disorder; the only controversy concerns treatment. This is not a case in which a defendant is charged with malingering or suddenly finds himself incompetent for trial in the aftermath of an indictment; Klein, to the contrary, has been treated for his ailment all of his adult life. Accordingly, where a defendant such as Klein is receiving extensive psychiatric care and there is no question as to the integrity and high professional competence of his personal psychiatrist, we do not consider 18 U. S. C. §4246 as intended to compel the District Court to determine which of two equally reputable methods of psychiatric treatment would prove most efficacious in a particular case. ³

We understand and sympathize with the conscientious efforts of the court below, so clearly reflected in the record, to find a solution to the problems which flowed from appellant's serious mental and physical difficulties. Although the indictment was more than a year old, there had been no arraignment. Despite four competency hearings and extensive psychiatric examinations, the date at which the appellant would be sufficiently competent to plead to the indictment was still unforeseeable. As a result, we can understand the sense of frustration which led the judge to search for a treatment for Klein's psychosis which would promise more immediate and tangible benefits and accordingly accelerate the date of trial. ⁴

Mental disorders being what they are, it is not surprising that eminent psychiatrists differ as to methods of treatment. Here, Dr. Shoenfeld believed that Klein would respond to a psychoanalytic form of therapy; Dr. Douglas, by his own testimony, favored a more physiological approach. ⁵ Courts of law, unschooled in the intricacies of what may be the most perplexing of medical sciences, are ill-equipped to choose among such divergent but responsible views. In a case such as this, where a man's life may literally hang in the balance, a judge ought not undertake the hazardous venture of changing the course of psychiatric treatment without, at the least, a much fuller hearing and a far greater preponderance of expert testimony than existed here.

Once more we emphasize that we are not faced with the determination commonly required by the statute as to whether a defendant is incompetent to stand trial; all agree that he is. Rather, the trial judge was asked to determine which of several recognized methods of therapy would be most beneficial, or to make a judgment as to methods of treatment in a field of medicine renowned for its responsible differences of opinion. The court felt called upon to resolve its dilemma by prying the appellant away from a course of treatment which had enabled him, during his periods of remission, to conduct a business and maintain social intercourse without the necessity of institutionalization. With the possibility of disaster lurking in the background and with a new form of treatment and its effectiveness here an unknown quantity, we do not consider a determination whether the appellant should now be committed to a distant and unfamiliar institution to be a decision which courts should be called upon to render.

We have already indicated our realization that vexing problems were presented to the district judge to resolve. However, the condition which temporarily prevents the appellant from conferring with counsel in order to prepare his defense is according to medical testimony subject to change. His present inabilities should not create a situation tantamount to dismissal of the indictment. The indictment remains outstanding and inquiry should be made from time to time as to appellant's condition. Perhaps it would be most helpful to take advantage of the flexibility afforded by informal conferences in which all interested parties--government, defense, psychiatrists and court--might together seek the proper road to their common objective, the amelioration of Klein's condition. It is not at all unlikely that such informal discussions, conducted with intelligence and compassion, could result in a solution acceptable to all concerned.

The judgment is reversed, without prejudice to further proceedings.

¹ 18 U. S. C. §§ 4244 and 4246 provide for discretionary commitment of a defendant who is mentally incompetent to stand trial. 18 U. S. C. §§ 4247 and 4248 authorize continued detention of a federal prisoner whose sentence is about to expire and who is so mentally incompetent that if released "he will probably endanger the safety of the officers, the property, or other interests of the United States." If a defendant otherwise subject to the provisions of §§ 4244 and 4246 is found to satisfy the "danger to safety" standard of §§ 4247 and 4248, the statute requires that the government proceed under the latter provisions, Greenwood v. United States, 350 U. S. 366 (1956), and hence detain the defendant only until he no longer presents such a danger, even if he is still incompetent to stand trial. In the present case, there has been no contention that Klein might endanger the safety of any person other than himself. In view of our ultimate disposition of the appeal, it is unnecessary to discuss the constitutional or statutory validity of a commitment in which the defendant committed did not so endanger "the officers, the property, or other interests of the United States." In light of the distinctive factual pattern presented by this appeal, it similarly seems unnecessary to explore general questions of federal power over an accused mentally incompetent to stand trial; neither is extensive recourse to medical texts warranted.

² While not stating his opinion in terms as vigorous as those employed by Dr. Douglas, Dr. Francis J. Hamilton, the other psychiatrist to examine Klein for the government, had earlier expressed his belief in the values of hospitalization. The government's treatment evidence came largely from Dr. Douglas, and Dr. Hamilton did not testify at the final hearing.

³ We note, moreover, that the court could not be assured that the Medical Center in Springfield, to which Klein was committed, would follow the course of treatment recommended by Dr. Douglas and apparently accepted by the court. Good medical practice would require that the Medical Center conduct their own "work-up" of the case, and form an independent appraisal of the proper treatment.

⁴ We feel it significant that the District Judge himself expressed uneasiness over commitment to an institution in Springfield, Missouri, over 1,000 miles from appellant's home and family.

