Petition — Allen v. United States

Supreme Court brief1976

Ask Donna

What actually matters in this document.

Text

ofa m

MICHAEL RODAK, JR., CLERK

ESOT I ASAE

In the

Supreme Court of the United States

October Term, 1975

No. A- 267

. JAMES L. ALLEN,

Petitioner,

vs.

UNITED STATES OF AMERICA,

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

James L. Allen

Post Office Box 8380

Canton, Ohio 44711

(216) 452-6411

la Propria Persons

(i)

Page

TABLE OF CONTENTS

OPINIONS BELOW ececes eoeeeoeeeeneeneeneeee#eee l

JUMESDEGESOMecceceeeeeeeeeseeeeeeeeees l

QUESTIONS PRESENTED .ccveeecceccevees 2

CONSTITUTIONAL PROVISIONS AND

STATUTES INVCLVED .ecccccceveecvesese 4

STATEMENT eoeeeveeeeeeneeneneeneerteeevneeeeeeee 6

ARGUMENT eoeeeoeeeeenreenrteenepe#enseeeeeeeneeeneee ee 9g

CONCLUSION eeeneveeeteeeeeenreeeeeeeeeee 46

TABLE OF CONTENTS

OF APPENDIX

APPENDIX A

Gpinion of United States Court of

Appeals for the Sixth Circuit ... la

APPENDIX B

Extension of Time in Which to

File Petition for Writ of

Ceortiorari coccccceocceccsceseseee§ |B

APPENDIX C

Portion of Audit Technique

Handbook for Internal Revenue

AGENTS coccccccccccccccsccseccscscsee IC

APPENDIX D

Memorandum of Agent of Initial

Interview ceccccccccccccscccesere Id

caw wes

Papal SBD ae ED tg BPE a NA. ORE SE San A MABEL. | napa mee Fm *

(ii)

TABLE OF CITATIONS

Cases:

Alderman Ve U.Se, 394 US l6Sccccceercssoan

Avery v. \la. 308 U.S. 444, 446

60 S.Ct. 321,322 84 L.Ed.377

(1940) eeeererefeneee#ee#ke#*ee#8#e#8eeee#e#e *eeee 38

Baines ve U.S. 426 F 2d 833

(5th Cife 1970)... oeeweeeee oeeveeeeee 26

Beasley v. U.S., 491 F 2d 687 (1974)

oeeeveeeeeeevreeereeeeeevneeeeeeeeaeeenee 33-38-39

Beckwith v. U.S. U.S. ; S.Ct.

U.S.S.Ct. #74-1243 Cert

granted 6/16/75 ...seee 12-14017-18-42

Boyd v. U.S. 116 U.S. 616, 6 S.Ct.

924, 1886 cccccccccccee ee - 13

Calif. v. Green 399 U.S. 149 (1970). 30

Dennis v. U.S., 384 U.S. 855 (1966)

eee eevee eeeeee oeeeoeeeeeeeeeeee ee 23-25 -31

Dutton v. Evans, 400 U.S.74 (1970).... 30

Erckman v. U.S., 40 L~-Ed 2 115,117.... 24

Flemister v. U.S., 260 F 2d 513

(5th Cir. 1958) e*e@eeneeeee#e#ee#ee#ee####e##e#e## @ 26

Glasser v. U.S. 315 U.S. 60, 62 S.Ci, .

457, 86 L.Ed 680 (1942)....ceeeeee 38

Green v. U.S. 411 F 2 588 (10th Cir)... 14

Holland v. U.S., 348 U.S. 121 27,43

(iii)

Cases, continued: Page

Jencks v. U.S., 353 U.S. 567,

77 SeGt. ee 32

Mathis v. U.S., 391 U.S.1, 20 L.

Ed 2d 381, 88 * Tr Tre rerrrrerrye 14

McMann v. Richardson, 397 U.S. 759,

90 S.Ct. 1441, 25 L.Ed 763 (1970).. 39

Miranda v. Arizona 384 U.S. 436....passim

: Olender v. U.S., 210 F 2d 795

(9th Cir. EEE EEE 30

Orozco v. Texas, 394 U.S. 324 ..c.e22- 14

Powell v. Alabama 287 U.S. 45 53 S.

Ct. SS 77 LeBS 196 (ISSA) ecccccccce 3B

Steele v. U.S., 222 F 2d 628

(5th Cir. 1955) *oeereeenveeeeneeneeeeeneeee 27

U.S. v. Ball, 428 F 2d 26 (6th Cir.

1970) eoeeeeene@ensee#e#e#e#neee#ee*ee#ee#ee#e#ee#eee#eee#e#*#e##ee 21

U.S. v. Burke, 279 F 2d 1082

(7th Cir. 1971) oeeeoeeee eee e ee ee eee 22

U.S. v.- Clancy, 365 U.S. 312, 316

(1960) *eeneesr+e#ee#e#e#eetensee#te#ee#e#seetereterekeeese#e#ee#ee#e#ee#e« 23

U.S. v. Dickerson, 413 F 2d 1111

(7th EE SL LEI IOP OE OO ETE TE 15,17

U.S. ve Fox, 403 F 2d 97, 100

(2nd Cir) eeeeeeneteeenrteeneteneeeeeneene4eeee 14

(iiii)

Cases, continued: Page

U.S. v. Marra, 481 F 2d 1196, 1203

(6th C 1973) Cert. denied

414 U.S. Dit btn tb Onen nb bone 6s oO we 10

U.S. v. Miller, 261 F Supp 442

(D.Del) eoeeeteeeeeeeveeeeseeeeneeeeteeoeeeeee 14

U.S. ve. Mullings, 364 F 2d 173, 175

(2nd Cir.) eeeeteneeeerteerete#skteeteeerteeenenee#eee#e 14

Mie A ne nt, ee Nb de Tl oe wae OR Ee te

U.S. v. Murdock (1933) 290 U.S. 389,

78 L Ed (Adv. 225) 54 S.Ct. 223.... 45

U.S. v. O'Connor, 237 F 2d (2d Cir.

(1955) eoeeeee3xscegeieeeeeteereeeeee#e#etee*e#e#ee#e#e 26

eH reek ee em ae.

U.S. ve. O'Connor, 273 F 2d 358

(2d Cir. | Perrrrrrrrrr Trt

| U.S. v. Prince, 264 F 2d 850

; (3rd Cir. 1959) *oeeteeeeeneeeese*eeee#ee#es 22

U.S. ve. Robinson, 142 U.S. Appd C 43,

439 F 2d 553 eoeeeeretree#ef28steneeeneeneeee#s? 14

U.S. v. Turzyanski, 268 F Supp. 847

(N.D.1I11) oeeeew ewe evw eevee e ee eeeaeeeeeee 15

White v. Ragen, 324 U.S. 760, 65 S.Ct.

978, 89 L Ed 1348 1) eer 39

(iiiii)

Page

Constitutional Provisions:

Constitution of the United States

Amendment [Viccccccceccscessssecese &

Amendment Vi cccccccccccccscccccccce &@

Amendment VI ccccoccccccseccssescese 2

Amendment ZIV cccccccccececsesesece AF

Miscellaneous:

28 United States Code Sec. 1254 (1)....1

18 U.S.C. Sec. 3900 .ccccccccee 21,25,3)

Amer. Jur. 2d DESK BOOK III........-- 3l

Internal Rev. Manual 4231, Audit

Division Audit Technique Hand-

book for I.R. AgentS weswcneseseee 8

Internal Revenue Manual 9900

Handbook for Intelligence Agents

Intelligence Div... cesccceeseeee Byll

Rules of U.S. District Court,

Northern Dist. of Ohio,

Crim. Rule 3 C ccccccccccceccceceee SI

Ne ll nt et NE ane aR TOE. AGS ite ~ Me eeaetee Hla oe St

—

re)

a a ee ee ee ee

- - tee See > me A me en ee

MS OI Re

In The

SUPREME COURT OF THE UNITED STATES

October Term 1975

No.

James L. Allen,

| Petitioner

United States of America,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR. THE

SIXTH CIRCUIT

OPINION BELOW

The opinion of the Court of Appeals

has not yet been officially reported

and is printed in the Appendix hereto

as Appendix A.

JURISDICTION

The judgment of the Court of Appeals

was entered on September 2, 1975.

(Appendix A) The jurisdiction of this

Court is invoked under 28 USC Sec 1254(1).

An Order Extending Time to File Pe-

tition for Writ of Certiorari, signed by

Mr. Justice Stewart and dated September

26, 1975, extended the time to file this

petition to and including November l,

1975 (Appendix B-Order and letter for-

warding same).

QUESTIONS PRESENTED

le. Whether the trial court's denial

of petitioner's Motion to Suppress certain

evidence effectively deprived petitioner

of his rights under the Fourth, Fifth,

and the Sixth Amendments to the

United States Constitution.

2. Whether the United States District

Court denied petitioner his inalienable

right to a fair trial when it denied his

Motion for Continuance after an affirma-

tive showing that his most knowledgeable

attorney had suffered a severe illness

and at the time of the trial was in the

process of recuperation.

3. Whether the trial court committed

reversible error when it denied to this

petitioner the referral report of Inter-

nal Revenue Service Agent Tracy and the

Criminal Reference Report of Special

Agent Pope pursuant to 18 USC Section

3500 for use in cross-examination of

those witnesses.

4. Whether the Trial Court committed

reversible error when it admitted into

evidence, and sent into the deliberation

room, Government's Exhibit 31 and other

charts and summaries prepared by the

Government.

;

‘

iu Pe ee eee

ue fe

5. Whether the Trial Court committed

reversible error when it allowed into evi-

dence hearsay testimony of Internal Revenue

Service with regard to the accounts re-

ceivable leads submitted by this petitioner.

6. Whether the Trial Court committed

reversible error when it did not dismiss

the indictment or in the alternative strike

the testimony of Special Agent Pope when it

was disclosed that his testimony had been

selectively not recorded along with the

testimony of other witnesses before the

same Grand Jury.

7. Whether it comports with established

procedure, and whether petitioner was de-

nied a fair trial, when one Government wit-

ness, testifying as an expert witness,

was permitted to challenge the credibility

of another Government witness, testifying

favorably for the petitioner, in the pres-

ence of the jury.

8. Whether this petitioner was denied

his Constitutional right to a fair trial

and to the effective assistance of counsel

when his defense counsel interposed no de-

fense despite considerable documentary

evidence and oral testimony being avail-

able. All of which was submitted to the

United States Court of Appeals in the form

of documents and sworn affidavits and which

the Sixth Circuit Court of Appeals refused

to consider. .

9. Whether petitioner was denied the

effective assistance of counsel guaranteed

by the United States Constitution by the

intimidatory and coercive acts of the

Internal Revenue Service, which had an

active interest in the case; particularly

when such acts were directed against de-

fense counsel during the very course of

the trial.

10. Whether petitioner's conduct durirj

all pre-indictment phases of the investi-

gation preclude any charge of "Wilfully

and Knowingly" committing any criminal

offense.

CONSTITUTIONAL PROVISIONS

AND STATUTES INVOLVED

Fourth Amendment:

"The right of the people to be secure

in their persons, houses, papers, and

effects, against unreasonable searches

and seizures shall not be violated.”

