Appendix — Schipani v. United States

Offiee-Suprame Court, U.S.

FILED 4

JOHN F. DAVIS, CLERK

IN THE

Supreme Court of the United States

OCTOBER TERM, 1966

No. 504 ‘

JOSEPH F. SCHIPANI,

Petitioner,

—V.—

UNITED STATES OF AMERICA,

| Respondent.

ee

APPENDIX TO PETITION FOR A

WRIT OF CERTIORARI

_—————

Jacos P. Lerxow!17Tz,~

Attorney for Petitioner

: Joseph F. Schipani,

150 Broadway,

New York, New York.

WSO Te

<p 320 Case Parse ixc., 421 Hudson St., N.Y.—ORegom 5-4540 i.

INDEX

| PAGE

Aprenpix A—Opinion of United States Court of

MEE na cece cin evacsvavssevesenrns peewee A-1 |

APPENDIX B—Opinion by Rosling, U.S.D.J. A-14

Appenpix C—Judgment of the United States Court .

of Appeals ....... asec eet eeeceesseceesees cess An108

* oF ae APPENDIX AD

s Opinion of United States Court of iiicai

UNITED STATES COURT OF “APPEALS

For THE Seconp Circuit

ve

bo

- No. 382—September Term, 1965. -

(Argued May 12, 1966 _ Decided June 29, 1966.)

| Docket No. 30256

>

Unirep States oF AMERICA,

Appellee,

—_—V.—— .

JosEPH F. ScHIPANI,

Defendant-Appellant.

a.

v

Before:

WatTERMAN, Moore and ANDERSON,

dy.

a

| Appeal from judgment of conviction in the United States

District Court for the Eastern District of New York,

George Rosling, Judge, ‘sitting’ without ‘a jury, on five

counts of an indictment, each charging willful evasion of

personal income taxes in violation of Title 26 U.S.C. §7201.

Affirmed. ee ?

Jerome ©. Drrorz, Assistant U. S. Attorney,

_ Eastern District of New York (Joseph P.

Hoey, U. S. Attorney, Eastern District of -

New York, on the brief), for Appellee.

Jacos P, LerKxow!rz, Esq. .. New York, N ew: “York,

for Defendant-Appeliont.

+

Circuit Judges.

-

=

id

oy

et

s

2

b

3

| Arpaia AOpnon of Cnet is Co of rr |

- Axtinsox, Cirowit Judge:

The defendant-appellant was convicted on all five counts

of an indictment charging him with ‘violations of Title 26

U. 8. C. $7201? for. willfully evading the payment of per-

- sonal income taxes due from him for the five calendar

years 1956 through 1960. He was fined $2500 and sentenced

- to three years imprisonment on each count, to be served con-

. currently, but with the proviso that he should not be re-

leased from confinement until the fines had been fully paid.

The case was-tried on the ‘‘net worth’’ theory, in support

of which the Government offered evidence to prove that

' Schipani had a certain net worth at the beginning of 1956

and an increase in net worth at the ‘end of that year and

at the end of each succeeding calendar year during the in-

ES ‘dictment ‘period. The proof was entirely circumstantial —

: because Schipani kept no records, did not file any income

tax return at all for any of the years covered by the indict- ..

ment, and did not furnish the Government with any leads

- with regard to any cash reserve, income or expenses.

An essential element of. a case of this kind is proof of —

the opening net worth of the accused as it was at the be-

ginning of the indictment period.. Holland v. United States,

348 U. 8. 121, 132 (1954). The Government offered as a

basis or starting point for this phase of its case a state- |

ment made by the defendant in 1943 concerning his cash re-

. pources at that time, thirteen years before the indictment.

In that year Schipani had been convicted of an offense

and commenced serving one and a half years of a-two year

term of imprisonment. On February 10, 1943, in the course’

t Title 26 U. S; C. §720 Bag apes uy pao reads as follows:

or defat a ie thif tit titl x & ‘e :

. OF Some e or the payment th

n to penalties provided by law, be gully

ry ay

~

_ Aovendia A-Opinion of United States Court of isan”

of a tontine interrogatiow by the prison ‘Suthoritios relat-

_ ing to Schipani’s personal history and circumstances at

the time he was admitted to the’ prison, he started that the

only cash he then had was $1350 which he had left with his

wife, The trial court found this to be true; and it also

found, ‘from evidence of Schipani’s financial dealings and

affairs from that time to and including. December 31, 1955,

that Schipani had assets on January 1, 1956 of $18,908.89

and liabilities of $1300. from which it computed a net worth

of $17,608.89: at the beginning of the indictment period.

The trial court further found that, at the end of the calen-

dar year 1956,* the defendant had an increase in his ‘net

worth of $7, 307.35, and in. each of the four. subséquent 4

indictment years there was likewise an increase in the. wi

fendant ’s net worth.? _ ei :

‘The findings atate, and the e¥idence clearly. showed; that .

the Governnient made an exhaustive investigation into vir-

tually every possible source of information concerning -

Schipani’s economic circumstances from January, 1943

through December, 1960. The leads obtained from checking »

“over ene hundred central and branch bank offices in areas °

in which Schipani lived and which he frequented, finance

companies and credit bureaus, varioys insurance, retail and

brokerage firms, records of Kings County and the New York ~

Surrogate Courts and the Estate and Gift Tax Office of the

United States were followed through by investigators. The

2 = 4

° Net Worth Previous Increase in

i Net Worth Year End Net Worth

12/31 /55 $17,008.89 — Ae

12/31/56 24,916.24 $17,608.89 ‘$7,307.35

12/31/57 ' 28,933.05 . 24,916.24 4,016.81

12/31/58 . 33,979.11 . 28,933.05 5,046.06

12/31/59 - 38,353.30 _ 33,979. 11. 4,374.19.

12/31/60 ° 39,245.26 "38,353.30 "891.96

_ Appendia A—Opinion of United States Court of Appeals

7 Government also sought -out and crndutieined frignds and

relatives of the appellant for further leads which were then.

pursued. The information thus obtained furnished the

proof presented in the Government’s case. |

‘The cash on hand at the end of one year and the beginning

of the next, however, was orily one of the items entering

‘into the total of the assets at that time. The unadjusted

-net worth was simply the result of subtracting the total”

liabilities at the time from the total assets. The court be-

low found that the initial cash of $1350 in 1943 had been

_ consumed; and it was assumed, on the basis of the pre-

sumption of innocence that, because Schipani filed-no in-

come tax returns for the years 1943 through 1955, he never

(except for a very small amount in 1945) in day of those

years had a yearly gfoss income in excess of the amount

which would€ have required him to file ‘a return. His ex--

penditures, however, were greatly in excess of such amounts

of income.’ It was, therefore, found that the cash on hand

_ at the beginning of-the indictment ‘period, January 1, 1956,

was zero,.* _

. ‘iiendinnss were made by defendant during the years 1943

through 1955 of the ere amounts segregated by calendar

years. .

1943 $1,203.47 1949 $3,691.73

1944 114560 . 1950-. 3,528.62

1945 1,145.34 1951 3,804.05

‘1946 - 1,164.64 = 1952 ‘4,912.86

1947 8,694.02 1953 3,776.71

1948 313880 - 1954 4,646.71

_ 1955 7,079.72

‘ Funds available to defendant on December 31 of each of the

years in the period from 1/1/43 to 12/31/55 — by calen-

dar years were as follows:

12/31/1943 - $1,146.52

12/31/1944 955.91

12/31/1945 | 442.76

12/31/1946/1955 —o—

se agin a

~

As -

Apgendiz 4—Opinion of United States Court of Appeals” I

The other items of assets, which on that dite were found

to total’ $18,908.89," consisted of two-savings accounts in

the Flatbush.Savings Bank, an investment in United States

Savings“Bonds, real estate, and a 1955 Ford automobile. ©

: From this amount Was ‘subtracted a loan and a mortgage

note totaling $1300. In the subsequent indictment years,

1957 through 1960, the total asset figures reflect purchases é

of stock, furniture, and a boat as well as increases in’ the

existing savings bank accounts and the opening of two

additional small savings bank accounts. Tie liability total,

which was deducted from the total value of the assets in

each of the years, also reflected additional increases in

liabilities, most of which were. associated with major asset

purchases during the same years. 7

-The Government. in its ‘proof and,the trial court. in. its

findings, in arriving at the opening net worth and in cal-

culating the net increase in net worth for each of the indict-

ment years, also made certain adjustments. The findings ~~

show that additions to the a figure included non- ©

.

ss *

Gh re ala lll el ai

5 Desenitent’ 's total assets at the iia si: gud heath 1 in-

dictment year were approximately as follows:

1/1/56 :

(12/31/55) $18,908.89 —- 12/31/56 $37:906 52

1/1/57 37,806.52: . 12/31/57 38,897.48

1/1/58 - . . . 3889748 12/31/58 . 44,447.77 -

1/1/59 44,447.77° 12/31/59 45,589.33

1/1/60 - 45,589.33 12/31/60 45,273.58

6 Defendant's total liabilities at the beginning and end of each

indictment year were approximately as follows PAE the

1/1/56 , a

(12/31/55) $ 1300.00 12/31/56 $12,800.28 |

1/1/57 12,890.28: 12/31/57 -9,964.43

1/1/58 9,964.4 12/31/58 _. 10,468.66 ©

1/1/59 10,468.66 12/31/59 7,236.03

1/1/60 7,236.03 12/31/00. 6,028.32 .

‘pani £--Oyinion of United States Court of Appeals

capital: expenditures’ and the non-deductible losses on “the

sale of personal property. The latter were included in ar-

-Tiving at the ‘1956 net worth and the 1960 net.worth. The

loss for each of these yeare was treated as the equivalent

of an expenditure, which explains the: differgnces between /

‘‘total expenditures’’ and ‘‘additions to net worth”’ for each

of those years, whereas those items in the other three years

(1957-1959, inclusive) are exactly the same. The deductions .

made from the unadjusted net worth, reflect the dividends-

‘received exclusion in each of the indictment years, the pro- ~

ceeds of a paid up life insurance policy in 1959, and re-

funds from the receiver of taxes and a realty company.’

The defense offered no evidence and the principal issue

at the,tridl was the sufficiency of te Govertiment’s case.

The trial court concluded that the Government had proven

7 = The total expenditures for each of the indictment years were

as follows:

.

1956 $ 7,339.09 :

1957 9,135.45

« 1958 10,316.66

1959 17,432.93

1960 | 10,289.32 ene ieee”

8 .. Intrease in Adjustments to

Net Worth _Net Worth, (Exh. 285)

. Gross

Foes 281) _ Addition§ Deductions _. Income |

: $7,307.35 $ 8,553.09 $ 61.52 $15,798.92

' 1957‘ 4,016.81 9,135.45 96.79 ‘13,055.47

,1958 5,046.06 10,316.66. 37.08 — . 15,325.64 ©

1959 _. 4,374.19 17,432.93 1,084.19 20,722.93 .

. 1960— 891.96. \ 12,080.23 59.20 12,912.99 -

-

o

rae Appendia A fipinion of United States Court of sant

beyorid a reasonable doubt that Schipani had-a gross in S

- come in each of the indictment years considerably in excess

of the amount which required him to file an income tax re-

turn, that income taxes were due for each-of those years

and that the defendant willfully sought to evade the pay-

ment of the taxes by filing no return for any. of the years

in question. We affirm. :

—

-The-appeliant has presented a ES, of pula ‘on ap- ‘

peal, most of whith attack the proof of ‘opening net worth”

as insufficient to establish a prima facie case and. which Ses

also attack, as inadequate for proof beyond a reasonable

doubt, the evidence offered to: show the increases in net: ;

worth, particularly as they were allocated to me ‘eparate ;

tax year. '

The. only issue raised on the. admissibility of elteaes

concerns the denial of the defendant’s pre-trial motion and

the overruling at the trial of his objection to the prison

_record of, what Schipani said to the prison official i in Febru- “sae

rary of 1943 that he had only $1350 in cash. which he had

left with his wife. The appellant. argues here, as he did ~

below, that this violated his. Fourth Amendment right. be-

cause the report.was the product. of‘an unreasonable search

and seizure and his-Fifth Amendment right because it was

an involuntary and incriminating statement: We ‘agree |

with the trial “judge; -however, that as far as the Fourth |

- Amendment is concerned, this routifie taking down of rele-

vant information as part of the regular prison procedure -

in setting up the personal record of an inmate, unrelated

to any pending investigation of a criminal offense, is not

an unreasonable search or seizure of appellant’s ‘‘person,

house, papers and effects.’”” Schipani made a voluntary re-..-

Son

as

“Appendia: 4—Opinion of United States Court of Appeals

/_ Sponse to'a question ciaced titin ander sifoumatancos tick”

‘bore no conceivable relationship to the procuring of an

_ ineulpatory statement by Police _or prosecuting officials in

- connection with any ¢ ‘activity, particularly to the .

present case which was not thought of or initiated until

wee many-years later. It, therefore, furnishes no basis for a

—elaim of lack of due process under the Fifth’ Amendment.

» With regard to the Government’s proof that there was

virtually no- cash in the defendant’s hands as part of his

assets as that“bore upon the opening net worth of Schipani -

on January 1, 1956, we are of the opinion that under the -

- circumstances of this case, the Government. would have

_ shown a more consistent approach if, in the pre-indictment.

period, 1943-1955, inclusive, it had assumed, as it did ‘for

the years covered by the’ indictment, 1956-1960, inclusive,

that proof of expenditures in a particular calendar year

showed. a commensurate income for that year. Where, ‘as

heré, there was so complete and thorough an exhaustion |

of non-taxable sources for cash, it seems unnecessary to

invoke Schipani’s presumption of innocence to sanctify the

_ proposition that he earned, during the _pre-indictment’

' Years, no more than the maximum. gross income ($499.99

_ or $599.99) which a person miay receive without being re-—

_ quired to file a tax return. His expenditures, as shown by

the Government, for the 1943-1955 period did not include —

living expenses for himself and family, ‘except for rent:

~It is more than likely that such living expenses consumed °

the $1350 i in the year and a half of his imprisonment. At

any rate, it must have been expended by the end of the 13

“year period. ‘Even if it were not, and it remained as a

cash resource. on January 1, 1956, there would still have |

Appendiz Opinion of United States Court t of Appeals

been a substantial increase in net worth in 1 1956. ‘The total

of Schipani’ 8 expenditures in the pre-indictment: years

must have reflected money which he had first received in

income. The court i in effect so found, and also. determined

that’ Schipani: had no-surplus of earnings over ae. .

during that period.

The appellant does not otherwise attack the findings “sa

cause ofa lack of-or infirmity i in, the evidential. bases on—

‘which they rest, but rather ¢ontests what he describes as the - |

court’s ‘‘factual theory of the proofs” and the sufficiency

of the evidence to establish his guilt on each of the counts —

‘beyond a reasonable doubt. Conviction i in a net worth case

nevessarily rests’ upon inferences reasonably drawn from. —

circumstantial evidence. It is within the province of the

trier to draw those inferences and, so long as they are

reasonably and logically supported by the evidence they

must stand. The trial judge made detailed findings, with -

annotations of references to pertinent evidence in the rec- e

ord, covering opening net worth and the annual increase

in net worth for each separate calendar and tax year for

the five years covered by. the indictment. We are satisfied

that there was ample evidence to support the findings and _

sufficient proof to establish Schipani’s guilt on all of the

counts beyond a reasonable doubt.

Appellant argues, in substance, that the pooemiiion of

_ innocence requires, in cases of this kind, based és they are

largely on circumstantial evidence, that the proof must

‘be such as to- exclude every. reasonable hypothesis of inno-

cence. He asserts that the evidence in the present. case

would have warranted an inference by the court that Schi-

pani ae a cash hoard or Teserve from which his expendi-

ar

on

.

Stns oe ere ar gaa

a P-

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- v ¢

|< -Appendia A—Opinion of Gnited States Court of Appeals -

"fares and incteases in net worth derived, and that, there-

. fore, the Government had the burden of proving that such. .

‘a hoard did not exist, which it failed to'do.: In the first

. place the Supreme Court has characterized this rule for

‘‘evaluating the proof’’.as confusing and incorrect. Holland

v. United States, supra, at 139-140. It deciared that. the

rule to be applied is. proof beyond a ‘reasonable doubt,

whether ‘the evidence is circumstantial or testimonial. In

the second place the totality of circumstances shown by

the evidence in the case, including financial assistance given "

to his family, his borrowings, his delinquency i in paying life _

insurance premiums, instalments on purchase of an auto—

_ mobile, payments on mortgage debt and other bills as well:

as other incidents found by the trial court, support the con-

clusion that no such cash’ hoard ever existed. The absence ie

of such a reserve. fund was established as part of the

Government’s prima facie case. At that point the appellant

remained quiet at his own peril. Holland v. United States,

supra, at 138-139; United States v. Mackey, 345 ¥', 2d 499,

606 (7th Cir., 1965), cert. denied, 382 U. S. 824; Fowler v.

United States, 352. F.-2i 100, 107 (8th Cir., 1965), cert.

denied, 383 U. 8. 907 (1966).

The appellant has not on this appeal suggested any non-

taxable.sources other than:a cash hoard, and it appears”

that the Government negatived all other reasonably possible |

sources from which Schipani could have acquired non- .

taxable funds.. Under the circumstances, proof of ‘‘a likely

gource’’ of net worth increases is not necessary. United

‘States v. Massei, 355 U. S. 595 (1958). Nevertheless, evi-

dence was offered, and the trial court found, that Schipani

had likely sources of income from an interest in a restau-

ppendia A—Opinion of Unite 8 States Court of Appeals

rath nd: alee <n: -hegndlebek. ju ietielsonsenetaiell salie

tions. The Government.made out a prima fate Proof ee

_, this fact in the case; it was not contradicted. —

The appellant disputes that’the Government. proved jhe

element of: willfulness, -that i ig. to\say the specific intention —_

to evade the payment of taxes." The evidence of Schipani’s

_ apparent attempts to conceal i income, however, through the

use of assumed names and other devices, and his failure

to file income tax returns, considered in connection with the

proof of unreported taxable income, are all that are neces-

sary, to show the requisite intent. Holland v. United States,

supra, at 139; Spies \ v. United States, 317 U. S. 492, 499

(1943). |

' This leads us “to ‘comment briefly on appellant 'g ‘claim :

that his constitutional rights were violated because he was

convicted of the felony violation. of willful tax evasion un-...

der Title 26 U. S. C.. §7201 ‘‘on the charge of failure to file

_ income tax returns” which, if. willful, is a misdemeanor

_ under Title 26 U. S. C. $7203. He asserts that §7201 is void-

for vagueness. Actually he was charged with violations of

§7201 as a willful -evader and-not simply as one who -will-

fully failed. to file tax returns under §7203. The latter may

‘under ‘proper ‘circumstances be .a lesser included offense 9

of the former, ‘‘Willftliy” under §7203 calls only for proof -

that the. taxpayer failed-to ‘file his tax return intentionally

and knowingly and het through accident or migtake or:

other innocent cause.. ‘‘Willfully’’ under §7201 ealls for.

proof that the taxpayer failed. to file a tax return with the.

specific intention of evading or defeating. payment of the

tax. The context of the respective statutes miakes this

perfectly clear, and they have -been so interpreted, and.

