Appendix — Bunch v. United States

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18 APPENDIX A

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No. 82-3118 95

UNITED STATES COURT OF APPEALS FILED

FOR THE SIXTH CIRCUIT D&C 20

JOHN F. HEHMAN, Clerll ©

UNITED STATES OF AMERICA,

Plaintiff-Appellee

v. ORDER

WILLIAM DON BUNCH,

Defendant-Appellant

J

Before: KENNEDY, MARTIN, and WELLFORD, Circuit Judges.

| William D. Bunch appeals hie conviction for tax

asien. 26 U.S.C. § 7201 (1954). We affirm.

Relying on the “net worth plus nondeductible personal |

de expenditures" theory of proof, the government proved to the jury's

ih satisfaction that Bunch evaded paying income tax in 1973, 1974,

„a2 1975. Upon conviction, he was given the following sentence:

Count I - one year and one day in prison plus a $5,000 fine;

Count II - four years probation to run consecutively with the

prison sentence imposed for Count I end conditioned upon payment

of the fine imposed for Count I; Count III - the same sentence

2 Count I, concurrent with Count II. Bunch 1% free on a $25,000

No. 62-3118

- 2 -

Bunch raises several issues here. The first and

second deal with the sufficiency of the evidence. Bunch argues

that there was insufficient evidence to support the jury's

finding that, as to Count II, he attempted to evade paying

income tax “on or about April 15, 1975." We disagree. Like

the court below, we find sufficient evidence to support the

conviction, regardless of whether the sale of the West Lane

Avenue property was or should have been included in the govern-

ment's calculations.

Bunch also makes che general assertion that the

evidence as a whole does not support the verdict, Again, we

disagree. When viewed in the light most favorable to the

government, the evidence is not deficient, In so holding, we

are mindful of the Supreme Court's direction that “the cogency

ot. Uthe government's)...proof depends upon ite effective

negation of reasonable explanations by the taxpayer inconsistent

with guilt." United States v. Holland, 348 U.S. 121, 135, quoted

in United States v. Giacalone, 574 F.2d 328, 332 (6th Cir. 1978).

Bunch's third argument that the district: court erred

in refusing to order the government to produce the Internal

Revenue Service's Special Agent Report is equally without merit. .

The dietrict court stated mee May 12, 1981 Order denying

Bunch's Motion for Production/ Fed. R. Crim. P. 16(a)(2) “Limite

@iscovery otherwise allowed by providing that the government need

not disclose ‘reports, memoranda, or other internal government

18

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5

No, 62-3118

— 5 -

documente made by... government agents in connection with the

investigation or prosecution of the case. Rula 16(a) (2) =

disposes of this issue. N

We have no difficulty in disposing, in a like fashion,

of Bunch's argument that the admission, pursuant to the business

records exception to the hearsay rule,of certain financial records,

including personal checks, loan applications, and other bank

records, denied him his sixth amendment right to confront and

cross-examine his accusers. As the Supreme Court stated in

Dutton v. Evang, 400 U. 8. 74, 89 (1970), quoting California v.

Green, 399 U.S. 149, 161 (1970), the “mission of the Confrontation

Clause is to advance a practical concern for the n © y the

truth-determining process in criminal triale by assuring / the trier

of fact (has) a satisfactory basis for evaluating the truth of

the prior statement. Business records are an exception to the

hearsay rule precisely because of their inherent reliability.

Where business records are appropriately introduced, as they were

here, the voncerns of the Confrontation Clause are adequately met.

In his fifth argument, Bunch claims that the government

failed to establish with reasonable certainty his opening net

worth as of January, 1973. Specifically, he argues that it failed

to accurately ascertain the amount of cash-on-hand in the base

year; it failed to accurately account for the effect of his

purchase and sale of certain real estate on net worth calcula-

tions; and it failed to include among his assets furni cure

allegedly in hie possession with a value of $15,000.

No. 82-3118

1 „ * 4 7

In Holland, a tax evasion case in which the govern-

ment relied upon the net worth theory, the Supreme Court held:

essential condition in cases of this

fe the establishment, with .

Inty, of an n

this sum of all assets on hand at the out-

348 U.S. at 132 (emphasis added). See, Giacalone, 574 F.2d at

331. Moreover,

ment does not track down relevant leads

re ee

taxpayer—lesds res-

- sonably susceptible of bein,, checked,

which, if true, would establish the tax-

payer's innocence. When the Govern-

ment fails to show an investigation into

a the validity of such leads, the trial judge

pony, eee

to

|

Id, at 135-136. Examining Bunch's claims in light of these

commands, we are persuaded that the government has carried its

burden of establishing with reasonable certainty the amount of

21

——_— — — — — K rere — —ũ— —äĩ4 :: ñ ñ ̃ —

No. 62-3116

985

cash-on-hand as of January, 1973. Moreover, we find no fault

with the treatment of the purchase and sale of the Charing Road ~

apartments. We have sowe difficulty, however, with the

manner in which the government treated the question of

furniture.

