Opposition — United States v. Pomponio

CORRECTED COPY, ¥

Supreme Court, U. $.

FILED

AUG 2 1976

-— RODAK, JR..CLERK

L

Supreme Court of the United States

OctoserR TrerRM, 1975

No. 75-1667

IN THE

Unitep States oF AMERICA,

Petitioner,

Peter Pomponto, et al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

MEMORANDUM IN OPPOSITION

Leonarp B. Bovuptn

Victor RaBINowITz

Attorneys for Respondents

Peter Pomponio and Paul Pompomo

30 East 42nd Street

New York, N.Y. 10017

Lex Paintine Co., Inc., 451 Gazenwice Srt., N.Y. 10013—-966-4300

“ng

INDEX

Cases: PAGE

American Construction Co. v. Jacksonville, T & K.W.

Sg I TEE, I ress cccnsitstinsnsceinienitertinlnnsasernianarie 7

Aveo Corp. v. Aero Lodge 735, 390 U.S. 557 ................ 6

Cox v. Louisiana, 379 U.S. 559 oon... ccccccccecceceeeceeee 7

Miller v. United States, 120 F.2d 968 (10th Cir. 1941) 7

Monrosa, The v. Carbon Black, Inc., 359 U.S. 180 ...... 9

Potter v. United States, 155 U.S. 488 0000000. 7

Raley v. Ohio, 360 U.S. 423 oon. ecccccccececcececcsececece 7

Spies v. United States, 317 U.S. 492 00. 4,5, 6,7

United States v. Bishop, 412 U.S. 346 5, 6, 7

United States v. Hawk, 497 F.2d 365 (9th Cir. 1974)

CONG, i, GP TEs Te tense te ee 4,5,6

United States v. Johnston, 268 U.S. 220 9

United States v. Malinowski, 472 F.2d 850 (3d Cir.

cig .S 6 Ct | | Renee ne 6

United States v. Matosky, 421 F.2d 410 (7th Cir. 1970)

ef eM A vee Tee Ta 7

United States v. MeCorkle, 511 F.2d 482 (7th Cir.

1975) cert. den. 423 U.S. 826 occ cc ccceeeeee es 4,5,6

United States v. Mitchell, 495 F.2d 285 (4th Cir. 1974) 3

United States v. Murdock, 290 U.S. 389 00. 5,7

United States v. Pennsylvania Chem. Corp., 411 U.S.

STU -scseninosaciiiiinidic baa instaaatiniahieae tie 7

United States v. Pohlman, 522 F.2d 974 (Sth Cir. 1975)

CURE, GM, GE Waa Te ceaececencinecicsatscitbedbinsencntatecemeteil 4,5,6

A

PAGE

United States v. Pomponio, 517 F.2d 460 (4th Cir.

I a aceite tnadleeiansnemanendoenenneneanane 3

United States v. Louis J. Pomponio, Jr., 511 F.2d 953

EES 3

United States v. Pomponio, 528 F.2d 247 (4th Cir.

(RG EEN ct 8 0 We 3

United States v. Smith, 487 F.2d 329 (9th Cir. 1973)

I i cceciateeeseeiiane 7

Statutes:

certs sersetesincaiitiamndinmnannmsaenestints 3

I eR 1, 4,5

I scosmnsundnsonsnanenenneste 4,5

Rules of the Supreme Court:

EEE SER ESESSS AE A 8

In THE

Supreme Court of the United States

Octroser Term, 1975

No. 75-1667

Unitep States or AMERICA,

Petitioner,

v.

Peter Pomponto, et ai.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

MEMORANDUM IN OPPOSITION

On November 14, 1973, the Grand Jury in the Eastern

District of Virginia indicted respondents Peter Pomponio

and Paul Pomponio, their brother, Louis J. Pomponio,

Jr., and respondent Charles J. Piluso, Jr. (United States

v. Pomponio, et al., 73-304, E.D. Va.) charging them with

willfully making and subscribing false tax returns for

the years 1969 through 1971 in violation of 26 U.S.C.

7206 (1).

The indictment set forth the same factual situation

against each of the defendants. It charged that the defen-

dants had improperly treated amounts paid to them by the

Pomponio family corporations as loans rather than divi-

dends, and that they had improperly deducted corporate

losses as partnership losses.

2

.

Following the severance of Louis J. Pomponio, Jr. by

reason of illness,’ respondents were tried before a jury in

March, 1974 (Oren R. Lewis, Jr., Judge).