’

1 Fi

oe:

A-12

Appendia A—Opimion of United States Court of Appeals

construed ' by the ‘Sapreme Court. Sansone v. United

» States, 380 U. 8. 348 (1965) ; Spies v. United States, supra.

There is no merit to the claim that §7201:is vague.

Finally, the appellant argues that he was prejudiced by

’ the procedure employed by the trial court in screening cer-

tain materials under the Jencks Act, 18 U.S. ©. 43500.

‘The procedure used by the trial judge was the same which

this court strongly condemned in Umted States v. Persico,

349, F. 2d 6, 13 (2d Cir., 1965). The in camera proceedings

were conducted with the assistant United States Attorney

‘present and participating, but in the absence of defense

counsel. In Persico, we stated:

‘¢. . . the procedure followed was entirely unneces-

sary and violated Canon 17 of the Canons of Judi-

cial Ethics: We do not consider this a ground for

reversal, but it is adverted to’solely to assure that

such procedure is not followed in the futare’* - aga

note omitted). !

The reason that the use of such a procedure was not ‘con-

sidered a ground for reversal is that, a study of the tran-

script of the in. camera proceeding by this court “revealed

‘*that absolutely nothing untoward occurred insofar as the .«

fair trial of this case was concerned’? (349 F. 2d at 13).

_In the present case the verbatim minutes of the similar

irregular proceedings were examined and we, likewise,

find that nothing%ook place that prejudiced the defendant

in any way. We, therefore, do not reveyse. Neither fhe |

lack of prejudice to the defendant in this particular case ..

nor the lengthy explanation for the procedure in the opin- ~

ion of the trial judge, however, justifies its continued use.

' We are aware that the in camera proceedings in this case

3

A-13 | be

Appendix A—Opinion of United States Court of Appeals

took place prior to.the date of the Persjco decision and the —

trial court was not on notice of the error, but the use of

this procedure after the date of Persico will call for correc-

- tive action.

. There was no other question raised on this appeal as to

the handling or disclosure to the defense of Jencks Act

material, but the materials withheld from the defendant at °

the trial were not sealed and sent up to this court ds the

‘ statute requires. It is essential-that the district courts

‘ comply with the statutory requirement in this regard. »

' We have considered the remaining questions raised by

the appellant but conclude that they neither disclose’ a

ground for error nor warrant discussion.

_The judgment of the district court is affirmed.

.

«

Do CR tle len SRS

. . s

baa

- a

_ APPENDIX B

Opinion by Rosling, U.S.D.J.

cera UNITED STATES DISTRICT COURT ‘

EasTERN District or New York

63-CR-237

»%

7

Unrrep States or Amznioa,

—against—

JosePpH F’. ScHrpant,

Defendant.

Appearances : _

JoserH, P. Hozy, Esq. —

United States Attorney

Eastern District of New York -

Attorney for United States of America

Donald N. Ruby, Esq.

Assistant U. S. Attorney

Of Counsel

Jacos P. Le#Kowr7z, Esq. -

Attorney for Defendant

Rosine, J. 7

Defendant, Joseph F. Schipani, i is charged in five counts

of an indictment with violation of Section 7201 of the Inter-

nal Revenue Code (IRC 1954). Except for the year in-

volved and the doliar amounts specified all counts are alike

A-15 wen am

po ities by eri! U. S.D.J.

in their Sicisinilittiads The first count >: whisk the ther

‘four conform mutatis mutandis charges in substance that

defendant had in 1956 received a taxable income of

$13,280.06 upon which he owed a federal income tax of. .

$3,104.02 as to which he was required to make a return to

the Director of this [3804] District, and to pay the tax on

or before April 15, 1957. It is further charged that with

knowledge of such requirement of the law defendant ‘‘did ©

wilfully and knowingly attempt to evade and defeat the. said

income tax due and owing by him to the United States of

America for said calendar year by failing to make’ such

income tax return to the said District Director of Internal

Revenue, or to any other proper officer of the United States —

of America, and by failing to pay to said District Director

of Internal Revenue, or to any other proper officer of the

United States of America, said income fax and by’ con-

cedling and attempting to conceal from all proper Officers ©

of the United States of America the true and correct gross

and taxable income of the said defendant J oseph F.. Schi-.

a for said calendar year of 1956.’’

- The other counts, each charging a similar offense in

parallel language, contain the following differentiating sta-

. tistical data:

| Yeat Unreported - — Unpaid Unfiled

Count Affected Income Tax Return Due

II 1957 $8,291.92 $1,75590 ‘4/15/58

III 1958 10,053.99 2,214.04- 4/15/59

IV 1959 16,717.51 . 4,163.15 4/15/60

V 1960 7,832.67 164071 4/15/61

SAS Oh Hala wind nahi

a

a) Oe ro tr

‘out 2 2 eee MISS

+

A-16

Appendix B—Opinion by>Rosling, U.S.D.J.

The defendant is adjudged guilty on all counts. The un-

reported income for the several years is determined to be |

’ the following :*

[3805]

Tax Year _ GrossIncome _ Taxable Income

1956 § _—- $15,798.92 $11,256.55

1957 18,055.47 8,474.67

198° 15,325.64 - 9,883.88

1959 i 20,722.93 16,753.29.

1960 . 12,912.99 > 8,836.98

Motion for a mistrial for alleged irregularities in the

‘court’s conduct;of proceedings under 18 U.S.C. 3500 (Jencks

Act) ‘is denied. For discussion see Appendix following

footnotes, infra. pp. 45-92.

Finpines OF Fact

cs 2 Expenditures were made. by ieitonitinns ae é

years 1943 through 1955 of the ra amounts segre-

gated by calendar years.®

1943 - $1,208. 47

1944 | 1,145.60 *

1945 1,145.34

1946 ie 1,164.64

1947 gor 8,694.02

. 1948 3,138.80

1949 : - . 3,691.73 .

1950 3,528.62

_ 1951 , 3,804.05

1952 " 4,912.86.

1953 3,776.71

1954 4,646.71

1955 ; 7,079.72

~ ae

a

Appendic B—Opinion by Rosling, U.8.D.J.

2. Funds available to defendant on December 31 of each

of the years in the period. from 1/1/43 to 12/31/55 segre-

gated by calendar years were as follows :*

[3806]

12/31/1943 : $1,146.52

. 12/31/1944 - 955.91

12/31/1945 442.76

12/31/1946/1955 —-

- 3, The government in good faith and with great effort 3

and competence corfducted an intensive investigation of

defendant’s: financial affairs for the indictment ‘years and

the anterior period unaided by any leads supplied by de-

fendant or his wife. When solicited by a government rep-

‘resentative for leads siete either a or refused to

furnish them*

a

‘4. Defendant had no, or - at most trifling, rn of cash .

on hand af January 1, 1956, which sum if any was far less

than the amount hereinafter found to have constituted his

taxable income in any of the indictment years.® -

5. Defendant’s total assets at the beginning and end of

each indictment year were approximately as follows:

(Govt. Exhibit 281).”

1/1/56 (12/31/55) $18,908.89 12/31/56 «$37,806.52

1/1/57 + 37,806.52 12/31/57, . 38,897.48

141/58 3889748 12/31/58 44,447.77

1/1/59 4444777 12/31/59 45,589.33

1/1/60 | 45,589.33 12/31/60 . 45,273.58

Ao ga Sy eae baat

,

Seid ilaaiceb dai Yoek She aie Ae

A-18

Appendi: B—Opinion by Rosling, U.S.D.J.

«6. ‘Defendant’s total. liabilities at the beginning and end.

of each indictment year were approximately as pista

(Govt. Exhibit 281). 8

1/1/Sby(12/3%55) _ $ 1,300.00 12/31/56 ~~: $12,890.28

1/1/57 12,890.28 - 12/31/57 9,964.43

1/1/58 9,964.43 ° 12/31/58 10,468.66

‘ae 40,468.66 ~—s- 12/31/59 — 7,236.03

1/1/60 ane _-7,236.03— 12/31/60 6,028.32

[3807 ]- t Net worth (unadjusted) at the beginning and

end of each indictment year is arrived at by subtracting the

year end liabilities shown on Exhibit 281 (Finding of Fact

6)*from the year end assets (Finding of Fact 5), and in;

crease in net worth, by subtracting the year end net worth,

thus determined,. from the last preceding year end’s net

- worth. These calculations produce the following results.

which the court détermines to be approximately correct, all

as 3 set out in the subjoined schedule :

Net Worth

. Previous Increase in

Net Worth Year End. - Net Worth °

12/31/58 $17,608.89 _ |

12/31/56 24,916.24 . $17,608.89 $7,307.35

12/31/57 28,933.05 -—»«-:24,916.24 4,016.81 -

12/31/58 33,979.11 28,933.05 5,046.06.

12/31/59 —«- 38,353.30 33,979.11 437419

12/31/60 39,245.26 38,353.30: 891.96

8. The expenditures made by the defendant during the

indictment years are those set forth in Exhibits 286 and

286-A, the latter a continuation of 286. The tabulations

are based on proof adduced at the trial by witnesses, by

A-19

Appendia: B—-Opinion by Rosling, U.S.D.J: |

stipulation in lieu of testimony, by exhibits and by infer-

ences drawn by the court.* The expenditures listed on the

charts Exhibits 286 and 286-A are found by the court to

have been established and the total for each of the indict-

ment years is as follows: - ..

[3808] | : -

1956 _ $ 7,339.09

1957 ; 9,135.45

1958 10,316.66

1959 | 17,432.93

1960 ' 10,289.32

9. Defendant’ wife, Anne Schipani nee Sclafani, was

at all times a housewife with no source of income from

wages, salary or otherwise.’°

10. Adjustments to the ‘‘Increase in Net Worth’ for’

the indictment years, the latter being shown as the foot-

ings on Exhibit 281, consist of additions.to andesubtrac-

tions from such footings. The results reflect the gross

income for the indictment years, all as scheduled in Ex-

hibit 285 and found by the court as a fact. The totals

producing the figures representing such gross income are

set forth in this finding, and the items entering into such

- totals are detailed in the appended footnote." |

Increase in Adjustments to

Net Worth ~ Net Worth Exh. 285)

PD cand .

cf ch 281) Additions — Deductions Income

1956 _ $7,307.35 $ 8,553.09 $ 61.52 . $15,798.92

, 1957 | 4,016.81 9,135.45 96.79 13,055.47

1958 5,046.06 10,316.66 37.08 =: 15,325.64

1959 4,374.19 17,432.93 1,084.19 20,722.93

1960 891.96 ‘12,080.23 59.20 12,912.99

Appendix. B—Opinion by Rosling, U.S.D.J.

11. Other than as herpinbefore noted and found, there

was neither evidence nor inference reasonably to be drawn

from evidence that defendant received nontaxeble funds

| — the indictment. years.” . :

[3809] -

12. Defendant’ 8 : finangial pain were marked: by con-

” cealment through use of the names of others, failure to keep

records in transactions when record keeping is usual and

absence suspicious,-extensive use of Manufacturers Trust

Oo. personal money orders, and large transactions in which

currency was used, all in a context of a liberal standard of

_ living during the indictment years, a standard which could

‘be maintainable only by one possessed of substantial means.

The court draws the inference that these are circumstances

indicative of a a consciousness of guilt on defendant’s part in

having received taxable income for which he wilfully failed

to file‘the returns required by law and to pay the i income

“tax due thereon."

13, Likely sources of defendant’s income™* during the in-

dictment years are an interest in a restaurant business*®

and services as a go-between in labor relations of employ-

ers with unions.’* No finding is made, insufficient evidence

having been adduced by the prosecution to substantiate its —

assertion to such effect, that defendant by. his own admis-

. sion was in receipt of income from illicit sources.”

14. There is a tax’due and owing by the defendant for

each indictment year in approximately the following

amounts.'*

ie

hanentia B—Opinion ae Rosling, U. 8.D.J.

$3,117. 49 -

£3810)"

1956

1957

1958

1959

— 1960

2,121.39

2,610.52

5,575.85

2,242.09

~. 15. Willful evasion is established.’

L Defendant i is guilty as charged on all counts.

r

Conontsioxs or Law

Canaan Ros.ine

U.S.D.J.

77

oT |

,

Le NaC OR PO PO Rt

(

- a volume marked as Govetnment’s Exhibit 283. All. was carefully -

«

ee

Appendiz B—Opinion by Rosling, U.S.D.J.

Foormorss

[3811] i

1§ 7201. . Attempt to evade or defeat tax

“Any person who willfully attempts in any manner to evade

or defeat any tax imposed by this title or the payment thereof

shall, in addition to other penalties provided by law, be_ guilty

of a felony and, upon conviction thereof, shall be fined not -

more than $10,000, or-imprisoned not more than 5 years, or

both, together with the costs of prosecution.”

2 See Finding of Fact 14 for Amount of tax due and evaded: The

- offense is made out upon a showing of failure to file a required re-

. turn with the essential felonious. knowledge and intent as the con-

text of such nonfiling.. Other elements having been established by ‘

the government, it does not-have to prove the exact amounts of un- -.

Teported income. It suffices for a finding of guilty that significant Bs

‘contrasted with de minimis amounts are unreported’ ‘within the appro- .

priate statutory ‘strictures. United States v. Johnson, 319 U.S. 503,

517, 63 S. Ct, 1233 (1943).

8 Items entering into annual totals are set forth on. chart, Gov-

ernment Exhibit 282 pfepared and explained by Internal Revenue’ @

“Service (I.R.S.) Special Agent (Intelligence-Division ) Masetti, [Tr. ;

M* 3000-3025]. The Witness supported his gummariés and analyses

by reference to the proof adduced at trial consisting of-testimony of .

witnesses, stipulations of co in lieu of proof, various documen-_ -

try exhibit3, anferences drawn by him from such’ proof and numer- 8

ous schedules nd statistical data compiled by him and comprised in

annotated therein by. Mr. Masetti with page references-to the min-

utes of the trial and identification symbols designating the exhibits. —

Inferences drawn Sy the witness were not necessarily adopted by the

court. It@ own inferences, however, largely coincide with those the

witness deduced, — :

[3si2} oF . soe

4 Items’’entering into year end totals are set forth on chart,

_ Government Exhibit 284, prépared and explained by, Mr. Masetti

| Tr. M3031-3060]. The item of $1,350 cash on hand 1/1/43 is based

'; of. statement ascribed to defendant in Govérnment’s Exhibit 9, an:

“Admisgion oe produced from an official file concerning de-

re meee! 4

* Masetti’s tatiana ‘is thus referred to herein.

o

4

—A-23

_ Appendix B—Opinion by Rosling, U.S.D.J.

fendant in the archives of the Bureau of Prisons, United States De-

partment of Justice. Defendant, confined ira Federal Penal Institu-

tion in Milan, Michigan, and serving a two-year sentence of impris-

onment upon a committment effective 1/14/43 was interviewed by the

prison authorities shortly after his admission as a prisoner. The in-' -

formation thus derived as well as data from other sources was-em-

bodied in the Admission Summary. The document dated. 2/10/43 ~

contains the following note which the court finds constitutes informa-

tion defendant himself supplied. It reads:

“10, Resources: This man claims that he has’ no prop-

erty, but later admitted that he had a $2,000 insurance policy

with the John Hancock Life Insurnce Co. and that he left his

wife approximately $1,350 in cash. He later stated that they

owned their own furniture.” - :

Defendant, at the opening of ‘the trial before any testimony had

been taken, moved to suppress the Admission Summary and “also

any leads. derived therefrom.or any information otherwise obtained

through said alleged declarations ‘ge Jeads.” His counsel grounded

such motion upon the alleged confidentiality of defendant’s disclos-

_ ure and the illegality of the government’s proposed use of -it. These

_ contentions need not here be restated inasmuch as they were formu-

>

lated: in voluminous motion papers and a supporting memorandum. _

They were, moreover, thoroughly explored in a lengthy argument

- and discussion at the opening of the trial.. [See Tr. on motion to sup-

press, pp. 6-66]. At page 66, ibid. the court denied the motion, as

well as derivative companion motions ta inspect the grand jury min-

utes arid to quash the indictment“fipon the defendant’s assumiption

that the evidence thus challenged as illegal had been submited to the

— jury which reported the indictment and in consequence viti-

ated the proceeding. Ager ict ae ie Ras Regs vi

As an incident of the denial of the motions the court reserved to’.

the defendant the right when the evidence came to be offered at trial

-

to renew his objection, with the possibility left open of a hearing |

_ Should one be required and applied for,

The government in due course marked the Admission Summary

as an exhibit for identification at the trial proper ["=xhibit 9, Tr. 98]

and upon its offer shortly thereafter was [3813] met by renewed ob-

jection of the defendant. This precipitated further colloquy and ar-

gument. The document was finally, with certain omissions, admitted

into evidence at Tr. 132. It thus appears that the subject of its ad-

“

4

station ve

«@,

®.

|

A-24

Appendia B—Opinion-by Rosling, U.S.D.J.

missibility has been thoroughly discussed and considered. Defense

counsel now ‘continues in his post-trial memorandum to press his

‘claims of error... © °° - *,

Central to the railing as to whether the exhibit should be received.

is the principle noted several years since in St. Regis Paper Company

v. United States, 368 U:S. 208, 218, 82 S. Ct. 289, 295 (1961), that

it is the court’s “duty to avoid a constriction that would suppress

otherwise competent evidence unless the statute, strictly construed,

requires such a resulé” With a like approach Wigmore on Evidence,

Vol. I, § 10, p. 293, enunciates as “[t]he second axiom on which our

law of Evidence rests” that “[ajll facts having rational..probative

value are admissible, unless some specific rule forbids.”’ ,

Both Wigmore *(ibid.) and Fisch (New York Law of Evidence,

¢ § 3, p. 3) ‘cite Professor Thayer’s Preliminary Treatise on the Law

of Evidence (1898) as authority forthe version of the precept which

teaches that “unless excluded by some rule or principle of law, all

that is logically probative is admissible.” See also Richardson on

- Evidence, Ninth Edition, §-5, p. 4.