⁵ While Dr. Douglas did assert that proper dosages of medication could lift appellant from the depths of a depression, nowhere in the record is it claimed that Klein's psychosis may be "cured." As we understand the situation, the course of treatment urged by the government is at best intended to induce a prolonged period of remission during which Klein, though still a manic-depressive, could intelligently plead to and defend the charges against him.

 

 

[58-1 USTC ¶9183]United States of America, Plaintiff v. Sidney A. Brodson, Defendant

U. S. District Court, East. Dist. Wis., No. 187 Crim. U., 155 FSupp 407, 10/8/57

[1939 Code Sec. 145(b)--similar to 1954 Code Sec. 7201]

Criminal prosecution: Continuance to await civil proceedings: Jeopardy assessment prevents taxpayer from defending criminal action: Net worth determination.--A motion for a continuance of a criminal (net worth) case was upheld where the government's seizure and freezing of the taxpayer's assets by a jeopardy assessment deprived him of the financial means to defend himself in the net worth case. The government was ordered to permit the taxpayer to go to trial in a civil case before the Tax Court so that there could be a determination as to whether he actually owned, or whether the government was entitled to, the assets which were seized in the jeopardy assessment. Noting that the government's policy was to require criminal cases involving tax liability to be tried before civil cases, the court said that the freezing of the taxpayer's assets "might probably deprive him of a fair trial." The continuance was granted upon terms which provided that the government have reasonable opportunity to join the taxpayer in pressing the Tax Court for a prompt trial, that if the taxpayer obstructed or in any way delayed the trial of the civil case, the criminal action would be put on for trial, and that the taxpayer, having requested this delay, would not be heard later to claim that the delay he requested had deprived him of his constitutional rights to a speedy trial, assuming that the government made a prompt and sincere effort to get the civil action on for trial.

Howard W. Hilgendorf, Assistant United States Attorney, Room 358--Federal Building, Milwaukee, Wis., for plaintiff. David Beckwith, John Palmer, Milwaukee, Wis., for defendant.

Opinion

GRUBB, District Judge:

This matter is before the court on motion of defendant for a continuance of the trial of this case until the proceedings of Sidney A. Brodson v. Commissioner of Internal Revenue, Docket No. 39317 and Sidney A. Brodson and Marion Brodson v. Commissioner of Internal Revenue, Docket No. 39318, now pending before the Tax Court of the United States are heard and determined on their merits, the motion of the Government opposing the granting of a continuance as requested and for setting an earlier trial in this action. There are also two other motions which will be referred to subsequently.

The background which forms the basis of these motions is set forth in a previous opinion of this court in this case, 136 Fed. Supp. 158 [56-1 USTC ¶9134], the decision of the Court of Appeals, 234 Fed. (2d) 97 [56-2 USTC ¶9649, 9998], the unprinted separate opinions of the Court of Appeals written by Chief Judge Duffy, Circuit Judges Major and Schnackenberg, nor printed because rehearing was granted En Banc, and the opinion of the Court of Appeals, 241 Fed. (2d) 107 [57-1 USTC ¶9386], reversing the decision of this court, on rehearing En Banc.

[Taxpayer's Assets Impounded--No Funds to Defend Criminal Action]

It is the contention of the defendant that the Government, through its jeopardy assessments and through its failure to permit the defendant to go to trial in the civil cases before the tax court so that there can be a determination made as to whether the defendant actually owns, or whether the Government is entitled to, the assets which were taken from the defendant in the jeopardy assessments, has deprived the defendant of the means to defend himself in this action, it being a net-worth tax case where the services of accountants, as well as counsel, are necessary. In response, the Government urges that it is its policy to require criminal cases involving tax liability to be tried before civil cases.

This court cannot pass upon the desirability of that Government policy. It is the duty of this court to see that the defendant has a fair trial. Where the enforcement of the Government policy would deprive the defendant of a fair trial, it is the duty of the court to give precedence to the right of the defendant to have a fair trial over and above the Government policy. In this particular situation, the freezing of the defendant's assets is, in the opinion of the court, prejudicial to the defendant and might probably deprive him of a fair trial. If the Government establishes that the assets were properly seized, that the defendant owes the money, then the defendant is in a position created by his own acts or omissions. If, on the other hand, the defendant does not owe the money which the Government has seized, then the defendant should have the use of these assets to protect himself in this case. He should have the opportunity of a determination of that civil liability so that if he is not liable up to the extent of the seized assets, those assets may be released and he may use them in the preparation and defense of this case.

[Six to Eight Weeks to Try Case]

The representations on the various oral arguments show that there are witnesses widely separated geographically and at remote distances from Milwaukee. Defendant claims that in order to properly prepare for trial, these witnesses should be interviewed. That expense plus the expense of accountants, taken in the light of the estimates that it would take six to eight weeks to try this case, present an unusual situation and one in which the court feels the defendant is entitled to relief, namely, to have a determination as to whether he, in fact, is indebted to the Government to the extent of the assets seized.