Fifth Amendment:

"No person .. . Shall be compelled

in any criminal case to be a witness.

against himself, nor be deprived of life,

liberty or property without due process of

law. ee ™

Sixth Amendment:

"In all criminal prosecutions, the ac-

cused shall enjoy the right... to be

confronted with the: witnesses against him

- « » and to have the assistance of counsel

for his defense."

18 U.S.C. Sec. 3500:

DEMANDS FOR PRODUCTION OF STATEMENTS AND

REPORTS OF WITNESSES.

— oe et ee

Die AOR MORI Pet fuer Date es Be) unre oo

as a

(a) In any criminal: prosecution

brought by the United States, no state-

ment or report in the possession of the

United States which was made by a Govern-

ment witness or prospective Government

witness (other than the defendant) to

an agent of the Government shall be the

subject of subpoena, discovery, or ins-

pection until said witness has testified

on direct examination in the trial of the

case.

(b) After a witness called by the

United States has testified on direct

examination, the court shall, on motion

of the defendant, order the United States

to produce any statement (as hereinafter

defined) of the witness in the possession

‘of the United States which relates to the

subject matter as to which the witness

has testified. If the entire contents

of any such statement relate to the sub-

ject matter of the testimony of the witness,

the court shall order it to be delivered

directly to the defendant for his exam-

ination and use.

* * *

(e) The term "statement", as used

in subsections BO, (c) and (d) of this

section in relation to any witness called

by the United States, means -

(1) a written statement made by said

witness and signed or otherwise adopted

Or approved by him.

* * *

26 U.S. C. Sec, 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 prose-

cution.

Section 7206 - FRAUD AND FALSE STATEMENTS.

Any person who -

(1) Declaration Under Penalties or Per-

jury.- Wilfully makes and subscribes any

return, statement, or other document, |

which contains or is verified by a written

declaration that it is made under the

penalties of perjury, and which he does not

believe to be true and correct as to every

material matter;

* * *

shall be guilty of a felony and, upon con-

viction thereof, shall be fined not more

than $5,000, or imprisoned not more than

3 years, or both, together with the costs

of prosecution.

STATEMENT

Petitioner was charged with three (3)

counts of attempting to evade and defeat

federal income taxes in violation of 26

USC Sec. 7201 by indictment filed January

10, 1973 in the District Court for the

northern District of Ohio. On September

10, 1973 and evenditiary hearing was held

eee SY —~

nia

ta AR MVR NE or oe ABT ete RI GIR AER Pe om

on petitioner's motion to suppress evi-

dence, obtained in the course of the

Internal Revenue Service investigation.

On September 13 the Honorable Leroy J.

Contie denied above mentioned motion. On

February 5, 1974 a motion for continuance

of trial was filed on behalf of the peti-

tioner and overruled on February 8, 1974

by Honorable Leroy J. Contie.

Trial commenced on February 25, 1974 and

concluded March 14, 1974. Prior to trial

proceedings Count I of the indictment was

dismissed by the District Court upon motion

of the United States Attorney.

Government rested its case on March 14,

1974. No defense was offered and a verdict

of guilty was returned by the jury on both

counts of the indictment.

On April 5, 1974 a motion for new trial

was filed on behalf of the petitioner and

subsequently denied by the Honorable Leroy

J. Contie on April 19, 1974.

On May 22, 1974 petitioner. was. sentenced

by the Honorable Leroy Contie. to wit:

COUNT TWO: Sentenced to six (6) months

confinement, four and one-half years proba-

tion and a fine in the amount of $2,500.00.

COUNT THREE: Sentenced to six (6) months

confinement, four and one-half years proba-

tion and a fine in the amount of $2,500.00.

Confinement and probation to run concurrent

with Count 2, fines to be paid separately.

WHEREUPON petitioner filed his timely No-

tice of Appeal and was continued upon per-

sonal recognizance bail in the amount of

$1,000.00.

Upon his appeal to the Court of Appeals

for the Sixth District his conviction was

affirmed. Motion for Stay of Mandate and

continued bail was granted.

The theory of prosecution upon which

petitioner stands convicted was the "net

worth" method of proving a criminal under

statement on his 1967 and 1968 federal tax

return.

Petitioner's conviction was largely bssed

on the uncorroborated, extra judicial

alleged statements of said petitioner to

Agent James Tracy (who has a pronounced

hearing problem, wears two hearing aids

(TR 104, 114), and documents (and informa-

tion flowing from them) received from pe-

titioner by Special Agent Pope. The very

nature of the agent's behavior and manner

as laid out in Internal Revenue Manual

4231, Audit Division - Audit Technique

Handbook, for Internal Revenue Agent Sec.

920, Approach, (Appendix C) (The mere read-~

ing of this section by anyone concerned with

‘the preservation of the Bill of Rights,

particularly the Fourth and Fifth Amend-

ments, will fill him with revulsion and

indignation as to how far this administra-

tive agency has strayed from the mandates

of the Constitution and makes it clear that

a taxpayer places himself in jeopardy by

responding to the most innocuous question

put to him by any agent of the Internai

Revenue Service), is one that fails to

eT Ele eI '

went a

give the taxpayer any notice of the

importance of his questions and to give

due consideration to his answers rather

than treat them as casual conversation.

This material was only recently made

available outside the Internal Revenue

Service under the mandate of the Freedom

of Information Act (5 U.S.C. Sec. 552).

ARGUMENT

Under the Constitution of the United

States of America, no person shall be de-

prived of his.freedom or property without

“due process.of law" and without the

“equal protection of the law". Due pro-

cess of law, of course, pre-supposes

that defendants in criminal cases shall

have vigorous and effective assistance

of counsel, with every defense and favor-

able evidence presented in his behalf.

This principle comes to American. Law as

a result of having been deeply imbedded

in the minds of free men and constitutes

_the very foundation of Constitutional

law under which Americans live. Students

of law as well as the layman frown sharply

upon a pers n being convicted of a serious

crime without due process of law and the

equal protection of the law. Each of the

ten issues presented herein were submit-

ted before the United States Court of

Appeals for the Sixth Circuit, and each

issue presented screams loudly of a

denial of due process and equal protec-

tion of the law.

QUESTION I

After an evidentiary hearing the peti-

tionersS motion for suppression of evi-

dence was denied. The court of Appeals

upheld the District Court, quoting “pites

States v. Marra, 481 F2d 1196, 1203 (6th

Cir. 1973), cert. denied 414 U.S. 1004,

in the absence of a clear showing that

the taxpayer has been tricked or deceived

by the documents and statements obtained

by the Internal Revenue agents are admiss-

ible.

Since the evidentiary hearing and fil-

ing to the Court of Appeals the petitioner

has come into possession of material which

can be considered as new evidence. Under

the Freedom of Information Act 5 USC Sec.

952, petitioner sought and eventually

received copies of the Audit Technique

Handbook for Internal Revenue Agents (App.

C) and the Handbook for Special Agents,

Intelligence Division.

There can be no question after reading

selected sections of these official hand-

books that the agents did misrepresent

and deceive and that this behavior is

authorized and routine policy for agents

of the Internal Revenue Service.

Appendixes C and D will clearly show

that the original agent was not doing a

routine audit but a net worth audit and

was to secure information that "might

become unavailable later’ Most signifi-

cant is the absence of any mention by the

agent in his memorandum of December ll,

1969 (the initial meeting) of any examin-

ing of the petitioner's books and records

to determine they were inadequate. (App.D)

Moving on toe the Special Agents Hand-

book we find under the title of Tax

Cases (Evidence and Procedure) Sec. 335

"All initial assignments have as their

objective the development of a potential

criminal case". Sec. 336.1 9(c) Detri-

mental effects to be avoided are: 4.

Premature disclosure of the course of in-

vestigative action to the principals and

others. (6) The question of when the

special agent should initially meet the

principal should be decided after con-

sidering the advantages of both early

and delayed interviews. (7) There

should be no affirmative misrepresenta-

tion or concealment. The special agent

will advise the subject of his constitu-

tional rights as required by Internal

Revenue Manual 9384.

Sec. 336.1 9(a) The special agent

should be sufficiently familiar with the

audit or collection features of the case

and the cooperating officer sufficiently

familiar with its criminal features to

corroborate or complement each other's

testimony if necessary.

Internal Revenue Service Agent Tracy

and Special Agent Pope did not claim to

have given petitioner the Miranda warn-

ing before he turned over to them the

records, files and documents pertaining

to his earnings for the years 1966,

1967 and 1968. In fact, both Agent

Tracy and Special Agent Pope testified

under oath that they did not recite the

Miranda warning to petitioner. Rather,

they attempted to evade the omission

with the claim that none of the mater-

ials received from petitioner were used

in the prosecution. Testimony at the

trial proved that the special agent did

request and receive from the petitioner

(through Mr. Howes thus. avoiding a face

to face confrontation) documents that

were used to build the case against him.

In BECKWITH v. UNITED STATES,

hie, ee, ee - oe S. Supreme

Court #74-1243) Costiorer! Granted 6-l6-

75, it was not denied that the defendant

in that case was given a portion of the

Mirenda warning in spite of the fact that

he was not in custody. No doubt, the

special agent involved in BECKWITH was

following the mandates of HANDBOOK FOR

SPECIAL AGENTS, Intelligence Division,

Internal Revenue Manual Chapter 9900,

which ordered that special agents advise

"the subject of the investigation sub-

eat ete as follows:

"In connection with my investigation

\Of your tax liability (or other matt-

ers) I would iike to ask you some ques-

tions. However, first I advise you that

under the Fifth Amendment to the Consti-

tution of the United States I cannot com=

pel yoy tO answer any questions or to

submit any information if such answers

- : .

ee ae

eee a ee tranny «

)

or information which you submit may

be used against you in any criminal

proceeding which may be undertaken.

I advise you further that you may, if

you wish, seek the assistance of an

attorney before responding."

It was admitted by Special Agent Pope

at the trial in the instant case that

even that minimal warning was not given

this petitioner. The same sworn admis-

sion was made by Agent Tracy who referred

the case to Special Agent Pope.

It cannot be disputed that at the time

the case was referred by Agent Tracy to

the Intelligence Division, this petition-

er became a virtual or putative defendant

requiring the recitation of the minimum

requirements of MIRANDA v. ARIZONA, 384

U.S. 436, upon first contact by any agent.

(See Boyd v. United States 116 U.S. 616,

6 S.Ct. 5/24/1886 It is also clear

that the mere fact that the first contact

took place by phone to petitioner's home

does not relieve the Government from the

minimum requirements of MIRANDA.

Petitioner contends he became a virtual

or putative defendant, a target for the

application of the criminal tax laws by

special agents of the Intelligence Divi-

sion who were set upon conviction. This

Court explained what it meant by "“custo-

dial circumstances" in MIRANDA when in

Footnote 4, it described them as an “in-

vestigation which had focused on an

accused". (384 U.S. 436, 444.)