Closely analogous to what is here presented # the factual situation

considered in Smith v. United Stag , 236 F. 2d 260 (8th Cir. 1956),

cert. denied 352 U.S. 909, 77 S. Ct. 148, wherein it, was held that it

was not error in a,prosecution for income tax evasion for the gov-

ernment to introduce at trial statements by the defendant declaring

his assets, even though it appeared that fhese had been made while

he was confined in a penitentiary under an earlier conviction. The

exhibits had been filed by def t in connection with a parole appli-

cation, but did not themselves titute part of the parole hearing

itself. iain sins diate ab adele Sak Gad ate, at lo Gears cay

today... The regulations in force at the time governing use of prison

records were formulated by the Attorney General (Section 2.14, 28

C.F.R.) an’ have since been amended, but with substance as it con-

cerns~us here unchanged. (See also Séctions 2.15 and 2.16 of the

Regulations, 28 C.F.R.) Section 2.14 was cited in Smith by defen- .

dant against the government as barring the use of the records as al-

egedly confidential and not open to the prosecution for support upon

charge of crime unrelated to or arising out of the making of the

statements. ; t

[3814]

The Ninth Circuit found defendant Smith’s position untenable

and adjudged that no error had arisen from such use to establish

a RE mee S SEs Oe

A-25

Appendix B—Opinion by Rosling, U.S.DJ.°

an admission by defendant Smith that he had had no assets while

in the penitentiary. Currently § 2.16 of C.F.R. 28, revised as of 1/1/65,

provides that hearings on parole “shall not be open to the public, and

the records of all such hearings shall be treated as. being confidential _

and shall not be open to inspection by the prisoner concerned or any

other unauthorized person.” Analysis of the provision and its reach

need ‘not fufther detain us inasmuch as the exhibit involved is not a

record of a parole hearing.

A general “housekeeping” provision 28 C.F.R. § 16.1, promulgated

by the Attorney General under authority of Reorganization Plan No.

2 of 1950, Sec. 2, 5 U.S.C. 22, is of more immediate pertinancy. § 16.1

is contained in Order No. 324-64, 29 F.R. 14027, 10/10/64, and reads,

relevantly, as follows:

“Production or disclosure of official information or material

in response to a subpoena, order, or other demand prohibited

unless approved by the Attorney General. :

“No officer or employee of the Department of Justice shall

produce or disclose, in response to a subpoena, order or other

demand * * * of a court or other authority any information or

material contained in the files of the Departuwiént of Justice or

any other information or material acquired as a part of the

performance of his official duties or because of his official

status, without the prior approval of the Attorney General

**”

The point need not be labored that the provision is a defensive

measure of the department calculated, hopefully, to keep its files free

of intrusion from third parties save upon the Attorney General’s

, consent. The U. S. Attorney and members of his staff are among those

_ who by definition set out in § 16.1 are categorized as officers and

employees of the Department of Justice. Exhibit 9 itself contains a

certificate of the Attorney General which authenticates the status of -

the Director of the Bureau of Prisons which supplied the document

from its fites. The director with his own further certificate produced

from the Bureau’s file, of which he is the custodian, the exhibit in

controversy. The Bureau of Prisons, its Director and employees are,

of course, under the direct jurisdiction of the Attorney General. (Ch.

- 303, Title 18) Such 'certification and authentication of the exhibit thus

[3815] establish the requisite “prior approval” of use, if explicit ap-

proval were required, by the U. S. Attorney. Cf. Arrow Distilleries v.

Alexander, 109 F.2d 397, 405; syllabus division 20 (7th Cir. 1940),

cert. denied, 310 U.S. 646.

SUEIMRINETL

a

»

A-26

Appendiz B—Opinion by Rosling, U.S.D.J._

United States v. Caserta, 199 F.2d 905 (3d-Cir’ 1952), cited by

- defendant is distinguishable. That case involved the use by the govern-

ment in an unrelated prosecution of information which had been

supplied by the gelectee on aselective “service questionnaire. The

document contained a representation to the effect that the information

was confidential except for certain specified uses by the government.

These did not include the prosecution in question. The appellate court

felt that the pledge thus made by the government to registrants should

be kept in good faith. The draftee surely would be morally entitled to

have the sovereign held to its covenant: The convict, on,the other

hand, subject to penal restraint thereby yields certain of the subsidiary

rights of freedom in the interest of his reform and restoration to

society. “Lawful incarceration brings about the necessary withdrawal

‘ or limitation of many privileges and rights, a retraction justified by

the cons#lerations underlying our penal system.” Price v. Johnston,

334 U.S. 266, 285, 68 S.Ct. 1049, 1060 (1948).

There is no substance to the contention urged here by defense

counsel that a disclosure made in 1943 that the prisoner then possessed

only $1,350 should now, 20 years later, be suppressed as a circumstance

tending to support a charge that defendant had committed crimes in

1957 and later years, long after the original disclosure. Theé 1943

‘financial representation may have been an involuntary inciderit in what

was surely a duressing restraint upon defendant. The information

thus furnished by defendant could not have been withheld by the |

prisoner as in any sense self-incriminating in 1943. Nor does its

current use against defendant breach any governmental pledge earlier

given to keep a confidence inviolate. |

A further accession of funds with which the government has —

credited- defendant in the preindictment years, as serving to build up

a potential “hoard” upon which defendant might have drawn during .

the indictment quinquennium, and which to that extent negatives.

current income as the source of the disbursement in the indictment

period, is shown on fe chart of avaiJable funds [Exhibit 284 ffn (c)

and (e)]. The chart notes with transcript reference [pp. 876-884, and

1171] an estimate of $500 as having @een given to Anne Schipani,

wife of defendant, by his brother Ralph Schipani and his sister

- Angelina Battaglia in 1943, and the further sum of $250 in 1944. These

and others of defendant’s siblings who testied variously as to having

_ made such gifts of not to have done so [3816] indicated quite clearly

that their donations were trifling and only occasional, and were in-

tended to help the wife during the difficult year and a half of her:

A-27

—

oe

Appendix B—Opinion by Rosling, U.S.D.J.

husband’s sojourn in Milan Penitentiary. It was Agent Mgsetti, and

not these witnesses, who supplied the estimated totals with which

defendant was thus credited. The court has accepted such estimates

as not exceeding that which was reasonable. The court’s own view

based on the’evidence Masetti took into account is that the credit was

unduly generous. But as a figure favorable to defendant the court

aecepts it. It may be noted that the government with similar benefit

to defendant’s position did net charge him in its correlative Expendi-

ture Schedule [Exh. 282] with disbursement of any money for food,

as well as other items of ordinary living expense.

The second column on Exhibit 284 gives the defendant credit for

the receipt of maximum. gross income for the years 1943, 1944, 1945,

1946 and 1947 of $499.99 in each year, and of $599.99 in each of the

succeeding years through 1955. This was based upon ‘the fact that the

relevant Internal Revenue Code provisions (Section 6012; I.R.C.

1954; Section 51 I.R.C. 1939) required under criminal penalties,

elsewhere imposed for violation, that income tax returns be filed when

the taxpayer’s gross income was at least one cent higher than the

amount credited in the chart, namely $500 for the earlier years and

$600 for the later. The fact that defendant did not file any income

tax returns for the years noted is equated by legal presumption with

an admission on his part that he had received gross income in the tax

year affected of less than the statutory minimum which would have

required him to file a return [See Leeby v. United States, 192 F.2d

331, 333-334 (8th Cir. 1951) ; United States v. Skidmore, 123 F.2d

604, 610 (7th Cir. 1941), cert. denied 315 U.S. 800; United States

v. Doyle, 234 F.2d 788, 794 (7th Cir. 1956), cert. denied 352 US.

893, 77 S.Ct. 132; Hanson v. United States, 186 F.2d 61 (8th Cir.

1950)-; United States v. Glazer, 110 F. Supp. 558,. 561 (D.C. Mo.

1952)]. To give full effect to a defendant’s presumption of innocence

the court is required, notwithstanding that no income were ghown to

‘have been earned during any pre-indictmen? year, to assume in the

defendant’s favor the maximum gross income per year which the stat-

* ute stipulates is not reportable. The presumption of innocence operates .

on the act considered in its contemporaneous context, and not in rela-

tion to its effect in an evaluation of the later events first generated in

the indictment years. f

The chart, Exhibit 284, has, however, been modified with respect

to the years 1945 and 1946 as to income established by proof to have

in fact been received which requires credit to defendant of the sum

received. Such substitution of actual [3816] income in place of the

. %

A-28

Appendia B—Opinion by Rosling, U.S.D.J.

presumed maximeim gross income involves the year 1945. Govern-

ment Exhibit 135, certificate of the Social Securit Administration,

confirms the fact that defendant had earned in that year through his

employment with the National Ship Scaling and Painting Corp. the

sum of $632.19. When such stim is substituted for the presumed

gross maximum income which is not reportable for the year.in which

earned the procedure requires adjustments for the years 1945 and

1946. The effect of these is to increase the cash on hand at 1945 year

end to $442.76 which is carried over to cash on hand on 1/1/46.

Inasmuch as, notwithstanding such increased credit, the expenditures

exceed the starting cash plus receipts for the year 1946, the cash on

hand at the end of 1946 continues to be reported as “-0-.” A further

adjustment is required to accommodate such amendment by an increase.

of the figure shown on the chart as the total of maximum gross income

for all years listed. The increase is from $7,299.87 to $7,432.07.

The recapitulation forming an appended part of Exhibit 284 ag-

gregates the figures showing the funds available as entered thereon for _

the period from 1/1/43 to 12/31/55, producing a total of $9,694.87.

The increase of maximum gross income to $7,432.07 increases the

total to $9,827.07.

The expenditures for the corresponding years, taken from the

footings of chart Government Exhibit 282 and entered in Exhibit 284

"in the fifth column under the heading “Less Expenditures” are shown

to amount in total to $47,932.27, a figure far exceeding the “funds

available” so far as the government has been able to ascertain them

by its investigation.

Defense counsel points with some indignation to the inescapable

fact that upon thig demonstration, and with no capital conversions

shown which migh# come even close to bridging the gap between cash

inflow and outgo of available cash, there is a patent incompleteness

in the calculations. If the apparent excess of expenditures over re-

‘ ceipts was covered by other sufficient items of receipt, both principal

and income,.why stop there? defense counsel asks argumentatively.

Does. not the presumption of innocense require that the government’s

_ .expert take*into account in the calculations he makes a sum sufficient

- . not only to liquidate the deficit, but also to produce a surplus, a hoard

large enough at the end of the preindictment period to account for

the excess of expenditures over non-taxable receipts in the indictment

years? [3818] A number of factors, however, are seen quickly to

dissipate the-seeming force of this contention. In the first place, the

principle of Rossi v. United States, 289 U.S: 89, 53 S. Ct. 532

A-29 ©

Appendix B—Opinion by Rosling, U.SD.J.

(1933) and Holland v. United States, 348 U.S. 121, 75 S. Ct. 127

(1954), in the context of the factual situation about to be noted

gives the government its prima facie case when it has sufficiently

proved, as it has here, such receipts and disbursements as its good

faith investigation has distilled from the infinite and uncharted sea

“of the financial affairs of all mankind. If the defendant is dissatisfied

with the product thus printa facie established, he need but furnish

the prosecution with the leads those cases speak of.

Furthermore; the deficit in receipt is a mathematical and eco-

nomic fact, if one accepts the probative validity of what ‘the govern-

ment adduces as preindictment income and resources it has uncov-

ered and no more.™Logic does not however, require that an excess

over what is needed to liquidate the obligations discovered to have

been paid be postulated. ;

Finally, as appears in finding of fact 4 and footnote 6 the cir-

cumstantial evidence touching defendant’s economic situation during

the “hoarding” years is such as to render it unlikely that defendant

was able to do more than balance expenditure with receipt and assets

on hand, and even that with difficulty. 3

’ &The government’s investigation was thorough and sweeping

_ for the period dating back to 1943, and spotty for earlier years.

Search was made of the files for the years 1932 through 1960 in the

Surrogates Courts of Kings and New York Counties for, evidence

of legacies from relatives of the defendant to him and immediate

family. The indices of the Register’s and County Clerk’s offices of .

the Counties of New York, Kings and Nassau were run for pur- —

chases, sales and mortgage transactions affecting ‘real property in

those districts during the years 1940-1960 and in which the defendant

or his wife might have been grantor, gfantee, mortgagor or mort-

gagee.

Additionally, nearly one hundred banks, both headquarters and -

branches, in the New York area were investigated to ascertain

whether checking or savings accounts or safe deposit boxes had

been opened or closed by defendant or his wife, and whether there

was evidence of loans obtained by them from these banks. The banks

selected for investigation were those located in the vicinity of de-

fendant’s residence in Brooklyn and Nassau or.in areas frequented

by him. Banks from [3819] which defendant had purchased money

orders or which were used by persons whose activities impinged on

A-30

Appendix B—Opinion by Rosling, U.S.D.J.

those of defendant were likewise checked. The inquiry was directed

as well to several finance companies in the New York area, the

major credit bureaus and agencies for possible loans involving’ de-

fendant and his spouse.. Numerous friends and relatives were inter-

rogated as to pertinent financial transactions, including possible gifts

or loans made at any time to the spouses. .

The Estate and Gift Tax offices of the federal government were

also checked for returns of gifts filed by relatives as donors.

Records of the Treasury Department listing the purchase and

redemption of United States Savings Bonds were resorted to for

pertinent information. Contact was also made with various insur-

ance companies, brokerage firms, retail stores and other commercial

establishments to ascertain what goods were purchased by, and serv-

ices rendered to or for, defendant and his family during the years

1943 through 1960.

Leads which were come upon in the course of the investigation

were pursued and checked out.

All this activity was concentrated upon ere of data from

which there might be compiled defendant’s net worth at the begin-

ning and end of each indictment year, and with a view to determining

the extent, if any, to which an increase therein was attributable to

taxable income.

The government’s task in carrying forward its investigation to

the goals envisaged was immeasurably complicated and rendered

more difficult of fruition by the uncooperative conduct of defend-

ant and his wife in their ref to furnish leads. No adverse infer-

erice, of course, may be drawn from their refusal to surrender: their

constitutionat privilege to remain silent and to have the assistance of

counsel at a time when it was clear that the defendant, and pos-

sibly the spouse, were. the target of an ongoing investigation the

culmination of which would, if culpability was sufficiently indicated,

be a criminal prosecution. Cf. Escobedo v. State of Illinois, 378

U.S. 478, 490, 491, 84 S. Ct. 1758, 1764, 1765 (1964) and consider

what the principle. therein enunciated promises by way of extra- |

polation.

The prosecution, however, is authorized in meeting its obliga-

tion to establish a prima facie case on trial of an indictment-when

found, to mortar an otherwise less than perfect structure of proof

by citing in extenuation of [3820] charged incompleteness the

A-31 7

Appendiaz B—Opinion by Rosling, U.S.D.J.

defendant’s failure to indicate where additional masonry helpful to -

him in instructuring the financial edifice might be come upon.

“[I]t is not incumbent” the Supreme Court declared in Rossi v.

United States, U.S. at p. 91, S. Ct. at p. 533 (supra fn. 4) “on

the prosecution to adduce positive evidence to support a negative

averment the-truth of which is fairly indicated by established circum-

_ stances and which, if untrue, could be readily disproved by the pro-

duction of documents or other evidence probably within defendant’s

Possession or control,” citing texts and cases. So also in Holland

v. United States, U.S. at p. 138, 'S. Ct. at p. 137 (supra fn. 4) an

income tax evasion prosecution, the court pointing to Rossi for prece-

dent, held that “where relevant leads are not forthcoming, the Gov-

ernment is not required td negate every possible source of non-

taxable income, a matter peculiarly within the knowledge of the

defendant.”

* Defendant’s general and pervasive lack of cash approaching at

times impecuniosity and utter poverty is supported by. inferences to

be drawn from circumstantial evidence. The court rejects the alterna-

tive inference,.as presenting only a possible but highly unlikely

eventuality in the context of all the evidence in the case. This in- -

cludes lack of leads by defendant to evidence supporting such alterna-

tive inference, namely, that defendant had funds, but perversely

and unreasonably conducted himself as though he were impover-

ished. By his own admission upon official interview at Milan Peni-

tentiary in 1943 he had but $1,350 in cash:in 1943 which he left

with his wife. Yet she, it appears, was receiving small handouts

during the term of his imprisonment from other. membefs of his

family scarcely themselves persons of means. Such receipts as

the prosecution could demonstrate during the preindictment period

fell far short of meeting his living and other day-to-day expenses

even though estimates for all his food bills’and much of what must

have been spent for clothing for himsel, his wife and children were

omited from the statistical’ comparison. Their inclusion would have

made the deficit to be accounted for by nontaxable assets and receipts |

that much greater. aa

During the preindictment period the purchase of a home with a

substantial cash down payment, the ownership of one and possibly

two cars, the employment of a maid, and other items of disburse-

ment betokened a standard of living considerably above a mere sub-

23 RTS TT RI

., 432

. Appendix B—Opinion by Rosling, U.S.D.J.

sistence level. The court will not, however, presume, with no proof

to sustain the presumption and when it is not shown that the prose-

cution has ignored leads which might have produced the proof, that

the defendant [3821] disbursed less than his-complete income in those

years in maintaining his indicated standard of living, thereby postu-

lating a preindictmenf year reserve of cash as having been built up

by defendant. Thus where retords exist, e.g. those of the Social

Security, the files report only $293.10 in 1944 and $632.19 in 1945

as éarnings received by defendant. These are attributed to employ-

ment with the National Ship Scaling Company [Exhibit 135].

The defendant, moreover, filed no income tax returns during these

years [Tr.-61-66], a fact established by the files in the statutory fil-

ing districts, to wit, the taxpayer’s residence, or place of business.

[26 U.S.C. (1954) 609; 26 U.S.C. (1939) §53(b)¢1)] The effect

of such nonfiling brings into play, as earlier noted, the presumption

that defendant had less than 500 or 600 dollars gross income in the

referent years.

That defendant’s wife did not work during the preindictment

period is borne out directly by testimony of defendant’s sons Joseph

and Frank and of Pauline Trento, a friend of the wife, and circum-

stantially, by the inference to be drawn from the wife’s failure to file

returns. [Tr. 901-904; 957-962; 1788-1795].

The court does not consider as having any probative value against

the defendant any representations in which he did not participate

made by the wife or others than himself in statements certifying either

his or her employment during these years or later, nor a fortiori in-

formation gathered by cfedit agencies and reported back to the con-

cerns which engaged their services. Documentary evidence was re-

ceived at trial under 28 U.S.C. 1732(a). .The civil rule, it is well

known, has equal application to criminal prosecutions. [United States

v. Brewster, 231 F. 2d 213, 215 (2d Cir. 1956), cert. denied 77 S. Ct.

1282; United States v. Kimmel, 274 F. 2d 54, 57 (2d Cir. 1960) ;

United States v. Re, 336 F. 2d $06 (2d Cir. 1964), cert. denied 379

U.S. 904]. Records made in the regular course of business serve to

_ establish that the “transaction recorded has in fact taken place.

Statements in such record, however, not shown to emanate from the |

_ defendant himself, are here given no weight against him as res inter

alois acta, and do not bind him, absent a showing of authorization.