In evidence as a government exhibit was a November 3,

1971 financial report submitted by Bunch to City National Bank.

Under “assets,” the report listed $15,000 worth of home and

office furnishings. In calculating Bunch's net worth for late

1972, however, the government did not include the value of these

furnishings. On cross-examination, the government's witness was

asked to explain the exclusion. "(Bjecause 1 have not seen any

evidence to the point that they were still in Mr. Bunch's hands

at the end of 1972," he replied.

It is for the government, if it proceeds on a net

worth theory, to negate the validity of any “relevant leads...

reasonably susceptible of being checked.” Until and unless it

does so, the burden of proof does not shift to the taxpayer.

The government witness’ statement implies a misunderstanding

of this fact. In this case, the November 3, 1971 financial report

was indisputably a relevant lead to an asset which was, we think,

reasonably susceptible of being checked. It is unclear from the

record whether it was checked.

In this case, however, the effect of an error on the

government's part was harmless. Once the $15,000 is credited to

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me: Bunch as a component of net worth in January, 1973, its . l

f effect is merely to increase the absolute net worth valuations .

i then and in subsequent years. It will not change the relative

fluctuation in net worth between those years nor, therefore,

will it change the calculations of tax deficiency.

The judgment of the district court is affirmed.

ENTERED BY ORDER OF THE COURT

" i‘ e A

* er

hg

A TRUE copy

' Attest:

ISSUED AS MANDATE: December 28, 1982

COSTS: x None

|

. 4

* This order was prepared by Judge Hart in.

No. 62-3118, United States v. Bunch

N KENNEDY, Circuit Judge, concurring in part and dissenting

n part. .

I concur in all of the Court's order except that portion

which holds that the listing of $15,000 worth of

home and office furniture on a financial report submitted by

Bunch to City National Bank on November 3, 1971 constitutes

a “relevant lead" which the government was required to check.

When the Court in Holland v. United States, 348 U.S. 121 (1954),

discusses relevant leads, it does so in terms of suggestions

from the defendant.

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289 U.S. 89, 91-92.

At 19/-38. While under investigation for tax evasion, Bunch

did not submit the existence of the furniture as an explanation

which might tend to establish his innocence. Had Bunch mentioned

that he possessed the furniture, then I would agree that such

suggertion would constitute a lead to be pursued. The

information here did not constitute a “relevant lead.*

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APPENDIX ¢ ' WN Ates

ja 15 2 un

IN THE UNITED STATES DISTRICT COURT Satine aN no

FOR THE SOUTHERN DISTRICT OF on:0

EASTERN DIVISION

UNITED STATES OF AMERICA, '

Plaintiff, ‘

va, + Case CR-2-60-62

WILLIAM DON BUNCH, '

Defendant. '

MEMORANDUM ANO ORDER

In @ jury trial commencing August 10, 1981,

William Don Bunch was tried on three counts of attempting

to evade income tex due and owing by wim to the United

States of Americe. Count I of the indictment charges the

defendant with willfully and knowingly attempting to evade

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

Americe for the calender year 1973, Count II chacges the

defendant with willfully and knowingly attempting on or

bout the 15th day of April, 1975 to evede income taxes due

ond owing by him to the United Status of America for the

calendar year 1974. Count III charges the defendant with

willfully and knowingly attempting to evade income taxes

due and owing by him to the United States of America for

the calender year 1975,

On September 16, 1961, the jury found the defendant

gvilcy of Count 1, Count 11 and Count 111. The defendant

hes filed a motion for judgment of acquittel pursuant to

red. R. Crim. Y, 29(e).

Previous motions by this de tendeat for judgment

of ecquittel were made et the close of the Government's

case and at the close of all the evidunce, pursuant to Fed.

. Crim, . 29(0), ond were denied by the Court. The seme

at ended ie to be applied in ruling on s wotion for judgment

of acquittal regardless of at what stage of the proceedings

the motion is made, United States v. Austin, 585 F. 2 127)

(Sth Cir, 1978); United States vy. Felice, 461 F. Supp. 79,

87 (n. b. Ohio 1978), aff'd 609 F.2d 276 (6th Circ. 1979);

Weight, Federel Practice and Procedure: Criminal $467

(1969); GA Moore's Federal Practice 429.06 (1961).

Pursuent to Rule 29(«), „ court “shell order the

entry of judgment of acquittel...if the evidence fe insufficient

to sustein d conviction.” This cule was thus interpreted

by the Sisth Circuit in United States v. Mey, 430 F.24 715,

717, 716 (6th Cir. 1970),

The test for determining the suse tetenes of the

evidence to sustain a motion for 3 of

acquittal is well settled and is 1177711. set

forth in United States v. Conti, 339 77d 10, 13

(6th Cir, 1860).