Ihe LECKWITH Petition for Certiorari

States:

"Heretofore, courts have not exclu-

Sively looked to prison walls, hand-

cuffs, or back room police station

physical restraint as the touchstone

of MIRANDA. They have also taken

note of the focus of the investiga-

tion upon the accused and the "target"

of Government investigators. OROZCO

ve TEXAS, 394 U.S. 324. United

States ve. Robinson, 142 U.S. App.

D.C. 43, 439 F.2d 553."

In BECKWITH, the defendant was given

some semblance of the MIRANDA warning.

In the instant case, this petitioner was

given NO warning or advice as te his

rights. The courts implementing MIRANDA

have jealously guarded the exact sub-

Stance of this right. UNITED-STATES-v.

MULLINGS, 364 _F 2d 173, 175 (2nd Cir.);

United States v. Fox, 403 F 2d 97, 100

2nd Cir.

Absolutely no mention was made to this

petitioner that he had a right to an ap-

pointed attorney. Since the date of the

MIRANDA decision, courts have suppresse”

statements which did not include this

portion of the required warning. GREE!!

v. UNITED STATES, 411 F.2d 588 (10th Cir);

a STATES v. MILLER, 261 F. Supp 442

eVCle

Dispositive of this issue is MATHIS v.

UNITED STATES, 391 US 1, 20 L Ed 2d 231,

F3 S.Ct.-wherein Mr. -Justice Black speak-

ing for the Court said:

}

;

"Before eliciting this information,

the Government agent did not warn

petitioner that any evidence he

gave the Government could be used

against him, and that he had the

right to be silent if he desired as

well as the right to the presence

of counsel and that if he was unable

to afford counsel, one would be

appointed for him. At the time of

the trial petitioner sought several

times without success to have the

judge hold hearings out of the pres-

ence of the jury to prove that his

statements to the revenue agent were

given without these warnings and

should therefore not be used as evi-

dence against him. For this conten-

tion he relied exclusively on our

case of Miranda v. Arizona, 384 US

436, 16 L Ed 2d 694, 712, 86 S.Ct.

1602, 10 ALR 3d 974 (1966). The

District Court rejected this conten-

tion as did the Court of Appeals in

affirming. 376 F.2d 595. We granted

certiorari to decide whether the

Miranda calls for reversal. We hold

that it does."

The law in the Seventh Circuit is that,

whenever a case has shifted to the Intel-

ligence Division of the Internal Revenue

Service, the involved taxpayer must be

accorded the benefit of full MIRANDA

warnings. UNITED STATES v. DICKERSON,

413 F. 2d 1111 (7th Cir.). In reaching

its decision on this issue, the Seventh

Circuit Court of Appeals relied heavily

upon the District Judge in UNITED STATES

ve TURZYANSKI, 268 F.Supp. 847 (N.D.I1ll.),

who ruled as follows:

(O)nce a taxpayer becomes the subject

of a criminal tax investigation,

as evidence by the referral of the

investigation to the Intelligence

Division or otherwise, our adversary

process of criminal. justice has be-

come directed against him as a po-

tential defendant. Any evidence

obtained from him is admissible (sic)

only if the taxpayer furnished it

after knowingly and voluntarily

waiving his Constitutional rights

and privileges. (Citations omitted)

To hold otherwise would lead to the

anomalous conclusion that a person

Suspected of bank robbery, sale of

narcotics, murder, rape or other

Serious crime is entitled to greater

Constitutional rights than a person

suspected of violating the Internal

Revenue laws. For when the silent

transition from civil to criminal in-

vestigation takes place in a tax case,

the taxpayer being interrogated and

asked to furnish books and records is

just as surely a prime suspect and

candidate for criminal prosecution as

the individual under interrogation as

a suspect for other crimes. (Id. at

850-851.)

- In attempting to reconcile the opin-

ions issuing from the Seventh Circuit

Court of Appeals with the Opinion of

the Sixth Circuit Court of Appeals in

' this instant case (App. A), it cen only

be determined that not only are bank

OF Ont Crna ead, a! +.

‘

—

robbers, narcotics sellers, murderers

and rapists afforded a greater protection

of their Constitutional rights, likewise

are the residents of the Seventh Circuit

afforded a greater protection of their

Constitutional rights as are the resi-

dents of the Sixth Circuit, in direct

violation of the Fourteenth Amendment to

the Constitution of the United States.

The Solicitor General for the United

States, in his Memorandum opposing the

granting of certiorari, in BECKWITH v.

UNITED STATES relied upon the fact that

this court has denied certiorari for the

reason that ". . . the Internal Revenue

Service adopted in.1967 a “modified

MIRANDA warning™ to be used in such

cases. The Solicitor General states:

"Since the time of the DICKERSON de-

cision, there have been a number of

certiorari petitions filed by defend-

ants in tax prosecutions seeking re-

view, as does petitioner here on the

ground of the conflict created by

DICERKSON. However, because the agent

in DICKERSON gave the taxpayer no

warning and the Internal Revenue Ser-

vice adopted in 1967 a "modified

MIRANDA warning" to be used in such

cases, we have consistantly opposed

certiorari in such cases. (Citations

omitted) (Emphasis supplied)

The emphasis supplied above is used to

direct this Honorable Court's attention

to the fact that at no time was this

petitioner given the benefit of even the

"modified MIRANDA warning".

As stated in BECKWITH, supra:

THE IMPORTANCE OF THIS CASE

In the light of this nation's recent

experience with an Administration's

compiling "enemies lists" and util-

izing the Internal Revenue Service

to "harass" citizens because of their

unpopular political views or for

other non-tax-related reasons, this

case clearly involves a question of

exceptional importance meriting con-

sideration by this Court. Because

this country utilizes a system of

Self-taxation and because our tax

laws are so technical and complex,

there exists, on the part of those

who administer those tax laws, a

great potential to abuse the Fifth

Amendment's privilege against self-

incrimination. The legality of the

Government's labeling 2 citizen a

target defendant for a non-tax-rela-

ted reason and then proceeding to

harass him and to convict him out of

his own mouth without extending him

the -full panoply of Fifth Amendment

rights is a question-of far-reaching

Significance. E.Gvy; this case pre-

sents an excellent opportunity for

judicial consideration of the pro-

Priety of the anumalous situation

existing with respect to special ag-

ents of the Intelligence Division of

the Internal Revenue Service. It is

counsel for petitioner's understanding

that the involved Intelligence Division

of the Internal Revenue Service is this

country's only criminal law enforcement

CR Ee Oe TLE Oe fe EON SES FRE ee cee

Pe ee ay ae eT

agency that has, as a matter of rou-

tine, substituted its own limited

advice of rights for those set out by

this Court in Miranda v. Arizona.

QUESTION II

It is axiomatic that effective

counsel is counsel who is prepared to

proceed to trial thoroughly conver-

sant with all the elements of the

cause, and most particularly with

the exculpatory evidence which could

be presented in his client's behalf

which would ensure a "not guilty"

verdict. The denial of a continuance

on February 8, 1974 in effect denied

this right to the petitioner.

Prior to trial call Mr. Lebit

(engaged in January 1971), the most

knowledgable attorney was hospital-

ized and recuperating. Other de-

fense counsel petitioned the court

for a continuance for the reason

that he was not familiar with every

aspect of the case, which was an

exceedingly involved one. (In his

Memorandum in Support of Motion for

New Trial, trial counsel, Robert J.

Rotatori, himself raised the issue

of ineffective counsel for the rea-

son that his Motion for Continuance

was denied.

A research of decisional law re-

flects that courts of review con-

Sider each allegation of prejudice

resulting from denial of continu-

ance on an ad hoc basis. However,

such research further reflects that

reviewing courts are not loathe to

reverse convictions when actual

prejudice can be shown in the denial

of a continuance. See: 112 ALR 608.

Further, the granting of the move

for continuance would have created

no problems to the case of the Govern-

ment for the reason that the entire

case was not based upon the memories

of the Government witnesses, rather

it was based upon records which would

not have deteriorated in a matter of

days, weeks or months.

It is this petitioner's respectful

position before this Honorable Court

that the prejudice suffered by him

with the denial of a continuance

resulted directly in his conviction

after trial counsel, having no know] -

edge of the evidence available to

him, rested his case without the pres-

entation of a single witness in peti-

tioner's behalf.

QUESTION III

During trial of this cause counsel

moved for certain reports to be made

available to him under 18 U.S.C. Sec.

3500 (Jencks Act). The Trial Court held

that the reports of the agent were not

Section 3500 material. The Sixth Circuit

Court of Appeals rejected the findings of

the trial court, held that the reports

were, indeed, Jencks Act material but the

error in the trial court holding was

"harmless error", relying upon their own

decision in UNITED STATES v. BALL, 428 F.

2d 26 (6th Cir. 1970).

"It is our opinion that even though

the entire reports could have been con-

sidered producible under the Jencks Act,

the failure to order production was harm-

less error."

The Government in its reply brief to

the Court of Appeals that the defense

had not asked for the special agent's re-

port and was therefore "fiot entitled to

it". Trial counsel in his memorandum in

support of a new trial states:

"VY. The court erred in denying to

the defendant the referral reporr

of Agent Tracy and the Criminal Ref-

erence Report of Special Agent Pope

pursuant to Title 18 U.S.C. Sec. 3500

for use in cross examination of those

witnesses.”

Subsequent to the testimony of both

Agent Tracy and Special Agent Pope the

defense requested production of their

reports which both witnesses stated

contained information relative to their

direct examination. In net worth tax

prosecutions where the Government builds

its case mainly on the testimony of

agents and their computations, a very

broad range of statements within testi-

fying agents' reports are producible.

United States v. Burke, 279 F. 2d 1082

(7th Cir. 1971). The necessity to the

conduct of the defense of producing

agent's reports relating to assets, in-

come and expenditures during the entire

tax period in question, whether prepared

for criminal or civil tax purposes to

determine whether any statements of fact

therein were inconsistent with or con-

tradictory to the testimony in prepara-

tion of the charts and computations used

by them is recognized in United States

v. O'Connor, 273 F. 2d 358 (2d Cir. 1959),

wherein the Court said:

"If the Government chooses to depend

on the expertise of a witness for.

proof of the essentials of a criminal

charge, it cannot insulate him from

a thorough cross-examination by any

claim of a sovereign right to secrecy

of reports or methods of computation."

Even where the trial judge thinks that

the result of the trial could not conceiv-

ably have been altered by the failure of

producing reports w6 which thé défense ™

was entitled, such omission is a substan-

tial error under the mandate of the Jencks

Act. United States v. Prince, 264 F. 2d

850 (3rd Cir. 1959). "It is not the funce-

tion of the District Court or ourselves to

determine whether the appellant was prej-

udiced by failure to make available the

relevant portions of the prior report of

the witness." Id, at 852. :

The United States Supreme Court ex-

pressed the same view in United States v.

Clancy, 365 U.S. 312, 316 (1960 wherein

Mre Justice Douglas states:

"Since the production of....statements

withheld was a right of the defense,

it is not for us to speculate whether

they could have been utilized effect-

ively.

Apparently, ‘the Sixth Circuit Court of

Appeals does not ‘concur with the holding

of this Honorable’ Court in Cincy, supra.