Finally, with the absence of leads serving to handicap inquiry, it

appears that the government’s investigation of the wife’s affairs has

ee

A-33

‘Appendix B—Opinion by Rosling, U.S.D.J.

failed to turn up evidence that [3822] she had received: any income

during this period. The court in this connection rejects as false the

‘statement in a loan application [Government Exhibit 131] which she

submitted to the Manufacturers Trust Co. in 1956 that she was em-

ployed by Rosetta Coat Co. as a designer and had been so employed

for ten years prior. It may be noted that her signed application con-

tains the egregious falsehood that she was single. Attorney for de-

fendant stipulated at trial she was defendant’s wife. [Exhibit 131,

170; Tr. 1229; 1728-1729; 1737] ;

Additional circumstances evidencing defendant’s straitened situ-

‘ation in the preindictment years and the unlikelihood of his having

accumulated by the opening of the indictment term a hoard into which °

he might thereafter dip as into a Fortunatus purse are his picayune

borrowings; his persistent delinquency in payment of life insurance |

premiums in trifling amounts, his failure to close .an advantageous

real estate purchase in 1949 or 1950 which he deferred for two-years

because of his professed lack of the $250 that the selJer demanded as .

consideration, the purchase in 1955 of a Ford automobile on time

with, subsequent delinquency in payment of installments to the finance

company, the suffering of a default judgment in 1955 in the sum of

$64.05 recovered by a Health Club upon its claim, at no time dis-.

puted, for $46 “dues”, and the ultimate payment of $55 in e

ment of the judgment ; and the raising early in 1956 of a $10,000 mort- -

gage on his one-family house at 94 Brookline Avenue, Long Beach,

' with substantial charges incidental to such loan deducted from the

amount advanced. The immediate cashing of the: check received on

the loan is suggestive of urgent necessity to use the proceeds. Here

too we find the defendant failing to meet periodic payments due on

the mortgage with dangerous consequences a possibility not. lightly

to be ignored by one able to meet them. In respect of several of the

mortgage payments which he was in fact required in 1957 by the

lender to pay—and did—$23.49 in late charges, [Exhibits 101-109,

Tr. 207-209 ; 730-744 ; 765-769 ; 937-943; 950; 955] were incurred.

In 1956 he is again buying a Ford car with the major part of the

price financed. [Exhibits 130-134. Tr. 970-973; 989]

Jalousies forthe Long Beach house were in 1958 financed through

a bank and in the same year a boat was purchased by defendant with

additional firiancing by the same lending institution.

Strongly leading to the conclusion arrived at by the court that

many of these delinquencies and borrowings were [3823] coerced by

So eS a

‘ r

‘ ‘ . : ,

+ ae -

A .

°

°

A-34

Appendia B—Opinion by Rosling, U.S.D.J.

lack Of a hoard on-which defendant might draw for cash immediately _

needed and that instead currently received income in the indictment.

years provided the.source for current expenditures and that defen-

dant was not thereby evincing traits of irresponsibility or indiffer-

ence to business obligations, is the fact, later noted herein, that he ~

went to great lengths to conceal or mask his procedures so that they

’ could not be directly brought home to him. This accounts ‘for his

self-defeating involvement of third persons. in his affairs, whose

names and identities were used or even without their consent appro-

priated by him in transactions the only apparent’ purpose of which was

to cover his trail. If he had had the cash with which to complete his —

purchases he surely. would not have resorted to the clumsy expedi-

ents that now only worsen his situation as pointing to a conscious-

ness of guilt. , \

The Holland case, supra, is here relevant as illustrating a factual

environment in a measure analogizing the situation here presented.

In Holland the taxpayer’s claim of the government’s failure to in-

clude “in its opening net worth figure an accumulation of $113,000 in

currency and ‘hundreds and possibly thousands of shares of stock’

which they [allegedly] owned at the beginning of the prosecution

period” is dissolved by the acid of evidence of defendants’ revealing

conduct. We-continue with the court’s analysis for the methodology—

alternative, not exclusive—it suggests.

~“They [taxpayer petitioners] asserted that the cash had been

accumulated prior to the opéning date, $104,000 of it before

1933, and, the balance between 1933 and 1945. They had kept -

the money, they claimed, mostly: in $100 bills and at various -

times in a canvas bag, a suitcase, and a metal box. They had

never dipped‘ into it until 1946, when it became the source

of the apparent increase in wealth which the Governnient later

found in the form of a home, a ranch, a hotel and other prop-

erties. This was the main issue presented to the jury. The

Government did not introduce any direct evidence to dispute

this claim. Rather it relied on the inference that anyone who

had had $104,000 in cash would not have undergone the hard-

ship and privation endured by the Hollands all during the

late 20’s and throughout the 30’s. During this period they

lost their cafe business; accumulated $35,000 in debts which

were never paid; lost their household furniture because of

an unpaid balance of $92.20; suffered a [3824] default judg-

A-35

| i Appendix B—Opinion by Rosling, U.S.D.J.

ment for $506.66; and were forced to separate for some eight

years. because it was to their ‘economical advantage.’ Dur-

_ ing the latter part of this period, Mrs. Holland was obliged

_ to support herself and their son by working at a motion pic-

_ ture house in Denver while her husband was in Wyoming.

The evidence further indicated that improvements to the hotel,

and other assets acquired during the prosecution years, were

bought in installments and with. bills of small denominations,

as if out of earnings rather than from an ‘accumulation of

$100 bills. The Government also negatived the possibility

of petitioners’ accumulating such a sum by checking Mr. Hol-

land’s income tax returns as far back as 1913, showing that

the income declared in previous years was insufficient to ‘en-

able defendants to save any appreciable amount of mofiey.

The jury resolved this question of the existence of a’ Sache of

cash against the Hollands, and we believe the“vérdict was

~ fully supported.” 7 ..

. In Holland leads had been furnished which the government was

in duty bound, albeit within reason,.to explore. Heré no leads were

provided. Thereby the other prong of,the Holland rule was bared

to disadvantage the defendant, for the Court had written further

that, ““[o]nce the Government has established its case? the defendant

remains quiet at his peril. Cf. Yee Hem v. United States, 268 U.S.

178, 185, 45 S. Ct. 470; 472, 69 L. Ed. 904. The practical disadvan-

tages to the taxpayer are lessened by the pressures on the government

to check and negate relevant leads.” )

- Other similarly illustrative situations which need not here be re-

stated are presented in the cases, companion to Holland, of Fried-

berg v. United States, 348 U.S. 142, 75 S. Ct. 138 and Smith v, United

States, 348 U.S. 147, 157, 75 S. Ct. 194, 199. See also United States

v. Ford, 237 F. 2d 57, 62 (1956) case remanded to the District Court

upon the suggestion of mootness with directions to vacate judgment

' of conviction and to dismiss the indictment on that groynd; Gariepy ..

Vv. United States, 189 F. 2d 459 (6th Cir. 1951) ; Remmer v. United

States, 205 F. 2d 277, 286 (9th Cir. 1953), reversed on other grounds

—just' tampering. ‘eee ,

7“An estimate of the taxpayer’s net worth as’ the means of: deter- \>

mining his’ income is’ resorted to in the absence of accurate recérds

which it is his duty under the statute to [3825] make and to preserve,

and by its very nature is an approximation; * * *.” Bell v. United

‘2

“

TS BSF

A-36

AppendiagB—Opinion by Rosling, U.S.D.J. -

States, 185 F. 2d 302, 308 (4th Cir. 1950), cert. denied 340 U.S.

930, 71 S: Ct. 492. See also Remmer v. United States, supra p. 287;

Schuermann v. United Stafes, 174 F. 2d 397 (8th Cir. 1949), cert

denied 338 U.S. 831.

The Exhibit 281 assets were the only ones found by the govern-

ment upon intensive investigation and in the absence of leads fur-

nished by defendant or his wife.

Cash: None. This has been earlier covered.

Bank Accounts are: Flatbush Savings Bank, accounts No. 202571,

202787 and 254040 [Exhibits 71-74. Tr. 585-609] and Masetti

evaluation with his worksheets and analysis, [Exhibit 283 for sup-

port ; M3079-3083] and Dime Savings Bank, a nominal account, No.

1519081, maintained -by defendant in the name of a friend Nancy

Segreto so that he could qualify for a safe deposit box at the bank

in the pretended depositor’s name. The bank rented vaults only to

depositors. [Tr. 1054-1057; Exhibits 145 and 146. Tr. 1062-1063,

1067-1074, 1076-1086, 1090-1102, M3083-3084].. , ;

Investments ate: Gurney’s Inn Corp. [Stipulation on trial, Tr.

- 1033-1044; Exhibit 141, M3084-3086] and U. S. Savings Bonds [Tr.

608-626 ; Exhibit 75-79, M3086-3089].

Real Estate and Improvements are: 94 Brookline Avenue, Long

Beach, two parcels purchased by defendant from Lenitz, one for

$15,000 and the other for $540, and a strategic strip of land acquired

from Clamons in 1952 for $250. [Tr. 179-188; 262-215; Exhibit 15,

16 and 20, M3089-3091] and Jalousies {Stipulation, Tr. 2144-2149:

Exhibit 221; M3091-3092]. .

Furniture: From Levine [Stipulation, Tr. 927-929; Exhibit 117

and 118; M3092-3094]| and Selwyn-Pomeroy [ Stipulation, Tr. 678-

696, 704-705 ; Exhibit 85-87; M3095-3097]. -

Automobilessand Boat: 1955 Ford (Tr. 628-642; Exhibit 80;

M3097- 3100) purchased by defendant in wife’s maiden name and

disposed of in 1956. Hence, $2,704, its cost is eliminated from

12/31/56 net worth and $1,214 ($2,704 less [3826] $1,490 its market

value, taken as evidence of the sum realized on disposition ) i is entered

on Exhibit 285 (“Adjustments to Net Worth”, q.v.) as increase in

net worth for the following year. The adjustment correctly reflects

the exchange effect of the transaction (M3170-3176). ;

| A-37

Appendix B—Opinion by Rosling, U.S.D.J.

1957 Ford purchased by defepdant from Wolff Motors in 1956,

defendant again using his wife’s Maiden name. [Stipulation, Tr. 970-

973, 989; Exhibit 130; M3100-3101] Purchase was financed through

Manufactvrers Trust Co. [Tr. 994-1007; Exhibit 131-134; Testi-

mony of Louis Esposito, Tr. 2268, et seq. passim.] In 1960 this

automobile was resold to. Lynn Motors for $700 [Stipulation, Tr.

2619] and accordingly was not thereafter included in the 1960 year-

end net worth statement [Exhibit 281]. The effect of such purchase

and resale was propertly accounted for,in the computation of defen-

dant’s 1960 gross income by adding $1,790.91 to defendant’s 1960

increase in net worth [Exhibit 285], and simultaneously eliminating

$2,490.01, the cost of acquisition, from defendant’s net worth at

12/31/60 [Exhibit 281; M3176-3179].

Boat purchased in 1958 by defendant with his own funds and for

own use in the name of his friend Esposito. Price paid was $2,100

plus a trade in of andther boat. [Tr. 2024-2030, 2035-2090, 2268-

22897 Exhibit 214-217] . The purchase was financed through Franklin

National Bank with defendant using Esposito as the nominal bor-

rower. [Tr. 2052-2060, 2071-2074, 2175-2194: Exhibit 214-217,

230.] Subsequently the loan installments were paid by defendant with

bank money orders which deféndant himself signed, affixing, how-

ever, Esposito’s name as the ostensible signatory. [Stipulation 2632;

Exhibit 231-x-23]

* Exhibit 281 lists as liabilities of defendant during the 1956-1960

period the amount of principal owed by defendant on his loan obliga-

tions at the end of each indictment year. Interest payments made by

defendant on the principal indebtedness scheduled in Exhibit 281 as

liabilities as well as finance charges incurred in connection with the

consummation of these obligations are set out in the list of defen- *

dant’s expenditures on Exhibit 286 and 286-A, later considered and

discussed. The liabilities follow : :

Lenite mortgaye arising out of the purchase of the Brookline prop-

erty. [Tr. 179-199; Exhibit 17; M3102-3104]

[3827]

Colonial Realty Co.,$10,000 mortgage raised by defendant on such

property. [Tr. 730, 744, 765-766 ; Exhibit 101-106, 109-x-23- M3104-

107).

Franklin National Bank—Loan to finance defendant’s purchase of

jalousies. [Tr. 2159-2175 ; Exhibit 221, 227-229; M3107-3111]

~ Merwe

A-38

Appendiz B—Opinion by Rosling, U.S.D.J.

Associates Discount Corp.—Loan to finance purchase of 1955 Ford.

[Tr. 628-642 ; Exhibits 80 and 81 ; M3112-3115]_,

Manufacturers Trust Co.—Loan to finance purchase of the 1957

Ford. [Tr. 994-1007 ; Exhibit 130-134; M3115-3118]

._ Franklin National Bank—Loan to finance boat purchased by de-

fendant in the cover name of Esposito. [Tr. 2175-2194, 2632 ; Exhibit

214-217, 230-231; M3118-3121]

Marion Levine—Furniture purchased from Levine on deferred

payments. [Stipulation, Tr. 927-929; Exhibit 117 and 118; M3121-

3122]°

Selwyn-Pomeroy—Furniture purchased from the seller, likewise

on deferred payments. [Stipulation, Tr. 678-696, 704-705; Exhibit

85-87 ; M 3122-3124] |

® The items entered upon the combined Exhibit 286/286-A are too.

numerous for detailed or for even limited analysis. They are accord-

ingly listed herein with pertinent transcript references only. Despite

their volume they draw a picture that is no doubt incomplete. That '

does not, without more, detract from the efficiency of the prosecution’s

proof in establishing the requisite prima facie showing. The good faith

of the prosecution, its skill and its industry, in investigation, all have

been demonstrated to the court’s satisfaction beyond a reasonable doubt.

In the absence of leads supplied by defendant, no inference may be

drawn by the court that further prospecting in areas which the defense

does not even now designate would be fruitful in defendant’s interest.

The expenditures which the court finds fully established are:

7

Rent—Nineteen Building Co. [Tr. 132-160; Exhibit 10-14;

M3136-3137]

Insurance premiums—Metropolitan Life Insurance Co. [Tr. 234-

261 ; Exhibit 24-27 ; M3139-3140]

[3828]

Gardening—Louis Biamonte & Sons. [Stipulation, Tr. 337-339;

Exhibits 47 and 48]

Property taxes—94 Brookline Avenue—See discussion supra. _

Brooklyn Union Gas Co.—{Stipulation, Tr. 387-391 ; Exhibit 51

and 52] mat :

A-39

Appendiz B—Opinion by Rosling, U.S.D.J.

Roosevelt Garage—[Tr. 547-554, 566-567 ; Exhibits 61 and 62]

New York Telephone Co.—[{Stipulation, Tr. 571-583; Exhibits

66-70}

Insurance Premiums—John Hancock Life Insurance Co. [Exhibit .

34, Tr. 320-330, 412; Exhibit 35, Tr. 393-397, 403, 405, 410-411 ;

Exhibit 36, Tr. 426-428; Exhibit 37, Tr. 405-410; Exhibit 38, Tr.

412-415 ; Exhibit 39, Tr. 415-418 ; Exhibit 40, Tr. 419-420, 425, 426:

Exhibit 41, Tr. 428-431; Exhibit 42 and 54, Tr. 432-433, 446-447, 461-

466; Exhibit 43 and 57, Tr. 504-505, 508-517; Exhibit 44 and 56,

Tr. 475-476, 485-488; Exhibit 45 and 55, Tr. 466-474; Exhibit 46,

Tr. 490-491, 495-504 ; Exhibit 58-x-23—Stipulation, Tr. 520]

‘Consolidated Edison Co.—[Stipulation, Tr. 712-715, Exhibit 92

and 93] | |

Mortgage—Brookline Avenue—[Lenitz, Tr. 188-195, Exhibit 17]

Haberdashery—{Levin—Stipulation, Tr. 709-711, Exhibit 90 and

91]

Madison French Cleaners—[ Stipulation, Tr. 706-709, Exhibit 89]

S. Friedman Furs, Inc—[Stipulation, Tr. 716-719, Exhibit 94 and

95] nc

Gymnasium Membership for defendant's wife—[Bay Factors,

Stipulation, Tr. 719-722, Exhibit 96 and 97] ;

Plumbing—94 Brookline Avenue—[H. V. Snow, Stipulation, Tr.

723-729, Exhibit 98 and 99]

Dr. A. Sternbach—[Stipulation, Tr. 933-935, Exhibits 123 and

124]

Dr. Jerome Kaufman—[ Stipulation, Tr. 931-933, Exhibits 121 and

122] |

[3829]

| St. Francis Prep. School—[Stipulation, Tr. 929-931, Exhibits 119

and 120]

Insurance, general—Colonial Realty Corp.—[{Tr. 745-746, 749,

753-759, 766 ; Exhibit 107 and 109-x-23 ; M3145-3146]

‘Interest Payments—Colonial Realty Corp—[Tr. 730-744, 765-

769 ; Exhibits 101-106, 109-x-23 ; M3146]

S Dew n eammee

.

A-40

2

Appendix B—Opinion by Rosling, U.S.D.J.

Mortgage Expense—Colonial Realty Corp.—[Tr. 937-939; Ex-

hibit 101-105 ; M3146-3147]

Safe Deposit Box—Dime Savings a an used name of

a friend’s wife, Nancy Segreto, as lessee. [Tr. 1044-1053, 1060-1061 ;

1062-1063, 1067-1074, 1076-1086, 1090-1102, 1806-1810. Stipulation,

Tr. 2631-3631-A, Exhibits 142-144; M3147-3148]

Maid full time—Ada Graham—(Stipulation, Tr. 1018-1019]

Dr. H. B. Herman—[Stipulation, Tr. 1027-1028; Exhibit 136]

Dr. Barnett A. Greene—[Stipulation, Tr. 1028-1030; Exhibits

137 and 138-x-23]

Dr. Robert L. Fisher—{ Stipulation, Tr. 1031- 1033 ; Exhibits 139

and 140-x-23]

Interest and late charges re 1955 Ford purchased by defendant -_

financed by Associates Discount Corp. [Tr. 628-642, 656; Exhibits

80 and 81; M3149]

Interest re financing 1957 Ford, Manufacturers Trust Co. {Tr.

994-1007 ; Exhibit 130-134; M3149-3151]

Dr. Joseph Eisenstein—[ Stipulation, Tr. sialic Exhibits 149 °

and 150-x-23]

New York Phoenix School of Dini, Tr. 1143-

1146; Exhibit 141]

Jewish Hospital of Brooklyn—{Stipulation, Tr. 1146-1149; Ex-

hibit 152]

Church of St. Ann—[Stipulation, Tr. 1149-1151; Exhibit 153-x-

23)

[3830]

Holy Innocents Building Fund—[Stipulation, Tr. 1152-1154; Ex-

hibit 156-x-23]

Wedding of defendant's son Joseph—Belmont Plaza Banquet Inc.

[Stipulation, Tr. 1155-1158; Exhibit 158]; Kayne Miller Orchestra

{Stipulation, Tr. 1159-1162; Exhibit 160-161]; Atlas Floral Deco-

.tators [Stipulation, Tr. 1162-1163; Exhibit 162] ; Ben Zuckerman

(Stipulation, Tr. 1163-1165, Exhibit 163-164]

—————oOoroe

eee ese SSS

Ai

Appendix B—Opinion by Rosling, U.S.D.J.

