Petition — DeFiore v. United States
Supreme Court brief1984
Ask Donna
What actually matters in this document.
Text
IN THE
Supreme Court of the United
OCTOBER TERM, 1983
PAUL DeFIORE,
Petitioner,
v.
UNITED STATES OF AMERICA,
Respondent.
PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
EDGAR PAUL BOYKO,
Counsel of Record, and
H. PAUL KONDRICK
MILLER, BOYKO AND BELL
110 Juniper Sireet
San Diego, California 92101-1598
Telephone: (619) 235-4040
Attorneys for Petitioner.
bits
QUESTIONS PRESENTED
1. Whether it is properly within the scope and application of the wire
fraud statute, 18 U.S.C., § 1343, to prosecute alleged violations of a state
statute and municipal ordinance relating to cigarette taxes especially
icularized federal legislati / ide eee ifically in-
tended to provide federal assistance to states in collecting cigarette taxes;
2. Whether the wire fraud statute may properly be applied by the
Government as a basis for additional counts in an indictment in order to
increase the se utence;
3. Whether the telephone calls in questions were significantly related
to the alleged scheme(s) to defraud New York of cigarette taxes; and
4. Whether the indictment was so totally devoid of evidentiary sup-
port as to render conviction improper and/or unconstitutional.
mF
TABLE OF CONTENTS
QUESTIONS PRESENTED................00cceeseeees i
RS Rg eae pe nt iv
NEE Ee OR A TD 1
NN 08007. 28 Ss So Sas eae 28 2
CONSTITUTIONAL PROVISIONS AND
TORI Reeve vobinsenckbetcccbeest. 2
STATEMENT OF THE CASE .........ccccccccccccccees 2
REASONS FOR GRANTING THE WRIT ............... 6
I. THE WIRE FRAUD STATUTE SHOULD NOT
BE APPLIED BY THE GOVERNMENT TO
PROSECUTE ALLEGED VIOLATIONS OF A
STATE STATUTE OR MUNICIPAL
ORDINANCE RELATING TO TAXES,
ESPECIALLY WHERE PARTICULARIZED
FEDERAL LEGISLATION EXISTS.............. 6
Il. THE INDICTMENT REPRESENTED AN
ATTEMPT BY THE GOVERNMENT TO
DESCRIBE AS A FEDERAL OFFENSE ACTS
WHICH, AT MOST, CONSTITUTED BREACH
OF A STATE OR MUNICIPAL
MISDEMEANOR LAW ...............0seeeee- 9
Ili. THE WIRE FRAUD STATUTE WAS
IMPERMISSIBLY USED BY THE
IV. THE TELEPHONE CALLS SET FORTH IN
THE INDICTMENT WERE NOT
SIGNIFICANTLY RELATED TO THE
oe:
TABLE OF CONTENTS (Continued)
Vv. THE GOVERNMENT FAILED TO PROVE THE
CONTENT OF THE ALLEGED TELEPHONE
OE AM) ohh 4 gs psi de Santitvt Oeodbspeakr eons
OT a oe bios vee wdds eh aus caves veg endcmlansp
IEE ic UL ok sags veh cuncababbels deketaces e
APPENDIX A - Opinion of the Court of Appeals........
APPENDIX B - Petition for Rehearing.................
APPENDIX C - Constitutional Provisions and
ER III 6 is Cec cdedWescscdex
ie
TABLE OF AUTHORITIES
CASES
Ashe v. Swenson,
397 U.S. 436, 90 S.Ct. 1189, 25 L.Ed.2d 469 (1969).......
Blockburger v. United States,
284 U.S. 299, 52S.Ct. 180, 76 L.Ed. 306 (1932) ..........
Brown v. Ohio,
431 U.S. 161, 97 S.Ct. 2221, 53 L.Ed.2d 187 (1977).......
Kann v. United States,
323 U.S. 88, 65 S.Ct. 148 (1944)... 0... cc eee
Osborne v. United States,
371 F.2d 913, 927 (9th Cir.), cert. denied, 387 U.S. 946,
87 S.Ct. 2082, 18 L.Ed.2d 1335 (1967)... ...............
Parr v. United States,
363 U.S. 370, 80 S.Ct. 1171, 4 L.Ed.2d 1277 (1959) .......
Thompson v. Louisville,
362 U.S. 199, 80 S.Ct. 624, 4 L.Ed.2d 624 (1960).........
United States v. Ashdown,
$09 F.2d 793 (Sth Cir.), cert. denied,
ee a. a on ceded dndhuneen see ees
United States v. Beall,
126 F.Supp. 363 (N.D. Cal. 1954)... .... 2.66. cece es
United States v. DeFiore,
720 F.2d 757 (2d Cir. 1983)... 2... eee eee e ee eee ees
United States v. Dixon,
536 F.2d 1388 (2d Cir. 1976) .... 2... ee cece eee ee ees
United States v. Garner,
633 F.2d 834, 838 (9th Cir 1981) .................0055.
a
-¥-
TABLE OF AUTHORITIES (Continued)
CASES (Continued)