In DENNIS ° V., UNITED STATES, 384 US 855

(1966), this Honorable Court HELD:

"(It is not) realistic to ‘b's sume

that the trial court’ s judgment as

to the utility of the material for |

impeachment ‘or other.-legitimate ‘.-——

purposes, however conscientiously

made would exhau’t the possibili-

ties. In our adversary system, it —~

is enough for judges to judge. The

determination of what may be useful

to the defense cat ‘properly and

effectively be made only ‘by an advo-

cate".

However, in the instant case, petition-

er's advocate was stopped before he could

start by the trial court's ruling that

the reports of the revenue agent were not

Jencks Act material. Petitioner was given

no essentalite by the Sixth Circuit

Court of Appeals to show that the error

was not “harmless error" when he was not

permitted to view the reports of the

revenue agent.

"These same considerations require

that the petitioner have the oppor-

tunity to examine: the agent's report

and to attempt to demonstrate to the

court that the error was not harmless.

Affording- the, petitioner. such an op-

portunity will minimize to the extent

possible the dangers of permitting

judicial speculation as to the utili-.

ty of a. statement to the defense."

Adversary proceedings will not magic-

ally eliminate all error, but they

will substantially reduce its indicence

by guarding against the possibility

that the... judge, through iack of

time or unfamiliarty with the informa-

tion contained in and suggested by

the materials, will be-unable to

provide the scrutiny. .« + demand(ed).”

Alderman:v, United States.

394 US 165 cited in-ERCKMAN v. UNITED

Petitioner respectfully contends that

dispositive of this issueris the language

of the dissenting Opinion in ERCKMAN

wherein it was said:

"Our judicial system is designed to

function in the context of -adversary

Proceedings. We:are therefore reluc-

tant to authorize ex parte, in camera

determinations unless they are truly

necessary to protect important govern-

mental interests. Indeed, in Dennis

and Alderman the Court, in order to

avoid in camera determinations akin

to those approved by the Court of

Appeals here, ordered disclosure of

the testimony and conversations in-

volved despite substantial counter-

vailing interests in Dennis, the

interest in Grand Jury secrecy, and

in Alderman the interest in national

security. In sharp contrast, there

is no justification here for not dis-

closing the agent's statement to the

defense, and thus no necessity for

the in camera determination engaged

in by the Court of Appeals. The

court has already determined that the

Jencks Act gave petitioner the right

to examine the agent's report in the

first place; at that point, no sub-

stantial governmental interest in

refusing disclosure of the report re-

mained. Yet disclosure of the report

is essential to permit the defense to

make an informed presentation of the

uses to which he might have put the

report. And without consideration of

such a presentation by counsel, the

Court of Appeals could not make a

truly informed decision on the harm-

less error question.”

QUESTION IV

The District Court allowed into evi-

dence Government's Exhibit 31 which was

the net worth analysis in document form

with supporting schedules-which were

explained by the Government's expert

accountant, and illustrated on a series

of four by eight foot blackboards before

the jury. (However, see challenging |

documentary evidence submitted herewith,

refused effect by the Sixth Circuit and

never even considered by defense counsel

who didn't realize such evidence was

available to him.) When the. jury re-

tired for its deliberations, Government's

Exhibit 31 and its supporting schedules

accoMpanied the jury. "Charts,, sum-

maries and schedules must fairly present

and summarize the entire evidence on

which they are based." United States. v.

O'Connor, 237 F.2d (2d Cir. 1955). :

"Conclusions by the Government in net

worth summaries which purport to be based

on all the evidence must reflect testi-

mony at trial which are favorable to the

defendant." Flemister v. United States,.

260 F. 2d 513 (5th Cir. 1958). - Where :™

conclusions of the Internal Revenue ex-

pert are based upon assumptions contested

at triel or testimony subject to impeach-

ment the inclusion of those items in a

net worth summary has been held to be

error. Baines v. United States, 426 F.

2d 833 (5th Cir. 1970). Likewise com-

putations in a net worth summary exhibit

which goes beyond the summarization of

evidence and includes within it an evalu-

ation of the credibility, reliability

and weight of certain of the testimony

renders such exhibits inadmissible.

Steele ve. United States, 222 F. 2d.628

(Sth Cir. 1955). In this case the net

worth exhibit submitted to the jury in-

cluded opening and ending figures of

accounts receivable of the defendant.

The Government's expert witness admitted

that some of the accounts which made up

the account receivable in the exhibit were

b.sed upon extra-judicial statements of

the witnesses and not upon their testimony

in trial because the expert did not be-

lieve the in-court testimony of the wit-

nesses. The court allowed the prior

statements of the Government witness to be

used by the Government over the objection

of the defendant for impeachment purposes.

The expert used the reference to the state

ments for substantive purposes in the net

worth analysis. In addition,.the weigh-

ing and evaluating of the witnesses’ testi-

mony by the expert in arriving at a con-

clusion to be placed in the net worth sum-

mary also rendered the summary inadmissible.

In HOLLAND v. UNITED STATES, 348 U.S.

121, this Honorable Court announced a basic

guideline for prosecutions of income tax

evasion cases utilizing the increase in net

worth method of proof to consist of:

".,.ethe establishment with reasonable

certainty, of an opening net worth,

to serve as a starting point from which

to calculate future increases in the

taxpayer's assets. The importance of

accuracy in this figure is immediately

apparent, as the correctness of the

result depends entirely upon the inclu-

Sion in this sum of all assets on hand at

the outset.".

This guidelinewas not ~ adhered to

in the instant case in undertaking

to establish a net worth for petitioner

on December 31, 1966,

Previous to the trial the Government

subpoenaed certain reels of microfilm cov-

ering specific dates, from the Harter Bank.

These microfilms were not introduced into

evidence but the Government requested they

be maintained at the Court House during

the course of the trial.

Special Agent Pope then testified to

items in the net worth schedule using the

above-mentioned microfilm as the basis

for his figures. These figures were in

turn used by the Government expert in her

net worth analysis.

Special Agent Pope omitted from his

testimony seventy-four (74) uncashed checks

on hand as of December 31, 1966 all of

which were reflected in the subpoenaed

microfilm.

The petitioner had copies of the Harter

Bank microfilm in the court room at the

time Agent Pope was testifying. Photocop-

les of these seventy-four checks were han-

ded to defense counsel who was totally

unaware of these checks and the value of

them for impeachment purposes along with

their effect on the expert witness’ sum-

mary.

It is to be remembered with the great-

est of emphasis the fact that the Summary

Schedule 31, submitted to the jury during

their deliberations was compiled from the

Special Agent Pope's testimony.

Although the microfilm was not offered

into evidence by the Government, and the

Schedule 31 compiled from the testimony

of Special Agent Pope from the microfilm.

was offered and accepted into evidence,

they are all a part of the court records

contrary to the findings of the Sixth Cir-

cuit.

Further, petitioner is constrained to

ask if the microfilm was not offered into

evidence by the Government ONLY because

the 74 check deficiency would be noted by

the jury?

During the trial, petitioner was in

physical control of photocopies made from

the microfilm which would have shown with-

out any question the selectivity of Special

Agent Pope's testimony relating to the

microfilm. Further, he was in physical

control of a plethora of documentary evi-

dence proving beyond a doubt the additional

31 errors appearing in the Schedule 3l.

However, Mr. Allen found it impossible to

direct his counsel's attention to the mas-

sive amount of errors in said Schedule 3l.

QUESTION. V.

Over the strenuous objection of defense

counsel, the trial court permitted testi-

mony of several agents to the effect that

they had contacted the acccunis receivable

leads submitted to them by this petition-

er and that they were not able to verify

the amounts. Petitioner objects to this

testimony on the basis that it was hear-

say and denied the defendant his right

to the confrontation of er icgeal vay Bln the

ight of cross-examination. In ender

>. aban States, 210 F. 2d 795 (9th Cir.

1954) a conviction was reversed due to the

admission of hearsay evidence. An Inter-

nal Revenue agent testified that he

spoke to persons and that his determina-

tion was that certain withdrawals were not

gifts to the taxpayer. The appellate

court held that this testimony was inad-

missible hearsay and reversed the convic-=

tion. The testimony in Qlender, supra, 15

not far removed from the agents’ testimony

in the instant case.

In California ve Green, 399 U.S. 149

(1970) it was held:

"The admission of the testimony of

the agents also worked a denial of

the right of confrontation. A

defendant has the inalienable right

to cross-examine witnesses where it

is necessary to provide the trier of

fact with a satisfactory basis for

evaluating the truth of the testi-

mony.

SEE ALSO: Dutton V. Evans, 400 U.S.

74 (1970)

QUESTION VI

The indictment in this case was re-

turned on January 10, 1973. On January

15, 1973 the District Court established,

as a matter of rule, the necessity of

recording all Grand Jury testimony. For

months prior to the effective date of the

rule, the Department of Justice was aware

of Crim. Rule 3 C of the U. S. District

Court, Northern District of Ohio.

Following the direct examination of

Pope, the special agent in the instant

case, defense counsel moved for the pro-

duction of his testimony before the Grand

Jury pursuant to Title 18, Section 3500.

Government counsel then disclosed to the

court, at the bench, that a transcript of

the agent's testimony before the Grand

Jury did not exist! His testimony was

not recorded as was that of all other wit-

nesses before the Grand Jury. The failure

to keep a record of the Grand Jury testi-

mony in regard to Agent Pope therefore

necessitated a departure from Supreme

Court Decisions establishing 2 defendant's

right to examine Grand Jury minutes and

to use such minutes for impeachment pur-

poses. See, e.g. Dennis v. United States,

384 U.S. 855 (1965).

The selective recording of witnesses'

Grand Jury testimony in this case, and

particularly the non-recording of Special

Agent Pope's testimony served to deprive

this petitioner of the use of that testi-

mony for purposes of cross-cxamination.

It is this petitioner's firm position

that the United States Attorney, rather

than placing reliance on the fact that

the indictment was returned on January 10,

1973, and the Court Rule requiring the re-

cording of all testimony was not effective

until Jonuary 15, 1973, should, in the

inierest of justice, cxplain to this

Honorable Court the reason for the selec-

tive non-recording of the special egent's

testimony before the Grand Jury.

"The interest of the United States in

. criminal prosecution is not that it

shall win a case, but that justice

shall be done." Jencks v. United

States, 353 US 567, 77 S Ct. 1007.

QUESTION VII

At trial transcript page 1105, Adele

Kihlken was called to testify as an ex-

pert witness for the Government. Ms.

Kihlken was permitted to remain in the

cour* room throughout the trial.

Government witness Pagnotia testified

favorably for the petitioner's cause.

Expert witness Kihlken was permitted to

challenge the credibility of Government

witness Poagnott2. “hile being asked by

defense counsel if she had taken into

consideration the testimony of witness

Pagnot-c in her figures she was tes*ify-

ina to, Ms. Kihlken responded:

"Mr. Pagnotto identificd purported

peyments. The payments are not in

evidence. And Mr. Pagnotta's testi-

mony somewho* lacked credibility.”

(At this point, the tricl judge advised

the expert witness that the “purported

poyments” were indecd in evidence being

Defense E hibits B through L, a total

of eleven (11) photocopies of money

orders sent to petitioner by witness

Pagnotta.)