Maimonides Hospital—[Stipulation, Tr. 1179-1181; Exhibits 166

and 167 ]

Whitehouse Garage—[Stipulation, Tr. 1181-1188; Exhibit 193]

Long Island Water Corp.—{ Stipulation, Tr. 1190-1192; Exhibits

168 and 169]

General Motors Acceptance Corp —Payments on a 1960 Olds-

mobile purchased by defendant’s son. [Tr. 1398-1399, 1407-1408;

1816-1817; 1853-1855; Stipulation, 2632-2633; Exhibits 177 and

178, M3154-3155] ;

Unity Hospital—[Tr. 1751; Exhibit 154]

- Mme. Denise French Cleaners—[Tr. 1412-1417, 2629, Exhibit

179)

Rental of cars—Craft Service Inc.—[{Stipulation, Tr. -1426-1430,

Exhibit 180 and 181]

Long Island Lighting Co.—[{Stipulation, Tr. 1430-1444, Exhibit

182]

Plumbing—Brookline Avenue—Moriarty and Sherman—[Stipu- |

lation, Tr. 1434-1437, Exhibit 183 and 184]

Home Carpet Cleaners—[Stipulation, Tr. 2149-2152, Exhibit 222

and 223]

M. Kavanagh & Son—[Stipulation, rd 2154-2156, Exhibit 224

and 225]

Laurel Floor a Hr. 2156-2158, Exhibit

226]

Jalousies—interest and late payment le it, National

Bank [Tr. 2159-2175; Exhibit 221, 227-209; M3157-3158]

[3831]

Boat Insurance—Parsons Insurance—[ Tr.” 2282-2289].

Tickets to a business association function—Dominick Londo—’

[Tr. 1994-1995, 2629; Exhibit 212]

Boat—interest paid re financing—Franklin National Bank—

[Tr. 2175-2194; Exhibits 214-217, 230, 231; M3158 and 3159]

Vulpis Heating Corp—[Tr. 2337-2341; iene 243]

A

|

A-49

Appendix B—Opinion by Rosling, U.S.D.J.

Fuel Oil—[Vulpolene Corp.—Tr. 2342-2347-A; Exhibit 244]

Boat rental—(Eagle Fishing Pier—Tr. 2516-2525, 2538-2540,

2633 ; Exhibits 239-x-23 and 248]

Insurance premiums, general—Frank Romanzi, insurance broker

{Tr. 1802-1805, 2213-2229, 2261-2263, 2496-2512, 2515; Exhibits

200-201-x-23, 232, 236, 238, 247 ; M3159]

Insurance premium—Arthur C. Lenitz [Stipulation, Tr. 2582-

2584; Exhibit 252-x-23]

Dresses—Lillie Rubin [Stipulation, Tr. 2579-2582; Exhibit

251]

Rumbplers Youth Center, Inc. (Stipulation, Tr. 2585-2587; Ex-

hibit 254]

Dr. M. D. Roven [Stipulation, Tr. 2587-2588; Exhibits 255

and 256]

Rosedale Florist (Stipulation, Tr. 2589-2591; Exhibits 257 and

258]

Dr. George A. Rawler [ Stipulation, pi 2 2591-2593: Exhibits

259 and 260] .

Drug store purchases—Reid and Yeomans [Stipuletion, ae

2594-2595 ; Exhibit 261]

Purchase—painting—French American Gallery—[Stipulation,

Tr. 2595-2596 ; Exhibit 262]

Atlantic Television Co. — Tr. 2596-2598; Exhibit

263-x-23]

Dr. Stanley Greenfield—[ Stipulation, Tr. 2598-2600; Exhibits

264 and 265]

[3832]

Dr. Hyman Strauss—[Stipulation, Tr. 2600-2601 ; ‘Exhibit 266]

Swim suit—Treasure Trove [Stipulation, Tr. 2602-2603; Ex-

hibit 267]

Carol Dairy—[{Stipulation, Tr. 2603-2604; Exhibit 268]

Bordens Farm Products—([Stipulation, Tr. 2604-2605]

Sylvan Dairy Inc.—[Stipulation, Br. 2605-2606-A]

SO ee

+e A enone en

ene rs ee ee

A-43

Appendiz B—Opinion by Rosling, U.S.D:J.

Hardware. for Brookline Avenue—F. M. O’Rourke [Stipulation,

Tr. 2615-2616; Exhibit 277]

Joe Morley Electricat Co.—{Stipulation, ‘Tr. 2607-2609: Ex-

hibits 271 and 272] 3

Vinny and Rogers Meat Market—I Stipulation, Tr. 2609-2611;

- Exhibit 273-x-23]

De Rand Market—{ Stipulation, Tr. 2617] :

Bianchi Boat Basin—[Stipulation, Tr. 2611-2614; Exhibits 274

and 275]

Traffic Summons and Control Bureau—This covers payment of

parking tickets by defendant during 1956-1958. The transactions

were conducted by defendant who used for the purpose the name

' of a friend, Joseph Dantuono. [Stipulation, Tr. 1512, 2629-2631,

2639-2644, 2649-2653, 2655-2657; Deféndant’s Exhibit’ HX 185-

ee wee

Pots and pans—Purchased from Kenro Sales and Service Corp.

[Stipulation, Tr. 2618-2619] ; |

The court finds that the defendant provided the funds which were

used applied or disbursed in making the foregoing expenditures.

1° Defendant’s children, Joseph Jr. and Frank, aged 27 and 22

respectively, testified that their, mother, defendant’s wife, had never

been employed, [Tr. 901-904, 1788-1791]. ° Pauline Trento, a friend

for some eighteen or twenty years testified to similar effect, [Tr.

957-962]. In an admission record of the Unity Hospital, covering

hospitalization of defendant’s wife in December 1959, he declared

that she was a housewife, [Exhibit 154, Tr. 2393-2398, 2406, 2411,

2634]. The Social Security Administration certified that its files

disclosed no record reflecting any earnings by the wife, [Exhibit 7].

The I.R.S. found no income tax returns filed by the wife at any

time, [Stipulation, Tr. 2621-2624].

The government’s thorough investigation uncovered no evidence

of receipt of income by her at any time. Exhibit 131, loan applica-

tion which Mrs. Schipani submitted to the Manufacturers Trust Co.

(see supra, fn. 8) provided the Government with a lead in the form

of the representation she made therein to the Bank that she had

been employed as 2 designer by the Rosetta Coat Co. for ten years.

wer ahd

Cer

Pe ee

< eryorrnnn

A-44

Appendiz B—Opinion by Rosling, U.S.D.J.

When this lead was checked, however, it developed that she had

never been so employed. Rosetta did not even employ a “designer”

in its business, [Exhibit 170, Tr. 1229, Exhibit 131, Tr. 1728-

1729, 1737]

Nor did -defendant’s children furnish any of the funds their

father expended. [Stipulation as to part; Tr. 525, 903-906, 1788-

1789]

11 Adjustment items of addition are defendant’s expenditures,

[Finding of Fact 8, fn. 9, Exhibit 286/286-A] ; loss on the disposi-

tion of the 1955 Ford car in 1956 and on the sale of the 1957 Ford

in 1960. [See fn. 7, “Automobiles and Boat’’]

Adjustment items applied in reduction consist of the following:

Statutory $50 exclusion from taxable income of dividends on the

Gurney’s Inn stock. These dividends had been applied by defendant

to the acquisition of the stock and were accordingly charged to defen-

dant in the asset schedule [Exhibit 281] as part of the investment.

[Stipulation, Tr. 1033-1044, Exhibit 141, M3180]

Other items, all quite small with one exception, namely $1025.13

proceeds of a John Hancock Life Insurance policy, and requiring no

special comment. nie

[Tr. 261-267, Exhibit 28; Tr. 2935-2936; Exhibit 280; Exhibit

54; Tr. 392-393, Exhibit 53; Tr. 737-739; Exhibit 104, M3181; Tr.

290, Exhibit 33; Tr. 2140-2141, 2286-2289, Exhibit 22]

[3834]. |

12 The government’s investigation educed no evidence, direct or

circumstantial, that defendant had received any taxable loans, gifts,

inheritances or other donations, non-taxable as income. It is true

that the inquiry did not embrace the records of every one of the tens _

‘of thousands of governmental subdivisions and agencies, domestic

and foreign, where information might have been sought. The ampli- ©

tude of the inquiry it made was, however, consonant with what is

found reasonable in light of defendant’s failure to supply leads when

solicited by government representatives to furnish them. (See

M2964-2990 for conspectus of the problem created by defendant’s

noncooperativeness and the measures adopted to cope with the situa-

tion.) The conclusions testified to as arrived at by Mr. Masetti are

accepted by the court as valid beyond a reasonable doubt.

*

i a EE AY Al APTN REIS eh re edt.

' A-45

Appendia B—Opinion by Rosling, U.S.D.J.

18 Although defendant received large sums during the indictment

years and in earlier tax years now outlawed by limitations, he had

no bank accounts in his own name in which these sums might be

deposited with record preserved of the deposits. It is true that he ©

maintained three accounts mn the name of’ his wife, but these were

small deposits in trust for his children. None of the large sums that

passed through his hands moved into or out of these accounts. [Ex-

+

hibit 71, 72, 74; Tr. 585-589, 593-596, 600-601, 606-608, M2971-

2975]

‘He opened and maintained a safe deposit box, the only one the

prosecution was able to locate, in the name of one Nancy Segreto.

[Exhibit 142-146; Tr. 1044-1053, 1060-1061, 1062-1063, 1067-1074,

1076-1086, 1090-1102, 1806-1810, 2631-3631la] —

His purchase’ of furniture from Selwyn-Pomeroy in 1956 was

paid for with $16,000 in currency. [Exhibit 85-87; Stipulation, Tr.

704-705]

Payments totalling about $6,000 made by him in 1959 in connec-

tion with his son Joseph’s wedding: were likewise in cash. [Exhibit

158, 160-161, Stipulation, Tr. 1155-1162]

Other payments in cash during the indictment years were for

rent during the years 1956-1960, [Exhibit 14, Tr. 160], mortgage

payments in 1956 [Exhibit 17, Tr. 192], garage bills in 1957, [Ex-

hibit 193, Tr. 1638], and medical expenses in 1957-1960, [Exhibit

139:and 152, Tr. 1031-1033, 1146-1149].

Defendant in countless instances during the indictment period

paid his obligations with bank money orders purchased at [3835]

various branches of the Manufacturers Trust Co. In accordance

with the bank’s procedures, which must have been known to defen-

dant and,’ therefore, entered into his motivation, no record was kept

by the bank of the identity of the purchaser, nor was any identifica-

_ tion required for the use of the paper and its honor by the bank when

the orders cleared for collection. In making the. purchases of these

instruments the defendant frequently signed the name of another

person of his acquaintance and executed such other documients as the

transaction demanded in the name of the person whose identity de-

fendant had ad hoc assumed.

Illustrative of his procedures in such impersonation or signing

are the following:

—

A-46

Appendic B—Opinion by Rosling, U.S.D.J.

The bank money orders used by defendant to pay Associate Dis-

count Corp. in 1956 were signed by him as “Anne Scalfani,” his

wife’s maiden name. [Exhibit 81, Tr. 633-634]

~ Money orders to pay parking ticket fines were signed by defen-

dant as “Joseph Dantuono” during 1956 through 1958. [Exhibit HX

185-x-23, Tr. 2629-2631]

In 1957 defendant signed his wife’s maiden name on a money

order which he used in paying the Manufacturers Trust Co. [Ex-

hibit 134, Tr. 1007].

In 1958-defendant purchased a Chris Craft Boat using Soe the

purpose pn the title documents the name of a friend, Louis Esposito,

who had no interest in the transaction. Defendant traded in another

boat he owned, registration of which was not found by the purchaser-

dealer. [Exhibit 214-217, Tr. 2024-2030, 2035-2052, 2268-2289]

In the years 1958 through 1960 defendant, continuing his mas-

querade in the boat transaction, signed the name “Louts Esposito”

on the money orders with which he paid the installments due the

Franklin National Bank. The bank had financed the unpaid balance

of the “Esposito” purchase of the boat. [Exhibit 231, Tr. 2632] He

also signed the name Louis Esposito on a bank personal money order

given to Eagle Fishing Pier in 1959:in payment of boat rental he

owed. He had posed as “Louis Esposito” when he rented the —.

[Exhibit 239 and 248, Tr. 2516-2525, 2538-2540, 2633]

He had used the name .Nancy Segreto, wife of a friend, for the

opening of a nominal account with the Dime Savings Bank so that-

he might be eligible’ under the bank’s rules to rent a vault in the same-

name from the bank. (See supra, fn. 7 [3836]. “Automobiles and

Boat”) During the indictment years he signed her name on two

bank money orders (1957 and 1959) which he used to pay the box

rental. [Exhibit 144, Tr. 2631-2631a]

He signed the name “Stephen Ucciardi” on bank’ money orders

which he transmitted to General Motors Acceptance Corp. in 1960

to pay instal]ments on an Oldsmobile putchased by his son. [Exhibit

178, Stipulation, Tr. 2632-2633]

The purchase of the 1955 Ford in that year and the 1957 Ford

in 1956 in his wife’s maiden name “Scalfani” have already been

noted. [Exhibit 80, Tr. 628-635; Exhibit 130, Tr. 970-973, 989].

There is a strong suggestion in the documents that in arranging for

A-4T *

Appendix B—Opinion by Rosling, U.S.D.J.

the delivery of the 1957 car he disguised his name by signing it

“J. Shippe.”. [Exhibit 130, Tr. 974-989] -.

During the years 1956 through 1958 defendant frequently used a

» 1957 Buick allegedly owned by Joseph Dantuono in whose name

traffic ticket fines had been paid by defendant. This and more leads to-

the inescapable conclusion that the registration of the car to Dantu-

ono was but a part of defendant’s continuing game of hide-and‘seek -

with the Internal Revenue Service and that the automobile despite

its registration to Dantuono actually belonged to defendant. [Tr.

1498-1506, 1584-1589, 1603-1604, 1630-1638, 1656, 2639-2644,

2649-2653. Exhibits 193 and 278] aa

It is noted, however, as a point in defendant’s favor that the court

considers the alleged use by defendant of the name Joseph Scalfani

instead of his true name in his membership of an athletic club at the

Pierrepont Hotel as not sufficiently established.

Representations by defendant from time to time in pertinent

documents as to émployment (fictitious) serve as additional circum-

stances from which adverse inferences are drawn by the court. The

facts are these: .

Posen ‘ene 46: tne whem filling out statements for personal or

business reasons defendant asserted a false history of continuing em-

ployment. The following examples of such deceptive practices are to

be noted: “

The National Ship Scaling Co. went into bankruptcy in 1949. The

existence of its successor, the Universal Ship Scaling Co. was brief,

ending its career in 1950 or 1951. [Tr. 667-670, 674] It was defen-

dant’s frequent deception, as will be demonstrated in a moment, to

claim that he was employed [3837] by the Ship Scaling companies as

a timekeeper, an employment which if genuine would have been re-

flected in the records of the. Social Security Administration. There

is, however, no record there of such employment. [Exhibit 135]

In an application for life insurance defendant represented on 2/ 19/57

to the John Hancock that he was and for five years past had been em-

_ ployed as a timekeeper and chief pay clerk at the Universal. [Ex-

hibit 44, Tr. 485, 488-490] On 9/30/57 in an application to the same

company defendant again certified to such — [Exhibit 42,

Tr. 454, 461, 465-466]

On 12/16/59. defendant once more alleged, i an admission record

of the Unity Hospital, that he was employed as a timekeeper by a

A-48

Appendix B—Opinion by Rosling, U.S.D.J.

Ship y Co. (National). [Exhibit 154, Tr. 2393-2398, 2406,

2411, 2434]

During the years 1955-1958 defendant told his son Joseph, then s

* student at Eollege, that he was a timekeeper in the ship scaling business,

and that whenéver the boy might he required to fill out an application

at college which called ‘for information concerning his father’s occu- .

paskon, Bo wie to-Cactaneleae as the eangeoyanens.cf le, father. [{Tr.

1826, 1830) . .

Ainlttes Decitiies caatiaitnints itis Vdbtuteas in einen certi-

fied was with the Riveredge Transportation & Storage Co. Its presi-

. dent. Martello testified that deferidant had never been employed by

the company. Ih 1958 defendant, according to Martello, had merely

asked him if he would “okay” defendant’s credit if a bank to which

defendant was applying for a loan should call. Defendant, however,

in an FHA credit application dated.4/15/58 expanded the credit rec-

ommendation he had asked for. to employment as a “solicitor”

ae ee — years. [Exhibit 229, Tr. 2166-2175]

Later that year he repeated the misrepresentation in an application

“for insurance dated 9/17/38, this time, however, describing his em-

ployment as that of a salesman, and reducing its antecedent duration

to five years. [Exhibit 45, Tr. 473-475] |

Here, too, the Social Security records reflect no such employment

as defendant claimed, [Exhibit 135]. Additlonally, there is an ob-

vious chronological conflict in the defendant’s competing claims of

. simultaneous employment by the Ship Scaling companies and the

Riweredge.

Defendant on occasion included his wife in false representations of

t. Thus, in 1956 he falsely stated to a broker in the course .

of applying for a policy of physical damage insurance in which his wife

was to be the insured that his wife was employed by the Rosetta Dress

Co., [Exhibit 236, Tr. 2229-2231, 2252-2260), His wife's misrepre-

sentation {3838] of a like employment would ordinarily be deemed to

be res inter alios acta as to defendant and inadmissible. But her mis-

representation in a document cannot be-considered as standing apart

from the mass of evidence directly binding upon the defendant. Taken

ee eee eee eee oe

that the wife's deception was an incident springing a com-

mae with her husband in a family transaction with a

Gisbons. It is merely cumulative of much that is clearly chargeable

— Me cogeives an Senuiying 06 conGatons, Chapeteps, to Spfer-Gat

LZ ”

*

A-49 :

Appendiz B—Opinion by Rosling, U.S.D.J.

he was privy to the Rosetta falsehood of the wife which parallelled and

fitted in with so much of his own devious procedures. [Exhibit 131,

Tr. 994, 1000-1001 ] ,

14 The court does not accept defendant’s reading of Holland, with

United States v. Massei, 355 U.S. 595, 78 S. Ct. 495, decided in 1958,

four years after Holland, supplying a supporting gloss, that by a rigid

dichotomy the government is given the choice in net worth prosecu-

tions of demonstrating either a source of taxable income or that all

sources other than that alternative are excluded. The cases are clear

that the courts have been guilty of no such folly as to mark out with

sharp definition for the guidance of the ingenious what form the prose-

cution’s proof must take to sustain a prima facie case of tax evasion.

See Holland, U.S. at p. 135; United States v. Massei, supra, in which

the Supreme Court although affirming, rejected the Court of Appeals’

(Ist-Circuit) holding and inferengially that in Thomas v. Commis-

sioner, 232 F. 2d 520, 526 (1st Cir. 1956). Cf. Spies v. United States,

317 U.S. 492, 499, 63 S. Ct. 34, 368 (1943).

To the contrary of defendant’s contention, the courts announce that

the equation of guilt has three, not merely the two alternative elements

noted. The third is the frame of reference in which the other two sub-

sist.