United States v. Hammond,
598 F.2d 1008 (Sth Cir. 1979)......
United States v. Henderson,
386 F.Supp. 1048 (S.D. N.Y. 1974)
United States v. Hopkins,
“ee eee eee ere eee eee ee
357 F.2d 14 (6th Cir.), cert. denied,
385 U.S. 858 (1966)..............
United States v. Huber,
603 F.2d 387 (2d Cir. 1979), cert. denied,
445 U.S. 927 (1980). .............
United States v. Kelem,
416 F.2d 346 (9th Cir.), cert. denied, 397 U.S. 952,
90 S.Ct. 977, 25 L.Ed.2d 134 (1970)
United States v. La Ferriere,
546 F.2d 182 (Sth Cir. 1977).......
United States v. Louderman,
“eee eee eee ee eee ee eee
ee
$76 F.2d 1383 (9th Cir.), cert. denied,
439 U.S. 896 (1978) ..............
United States v. Mangan,
$75 F.2d 32 (2d Cir.), cert. denied,
439 U.S. 931 (1978)..............
United States v. Maze,
414 U.S. 395, 94S.Ct. 645, 38 L.Ed.
United States v. Wilson,
565 F.Supp. 1416 (S.D. N.Y. 1983)
eee eee een eee ee
603 (1974) ..........
Page
8,9,11
12
12
13
6,9,12
—
$
- vi -
TABLE OF A\JTHORITIES (Continued)
Page
CASES (Continued)
United States v. Wiltberger,
18 U.S. (5 Wheat.) 76, 5 L.Ed. 37 (1820) ................ 6
Washington v. United States,
357 U.S. 348, 78 S.Ct. 1373, 2 L.Ed.2d 1368 (1958)....... 13
CONSTITUTIONAL PROVISIONS
Fifth Amendment to the United States Constitution ........ 10,11
Tenth Amendment to the United States Constitution ....... 10
FEDERAL STATUTES
15 U.S.C.
§ 375, et seq. (The Jenkins Act)............cccccccccees 6
es ee oe a, se Ban ole ol, og 7
18 U.S.C.
ESOL cubs dk acide s Gace GNEDOWs 6:0 okneckcbaciee ok 6,8
ch ACae dh atided <u cs kos sae wha Cheeks cUl ics vac i,2,3,6,12
§ 2341, et seq. (The Trafficking and Contraband
I ia di ka bn 4d Ricken el on coliSwe beeen s ee 7
eke veka Bese cute ddwe 0X Rcmbass 64 dhe eae oan 7
TUES kath cu wnhedsdeuedh ocbebeih Wile se eetenes ac 7
28 U.S.C.
PE th Ane da ticthaadcariek hobuededsockulscoudke 2
EET in Girvind s de «05:0 6 be addline. an Sne vanveh ot 4
: te ».
- vii -
TABLE OF AUTHORITIES (Continued)
OTHER STATUTES/ORDINANCES
New York State Statutes,
EMS R's co's cnk-6.a.96 bone ees sabes se eeieke
re Me cd een kh cabs bade eeen aa
i, ic dccuspulecdataedeesenen tees
New York City Ordinances, Chapter 46, TitleD ...........
MISCELLANEOUS AUTHORITIES
Hagen and Nagel, ‘‘ White-Collar Crime, White-Collar Time;
The Sentencing of White Collar Offenders in the
Southern District of New York,”’
OE ey eee
Rakoff, ‘‘The Federal Mail Fraud Statute,’’
i te ee. Sdecieansdseatedecencesconss
ps TS OO, SU By BOE a cocaccccecgesccctacensecs
Baw. No. 95-B62, FURO TB, 1976... ccscccccvccsscccvcces
United States Attorneys’ Office, Statistical Report,
Fiscal Years 1979, 1980 and 1981 ................ ee eeee
Page
—NN
10
10
10
‘ ae
No.
IN THE
Supreme Court of the United States
OCTOBER TERM, 1983
PAUL DeFIORE,
Petitioner,
v.
UNITED STATES OF AMERICA,
Respondent.
PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
Petitioner, Paul DeFiore, respectfully prays that a writ of certiorari
issue to review the November 2, 1983 decision of the United States Court
of Appeals for the Second Circuit that affirmed in part and reversed in
part the judgment of conviction rendered in the United States District
Court for the Eastern District of New York.
