Petition — Pomponio v. United States

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MICHAEL RODAK, JR., CLERK

Supreme Court, U.S.

FILED

DEC 22 1977

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1977

——

No 77-898

PETER POMPONIO, PAUL POMPOIO,

Petitioners,

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

«OR THE FOURTH CIRCUIT

PHILIP J. HIRSCHKOP

LEONARD S. RUBENSTEIN

Janis L. MCDONALD

108 North Columbus Street

Post Office Box 1226

Alexandria, Virginia 22513

(703) 836-5555

Attorneys for Petitioners

Washington, OC. + THIEL PRESS + (207) 638-4521

(1)

TABLE OF CONTENTS

Page

OPINIONS BELOW ..nccccccccccsnccccscssccces 2

JURISDICTIONAL STATEMENT ..... 0.00 e eee eeeee 2

QUESTIONS PRESENTED .......ccccccscccvccces 2

STATUTE INVOLVED ...cccccccccccccceseeveces 3

PROCEEDINGS BELOW ...... ccc cccsccnsnvnscces 3

STATEMENT OF THE CASE .......ececcccsvccees 4

REASONS FOR GRANTING THE WRIT .........665. 10

I, The Case Presents Questions Central To The

Consistent Administration And Enforcement

Of Federal Criminal And Civil Tax Legislation

In The Context Of The Appropriate Standard

To Apply In Determining The Required

Intent For Criminal Liability .......02000s0e0 10

Il. The Question Whether A Trial Judge Must

Determine If Possible Prejudice Exists And

Whether Proper Limiting Instructions Must

Be Given To Counter The Impact Of

Serious Charges Made During An Opening

Statement And Subsequently Severed From

The Trial Presents A Conflict Between The

Court Of Appeals For The Fourth Circuit

And Three Other Circuits .......c0eeeeeeeees 14

Ill. This Court Should Review The Decision Below

To Determine Whether The Court Of Appeals

Created An Impossible Standard, And One

Contrary To That Adopted In Other Circuits

For Demonstrating Prejudicial Pretrial And

Trial Publicity, In Justifying The Trial

Court’s Refusai To Interrogate The Jury

After A Showing Of Massive Prejudicial

PURMy ccc ccc er cece cccccceccecccececes 17

CONCLUSION, ..cccccccccccccccccccccscccccces 20

(1)

APPENDICES: Page

A — Opinion of the United States Court of Appeals ..... la

B — Opinion of the United States Supreme Court ...... 19a

C — Opinion of the United States Court of Appeals 24a

TABLE OF AUTHORITIES

Cases:

Albert Ravano, T.C. Memo, 1967-170 ......25ee ee eee 12

Carver v, United States, 412 F.2d 233 (Ct. Cl. 1969) ..... 13

Frazier v. Cupp, 394 U.S. 731 (1969)... we ee eee ee eee 15

Livernois Trust v. Commissioner, 432 F.2d 879

fe 3, PPP rTrrrrerrerreererererrer il

National Carbide Corp, v. Commissioner, 336 U.S.

ree Tr rer er eT Te Tee eT 13

Patriarca v, United States, 402 F.2d 314 (ist Cir. 1968)

cert, denied, 393 U.S. 1022 (1969) ........ee eee 20

Pay mer v. Commissioner, 150 F.2d 334 (2nd Cir.

errr re ae ee ee ee 13

Roads Materials, Inc. v. Commissioner, 407

F.2d 1121 (4th Cir. 1969) ...... cece eee eeeeceees 11

Sheppard v, Maxwell, 384 U.S. 33 (1966) .........565- 17

Silverthorne v, United States, 400 F.2d 627 (9th Cir.

1968) cert. denied, 400 U.S, 1022 (1971) ........ 18, 20

Spies v, United States, 317 U.S. 492 (1943) ......50 eee 10

United States v. Bishop, 412 U.S. 346 (1973) .........4.. 10

United States v. Brown, 540 F.2d 364 (8th

SS, PPrTrerrerererrererererrrerrerey 15, 16

United States v, Bryant, 471 F.2d 1040 (D.C. Cir.

1972) cert, denied, 409 U.S. 1112 (1973) ......2656- 20

United States v, Critzer, 498 F.2d 1160

CO Gin, BOPED ccccncccecccccccccccccecesese 13

United States v, Dellinger, 472 F.2d 340 (7th Cir.

1972) cert. denied, 410 U.S. 970 (1973) owe ee ee eee 18

(ttt)

Cases, continued: Page

United States v, DeRosa, 548 F.2d 464 (3rd Cir.

SEPP 666666600606 CAS G6cbbwasdeovooeee 15, 16

United States v, Hankish, 502 F.2d 71 (4th Cir.

SE. 666606006060 bebeKe Cede ben es ceeeedes 19

United States v. Jones, 542 F.2d 186 (4th Cir.

SEE «cdesesh ches eee sbeebs eecoceeescocees 19

United States v. Liddy, 509 F.2d 428 (D.C. Cir.

PETG cceceseoeceses peeeeseeeeececeeesees 20

United States v, Perrotta, 553 F.2d 247

SEG GEUEE SoS ce ee eeeecececcocrccccoesoos 20

United States v, Pomponio, 528 F.2d 247

(4th Cir, 1975) rev’d., 45 U.S.L.W. 3272

Gee, BE, BEPED coccessescces *“e © @ @ @ hl la ita lal 4,14

United States v. Pomponio, 517 F.2d 460

(4th Cir.) cert, denied, 423 U.S. 1015 (1975) ......... 19

United States v, Prieto, 505 F.2d 8 (5th Cir.

SEE S66666 60GE6b Se bb bEC Ode cce0Cn Cees 15, 16

Walter Freeman, T.C. Memo, 1957-14) «ow. we ee ee ee es 12

Statutes:

SPREE £035 604 Sebesdekteeesdbeseeeseeueceed 8

CN Ee a 3

Treatises:

1 Mertens, Law of Federal Income Taxation,

i Pe 566 06606666.66066666 bes cceen 12

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1977

No.

PETER POMPONIO, PAUL POMPONIO,

Petitioners,

UNITED STATES OF AMERICA,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

Petitioners Peter and Paul Pomponio respectfully pray

that a Writ of Certiorari issue to review the decision of

the United States Court of Appeals for the Fourth

Circuit.

OPINIONS BELOW

The opinion of the Court of Appeals for the Fourth

‘ Circuit has not yet been officially reported, but is

annexed to this Petition as Appendix A. Previous

opinions in this case are reported in United States v.

Pomponiwo, 528 F.2d 247 (4th Cir. 1976) reversed in

United States v. Pomponio, 45 U.S.L.W. 3273 (Oct. 12,

1976) (See Appendix B and C respectively).

JURISDICTION

The Court of Appeals entered judgment on October 6,

1977 (Appendix A) and denied a Petition for Rehearing

on November 22, 1977. The mandate was stayed on

December 8, 1977 pending application for a Petition for

Certiorari by December 22, 1977. This petition is timely

filed. Jurisdiction of this Court is invoked pursuant to

28 U.S.C. §1254(1).

QUESTIONS PRESENTED

1. In weighing the sufficiency of the evidence in a tax

fraud case, whether the Court of Appeals misconstrued

this Court’s earlier opinion in the case and applied an

improper, civil standard for evaluating criminal intent in a

tax case, thereby frustrating the policies underlying this

Court’s decision in United States v. Bishop and Spies v.

United States, and seriously confusing the administration

and enforcement of federal civil and criminal tax legisla-

tion.

2. Whether the Court of Appeals conflicts with and

ignores the standard imposed by three other circuits for

determining the occasions requiring limiting instructions

to the jury to counter the prejudicial impact of repeated

and inflammatory prosecutorial references in its opening

statement to alleged acts by the defendants relevant only

to conspiracy charges which are subsequently severed

from the trial.

3. Whether the Court of Appeals properly held, con-

trary to the practice of other circuits and its own prior

law, that no voir dire was required to determine the jury’s

exposure either to massive pretrial publicity which was

acknowledged both by the government and the trial

court, or to prejudicial trial publicity, whicii the trial

court recognized would require a mistrial if read by the

jury.

STATUTE INVOLVED

26 U.S.C. §7206(1) of the Internal Revenue Code

provides: .

“Any person who “(1) .. . willfully makes and

subscribes any return, statement, or other docu-

ment, which contains or is verified by a written

declaration that 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.”

THE PROCEEDINGS BELOW

Petitioners were convicted of willful evasion of federal

income taxes under §7206(1) of the Internal Revenue

Code. Each petitioner was fined $5,000 per count for

a total of $15,000, and was sentenced to three years on

each count, the sentences on each to run concurrently. !

The judge originally pronounced a sentence of a $10,000

fine on each count but when he was informed that this was in

excess of the statutory maximum, he corrected the fines to $5,000

each (Record at 103).

On appeal their convictions were feversed by the

United States Court of Appeals for the Fourth Circuit on

the grounds that the trial court had not adequately

instructed the jury on the issue of willfullness. United

States v. Pomponio, 528 F.2d 247 (4th Cir. 1976). Upon

the Petition for a Writ of Certiorari by the United States,

this Court granted Certiorari and reversed the Fourth

Circuit on the grounds that the jury had been adequately

instructed. United States v. Pomponio, 45 U.S.L.W. 3273

(October 12, 1976). This Court then remanded to the

Court of Appeals for the Fourth Circuit for consideration

of the points raised in petitioners’ appeal and not

considered in its initial opinion. On October 6, 1977,

the Court of Appeals rejected petitioners’ remaining

contentions on appeal and affirmed their convictions.