No problem of sufficiency of proof exists, of course, when the

. .

_ ro!

A-50

Appendix B—Opinion by Rosling, U.S.D.J.

complete, nevertheless can, and here does, beyond reasonable doubt

make out a prima facie case. For then the third element, a tertium

quid, comes into play. It is not to be defined and its reach is as un-

limited as is the human ingenuity in contriving that which is fraudu-

lent and deceptive which it must counter.

Nor will this court imprudently—(in light of the cases just cited)

—undertake to provide a definition ‘or to delimit the bounds for this

elusive element. The cases illustrate, rather than verbalize its at-

tributes. It is easily recognizable when present, and its presence lends

‘ corroborative strength to that which would otherwise be deemed an

insufficient showing of either of the other two elements. Thus,

unexplained increases in net worth alone with neither source effec-

tively shown nor possible nontaxable origins universally negatived

would not meet the standard of proof required upon which the court

might base a conclusion that increments are attributable to income

required to be reported. But an exculpatory explanation offered by

the accused is when later demonstrated to be false not wholly can-

celled and disregarded. What defendant has originally adduced, is

availed of by the prosecution, serving to be transmuted under well-

established rules of evidence into a circumstantial and affirmative

inference marking the increase as reportable but unreported income.

i( United States v. Adonis, 221 F. 2d 717, 720 (3d Cir. 1954) ; United

States v. Ford, supra, 237 F. 2d at p. 63.)

Defendant at p. 102 in his post-trial brief cites as helpful to his

position United States v. O’Malley, 131. F. Supp. 409 (E.D. Penn.

1955) wherein the court acquitted, by arguing that here as in

O’Malley (p. 412) the government “has established a lack of ex-

planation rather than a false explanation” by the defense.

We cannot agree. The defendant was well within his constitu-—

tional rights both before indictment and during trial in electing to

offer no explanation and to provide no leads. But his extraordinary

behavior in relation to receipt aad disposition of money, and his

procedures in transactions affecting assets which were incontrover-

tibly his own, his camouflaging of these transactions as those of

others who hafl no interest in them,—all are circumstantially the

equivalent [3840] of the grossest deception and falsehood he might

have arti in attempted self-exculpation. “The wicked flee

when no man pout” If he fled, he fled only the tax gatherer.

The broad ‘principle is expressed by Wignaore in his “Evidence”, Vol.

II, § 281, 1964 Pocket Supplement, p. 45, as follows:

oe

A-51

Appendiz B—Opinion by Rosling, U.S.D.J.

“No useful purpose would here be served in undertaking to

make further classification of the innumerable instances of

conduct, both verbal and non-verbal, of a party indicating a

consciousness of guilt. The common experience of mankind

in dealing with the ordinary affairs of life should offer, it

would seem, an indispensable test in making the determination |

as to whether or not the particular conduct encountered is

calculated to raise the inference of a consciousness of guilt.

And in this connection, common experience dictdtes that often

times while an affirmative or a negative act of a party may

not in and of itself justify such an inference, considered in

the light of the attendant facts and circumstances, an entirely

different result is warranted.”

*® Scattered bits of testimony strongly suggest the ownership by

defendant of some restaurant business, or possibly a specific restau-

rant, the Casa Bianca at 1005 4th Avenue, Brooklyn, or at least an

interest in it, as a likely source of his income. On May 22, 1961 his

son Frank (so the boy testified), having occasion to fill out an

application for employment, represented in the document that his

father, the defendant’s “‘occupatiqn” was that of “restaurateur,” ‘and

that the parent’s firm and its address were “Casa Bianca, 1005 4th

Avenue, Brooklyn.” This, the son continued, was pursuant to the

father’s instructions. [Tr. 908-927]

On June 9, 1961 the same son had filled out an application for a

fidelity bond. At the foot of the sheet which bore his signature were

affixed the signatures of deferidant and his wife as indemnitors of

the obligations which the son undertook by the instrument. In the

body of the page thus attested by the defendant appears the following :

“Name ; Occupation

* Father—Joseph Schipani Restaurateur”

[Stipulation, Exhibit 114, Tr. 913]

[3841]

Additional testimony on the subject of defendant’s Ownership of a

restaurant is supplied by the gardner Biamonte to the effect that in

1959 or 1960 defendant had told him that fe would like to buy a

plant for his restaurant. (Tr. 348-351, 378, 1}

Jeanette Corwin, a friend of the Schipani’s for some 25 years gave

testimony which the court has accepted only in part. The remainder

ee

/f

A-52

Appendix B—Opinion by Rosling, U.S.D.J.

is rejected, but in light of its manifest and purposive falsity intended

by the witness to aid defendant, it is upon evaluation and in its con-

text found by the court to provide an evidentiary basis for an inference,

hereinafter discussed and formulated, as to what approximately was

the true situation which the witness sought to distort or withhold.

Indisputably defendant on at least one occasion—in 1959—had

evinced a marked interest in benefitting the Casa Bianca financially.

This he had done by urging. Mrs. Corwin to stop in with her husband

at the restaurant whenever they were in the neighborhood, and to

divert her patronage from the Hamilton House to which she had been

accustomed and to resort to the Casa Bianca. [Tr. 1269-1276] The

significance of his interest which might otherwise have been slight

is found in another incident which she related, namely, that on a prior

occasion, the date of which is unclear, defendant had told Mrs. Corwin _

that he had an interest in a restaurant, the name of which he did not

mention. In answering questions of the prosecutor directed toward

having her fix a date for the conversation, she gave responses which

the court finds utterly ineredible. After many protestations that her

memory for dates was poor,to the accompaniment of endless incon-

sistencies and self-contradictions, she finally came to rest on a claim.

that the conversation in the course of which defendant’s admission

had been made and which had by her estimate consumed no more than

ten minutes, was engaged in twenty-two or twenty-three years before.

"It could have been twenty-four or twenty-five years she was prepared

to concede but not as few as twenty-one.

That the witness was lying was patent not alone from the content

of the testimony she gave, but also from the manner of its delivery.

Called by the prosecution, she was endlessly evasive, unresponsive

and seemingly unable to understand the simplest questions put by the

U. S. Attorney. Much of this air of confusion and ignorance -was in

the court’s view mere pretence, for she exhibited no such difficulty in.

answering defense counsel when he later took’ over the inquiry. To

him she delivered short, crisp and relevant replies. .

_- [3842]

.. The Court accordingly, recognizing that’ her objective was to

retrogress the incident to a past as remote from the indictment years

as possible, draws the inference as the only reasonable one to be

distilled from the evidence, that the conversation in fact took place

in a much more ‘recent period than she assigned to it, and under

eo

| A-53

Appendix B—Opinion by Rosling, U.S.D.J.

circumstances which left a lasting impression upon the witness.

[Tr. 1239 et seq. passim]

After having laid a foundation for the impeachment of this ~

manifestly hostile witness by interrogation concerning answers she

allegedly had given in the course of an interview by Agent Robert

Wynne less than a month before the trial, the U. S. Attorney called

Mr. Wynne to the stand and elicited from him the information that

Mrs. Corwin had at such interview reported the incident as having

_ occurred about ten years earlier, “during the 1950's.” [Tr. 2874-

2877] +

The agent’s testimony was offered and receive for impeachment

purposes only. If credited it might cancel out the witness’ attempt

to relegate the conversation to a remote chronology which might

deprive it of all probative value. The court in its discretion is author-

ized to admit the testimony for such limited purpose even though the

witness thus impeached has been called by the very ‘party which

seeks to nullify the effect of so much of the testimony elicited as .

conflicts with earlier extrajudicial statements. [United States v.

Freeman, 302 F. 2d 347 (2d Cir. 1962) ; United States v. Fancher, —

319 F. 2d 604 (2d Cir. 1962) ; Stevens v. United States, 256 F. 2d -

619 (9th Cir. 1958) ; Ellis v. United States, 138 F. 2d 612 (8th Cir.

1943) ; Asaro v. Parisi, 297 F. 2d 859 (1st Cir. 1962), cert. denied

370 U.S. 904. Cf. Hickory v. United States, 151 U.S. 303, 14 S. Ct.

334 (1898) } United States v. De Sisto, 329 F. 2d 929 (2d Cir. 1964),

cert. denied 84 S. Ct. 1885.]

The agent’s testimony is, moreover, cumulative insofar as its

effect is to call into question the portion of Mrs. Corwin’s testimony

bearing upon the date of the conversation, and even without having

received it the court would have made the evaluation indicated in

this footnote. The court had already given clear indication of such ©

disbelief of Mrs. Corwin’s purported chronology. (See Tr. 2747,

2748, at which point before Mr. Wynne had testified the court had

remarked that “I will take with more than one grain of salt her claim

that she can remember a ten-minute conversation which took place

not as [recently] as 21 years ago, but it had to be more than 23 years

ago.” The witness had in fact given as the likely outer limit of this

brief talk a date twenty-five years before. ) :

[3843] .

Finally, that defendant was frequently at the Casa Bianca restau-

rant and at odd hours not necessarily related to meal times is borne

A-54

Appendix B—Opition by Rosling, U.S.D.J.

out by the ieallony of a number of witnesses. Jerry Gross [Tr.

1880-1881] ; Charles Perla [Tr. 1710]; Ralph Schipani [Tr. 888-

893]; Joseph Dartley [Tr.. ‘1418-1422] ; Louis Esposito [Tr. 2273,

. 2274]; Pauline Trento [Tr. 963-964]; and Regina Attanasio [Tr.

2527-2538, 2620-2621, Exhibit 248]. The last witness mentioned

produted a record book of her business (rental of slips for small

aaa craft) in which at page 93 appears the address of the Casa

Bianca, a telephone number, the years “1959 to 1960”, the words

“of Rest.” which last expression the witness construed to be an

abbreviation of “restaurant”, and the address of the Long Beach

property, “94 Brookline (sic) Ave.” The information according to

the witness had been supplied by defendant. The name he used was,

an alias: L. Esposito. It appeared on the page in question.

16 That defendant had another likely source of income from

activities in labor relations is supported by no direct evidence, but

circumstantial proof of some force is not wanting.

Victor Matrunola, Vice President of Colonial Realty Co., while |

engaged in procuring a $10,000 mortgage loan froma private lender

for defendant prepared a work sheet, Exhibit 112-x-100, on which

he jotted down along with other random notations information per-

tinent to the credit of the borrower, nominally defendant’s' wife, the

record owner of the Brookline Avenue property. The loan, however,

was being secured for defendant. [Tr. 733] The mortgage applica-

tion, Exhibit 111, dated 3/10/56 was signed by both defendant and

his wife. After the transaction. closed the interest and amortization

payments during 1956-1960 to Colonial were all made by personal

money order signed by defendant, although some thus signed pur-

ported to carry the wife’s signature. [Exhibit 109, Tr. 766]

On the exhibit is a notation which the court, on the basis of an

analysis of Matrunola’s testimony and that of Dominick Longo,

defendant’s attorney, aided by reasonable inferences it draws from

the evidence as to the probabilities inherent in the situation thus

disclosed, interprets as a record of a contemporaneous, i.e. in 1956,

representation, personally made by defendant to Matrunala, that

defendant was a labor consultant with an income of $12,500 a year

from such activity. [Tr. 769 et seq., 1995-2001, 2014-2018] Two

incidents lend color to the Matrunola memorandum.

a ae

- A-55

Appendix B—Opinion by Rosling, U.S.D.J.

[3844]

In 1954 Martin Leonard, attorney for Giovanni’s Restaurant, told

defendant of difficulty his client was experiencing in negotiating a col-

lective bargaining contract with the Chefs, Cooks and Pastry Workers

Union. Defendant promised Leonard he would speak to a “friend” of

his at the union to see if the friend could help. A few days later defen-

dant told Leonard that the contact had been made and that Leonard

should speak to the union again about the agreement. The contact

seemed to have been productive, for a new contract was closed with

little difficulty soon thereafter. [Tr. 1109-1128]

Serving with the incident just noted to bracket the indictment years

and sufficiently close to their end to cast a retrospective illumination

upon defendant’s similar activities within that interval are two related

episodes, both occurring in 1961, and involving one Jerry Gross and

the troubles of his company, the Kleen Linen Service, Inc., with his

union. Gross was in the laundry (linen supply) business, servicing the

Casa Bianca and would on occasion see defendant there. Gross ac-

knowledged no more than a nodding acquaintance with defendant, yet

although only after much equivocation and fencing, Gross admitted to

having had a conversation with defendant in the restaurant in 1961

about his problem. His testimony that Schipani’ was only one of a

group then present, and that his remarks were addressed to the entire

group is scarcely believable in light of the subsequent individual interest

of defendant in Gross’ problem. “On one occasion I asked Mr. Schi-

pani’s advice regarding picket lines,” Gross testified. et Le

In October 1961 Gross called defendant on the telephone at the

Casa Bianca and asked him to come over to his place of business. There

in his office Gross disclosed his union difficulties to Schipani who after

hearing him out. declared—so Gross testified—that he couldn’t help.

It wasn’t Schipani’s field—his business. Gross claimed to have spent

15 or 20 minutes in his recital to defendant before the latter said he

could not help. [Tr. 1869 et seq.]

Leonard and Gross both professed that no money had passed hands

in their respective consultations with defendant. The incidents, how-

ever, as the witnesses narrate and embroider them give off that charac-

teristic effluvium which customarily envelops back-door labor-manage- -

ment negotiations. The court is not persuaded that one so slightly

known to the emiployers concerned before he evinced an interest in

their problems was altruistically motivated in his interest.

~ ‘

\)

856

Appendix B—Opinion by Rosling, U.S.D.J.

[3845]

117 On the other hand, the contention pressed upon the court by the

prosecution that the defendant in preindictment “admissions” made to

_ government agents, who testified concerning them, that he was engaged

in lucrative illegitimate activities, is rejected as lacking evidence of the

requisite probative quality. The admissions are vague and uncorrob-

orated—(See Smith v. United States, 348 U.S. 147, 156, 75 S. Ct. 194,

199 (1954) ; United States v. Calderon, 348 U.S. 160, 164, 75 S. Ct.

~ 186, 188 (1954) )—and the testimony which embodies them does not

persuade beyond a reasonable doubt that the specific words ascribed to

the defendant were articulated by him and with the iritent ascribed.

Finally, with these doubts regarding the evidence troubling the court

as trier of the facts, uncertainty’as to fhe legal reach of Escobedo v.

\ Illinois, 378 U.S. 147, 156, 75 S. Ct. 194, 199 (1964), admonishes it

‘ to give the defendant the benefit of the doubt in this area of the proof.

Justice White’s comment, though a dissenting and exaggerated stric-.

ture upon the Escobedo majority’s views, nevertheless by its very exag-

geration warns that the sweep of the opinion may well be tidal. The

"justice remarks with measured asperity that in light of Escobedo “de- .

fendant is constitutionally entitled to a lawyer before, not after, he

commits a crime, since it is then that crucial incriminating evidence is

put within the reach of the government by the would-be accused.”

18 Government Agent Rosman, using the figures provided by the

Masetti schedules computed the tax due for each of the indictment —

years. The elements entering into the final figure fixing the respective

tax liabilities are set out in Exhibit 290 and are comprised of the fol-'

lowing: Gross income [Exhibit 285, Tr. 3236-3237] ; Deductions -

[Exhibit 283, 290, 291, 292, Tr. 3237-3247, 3293] ; Exemptions [Tr.

3249-3250] ; Taxable Income [Tr. 3250] ; Tax on line 5 [Tr. 3250] ;

Dividends Received Credit [Tr. 3250-3251] ; Tax Liability [Exhibit

3, Tr. 61-66; Exhibit 290, line 8, Tr. 3253]. Deductions set out in

detail in Exhibit 291 are grouped, appropriately, under contributions,

interest, taxes and medical expenses.

19 Wilfulness is clear. Much more than wilful failure to file a

return, supply information or pay the tax, a misdemeanor under 26

U.S.C. § 7203, is here present. A long history of nonfiling coupled

with devious procedures of deliberate concealment of income by use of

the names of others, including his wife’s maiden name, by absence of

records, cash transactions, the use of bank money orders, and other

. as A-57. |

Appendix B—Opinion by Rosling, U.S.D.J.

devices, in their summation justify a finding of a wilfull attempt to

evade and defeat the income tax imposed by the Internal [3846] Reve-

nue Code in violation of § 7201. See Holland v. United States, supra,

348 U.S. at p. 139; Spies v. United States, 317 U.S. at p. 497; United

States v. Holovachka, 314 F. 2d 345, cert. denied 374 U.S. 809: 83

S. Ct. 1695; Cooper v. United States, 321 F. 2d 274, 277 (Sth Cir. .

1963), cert. denied 375 U.S. 964, 84 S. Ct. 482.

A-58

Appendiz B—Opinion by Rosling, U.S.D.J.

[3847] APPENDIX

Motion For A Misrerat BECAUSE OF ALLEGED IRREGULARITY IN

THE PROCEEDINGS Unper 18 U.S.C. § 3500.

Defendant, in his brief after trial, pp. 21-24, contends that

error inheres in the circumstance that ‘‘several conferences

[were] conducted by the court in chambers privately with

the government attorney and out of the presence and over

the objection of the defendant and his attorney, in connec-

tion with the screening of ‘3500’ materials, all of which was

prejudicial and deprived defendant of his rights of due

- process of law under the fifth amendment and of confronta-

_ tion under the sixth amendment.”’

The subdivision of the memorandum concludes, without _

citation’ of supporting authority, (p. 24) with a hesitant

motion for mistrial reading, ‘‘This we are most reluctant. to

do, but, nevertheless, in ordér to preserve our position in

the event of an appeal, we do hereby respectfully (and re- ©

luctantly) move for a mistrial upon the grounds stated in

the above subheading.’’? These grounds. are those Quoted i in

the opening paragraph of this appendix.

The reasons for the denial of the motion (supra p: 3)

follow: |

[3848] *

| Express Consent Was GIVEN BY DErENsE er

To THE PROCEDURE FoLLoweEn. |

The procedure to which defendant hit to have ‘*ob-

jected” involves only the Masetti material, the nature of

- which created grave and difficult problems for the court in

r

A-59

Appendia B—Opinion by Rosling, U.S.D.J.

its processing under. the statute. Mr. Lefkowitz was. thor-

oughly and happily familiar with this court’s liberal atti-

tude respecting a turnover of § 3500 material to the defense.

He had only recently before the instant trial been counsel

for one of the defendants in another trial over which. this

court presided. (See infra, p. 62) His express consent

_ which was here given only after detailed explanation of the:

steps the court proposed to take could: not have resulted

from confusion or misapprehension.

The situation first arose at the conclusion of the govern-

ment’s direct testimony of Agent Wynne concerning inter-

. views, with the witness Corwin. Mr. Wynne had made no

notes, nor had Mr. Masetti who was likewise present at the

interviews done so. Mr. Ruby, the third of the government

personnel in attendance, had made some attorney’s jottings.

These he proposed to turn over to the court, alleging, how- ©

ever, that they did not fall within the definition of a state-

ment under § 3500(e). The notes were not in his file in court.