OPINION BELOW
The opinion of the United States Court of Appeals for the Second Cir-
cuit, affirming in part and reversing in part petitioner’s conviction, is
reported in 720 F.2d 757 (1983), and is printed in Appendix ‘‘A.”’
rar
are
+ oa
sae
JURISDICTION
The United States Court of Appeals for the Second Circuit filed its
decision on November 2, 1983. A timely Petition for Rehearing, printed
in Appendix ‘‘B,’’ was filed on December 6, 1983, and it was denied on
January 25, 1984. This petition for certiorari was filed within sixty (60)
days of that date. This Court’s jurisdiction is invoked under 28 U.S.C.
§ 1254(1), in order to determine questions of importance relative to the
scope and proper application of 18 U.S.C. § 1343, commonly known as
the wire fraud statut:. See, Parr v. United States, 363 U.S. 370, 373, 80
S.Ct. 1171, 4 L.Ed.2d 1277 (1959).
CONSTITUTIONAL PROVISIONS AND STATUTES INVOLVED
The constitutional provisions and statutes involved are set forth in Ap-
pendix ‘‘C.”’
STATEMENT OF THE CASE
Petitioner was tried under a ten-count indictment alleging violation of
18 U.S.C. § 1343 (wire fraud). The indictment specifically charged that
petitioner and co-defendants, Galler, Coppola and Kerns, defrauded the
state and city of New York of substantial cigarette tax revenues in viola-
tion of a New York state statute and New York City ordinance.'
The indictment specifically alleged that DeFiore and co-defendants,
Galler, Coppola and Kerns transported substantial quantities from a
North Carolina corporation known as Piedmont, to New York, in
' The indictment alleged that the state of New York was empowered pursuant to Arti-
cle XX, Section 171 of its tax regulations, and the city of New York was empowered pur-
suant to its Cigarette Tax Law, Chapter 46, Title D, to collect taxes on each package of
cigarettes possessed for sale in the state and/or city of New York. Note in Appendix “*C”’
hereto that New York Statutes, Article XX, Section 171, does not generally or specifically
impose a cigarette tax; but rather, Section 171, empowers the state tax commission to tax
property, stock, personal income, mortgages and motor vehicles. The exclusive New
York state statute relating to cigarette taxes is New York Statutes, Article XX, Section
471, which imposes a cigarette tax, but only under certain circumstances. Nonetheless,
the indictment does not allege a scheme to defraud under that section of the New York
tax statutes. Note also that New York Statutes, Article XX, Section 471, places the tax
burden on the consumer, and by its own terms, i provides that, under certain cir-
cumstances, the cigarette tax may be collected without the use of cigarette stamps.
ais
violation of the before-mentione’ New York state statute and the
municipal ordinance. Piedmont maintained a bank account at the
Citibank, Brooklyn Branch, and as part of the alleged scheme, substan-
tial cash deposits were made in Piedmont’s account. Thereafter, persons
from Piedmont telephoned Citibank to verify the cash deposits. Ten (10)
telephone calls from Piedmont in North Carolina to Citibank, cor-
responding to the ten (10) counts of the indictment, allegedly brought the
scheme undet the wire fraud statute, 18 U.S.C. § 1343.
At trial, Piedmont’s president, John Cox, testified that Piedmont was
a North Carolina wholesale distributor of cigarettes, and as such,
. authorized to affix North Carolina stamps on cigarettes. [R.T. 42.]’
Cox also testified that the North Carolina tax was two cents ($.02) per
pack compared to the New York cigarette tax of twenty-three cents ($.23)
per pack. [R.T. 42.]
In 1974, DeFiore began purchasing cigarettes from Piedmont. In
order to facilitate these purchases, Piedmont opened its bank account
with Citibank’s Brooklyn Branch. [R.T. 89-93.] Using Citibank’s
customer service telephone number, Piedmont usually verified the
deposit of money in its New York account. [R.T. 93-94.] Cox testified
that the Citibank account was used for other transactions beside the sale
of cigarettes. [R.T. 237.]
Based upon the testimony of Frank Napoli, an agent for the Bureau of
Alcohol, Tobacco and Firearms, Piedmont’s telephone toll records were
admitted into evidence. Agent Napoli testified that he audited the finan-
cial records of Piedmont, including its checking account activity with
Citibank’s Brooklyn Branch which he compared with Piedmont’s
telephone records. Agent Napoli attempted to correlate deposits made
into Piedmont’s Citibank account with telephone calls from Piedmont’s
offices in North Carolina to Citibank’s customer service telephone
number, or other numbers in New York City and suburbs. Napoli testi-
fed that deposits were made in the Citibank acc unt within three (3) to
ten (10) days of a telephone call from Piedmont to Citibank. [R.T. 543.]
? Note: Two (2) of the telphone calls were not even from a North Carolina phone
number; but rather, the two (2) calls were from an unidentified source in New York to
. North Carolina. The Court of Appeals reversed convictions on the two (2) counts cor-
responding to those two (2) phone calls.