The Sixth Circuit could find no error

for the reason that the challenge to wit-

ness Pagnotta's credibility by Government

witness Kihlken occurred while under cross-

examination by defenee counsel. No where

in said trial transcript is it to be found

that defense counsel invited the challenge

to witness Pagnotta's credibility from

witness Kihlken. t

- QUESTION VIII

"Defense counsel must perform at

least as well as a lawyer with ordi-

nary training and skill in the

criminal law and must conscientiously

protect his client's interest, unde-

flected by conflicting considerations,

and defense counsel must investigate

all apparently substantial defenses

THIOL to the defendant and must

assert them in a proper and timel

manner. U.S.C. COTUR 6". Beasley v.

United States, 491 F. 2d 687 Cis7a}

~ (Emphasis added)

In this case, defense counsel never

looked at any record or document in this

| petitioner's possession nor did defense

counsel ever contact a defense witness

from a list provided months earlier from

which.could have and would have formed

the basis of affirmative defense. It is

unquestionable that defense counsel was

relying heavily on his Motion for Con-

tinuance being granted, and when it was

denied he was totally unprepared for trial.

This petitioner was advised by Attorney

Lebit (incapacitated during trial) that

there would be meetings prior to trial ®

discuss the defense and during the trial

at lunch and after adjournment for the

day. (Letters and telephone transcripts

support this contention). None of these

meetings ever took place, although the

trial lasted from February ah 1974 to

March 14, 1974.

However, this petitioner asserts, even

during the trial he tried to apprise

counsel of the fact that petitioner was

in possession of records and documents

which would dispute allegations pro-

jected by the United S ates Attorney.

It should also be noted he did not

consult with the possible defense witnes-

ses who accompanied petitioner to the .

Court House to testify in his behalf. He

had no knowledge as.+o what any of the __

witnesses would have testified. —

Further, the Government. subpoenaed :

four witnesses who were accounts receiv-

ables prior to 1967. Two of the witnesses

were called and testified ina fashion

favorable to this petitioner. Whereupon

the Government decided not to call the

other two. Counsel made no effort to

consult with these witnesses who did not

Lestify to determine whether their test-

imony would also be favorable.

The only inference to be drawn from

the abandonment of the witnesses by the

Government is that the testimony of

said witnesses would have also been fa-

vorable to this petitioner. These same

witnesses were among those who were to be

called for the defense to testify as to

petitioner's accounts receivable prior

to 1967. Contradicting the testimony of

both the revenue agent and the special

agent that “because petitioner was not

in business prior to 1967 he could not

have had any accounts receivable".

At the close of the Government's pres-

entation, defense counsel suggested to

this petitioner that he should rest de-

fense, in his opinion the Government had

not proved its case. Petitioner and his

wife asked that counsel submit a Motion

for Judgment of Acquittal if he felt this

were true. Petitioner further informed

counsel that in no way would he agree to

resting without submitting a defense if

the court denied the Motion for Acquit-

tal. (There exist sworn affidavits of

bystander witnesses who were present dur-

ing the conversation.) This request was

refused. It was then requested that he

ask for an early adjournment (it was then

approximately 3 or 3:30 P.M.) so they

would have time to think about it. This

request was also refused.

Upon returning to the bench, defense

counsel did make such a motion at a side-

bar conference, it was denied by the court,

counsel did not inform the petitioner of

this but immediately rested the defense.

In AMERICAN JURISPRUDENCE 2d DESK

BOOK III. Document No. 91, CANONS OF

PROFESSIONAL ETHICS OF THE AMERICAN BAR

ASSOCIATION (15) it is said:

"The lawyer owes "entire devotion to

the interest of the client, warm. zeal

in the maintenance and defense of his

rights and the exertion of his utmost

learning and ability", to the end that

nothing be taken or be withheld from

him, save by the rules of law, legally

applied. (Emphasis supplied) “In the

judicial’ forum the client is entitled

to the benefit of any and every rem-

edy and defense that is authorized

by the law of the land, and he may

expect his lawyer to assert every such

remedy or defense."

Withheld from this petitioner was the

fact that he had made and the court de-

nied the Motion for Acquittal. The first

notice that petitioner had was in reading

the transcript of the trial.

The Record, itself, lends a strong in-

ference to the proposition that counsel

offered no defense because he had other

plans for the time required to offer it.

The record reflects that on Monday,

March 19, 1974 a Morion for Extension of

Deadline for Filing of Motion for New

Trial, was filed by Attorney Niki Schwartz,

who termed himself “Counsel for Defendant",

in which it was shown that Attorney Rota- __

tori, petitioner's trial counsel, would

be out of the city for the balance of the

month of March.

The Sixth Circuit Court of Appeals

refused to consider certain evidence con-

tained in petitioner's appendages to his

Brief on Appeal for the reason that such

evidence was not part of the record be-

low and would, therefore, improperly

“enlarge the record". The fact being

that part of the evidence was a part of

the record submitted by the United States

Attorney, himself, appearing in the sub-

poenaed microfilm.

The claim that this petitioner was not

properly represented by counsel is not an

unsupported claim made solely by this

petitioner. As_a matter of fact, the

claim was made by Mr. Rotatori himself.

In his Memorandum in Support of a New

Trial filed with the District Court sub-

sequent to petitioner's conviction, At-

torney Rotatori argued to the District

Court:

"The denial of the Motion (Continu-

ance) thereby requiring defendant to

proceed to trial without the assistance

of the tax and accounting expert who had

worked with defendant's counsel in prep-

aration and presentation to the Govern-

ment of a net, worth statement, denied the

defendant the effective assistance of —

counsel.” ‘(Emphasis added)

Remembering that said Memorandum was”

filed subsequent to the conviction,

Attorney Rotatori goes on the record him-

self as admitting that he ineffectually

represented this petitioner.

38 39

This Honorable Court speaking in involved, the Glasser court over-

Powell _v. Alabama, 287 U.S. 45, 53 S.Ct. turned = conviction of a defendant whose

55, 77 L. Ed. 158 (1932), through Mr. attorney was retained by co-defendant

Justice Sutherland stated: with a potentially inconsistent défense.

"The Sixth Amendment guarantees that The Sixth Circuit, continuing in Beas-

a criminal defendant shall enjoy the ley, said: |

right “to have the Assistance of

Counsel for his defense." This guar- "The right to have the assistance of

antee was interpreted to mean the counsel is too fundamental and abso-

effective assistance of ‘counsel.” lute to allow courts to indulge in

nice calculations as to the amount

The Sixth Circuit in BEASLEY, supra, : of prejudice arising from its denial.

said: ois , | 315 U.S. at 76, 62 S.Ct. at 467".

3 Oe | (SEE ALSO: White v. Ragen, 324 U.S.

"(Eight yeers-leter,--sperking throuh 760, 65 S.Ct. 978, 89 L. Ed. 1348

Justice Black,-the-€ourt-hretd that---—- > (1948)

"The Constitution's guarantee of as-

sistance of counsel cannot be satis-. | "Most recently, in McMann v. Richard-

fied by mere formal appointment." | son, 397 U.S.759, 90 S. Ct. 1441, 25

Avery v. Alabama, 308 U.S. 444, 446, | L. Ed. 763 (1970) the Supreme Court

60 S.Ct. 321, 322, 84 L Ed 377 (1940). stated that "It has been recognized

Resting its holding on the Fourteenth | that the right to counsel is the

Amendment, since a state defendant was right to the effective assistance of

involved, the court held that the counsel". Continuing: "({I)f the right

trial court's denial of a continuance

requested by appointed counsel had not

deprived the defendant of the effec-

tive assistance of counsel. On the

fact of the case, "His appointed coun-

Sel..eehave performed their ‘full duty

intelligently -and- well’-".-308-U.Ss-at —

450, 60 S. Ct. at 324. In Glasser vi ----

United States, 315 U.S. 60, 62 S.Ct.

457, 86 L. Ed 680 (1942) the court

enforced the implication of Avery

that an inadequate performance by

counsel would render a conviction void.

Basing its holding on the Sixth Amend-

ment, since a federal defendant was

to counsel guaranteed by the Constitu-

tion is to serve its purpose, defend-

ants cannot be left to the mercies

of incompetent counsel...."

The Sixth Circuit held in Beasley,

supra, to wit:

"(3-5) We hold that the assistance of

counsel required under the Sixth Amend-

ment is counsel reasonably likely to

render and rendering reasonably effec-

tive assistance. It is a violation

of this standard for defense counsel

to deprive a criminal defendant of a

substantial defense by his own in-

- effectiveness or incompetence.

Petitioner has carefully documented

numerous instances wherein defense coun-

Sel permitted extremely erroneous and

prejudicial testimony to enter the

record without challenge. Petitioner

hereby requests permission tio forward the

"ppendages" to this court.

QUESTION. Ix

During the course of this trial, de-

fense counsel notified the triel court,

to-wit: .

MR. ROTATORI: Your Honor, before the’

jury is called in I want to bring some-

thing to the court's attention.

THE COURT: Certainly.

MR. ROTATORI: Saturday morning I re-

ccived in the mail, Your Honor, a notifie-e

cation that my tax return is going to be

audited. I feel that it is not coinci-

dentel that I received this notification

during the course of this trial. The

only other time I was audited was in the

course of United States v. D'Alessio,

2>neother criminal tax fraud case which I

tried before this court.

And, I can't -help, -Your’Honor, but feel

that this involves, really, an attempt

ace ANS ate tai AEA ee hes = cons waned

by governmental agency to interfere with

the right to counsel and to, in effcct,

attempt to deny a defendant to effective

counsel. (SEE: EIGHTH ISSUE)...."I

should add that in the D'Alessio matter

it was not only mysclf that was subject

to audit, but it was my expert Mr. Ricci

who was also audited and received noti-

fication the very same date.”

Petitioner knows of no good reason

to burden this Honorable Court with a

long dissertation on the why's and

whercfore's of the Internal Revenue

Service's determination that an audit

would be made of defense counsel's re-

turn at the very moment that he was

defending this petitioner. Producing

proof positive to the effect that the

audit was determined for the reason that

said defense counsel was defending this

petitioner would be impossible to do.

However, when taken in context with the

previous notic2 of audit, under similar

circumstances it would be safe to state

tnat there are persons in prisons at

this very minutc convicted on weaker

circumstantial evidence than is presen-

ted here.

Petitioner feels it would be disposi-

tive of the entire issue if the United

States Attorney would inform this Honor-

able Court as to whether the audit was

cancelled when defense counsel offered

no defense whatsoever. It should be

noted that the Sixth Circuit made no

comment on this issue at all.

As stated in BECKWITH, supra:

"In the light of this nation's

recent experience with an admin-

istration's compiling "enemies

lists" and utilizing the Internal

Revenue Service to "harass" citi-

zens for other non-tax-related

reasons, this case clearly in-

volves a question of exceptional

importance meriting consideration

by this court".