The case presented sharply contested issues of fact, with

the government’s principal witness supporting respon-

dents’ position that the disputed payments were loans

which they intended to repay (Tr. 316 et seq.).? The trial

court excluded evidence showing that respondents had re-

lied upon the Internal Revenue Service’s acquiescence in

their treatment of similar payments as loans in their tax

returns from 1964 through 1966 (Tr. 349 et seq., 611, 612).

The trial court also declined to charge the jury that (i)

bad faith or evil motive is an element of the offense and

(ii) the jury must acquit if the respondents reasonably

believed that they had received loans and incurred losses.

(App. 3A).

The Court of Appeals found error in both these refusals

and remanded the case for a new trial. “We are of opin-

ion,” it said, “that the court’s instruction as to motive was

incorrect as used in the case before us, and... it erred in

refusing to give a requested instruction on good faith

belief of the defendants as to the nature of the loans

especially and the deductibility of the partners losses.”

(App. 3A) (emphasis supplied).

The Court of Appeals found it unnecessary to resolve

the other issues raised by respondents. These included,

inter alia, (1) the failure to conduct a proper voir dire of

* Louis J. Pomponio, Jr., upon his recovery, was subsequently

= = acquitted by a jury. (United States v. Pomponio, 73-304,

.D. Va.)

* Tr. refers to the transcript of trial proceedings; Pet. to the

petition for certiorari; App. to the opinion of the Court of Appeals

attached to the petition; and Pil. Br. to respondent Piluso’s

opposition to the petition.

3

the jury to determine and correct the effect of massive

publicity directed against respondents immediately prior to

the trial;* (2) the exclusion of conversations between re-

spondents’ representative and the Internal Revenue Ser-

vice with respect to the respondents’ practices of earlier

years bearing upon their good faith; (3) the trial judge’s

excessive and one-sided examination of witnesses and other

undue intervention in the trial; and (4) his unfair and

inaccurate summary of ihe evidence.*

The immediate question is whether this Court should

undertake to determine, at an interlocutory stage of the

ease, the propriety of jury instructions within the context

of a long record, where the government has the oppor-

tunity to try the respondents again, undoubtedly before a

d:fferent trial judge.°

This and similar publicity led to the reversal of respondents’

convictions in a related stock fraud case tried in January, 1974

before the same judge, United States v. Pomponio, 517 F.2d 460

(4th Cir. 1975). The same issue is now pending before the Court

of Appeals for the Fourth Circuit upon an appeal by Louis J.

Pomponio, Jr. from a conviction under 18 U.S.C. 1952 (United

States v. Lowis J. Pomponio, Jr., No. 75-2287), following the re-

versal by the Court of Appeals of a district court order granting

a motion in arrest of judgment. (United States v. Louis J. Pom-

ponio, Jr., 511 F.2d 953 (4th Cir. 1975).

‘Other issues presented to and not decided by the Court of

Appeals included the trial court’s prejudicial delay in severing a

conspiracy count, its admission into evidence of matters possibly

relevant to that count but not to the remaining ones, the prejudi-

cial behavior of the United States Attorney’s office before the

grand jury and related matters.

5In at least three cases before the same trial judge arising out

of the multi-faceted government attack upon the respondents, their

employees and associates, the Court of Appeals reversed convic-

tions for inadequacy of the charge or inadequacy of the voir dire

of the petit jury, United States v. Pomponio, 517 F. 2d 460 (4th

Cir. 1975); United States v. Pomponio, 528 F.2d 247 (4th Cir.

1975 (the instant case), and United States v. Mitchell, 495 F. 2d

285 (4th Cir. 1974). More recent indictments were assigned to

another judge in the Eastern District of Virginia.

Reasons for Denying the Petition

1. There is no conflict between the decision of the Court

of Appeals in this case and the decisiuns of other courts of

appeals concerning the need for a jury instruction on “bad

purpose or evil motive”. The government has cited no

appellate court decision in a criminal prosecution under

26 U.S.C. 7206 (1), the statutory provision which concerns

us here, in conflict with the decision sought to be reviewed.