In cesting the — 1 of the evidence

to withstand « motion for judgment of scquitcel

the trial judge does not pase upon the credibility

of the witnesses or the weight of che evidence.

On the contrary, he must view the ovidonse

and the inferences: that may justifiably be

dravn therefrom in the Light most favorable

to the ecnment, [The many citations

omitted). If, under such view of the evidence

he concludes that # reasonable mind might

fairly conclude guile beyond «a reasonable

4, che motion should 11 and

the isse left to the a t is ony

re under such view of evidence

concludes there ust be such « doubt in a

coasonable wind, should the unin to granted,

(The many citations omitted,

re fact that the evidence is 12127“ idence, .

inconsequential. Circumstantial evid

trong to convince a jury of « defendant

0 guile be @ reasonable doubt, te set fte tent te

eke e case to the 1 204 sustein « verdict.

(Citations omitted,

Accord, United Stetes v. Lewis, No. 60-5183, slip op. ot 3

(6th Cie. June 19, 1961); United States vy. Gaines, 353 F.2d

276, 278 (6th Cir, 1965); United Stetes v, Berkley, 268

5. 24 733, 716 (6th ct.), cert, denied, 368 U.S. 822 (1961),

+ 493 . Supp. 1092, 1094-3 (M.D.

Tenn, 1979), aft'd, 617 7. 20 604 (6th Cir.), SA denied,

101 8. Ce. 119 (1980); United States . Gibson, 486 F.

Supp. 1230, 1233 (3.0, Ohio 1980).

+ @aT¢

Applying these standards to the evidence adduced

ae to each count, the Court concludes thet the motion for

Judgment of ecquittel should be dented. The Court hes

corefully considered the evidence presented at (ciel, and,

viewing the evidence and the inferences justifiably drawn

therefrom In the light most favorable to the Government,

concludes that @ reasonable juroc could find beyond e reasonable

doubt each of the essential elements of the crines of which

the defendant wes convicted, and thus could fairly conclude

guilt beyond e reasonable doubt on each count of the indicteent.

The defendant's motion basically calses two issues.

Firet, the defendant argues that the Government failed to

eetablish with reasonable certainty the beginning net worth

of the defendant. Additionally, che defendant argues chat

the guilty verdict was improper since the defendant did not

have any duty to ceport the gain from the sale of his Lane

Avenue residence until October 15, 1975.

11. FALLURE TO ESTABLISH OPENING NET WORTH

The defendant's argument that the Government

failed to establish the defendant's opening net worth fe

two pronged. First che defendant argues that I. A. 8. Revenue

Agent Barbace Kast] failed to adhere to the Special Agente

Handbook's guidelines which desl with establishing e fire

opening net worth for the defendent.! Therefore, the defendent

argues the verdict should be set aside because the I. k. 8.

is bound to follow its own cules and regulations. Additionally,

the defendont argues that equipment and furniture owned by

the defendant were ignored by the Government in determining

the defendant's opening net worth,

A. A zerdl Doctrine

The defendant attempts to base ite Fed. K. Crim,

The Court notes that the Specie) ens

never offered into evidence, A few passages from rhe

Handbook were read into the record during the trial.

The Court 2 ie exceedingly 14 90 to tely

sanhyes Spe idelines in question without © access

to . guidelines

. 29(c) motion in part on the peinciple that an agency is

bound to follow its own cules and regulations. That principle

wes enunciated in United States ex rel. Accacdi v, Shaughnessy,

347 U.S. 260 (1954). .

10 Accerdi, an alien brought « habeas corpus

action attacking the validity of the denial of his application

for suspension of deportation. We claimed thet his application

to the Board of lesigtet ton Appeals hed been prejudged

beceuse, prior to the Board's decision, the Attorney General

hed included the alien on e confidential List of “unsavory

characters” whom the Attorney Generel wished to deport.

347 U.S. at 262. The Supreme Court was feced with the

fesue of whether the alleged conduct of the Attorney General

deprived the alien of any rights quo t eat oed him by etetute

or by regulation.

The Supreme Court reviewed the operative tegulations

applicable to appeals from deportation decisions. Those

teguletions expressly required the Board of lomigration

Appeals to exercise the same discretion and power thet hod

been conferred upon the Attorney Generel by law. The Supreme

Court concluded thet "as long as the regulations remain

operative, the Attorney General denies himself the right to

sidestep the Board or dictate ite decision in any manner.”

1d. at 267, The Supreme Court therefore held that if the

petitioner could prove his allegations thet the Board hed

failed to exercise its discretion under the regulations, he

would be entitled to e new hearing before the Boerd without

the burden of the previous proscription by the Attorney

General's list.