He thought they might be in his office. Some colloquy not

pertinent to the immediate problem then ensued. The record

then continues [Trz2896],

‘*Mr. Lefkowitz: Well, your Honor, I could repre-

sent to the Court at this time that if Mr. Ruby has no

notes with reference to the [3849] particular inter-

view, and if they are—if they are not there, well, that

is the end of the defense counsel’s cross-examination.

‘‘The Court: Why: don’t you go a step further? I

think you are going to suggest that you have Friday,

clear. .

‘‘Mr. Lefkowitz: Yes, that is clear.

‘“‘The Court: Well, suppose we do =" what I

+

xivy $%

oN

Aronia Binion by Riding, OD.

griginatly: thought of doing i will do in this context.

a So ghee ge ag cr cage ely recess here

I will be in Chambers, and if. upon your review

notes as you find you feel they do not qualify

Sear then under the statute’ itself J am re-

quired to meet with you privately, that is, to the ez-

“clusion of the defendant’s counsel and review ‘those

things and make my own determination..

If I determine in that situation that the notes are ~

not producible, or that there are no notes at all, then

we Can recess completely tommorrow. Is that what you —

had it mind?

| Mr, Lefkowitz: ‘Yes. ‘That is what I was going

' “The Court: You will leave a‘number, Mr. Lefko-

“witz, where you can be reached—

- §*Mr, Lefkowitz: I will be at my office.

“The Court: ( Continuing )—within the next hour |

or so, 8o that you can be apprized ef whether you are

required to:return here tomorrow morning or not.

“Mr, Lefkowitz: Very good.

‘‘The Court: .I will, of course, if the wie are .

_ turned over to me for in camera inspection—I will of

course have them routinely marked as an exhibit—a

Court’s Exhibit for Identification—so that they may

be preserved in the event that [3850] there should be

~ an appeal from that determination. »

“Mr. Lefkowitz: If that will bé so, or if that were

. to be so, then we would reconvene on Tuesday?

‘The Court: Tuesday, yes.”’

It developed when Mr. Ruby located the notes and turned

them over to the court a8 arranged that upon a mere glance

- the single sheet [Court’s Exhibit B] was found obviously

not — material and Mr: — was accordingly asked

&

; y iS

; “Append B—Opinion by Ro: , 08.DI.

‘i.

by the court to notify Mr, Lefkowitz that there would be no

session.on the 19th, the following day.

On the next scheduled trial day, the-23d, an office asso- gee

ciate reported that Mr. Lefkowitz’ was too ill to come to -°

court. The following day the attorney was in attendance,

ailing and carrying @ cane.

- On February 24 Mr: Masetti, the icesibiils 1! ‘cleanup ‘g

| witness, concluded his long and involved direct testimony

with voluminous and complex investigatory and statistical .

data for reference and support. [Tr. M2937-3187] ...Mr.

Lefkowitz a nfoment earlier at p.:3186 had asked, ‘Have I -

- been furnished with all 3500 material of this witness?”

Mr. Ruby after some reference to the content, of govern-

ment’s Exhibit 287 (the: sealed in camera material) an-

' nounced the government ’s position that ‘‘as to certain por-

tions of the report, I would not turn them over to Mr.

Lefkowitz unless direeted by the court to do so.”” [Tr. 3187] -

; At this the court declared its position and tennamh

[3851] aphieoger: as fellows:

“The Court: Well, the Court never makes'a final.

diregtion. It does what 3500 says. 3500 gives you

[addressiig. Mr. Ruby] a choice..And part of the ©

choice is the abandonment of the prosecution or part

of it anyway. This calls for an in camera proceeding

_ with the defendant and defense counsel not present

because a disclosure made to the Court might dis-

close the very thing to the defendant which - the

Government is entitled to have withheld.’’

/ *

- ime.

ag

A62 Pe

Appendiz Bipiaion by Rosling, U. SDJ.

‘Mr. Lefkowits without. duuitiries 6 the court’s indicated

- action argued at sonie length [Tr. 3188-3194] that he was

entitled to the full report as constjtuting the statenht of

‘orie’ who prepared this case against my, client.’’. [Tr.

. 3189] Mr. Lefkowitz then (Tr, 3191] turned. abruptly from

the subject to move for an ‘examination by the court ‘‘of

. the grarid jury minutes insofar as. testimony given by Mr.

_ Masetti,”’ and for permission ‘‘from the Court’ to use such

portions thereof, or alk of his testimony for purposes of

" eross-examination insofar as it affects the testimony’ that

_he has given.’’ When Mr. Ruby indicated some reluctance

' to consent, the court made the following observations which

are quoted together with colloquy of counsel at greater

length than might otherwise be the case wefe it not for

the fact that what w&s said provides a context for the lan-

guage, here anderscored for. easier identification, relative.

to. the § 3500 procedure about to be entered upon:

‘‘Now, courts are completely cognizant of the fact

that this rute of disclosure only where inconsisten-

__Gies appear is often unfair in its operation and im-

possible of fulfillment [3852] because what mz may ap- —

_ pear to be no inconsistency to the judge sitting here

with limited familiarity with what is involved and

what is yet te come may present to resourceful coun-

‘sel the grossest sort of inconsistency. So my attitude

_ is that if there is any—if there is no serious prejudice

‘that will come to the Government through a dis-

closure, that the minutes need not be searthed for

possible inconsistencies. On the other hand, if the

inconsistencies are apparent, the Court surely would

not wish to withhold the minutes from counsel.

‘ Mr. Ruby: May I have a moment, your Honor?

“a. Appendia $e B_-Opinion by Rosling, Usps.

p Bicester se Suppose we do this? \ Suppose you

of minutes time reexamining the Grand

‘satuniso; which 1 see teees Ga. Apalia’ aie

Jy mint wih tm tn and then if it

Bir should be appropriate to turn them over to Mr.

- Lefkowitz, he can spend the time reviewing the.

Grand Jury minutes while we‘[indicating Mr. Ruby]

are in chambers in camera conn the $500 :

application.”

Further colloquy in open court Detween the court and

Mr. Ruby ensued interrupted ‘by conferences out' of court

by Mr. Ruby with the U. 8. Attorney following which he

reported back in open court. Thereupon the court once

more made clear its contemplated procedure to all, includ- © |

ing Mr. Lefkowitz and his client, as"appears from the fol- -

lowing further excerpt from the minutes: [Tr. 3199]

‘‘The Court: Well, suppose we [again indicating

Mr. Ruby] adjourn to chambers and.I will consider —

the grand jury minutes first, so that, they being far

less voluminous—they may be made available to Mr. .

Lefkowitz and-then we will deeide-whether sufficient

time remains tonight for a disposition of the SOO

. material. .

All right, the reporter and the Clerk will siiabe

: come with the Court to—we will use the jury room

for the in-camera proceeding. ? ee

[3853]

Mr. Ruby: We will first iieaion the o grand jury

minutes? Zz ~~ ee

- The Court: That i is right. So will you ‘wat, Mr:

Lefkowitz. We may have quick work for you on the .

grand jury minutes, but from the size of the 3500

material, it is not likely in .>at case.

- <3 See AS aD

. ”

| : et ae 2 A-64 , eee :

“Appendia B—Opinion by Rosling, US.D.J..

3 - (‘Thereupon ensued an in-camera session with: the

- Court; Mr. Ruby, the teporter and the Clerk pres-

~ ent.)??* ee ue pees ie are:

‘The bracketed description is the reporter’ 8 langaage ‘Té-

citing what was observablé and observed by ‘all present in

_ the court including Mr. Lefkowitz ‘and. the defendant,

ie namely, the exit from the courtroom of the judge, the clerk,

the reporter and Mr. Ruby through the private door beside | .

.the judge’s desk leading to their announced Aetination, .

the jury room“? -

_ On February’ 26 at the next scheduled open session of the

sourt, the incidents. and results of the § 3500 proceedings

respecting the Masetti, documentatibn: were disclosed and

pfaced upon the record by the court in colloquy ‘with both

-counsel. The transcript pp. 3207-3220 is’ too lengthy for:

convenient quotation, and excerpts would lose something of .

their significance in removal. from the context. That defense

counsel was not evincing even a minimal dissatisfaction

with the ceurt’s procedure of which he had throughout been

kept abreast is manifest. That his client was receiving,

through the court’s greater freedom of action in the pro-

cedure adopted much that a court puight otherwise without

abusing its .diseretion or committing clear error have: re-

fused him becausé no’ basis for-disclosure was discernible »

- [3854] from its mere perusal of:the tendered document was

equally clear. [Tr. 3210]

A reference to. Mr. Buby’s attendance that morning in

camera appears at Tr, 3208. The court noted [Tr. 3210]

- that the tiberal turnover was. in n part = 7 Judge

e “. ee

a

| £6

" Appeniz: B—Opinion by Rosling, U SDJ.

Friendly ’s wise ‘comment in United States v. -Borelli, 2 336.

. F.2d 490, 497, concerning the imperilling of convictions by

- eaviling over the delivery of 3500 material which could by

surrender ‘‘not-add appreciably to the strength of the de-

fense.’’ The afternoon, the:court announced, would be

reserved for the testimony of a witness other than Mr.

Masetti. This would afford Mr. Lefkowitz the entire week- .

end for review’ of the Masetti § 3500 papers now made

available by the in camera proceedings described, i in prepa-.

ration for. the cross-examination of Masetti. by Mr. Lef- »

kowitz. [Tr. 3213] On. Monday the court proposed to call-

Mr. Masetti as its own witness in a § 3500 proceeding’ * so

that Mr. Lefkowitz could cross-examine him without being | Se

subject to any impediment which might limit the attorney’s

right to a broad interrogation, f‘T'r. 3214], as might have.

been the case were Mr. Lefkowitz to be required to place |

the agent on the stand as his own witness. ‘That sueh qués-

-tioning by Mr. Lefkowitz might well be required appeared

‘to the court from the fact that Exhibit 287, notwithstanding

its bulk, referred to, but did not annex numerous support-

ing documenta. Additionally a host: of persons who pre-

sumably had been [3855] interviewed by. Mr.’ Masetti. and

whose iriterviews formed i in part a basis for his report were

merely listed in the Exhibit. In this connection the court

- now addressed Mr. Lefkowitz, sayigg [Tr. 3218], ‘‘I will

give Mr. Lefkowitz an opportunity to answer or to com-

ment, and if he wishes-he may. I saw him a nodding his head,

indicating that—’’

Mr. Lefkowitz’s reply was, ‘“‘T appreciate that, your

>

Honor, but I just want to inquire whether the entire report. .

“

: A668

:

‘Appendio B—Opinion by Rostng, USD.

_with the parts deleted, are made a Cian Exhibit.” ‘The

court assured him it had been and that.a -sténographic rec-

ord of the proceedings had been: made and that the Clerk.

- had been present. The-court then in summation: ‘asked. [Tr. « -

3220], “So is-the “arrangement satisfactory?” ’ to which Mr.

Lefkowitz replied, ‘‘Yes, your Honor. i ee le

The colloquy which now followed was voles long and

dealt with an unrelated matter of proof. Tlie balance of

the day,-as éarlier agreed, was consumed in the testimony .

of Mr. Rosman, the government agent who had computed an

- the tax due for the indictment years (See fn. 18, p. 43 supra)...

Recess" was then taken over the ‘weekend .to Hondey,

March 1.

On that date the court amin its plan to proceed.

with the conclusion of Rosman’s examination. This would |

be followed with the Masetti § 3500 inquiry. (in open court)

“‘unles8 Mr. Lefkowitz has other ideas.’? Mr. Lefkowitz .

declared he had none. ['Tr. 3290] Mr. Rosman then testified

briefly. [3856] When he had concluded Mr. Ruby, announc-

. ing that he had a few other 3500 items that he wished to’

have marked and turned over to defendant, ail without in

camera ‘processing, proceeded to do so, [Exhibits 293,. 294, ~

- 295, 297 and 198 for identification].

The court thereupon inquired ‘of the givertiinanit sila ? |

whether any of these documents now made available by .

him to the defendant were among those which had been

merely enumerated in the General Exhibit 287 for Identifi-

cation that Mr. Masetti had used as his master file, but

whieh were not annexed thereto. Being informed by Mr. —

a al

a

—

-

|

we

_ Appendio B—Opinion by Rosling, U.S.DJ. >

- Buby that the Exhibits (293 through 298) just delivered to

the defense were not mentioned in 287 but were in addition

‘to those listed therein,. thé court decided to ‘soften up”’

_ Mr, Ruby before turning him over to defense counsel for

§ 8500 inquiry as to what these subsidiary documents. re-

. ferred to in Exhibit-287 were and as to such other matters —

as might relevantly be the subject of interrogation.As will ~

~ be noted in the discussion which immediately follows the —

court in this approach not only had the exhortation of the.

Court of. Appeals of this circuit to serve as a guiding prin-

ciple, but itself cited the most recent of the cases which em-

bodied it. ‘The first of the cases noted [Tr. 3298] was

- United States'v. Ellenbogen, 341 2d 893 (2d Cir. 2/25/65)

_ the slip memorandum in which the court had received only ’

the preceding Saturday, two days earlier. From the opir-

ion in Ellenbogen written. by the then J udge Marshall

[8857] the court quoted several excerpts.. The. court re-

marked in the context of its discourse that ‘‘ Judge Marshall

refers us to United States against Borelli, which I believe

I cited to you gentlemen last week.’’ In Borelli (supra,

p. 52), it may be reéalled, J udge Friendly inveighs against

_ the folly of the U. S. Attorney in jeopardizing hard-won

convictions by a scrimping approach to what is Jencks Act-

discoverable. N oting that Judge Marshall had ruled that

a sufficient nexus to the direct testimony of - the’ witness

‘affected is shown to exist which requires disclosure when

. _ the document in question may be useful, i in the opinion of —

the defense, rather than of the judge, even though only as

an auxiliary to cross-examination, this court commented ;

_ [Tr. 3301] :that with ‘the -Court of Appeals breathing

rather warmly on the judicial neck of the District Judge,

.

oe ee,

: P

ERAN AE EN BEL GN AEC NBA NOTES ADE ti apie Sth plies

Pet reenact re

gS yes B—Opinion by Rosling, U.SDJ.-

: the. : Deatt will not be niggardly or unduly antilaliee in

considering what. should and should not be produced.””

Mr. Lefkowitz then requested that he be permitted to

take a statement from Mr. Ruby under § 3500 procedure.

The Court, of course, granted the request, Whereupon Mr.

Lefkowitz for the first time disclosed. _ he. found the

§ 3500 procedure ane.

_ &

RELATIONSHIP OF THE Ossactios TO THE THEN PENDING -

.-AppzaL 1x Unrrep Srares v. Pzrstco, et al, Supse- .

quentLy Decwep aNnp Conviction REvERSED, ines

ON OTHER GRounDs. | vr

The § 3500 interrogation which cnswed cumidetil of but,

two questions put by Mr. Lefkowitz to Mr. Ruby. Mr. |

Ruby’s response supplied Mr. Lefkowitz with no informa-

tion .[3858] that he and his client did not already and con-

temporaneously with the events know from words spoken

- and things seen and to which the attorney had given ex-

press assent. The court justifiably felt, as the record surely

must persuade, that it had more than mere acquiescence on —

the part of.the defense in the routine followed, indeed ex-

press and gratified approval. The gratification was under-_

standable in that unless the court’s open statements were to

be belied by its clandestine contrary conduct, which it was

imprudent enough to have recorded by a clerk and court

reporter for appellate court review, the court had mani-

fested an attitude most liberal toward disclosure.

The two questions put by the defense attorney to Mr.

Ruby and his responses were these [Tr. 3303]:

i ee,

Naar Appendie B—Opinion by Rosling, D USDI.

4Q ‘Were’ you in Chiambare with Tale Bosling *

to indicate to the Court which of the portions in 287_—

you found vas ces eacat » turning over to me? <A.

Yes.

time I would say about 45 minutes and the second

time, it‘ must have been — an hour and a halt. aah

“After some further brief colloquy betel? the sit and

Mr. Ruby, Mr. Lefkowitz now and for the first time no

his objection that the presence in camera of Mr, Ruby with-

out both defendant and counsel likewise in attendance Ww

legally impermissible. Counsel did not follow the overruling

of his objection with ‘a motion for a mistrial, but abandon-

ing the [3859] § 3500 interrogation, entered at once upo

the ree team ste of Mr. Masetti as part of the tial,» !

proper. BS eee

A judge, sitting as ; the trier of the facts .is siiaanal to

_ have disregarded, unless his decision of the case affirma-

tively demonstrates the contrary, illegal evidence and ‘ex-

traneous considerations. So that there can be no question

that this court has honored. the precept implicit in such

observation, the court gives such assurance. Of greater con-

cern to defendant, surely, is the fact that with defendant

‘waiving a jury the court’s mere perusal of the sealed. Ex-- .

hibit 287 required in the performance of: its duty” “under ©

§ 3500 brought to its attention matter which if the court —

failed to omit it from its consideration would be highly

prejudicial to the defendant. This matter, too, ‘the court

represents it has for the purposes of its role.as trier of the

facts relegated to the lumberroom reserved for matters that

Y

" r

Q. And how long were you “with the Judge? i ="

I think were were there on two occasions, the first.

edly eet nn wip nme ewig aw wn

~ see ~

:

A-70

Appendia B—Opinioy by Rosling, U.S.D.J.

never happened. Somé note vAll be taken in a later division

‘of this opinion under an appropriately descriptive caption

of the content of Exhibit 287. Immediately, however, our

_ attention is turned to a consideration of the post-trial mo-

tion for.a mistrial and its link with the fourth Persico trial

and the appeal therein then still undecided

DEFENDANT’S Morton 1 ror A MisrriaL Fyrst MADE In ITS

Post-TRiAL MemoraNnDuM (P. 24) Anp its RELATIONSHIP

" ~ To. Unrrep Srarzs v. Pznsico.

Mr. Lefkowitz’s cross-examination of Mr. Masetti [3860]

occupies pages 3309 through 3435 of the Transcript: Not

once did he i in the course of such interrogation refer to the

in camera Exhibit 287 or indicate that he had used it in

preparation for the Masetti questioning. A fortiori, he

made no inquiry as to the contents of the numerous unan-

nexed documents of which it provided an index, nor called

for their production. Nor did he seek enlightenment 4s to

the nature of the inquisition which the government repre-

sentatives had directed to the large number of individuals

whose mames alone were catalogued in the document. Nor -

did he probe as to the contents of the statements, whether

signed or merely interview reports, which apcording to gov-

ernment practice, must have existed. He could have called

for their production, without obligation to introduce them

after his ex parte study of their contents,#ut did not dolso. -

At the conclusion of the prosecution’s case which followed.”

Mr. Masetti’s brief redirect examination by Mr. Ruby—

(there was no recross)—the government rested.

d

i)

LE OBL AOL OD LS Ay FOOL Ee, LOO te ts ae age

et | ; sag a . a |

A-71 eh se a 4

Appendia B—Opinion by Rosling, U.S.D.J.

