# Appendix — Schipani v. United States

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 1967
- **Citation:** 385 U.S. 372

## Text

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

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.

-
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et
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2
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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-

oe AS A-10 : Ae. ai a

- v ¢

|: 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

at case.

-

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?

. 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 their election reply to the gen-
eral affidavit by argument and answering affidavit. [3874]
_ Despite what the prosecution had thus disclosed to them,
they would be handicapped in their opposition by their

_ ignorance’ of what had been withheld.

Nor if their clients were remanded, as they ultimately
were, would defense counsel be denied an opportunity to
renew their applications that their clients be enlarged.

' That the procedure in its analog to a Jenck’s Act routine
was in no minor sense et parte could not be gainsaid, but —
that the court’s choice was one responsive to the duress of
circumstanees is at once apparent upon a reading of the
papers which .the governmerit served upon defendants in
context with those submitted ex parte and only to the court.
In what follows the seal of secrecy is broken as to some,
but not as to all, that was thus kept private. Nor is more
of the general affidavit summarized than suffices -to. impart

A-84
Appendiz B—Opinion by Rocling, U.S.D.J..

its flavor. The confidentia! matter now-for the first time
revealed is underscored in what follows.

The jury at the first trial had reported its disagreement
on 5/13/61. The second trial (before Judge Abruzzo)‘ be-
gan the 5th of the following month of June. In the interval
between the end of the first and the beginning of the second
of the trials an informer had told a story of tampering with
tHe jury at the first trial. His information was prime, for
the informer was one of the defendants om triat. And his
information was conveyed through no intermediary. He
told it #3875] directly to a United States Attorney and
agents of the FBI. Following this lead, and thereby veri-
fying its basic reliability, the Federal Agents interviewed,
among others, a juror who had been approached and an
underworld character who had approached him. Both sep-
~~ arately admitted they had been in contact. A request had
been made by the interloper of the juror that he should help
a named defendant. Significantly the incident had not been -
reported to the trial judge by the juror thus importuned.

With respect to the third trial it will be recalled (see
supra, p. 61) that adverse publicity had flooded the papers
over the weekend following the shooting of Persico. Two
of the defendants, La Fante and McIntosh nevertheless ©
‘would not join in the’application of the other three for a
mistrial which was, accordingly, granted to these three
only. The event—a second disagr&ement of the jury—jus-
tified the confidence defendants La Fante and McIntosh
had manifested. Their conduct, otherwise inexplicable, is
readily understandable if the: allegations of the govern-
ment’s general affidavit, read with the key supplied by the

g

A-85

n~-—_—

roid

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

' court’s ‘‘private’’? memorandum, ‘are accepted at face. For

the purposes of the motion to remand the court felt con-
strained to give what was thus averred at least prima facie
credit. The general affidavit which had been delivered to
the prosecution recited the following: :

[3876]

“* * * At the.conclusion of the trial ten members
of the jury yisited the ,office of the United States At-
torney for the Eastern District of New York and
informed the United States Attorney’s office that
the jury’s deliberations had ended .10 to 2 for con-
viction of both defendants; that at one point of the
deliberations they had agreed on a guilty verdict
against the defendant Hugh McIntosh but when that
agreement was put to a vote the count was 11 to 1,
one juror having reneged on the agreement. All
jurors reported that the one dissenting juror, at the
moment deliberations began, went over to a bench,
reclined on it and said ‘Wake me up when you de- |
cide that the defendants are not guilty.’ He would
not listen, nor did he change his position during the
two days of deliberation. _

-“*Judge Bruchhausen read tlie so-called Allen
Charge on two occasions to no avail. A confidential
informant, whose name ‘will be revealed to the Court,
and who is in a unique position to know, informed
agents of the Federal Bureau of Investigation that
efforts to approach the jury by the defendants were
successful and that was why McIntosh elected to con-
tinue on to the conclusion of the trial.