[Speedy Trial]

The Government speaks of defendant's right to the speedy trial under the Sixth Amendment. Here, the defendant is the one asking for delay, for the reasons above set forth, in order that the civil liability can be first determined to the end that if he does not owe these large amounts, he can use the money in his defense. The right to a speedy trial is a right of the defendant. The Government points out that defendant will need an accountant in the trial of the civil case. Here, again, that is a matter for the defendant's determination. If the defendant wants to proceed with the civil case, the Government cannot be thereby prejudiced.

The Government cites O'Brien v. United States, 51 Fed. (2d) 193 (C. A. 7) [1931 CCH ¶9474]. A reading of the opinion in that case indicates that the facts are not at all comparable to the present situation.

The Government suggests that the defendant can obtain the services of an accountant under Rule 17(b) of the Federal Rules of Criminal Procedure, but defendant points out that it would be impossible for defendant to make an affidavit with reference to the testimony of such proposed witness (accountant) before the witness (accountant) had had the opportunity of studying the records. The court does not believe that Rule 17(b) was intended to cover this situation.

For the reasons above set forth, and in order that defendant may have the opportunity of having his liability in the civil case determined, to the end that if he does not owe as much as the Government has seized of his assets, they may be released to him for use in his defense on this charge, defendant's motion is granted upon the following terms:

(a) The Government will have reasonable opportunity to join the defendant in pressing the tax court for a prompt trial in the civil case.

(b) If the defendant obstructs or in any way delays the trial of the civil case, this action will be put on for trial.

(c) The defendant having requested this delay will not be heard to claim that the delay he requested has deprived him of his constitutional rights to a speedy trial. This is conditioned upon the Government's prompt and sincere effort to get the civil action on for trial promptly.

Defendant has made a motion for discovery and inspection pursuant to Rule 16, and a separate motion for production and inspection of evidence pursuant to subpoena served under Rule 17(c). In the light of the foregoing, these motions, and each of them are hereby denied without prejudice. The court does not believe that Rules 16 and 17(c) of the Federal Rules of Criminal Procedure should be used as a means for discovery in connection with the case pending before the tax court.

 

 

[87-1 USTC ¶9268] United States of America, Plaintiff-Appellee v. Jim C. Bergman, Defendant-Appellant

(CA-9), U.S. Court of Appeals, 9th Circuit, 86-1102, 3/31/87, 813 F2d 1027, Affirming an unreported decision of the District Court

[Code Sec. 7203 --Result unchanged by the Tax Reform Act of 1984 ]

Crimes: Failure to file return: Evidence: Admissibility: Withholding forms: Continuance: Improper comment.--An electrician who filed income tax forms containing only his name, address and signature and a notation at the bottom of each page stating that he did not understand the return, the income tax laws did not apply to him and that he objected to answering the questions based upon the 1st, 4th, 5th, 7th, 8th, 9th, 10th, 13th, 14th and 16th amendments to the Constitution was properly convicted of failure to file tax returns. The district court did not err in allowing the IRS to repeatedly refer to the individual as a "tax protestor" since the term accurately characterized his activities. His W-2 forms were properly admitted into evidence because the forms contained information necessary to establish that he was required to file income tax returns. In addition, his W-4 forms were properly admitted, even though they amounted to evidence of crimes other than the one for which he was charged, as they were highly probative of the taxpayer's intent to evade taxes. Further, the district court did not err in refusing to acknowledge the taxpayer's pro se filing since he was represented by counsel at the time. Finally, there was no abuse of discretion in denying the taxpayer's request for a continuance where there was no showing that such a denial prejudiced his case.

Rob ert E. Linday, Donald W. Searles, Department of Justice, Washington, D.C. 20530, for plaintiff-appellee. Alan R. Harter, 530 S. 4th St., Las Vegas, Nev., for defendant-appellant.

Before HUG, JR., SCHROEDER and NORRIS, Circuit Judges.

OPINION

HUG, Circuit Judge:

Jim Bergman appeals a jury conviction for willful failure to file federal income tax returns in violation of 26 U.S.C. §7203 (1982). Bergman contends that the district court erred by: (1) allowing the Government to refer to him as a tax protester; (2) admitting his wage and tax statements (W-2 and W-4 forms); (3) excluding some of his exhibits; (4) striking his pro se filings when he was represented by counsel; and (5) refusing to grant a continuance. We disagree and affirm. ¹

FACTS

Bergman worked as an electrician earning $37,834.97 in 1979, $39,701.39 in 1980, and $46,702.07 in 1981. During this period Bergman filed federal tax returns containing no information other than his name, address, and signature. He completed the returns by inserting asterisks corresponding to a notation on the bottom of the return stating that he did not understand the return or the laws which may apply to him, and objecting on the basis of the 1st, 4th, 5th, 7th, 8th, 9th, 10th, 13th, 14th, and 16th amendments. Bergman attached to his returns affidavits and letters challenging the federal taxation filing system. Bergman also filed W-4 forms claiming that he was exempt from withholding.