QUESTION X

The file compiled on this cause will

reflect a total cooperation by this peti-

tioner with the requests and demands of

Government agents who gsve no MIRANDA

Warning. No record, no file and no doce

ument wos withheld from the investigating

agent who was “turned loose" in petitione-

or's office even to the extent of Agent

Trocy being totally alone. Further, on

April 15, 1971 petitioner agreed to the

extension of the Statute of Limitation

to June 30, 1971 believing that if any

deficiency were found in his returns

said deficiency would be corrected with

further payment.

Subsequently, on June 25, 1971 peti-

tioner aaqreed to yet a further extension

of the Statute of Limitation believing

it his duty te cooperate with Government

2genise Again, on September 2, 1971

petitioner signed yet another form 872

extending the Statute of Limitation a

third time.

+ ote nae wee

‘All such agreements to the Statute of

Limitation predicated upon the last para-

graph of a letter received by petitioner ~

from the District Director of the Inter-

nal Revenue Service, dated January ll,

1971, stating:

"By extending the limitation period,

you will have time, if you choose to

present your views at conferences

at district and regional levels if

we propose adjustments you do not

agree to."

In addition to above, and never being

warned of his rights under MIRANDA, peti-

_tioner was assured that "nothing would

come of it". Said assurances made to

him by Internal Revenue Agent Tracy.

Petitioner strongly urges this Honor-

able Court to take into serious consid-.

eration the fact that these were the first

' two years he was in business, with the

business “dropped into his lap",

so to

speak. Within a ninety day period the

only two major publishing companies both

discontinued their field sales organiza-

tions = Cowles Sept. 1966; Curtis Dec. '66.

Both were employers of petitioner. Neither

he nor his wife had any formal training

in bookkeeping or other record keeping

and certainly not net worth.

In Holland vy, United States, 346 U.S.

121, this Hoflorable Court warned: ~

"Nevertheless careful study indicates _

that it (net worth method) is so

fraught with danger for the inno-

cont that courts must scrutinize

its use." 348 U.S. at 125.

Attorney-Accountant Hubert Howes testi-

fied at trial that petitioner was 1M a

new business and it was a rather "chaot-

ic" period for him and he didn't even

know if the business would last.

This petitioner would urge this court

to consider the fact that at no time did

he deny that because of the state of his

records, best described by Attorney-

Accountant as “chaotic*, a tax liability

might exist.: (It should be noted that

all returns filed by this petitioner

prior to his entry into business were

found by the Internal Revenue Service

to be in "excellent order".

Further supporting this petitioner's

claim of complete cooperation with Govern-

ment agents is the letter written by

petitioner to Special Agent Pope, which

accompanied documents requested by the

special agent in which petitioner ad-

vised the special agent:

"Should there be organizations that

are not included here that you want,

I will be most happy to pull the

file if you will give me the organ-

ization city and checks in question,

or my files are available, as -they

were for Mr. Tracy, for your viewing

or phorécopying.”

(Emphasis added)

Petitioner would assert that a show-

ing of good character and integrity is

a basic element in the positive defense

to a charge of wilfully and knowingly

committing a crime. Although petitioner

had a plethora of witnesses to testify

to his integrity and his excellent

character, he was precluded the use of

said witnesses by his counsel inter-

posing no defense.

This petitioner would respectfully

direct this Honorable Court's attention

to the language used by this Honorable

United States v. Murdock, (1933)

Court in

290 U.S. 389, 78 L Ed. (Adv. 225), $4 §.

Ct. 223, wherein: the Court said:

"Congress did not intend that a per-

son, by reason of a bona fide mis-

understanding as to his liability

for the tax, as to his duty to make

a return, or as _ to the adequacy of

his records he maintained, should

become a criminal by his mere failure

to measure up to the prescribed

standards of conduct. And the re-

gQuirement that the omission in these

instances must be wilful, to be crim-

inal, is persuasive that the same

element is essential to the offense

of failing to supply information."

46é

CONCLUSION

WHEREFORE, it is submitted that this

Court should gran*+ this petition and

issue a wri: of certiorari to the United

States Court of Appeals for the Sixth

Circuit.

Respectfully submitted,

James L. Allen

P.O. Box 8380

Canton, Ohio 44711

In propria persona

November 1, 1975

Appendix A

No. 74-1959

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

Untrep STaTEes OF AMERICA,

Plaintiff-Appellee,,; ApPEAw from the

‘a United States District

Court for the North-

James L, ALLEN, ern District of Ohio.

Defendant-Appellant.

Decided and Filed September 2, 1975.

Before Weicx, McCree and Mien, Circuit Judges.

Weick, Circuit Judge. Allen has appealed from his judg-

ment of conviction entered upon a jury verdict of guilty on

two counts of an indictment charging him with willfully at-

tempting to evade income taxes for the years 1967 and 1968

in violation of 26 U.S.C. $7201. He was sentenced to two,

five year concurrent terms of imprisonment, the first six

months of which were to be served in a jail-type institution and

he was placed on probation for the balance of the sentence.

He was fined $2,500 on each count or a total of $5,000.

Count I of his indictment was dismissed.

Although he was represented in the District Court by two

retained trial lawyers, his brief in this court, as well as his

oral argument, were pro se.

At the trial, the government used the net worth and expendi-

tures’ method of proof. Its evidence tended to prove that

although Allen and his wife, in joint income tax returns,

2 United States v. Allen No. 74-1959

reported a taxable income of $11,225.56 for 1967 and $16,580.-

79 for 1968, their net worth increased $18,402.37 during 1967

and an additional $35,436.96 during 1968. The Allens’ actual

taxable income was computed to be $26,415.68 for 1967 and

$44,036.54 for 1968. A technical adjustment, adjusting the

1968 income $10,000 downward to $34,036.54, was made to

allow for an error discovered in one of the adding machine ~

tapes used in preparation of the 1968 return. This adjustment

allowed in full the deduction claimed by Allen in his original

return.

Allen had been employed, prior to 1967, by various maga-

zine circulating companies supervising the activities of maga-

zine salesmen.

Late in 1966 Allen started his own business, calling it

National Organization Sales. He was a subfranchisee under

a regional franchisee in the magazine subscription sales busi-

ness. He acted as a clearinghouse for salesmen and others,

who were independent contractors, and processed subscriptions

to various publishers.

Revenue Agent Tracy described Mr. Allen’s business:

Mr. Allen explained to me that most of his sales were

through a sponsor, and these sponsors usually consisted

of VFW posts or volunteer fire departments or organiza-

tions similar to these.

The sales campaign would be in a given locale, where

they would advertise a sales campaign and explain that

they were benefiting the sponsor, and the sponsor would

take the proceeds they made, the profits, and use this

money either for their organization or to buy hospital

equipment. And he explained to me that the hospital

equipment was free for public use and this was part of

the campaign, to build up good will and so forth. This

was publicized and the people that were sold subscrip-

tions hopefully were aware of this fact, which would in-

duce their sales.

Appendix A | Appendix A

No. 74-1959 United States v. Allen 3

The sponsoring organization would receive 8 percent of

the gross sales for the campaign.

Allen admits that the volume of his business in 1967

totalled $596,087.30 and $711,988.14 for the year 1968.

National Organization Sales was operated primarily out of

an office in the basement of the Allen home. During the years

in question, the business records were kept in a single entry

system, which Revenue Agent Tracy, who was assigned to

perform a field audit of the taxpayers described as “unique.”

Tracy testified:

To summarize my opinion, in areas where I felt he

should have records he didn’t have records; in other

areas I felt he had too many records.

It was not possible to make an accurate accounting of all

of Allen’s income.

The Allens’ tax returns for 1967 and 1968, and for many

years prior to that time, were prepared by Hubert Howes,

an attorney, and his wife, Shirley Howes, a certified public

accountant. The returns were prepared primarily on the

basis of information furnished by Allen. Mrs. Howes testified

that in January, 1968 Allen discussed with her the advisability

of setting up a bookkeeping system. Mrs. Howes finally set

up such a system in 1970 for Allen. One of the theories of

the case presented to the jury by the defense in argument was

that Allen simply was inadequate to the task of starting and

running his own business and keeping the records for that busi-

ness. In other words, the defense argued that if some income

was not reported, it was the result of the inadequate records,

and not the result of a wilful attempt to evade income taxes.

The defense also attacked the accuracy of the government's

opening and closing net worth figures.

Much of the prosecution’s evidence concerning willfulness

was presented through the testimony of Internal Revenue

Agent, James Tracy.

Agent Tracy testified concerning his audit of the returns

Appendix A

4 United States v. Allen No. 74-1950

and investigation of the Allens’ income. Tracy was assigned

to conduct a field audit of the Allens’ 1967 return on No-

vember 14, 1969. He visited the office in the basement of the

Allen home many times from December 11, 1969 through April

15, 1970. He decided to audit both 1967 and 1968 income

tax returns.

Tracy's testimony was important in establishing the accuracy

of the net worth computations. He also testified that Allen

at first denied and, later in the investigation, admitted re-

ceiving reimbursement for expenses from the Veterans of

Foreign Wars for which expenses he had taken deductions in

his returns.

During 1967 and 1968, Allen served as junior vice command-

er, senior vice commander and commander of the Ohio Vet-

erans of Foreign Wars. Such payments by the Veterans of

Foreign Wars could have been a source of unreported income

and the initial denial of such payments was strong evidence

of willfulness. Tracy also testified that Allen denied making

a profit on hospital equipment which sponsoring organizations

order in lieu of receiving cash for sponsoring a sales cam-

paign. Other evidence in the case tended to show that Allen

did make a profit on the sale of such equipment. Again, the

profit could be a source of unreported income and the de-

nial would be evidence of willfulness in the evasion of income

tax.

Allen contends that the District Judge committed prejudicial

error in denying his motion for continuance which was sought

because of the illness of one of his attorneys, Edward Lebit.

The motion asserted that Mr. Lebit, a former employee of

the Internal Revnue Service, was primarily responsible for the

accounting and tax aspects of the case and was to testify as

an expert for the defense and to serve as co-counsel. The mo-

tion further recited that it would be a month before Mr.

Appendix A

No. 74-1959 United States v. Allen 5

Lebit would be well enough to even have business visitors.

Trial counsel wished to discuss the case with Mr. Lebit before

deciding whether to employ substitute counsel. The motion

did not indicate how much of a continuance would be neces-

sary.

The government opposed the motion on the grounds that

trial counsel, Robert J. Rotatori, had been connected with the |

case since March 20, 1973, which was over ten months prior

to the filing of the motion for continuance; that the defense

possessed the government'’s tentative net worth schedule and

almost all documents which would be introduced at trial; that

the case had previously been continued several times at Allen's

request, and that there was no showing why attorneys as-

sociated with Mr. Lebit, who also were former employees of

the Internal Revenue Service, would be unavailable to re-

place him in the fifteen days remaining before trial.

Mr. Rotatori was present for the status call of the case on

March 20, 1973 and signed the motion and order for discovery.

He represented Allen at the hearing on the motion to suppress.

He had sought and obtained several continyances. The case

had been assigned for trial on a standby basis on May 1,

1973 but the trial did not commence until February 25,

1974. The record discloses that Allen’s defense was ably

conducted by Mr. Rotatori.