(a) Each of the three cases relied upon by the gov-

ernment was a criminal prosecution under a different

statute, 26 U.S.C. 7203, for willful failure to file tax re-

turns. United States v. Hawk, 497 F.2d 365 (9th Cir. 1974)

cert. den., 419 U.S. 838; United States v. McCorkle, 511

F.2d 482 (7th Cir. 1975), cert. den., 423 U.S. 826; United

States v. Pohlman, 522 F.2d 974 (8th Cir. 1975) cert. den.,

423 U.S. 1049.

The quantum of proof is much higher in the case of an

alleged false return, as in the present case, in violation of

26 U.S.C. 7206, than where the taxpayer has failed to file

a return in violation of 26 U.S.C. 7203. The § 7203 cases

present no dispute as to the essential fact, non-filing, and

the claims of justification are relatively simple. In contrast,

the § 7206 cases require a jury determination of deliberate

falsity in the content of the returns. In the present case,

for example, there are difficult questions as to whether the

monies received were loans or income, the nature of the

respondents’ past practices and their reasonable belief that

those practices were lawful in the light, inter alia, of the

*The government correctly admitted the difference in its brief

in the Court of Appeals in United States v. Hawk, supra (see Pil.

Br., pp. 22-23). An analogous distinction between two other

quite similar tax provisions was noted by Mr. Justice Jackson

in Spies v. United States, 317 U.S. 492, 497-498.

==

5

government’s past acceptance of those practices.’ As the

Court said in Spies v. United States, 317 U.S. 492, 498:

“[wle would expect willfulness in such a case to include

some element of evil motive and want of justification

in view of all the financial circumstances of the tax-

payer.”

(b) The good motivation instructions sought by the de-

fendants in the § 7203 cases relied upon by the govern-

ment were very different from that directed by the Court

of Appeals in this case. In McCorkle the defendant sought

an instruction which would have required evidence of “an

intent to defraud” (supra at 483); Hawk had no claimed

factual basis for the instruction he requested except for

the defendant’s “mental block” (supra at 366); Pohlman

also invoked “personal problems” (supra at 976), which

made the requested instruction equally baseless. In con-

trast, the instruction sought here has a rational applica-

tion to the financial and bookkeeping practices which were

the subject of extended testimony.

(c) Even if we were to treat § 7203 cases as presenting

problems identical with § 7206 cases, there is no substan-

tial disagreement among the circuits as to the basic re-

quirement of willfulness in instruction-. All of the appel-

late courts follow, with variations of language, this Court’s

holding in United States v. Bishop, 412 U.S. 346, 361, that

“(Until Congress speaks otherwise, we therefore shall

continue to require, in both tax felonies and tax misde-

meanors that must be done ‘willfully,’ the bad purpose or

evil motive described in Murdock, supra.” (United States

v. Murdock, 290 U.S. 389.) The precise formulation of the

* The complex factual situation is reflected in the government’s

excerpt from the 4l-page charge to the jury (App. 10-114, Tr.

1091-1131).

6

charge will, of course, vary with the facts and the lower

appellate courts have recognized that the differences in

formulation may be merely semantic.’ More important,

as Mr. Justice Jackson wrote for this Court, “willful...

is a word of many meanings, its construction often being

influenced by its context”. Spies v. United States, supra

at 497. Indeed, the céurt below limited its criticism of

the instruction to the facts of this case saying that the

instruction was insufficient “as used in the case before us.”

(App. 3A).

Accordingly, the case does not present a clear conflict

between the decision below and those of the other courts

of appeals which would require resolution by this Court.

Avco Corp. v. Aero Lodge 735, 390 U.S. 557, 559.

2. The Court of Appeals in this case correctly read

Bishop as requiring “a finding of a bad purpose or evil

motive” (App. 5A). Contrary to the government’s implica-

tion (Pet. 11) the Court of Appeals did not employ the

term “bad purpose or evil motive” as encompassing matters

dehors the offense charged. The case is unlike those cases

cited by the government arising from political objections

to the war, United States v. Malinowski, 472 F.2d 850

8In United States v. Hawk, 497 F.2d 365, 369 (9th Cir. 1974)

cert. den. 419 U.S. 838, the Court of Appeals found that “the

use of such terms [“as evil motive”| is often helpful” adding that

“all that is required are instructions which communicate the

preper notion of specific intent in understandable terms” and that

“Tt}he instructions here were adequate to that purpose.” Jbid. In

United States v. McCorkle, 511 F.2d 482, 485 -(7th Cir. 1975) the

court merely held that “bad purpose” and “evil motive” was a

“convenient method of referring to the longer definition of ‘will-

fully’ ...” Jd. at 485. In United States v. Pohlman, 522 F.2d

974, 977 n. 2 (8th Cir. 1975) cert. den. 423 U.S. 1049, the eourt

recognized the possibility of alternative formulations, and, while

affirming the judgment of conviction, rewrote the required in-

struction for future trials.

7

(3d Cir. 1973) cert. den. 411 U.S. 970; from protests against

withholding taxes from workingmen’s wages, United States

v. Smith, 487 F.2d 329 (9th Cir. 1973) cert. den. 416 U.S.