The Internal Revenue Service ("IRS") notified Bergman that his returns were unacceptable and requested that he file proper returns. Bergman did not do so.

Bergman subsequently was indicted for failing to file income tax returns. The court appointed a public defender to represent Bergman. Shortly before trial, Bergman discharged the public defender and retained his own attorney. Although Bergman filed two motions on his own behalf, he was represented by counsel throughout the proceedings.

DISCUSSION

I. "Tax Protester"

Bergman contends that he was prejudiced at trial because the Government continuously referred to him as a "tax protester." He argues that the references were prejudicial because they associated him with a conspiratorial group of lawbreakers and deprived him of presenting a willfulness defense. We disagree.

The term "tax protester" accurately characterizes Bergman's activities. His objections to filing tax returns, based principally on the Fifth Amendment, have been rejected repeatedly by this court. United States v. Malquist [86-2 USTC ¶9484 ], 791 F.2d 1399, 1402 (9th Cir.), cert. denied, 107 S.Ct. 445 (1986); United States v. Smith [84-2 USTC ¶9686 ], 735 F.2d 1196, 1197 (9th Cir.), cert. denied, 469 U.S. 1076 (1984); United States v. Carlson [80-1 USTC ¶9299 ], 617 F.2d 518, 522-23 (9th Cir.), cert. denied, 449 U.S. 1010 (1980). References to Bergman's "tax protest" activities were also probative of his willfulness in violating the tax laws. Carlson, 617 F.2d at 523-24; see also United States v. Booher [81-1 USTC ¶9304 ], 641 F.2d 218, 221 (5th Cir. 1981). Consequently, we agree with other courts that have found the term "tax protester" a permissible shorthand reference to such activities. See, e.g., United States v. Turano [86-2 USTC ¶9714 ], 802 F.2d 10, 12 (1st Cir. 1986).

II. Wage and Tax Statements

Bergman argues that the district court erred by admitting as evidence his W-2 and W-4 forms. He argues that these forms were unduly prejudicial and irrelevant because he was willing to stipulate to the information contained in those forms. We review the district court's decision for an abuse of discretion. Malquist, 791 F.2d at 1402.

The court's decision to admit the W-2 forms did not amount to an abuse of discretion. Information regarding Bergman's earnings was necessary to show that he was required to file a tax return. 26 U.S.C. §6012(a) (1982); United States v. Buras [81-1 USTC ¶9126 ], 633 F.2d 1356, 1358 (9th Cir. 1980). Even though Bergman was willing to stipulate to the amount of his income, the forms were still relevant to show willfulness--an issue which Bergman clearly contested. See, e.g., United States v. Green [85-1 USTC ¶9178 ], 757 F.2d 116, 119-20 (7th Cir. 1985). Finally, irrespective of the relevance of the W-2 forms, Bergman has shown no prejudice resulting from their admission.

Bergman objects to the W-4 forms as impermissible evidence of other crimes. See Fed. R. Evid. 404(b). Since the filing of a false W-4 form could provide the basis for prosecution under 26 U.S.C. §7205 (1982), we agree that it is evidence of "other crimes" under Rule 404(b). Nevertheless, evidence of other crimes may be admissible to show intent, knowledge, motive, etc., if: (1) the prior crime is similar and close enough in time to be relevant; (2) the evidence of the prior crime is clear and convincing; and (3) the crime is an element of the charged offense that is a material issue in the case. United States v. Bailleaux, 685 F.2d 1105, 1109-10 (9th Cir. 1982). The probative value of the evidence must also outweigh any unfair prejudice. Id.; Fed. R. Evid. 403.

Here, the W-4 forms were similar and close in time to the section 7203 violations--they were filed during the same years. The forms showed that Bergman was claiming "exempt" status even though there was clear evidence that he had incurred income tax liability in the previous years and had failed to file proper tax returns. And finally, the forms were highly probative of Bergman's willful scheme of evading federal income tax laws. See Carlson, 617 F.2d at 519, 523-24; see also United States v. Verkuilen [82-2 USTC ¶9618 ], 690 F.2d 648, 656 (7th Cir. 1982).

III. Excluded Evidence

Bergman objects to the district court's exclusion of certain documents he relied on in deciding not to file income tax returns. These documents included a copy of the Constitution and Declaration of Independence, transcripts of "winning cases" against the IRS, and the entire Internal Revenue Code. The district court excluded the documents on the basis of relevancy but allowed Bergman to testify that he relied on the documents in forming his belief that he was not required to file an income tax return. In Malquist, 791 F.2d at 1402, we considered the precise claim that Bergman raises here. We held that the district court was not obliged to admit legal materials as evidence and did not abuse its discretion. Id. We reach the same conclusion here.

IV. Pro Se Filings

We find no error in the district court's refusal to acknowledge Bergman's pro se filings. A criminal defendant does not have an absolute right to both self-representation and the assistance of counsel. United States v. Halbert, 640 F.2d 1000, 1009 (9th Cir. 1981). The decision to allow such hybrid representation is within the sound discretion of the judge. Id. Bergman has shown no abuse of discretion here.