Initially the Court of Appeals denied both the petition

for a rehearing and petitioners’ motion for a stay of the

mandate; however, on December 8, 1977 a stay of the

mandate was granted pending this application for a Writ

of Certiorari.

STATEMENT OF THE CASE

Petitioners Peter and Paul Pomponio were officers and

shareholders in a number of family-owned close corpora-

tions and partnerships. They were charged with criminal

tax fraud for two elements of accounting in connection

with these businesses for 1969, 1970 and 1971. The first

concerned loans received by petitioners from their

corporations which were claimed by the government to

be taxable income advances, despite petitioners’ stated

intention to repay the advances in the future and despite

the loans being properly recorded on the corporate

books, and even though their accountant, who prepared

the tax returns without specific instructions, treated the

loans as non-taxable.

The second concerned government charges that peti-

tioners intentionally claimed certain partnership losses on

their individual income tax returns for 1971, when, in the

government’s view, the losses should have been attributed

to their corporation. The corporation, however, was

acting as agent for the partnership under a written

nominee agreement.

Similar charges against Louis J. Pomponio Jr., were

severed prior to trial due to his sudden illness. After a full

trial, based upon the same facts, a jury acquitted him on

all counts.

Corporation Funds Received By Petitioners

In accordance with their longstanding practice, from

time to time petitioners received loans of money from

their corporations. Each time a loan was made, it was

duly recorded on the corporate books and subsequent

repayments were noted. The record shows that no

attempt was made on the entries to conceal the with-

drawal of funds (Record at 347, 393, 491, 606).

Whenever a loan was made to one of the officers of the

cérporation, a check was issued and an account receivable

would be set up or debited on the corporate books, with

a credit entered on the account when a repayment was

made (Record at 208, 218, 395, 396, 488, 490, 491).

Although no interest on the loans was charged and no

due date was indicated, the petitioners personally guaran-

teed corporate loans, including secondary financing on

buildings owned by the corporation (Record at 283,

294).2 The Court of Appeals noted that such loans are

2On numerous occasions petitioners informed their account-

ant of their intention to repay the loans (Recorded at 316, 317,

322). They had no reason to believe that these loans would be

[footnote continued]

familiar in close corporations and do not always reflect

all indications of a commercial loan, United States v.

Pomponio, No. 74-1758, slip op. at 8 (4th Cir. October 6,

1977) (hereinafter Appendix A).

At the time he prepared petitioners’ 1969, 1970 and

1971 income tax returns, the accountant knew that each

had received loans from the corporation. According to his

testimony at trial, he did not include these accounts as

income in the returns because he concluded that they

represented bona fide loans (Record at 208, 316, 322,

417, 418). Neither petitioner ever told their accountant

to omit the funds received by them as income when he

prepared tax returns; the decision to omit these funds

from taxable income was his alone. Aside from inferences

which had to be made from the transactions themselves,

the government introduced no evidence of criminal in-

tent.

The Partnership Losses

In the fall of 1970 petitioners were involved in the

construction of a building in the District of Columbia. It

soon became apparent that additional funds would be

necessary to complete the project. A potential investor,

Mr. Ginsberg, indicated his willingness to invest in the

project on the condition that ownership of the property

be in partnership form (Record at 310). Subsequently a

limited partnership was formed which included the

investor and the three Pomponio brothers. In addition to

viewed as taxable income since this same issue had been resolved

in their favor administratively with the IRS years earlier. However,

despite strenuous objection from counsel, petitioners’ evidence on

the earlier IRS proceeding was excluded at trial (Record at 348-49).

The accountant also had participated as an independent C.P.A. on

behalf of petitioners in the earlier IRS investigation and continued

to treat these funds as loans.

———

7 eed

a ee

the proper partnershi_ agreements, a nominee agreement

was also executed, appointing a nominee, the Virginia

G&erporation, to act as agent for the partnership with

respect to all matters relating to the building project

(Def. Exh. No. 3, p. 13).

As nominee of the partnership, the corporation trans-

ferred beneficial ownership of the property involved to

the partnership by deed (Def. Exh. No. 9). As is common

in nominee agreements, the corporation conducted acts

in the corporate name for the benefit of the partnership.

The beneficial owners of the partnership were substan-

tially different than the shareholders of the corporation;

indeed, investor Alan Ginsberg, who possessed a 50%

interest in the partnership, had no interest or ownership

in the corporation. The government introduced no

evidence to indicate that, following execution of the

Nominee Agreement, the corporation conducted its

activities with respect to the partnership cn its own

behalf, rather than as nominee of the partnership.

The same accountant prepared the partnership income

tax return. According to his testimony at trial, he had

seen the limited partnership agreement and knew of the

nominee arrangement, which is common in real estate

transactions, and treated the corporation as the nominee

of the partnership (Record at 300, 301). The total loss

reflected on the partnership return for 1971, prepared by

the accountant, was allocated among the individual

partners on their individual tax returns.?> There seemed

no question at the time that this loss should be attributed

to the corporation since the corporation’s role as an agent

Seven if this loss had not been included, petitioners’ tax re-

turns for 1971 would still not have shown a taxable amount due

(Gov. Exhibit No. 14).

of the partnership was firmly established between the

parties. Nevertheless, petitioners were charged with

defrauding the government in taking the corporation’s

losses on the partnership returns and were convicted.

The Impact of Severed Conspiracy Charges on the Jury

In addition to the charges under §7206(1) of the

Internal Revenue Code, petitioners were charged with a

conspiracy count in violation of 18 U.S.C.§371. This

charge was ultimately severed from the trial, but not

before the prosecution devoted over half of its opening

statement to damaging elements of the conspiracy charge.

Included in the opening statement were references to

extravagant payoffs of Cadillacs and Lincoln Continentals

allegedly made by petitioners to a bank vice president in

charge of construction loans, references to petitioners’

accountant (and chief witness) as an “unindicted co-

conspirator,” and payments of substantial amounts of

“bribe” money (Record at 151, 152).

Both petitioners and the government expressed con-

cern over the impact of the highly inflammatory conspir-

acy allegations upon the jury after the charge was

severed, and requested an instruction from the court

telling the jury to ignore the prosecutor’s statements as to

the conspiracy charges. But the trial judge refused to give

specific jury instructions that would ameliorate the

impression of a criminal conspiracy from the jury

deliberations. The only instructions he gave to the jury

were a general admonition at the commencement of the

trial that opening statements are not evidence and a

notification to the jury that the conspiracy charge had

been severed.

Prejudicial Pretrial and Trial Publicity

Extensive pre-trial and trial publicity pervaded this

case. Petitioners had been involved in another trial two

months earlier which was covered extensively in the

media. Some weeks before and continuing throughout

the trial, area newspapers, radio and television maintained

a high level of coverage of stories concerning petitioners’

participation in the tax charges.* Twenty-eight articles

which appeared in the press before commencement of the

trial were made a part of the record in this case.

Numerous motions for a change in venue were made

based on the pretrial publicity problem. The trial judge,

however, refused to hear the details of these articles and

denied all motions for a change of venue.

At trial, petitioners submitted proposed voir dire

questions designed to identify potential jurors who might

be influenced by the adverse publicity. When the trial

judge asked how many had read anything about the

Pomponios, sixteen (16) of the twenty-eight (28) mem-

ber panel raised their hands; however, the trial judge

ignored petitioners’ efforts to determine whether their

extensive exposure would affect their impartiality. He

refused to ask, after request, what the jurors had read or

heard or whether they were familiar with the recent

convictions of the defendants. Again, during trial, articles

appeared daily concerning the activities of each day,

*Many articles dealt with the charges involved in the first

trial. The headlines were generally prejudicial and disparaging:

“Two Million Dollar Pomponio Check Said Diverted to Personal

Use”’, “Creditors Allege Pomponio Deceit”; many of the articles,

including those reporting on petitioners’ convictions were promi-

nently placed on the front page. One article quoted a “court of-

ficer” as comparing the case to being like “trying Al Capone,”

(Record at 164).

including evidence which was excluded and information

about prior convictions. But despite the court’s recogni-

tion of the problem, (It stated “If they (the jury) read

the paper, you have got a mistrial. It is just that simple to

me.’’), it still refused a defense request for the court to

examine the jurors as to what they had heared or read

(Record at 1133).

It is significant to point out that there was a news-

paper strike during the subsequent trial of Louis

Pomponio Jr., on the same charges. Without the

negative and sensational publicity and absent the damag-

ing references to highly inflammatory conspiracy charges

in the government’s opening statement, he was acquitted

on all counts.

REASONS FOR GRANTING THE WRIT

THE CASE PRESENTS QUESTIONS CENTRAL TO THE

CONSISTENT ADMINISTRATION AND ENFORCEMENT

OF FEDERAL CRIMINAL AND CIVIL TAX LEGISLA-

TION IN THE CONTEXT OF THE APPROPRIATE STAN-

DARD TO APPLY IN DETERMINING THE REQUIRED

INTENT FOR CRIMINAL LIABILITY.

The Court has devoted considerable effort in deter-

mining the meaning of the “willfullness” or intent

required to impose criminal liability. United States v.