‘‘ Another confidential informant, also in a unique
position to know, informed agents of the Federal
Bureau of Investigation, as well as your deponent,
that there had been tampering with the jurors in the

A-86

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

third trifi. Members of the New York City Police
Department have told your deponent that the so
called Gallo Group had a representative in‘the court-
room during the course of the entire trial and that,
having learned through underworld sources that the
jury had been tampered with, decided to take jus--
tice in their own hands and murder the defendant
Carminé Persico, Jr. This was one of the reasons
which prompted the shooting of the defendant Per-
sico on the day before summations. It should be
noted that in spite of the widespread publicity natu-
rally prejudicial to the defendant Hugh McIntosh,
he chose to continue with the trial.

‘*During the jury’s deliberations known members
of the underworld, some of whom have since been
killed, attended the trial, menacing the jury [3877]
and causing great concern to your deponent, who
was then prosecuting the case and occasioned your

_ deponent to order Marshals in among the group. An
additional purpose for the presence of this menacing
group was to safely escort McIntosh, Persico’s first
lieutenant, to and from the courthouse to protect him
from the same fate as Persico. It was in this atmos-
phere and attitude that the jury had to perform its
important Functions. After the trial jurors reported
that they were aware of the presence of these men
and understood the nature of their menacing atti-
tudes. is

_ ‘The court now for the first time reveals that the in

. camera affidavit gives the names of at least one of the

informants as to the third trial jury tampering, whom it
describes as a close associate of the defendant La Fante. A

' secondary source of dovetailing information was reported
- to be “‘officials of the New York City Police Department -

4-87,

Appendiz B—Opinion by Rosling, U.S.DJ.

who because of security reasons refused to divulge to:the
(U. S. Attorney) the name of their informer.’’ La Fante.
. is alleged to have declared to his associate that the-third
jury had been successfully ‘‘reached’’ and that ‘‘ Hugh Mc-
Intosh is currently charged with the duty of trying to ‘get
close to’ a juror on ths (the fourth) panel but that so far
he has not been successful.’’

Annexed to the general affidavit moreover, was a melan-
choly three pagé‘‘Boot Hill’’ schedule, a catalogue of
numerous deaths coupled with references to injury by vio- |
lence and suspicious disappearances, ail of persons who
allegedly moved in circles to which the defendants were not
strangers. [3878] This, too, furnished the court with much °
food for thought as it weighed the pros and cons of the
' remand and sequestering applied for and opposed, and
later when it came to consider the mass of § 3500 material
‘that the government had not on any of the earlier three
trials opened up to the defense.

aa
3

* § 3500 as AN INQUIRY, NOT’AN ADVERSARY PROCEEDING,
INVOLVES PROCEDURAL, NOT CONSTITUTIONAL PROBLEMS.

Thus, in an aura of menace and sudden doom which might
—for none could in advance make prediction or, to the con-
trary, give safe assurance—befall one whose name chanced |
to receive even passing mention in the mass of papers which
comprised the government’s Vaccaro file in this and other
pending investigations—(one might thereby be marked in
a fearful mind as a potential informer or enemy )—the court
was called upon when Vaccaro’s direct testimony ended, to

A-88
Appendia B—Opinion by Rosling, U.S.D.J.

make the determination as to what should be disclosed and
what withheld. |

In the present trial the difficulty in a sense was even
greater than that which confronted the couyt in Persico
IV. The physical danger to be apprehended may have been
nonexistent. The presumption of innocence compels such
conclusion. But what is set out in the Masetti 4 3500 mate-
rial suggests a continuing and far ranging investigation
_ not limited to the defendant here charged. The affairs of
others [3879] than Schipani adumbrated a shadowy, inter-
mediate area wherein may be found that which the govern-
ment asserts it has a right to conceal as matters whose
trifling relevancy to what is here under inquiry is far out-
‘weighed by the public interest in maintaining their confi-
dentiality inviolate. Fair play to a defendant blindly grop-
ing toward that which is denied him might on the other
hand require disclosure whatever the cost to the sovereign.
It was in such central area of uncertainty that the trial
court was called upon to give play to its discretion. pe