In addition, Allen was represented at the trial by Edward

Kleinman who served as associate counsel. Mr. Kleinman was

a former employee of the Internal Revenue Service and had

assisted Mr. Lebit during various pretrial matters. He was

familiar with the case and was available to assist Mr. Rotatori

or any technical matters.

The grant or denial of a continuance is within the sound

discretion of the trial judge and will be disturbed on appeal

only where there has been a clear abuse of discretion. United

States v. Ploeger, 428 F2d 1204 (6th Cir. 1970). In our opinion,

there was no abuse of discretion in the denial of the motion

under the circumstances as presented to the trial judge. Giaca-

Appendix A |

6 United States v. Allen No. 74-1958

lone v. Lucas, 445 F2d 1238 (6th Cir. 1971), cert. denied 405

U.S. 922 (1972).

Allen further contends that the District Court erred in de-

nying his motion to suppress statements made by him to rep-

resentatives of the Internal Revenue Service, and for return

of all documents obtained from him or his accountant. He

claims that he was entitled to the Miranda warnings. Miranda

v. Arizona, 384 U.S. 436 (1966). The Allens were not in

custody and the Miranda warnings, in our opinion, were not

required. United States v. Carter, 462 F2d 1252 (6th Cir.

1972), cert. denied 409 U.S. 984; United States v. Stribling,

437 F2d 765, 771 (6th Cir. 1971), cert. denied 402 U.S. 973.

In the absence of a clear showing that the taxpayer has

been tricked or deceived by the government agents into pro-

viding incriminating information, the documents and state-

ments obtained by the Internal Revenue agents are admissible

United States v. Marra, 481 F2d 1196, 1203 (6th Cir. 1973),

cert. denied 414 U.S. 1004. The District Court’s factual find-

ings that there was no such showing are supported by sub-

stantial evidence and are not clearly erroneous.

Ill

Allen’s next contention is that the District Court erred in

permitting Internal Revenue agents to testify, over objection,

that they investigated certain accounts receivable “leads”

furnished to the government by Allen and that they were un-

ab.e to verify the amounts set out on the accounts receivable

list.

Since Allen computed his income by the accrual method,

accounts receivable in existence prior to the opening net

worth date would constitute a possible source of non-taxable in-

come with respect to the tax years in question. The government

is required to investigate leads reasonably susceptible of be-

Appendix A

No. 74-1959 United. States v. Ailen 7

ing checked concerning possible sources of non-taxable income.

Holland v. United States, 348 U.S. 121, 135-136 (1954).

The defense objection was made on the theory that the

testimony was hearsay. An agent’s testimony that he was

unable to verify the account receivable amount allegedly due

from a named person as the result of his investigation is not

hearsay. The agent is simply stating the result of his in-

vestigation. He is not recounting the out-of-court statement

of the person who allegedly owes the account. The agent

must testify concerning his inability to verify the amount

if he is to negate the possible source of non-taxable income, or,

in other words, the validity of the “lead.”

Allen further contends that the District Court erred in al-

lowing the prosecution to impeach one of its witnesses, Daniel

Pagnotta, by the use of his prior inconsistent statements. This

court has already rejected “as unsound and illogical the mile

that prohibits a party from impeaching a witness whom he

calls.” United States v. Bryant, 461 F2d 912, 918 (6th Cir.

1972).

Allen also contends that the government’s expert summary

witness, Adele Kihlken, improperly commented upon the credi-

bility of Mr. Pagnotta’s testimony. The statement complained

of was made in answer to a question by defense counsel as

to why Mr. Pagnotta’s testimony was not reflected in the ac-

counts receivable figures. The witness explained that she had

to accept one figure or another for her summary. She further

explained that she understood Mr. Pagnotta’s testimony to be

that he made payments to Allen during the period in ques-

tion, but yet the amount of his debt to Allen remained the

same. Trial counsel brought out in further cross-examination

that Mrs. Kihlken’s understanding of Mr. Pagnotta’s testimony

may have been wrong. It is important to note, however,

that on redirect examination Mrs. Kihlken testified concerning

Appendix A

8 United States v. Allen No. 74-1958

the effect including the payments testified to by Mr. Pag-

notta would have on the net worth summary. All of the

facts were before the jury for the jury’s resolution. We find

no error in this contention.

We find no error in the court's failing to record the tes-

timony of Special Agent Pope before the Grand Jury. United

States v. Battisti, 486 F2d 961 (6th Cir. 1973).

The court did not err in admitting the summary prepared

by the government's expert witness as it was based on facts

established by evidence in the record. United States v. Bar-

tone, 400 F2d 459 (6th Cir. 1968), cert. denied 393 U.S. 1027

(1969).

During IRS Agent Tracy’s direct testimony, the defense

moved the court for an order requiring the government to pro-

duce his Referral Report, which is the form used for referring

the case to the Intelligence Division and his Revenue Agent's

Report. The defense did not ask for the production of Special

Agent Pope’s criminal Reference Report. It was the claim

of the defense that both these Reports of Agent Tracy were

statements required to be produced under the Jencks Act, 18

U.S.C. § 3500.

Attached to the Referral Report were six schedules con-

taining net worth computations which were the basis for the

Report. The District Court ordered the government to pro-

duce the schedules but not the Report itself which he conclud-

ed was merely an inter-departmental communication and not

producible. Thus, with the exception of the two page Report

itself and one preliminary computation which did not relate

to Agent Tracy's testimony, the defense was given everything

in the Report. The court also ruled that the Revenue Agent's

Report was not producible. The Report consisted merely

Appendix A

No. 74-1959 United States v. Allen fe)

of net worth schedules of use in computing Allen’s income

tax liability for civil purposes. It is dated a year after

the date of the Referral Report. Both Reports were sealed

and transmitted to this court.

The defense offered in evidence the schedules attached to

Agent Tracy’s Referral Report and a few other exhibits and

then rested at the close of the government’s case in chief

without offering any evidence except the schedules and other

exhibits.

There was extensive cross-examination of Agent Tracy con-

cerning his net worth computations and also of Adele Kihlken,

the government’s expert who testified concerning the summary

which she prepared. As previously stated, the defense did not

even move for the production of Special Agent Pope’s Criminal

Reference Report.

It is our opinion that even though the entire reports could

have been considered producible under the Jencks Act, the

failure to order production was harmless error. United States

v. Ball, 428 F2d 26 (6th Cir. 1970).

VII

The government was not required to prove the exact amount

of Allen’s income for the tax years in question. It was re-

quired to prove beyond a reasonable doubt that Allen’s tax

returns contained a substantial understatement of income for

the years in question and that the understatement was willful

for the purpose of attempting to evade the payment of his

income taxes. United States v. Johnson, 319 U.S. 503 (1943).

The jury could take into account that by his own admission

the volume of Allen’s business for 1967 was $596,087.30 and

$711,988.14 for the year 1968; that with this large volume

of business for the two years in question, Allen did not keep

adequate records so that the amount of his income could be

accurately ascertained; that he took deductions for expenses

on his income tax returns notwithstanding the fact that he

had received reimbursement for the expenses from VFW and

Appendix A

10 United States v. Allen No. 74-1959

that he did not report profits he made on the sale of hos-

pital equipment to his sponsors.

We also note Allen’s claim that he was not adequately rep-

resented by counsel at his trial which the record shows is

without merit.

We are of the opinion that the jury’s verdict is supported

by: substantial evidence and ‘hat no prejudicial error inter-

vened.

Allen has submitted as an appendage to his brief, two

volumes of material not contained in the record. The record

cannot be enlarged in this manner and we cannot consider the

material. United States v. Collins, 349 F2d 296, 298 (6th Cir.

1965); United States v. Young, 301 F2d 298 (6th Cir. 1962).

We have considered other alleged errors claimed in Allen's

brief which in our opinion have no merit and do not need

to be discussed.

Affirmed.

1 -B

SUPREME COURT OF THE UNITED STATES

OFFICE OF THE CLERK

WASHINGTON, D.C. 20543

September 26, 1975

Mr. James L. Allen

Box 8380

Canton, Ohio 44711

Re: James L. Allen v. United States

No. A=j267

‘Dear Mr. Allens:

Your application for an extension of

time in which to file a petition for -writ

of certiorari in the above-entitled case

has been presented to Mr. Justice Stewart,

who on September 25, 1975, signed an order

extending your'time to and “including Novem-

ber 1, 1975.

A copy of the Justice's order is enclosed.

Very truly 'yours,:

MICHAEL RODAK, Jr.,Clerk

odds. drat Sn a sailiies By .

Francis J. Lorson

Deputy Clerk

dam

Enclosure :

ccs: The Solicitor General of the United States

Clerk, United States Court of Appeals

(74-1959) for the Sixth Circuit

Cincinnati, Ohio 45202

2-B

SUPREME COURT OF THE UNITED STATES

No. A=-267

JAMES L. ALLEN,

Petitionei

' UNITED STATES

ORDER EXTENDING. TIME TO FILE PETITION

FOR WRIT OF CERTIORARI

rant

UPON CONSIDERATION of the application of,

petitioner, it is ordered that the time

. for filing a. petition for writ of certior-

ari in the above-entitled cause be, and

the same is. hereby, extended to and in-

cluding November 1, 1975.

{s/ Potter Stewart

'. Associate Justice of the

Supreme Court of the

United States

Dated this 25th 5 oe ee ee ee

day of September, WDTS6e> iat

- wi

1-C

AUDIT TECHNIQUE HANDBOOK

FOR INTERNAL REVENUE AGENTS

Audit Division IRM 423)

921 Initial Interview *

(1) One of the most important phases

of any investigation is the initial inter-

view with the taxpayer. This is especi-

ally true when the records are inade-

quate, non-existent, or there is reason

to believe that they are false. This

first interview offers the examiner oppor-

tunities to obtain information which may

not be forthcoming at a later date,

(2) This interview should be exploited

to its utmost, for'the information se-

cured may save many days of work in the

future. Encourage the taxpayer to dis-

cuss himself, family, ‘business, hobbies,

‘financial history, and his sources of in-

come of himself and other members of his

family. The revenue agent, however,

' Should not make the taxpayer feel subjec-

ted to a formal interrogation. He should

try to make as many pertinent determina-

tions as possible by guiding the inter-

view rather than‘ by direct questions.

(3) The revenue agent at this phase

of the examination should attempt to se-

cure from his conversation with the tax-

Payer sufficient facts to evaluate.the

Over-all financial picture of the taxpay-

er, his’ approximate mode of living, his

life insurance program, investments, unv «

ual expenditures, as well as gifts, loans,

inheritances and other nontaxable receipts

received by him. The examining officer

should then be in a position to see if the

taxable income reported bears a plausible

relationship to the taxpayer's net worth

and manner of living.

(4) If the desired information can-

not be secured from a casual interview

with the taxpayer, the examining agent

should prepare a series of questions to

ask. Except in unusual circumstances he

Should develop the case as. much as possi-

ble from information and data furnished

by the taxpayer rather than from an out-

Side source, normally a much more time-

consuming job. ae

(5) The following paragraphs contain

some suggested approaches to use if there

are inadequate records present, or if the

taxpayer is uncooperative and there is

reason to believe that fraud is involved.