Bishop, 412 U.S. 346 (1973); Spies v. United States, 317

U.S. 492 (1943). It is clear from these opinions that more

is required in order to establish criminal intent than

simply evidence which would support a finding of tax

liability in civil court. If the Court of Appeals decision in

the present case is allowed to stand, taxpayers may well

be subject to criminal penalties even in instances where

tax liability itself is in serious doubt and confusion will

develop as to the role played by civil tax court

adjudications of tax liability in deciding criminal intent

to defraud. The basic policy underlying decisions in

Bishop and Spies would be violated by an imposition of

criminal liability when the sufficiency of the evidence is

measured by references to criteria and standards which

should be used exclusively in civil determinations of tax

liability.

In determining whether sufficient evidence existed to

support a conviction, the Court of Appeals applied a civil

standard for tax liability to the present prosecution.

Although the court recognized that loans from close

corporations often did not look as formal as other loans

and that it was possible this might have been a bona fide

loan, it found cases upholding civil tax liability in related

circumstances. Livernots Trust v. Commissioner, 433

F.2d 879 (6th Cir. 1970); Roads Matenals, Inc. v.

Commissioner 407 F.2d 1121, 1125 (4th Cir. 1969).

From these cases it arrived at the erroneous proposition

that the jury, on the basis of similar factors, had

sufficient evidence to conclude that the payments were

not made as loans in these circumstances, and, even one

step more removed, that therefore the required criminal

intent existed.

The court’s determination seemed to be based upon

the rationale that if bad faith was not necessary in order

to find criminal intent, then a less stringent standard

could be applied. Its focus shifted to the question of

whether the money received could be considered a loan

or an income advance based on civil standards without a

direct showing that the petitioners knew it was not a

loan. The analysis, however, badly misconstrued the

relation between tax liability and a criminal act. It is one

thing to say that ambiguous transactions may justify

imposing tax liability; it is quite another to conclude, in

the absence of any indication of criminal intent, that the

taxpayer should be found guilty and imprisoned for three

years. No evidence was introduced by the government

bearing directly or indirectly on the petitioners’ intent to

defraud; rather, almost all of the evidence went to

whether the monies received could be considered a loan

or an advance of income.

In the civil context, moreover, the question of

whether, under similar circumstances, the money received

is a loan or an advance of income, is by no means clear.

On this record petitioners have a strong legal argument, in

support of their right, as a matter of civil tax liability, to

claim the advances as loans and not as taxable income.°

Under those circumstances, to uphold a criminal convic-

tion is even more questionable, illustrating the obvious

need for immediate clarification by this Court of the

standards to be used in civil and criminal tax liability.

The same question concerning civil tax liability exists

as to their claim of the partnership losses. This question

revolves around a determination of whether the corpora-

tion involved was acting as a true agent for the beneficial

owner of the property, in which case the owner, not the

See Albert Ravano, T.C. Memo, 1967-170 (where the tax

Court viewed the search for this intent as taking on an Alice in

- Wonderland quality when the stockholder is dealing with closely

held corporations); and Walter Freeman, T.C. Memo, 1957-14

(where a substantial shareholder and officer in a family corpora-

tion made net withdrawals of funds during a five year period in

excess of $724,000 for personal use. Although the shareholder in-

formed the company accountant that he would eventually repay

the amounts withdrawn, the court found that the sharcholder’s

intent to repay the advances through future gambling winnings was

without justification. Even so, the advances were held to be non-

taxable loans.); 1 Mertens, Law of Federal Income Taxation,

§9.21 (1969 rev.) (even where there is no record of formal

authorization of a loan, a finding that a loan was made is still

possible.

agent, bears the tax consequences. National Carbide

Corp. v. Commissioner, 336 U.S. 422 (1949).© In this

case, petitioners had a written nominee agreement and

there was no evidence to indicate that the corporation

conducted activities with respect to the partnership

property on its own behalf rather than as a nominee. The

fact that the corporation conducted its acts in the

corporate name was consistent with its obligation to do

so under the terms of the nominee agreement. The

partnership was created at the insistence of a new

investor to protect his interests, which were completely

separate from any of petitioners’ corporations. The lack

of substantial identity of ownership of the partnership

property and the corporation strongly supports nominee

status. Carver v. United States, supra.

When it is highly questionable whether, under these

circumstances, petitioners could incur civil tax liability, it

is inconsistent that imposition of criminal penalties has

been affirmed.’ Even the Court of Appeals recognized

that whether the corporation was acting as the true agent

of the partnership was a debatable question; however, it

felt that this was a question of fact for the jury, ignoring

the necessity of linking petitioners’ intent to deceive to

any finding that the corporation was not acting as an

agent of the partnership.

Cf. Paymer v. Commissioner, 150 F.2d 334 (2nd Cir.

1945) where one corporation was regarded as a nominee for the

beneficial owners of real and another was not;

Carver v. United States, 412 F.2d 233 (Ct. CL 1969) where a

single corporation was held to be a nominee as to certain trans-

actions but not to others.

"This Court of Appeals has indicated in the past that when a

question of taxability is highly problematical, criminal intent can-

not be found. United States v. Critzer, 498 F.2d 1160 (4th Cir.

1974).

In affirming petitioners’ convictions, the Court of

Appeals perhaps misunderstood this Court’s prior deci-

sion in this case, United States v. Pomponio, 45 U.S.L.W.

3273 (October 12, 1976), reversing the Court of Appeals’

earlier decision. There, this Court found the instructions

to the jury adequate on the question of willfullness.

While this Court did not require bad faith in showing the

requisite mens rea, it did approve instructions which

indicated that to find guilt beyond a reasonable doubt

the defendants must have possessed knowledge of the

true nature of the transactions at the time of filing the

disputed tax returns. But that decision did not alter the

requirement of a showing of willfullness on the part of

the defendants.

The Court should review this decision in order to

clarify the appropriate standards to determine criminal

intent in these circumstances. It is vital that the standards

in civil and criminal tax cases be clearly differentiated

to avoid injustice to the taxpayer and confusion in the

administration of this federal legislation.

THE QUESTION WHETHER A TRIAL JUDGE MUST

DETERMINE IF POSSIBLE PREJUDICE EXISTS AND

WHETHER PROPER LIMITING INSTRUCTIONS MUST

BE GIVEN TO COUNTER THE IMPACT OF SERIOUS

CHARGES MADE DURING AN OPENING STATEMENT

AND SUBSEQUENTLY SEVERED FROM THE TRIAL

PRESENTS A CONFLICT BETWEEN THE COURT OF

APPEALS FOR THE FOURTH CIRCUIT AND THREE

OTHER CIRCUITS AND THIS COURT’S DECISION IN

FRAZIER V. CUPP.

The government’s opening statement at trial concen-

trated heavily on conspiracy charges against petitioners

involving damaging allegations about bribery, illegal gifts

and other tainted business transactions. After the opening

statement, the conspiracy charge was severed from the

trial. The judge, however, refused a defense request to

instruct the jury to disregard the references to matters

only relevant to the conspiracy charge contained in the

government’s opening statement. In affirming, the Court

of Appeals ignored the standards established by the

Third, Fifth and Eight Circuits,? which require a trial

judge to focus upon the question of prejudice to

determine whether a mistrial or proper limiting instruc-

tions are required when the prosecutor’s opening state-

ment makes extended reference to matters which are

ultimately severed or excluded from the trial. Instead, the

court off-handedly held that specific instructions were

not required.

Underlying this Court’s opinion in Frazier v. Cupp,

394 U.S. 731 (1969) was a recognition of the importance

of determining whether or not prejudice was created

when evidence, which is not later produced, is referred to

in an opening statement. Relevant to the Court’s decision

im Frazier was the fact that the reference in the opening

statement was brief and a proper limiting instruction

was given. 394 U.S. at 736. Although no prejudice was

found, the Court indicated that limiting instructions are

not necessarily enough to alleviate potential prejudice,

but they constitute a minimum standard in situations

where the dangers of prejudice exist.

The Court of Appeals’ decision gives little attention

to the trial court’s failure to ameliorate the prejudice

SUnited States v. De Rosa, 548 F.2d 464 (3rd Cir. 1977);

United States v. Brown, 540 F.2d $64 (8th Cir. 1976); United

States v. Prieto, 505 F.2d 8 (5th Cir. 1974).

created by the government’s damaging references to the

conspiracy charge, despite the seriousness of the charge

and the lack of a proper limiting instruction. The only

instructions given by the trial judge were the initial

warning that opening statements are not evidence and a

notification to the jury that the conspiracy charge had

been dropped.? According to the Court of Appeals,

United States v. Brown, 540 F.2d 364 (8th Cir. 1976),

and United States v. Prieto, 505 F.2d 8 (5th Cir. 1974),

dispose of petitioners’ claim because they both resulted

in affirming convictions despite remarks made in opening

statement. However, in each of those cases, the court

examined the information given to the jury to determine

the prejudicial impact which could result. Indeed, in

Brown, this inquiry was made despite the fact that the

jury was instructed to ignore the prosecutor’s opening

statement.

In United States v. DeRosa, 548 F.2d 464 (3rd Cir.

1977), the Court of Appeals for the Fifth Circuit also

focused on the danger of prejudice from transcripts read

in the prosecutor’s opening statement and later excluded.

Despite counsel’s failure to seek an instruction to

disregard the transcripts, the court found it necessary to

examine the prejudicial impact of the opening statement

on the entire trial. After that examination, the court held

that special circumstances!® eliminated any prejudice

that otherwise might have resulted.

Although admittedly directed to defense arguments, in the

charge to the jury at the end of the trial, the court, in fact,

specifically invited the jury to pay attention to the opening state-

ments of counsel.

10The jury sent a note to the judge asking specifically if

they were allowed to consider ‘evidence’ presented in the govern-

ment’s opening statement. The judge at that point told the jury

that it could not. 548 F.2d at 469.