In the present case Agent Masetti had given his expert
opinion as to what was fe quired, and what had been done
in compliance with that requirement, in. carrying through a
thorough investigation of defendant’s financial affairs by
the government. Only by demonstration to the court’s
satisfaction that it had made such investigation could the
prosecution provide a basis which the court would accept
for the net worth and income computations. (See supra, |
pp. 4, 16-18). Such testimony had in tlie court’s view thrown
the Jencks Act door wide open for explanation of the docu-
mentation upon which the expert witness had come to the
’ eonclusions he had announced and proffered as valid. _

A-89

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

Mr. Ruby had originally in camera noted his objection ©
to turning over by far the greater part of the matter com-
prising Exhibit 287. In the end, however, after an over-
night review of the document at home by the court, the
- U.S. Attorney with [3880] some misgivings upon resump-
tion of the in camera proceeding, was persuaded to consent
to delivery of almost the entire exhibit. Extensive supple-
mental source material merely identified in Exhibit 287,
but which had not as yet been made available to the court
by such attorney and presumably constituting the product
of a vast investigation extending over a long period of
time seemed to involve the affairs and possible derelictions
of others, alone or in association with the defendant. All
this, the court announced in camera in the absence of pro-
test from Mr. Ruby and thereafter repeated in open court,
was to be the subject of further § 3500 inquiry. Disposition *
of the question of a later in-camera examination of these
identified supplemental documents was to be reserved until
after Mr. Lefkowitz had had his opportunity to inquire
concerning them and the court could reflect upon the matter.
It developed that the defense attorney after having had
Exhibit 287 for study over the weekend [Tr. 3285-3287] was
not interested in questioning Mr. Masetti or Mr. Ruby as
to these as yet unproduced documents [Tr. 3290, 3308, 3309-
3436]. He did not ask about them nor demand their produc- .
tion. car

In the in camera proceeding, moreover, the sealed record
will indicate that Mr. Ruby had originally objected to the
delivery to the defense of pages 64 through 146 {page 86
excepted), and many other pages, wholly or in part.

MTT Se eee

be A-90

-~

“Appendix B—Opinion by Rosling, U:8.D.J.

Among the items originally opposed but which by the
[3881] court’s persuasion and direction were made public
was a list of 551 numbered exhibits, with contents undis-
closed, and of 170 potential ; witnesses with only their names
and addresses in most instances provided. A small- -propor-
tion of these did in-fact testify. The testimony of others
was dispensed with the court’s receiving Mr. Lefkowitz’s
stipulati®n in lieu of testimony as the proof. To the defen-
dant the sterile lists of names might gives clues concerning »
the government’s prying into affairs which, as unrelated to
this trial, were no concern of his. These clues might prove
useful knowledge for him in the concerns of others and per-
haps even his own. For the court, however, uncued by any
prior familiarity with the subject matter, these lists pro-
vided only an interminable index to the unknown except
in those relatively few instances in which in the court’s less
than perfect recollection of the testimony, later to be re-
freshed by the transcript, something appeared which might
be correlated with proof directly adduced at the trial.

Dancers or Inquiry 1n OPEN Court Into THE MEANING
_oF THE Items ListeD, Upon a § 3500 Evanuarion.

A number of references in Exhibit 287, which in the end
were not ordered turned over to defense, alerted the court
to the danger of indiscriminate and open court inquiry,

- directed to the prosecution with the defendant listening, as —
~ to possible relationsHip between the items: enumerated and

the Masetti testimony. And yet upless there was such
inquiry how was the court to avoid giving no more than mere’

A-91
Appendix B—Opinion by Rosling, U.S.D.J.

lip service to the teachings of [3882] those most recent cases

‘that even that which might be useful only in the impeach-

ment for bias and interest of the witness, with defense
counsel as the judge of value, should be given over? How
was one fairly to comply with the rule of United States v.
Birnbaum, 337 F. 2d 490, 497 (2d Cir. 1964), and of Borelli,
supra, and of Rosenberg v. United States, 360 U.S. 367, and

' Palermo v. United States, 360 U.S. 343 in support, that pro- ,

duction may be required through the Jencks Act witness did
not on his direct examination testify as to the contents of

the specific document or conversation tlie interview report .

of which was now demanded? And what of United States v.