The following day,-March 2, defendant made a number of

motions, none of which remotely had reference to his ob-

jection to the Masetti § 3500 procedure, and when these were

all denied, absolutely or with qualification; he too rested. .

[Tr. 3469] Defendant’s counsel thereupon renewed:all mo-

tions made by him at the prosecution’s close and an addi-.

tional motion for a judgment of acquittal. Decision was

reserved by the court pending submission of briefs and pos-

‘sible oral argument. [3861] No motion for a mistrial on

any ground had been urged, nor did the court leave open

the opportunity to so move. [Tr. 3470-3486]

_*, Itis in defendant’s post-trial brief (page 22) that we first

‘ ; find a motion for mistrial grounded on the § 3500 irregular-

ity. -He had not found, the attorney acknowledges, ‘‘any

decisional authority concerning such private in camera

(sie)* practice. However, we are informed by Mr. ‘Lefko- -

_ witz, ‘‘that this same issue is presently awaiting decision ;

by the United States Court of Appeals for the fp Cir-

- cuit in United Statés v. Persico, et’al.’’ | /

Professing to find a grave potentiality of ee a to a

defendant in the procedure adopted, counsel’ proposes as an.

_ piternative (brief p. 23), ‘hat if a Court feels the need of *

some kind of clerical assistance from the prosecutor in

screening the ‘3500’ materials, the Court on ifs Own proper

judicial initiative could invite defense counsel to be present

* * Black’s Law Dictionary, Fourth Edition, defines “In camera” 7 yo

as, “In chambers ; in private * * *.” Webster's Third New Inter- ; _-

national Dictionary (1961) gives as the meanings 4

of the phrase: “1. mem ithowye 8 [the trial was held i wo AE

camera.| 2. in private: PRIVATELY, Medic ” [Italicized _. ti

~ matter in original is here underscored capitals -here also in |

original] : | ee

A-72

Appendiz B—Opinion by Rosling, U.S.D.J.

under proper safeguards to insure that the defense should

not learn the contents of ‘3500’ materials to which the court

might [3862] find the defense unentitled.’’ (underscbring

supplied as indicating the fundamental and as yet unre-

solved antinomy which has confronted the courts for gener-

ations in dealing with the conundrum’ of how to inquire

when the ultimate ruling is to be ‘‘you need not disclose. ”)

(See infra, p. 97.)

Finally and again without in of authority which the

court might-find useful or enlightening, defendant’s brief

argues that the procedure reprehended ‘‘would seem to

work a clear violation of the Sixth Amendment’s right of

confrontation * * *?’ and a ‘‘denial of the due process right

of fair trial by a fair and impartial tribunal.’’

ee PERSICO Decision

Persico and his codefendants were charged with a single

incident of highjacking. They were tried four times. The

first trial'(Mishler, J.) ended in a disagreement of the jury

as to all six defendants on 5/13/61; and the second

(Abruzzo, J.) in a conviction on 6/19/61 of five on both the

substantive and conspiracy counts, and of the sixth, La

_Fante, on conspiracy alone. The Court of Appeals reversed,

305 F. 2d 534 (7/13/62) largely because the trial judge had

kept too tight a rein on defendant’s cross-éxamination of

Vaccaro, the prosecution’s ‘‘uncorroborated’’ and thor-

oughly villainous witness, who had turned states evidence

when facing endless years of imprisonment for his own mis-

deeds. “°® P

A-73 Been

pees B—Opinion by Rosling, U. S.D.J.

[3863] For the third trial, only five of.the defendants

_. Were able to answer ‘‘present”’, the sixth defendant, Mag-

nasco, having met his end by unfriendly hands on 6/16/61.

Nor was this untoward event unique in this series of trials.

- Although Judge Bruchhausen on 5/7/63 began the third

trial with all five surviving defendants facing the jury, on >

. Monday, ‘May 20, summations having been completed the

preceding Friday and with the judge about to charge the

jury, it appeqared the defendant Persico was absent and

indisposed. Over the weekend he had been the target: of

‘five bullets fired from the gun of one whose aim was poorer

than his intent. All five bullets had, indeed, found their

mark, but miraculously Persico continued among the living,

although his guardian angel had been less considerate of

his companion of the moment, not a defendant here charged.

A mistrial as to three of the defendants was thereupon

applied for them by their attorneys, and perforce was

granted. The other two, McIntosh and La Fante, ignoring

a spate of weekend publicity—none of it unduly flattering

to the defendants—wanted no mistrial and insisted on hav-

ing their cause submitted to the jury. By not taking the

stand in that trial they had been shielded from exposure to

questidning as to the unhelpful matters thus publicized,

and other data which could never have been a proper matter

for jury consideration. A second time a jury gic 3 them

disagreed.

The fourth trial was presided over by a writer. All

five defendants were on hand for its commencement on

1/6/64 and also at its close [3864] three and a half months

. later when on 4/25 the jury after no lengthy deliberation

reported its verdict of guilt as charged.

A-74

Appendia B—Opinion by Rosling, U.S.D.J.

In the fourth trial some thirteen thousand pages of testi-

mony and colloquy, most of the latter with the jury ex-

cluded, were recorded. Mr. -Lefkowitz who appears here

for Mr. Schipani represented Albanese, one of Persico’s

co-defendants, upon that trial. The experience must have

been a harrowing one for him, as he was not only unpaid

_assigned counsel (by Mishler, J.) caught in the nightmare

of an anticipated two weeks engagement that dragged on.

instead for months, but also by reason of his falling ill of

an excruciatingly painful and embarrassing ailment, de-

spite all of which ‘he carried on courageously. His current —

representation is, more profitably and deservedly, as re-

tained counsel. +

The testimony of Vaccaro alone, the opening witness in

the fourth trial, consumed nineteen court days and com-

prises, with its interminable colloquy of court and counsel,

over four thousand pages of minutes: It was at the conclu-

sion of Vaccaro’s direct examination that an in camera

proceeding, which served as an exemplar for the one here

criticized, was conducted. The procedure was disclosed and

apparent ‘to all defense counsel, including Mr. Lefkowitz,

before it took place. It was fully reported by. the clerk and

court reporter who were’ in obvious attendance following

prior announcement in open court to such effect.

[3865] The Persico record ‘comprises approximately

10,000 pages of transcript ef the-trial proper plus perhaps

an additional 3,000 pages of untranscribed minutes of ex-

tended argument at the outset in relation to applications by

defense for a continuance by reason of ‘‘prejudicial publi-

_eity,”’ for severance, etc. and voir dire upon the selection

A-75 —

Appendia B—Opinion by Rosling, U.S.D.J.

of the jury. Innumerable motions for a mistrial were.made

‘ by defense counsel, and thousands of objections interposed

by them to rulings made by the court, actual or merely

feared. Not once, however, was an objection noted or mo-

tion for mistrial made by any defense attorney with respect

to ‘the § 3500 procedure which the court adopted and which

in a similar context Mr. Lefkowitz now cites as justifying

a mistrial.

Upon the Persico appeal, four attorneys represented the

five defendants. Mr. Léfkowitz had upon his-request, been |

relieved from his assignment as attorney for the indigent

Albanese, and Mrs. Wolff, assigned counsel for the defen-

dant Spero, had graciously agreed to represent the defen-

dant Albanese as well as her original client. In such appeal

only Mrs. Wolff 80 much as. mentioned the: subject of the

§ 3500 procedure i in her appellant’s brief. The thrust of her

position was that the defendant Spero had been. prejudiced

by the court’s ‘‘clandestine meetings’’ with government

counsel, but she indieated quite clearly’ by her transcript.

references that what she was animadverting upon were

certain conferences [3866] between the court and the U. S.

Attorney relating to jury security in the trial and not the

§ 3500 procedure. These were announced in open court, but

from them the defendants and their lawyers were, under-

standably in light.of what follows, excluded. For early in

the trial, before the jury had been selected, the prosecution

had,vigorously charged upon the record that the juries

which had disagreed i in the first and third trials had been

tampered with, and that efforts were on foot to fix the

fourth jury as well. The assassination of Vaccaro, it was

— was also being plotted...

-

ant eh om TAQ ei

PRONE ES ne Lier

A-76

Appendia B—Opinion by Rosling, U.S.D.J.

oper }

“

Defense counsels’ unwillingness. to include as basis for.

their innumerable objections and motions fur mistrial in

‘Persico the court’s § 3500 in camera ‘procedures was sen-

sibly motivated, as it is in the current case. For as soon as

Vaccato hadeoncluded his direct examination the prosecu-

tor proceeded to have marked for identification and to turn

over to the defendants’ attorneys all the 3500 material, but

no more than that, which they-had received at the same

juncture_ during each of the first three trials. The three

| judges who had severally presided at such trials and the

Coutt of Appeals i in its review of the judgment of conviction

upon the second trial had presumably found the delivery

in the respective trials an adequate compliance with thé

requirements of the Jencks Act. An inviting prospect, how-

- ever, now upon the fourth trial lay open to the attorneys

to get more—much more. The only [3867] condition which

‘confronted them was to persuade the court that no one

would be murdered in consequence of what was additionally

to be disclosed, and to enable the court to satisfy itself that

it was not, by reason of its unfamiliarity with the details -

of the far-ranging highjacking investigation other than the

one for which they were being tried, compelling the govern-

ment to disclose what it was in the public interest to with-

hold. . |

The reversal of the conviction on the fourth trial was, as

‘the opinion declared, solely for errors committed by the

court in an overlong charge. The majority opinion of the

Court of Appeals 3 was express.in its view that as to the

‘numerous points raised on the appeal’’ other than those

thus noted ‘as error ‘‘neither individually nor in their total-

ity do they constitute grounds for reversal.”” —

-

‘The

guage:

relatio

[3868]

A-77

Appendiz B—Opinion by Rosling, USDJ.

disposition of Mrs. Wolff’s point which touched the

in camera proceedings was couched in. the following lan-

‘*Defendants make complaint about the in camera

proceedings conducted by the trial judge in connec-

tion. with rulings on Jencks Act material (18 U.S.C. .

§ 3500). The Assistant United States Attorney was

"present, but not defense counsel. A verbatim tran-

script of these proceedings was made and sealed

along with certain material which was not furnished

_ defense counsel. The court has read these transcripts

and finds @at absolutely nothing untoward occurred:

insofar as the fair trial of this cas¢ _was concerned.

However, the procedure followed was entirely un-

necessary and violated Canon 17 of the Canons of |

Judicial Ethics. We do not consider this a ground for

reversal, but it is adverted to solely to assure that

such procedure is not followed i in the future. In the,

' absence of some extraordinary circumstance,all pro-

ceedings affecting the trial should be conducted in the

presence of counsel for both sides.”’

n to the current problem can be made clear only by

further use of the Persico context as a frame of reference.

Had the Persico teaching been available in time for: the

guidance of the court in the instant trial, it would have been

obedient to the injunction admonishing against repetition. -

The consequence surely would have been the withholding of

far more than the miniscule fraction of Exhibit 287 which

was excised as not relevant on its face to the Masetti direct

examination. (See infra, pp. 77-79 for discussion and ex-

planation.)

How this brief paragraph, is to be construed: in its —

‘

perenne PRR ARSE AP DEAN ALS

wanna am

A738

Appendia’ B—Opinion by Rosling, U.S.D.d.

a . The Persico appeal Jencks Act'stricture upon this court’s

procedure breaks down into the following elements:

(1) A verbatim transcript of the proceedings was sealed

. by the court together with the excised matter and made

_ available for appellate review. —

(2)-** Absolutely nothing untoward occurred’’ in.the ab-

seins of defendant and his counsel: “insofar as the fair trial

? AP. -

of this case was concerned,’’

(3) ‘The procedure was ‘‘entirely unnecessary.”’

(4) The procedure violated Canon 17 of the Canons of

_ Judicial Ethics. The canon, not ; quoted i in the text of the

‘opinion, reads:

© | ‘‘Ajudge should not permit private interviews,

' arguments or communications designed to influence

é 4 his judicial action, where interests to be. affected

thereby are not represented before [3869] him, except

* 3 in cases where provision is made by law aes ex —

‘application.

+ ‘While the conditions under which briefs of argu-

/ .. ment are to be received are largely matters of local

6 | rule or. practice, he should not permit the contents of

‘such briefs presented to. him to be concealed from

cad

opposing counsel. Ordinarily ‘all-communications of —

counsel to the judge intended or calculated to influ-

ence actign should be made known to opposing coun-

sel.’’

(5) The Court of paaton did. “not consider this 4

ground for reversal.”’

A-79 - ;

Appendia B—Opinion by Rosling, U.S.D:J.

(6) The trial court to which the case was remanded for

a fifth trial was admonished not to follow the ex parte prac-

tice in the future. a | Sarr

(7) In the absence of some ° penbeundinans circumstance

“all proteedings affecting the trial should be conducted in

the presence of counsel for both sides.’’

ee

(Underscoring supplied in items ‘‘5’’ and ‘‘7”’ for more

. ®

convenient reference.)

s

The word ‘‘this’’ in section 5 leaves the court in doubt as

to the precise referent. It is unclear whether what the

opinion teaches is that only a ‘canon. of ethics as distin-

guished from organic law was infringed and hence rever-

sible error was not committed, or whether the finding that .

the trial'was in any event fair was the controlling considera-

tion. oe cy Salis

The warning in Persico against repetition of action not-

withstanding no ground for~reversal was found therein

presents an additional difficulty for this ceurt in evaluating

the current.defendant’s belated objection and motion for a

[3870] mistrial, for the Persico text suggests that an ‘‘ex-

traordinary circumstance’”’ might: despite the canon cited

authorize the questioned procedure. —

(7

cee cna gL TORK

(

A-80

Appendia B—Opinion by, Rosling. U.8.D.J.

; ne PROCEDURES” CONSIDERED. PuBLICcITy,

Jury France, Murper anp Mayxem, Gana Wass, AND A

SweerinG On-Gorne Investigation. By THE FBI or

Numerous Hicryackrnes as THE FRAME OF

- Rererence rn Persico ror THE. Courts

§ 3500 In CAMERA PROCEDURE. ‘

None of'the matters, for which the headnote of this divi-

- sion is not excessive, appear to have been discussed. in the

. briefs submitted by the parties to the Court of Appeals in

Persico IV. And yet they constituted, the jtiry being absent,

the subject of days and days of argument and colloquy with

“numerous supporting exhibits“ ‘ presented to this court.

during the period between J anuary 6, 1964, when the trial ~

began and January 20, the first trial date noted in the

transcribed portion fi the record. Continuing freshets of

‘motion and argument, with additionat’exhibits, flooded.the

proliferating record as the points thus preliminarily urged

were labored and renewed with unimaginable persistence —

of counsel. «Io undertake more than the most cursory refer-

_ ence to this essentially. tangential factual background. in a .

prior prosecution so that its bearing on a claim of prejudice

asserted by an attorney who appeared as counsel in both

the earer and the current suits may be assessed would

serve no useful purpose in an opinion already much too

‘lengthy. The following, however, (3871) may be useful in

such evaluation. :

'. As the first order of business upon the Persito IV trial,

: four of the five counsel for defendants moved for a lengthy

eontinuance, advancing in justification the claim that their

A-81 .

| Appendi. B—Opinion by Rosling, U.S.D.J.

principals, chiefly Persico, had but reeently bate the target 7

of extensive newspaper, magazine and other publicity, none.

of it laudatory. From the mountainous conglomeration of. :

exhibits offered, we cull the following titles as typical of all:

‘*Revolt in the Mafia,’”’ a book. copyrighted 1963 with fre-

quent references, passim, in context to Persico. The author

as we are advised on the dustcover was one ‘‘Raymond V.

Martin, Assistant Chief. Inspector (Retired) in charge of

Brooklyn South Detectives.”’ “Brooklyn South’’ is the

locale of the events examined into in the Persico trials.

Life (Magazine) issue 8/30/63, ‘diribele entitled ‘‘Mafia

Rubs Out a Rebellion,’ with accompanying photographs

of the dead and half dead, viviffy Hloodied and ecchymosed.

Among these are, each in a separate frame, two of the

defendants, the one subtitled ‘‘Joe asco, (Dead)’’ and

the other ‘‘Carmine Persico, (Wounded):”’

Saturday Evening Post, Issue of 8/24-8/31/63, Article

entitled “‘My Life Inside the Mobj’ by Sidney Slater with

Quentin Reynolds. - Impressive} photographs accompany the

text, but none are those of any of the defendants. Persico,

[3872] however, is mentioned i in the account, and not’ with

~ intent to commend him.

+

New York Post, newspaper published 9/ 19/63, a full page

article entitled, ‘*The « Loan Shark Racket.”” Only one

) photograph: illustrates the tract. It is Persico whose’ three

quarter full face stares cold-eyed from the central column

of print, half of which it occupies. For easier identification

a subscript legend is provided. It reads: ‘‘Carmine (Snake)

Persico—His gang worked as 6 triggermen. a4

»%,

Se 482

Appendia B—Opinion ‘by Rosling, U.S.D.J.

Sundry references in the New York Times, New York

|. Herald Tribune; the New York Daily News,.and Newsday,

a daily serving Long Island, fill out the budget,pf the feature.

writers to whom the libel laws do not seem to give pause.

The undersigned, presiding at the. trial, might not avert

his gaze. Compelled by the act of defendants? attorneys he

read what was submitted that he might be able‘to rule upon

their application. gfhus the court received a dossier in ad-

vance of, and de hors, the trial testimony which no amount

of hugger mugger confabulation with the prosecution could

-have further denigrated. The gourt denied the continuance

—six months—applied for. The life expectancy, it ex-

plained. of persons interested was too uncertain.

The prosecution immediately countered with a motion of

its own to’ remand three of fhe defendants-two were al-

ready serving prison terms and were in attendance only

pursuant to’writs—and to sequester the jury for the dura-

tion of the trial. The [3873] basis for the application was

alleged jury fixing during the first and third trials in which

the juries had disagreed, a pending scheme to fix the fourth

jury as well, and a word picture of*menacing gestures di-

rected»in open court during the third trial toward the jury

by putativ, cohorts of the defendants, with the inference

strongly suggested of renewed visifs in the present trial by

others with similar objective in view.4 ® Additionally, plans —

the assassination of the witness Vacedro * were charged.

* The court, on applications to sequester and remgnd has,

itis well known, a wide discretion, and may act on less of a

showing than would be required for prosecution and con-

viction of relevant offenses.4* To accommodate the require-

A-83

Appendia B—Opinion by Rosling,U.S.D.J. *

ments on the one hand of fair play to the defendants with

exigencies of trial security * on the other the court directed

_ government counsel to draft a general affidavit embodying

his assertions and supplying as much particularization as

“\he might safely venture without ‘‘tipping’’ the FBI’s hand,

and to serve copies of the affidavit upon defendants’ attor-

neys. To the court he was to deliver a document which, de- ~

tailing source and substance of his accusation, coritained

the key to what was charged and which would after in

camera review be retained by the court as though it were—

which it of course was not—excised § 3500 matter reserved

air 4

only for the eyes of a reviewing court ay

The defendants might at

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