V. Continuance

Bergman challenges the district court's denial of his request for continuance. We will not overturn the denial absent a clear abuse of discretion. United States v. Lane, 765 F.2d 1376, 1379 (9th Cir. 1985). "To demonstrate reversible error, the defendant must show that the denial resulted in actual prejudice to his defense." Id. In this case, Bergman claims that he was not allowed adequately to research, brief, and prepare motions challenging the use of the term "tax protester," the admission of his W-2 and W-4 forms and other "highly prejudicial" information, and the exclusion of his proffered documents. We have discussed each of these objections above and concluded that the district court committed no errors. Consequently, Bergman has failed to show that the denial of a continuance prejudiced his defense.

AFFIRMED.

¹ Bergman, acting on his own behalf, also challenges various jury instructions in his "Supplement to Defendant/Appellant's Opening Brief." He has not sought permission of this court to act on his own behalf and the document was filed outside the time provided by our order of September 9, 1986. Nevertheless, we find no merits to the arguments raised.

 

 

[86-2 USTC ¶9502] United States of America, Plaintiff-Appellee v. Jerome David Pederson, Defendant-Appellant

(CA-9), U.S. Court of Appeals, 9th Circuit, 85-3035, 3/21/86, 784 F2d 1462, Affirming unreported District Court decision

[Code Sec. 7203 ]

Criminal penalties: Reason for prosecution: Failure to file return: Constitutional grounds.--The statute providing for criminal sanctions for failure to file federal income tax returns was not void for vagueness. The definition of the "person required" to pay an income tax is set forth in Code Secs. 1 and 6012 . Moreover, the government's misconduct was not the cause or justification for the withdrawal of the taxpayer's lead counsel. Furthermore, although the refusal to grant a continuance in this case for more than two days was strict, it was not an abuse of discretion. The two-day trial did not present complex factual or legal issues, and the assistance of local counsel provided for continuity in representation. Because the taxpayer cited no specific showing of prejudice or ineffective assistance of counsel in the record, the denial of a longer continuance did not violate the Sixth Amendment. Finally, the trial judge's doubts concerning the taxpayer's competency to stand trial did not show how any excessive confinement affected the validity and fairness of the trial or the conviction that followed.

Carl E. Rostad, Assistant United States Attorney, Great Falls, Mont., for plaintiff-appellee. Laura Lee, 1250 15th St., W., Billings, Mont., Scott McLarty, Athens, Calif., for defendant-appellant.

Before KENNEDY and REINHARDT, Circuit Judges, and STEPHENS, ^* District Judge.

Opinion

KENNEDY, Circuit Judge:

Jerome David Pederson appeals from his conviction for seven counts of willful failure to file federal income tax returns, in violation of 26 U.S.C. §7203 . In addition to arguing that 26 U.S.C. §7203 is void for vagueness, Pederson contends that his conviction should be reversed because the prosecutor engaged in gross misconduct, the district court failed to grant him a continuance, and he was erroneously committed to a hospital for psychiatric evaluation. We find no error, and we affirm.

Appellant claims the statute providing for criminal sanctions for failure to file federal income tax returns, 26 U.S.C. §7203 , is void for vagueness. The section states:

Any person required under this title to pay any estimated tax or tax, or required by this title or by regulations made under authority thereof to make a return . . . , keep any records, or supply any information, who willfully fails to pay such estimated tax or tax, make such return, keep such records, or supply such information, at the time or times required by law or regulations, shall . . . be guilty of a misdemeanor . . . .

26 U.S.C. §7203 (1982). Pederson argues that the statute fails to define the "person required" to file a tax return and is therefore void for vagueness. We agree with the other circuits that have addressed this claim that section 7203 is not vague. United States v. Parshall [85-1 USTC ¶9279 ], 757 F.2d 211, 215 (8th Cir. 1985); United States v. Moore [79-2 USTC ¶9676 ], 692 F.2d 95, 96-97 (10th Cir. 1979); United States v. Eagan [79-1 USTC ¶9106 ], 587 F.2d 338, 339 (6th Cir. 1978) (per curiam); United States v. Lachmann [72-2 USTC ¶9766 ], 469 F.2d 1043, 1046 (1st Cir. 1972), cert. denied, 411 U.S. 931 (1973); United States v. Ming [72-1 USTC ¶9449 ], 466 F.2d 1000, 1004 (7th Cir.), cert. denied, 409 U.S. 915 (1972). The definition of the "person required" to pay an income tax is set forth in 26 U.S.C. §1 , which imposes a tax on all individuals in accordance with detailed tables set forth in that section. That definition of the "person required" to file a federal income tax return is again explicit in 26 U.S.C. §6012 . See Moore, 692 F.2d at 96-97. The vagueness argument is meritless.