Ellenbogen, 341 F. 2d 893 (2d Cir. 1964) that ‘prior state-

ments that relate ‘generally to the events and activities
testified to’ must be produced ?”’

‘The appellate courts in this troubled field are unaninjous

"at least in the view that the cross-examiner knows best, and

surely better than the judge, where to plant his spade, and
the trial judge must direct the prosecution, once a 3500
relationship defined by decisional law has been established
with the testimony of a witness, to transmit the document to
the defense. But what short of clairvoyance can, where the
document gives no clue, inform the judge that a seemingly
neutral writing is thus related and hence producible, or that
an apparently innocuous one is both irrelevant under the
section and calamitous even to hint at. When the court with
a trial scarcely begun, [3883] in the dark as to what is to
follow and uninstrncted as to much that will never become

. part of the r-eord, is called upon to make its determination

as to what is to be withheld and what given up to the defense

2

A929

Appendia B—Opinion by Rosling, U.9.D.J.

it has no such conspectus of the whole as is possessed by the

_ attorneys for the parties or is afforded to a reviewing court

by the record of a complete trial and summations which
draw the threads together. In the ordinary cases, and these
predominate, the § 3500 demand by the defense presents no
problem for the court. Customarily the statements are
turned over directly by the prosecution to the defense with-
out recourse to the court for in camera adjudications. But
when what is in question is an unmarked island in an un-

- charted sea of a general rackets investigation the answer
is not easy to:come by. Solitary perusal of a meaningless

jumble of words makes them no clearer. Mere coded refer-
ence numbers noting, as here, the existence.of otherwise un-
explicated documents, aid the court even less. What is

obscure, continues so, and open inquiry is dangerous.

Nor would Mr. Lefkowitz’s attendance in chambers with-
out his client, a solution he proposes for the court’s di-
lemma, have furnished the answer. The attorney’s presence
would have been not in his own right, but vicarious in his
client’s interest with a duty to disclose what he had learned. .
(See Canon 15 of the Canons of Professional Ethics) And
why would he be there? His function surely would not:have
been to [3884] make certain that an unwatched prosecutor
did not instill a poisonous potion in a receptive judicial ear.
If that were the government’s désire the contents of Exhibit

287, though no hostile prosecutor were present, could well

supply all the venom which the prosecutor would nave

needed to —— the -aerees

93

| { Appendix B—Opinion by Rosling, U.S.DJ.

Here the client’s waiver of a jury trial had breached the
dam that might otherwise have insulated the trier of the

facts from exposure to extraneous blackening of the good.

name defendant was entitled to for the purposes of the
trial. Nor does it serve defendant as a valid argument that

in the end the ‘government conceded all that had given the :

unknowing court concern. The court could not at the thresh-

old of its inquiry have anticipated such an outcome.
Realistically, by what i ingenious contrivance, by the use

of what Aesopian verbiage could a public inquiry go for-
ward in such fashion that no clue as to what was being-with-
held might accrue to defense counsel or his client frém what
their eyes beheld and ears heard, what cryptic phrasing of
the.court’s inquiry and U. S. Attorney’s response could
successfully mask the content of their colloquy? How were
the nature and content of what the prosecutor asked the
court to excise and which he was in fact entitled to have
kept inviolate from disclosure to the defense, to be ‘pre-
served in secrecy? Would any esoteric semantics which the
court and prosecutor might engage in under the watchful
eye and attentive ear of the defense, at the same instant
enlighten a court which was without an initial and underly-
ing familiarity with the matters explored, and yet keep in
[3885] continuing ignorance one whose very fabric and
‘texture of existence was being penetrated by the inquisi-
tion?