The Accardi doctrine hes subsequently been ppl

by the Supreme Court to invelidete discharges of federal

po when safeguards required by agency regulations

were aot provided. See Viterelli v. Seaton, 359 U.S. 535

(1959); Seevice v. Dulles, 354 U.S. 363 (1957).

The Accerdi doctrine hes also been applied in the

context of criminal prosecutions. See

Heffner, 420 F.2d 809 (4th Cir. 1969);

Jones, 366 F.2d 795 (1966). Im Heffner, the Fourth Circuit

reversed the defendant's conviction. The court noted:

—

It is of no ei 5 Hog the procedures ot

fostructions «hich the as established ere

more generous than the I requires. Io

Service v. Dulles, the Supreme t victeted

the discharge of « Torsten service officec because

pak the State Department's Esilure to follow ite

n The Court 3 that it

no difference thet the stete De t hed no

atetutory ot constitutional obi nid — to eotebliah

the procedure in question:

While it fe of course true that... the Secretery

was not obligated to upon hinself

these more t 2 — * «ve tive and procedural

822 * 21 done so could not, 60

long os fons 898 unchanged,

proceed Kess 2 to then

354 U.S. at 368, 77 8. Ct. at 1165. See also

Vitarelli v. Seaton, supra,

Hor does it matter that these IRS instructions

to special agents were not promulgeted in some-

thing 11 y labelled « A io fon” ot edopted

with etcict regard to the Administrative Procedure

Act; the doctrine has s broader sweep.

The Supreme Court in Viterelli v. Seaton, 22572.

applied it to a Department of the Interior .*

Second Circuit * 4 82 it to tee andl a

"Weekly Bulletin 05 » (ct. 20 7).

solch “. Resor, 406 F 33 ial, 143-144 72 12 146

had

court found had been established by the FCC's

“usual practice” of N= the Avy in ite

orders. Sangamon . Television ats v

United States, 106 BB 3: c. 2. 2 4 5. 2d

221, 224-225 b nn. 8 & 9 "tts 9). fe

ahlenmaier, 226 F.2d 35, 43 (0. + cies 2. 1993)

Rien holding). The same court

applied the * ety 10. rec 1 33.

Broedcasti 241 U.S. A, 9. C.

343, 179 1.123,73. 3275 iad) Finally, ia

United Stetes ex rel. Brooks v. Clifford, 69

2.23 at 706, this ce ppl ied the doctrine to @

Department of Defense “Directive.”

420 F.2d at 612.

The defendant in United States v. Jones, 368 F.2d

793 (2nd Cir. 1966), hed been convicted under 18 U.S.C.

61407 for failing to register ee 6 narcotics veer upon

entering the United States. The Secretary of the Tressuty

hed promulgated « regulation under thie statute requiring

custome officers to furnish registration foras to narcotics

users, aod no euch form bed been furnished to Jones, The

Court of Appeals reversed the conviction, holding:

-30~

4

n

Our decision rests the os leas le that because

the Government has failes to follow its own regulation,

promulgated in the proper exercise of the Secretary

of the Treasury's discretion, its ection cen heave

to effect. In other words having felled to

pportunity to regist LDA

rt unity reg listet or in uletion,

hie errest and ee ons fovelid. There te

mo novelty in holdirg thet where an official ie

given discretionary power by statute, promulgetes

tegulations es to liow the ie to exercised

then fells to follow his own regulations, the

action is of no effect.

368 F.24 et 799 (citations omitted).

This Court does not question the validity and

continuing vitelity of this rule of lew. See Uni

¥. Hixson, 416 U.S. 683 (1974). However, thie Court notes

that exceptions have developed to the Accardi doctrine.

Government agencies have been perwitted to depart from

their reguletions when those regulations wero designed to

govern internel agency procedures rathor than to protect an

interest of some other party. See, : . American Farm

Linea v. Block Ball Freight Service, 397 U.S. 532 (1970).

These cases have noted thet the agency rules in question

“were not intended primarily to confer important procedural

benefite upon individuals in the fece of otherwise unfettered

d@lecretion,,,[citation omitted); wor lere these cases) in

which an agency required by rule to exercise independent —

discretion bes failed to do so." American Farm Lines,

fupta, at 538-39. Cases involving regulations designed to

govern internal agency proceduces are exempted from the

Accardi doctrine because:

[T)here is no ceason to exempt (these cases) from

the 1 principle that “Tile ie elways within

the discretion of a court or an edministrative

ency to relex oi modify its procedural rules

ed for the orderly transaction of business

before it when in a given case the ends of justice

require it, The action of either in such « case

— — 3 passes. ween 4 nee ; ing of end-

tent el pre ce to ain ety.

cone 305 Pera 16 „ 764,

Ig. at 339.