Pederson next contends that misconduct of the prosecution deprived him of the defense counsel of his choice, and that as a result, the conviction should be reversed and the indictment dismissed. We need not examine or accept the various legal premises implicit in this argument, for we do not find it established on this record that the government's misconduct was the cause or justification for the withdrawal of appellant's lead counsel.

On the day before the trial was set to commence, the Assistant United States Attorney prosecuting the case allegedly made certain disparaging and unprofessional remarks about Pederson's principal defense attorney. The remarks were made to a defense witness who happened to be Pederson's brother, and it is presumed that the remarks were promptly relayed to Pederson himself. The defense counsel in question unilaterally determined that the remarks so impaired his ability to question the witness and to retain the confidence of his client that he was required to withdraw from the case. He announced his withdrawal accordingly. The abrupt and determined decision of defense counsel to withdraw from the case pretermitted full inquiry and resolution by the district court with reference to the precise statements that the government made, their effect on the witness and the client, and whether the defense counsel's standing with the witness and the client necessarily were impaired so his withdrawal from the case was required. Since these matters were not presented to the district court, we do not have a case where it has been established that counsel's withdrawal was necessary or required, and we hold that the appellant has not properly preserved that issue for our review.

Pederson also argues that his Sixth Amendment right to effective assistance of counsel was violated because the district court refused to grant a long enough continuance for his replacement lead counsel to prepare the case. Pederson's original lead counsel withdrew from the case the day before the trial was originally set to begin, and the district court granted a two-day continuance of the trial. New lead counsel was already somewhat familiar with the case and arrived to confer with Pederson the day before the trial began. Local counsel had been involved in the case for some time and continued to assist the new lead counsel.

Granting a continuance is within the trial court's discretion. Ungar v. Sarafite, 376 U.S. 575, 589 (1964); United States v. West, 607 F.2d 300, 305 (9th Cir. 1979) (per curiam). Though the refusal to grant a continuance in this case for more than two days was strict, it was not an abuse of discretion. The two-day trial did not present complex factual or legal issues, and the assistance of local counsel provided for continuity in representation. Since appellant cites no specific showing of prejudice or ineffective assistance of counsel in the record, the denial of a longer continuance did not violate the Sixth Amendment. See Strickland v. Washington, 104 S. Ct. 2052, 2064-69 (1984); United States v. Schaflander, 743 F.2d 714, 717-21 (9th Cir. 1984) (per curiam), cert. denied, 105 S. Ct. 1772 (1985).

Pederson next argues that the district court erred in committing him to the Medical Center for Federal Prisoners, Springfield, Missouri, for three months for psychiatric evaluation in order to determine his competency to stand trial. Prior to trial, defendant refused to consult with court-appointed counsel and insisted that his decision not to participate in the federal income tax system provided him with a solid defense. Based on his observations of defendant and defendant's answers to his questions, the trial judge had a genuine doubt about defendant's competence to stand trial, to waive his right to counsel, and to understand the gravity of the proceeding. In such a situation, the court has an obligation to mandate further inquiry and professional psychiatric evaluation, even if no party so moves the court. Chavez v. United States, 656 F.2d 512, 515-17 (9th Cir. 1981). In this case, we believe that the trial judge's doubts concerning defendant's competency to stand trial were reasonable.

Id. at 516.

Petitioner also objects to the length of his pretrial confinement, claiming that it lasted for three months. It is not clear to us from either the briefs or the record presented here that the period of commitment or observation in fact exceeded the time periods provided in 18 U.S.C. §4247(b). In any event, appellant has not shown how any excessive confinement affected the validity and fairness of the trial or of the conviction that followed.

Appellant's remaining arguments are without merit. The opinion of the district court is AFFIRMED.

^* Albert Lee Stephens, Jr., Senior U.S. District Judge for the Central District of California, sitting by designation.

 

 

[55-2 USTC ¶9620]In the Matter of Alexander M. Goldberg, Petitioner v. Hon. Julius J. Hoffman, Hon. Herbert Brownell, Jr., Hon. H. Brian Holland and Hon. Rob ert Tieken, Respondents

(CA-7), In the United States Court of Appeals for the Seventh Circuit, No. 11469. October Term, 1954, April Session, 1955, 225 F2d 463, August 22, 1955

Original Petition for Writ of Mandamus and for Other Relief from 53 CR 158 in the United States District Court for the Northern District of Illinois.

Mandamus: Executive discretion to prosecute: Jurisdiction of Appellate Court: Physical condition of defendant immaterial.--Taxpayer was arraigned for criminal prosecution under the Internal Revenue laws. After various continuances due to taxpayer's acute coronary condition, trial was set for January 17, 1955, on which date taxpayer appeared and suffered a heart attack. Three months later, the District Court, denying further continuance, once again opened trial. Taxpayer suffered another heart attack and, during his subsequent hospitalization, the trial was held and the jury returned a verdict of guilty. On taxpayer's petition for a writ of mandamus enjoining the prosecution from proceeding further in their cause, the Court of Appeals held that prosecution by the U. S. Attorney and Attorney General falls within the latitude of executive discretion, the decisions incident to which are not subject to judicial review. The petition was accordingly denied.