‘
\s

A-94
Appendia Q—Opinion by Rosling, U.S.D.J.

§ 3500 Procepure, A NON-ADVERSARY INQUIRY, NOT A
_ Tein, INVOLVES A DUE ACCOMMODATION OF EX PARTE
AND OPEN Count Jupio1aL Action.

Between Jencks v. United States, 353 U.S. 657, 77 S. Ct.
1007 (1957) and United States v. Burr, 25 Fed. Cas. p. 187
(case No. 14,694)4° a sesquicentennium had elapsed. And
yet Jencks marked the passage of the century and a half
by undertaking once more and still with less than complete
success* *° to shift the ever wavering line that divided the
urea wherein were to be found those writings which must
be produced in aid of an accused on trial from that in which
lie buried from public view those documents which ‘by rea-
son of the public interest should be withheld from a defen-
dant and his counsel. In passing Jencks gave a curt nod of
recognition to Burr (see Jencks, ffn. 12 and 14).

Jencks had been argued in October 1956 and was decided
in June of the following year. Roviaro v. United States
cited supra, which had been argued later (December 1956)
but decided earlier in March 1957, reaffirmed the com-
peting right of the government in the judicial process to
‘‘balanc[e] the public interest in protecting the flow of in-
formation against the individual’s ante to prepare his de-
fense.’’

[3886]

Jencks does not appear to have overruled Roviaro at the
time so recently decided. Jencks, however, was explicit in
its declaration, U.S. p. 669, S. Ct. p. 1014, that ‘(t]he prae-
tice of producing governmént documents to the trial judge
for his determination of relevancy and materiality, without

fo a *
Appendiz P—Opinion by Rosling, U.S.D.J.

hearing the accused is disapproved,” citing cases illustrat-
ing such earlier procedure. [emphasis supplied]
Jencks further noted, ibid., with a clear expression of
approval ‘‘the holdings of the Court of Appeals for the
Second Cireuit (citing additional cases) that in criminal
causes * * * the government can invoke its evidentiary
privileges only at the price of letting the defendant go
free.’’ ‘We hold,”’ the court’s opinion expounded (U.S.
672, S. Ct. 1015), ‘‘that the criminal action must be dis-
missed when the government, on the ground of privilege,
elects not to comply with an order to. produce for the ac-
cused’s inspection and for admission in evidence, relevant
statements or reports in its possession of government wit-
nesses touching the subject matter of.their testimony.’’ As
being in accord with this draconian pronouncement the
Supreme Court cited Roviaro, and then concluded with a
declaration which surely rang sweetly in the ears of the
harassed district court judiciary:

‘‘The burden is the Government’s,’’ the court declared,
‘*not to be shifted to the trial judge, to decide whether the
public prejudice of allowing the crime to go unpunished is
greater than that attendant upon the possible disclosure °
of [3887] state secrets and other confidential information
in the Government’s possession.’’

In short, the boundary of the precinct wherein ex parte
action was authorized and might be resorted to, enclosed
the prosecution but excluded the judge. The U. 8. Attorney
was cautioned, however, that ‘‘the interest of the United
States in a erfminal prosecution ‘* * * is not that it shall
win a case, but that justice shall be done * * *’ Berger v.

. AS
Appendiz B—Opinion by Rosling, U.S.D.J.
‘United States, 295 U.S. 78, 88, 55 S. Ct. 629, 633,’ and ad-
monished (Jencks fn. 13) that Canon 5, American Bar
Association, Canons of Professional Ethics (1947) estab-
lished a high standard for a prosecutor’s conduct. The
‘canon in pertinent part announces: ‘‘ * * * The primary
d

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385001_0856%3A2. Public record. Not legal advice.