Thus e number of cases have concluded thet che

„

Accardi doctrine applies only (1) when the agency's regulations

ace designed to protect the perty deeling with the agency

and (2) when the egency’s departure from those regulations

tesulte in prejudice to thet party. See, 8: ·

City Council! of Baltimore v, Nethews, 362 F.2d 914 (Ath

Circ. 1977), cect. denied, 439 U.S. 862, véceted on other

grounds, $71 F.2d 1273 (Ath Cic, 1978);

E. of Baltimore County, 462 F. Supp. $35 (D. Hd. 1978).

In United States v. Ceceres, 440 U.S. 741 (1979),

the Supreme Court further explained and refined the scope

of the Accerdi doctrine. In Ceceres the Supreme Court

refused to apply the Accevdi doctrine to exclude evidence

ebteined in violation of Internal Revenue Service regulations.

The Court eppesred to apply e two pronged analysio in deciding

whether the courts hed « duty to enforce an agency tetulet ton.

First, the Court looked to see if “compliance with the

tegulation is mandated by the Constitution or federel lew.”

Id. at 749, it compliance is mandated, then the courts

obviously have a duty to enforce the regulation.

In the next step of ite enslye ie the Court looked

to see whether the violation of agency reguletions raised

any consticutionel questions, While e tule may not heave

been adopted to make certain that individuals’ constitutional

rights are not infcinged, the violation of that rule efter

it le adopted may give rise to constitutions] cle tees. This

second prong of the Caceres analysis appeere to reflect the

rationsle of those cases which hold chat the Accerdi doctrine

only applies when the agency's regulations are designed to

protect the party dealing with the agency end when the

agency's departure from those regulations results in prejudice

to that party. See, , Meyor end City Council of Baltimore

¥. Nethewe, supe,

In the present cease it is clear that compliance

with the Internal Revenue Service's guidelines on establishing

a firm opening net worth ie not mandeted by the Constitution

or etetute. The guidelines are not cules informing L. N. 8.

date on how to safeguard express constitutions] rights,

This Court slee believes thet eny deviation from

-32-

the guidelines in question would not ralse any constitutional

questions, In the present case it does not eee that

these guidelines on establishing an opening net worth were

designed to protect the pacty dealing with the 1.8.5. los tee,

these guidelines appear to be on aid to 1. K. 8. epeciel agente

in deteraining whet questions should be ested while conduct ing

an investigation,

Thie Court also notes thet defendant Bunch could

not cle te e due process violet ten if chte Court should find

thet Barbera Kestl did not follow the guidelines. Defendant

Bunch cannot cleim that he relied upon these guidelines or

thet 6 deviation from the guidelines effected his conduct

since hie filing of the tex returns in question occurred

long before the alleged breech. See United Stetes v, Cormier,

639 . % 1177, 1100 (Sth cit. 1961). The defendant 81e

cannot claim thet @ devietion from the guidelines would per

ge reovlt in failure to adequately prove the defendant's

opening net worth.

Finally, testimony from the Government's expert

witness Mr. Peter Hugenderg, Supervisory Revenue Agent for

the Internal Revenue Service, indicates that revenue agente

euch as Becbere Kast) ere not required to read ot adhere to

the IRS special agent's manual. Revenue agents eppacently

heve o separate set of guidelines to ald thele investigations.

Im light of this evidence, the Court fells to see how the

defendent could claim he wee prejudiced by Berbera kost!

not following guidelines she was not cequired to utilize.

B. Failure to Include Assess in Opening Wet Worth

The defendant also argues that the opening net

worth in this cose wae not established with reasonable

certainty becouse the Government felled to take into cone der et lo

furniture owned by the defendant. The record indicates no

evidence of substantial transactions by the defendant involving

furnituce. It does not appear that the defendant furnished

the I. K. 8. with reasonable leads of furnituce sales which

would change his financial position. Thus, this Court

feele the Government was justified in treating the defendant's

furnituce essets 60 @ constant during the tex years in

33

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question. To the extent thet the defendent attempted to

argue ot ciel thet significent sales of furniture occurred,

the jury was faced with e question of fect. There was

out tte tent evidence for the jury to reject the defendant's

position and find the defendant guilty beyond e reasonable

WUE RESTDERC!

anl. 9 4 1.

Ane

The defendant argues thet bie conviction on

Count I1 of the indictment was improper because the Government

Sought to include in the net worth computetion for the

1974 tex year evidence of gein realized on the sele of the

defendant's principal residence, Ae this Court noted

earlier, thie Court must view the evidence in this case in

the light most favorable to the Government to determine

whether there is sufficient substential proof, direct and

civrcumatentiel, together with inferences reasonably drawn

therefrom, oo which the defendant wight be found guilty

beyond « reasonshle doubt.