Joseph A. Struett, 105 West Madison Street, Chicago, Ill., for petitioner. Rob ert Tieken, John Peter Lulinski, United States Attorneys, Chicago, Ill, for respondents.

Before DUFFY, Chief Judge, and LINDLEY, Circuit Judge.

LINDLEY, Circuit Judge:

The court having granted leave to file, this cause is before us on Goldberg's original petition for a writ of mandamus or other appropriate relief. The respondents are the Honorable Julius J. Hoffman, Judge of the United States District Court for the Northern District of Illinois, Honorable Herbert Brownell, Jr., Attorney General of the United States, Honorable H. Brian Holland, Assistant Attorney General of the United States, and Honorable Rob ert Tieken, United States Attorney for the Northern District of Illinois.

Goldberg's prayer is that respondents be enjoined from proceeding further in criminal cause number 53-CR-158 now pending against petitioner before Judge Hoffman in the district court, "except to take such steps as this court may deem proper in the light of the facts herein to relieve petitioner of said indictment in said cause * * *." We entered a rule against each respondent to show cause why a writ should not issue as prayed, and an order staying further proceedings in the criminal cause in the court below pending disposition of this petition.

The issue now before us is whether the several motions filed by the admin istrative respondents to dismiss the petition should be allowed. Since the various motions rely upon different grounds for dismissal, that of respondent Tieken will be considered separately from those filed by respondents Brownell and Holland. The basis for each will be stated coincidently with our discussion of the merits of the motion.

Respondent Tieken moves to dismiss on the ground that the petition fails to state a claim on which relief can be granted against him, inasmuch as the prosecution of petitioner by him is merely the exercise of the discretion vested in him as United States Attorney, which is not subject to judicial review. We think the motion should be allowed.

Our adjudication of the issue raised must be guided by considerations inherent in the well settled principle of the separation of the powers vested in the three branches of government, which is the keynote of our constitutional mandate. We must bear in mind that the United States Attorney is an officer of the executive branch responsible primarily to the President, and, through him, to the electorate, and that the remedy sought against Tieken is a broad one, to a direct mandate from this court compelling him to take, or refrain from taking, a specific course of action with respect to the indictment pending against petitioner. More specifically, we are asked to review the exercise of admin istrative discretion, overrule the decision of the executive and direct the course which that discretion must take. We think such judicial control of an executive officer is beyond the power of this court.

The pattern for the relationship between the judicial and executive branches of government in this respect under our Constitution was drawn by Mr. Chief Justice Marshall when he said, in Marbury v. Madison, 1 Cranch 137, at pages 170-171:

"It is not by the office of the person to whom the writ is directed, but the nature of the thing to be done, that the propriety or impropriety of issuing a mandamus is to be determined. Where the head of a department acts in a case in which executive discretion is to be exercised * * * it is again repeated that any application to a court to control, in any respect, his conduct would be rejected without hesitation. But where he is directed by law to do a certain act, affecting the absolute rights of individuals, in the performance of which he is not placed under the particular direction of the president * * * it is not perceived, on what ground the courts of the country are further excused from the duty of giving judgment that right be done to an injured individual * * *."

Thus the courts may compel an executive officer to perform an express duty imposed by constitutional statute, but they have no power to control his conduct in matters involving his discretion. We have found no case which has relaxed this limitation on the use of the remedy of mandamus, and we think there can be no doubt on the facts before us that our action must be governed by the principle announced in Marbury v. Madison, supra, and applied without reservation by the courts since the early day of that decision.

The facts, as averred in the petition, are these. Sometime prior to 1950 criminal proceedings were contemplated against petitioner Goldberg on the theory that he had evaded a part of his individual income tax for the taxable year 1946. Under the then "Health Policy" of the Bureau of Internal Revenue the cause was admin istratively closed on the finding that petitioner's health was such that criminal prosecution would endanger his life. Criminal prosecution was not recommended, therefore, and the case was returned to the civil division of the Bureau. No settlement was ever reached.

On December 11, 1951, the Bureau publicly announced its abandonment of the Health Policy. Petitioner was advised on March 21, 1952, that the Bureau was again considering prosecution. Accordingly, the case was referred to the Department of Justice. On March 10, 1953, an indictment was returned charging petitioner with attempting to evade the said income tax. On May 22, 1953, the case was assigned to Judge Hoffman. The cause was called for trial several times prior to January, 1955, but was, each time, continued because of petitioner's physical condition, as reported by examining physicians.

The cause was set for trial on January 17, 1955. At that time, on the basis of medical reports that petitioner was suffering from a serious cardiac condition and severe hypertension, petitioner moved for further continuance. The motion was denied, and petitioner was placed on trial under the indictment at 2:00 P. M. of that day. At 3:30 of the same afternoon, petitioner's physical condition was such that he was unable to continue his presence at the trial. On the same evening he suffered a heart attack and was admitted to a hospital where he remained for several weeks thereafter. On January 21, 1955, a mistrial was declared by Judge Hoffman.