In each of the cases dealt with by the Third, Fifth and

Eighth Circuits, the situation involved less damaging

information given to the jury in the prosecutor’s opening

statement; however, each circuit has applied a more

stringent standard in determining whether the remarks

may result in prejudicing the jury’s determination and

what cautionary instructions may be given, because each

of these circuits has recognized the importance of a

careful examination for potential prejudice. A dangerous

precedent will be set if this decision is allowed to stand

where the court is dealing with an even more serious

possibility of prejudice. The Court of Appeals opinion’s

casual dismissal of petitioners’ claim without any

analysis of the obvious prejudice created in the opening

statement, therefore, merits review by this Court.

THIS COURT SHOULD REVIEW THE DECISION BELOW

TO DETERMINE WHETHER THE COURT OF APPEALS

CREATED AN IMPOSSIBLE STANDARD, AND ONE

CONTRARY TO THAT ADOPTED IN OTHER CIRCUITS

‘ FOR DEMONSTRATING PREJUDICIAL PRETRIAL AND

TRIAL PUBLICITY, IN JUSTIFYING THE TRIAL

COURT’S REFUSAL TO INTERROGATE THE JURY

AFTER A SHOWING OF MASSIVE PREJUDICIAL PUBLI-

CITY.

In dealing with the recurring problem of publicity in

criminal cases, the concern and focus of this Court in

Sheppard v. Maxwell, 384 U.S. 333 (1966) was not upon

the technicalities of procedure in bringing the sensational

publicity to the trial court’s attention, but rather on the

fair administration of justice in insuring that the defend-

ant’s rights were adequately protected against the prejudi-

cial impact of pretrial and trial publicity. The Court of

Appeals’ review of the trial court’s handling of the

publicity in this case ignored that important directive.

There was extensive pretrial and trial publicity in this

case and petitioners made every conceivable effort to

bring this publicity to the court’s attention, including

making numerous motions, submitting the articles to the

court and even commissioning a survey on its impact in

the community. The Court of Appeals, however, held

that these efforts were not enough and refused to require

voir dire as to what the jurors had read and the

conclusions they drew from their reading.4! As a

measure of the types of actions required by defendants to

trigger judicial inquiry, the court created a standard which

would be impossible to meet. It allows trial courts to

ignore the problem altogether. Other circuits have been

properly more demanding.

Both the Seventh and the Ninth Circuits have held that

where the trial court’s failure to make inquiries during

voir dire “adequate to determine whether anyone has

read or heard about the facts, and, if so, what the impact

has been on his ability to serve as an impartial juror”

constitutes reversible error. United States v. Dellinger,

472 F.2d 340 (7th Cir. 1972), cert. dented 410 U.S. 970

(1973); Silverthorne v. United States, 400 F.2d 627 (9th

Cir. 1968), cert. denied 400 U.S. 1022 (1971). In this

case the trial judge had good reason for making an

II the sixteen jurors out of a panel of twenty-eight who

raised their hands when asked whether they had read or heard

anything about the Pomponios were never identified so that de-

fendants might later challenge them. The Court of Appeals stated

that this lack of challenge constituted a separate and alternate

ground for refusing to reverse the conviction but the record clearly

demonstrates that the defendants bad no opportunity to postively

identify those sixteen } rors (Record at 75-76).

~—?

extensive examination for possible prejudice because

sixteen of his panel jurors indicated that they had heard

or read publicity concerning the petitioners. Yet the trial

judge inexplicably refused to follow this with an inquiry

into the impact of this publicity on the jurors.

In the past, the Court of Appeals for the Fourth

Circuit has also indicated that in cases of pretrial and trial

publicity a voir dire is required to ascertain the in-pact of

publicity upon the prospective jury.!? However, in its

opinion here, the Court of Appeals found that examina-

tion of the prospective jurors was unnecessary because

the petitioners failed to bring particular examples of

prejudicial publicity to the attention of the court. It is

difficult to see, however, how petitioners could have

done anything more to meet this criteria than was done

in the instant case. The record is replete with examples of

petitioners’ attempts to bring this prejudicial publicity to

the court’s attention. Even the government acknow-

ledged that “we recognize that there is a publicity

problem in this case. There has been a tremendous

amount of publicity . . .”” (Record at 134).

' Even if the petitioners’ constant attempts to bring

specific examples of articles concerning bribery and for-

mer convictions to the attention of the court can con

ceivably be viewed as a “general allegations of damaging

publicity” United States v. Pomponio, App. A, there

is conflict among the circuits as to whether such

general admonitions to the jury are indeed sufficient to

12 United States v. Jones, 542 F.2d 186 (4th Cir. 1976);

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

423 U.S. 1015 (1975); United States v. Hankish, 502 F.2d 71

(4th Cir. 1974).

justify this Court’s examination of the problem. !%

There does not seem to be significant disagreement,

however, among these circuit court opinions, that when

specific jurors have been identified as having been

exposed to prejudicial publicity, general admonitions are

not sufficient. Where, as here, the jurors are clearly ex-

posed to publicity, it is vital that uniform standards be

established requiring complete examination of the extent

of exposure and its impact upon the jurors. The problem

is one best resolved by this Court.

CONCLUSION

For the foregoing reasons, petitioners urge that this

Court issue a Writ of Certiorari to review the decision

below.

Respectfully submitted,

PHILLIP J]. HIRSCHKOP

LEONARD S. RUBENSTEIN

JANIs L. MCDONALD |

108 North Columbus Street

Post Office Box 1226

Alexandria, Virginia 22313

(703) 836-5555

Attorneys for Petitioners.

'3Compare United States v. Perotta, 553 F.2d 247 (1st Cir.

1977); United States v. Liddy, 509 F.2d 428 (D.C. Cir. 1974);

Margoles v. United States, 407 F.2d 727 (7th Cir.), cert denied

396 U.S. 833 (1969) with United States v. Bryant, 471 F.2d 1040

(D.C. Cir. 1972) cert. denied 409 U.S. 1112 (1973); Silverthorne

v. United States, 400 F.2d 627 (9th Cir. 1968), cert. denied 400

U.S. 1022 (1971); Patriarca v. United States, 402 F.2d $14 (Ist

Cir. 1968), cert. denied 393 U.S. 1022 (1969).

APPENDIX

APPENDIX A

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

No. 74-1758

UNITED STATES OF AMERICA,

Appellee,

PETER POMPONIO, PAUL POMPONIO,

Appellants.

APPEAL FROM THE UNITED STATES DISTRICT

COURT FOR THE EASTERN DISTRICT OF

VIRGINIA, AT ALEXANDRIA

Oren R. Lewis, District Judge

Resubmitted after remand

April 18,1977 ° Decided October 6, 1977

Before RUSSELL, FIELD, and WIDENER, Circuit Judges.

Alan Y. Cole (Lee A. Schutzman; Cole and Groner,

Stuart E. Seigel, Cohen and Uretz, Philip J. Hirschkop

and Leonard S. Rubenstein, Philip Hirschkop & Associ-

ates, Ltd., on brief) for Appellants Peter Pomponio and

Paul Pomponio; Thomas K. Moore, Assistant United

States Attorney (David H. Hopkins, United States Attor-

ney, Frank W. Dunham, Jr., Assistant United States

Attorney, and Charles E. Brookhart, Attorney, Tax

Division, United States Department of Justice, on brief)

for Appellee.

WIDENER, Circuit Judge:

Peter and Paul Pomponio were convicted in the dis-

trict court of willful evasion of federal income taxes for

the years 1969, 1970, and 1971.! Their appeal challeng-

ing the validity of the convictions is now before us for

the second time. In United States v. Pomponio, 528 F.2d

247 (4th Cir. 1976), we reversed on the ground that the

district court inadequately instructed the jury on the

essential element of willfulness. The Supreme Court

granted the government’s petition for certiorari and re-

versed in 429 U.S. 10 (1976), holding that the trial court’s

instruction on criminal intent was proper, thus reinstat-

ing the convictions. The case was remanded to us with

instructions to consider the assignments of error raised

which we found unnecessary to reach in our previous

disposition. In obedience to the mandate, we have con-

sidered the remaining contentions on appeal, and con-

clude that the convictions should be affirmed.

The appellants, together with a third brother, Louis

Pomponio,? owned and operated several closely-held

196 USC § 7206(1) states:

Any person who —

(1) Declaration under penalties of perjury — Willfully makes

and subscribes any return, statement, or other document,

which contains contains or is verified by a written declara-

tion that it is made under the penalities 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 conviction thereof,

shall be fined not more than $5,000, or imprisoned more

than 3 years, or both, together with the costs of prosecu-

tion.

2The trial of Louis Pomponio was severed because of his illness.

corporations engaged in real estate development in the

vicinity of northern Virginia. They and their attorney,

Charles Piluso,? were charged in a thirteen count indict-

ment with three counts each of willfully filing false in-

come tax returns (one count for each year in question for

each defendant), and one count of conspiring to defraud

the United States. The substantive counts related to the

Pomponios’ individual income tax returns, and consisted

of: (1) failing to report as income certain monetary

advances received from closely-held corporations con-

trolled by the Pomponios; and (2) deducting from per-

sonal income a claimed partnership loss of $119,000 in

1971, which the government claimed was properly

allocable to one of the Pomponio corporations.