The Government presented evidence in this cose

which tended to show that the defendent hed unreported

taxable income of approximately $14,600)for the 1974

tex year. This figure included aii of the getn reelized

by the defendant on the sale of the defendant's West Lene

residence since the Government felt the defendant was only

entitled to the exclusion provided for in 26 U.S.C. 1202,

However, if the defendant is correct end if pur sunt to

26 U.S.C. $1034 the defendant did not have e duty on

April 15, 1975, to ceport c gain on the sale of the West

Lane property, approximately 510, 2000 would have to be

2 1 amounts used in thie section of the opinion dave

rounded to the neerest hundred dollere. Bec

the Government is not required to prove en exect figure

of taxes due, rounding will not affect the present

the 4 Mc. Hugenberg used $14,651 es the smount of

texeb

ct wi? give the 2 the benefic

this to $14,600

’ Gein realized by the defendent efter sale of the West

ty wae said to be $20,464 at one point in

the trial, „ Of cross examination Mr.

-34-

aa A 14 * N LA * * Genn.

deducted from the unreported taxable income figuce which

the Government cle lee as correct,

Ignoring the gain veel tted from the sale of the

West Lane property end viewing the remaining evidence in the

light most favorable te the: Government, there wes proof

tending to show: he defendant hed failed to report

D © taxable income. The defendant

in bie 1974 . ro reported taxable incose p of $8,785. 10.

Thue, the Government's proof, excluding che gein fros 15

sole of the West Lene property, indicates thet taxes

would be due on — — tenable loco.

Besed upon thie texable income ute the defendant would

heve failed to pey 6 evbstantiel ont of income taxes.

Thus, thie Court finds thet there is sufficient proof

from which @ jury could find beyond e reasonable doubt

thet the defendent willfully ettempted to evade substantial

taxes due and owing when he filed his 1974 tex return on or

about Apt 1 15, 1975.

The defendant relies upon e number of cases

dealing with attempts by the Government to amend indictments,

The present case does not involve an attempt by the Govern-

met to end the indictment. The present case was tried

and subeitted to the jury on the theory thet defendant Bunch

willfully ettempted on of about the 15th day of e, 1975

to evade income texes due end owing by bis for the calender

year 1974, The Government did not attempt to amend the

indictment to also cherte that the defendant ettempted to

evede tees on October . 1973. Thus, thie Court faces

„ different question then the question addressed by the

Sixth Ciccuit Court of Appeals in

524 F. 2d 644 (6th Cie. 1975), where the Government did

attempt such en effort, The defendent's reliance on

Pendilidie and other cases dealing with emendments to

indictments is, therefore, misplaced.

4% isse . the 26 U. 8.6, this 27525255 te

equa 0 0 s discussion

Sn n 7 $20,400 to 7

in from the sale of the 88e 38 = 1

SS the additions] emount which would heve — . l.

2 ©

The defendent elso cites to s number of cases

construing the scope of the phrase “on or bout“ in a

criminal indictment. See Ledbetter vy. United Stetes, 170

U.S. 606 (1898), United States v. Lene, 514 F.2d 22 (9th

Cie. 1975); United States z. Goldstein, 502 v. 2 526 (34

Cie. 1974); United States v. Goodrich, 493 F.24 390 (9th

Cie. 1974); United States v. Heard, 443 F.24 856 (6th

tr.), cert. denied, 404 U.S. 850 (1971); Yew v. United

States, 226 F.2d 362 (9th Cir, 1955); United States v.

Tramagline, 197 F.24 928 (24 Cle. ), cert, denied, 344 U.S.

864 (1952).

Thies Court agrees with the defendant's contention

thet October 15, 1975, could not reasonably be conotrued

to be “on ot ebout the 15th day of April, 1975." Thue,

it the defendant's duty to report the gein from the sele

of the West Lene property could only have et sen on October 15,

1975, the defendant could not heve willfully ettempted

to evede the tax due on thet gein when he filed his 1974

tex teturn on ot about Apcil 15, 1975. Ae the First

Cicevit bas noted in s case involving # prosecution for

feilure to file a tax return: “just #8 subsequent conduct

cannot relieve a texpeyer from criminal Liebility for feilure

to file tex returns on or before their due date, leitet tons

omitted), [thie Court does] not think thet subsequent events

can trensform en act of omission, innocent when it occurred,

into o criminel ect.” United States v. Bourque, 541 F.2d

290, 294 (let Circ. 1976).