989; or to avoid detection of a fugitive’s whereabouts,

United States v. Matosky, 421 F.2d 410 (7th Cir. 1970) cert.

den. 398 U.S. 904. Instead, the Court of Appeals used the

term “evil motive” in this case as did this Court in Bishop

when it referred to “evil motive and want of justification

in view of all the financial circumstances of the taxpayer”

(412 U.S. at 360) quoting from Spies v. United States, 317

U.S. at 498. It was for this reason that the past practices

of the respondents and the government’s acquiescence in

those practices’ were relevant to show respondents’ good

faith belief in their description of the monies involved as

loans.’ See United States v. Murdock, 290 U.S. 389.

There is no occasion here for requesting this Court to

repeat in this case what it said about willfulness only

four terms ago in Bishop and earlier in Spies v. United

States, supra, and even earlier in United States v. Mur-

dock, supra.

4. An additional reason for denying the petition for

certiorari, even if a conflict of circuits had been shown,

is that the judgment of reversal is interlocutory from any

realistic point of view and as such is not presently en-

titled to this Court’s review. See American Construction

Co. v. Jacksonville, T. d K.W. Ry. Co., 148 U.S. 372, 384. It

is unlikely that a decision by this Court could end this

litigation since the Court of Appeals upon remand would

® Potter v. United States, 155 U.S. 438; Miller v. United States,

120 F.2d 968 (10th Cir. 1941).

10 The government’s acquiescence sought herein to be established

(Tr. 349-392, 407, 446, 611-612) would also be the basis for the

application of equitable estoppel principles. United States v. Penn-

sylvania Chem. Corp., 411 U.S. 655, 674; Raley v. Ohio, 360 U.S.

423; Cox v. Louisiana, 379 U.S. 559.

8

be required to consider the other substantial issues

raised by respondents. On the other hand, if the case is

remanded to the district court for retrial, as directed by

the Court of Appeals, many of the other issues may be

resolved by more adequate instructions and more satis-

factory trial procedures before another trial judge.

5. The interlocutory aspect aside, this Court does not

sit, except in the most unusual of cases which this does

not appear to be, to review upon application of the gov-

ernment a ruling by a Court of Appeals upon a jury in-

struction in a case remanded for a new trial to the dis-

trict court. Review of such instructions is peculiarly a

function of the lower appellate courts whose normal re-

sponsibility is to review trial records. Indeed, this alloca-

tion of power to the courts of appeals is reflected in the

variations of language used by the district and appellate

courts in their respective circuits in the very tax cases

relied upon by the government (supra, pp. 4, 7).

6. Review should be denied because of the existence of

an independent ground for the decision below, which the

government concedes is not an appropriate ground for

certiorari (Pet. 12). This is the court’s alternative reason

for reversal, namely, that the trial court had erred in fail-

ing to charge the jury as to “good faith belief” (App. 3A).

The government’s claim that the district court did in fact

give such an instruction” is not a matter upon which this

Court would rule, it being outside the scope of Rule 19(b)

of the Rules of this Court.

1 This Court is hardly in a position to decide whether the

“instruction”, as the government suggests (coneerning the loan

and advances) “was more than sufficient” (Pet. 13) or whether the

instructions as to the partnership loss “adequately advised the

jury” (/bid.) concerning guilty knowledge, upon a twelve hundred

page record and numerous exhibits.

9

The Court of Appeals must have a wide area of discre-

tion in reviewing such matters as jury instructions in the

absence of a conflict between circuits or a significantycon-

stitutional issue, particularly where the governmient’s

claim must be assessed in the context of a long, detailed

and controversial record.’* This Court does not grant

certiorari where there is a non-reviewable alternative

ground for the decision below. The Monrosa v. Carbon

Black, Inc., 359 U.S. 180.

7. Respondents adopt in their entirety the arguments

made by the respondent Piluso*™ in his opposition to the

petition for certiorari.

CONCLUSION

For the reasons stated, the petition for a writ of cer-

tiorari should be denied.

Respectfully submitted,

Leonarp B. Boupin

Victor RaBinow1Tz

Attorneys for Respondents

Peter Pomponio and Paul Pomponio

Dated: July 30, 1976

New York, N.Y.

2 See United States v. Johnston, 268 U.S. 220, 227.

18'We particularly call the Court’s attention to the instructions

tendered by that respondent, adopted by the Pomponio respondents

at the trial and rejected by the trial court (Pil. Br. 2a-6a).