The conspiracy count related to the alleged falsifica-

tion of the corporate tax returns and, for that reason,

was severed from the trial on appellants’ motion follow-

ing the government’s opening statement, as we will dis-

cuss in more detail below.*

The Pomponios’ position is that the advances received

from their corporations were merely loans, not re-

portable as income, and were correctly treated as such

for income tax purposes. They claim that, even if the

advances should have been treated as income, the error

was not willful, in that they relied on their accountant,

Bates, who was responsible for preparing the returns.

They further assert they were entitled to deduct as a

partnership loss on their individual returns a loss sus-

SBy order of this court, Piluso’s conviction was remanded to

the district court for dismissal on account of a plea bargain with

the government.

*See part IV of this opinion.

tained by one of the Pomponio corporations, the Virginia

Corporation, for the reason that, when the corporation

sustained the loss, it was acting only as an agent of

PHB Associates, a partnership in which the appellants

were partners.

SUFFICIENCY OF THE EVIDENCE

We reject the Pomponios’ defense of reliance on their

accountant in treating the advances as loans,” as well as

their reliance on the priviciple that, when it is problemati-

cal as a matter of law whether a taxpayer’s unreported

income in taxable, mere errors in judgment will not give

rise to criminal liability. United States v. Critzer, 498

F.2d 1160 (4th Cir. 1974). Both assertions are applied to

the proposition that the criminal law concerns itself only

with willful violations of the tax laws, not with inadvert

ent errors made in good faith. United States v. Bishop,

412 U.S. 346, 360-61 (1973); Spies v. United States,

317 U.S. 492, 496 (1943). But in this case, they consti-

tute no more than defenses which were rejected by the

jury as the triers of fact; for, as to the first defense, the

sine qua non of a bona fide non-reportable loan is the

taxpayer’s own intention to repay. See Estate of Taschler

v. United States, 440 F.2d 72 (3d Cir. 1971); Livernots

Trust v. Commissioner, 433 F.2d 879 (6th Cir. 1970);

Commissioner v. Makransky, 321 F.2d 598 (3d Cir. 1963);

1 Mertens, Law of Federal Income Taxation § 9.21. As

to the second defense, that loans which are not actually

such are income, is beyond argument. If the Pomponios

intended to repay the advances, the sums advanced to

5See, ¢.g., United States v. Mitchell, 496 F.2d 285, 288 (4th

Cir. 1974).

them did not constitute reportable income, as the jury was

instructed. While there may be instances in which an

accountant’s interpretation of the tax laws can justifi-

ably be relied upon by a taxpayer, even if erroneous, see

United States v. Pechenih, 236 F.2d 844 (3d Cir. 1956),

certainly these cannot include cases where the only real

question bearing on the correctness of the returns, as

here, is one of the taxpayer’s own intent.

The Pomponios knew, at the time they signed their

tax ‘returns, whether they had received funds from their

corporations with the intention of repaying them. On the

question of their own state of mind, a matter of fact,

they can hardly claim reliance on their accountant, for it

was incumbent upon them to inform Bates that the ad-

vances were not loans if they had no intention to repay-

ment. As one court has repeated, “a taxpayer cannot

shift the responsibility for admitted deficiencies to the

accountants who prepared his returns if the taxpayer

withholds vital information from his accountants... .”

United States v. Lisowski, 504 F.27 1268, 1272 (7th Cir.

1974); United States v. Scher, 486 F.2d 319, 321 (7th

Cir. 1973).

The nature of that intent was a question of fact for the

jury’s resolution. See Livernois Trust, at 883. In this

criminal prosecution, the principal question that pres-

ently concerns us with respect to the advances is

whether the evidence was sufficient for the jury to have

found beyond a reasonable doubt that the advances were

not loans, that is, that no intent to repay them existed,

and that the defendants knew they were not loans. We

think the evidence was ample to sustain such findings.

For example: although the advances were treated as

loans on the books of the Pomponio corporations, it is

undisputed that no date was fixed for repayment, and

no notes were executed by the Pomponios as evidence of

indebtedness; neither was any security given to guard

against the contingency of default, nor was interest

charged or paid with respect to the advances.© We have

approved reference to similar criteria in distinguishing

loans from contributions to capital for the purpose of bad

debt deductions, see Road Materials, Inc. v. Commts-

sioner, 407 F.2d 1121, 1125 (4th Cir. 1969), and the

jury here was entitled to conclude on the basis of such

factors that the loans, approximately in the aggregate

2.5 million dollars, in the three pertinent years, were not

made as loans in these circumstances.

We realize that a course of self-dealing between in-

dividuals and their closely-held corporations must be

considered from both sides. On one hand, the need to

examine closely the substance of the transactions, as well

as the form in which they are couched, is especially

acute; thus, the fact that the advances were formally

treated as loans on the corporate books is not control-

ling. Road Materials, Inc., supra. On the other hand, the

possibility exists that bona fide loan transactions may be

carried out in the informal manner presented here within

closely held corporations. But these are circumstances for

the jury to have weighed and have less force on appeal

where our reviewing role as to factual matters is limited

to ascertaining whether the jury’s verdict is supported

by substantial evidence reviewed in the light most favor-

able to the government. Glasser v. United States, 315

U.S. 60, 80 (1942); United States v. Sherman, 421 F.2d

198, 199 (4th Cir.), cert. den. 398 U.S. 914 (1970).

The inclusion of the 1971 loss on account of the PHB

SFor a discussion of these and other factors, see 1 Mertens,

Law of Federal Income Taxation § 9.21 and cases cited therein.

partnership requires inquiry into this additional basis for

conviction on the 1917 tax evasion counts.

The Virginia Corporation was formed by the Pom-

ponios in 1970 for the purpose of constructing a building

on land to be acquired in the District of Columbia. The

defense contends that, as a condition for providing

additional, necessary financing for the project after con-

struction had commenced, a New York financier named

Ginsberg required that ownership of the land and build-

ing be placed in partnership form. Thus a limited part-

nership, PHB Associates, was formed, with the three

Pomponio brothers, attorney Piluso, and Ginsberg as

partners, as well as PHB Realty, Inc.

In addition to the limited partnership agreement, a

nominee agreement was executed which provided that,

in this real estate transaction, the Virginia Corporation

would act as an agent for PHB, and would hold title to

any real property belonging to the partnership. Although

it appears that a deed was executed conveying the

Washington, D.C. property from the Virginia Corporation

to PHB Associates, record as well as actual title to the

property was retained in the corporation’s name. The

deed to PHB was never recorded.

Accountant Bates testified that, based on the limited

partnership agreement furnished him by the Pomponios,

and acting pursuant to their instructions, he treated the

Virginia Corporation as the agent of PHB, disregarding

the corporation as a taxable entity and allocating its

1971 loss of over $950,000 to the partnership. Each

defendant’s 1971 tax return reflected his share of the

total partnership loss.

The government challenged the propriety of the de-

duction, claiming the loss was that of the Virginia

Corporation, and could only have been deducted by that

corporate entity. It is not disputed that, where a true

agency relationship exists, the agent may be disregarded

for tax purposes and its profits or losses attributed to

the principal. National Carbide Corp. v. Commissioner,

336 U.S. 422 (1949); see Moline Properties, Inc. v. Com-

missioner, 319 U.S. 436 (1943). The relevant factors in

determining whether a corporate agent must be passed

over for tax purposes in deference to its principal relate

not to the mere fact of whether or not a formal contract

of agency has been executed, National Carbide, p. 436,

but whether the business purpose of the claimed agent

is to carry on “the normal duties of an agent.” Id. at

437, including the “usual incidents of an agency relation-

ship.” Id. at 439.

Judge by this test, we are satisfied that the evidence

was sufficient for the jury to have found beyond reason-

able doubt that the Virginia Corporation’s loss was

improperly allocated to the PHB partnership, and that

the defendants were aware of that fact when they signed

their 1971 tax returns. With respect to the propriety of

the deduction, the jury was presented with substantial

evidence that the Virginia Corporation continued to

operate as an independent corporate entity, and not as

an independent corporate entity, and not as an agent

for PHB.

For example, Virginia Corporation bank records, in-

troduced by the government and unexplained, fail to

indicate that any payments were made by the corporation

to its principal, PHB Associates.’ In addition, throughout

7Check #424, in the amount of $7,708.00, dated June 30,

1971, and paid to the order of a New York City law firm, does

contain this cryptic reference: “Re: P.H.B. Associates.” The record

offers no explanation for the check.

extensive negotiations with the General Services Ad-

ministration over the lease of the Washington real estate,

the Virginia Corporation did not reveal that it was acting

as agent and not as principal; no reference of any kind

was made to PHB or to the unrecorded deed transferring

title to PHB from the corporation. One exhibit is partic-

ularly instructive: in making a GSA Form 1364 “Pro-

posal to Lease Space to the United States of America,”

Paul Pomponio twice listed the Virginia Corporation as

the “Offeror,” and in blank #14, “Offeror’s Interest in

Property (Owner, agent, etc.),” Pomponio twice re-

sponded “Owner.”

This evidence, and more, such as testimony that PHB

Associates had no bank account; that the corporation had

retained record title as of two days before trial; and had

itself paid the expenses listed on the partnership return,

provides strong support for the verdict below.