(a) Secure information as to the

taxpayer's dependents and family, and de-

termine the status of the family as to

age, degree of support and their names and

addresses. This information will not

only assist the examiner in the determi-

nation of the allowable exemptions and

dependents in the computation of the tax,

but will aid the agent, in determining the

cost of living of the taxpayer resulting

from family size, dependents outside the

household, unusual expenditures for chil-

dren who may be in college, camp, etc.

ee ae ow

3-C

(b) Secure information as to the

taxpayer's bank accounts and those of his

immediate family and, if possible, the

ledger sheets and cancelled checks of all

accounts. If the checks and ledger sheets

are not available, the examining officer

should be sure to secure the locations

and the names of these accounts. Partic-

ular emphasis should be placed on bank

accounts which are not normally a part

of the business records, since unreported

receipts may have been deposited in the @

non-business bank accounts. A more de-

tailed discussion on the’ analysis of bank

accounts appears at 940.

ity holdings including both stocks and

bonds, taxable or nontaxable, governmental

or commercial. The agent should ascertain

the dates acquired, dates sold, costs,

selling price, where acquired, where sold.

Such information may not only develop

specific items of capital gains, interest

and dividend income, but may disclose

cash purchases which are not accounted

for by reported income and sales proceeds

invested in previously undisclosed assets.

(d) Obtain a listing of the tax-

payer's real estate holdings similar to

the manner in (c) above from public rec-

ords and escrow statements with the same

purposes in mind. Also,’ questions about

the taxpayer's personal residence may

give indications that he is spending for

this item more than could be justified by

the size of the income reported.

4-C

(e) Determine the extent of the

taxpayer's currency accumulations. Most

taxpayers will not have @ record of amounts

as of particular dates. In many instances,

the agent's entire case may hinge upon the

correct determination of this one item

alone. It is most important that the

examiner word any questions in such a

manner as to leave little doubt as to

what was’ asked. If it appears that the

examination will depend on this item, ‘it

may be necessary to secure an affidavit

from the taxpayer or have a witness to

corroborate the answer given. Some typ-

ical questions which may be asked about

currency accumulations to develop this in-

formation are as follows: | dali

1.- Has it! been your practice, or the

practice of your wife or children to accu-

mulate cash on hand? This includes un-

deposited*‘cash atvall locations such as st

your home, at your place of business, in

a safety deposit box or in the possession

of some third party. This does not include

funds which’ are‘'on deposit in a financial

or savings and loan establishment, the

amount of which is a matter of: record.

‘2. Would you ever have had cash on

hand to exceed $100.00? To exceed $500.00?

To exceed $1,000.00? To exceed $5,000.00?

3. When? “ .

4. For what purpose did‘'you have thet

cash on hand? = *°%"** 2S |

9+ How much cash on hand do you have at

the present time? In this manner the

5-C

desired information may be secured by in-

direct means rather than by a direct re-

quest as to what was on hand as of a par-

ticular date. In 932 @ discussion is

presented on methods of verification of

taxpayer's contentions about cash on hand

at the beginning of the period under ex-

amination.

(f) Secure information about the _

taxpayer's accounts, loans and notes re-

ceivable. This is especially significant

when the taxpayer is required to report

on the accrual basis. Since this infor-

mation, in many instances, is most diffi-

cult and time consuming to secure from

third parties, the examining officer

should secure for analysis any records,

workpapers or other data which will assist

in the determination of these items.

(9g) Secure information on inven-

tories, by whom they were prepared, the

method used in the determination and any

workpapers used in the computations.

(h) Obtain a list of the taxpayer's

equipment, showing dates of acquisition

and disposition, costs, selling prices,

suppliers, purchasers, trade-ins, whether

financed or paid for without borrowed

funds. :

(i) Make a list of other assets,

both business and personal, securing dates

of purchase, costs, dates of sale, selling

prices, names of purchasers or suppliers.

(j) Secure information regarding

bank loans, personal loans, accounts pay-

6-C

able and other borrowed funds of the tax-

payer. Information received may help to

explain asset acquisitions or indicate

undisclosed income being used to reduce

the taxpayer's liabilities. In checking

bank loans and other loans, ascertain if

collateral is involved. This may lead

‘to the discovery of hidden assets. The

item of business accounts payable is

especially significant when the taxpayer

is required to report on the accrual basis

anc since this item may be difficult. to

secure from third parties, any records,

workpapers or ather data which will assist

in this determination should be secured.

(k) Secure information regarding

depreciation rates and methods of compu-

tation, and also develop facts as to de-

pletion, if applicable. Since deprecia-

tion and depletion cause a reduction in

taxable income without an outlay of cash,

this should not be overlooked in the con-

sideration of the taxpayer's overall

financial picture.

(1) Obtain information about the

taxpayer's living expenses. Many indiv-

idual items may be included under this

broad category. The example below will

assist the agent in the determination of

this item; however at the initial inter-

view it may be expedient to break down

these expenditures on the basis of fixed

and variable expenses. The fixed ex-

penses which will normally repeat year

to year without too much variance will.

include food, minimum clothing expense,

rent or mortgage payments, life and other

personal insurance payments and a certain

amount of other living costs. The deter-

mination of the living expenses by this

breakdown may disclose to the examining

agent tax possibilities in other years

besides the year or years assigned for

examination.

(MT 4231-15 (1-13-69) IR MANUAL

* Sec. 900 is entitled "Examination of

Ret@rns - Inadequate Records"

1-D

MEMORANDUM OF INTERVIEW

December 11, 1969

Place: 2646 Orchard Park Dr. NW, Canton,

Ohio 44718

In re: James L. and Marie D. Allen

Income Tax 1040 for 1967

Persons Present: James L. Allen, Taxpayer

Marie D. Allen, Taxpayer

James L. Tracy, Internal

Revenue Agent

At the beginning of the examination Mr.

and Mrs. Allen were interviewed. Mr.

Allen provided the answers to questions.

At times he checked with Mrs. Allen or con-

Sulted records. He was told to answer

questions to the best of his ability

where he was uncertain of a date or an

exact fact.

Mr. Allen said he and Mrs. Allen were both

45 years of age. He also said they have

been married 25 years and have one child,

Dewitt. He said their son has been away

attending Notre Dame University, in his

freshman year, since September of 1969.

Mr. Allen said he attended college approx-

imately two years. He said his wife at-

tended college about one half year. He

also said she had one bookkeeping course.

Mr. Allen said he has been in the magazine

selling business since he was a boy in

Kansas City, Missouri. Mr. Allen said he

Started in the business full time in 1947

and has never been in any other business.

2-D

Mr. Allen said Mrs. Allen has never been

employed since their marriage. Mr. Allen

scid he is a veteran and active in the VFW.

Mr. Allen said he considers himself a suc-

cessful salesman and supervisor in selling

magazines door to door. He claims this is

in spite of over-all declining success

in the business. He said his sales have

been mostly in conjunction with VFW post

and volunteer fire departments. He said

these organizations are sponsors and have

allowed him to build up a reputable name.

Mr. Allen said they never work with schools

as sponsors.

Mr.e Allen said that as an employee he

worked his way up to supervisor of the

eastern half of the United States. He

mentioned Look, Cowles Publishing Company.

Curtis Circulation Company and National

Organization Service, Inc., as previous

employers. He claimed he survived a

series of mergers and re-organizations un-

til 1966 when the publishers terminated

this phase of the business. Mr. Allen

claimed that he and other fellow employees,

without jobs, decided to set up an organ-

ization with existing sales personnel in

the field. Mr. Allen claimed he became a

self-employed franchise manager in the new

organization which clears approximately 30

publications with Curtis Circulation Com-

pany. Mr. Allen said he is like a clearing

house for men in the field.

Mr. Allen said he consults Attorney Hubert

Howes in regard to records, books and tax

returns due. He also said Mr. Howes has

3=-D

prepared his returns since at least 1954.

Mr. Allen said Mr. Howes keeps his depre-

ciation records, but all other books and

records are retained at his office. Mr.

Allen said he receives reports for sales

orders from supervisors and managers in

the field. He explained that the reports

are recapped weekly for his records.

Mr. Allen said his supervisors and managers

are not employees. They are independent

contractors. He said he discussed this

with Attorney Howes. He also said he has

no control over them.. He said he files

forms 1099 and 1096. He claimed he does

not reimburse the men for expenses or give

them an allowance.

Mr. Allen said he and Mrs. Allen have five

Savings accounts and five checking accounts.

He said all of them are with the Harter

Bank & Trust Company of Canton, Ohio. Mr.

Allen said three of the checking accounts

are used for business. They are:

Master Account #6074057

Office Account #6087019

Organization A/C#6069975

Mr. Allen said both he and Mrs. Allen have

personal checking accounts. They are:

Mr. Allen A/C #5000599

Mrs. Allen A/C #5074339

Mr. Allen said he uses his account for in-

Surance and personal checks. He said his

wife uses her account for home and personal

expenses.

Mr. Allen soid three of his savings accounts

are used for business. He soid they 2re as

follows:

Sponsors A/C #15633-08

Bad Checks A/C #14722

Managers A/C #16319

Mr. Allen said money in the above savings

eccounts is not his. He holds money for

sponsors, supervisors and managers until

reports are finalized. He claims that he

puts money into savings accounts while he

is holding it and collects the interest

which he reports. He also said only the

interest belongs to him.

Mr. Allen said the other savings accounts

are personal as follows:

Joint #9292-01

Mrs. Allen #04-1334-02

Mr. Allen said his son has a savings account

which had not been used for several years.

He said it is account #9552 at The Harter

Bank & Trust Company.

Mr. Allen said he and Mrs. Allen had a

mortgage at Citizens Savings Association of

Canton. He said it was account # C-64700

and paid off during 1967. Mr. Allen checked

his balance at 1-]1-67 and said it was

$3,763.34. He said his payments were $75.0

per month, but on August 14, 1967 he paid

it off with a payment of $3,358.83.

Mr. Allen said they do not have a safe de-

posit box. He also said except for their

residence, they do not own real estate

5 =D

property. Mr. Allen said they have never

owned investment securities of any type

including stocks and bonds.

Mr. Allen said he has no income in addi-

tion to his interest income and business

income. This agent asked him about his

House of Jamar business reported on his

return. Mr. Allen said that he and his

wife were interested in that business for

2 very short time. He said they investi-

gated it and purchased an initial inven-

tory of products such as cosmetics, paper

napkins and similar items for local sales

distribution. Mr. Allen said they discon-

tinued this business after only a few sales

due to the time required in his magazine

business. He said the stock was consumed

by Mrs. Allen, given away as gifts to

friends or still on hand and available for

their personal consumption at home. He

“said they did not consider their investment

a loss. He said early in 1967 they decided

to discontinue all sales of these items.

Mr. Allen said he did not receive any tax

free income such as disability pensions.

He said he did not receive reimbursements

for any of his expenses from the publishers

Or anyone else since he went into business

and his employment was discontinued.

Mr. Allen said they have never received any

gifts or inheritances in 1967 or any other

year.

Mr. Allen said he has no time for recreation

or hobbies. He claims he used to be a very

good golfer, but he has not had time for it

in recent years.

S/ James L. Tracy

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.