However, this Court notes that the jury aay

heve found that the sale of the West Lane property did not

fall within the scope of the provisions of 26 U.S.C. §1034

because the defendant never intended to reinvest the gein

realized from that sale in a new residence, If the defendent

never intended to reinvest hie gein in a new residence,

then the gain from the sale of the West Lane property

should have been recognized and reported on the 1974

tex return filed on or ebout April 15, 1975. g., United

, S11 F.2d 514 (loth cit.), cert. denied,

423 U.S. 825 (1975) (holding that losns obtained in bed

faith and without on intent to repay constitute income).

Se ft

In the present cose the evidence is undisputed that the

defendant failed to reinvest hie gain from the sale of the

West Lane property in « new cesidence within the eighteen

(18) month period provided fore in 26 U.S.C. $1034. The

evidence is also undisputed that the defendant never amended

hie 1974 tex return to reflect any tete from the sale of

the West Lene property. Where e defendant hes en opportunity

to correct his return, end is on notice thet euch correction

fe necessary, bie failure to file an ewended return aay be

considered by the jury in determining the defendant's

intent. See United States v. DeNiro, 392 . 2 753, 758 a.

8 (6th Str.), cert. denied, 393 U.S. 626 (1966); Hill v.

United Stetes, 363 F.2d 176, 160 (Sth cite. 1966). Thus,

im the inetant case the jury could have found thet the

defendant never intended to reinvest bis gain from the

sale of the West Lane property; that 26 U.S.C. §1034 did

not, therefore, apply to this transection; and thet the

defendant was willfully attempting to evade che texes due

on this property when he filed his 1974 tex return. Whether

the jury drew such reasonable inferences from the evidence

in this case, however, is not determinative, since, os

this Court noted earlier, there is sufficient evidence,

even excluding the gein from the sale of the West Lene

property, for the jury to have found the defendant guilty.

The Court finds thet the defendant's arguments

ere not well taken. The defendant's Fed. K. Crim. P.

(e) motion is, therefore, DENIED.

IT 18 SO ORDERED.

° schuh,

ted States District Court

=37-

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ö 7 DISTRI

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UNITED STATES OF AMERICA, ~

Plaintift, 1

a + Case CR-2-80-62

WILLIAM DON BUNCH, :

Defendant. >

ORDER

This case ie now before the Court upon the aotion

of defendant Bunch for an order directing the United States

to produce the Internal Revenue Service's Special Agent

Report (SAR).

The defendant is charged with three counts of

income tex evasion in violation of 26 U.S.C. §7201. The

government represents thet by pote the “net worth plus

expenditures” method of proof, l it will prove thet defendant

Sunch earned income substantially in exces. of the amounts

he reported to the Internal Revenue Service in 1973, 1974

and 1975. The SAR is „ compilation of memorands, tax

schedules, reports and other documents prepared by « Special

Agent of the Internal Revenue Service in the course of en

investigation of e texpayer.v United States v. Clevelend,

$07 F.2d 731, 736 m. 9 (7th Cir. 1974).

On April 3, 19861, the Court heard oral argument

on defendant's motion. bur ug defendant's argument to the

Court, defendant's counsel stated that he was seeking the

1

worth method of f “compares the velve of

by — ‘e eesets end raises at the sported un tag

* ond of a tex r fo order to show unr

income.” + 486 5.

1235 (8. 0.

nir Peston ys Cibeen

A ee 24 310, 111 ben

.

7 SAR io order to challenge the spec el Agent s test imony

regard tag the “opening net worth” ettcibuted to defendant

for each of the tax years in question. (Tr. 33, 34).

Defendant's counsel further stated that to deny defendant

eccess to the SAR would, with respect to the Special Agent,

deprive defendant of effective cross-examidation and con-

frontetion, In support of his motion, defendent relies

vponiinited Stetes v. Clevelend, supts, „ Jencks Act decision.

The government opposes defendant's ot Ion end

maintains that the SAR is not subject to pretrial discovery.

Furthermore, the government's trial ettorney represents

that the Special Agent who investigated defendant in connection

with thie cese may not be called to testify et defendant's

trial.

Even assuming thet the IRS Speciel Agent wiil

testify at defendant's trial, it is cleat thet defendant

ie not entitled to discover the SAR. Rule 16 (0 (% of the

Federal Rules of Criminal Proceduce limits discovery other-

wise allowed under the rules by providing thet the govern-

ment need not disclose “reports, memoranda, or other intecnal

government documents made by...government agents in connection

with the investigation ot prosecution of the case.” Rule

16(#)(2), Fed, . Crim. Proc. Moreover, defendant's relience

e United States v. Cleveland, supra, is misplaced.

Clevelend is # Jencks Act decision. 18 U.S.C. $3500 (1970).

The Jencks Act prohibits the pretrial discovery of statements

and reports made by prospective government witnesses unless

the witness testifies on direct examination at triel, in

which case the Act requires the government to produce any

previously-made statement of the witness in ite enen

* i insofer es it relates to the witness’ testimony at triel.