The jury also heard testimony that PHB Associates,

to the knowledge of the defendants, was not, and could

not have been validly formed in accordance with the

limited partnership agreement. The agreement specified

that all stock of the Virginia Corporation would be con-

tributed to the capital of PHB, and, according to the

defendants’ own version of the facts, the only purpose

for which PHB was formed was to assume ownership of

the Washington property in place of the corporation as

a condition of obtaining Ginsberg’s loan. But the de-

fendants knew in advance that PHB could not, as it did

not in 1971, acquire possession of the corporation’s stock,

because they had previously placed it in an escrow, which

existed until 1972, as collateral for a debt unrelated to

these proceedings, and we are not told of any transfer of

ownership subject to the escrow. Moreover, the partner-

ship could not have acquired an unencumbered fee title

10a

to the Washington property, as called for in the partner-

ship agreement, because, as the defendants must have

known, the individual from whom they had purchased

the property held a deed of trust in his favor on the land.

While these last facts are, to be sure, circumstantial evi-

dence, they weighi in the government’s favor.

Viewing the facts in the light most favorable to the

government, the jury could certainly have concluded that

the Virginia Corporation was never intended to become

the agent of the partnership, rather that it remained the

principal, and, indeed, that the formation of PHB was a

sham.

Il.

PUBLICITY BEFORE AND DURING TRIAL

Of the many® assignments of error raised by the

Pomponios, they emphasize the district court’s refusal to

conduct an individualized, in camera voir dire examina-

tion to probe the effect of pre-trial publicity on each

member of the venire, and its refusal to question each

juror at the conclusion of the trial concerning the effect

of publicity during the trial.9

8The defendants have filed 14 principal assignments of error,

five of which are subdivided for a total of 24 grounds for reversal.

We have considered the assignments of error not especially men-

tioned here and are of opinion they are without merit. The main

assignment mentioned oral argument was the sufficiency of evi-

dence in its various aspects, but we do not infer any assignments

were waived for others were later emphasized.

9 Appellants also assert as error the trial court’s denial prior to

trial of a motion for of venue. In Sheppard v. Maxwell,

384 U.S. 333, 363 (1966), the Supreme Court implied that a

change of venue is desirable, and perhaps mandatory protection

“where there is reasonable likelihood that prejudicial news prior

[footnote continued]

lla

On several occasions we have defined the scope of a

trial judge’s obligation to make particularized inquiries

concerning the effect of extensive press coverage both

prior to and during a criminal trial.

In United States v. Sawyers, 423 F.2d 1335 (4th Cir.

1970), on facts very similar to those before us here, we

approved the trial judge’s refusal to question veniremen

individually about what each had heard or read about

the case, a prosecution for conspiracy to commit bribery.

We emphasized that, “‘[t]here were no specified headlines,

news reports, or editorials brought to the attention of the

trial judge as possible sources of prejudice.” 423 F.7d at

1344. In these circumstances, general questions addressed

to the venire as a whole, requiring each member to assess

his ability to render a just verdict based only on the evi-

dence adduced at trial, were deemed sufficient.

While we reversed in the more recent cases of United

States v. Hankish, 502 F.2d 71 (4th Cir. 1974), and

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

den. 423 U.S. 1015 (1975), a case involving these same

defendants, the facts were different. In Hankish, an

article appeared during trial characterizing the defend-

and as a “Wheeling [West Virginia] rackets figure,” and

alleging that he “directed operations” of a theft ring,

to trial will prevent a fair trail.” We do not find, however, any such

likelihood in this case. There was no Sheppard- -type publicity such

as “editorials or slanted articles conviction,” United

States v. Sawyers, 423 F.2d 1385, 1343 (4th Cir. 1970), and

appellants thus did not rebut the presumption of impartiality of

prospective jurors. United States v. Morlang, 531 F.2d 183, 187

(4th Cir. 1975). Indeed, the record does not show the defendants

even filed affidavits that they would be unable to get a fair trial.

The questions the defendants wanted the court to ask each individ-

ual juror were: “How many articles did you read? Did you follow

it daily? What type of articles did you read?” No specific article

was pointed out to the court as especially damning.

12a

unrelated to the ongoing prosecution.!® We held that the

trial judge’s refusal to ascertain from each juror whether

he had read this prejudicial article, which had been called

to the court’s particular attention by defense counsel,

constituted reversible error.

Of similar import is our holding in Pomponto, supra,

where we explicitly stated, “[s]uch articles must be

brought to the court’s attention, as these were by the

attorneys, to enable it to make an initial determination

as to whether the information is in fact prejudicial... .”

517 F.2d at 463.

The analysis we have consistently employed in cases

of this nature requires the party seeking an individualized

inquiry into the effect of publicity to bring specific ex-

amples of allegedly prejudicial publicity to the attention

of the trial court. Only then can the court determine if

the publicity is of a sufficiently prejudicial nature to man-

date individual questioning of jurors of veniremen. United

States v. Jones, 542 F.2d 186 (4th Cir. 1976). General

allegations of damaging publicity are sufficiently dealt

with by questions and admonitions addressed to the

panel as a whole. 542 F.2d at 195, n. 11; see United

States v. Thomas, 463 F.2d 1061 (7th Cir. 1972);

Margoles v. United States, 407 F.2d 727 (7th Cir.), cert.

den. 396 U.S. 833 (1969).

We agree with the government that, because the de-

fendants here failed to bring specific items of allegedly

damaging publicity to the court’s attention to enable it

to determine independently whether individual question-

ing was either necessary or desirable, the court had no

obligation to conduct such questioning. The defendants

simply dumped the multitude of articles on the court,

10502 F.2d at 76.

13a

about 110 at one time and 28/9? at another, apparently

hoping to make an impression on the basis of quantity

alone, see United States v. Jones, supra; United States v.

Hankish, supra, and inviting error when they asked the

trial court to wade through the voluminous items of

publicity without even the benefit of counsel’s help in

pinpointing objectionable matter.

The steps taken by the district court were sufficient.

First, acontinuance of one month was granted on defend-

ants” motion (defendants filed motions the same day

asking for a change of venue and a continuance.) In its

voir dire examination, the court strenuously admonished

the venire that, if any prospective juror had the slightest

doubt of his ability to disregard anything he had heard or

read about the case, and to decide the case on the basis

of the evidence only, he must give the defendants the

benefit of that doubt and step aside. See /rvin v. Dowd,

366 U.S. 717 (1961); United States v. Sawyers, supra.

During trial, the judge instructed the jury at the close of

each day’s session to refrain from reading any news

broadcasts.

On the facts of this case, especially where the com-

munity was by no means flooded with sensational

journalism of the Sheppard v. Maxwell'! variety. Saw-

yers, p. 1344, no more was required of the district court

on the basis of the defendaits’ general allegations of

prejudicial publicity occurring prior to the trial.

We also note the defendants’ did not challenge to the

10The 28 articles, the latest of which was published February

7, 1974, were filed with the court February 11, 1974. The jury was

impaneled until March 19, 1974.

11384 U.S. 333 (1966).

l4a

favor, individually or collectively, any of the jurors who

had indicated he had read something about the case. The

absence of such a challenge in our opinion constitutes a

separate and alternate ground for refusing to reverse the

convictions because of pre-trial publicity when, as here,

the claim is that the jury was infected by the pre-trial

press. Frazier v. United States, 335 U.S. 497 (1948);

Beale’s Criminal Pleading and Practice, §245 (1899). See

Queen v. Hepburn, 7 Cranch 290 (Feb. Term 1813).

Il.

ALLEGED TRIAL COURT INTERFERENCE WITH

THE TRIAL

Appellants characterize the district court’s role in the

trial as “interference,” and claim that this “interference

in the trial process was so pervasive and so prejudicial that

appellants could not receive a fair trial.” They further

characterize the court’s “interference” as assuming “the

role of the prosecuting attorney,” and point out twenty

examples extracted from the trial transcript. Three of

these twenty instances have Leen selected for our partic-

ular attention by appellants as those they say are worst

examples of the trial court’s interferences. We have con-

sidered all the claims and conclude that no error has

occurred.

The first of the three interferences -xpressly pressed

by appellants occuired during the government’s direct

examination of H. Burion Bates, the chief accountant

for the Pomponios. At one point the trial court directed

the government’s attorney to ask Bates “why he used

corporate figures to make a partnership return.” The

court further stated, “If you don’t, the Court will.” The

following then transpired:

Question by the prosecutor:

15a

Q. The Court has directed me to ask why you used

corporate figures to prepare a partnership return.

A. I was furnished with a partnership agreement

at the time the tax return was done and that part-

nership agreement indicates that the partnership

was the acting party and the corporation was acting

as an agent or nominee for the partnership, and

under those instructions I prepared it under the

partnership law.

THE COURT: It was in the agreement or did any

of the POmponios [sic] so instruct you?

THE WITNESS: It is in the partnership agreement

and they also told me.

THE COURT: All right. So you did it — Theyhanded

[sic] you an agreement and told you to do it that

way?

THE WITNESS: Told me the partnership had re-

placed the corporation and here is the partnership

agreement and —

THE COURT: All right.

THE WITNESS: — you should make it up as a part-

nership.

THECOURT [sic]: All right.

Appellants find from this colloquy that the court was

“seeking to create the impression of wrongdoing,” and

that “the court, while purporting to sum up Bates’ testi-

mony, twisted it.” We do not agree. There is nothing here

that indicates the court was seeking to create any im-

pression. What appears is merely a question by the court

eliciting a response from Bates as to ‘he role of the

Pomponios, if any there were. Further, the trial court’s

question to Bates that “they handed you an agreement

16a

and told you to do it that way” does not at all appear to

be a twisted or distorted account of Bates’ testimony

that “‘[i]t is in the partnership agreement and they also

told me.”