The cause was again called for trial on April 18, 1955, and further continuance denied. Petitioner was in attendance at the trial until the noon recess on April 20 at which time he suffered another heart attack and was hospitalized. Judge Hoffman refused to declare a mistrial but continued the trial to April 25. On the latter date, when the cause was again called, the Judge concluded, on examination of hospital records, that petitioner, though still in the hospital, had voluntarily absented himself from the trial. He permitted the trial to continue under the provisions of Rule 43 of the Federal Rules of Criminal Procedure, and the jury returned a verdict of guilty. Prior to the date assigned for sentence pursuant to the verdict, petitioner filed his motion in this court for relief and a stay order was entered as aforesaid.

As to the United States Attorney's insistence on trying a man when such proceedings might endanger his life, there can no longer be any doubt that this prerogative is within the large discretion which is vested in him to control the initiation of and the course of criminal prosecution. See e.g., United States v. Thompson, 251 U. S. 407; United States v. One 1940 Oldsmobile Sedan, 167 Fed. (2d) 404 (CA-7); Howell v. Brown, 85 Fed. Supp. 537; United States v. Brokaw, 60 Fed. Supp. 100. Indeed, petitioner concedes that he is asking us to review an act done in the exercise of that discretion, but contends that his prosecution represents such an abuse of discretion as to render respondent's act justiciable. Our attention is directed to certain language taken from context in the opinion in People v. Graber, 394 Ill. 362, in which it is stated that a willful abuse of discretion by the Attorney General of the United States may render its exercise justiciable. The quoted passage is dictum, as we read the decision. Furthermore, with all due deference to the Supreme Court of Illinois, the dictum does not accord with the controlling weight of authority dating back to Marbury v. Madison, supra.

Whether Tieken's refusal to dismiss this indictment, despite his knowledge of the condition of petitioner's health, and his insistence on prosecution amounted, as petitioner suggests, to an abuse of discretion, we are not empowered to decide on this petition. Discretion is always subject to abuse, but the framers of our Constitution have indicated their conviction that the danger of abuse by the executive is a lesser evil than to render the acts left to executive control subject to judicial encroachment.

The argument that we are asked to review an exercise of respondent's "non-political justiciable discretion" is one based on consideration of morality, not on legal principles. Mandamus against an executive official is an available tool only to protect vested legal rights and to enforce fixed legal duties. The hardships of a particular case may aggravate deliberation, but it cannot batter down established principles of law. Questions of morality, except insofar as they coincide with legal rights and plain duties, must be left for decision to the Omnipotent Jurist.

The quoted language from Virginia v. Rives, 100 U. S. 313, 323, treats of mandamus to prevent abuse of discretion by the lower courts and is inapplicable to the question before us. See also Chicago, R. I. & P. R. Co. v. Igoe, 220 Fed. (2d) 299 (CA-7).

Respondents Brownell and Holland move to dismiss the petition for want of jurisdiction. In support they point out that the official residence of each is at Washington, District of Columbia, Panatech Corp. v. Carl Zeiss, Inc., 110 Fed. Supp. 664, 666; Butterworth v. Hill, 114 U. S. 128, outside the territorial limits of the Seventh Circuit. The contention is well taken and the motions must be allowed.

The historic limitation of the jurisdiction of the various federal courts to the Circuit or District in which they sit is too well established to require restatement. Georgia v. Pennsylvania R. Co., 324 U. S. 439, 467; Edgerly v. Kennelly, 215 Fed. (2d) 420 (CA-7); Reconstruction Finance Corp. v. Maley, 125 Fed. (2d) 131, 137 (CA-7). We have recently rejected as untenable the theory that the All Writs Act, 28 U. S. C. A. 1651, may enlarge the territorial jurisdiction of the federal courts. Edgerly v. Kennelly, supra, at pages 421-422. See also Ahrens v. Clark, 335 U. S. 188.

Nor can jurisdiction be created by reasons of the broad powers of these admin istrative officers over criminal litigation throughout the United States. See 5 U. S. C. Sec. 291; 5 U. S. C. Sec. 309; 5 U. S. C. Sec. 310; 28 U. S. C. Sec. 507(a)(b). The fact that the Attorney General, as chief law enforcement officer of the United States, is vested with complete control over all criminal prosecutions through the United States Attorneys and other subordinates, and the fact that he may supersede any subordinate in any litigation in any court cannot render him subject to the jurisdiction of every federal court, no matter where it may sit. It is not difficult to picture the chaos which would reign if the Attorney General were subject to the be summoned at the whim of every individual accused of crime in every criminal proceeding. And, as a practical matter, issuance of process by this court is limited to the territorial limits of the Seventh Circuit.

What has been said with respect to the Attorney General is equally applicable to respondent Holland.

For the foregoing reasons, the several motions of the admin istrative respondents must be allowed and the petition, as applicable to them, is dismissed.