„ United States v. Nickel, 552 ¥.24 684, 688 (6th Cir. 1977).

2 The Jencks Act, 18 0. 8. c. $3500, provides in pertinent

pert: :

: (a) In criminal prosecution brought the United

Sates, no statement ot report in I I

{ of the United Stetes which wes made a Covern-

went witness or 9 witness

8 fendent) shall be the subject

@ subpoena, discovery, of inspection until

BLT) Te NM PEM IAN ae

40 . ‘ ay? ' ;

=

=

=

~

=

2

2

—

2.

€

7

5

“Im Cleveland the Seventh Circuit Court of Ape,

; held thet the ertire SAR In ao crininel tax evasion case is

„ staterent under the Jencks ace? $07 F. at 737. not-

withstending th» fort that the Specie! Agent may not testify

et defendant's tet end hes, delentant’s argucent in

favor of „ Jencks disclosure is peenituce, the Clevelenc

court's position has not been followed by the Sixth Circuit.

in /United Stetes v Derk, 597 . % % (oth Cir. 1979),

eaid witness hes testified on dicect exeminetion

in the triel of the case.

(b) After e witness called by the United States hes

test te on direct exemination, the court shall,

on motion of che defendant, order the United

States to produce ony statenent (as hereinafter

821 of the witness in the session of the

United States which relates to subject matter

as to which the witness hes testified. if the

entice contents of eny such statement relete to

the subject matter of the test of the witness,

the court shall order ic to be delivered directly

to the defendant for his exenination and use.

18 U.S.C. $3500(b) (1970).

N It should be noted that with respect to disclosure of

lor relevant statements of witnesses, the Jencks

t has been supplemented by new Rule 46.2 of the

Federal Rules of Criminal Procedure which is designed

to plece disclosure of prior celevant etetements of

defense Witnesses on the same legal footing of is the

dieclosuce of prior relevant statements of prosecution

witnesses under the Jencks Act. ight, rt

t „ Supplement to Vols. T-3, $435

; 3 The Jencks Act defines “statement” as follows:

(e) The term “statement”, as used in subsections

(b), (e), and (4) of this section in relation to 5

Ne any witness called by the United Scetes, means

a (1) @ written statement mode by said witness

¥ and signed or otherwise adopted or approved

by bin;

(2) a@ stenographic, mechanical, electrical, or

other recording, or @ transcription thereof,

which is a substantially verbetio recite

of an oral statement made by said vitness

and recorded contemporaneously with the

making o such oral statement; of

(„ @ statement, however taten ot recorded, ot

@ transcription thereof, if any, made by

seid witmess to „ grand jury.

— — —— —

-40-

Dil? enn e Ng Sg in aii er a an eae en, N

pa te

for example, the Siath Ciccuit held that the contents of

an IRS Special Agent's case tepoct in @ cciminal tax prosecution

did not constitute s stetement under the Jencks Act. 18

U.S.C. §3500(e). Furthermore, in e factually similer case

fovolving FBI case reports, the Sixth Circuit cejected the

ergument Chet the agent's case reports constituted stetements

under the Jencks Act.

(4) We do not find such broad requirements in

the Jencks Act ot in I of 2 1 cited to

Rel wea te" caste tas"e” oe th SE tight to

file 2 tig ag = „: he in

12555 1577 77 $. Ce.

425 U8. 94, 04, ; ‘

1

9 8. 353 98. $ . Ct. 7 .

4 1287 (1954) (Footnote omitted).

7 Ue tee v. Nickell,

Defendant Bunch's motion presents a cequest for

pretrial discovery of government files, oc in the alternative,

@ premature request for disclosure of Jencks material. itn

view of Rule 16(a)(2) of the Federal Rules of Criminal

Procedure and the decisions set forth in

Dark, supce, end Ainited States v. Nickell, supra, neither

request by defendant is meritorious. Inasmuch as defendant

will have the opportunity to cross-examine the Speciel

Agent at triel should the government elect to call her ae

a witness, the defendant's cleim chat he will suffer e

denial of crose-examination and confrontation if he ie not

provided eccess to the SAR is unmeritorious. Accordingly,

defendant's ot on for production of the SAR is DENIED.

IT is SO ORDERED.

* sc

ited States District Court

-4l-

CERTIFICATE OF SERVICE

I hereby certify that on this at

day of February, 1983, three copies of

the re-printed Petition for A Writ of

Certiorari were mailed to James Ratan,

Assistant United States Attorney, at 85

Marconi Boulevard, Columbus, Ohio 43215,

Counsel for Respondent\™..I further

certify that all parties éQuired to pe

served have been serves

SHEWARD & WEINER

743 South Front Street

Columbus, Chio 43206

Telephone: 614/443-6581

Counsel for Petitioner