The second example cited by appellants occurred

during the cross-examination of Bates. Defense counsel

was questioning Bates as to why he treated the advances

from the corporations to the appellants as loans, rather

than as reportable income. Bates’ response and the trial

court’s questions of Bates are found on pages 315-319

of the transcript. Appellants characterize the court’s

questioning here of Bates as “badgering,”’ and add that

the “net impression left” from the exchange “could only

have been that the defendants could not honestly have

treated the advances as loans at all.’’ Again, we find no

error. The court’s questions to Bates were directed

toward discovering how the accountant understood that

the advances were loans to be repaid, and what conver-

sations Bates may have had with the Pomponios that led

to the understanding. No badgering appears, and we do

not think the court assumed the role of the prosecuting

attorney. Thus, we do not find the trial court created

any impressions adverse to defendants. Such impressions,

if any there were, derived solely from the responses of the

accountant and did not differ from impressions that

may be created from any witness’ response to a relevant

question. !? Without copying in the opinion the pages

referred to, it sufficies to say the tone of the questioning

l2uThe trial court] should not hesitate to ask questions for

the purpose of developing the facts; and it is no ground of com-

plaint that the facts so developed may hurt to help one side or the

other.” Simon v. United States, 123 F.2d 80, 83 (4 th Cir.), cert.

den. 314 U.S. 694 (1941).

17a

in this and the following example are equally as innocu-

ous as is the first cited.

The final instance stressed by appellants transpired

during the trial court’s examination of Bates after the

government and defense had finished their questioning

of Bates. The record, transcript p. 459-461, according

to appellants, reveals that the trial court “stressed only

the guilt of defendants.” We find no such stress revealed

by the transcript. The court’s questioning of Bates as to

whether there was any pattern to the advances made to

the Pomponios or payments from them seems to have

been thoroughly impartial; no impermissible advocacy

is revealed. In fact, the effect of Bates’ answers to the

effect that there was no pattern may have been ex-

culpatory, and one case has so implied.!*

There are two points we have found in the transcript

where the trial court in its extensive charge referred to

the disputed advances as “items of income,” when

whether or not these advances were in fact reportable

items of income was a matter for the jury. But in view of

the trial court’s numerous instructions to the jury that it

was the government’s contention that the advances were

reportable income (Appellants’ Combined Volume II at

869,872,877, 882), that the jury alone should determine

whether the advances were reportable income (Appellants

Combined Appendix Volume II at 868, 878, 881) and

that bona fide loans were not reportable income (Volume

3 The jury may have thought that the absence of any correla-

tion between the amounts of the advances and the equity interests

of the recipients in the corporations indicated that the advances

were more likely to be bona fide loans than taxable dividends as

claimed by the government. Clark v. Commissioner, 266 F.2d 698,

711 (9th Cir. 1959) (withdrawals in proportion to shareholders’

respective interests indicates dividend, not loan status.)

18a

II at 868, 869, 881, 882, 889, 890, 891), together with a

standard reasonable doubt instruction (Vol. Il at 873,

874), we do not think there is a reasonable likelihood the

court was misunderstood or the jury confused.

IV.

The final points stressed by appellants are the trial

court’s allegedly improper regulation of the testimony of

extensive comments upon charges which had been severed

from the trial, but which had been contained in the gov-

erment’s opening statement, without a limiting instruc-

tion to the jury. ...”

The regulation of Bates’ testimony requires, we think,

little comment. In addit*sn to their complaint about the

testimony previously quoted, defendants say the trial

court too explicitly questioned Bates on another matter.

Bates had testified that the advances were loans to be

repaid and that he had so understood from the de-

fendants. The court asked Bates for specific conversa-

tions with the defendants when they had so advised him.

Upon receiving indefinite answers, the court pressed for

them. We do not think this is error, or that the judge did

any more than try to bring out the facts of the case.

Simon, supra.

United States v. Brown, 540 F.2d 364 (8th Cir. 1976),

and United States v. Prieto, 505 F.2d 8 (5th Cir. 1974),

dispose of defendants’ remaining ground emphasized. In

his opening statement, the prosecutor in each of those

cases discussed the expected testimony with respect to a

count which was later reversed. In Prieto, the trial judge

did not instruct the jury to disregard the statements,

while in Brown he did. The outcome was the same in both

cases and affirmance resulted. Here, as in both those

cases, there was no improper conduct of the procedures

19a

involved. Also, in the case of United States v. DeRosa,

548 F.2d 464 (3d Cir. 1977), the court affirmed a con-

viction despite a too detailed opening statement of

damaging facts the prosecutor expected to prove but was

later unable so to do because of their exclusion as evi-

dence. DeRosa affirmed the conviction, although the con-

duct of the prosecutor was criticized, because of the

court’s later instruction to disregard the statement.

We are of opinion that the trial judge here gave ade-

quate limiting instructions. The court told the jury in

advance that the opening statements were not evidence;

when it severed the conspiracy charge, it told the jury no

longer to consider it; and in its charge near the end of the

trial, the court repeated that the opening statements were

not evidence. We express no opinion on a case in which

no such instructions are given.

APPENDIX B

UNITED STATES v. PETER POMPONIO ET AL. On

petition for writ of certiorari to the United States Court

of Appeals for the Fourth Circuit. No. 75-1667. Decided

October 12, 1976.

Per Curiam

After a jury trial, respondents were convicted of will-

fully filing false income tax returns, in violation of 26

U.S.C. $7206(1).! Based on its reading of United States

1 Section 7206 provides:

“Any person who

“(1) . . . Willfully makes and subscribes any return statement, or

other document, which contains or is verified by a written declara-

[footnote continued]

20a

v. Bishop, 412 U.S. 346 (1973), the Court of Appeals held

that the jury was incorrectly instructed concerning will-

fullness, and remanded for a new trial. 528 F.2d 247 (CA

4 1975). The United States petitioned for certiorari. We

reverse.

The respondents were charged with falsifying tax

returns in two principal ways: (1) they allegedly caused

corporations they controlled to report payments to them

as loans, when they knew the payments were really tax-

able dividends; and (2) they allegedly claimed partnership

losses as deductions knowing that the losses were prop-

erly attributable to a corporation. Their defense was that

these transactions were correctly reported, or at least that

they thought so at the time.

The jury was instructed that respondents were not

guilty of violation §7206(1) unless they had signed the

tax returns knowing them to be false,? and had done so

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 gulity of a felony ... .”

2We agree with the Court of Appeals that the instructions

on this point were “full and complete.” 528 F.2d at 249-250. The

jury was told the government contended that respondents “‘couldn’t

claim this [the partnership losses] as a deduction . . . because by

so doing they would know that they were filing a false report of

their total gross imrome.” Later the jury was instructed that, if

they found the loans were incorrectly reported, they must also find

that the return was “made willfully and with the specific intent and

knowledge at the time they made it that it was in fact a false re-

turn.” In explaining intent, the trial judge said that “(t]o establish

the specific intent the Government must prove that these de-

fendants knowingly did the acts, that is, filing these returns,

knowing that they were false, purposely intending to violate the

law.” The jury was told to “bear in mind the sole charge that you

have here, and that is the violation of 7206, the willful making of

the false return, and subscribing to it under perjury, knowing if not

to be true and to [sic] all material respects, and that and that

alone.”

Se Re AE De

fe res te Nh le RE Ne RNS BN

pei ee Dal tell lll thle AEA ARTO RE Daren Ve ee Ne ®

Ae or me

2la

willfully. A willful act was denied in the instructions as

done “voluntarily and intentionally and with the specific

intent to do something which the law forbids, that is to

say with [the] bad purpose either to disobey or to disre-

gard the law.” Finally, the jury was instructed that

“‘[g] ood motive alone is never a defense where the act

done or omitted is a crime.” and that consequently

motive was irrelevant except as it bore on intent. The

Court of Appeals held this final instruction improper be-

cause “the statute at hand requires a finding of bad pur-

pose or evil motive.” 528 F.2d, at 249. In so holding, the

Court of Appeals incorrectly assumed that the reference

to an “evil motive”’ in United States v. Bishop, supra, and

prior cases meant something more than the specific intent

to violate the law described in the trial judge’s instruc-

tions.

In Bishop we held that the term “willfully” has the

same meaning in the misdemeanor and felony sections of

the Revenue Code and that it requires more than a show-

ing of careless disregard for the truth.? We did not, how-

ever, hold that the term required proof of any motive

other than an intentional violation of a known legal

duty. We explained the meaning of willfulness in §7206

and related statutes:

“The court, in fact has recognized that the word

‘willfully’ in these statutes generally connotes a volun-

5The Court of Appeals in Bishop held that the evidence

under the misdemeanor statute “need only show unreasonable,

capricious, or careless disregard for the truth or falsity of income

tax returns filed.” 455 F.2d 612, 615 (CA9 1972). This Court

rejected the view that this lesser degree of culpability was required

for a violation of the misdemeanor statute, and held on the con-

trary that “Congress used the word ‘fillfully’ to describe a con-

stant rather than a variable in the tax penalty formula.” 412 U.S.

at 359-360.

22a

tary, intentional violation of a known legal duty. It has

formulated the requirement of willfulness as ‘bad faith or

evil intent,’ [United States v.] Murdock, 290 U.S. [389]

at 398, or ‘evil motive and want of justification in view of

all the financial circumstances of the taxpayer,’ Spies [v.

United States], 317 U.S. [492] at 498, or knowledge

that the taxpayer ‘should have reported more income

than he did.’ Sansone [v. United States], 380 U.S. [343]

at 353. See James v. United States, 366 U.S. 213, 221

(1961); McCarthy v. United States, 394 U.S. 459, 471

(1969).” 412 U.S., at 360.

Our references to other formulations of the standard

set forth in the first sentence of the quoted paragraph.

On the contrary, as the other courts of appeals to con-

sider the question have recognized, willfulness in this

context simply means a voluntary, intentional violation

of a known legal duty. United States v. Pohlman, 522

F.2d 974, 977 (CA8, 1975) (en banc), cert. denied, 423

U.S. 1049, United States v. McCorkle, 511 F.2d 482

484-485 (CA7, 1975) (en banc), cert. denied, 423 U.S.

826; United States v. Greenlee, 517 F.2d 899, 904 (CA3

1975), cert. denied, 423 U.S. 985; United States v.

Hawk, 497 F.2d 365, 266-269 (CA9 1974), cert. denied,

419 U.S. 838. The trial judge in the instant case ade-

quately instructed the jury on willfulness. An additional

instruction on good faith was unnecessary.

As an alternate ground for ordering a new trial, the

Court of Appeals held that respondents were entitled to

instructions exonerating them if they believed that the

payments to them were loans and that the losses belonged

the partnership, 528 F.2d, at 250. Our inspection of the

record indicates that such instructions were given and

23a

that they were adequate.*

The respondents’ other allegations of error which the

Court of Appeals found it unnecessary to reach should

be considered by that court in the first instance.

The judgment of the Court of Appeals is reversed and

the case remanded for further proceedings consistent with

this opinion.

* * *

*The instructions set forth in n.2, supra, by requiring

knowledge that the returns faisely reported the transactions, im-

plicitly required knowledge of the true nature of the transactions.

In addition, the jury was instructed with respect to the loans that

“if you do find that they were not bona fide loans then you must

next determine whether or not the defendants knew at the time

they were withdrawing this money that it was not a loan. ...In

other words, you should determine whether they knew that, as I

have told you, that is an essential element.” With respect to the

partnership losses, the jury was told that the government claimed

that respondents “knew that they couldn’t transfer [a certain

asset] to a partnership, and, therefore, when they couldn’t transfer

if they couldn’t take the benefits of any losses sustained by the

partnership in question... .”

& * a

24a

APPENDIX C

UNITED STATES OF AMERICA,

Appellee,

PETER POMPONIO, et al.,

Appellants.

No. 74-1758

UNITED STATES COURT OF APPEALS,

FOURTH CIRCUIT

Aruged Feb. 6, 1975

Decided Dec. 16, 1975

* * *

Albert J. Ahern, Jr., Baileys Crossroads, Va. for appel-

lant Charles J. Piluso.

Alan Y. Cole, Washington, D.C. (See A. Schutzman,

Cole & Groner, Stuart E. Seigel and Cohen & Urtez,

Washington, D.C. on brief), for appellants Peter Pom-

ponio.

Thomas K. Moore, Asst. U.S. Atty. (David H. Hop-

kins, U.S. Atty. and Charles E. Brookhart, Atty., Tax

Div., U. S. Dept. of Justice, on brtief), for appellee.

Before RUSSELL, FIELD and WIDENER, Circuit

Judges.

WIDENER, Circuit Judge:

Peter, Paul, and Louis Pomponio are brothers who

were business associates involved in the development,

construction, and operation of high-rise office and apart-

ment buildings in the District of Columbia-Northern

Virginia area. Charles Piluso was their attorney. The four

were originally indicted on September 24, 1973 on several

ee ee ee ee ee ee ee

As Me!

brcePedatht 2

2 RT ee Om pa

a ol ela et SI

Mahia it ie inet Sete nantes eR dedse nse

25a

counts of income tax evasion and conspiracy to commit

income tax evasion. This indictment was superseded by

another grand jury indictment on November 14, 1973 in

which they were each indicted on three counts of filing

a false income tax return in violation of 26 U.S.C. §

7206(1) and jointly indicted for conspiracy and others to

defraud the United States by impeding the ascertainment

and collection of income taxes and withholding taxes by

various means in violation of 18 U.S.C. § 371. Due to

illness. Louis Pomponio was severed from the case and

tried separately. Prior to trial, the United States struck

from the conspiracy indictment that portion of it dealing

with withholding taxes and several of the means alleged

to have been used.

The trial commenced on March 19, 1974. After the

jury was empaneled and the government made its open-

ing statement, the court severed Count I, the conspiracy

count. The defendants were then tried and each was con-

victed on three counts of filing a false return. From

these convictions they appeal.

The income tax fraud alleged was principally based on

two allegations: (1) the various corporations owned or

controlled by the defendants would list as loans amounts

paid to the defendants, which amounts were actually

income taxable to the defendants; (2) the defendants

deducted losses attributed to a partnership which actually

did not have the losses to attribute to the partners be-

cause such losses were actually those of a corporation.

The defendants allege numerous errors, including sev-

eral involving the jury instructions. We are of opinion

that the court’s instruction as to motive was incorrect as

used in the case before us, and that 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

26a

the deductibility of the partners losses. We express no

opinion on the other issues raised, but their very num-

bers may indicate that many of them are patently without

merit.

The offense charged was that the defendants “will-

fully” made and subscribed income tax returns to be

filed with Internal Revenue Service, which were verified

by written declarations ma de under penalties of perjury,

and which the defendants did “‘not believe to be true and

correct as to every inaterial matter,” in violation of 26

U.S.C. §7206(1). The disputed instructions turn on the

meaning of the word willfully.

The Supreme Court recently dealt with the meaning

of willfully in 26 U.S.C. §7206. United States v. Bishop,

412 U.S. 246, 93 S.Ct. 2008, 36 L.Ed.2d 941 (1973),

involved a dispute as to whether willfully meant the

same in 26 U.S.C. §7207, a misdemeanor statute, as it

did in 26 U.S.C. §7206, a felony statute. The court held

that the meaning was the same in both and went on to

_ clarify and reaffirm its earlier interpretation of willfully

as “the bad purpose or evil motive described in Murdock,

supra [Murdock v. United States, 290 U.S. 389, 54 S.Ct.

223, 78 L.Ed. 381 (1933)].” Bishop at p. 361, 93 S.Ct.

at p. 2017. See also Spies v. United States, 318 U.S. 492,

63 S.Ct. 364, 87 L.Ed. 418 (1943).

Murdock involved a willful failure to supply informa-

tion to the revenue service. The court held that willful,

when used in a criminal statute, “. . . generally means an

act done with a bad purpose . . .; without justifiable

excuse . . .; stubbornly, obstinately, perversly . . . the

word is also employed to characterize a thing done with-

out ground for believing it is lawful . . . or conduct

marked by careless disregard whether or not one has the

ee Se ee SEE

ekg APT US a i DP ban

—. .

27a

right to act . . .” Murdock, 290 U.S. 594, 54 S.Ct. at

225. (Citations omitted). In connection with finding a

willful failure to observe the directions of a statute as to

furnishing information to the revenue service, the court

stated the defendant had a right to have the “absence of

evil motive submitted to the jury,” Murdock at 396, 54

S.Ct. at 226 and the jury might acquit if it found the

refusal to furnish the information was “not prompted by

bad faith or evil intent.” The Murdock court approved a

reversal of a conviction because the defendant was re-

fused a jury charge that they should consider whether the

defendant’s refusal to supply information was in “good

faith and based upon his actual belief” in considering

whether the refusal was “willful.” See Murdock, p.

393, 54 S.Ct. 223, 225, for the form of the instruction.

[1] In the case at hand, the district court gave de-

tailed instructions as to the meanings of intent and mo-

tive. Motive was described as “‘what prompts one person

to act or fail to act,” while intent “refers only to the state

of mind with which the act is done or omitted.” The

court then went on:

“Good motive alone is never a defense where the

act done or omitted is a crime. So the motive of the

accused is immaterial except insofar as evidence of

motive may aid determination of state of mind or

intent.”

In light of United States v. Bishop, this instruction was

improperly used here. Although the instruction was given

to explain the difference between intent and motive,

and would have been correct in most criminal trials, the

Supreme Court indicated in Bishop that the statute at

hand requires a finding of a bad purpose or evil motive.

Since good faith is required by Murdock, as referred to

in Bishop, to be considered by the jury in determining

28a

whether or not the act charged was done willfully, ex-

cluding good motive from the consideration of the jury

in a case for violation of 26 U.S.C. §7206(1) is incon-

sistent with Bishop. We note that in a considered dictum

we have stated that, in a discussion of “willfully” under

the same series of statutes, “[i]t is possible that purpose

and motivation may be found by a jury to negate will-

fulness.” United States v. Snider, 502 F.2d 645, 657 (4th

Cir. 1974). Accord, United States v. Pohlman, 510 F.2d

414 (8th Cir. 1975); but see United States v. McCorkle,

511 F.2d 482 (7th Cir. 1975).

[2] The district court gave full and complete instruc-

tions to the effect that the jury could convict only if it

found that the defendants had signed the returns know-

ing them to be false. However, since there was evidence

which may have tended to show that the defendants

might have believed the payments to be loans, they were

entitled to an instruction on that point. United States v.

Mitchell, 495 F.2d 285 (4th Cir. 1974). The same reason-

soning applies to the claimed losses on account of the

partnership. Since a good faith belief would tend to ne-

gate the elements of willfulness and knowledge, they

were entitled to an instruction similar to that described

in Murdock v. United States, 290 U.S. 389, 393, 54 S.Ct.

223, 78 L.Ed. 381 (1933), and they were entitled to have

motive not excluded from jury consideration.

Reversed and remanded for a new trial.

+ * *

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.