> Reporter’s Transcript of the trial.
wie
Napoli also testified that his analysis of Piedmont’s business activity
established that during the periods alleged in the indictment Piedmont
was carrying on business in the greater New York area with’ various
cigarette companies including Atlantic Tobacco Company and Philip
Morris. [R.T. 564-565.] Therefore, there is a substantial likelihood the
Citibank account was used for those transactions.
Cox testified that generally, Piedmont would not ship cigarettes to a
customer unless they were paid cash on delivery or the purchase price was
deposited into Piedmont’s bank account. In the latter event, Piedmont
would confirm the deposit by telephone. The uncontroverted testimony
of Cox established that neither he, nor Piedmont, broke any North
Carolina or federal law, or other state law, in either selling or transport-
ing the cigarettes. [R.T. 148, 163, 165 and 173.] There was no testimony
whatsoever that any cigarettes were purchased by or through petitioner
and shipped into New York. The only testimony linking Piedmont to the
transporting of cigarettes to New York was that Cox purchased two vans
and a truck. [R.T. 116.] An investigator for the New York State Depart-
ment of Taxation and Finance testified that he saw one of these trucks in
Brooklyn, New York on April 4, 1978. [R.T. 607.] One witness testified
that in 1979 he purchased some cigarettes without New York state tax
stamps from co-defendant, Galler.
In the District Court, the jury returned a verdict of guilty as to peti-
tioner on all ten (10) counts of the indictment. Petitioner’s motions for
acquittal, new trial and arrest of judgment were denied, and he was
sentenced to three (3) years imprisonment as to each of the ten (10)
counts. The sentences were to run concurrently with petitioner serving
six (6) months and the balance of the sentence suspended. Petitioner was
also fined $1,000.00 cumulative as to each of the ten (10) counts.
Petitioner appealed the conviction and sentence to the United States
Court of Appeals of the Second Circuit pursuant to 28 U.S.C. § 1291.
The Court of Appeals dismissed two (2) counts of the indictment. While
the Government contended that each of the telephone calls set forth in
the indictment constituted a separate crime since each furthered a single
scheme to defraud New York of cigarette tax revenues, the
conceded in its oral argument on appeal that there was f as to
where the great bulk of the cigarettes were transported and sold. In addi-
tion, the Government further conceded that it failed to establish a nexus,
or connection, between any particular telephone calls set forth in the in-
dictment and the transportation and sale of cigarettes in New York.‘
* See, United States v. DeFiore, 720 F.2d 757, 765 (2nd Cir. 1983).
. be c , *
wb? yi . ‘gs Die 8 a
ey
The Court of Appeals’ decision carries a strong dissent which notes
that the Government acknowledged in its authorities that it was required
to prove a scheme involving a false statement or other deception intended
to cause New York to lose tax revenues. All the evidence showed was a
_ scheme to purchase, and presumably sell, cigarettes without a tax stamp.
If deception of New York was proven, it was only the single incident
where a truck owned by Cox was observed in Brooklyn in April 1978,
and the sale of a small number of cigarettes. None of the calls alleged in
the eight counts which were affirmed involved the trucks in question,
trips to New York, or cigarette sales. Moreover, under New York state
and city law, it is unclear whether such isolated incidents constitute viola-
tions of tax and/or criminal! laws.
The trial transcript further suggests the Government’s failure to prove
its case. In specific response to the District Court’s expressed concern as
to whether the Government met its burden of proof in the case, the
Government responded that:
No one is able to state that the calls were made in fur-
therance of the conspiracy. The Government is asking
that because bank deposits were made, that must mean
every call was made in that connection.
The District Court replied:
I understand what you are saying -- you are saying in ef-
fect that the jury would have to speculate.
But there is no evidence . . . that sustains any suggestion
of a shipment of cigarettes or shipments of cigarettes
which accompanies the telephone calls to the bank. [R.T.
647 -648.]
Cox further testified that he had no recollection whatsoever of using
Pisdmont’s telephone on the dates alleged in the indictment. Moreover,
he had no recollection, nor was any other testimony taken, which
established, much less suggested, the content of any of the alleged
telephone calls made between Piedmont in North Carolina and New
York, or vice versa. [R.T. 226-227.]
ae
SS
REASONS FOR GRANTING THE WRIT
I.
THE WIRE FRAUD STATUTE SHOULD NOT BE APPLIED
BY THE GOVERNMENT TO PROSECUTE ALLEGED
VIOLATIONS OF A STATE STATUTE OR MUNICIPAL
ORDINANCE RELATING TO TAXES, ESPECIALLY
WHERE PARTICULARIZED FEDERAL LEGISLATION EXISTS.
Statutes, such as 18 U.S.C. §§ 1341 (the mail fraud statute) or 1343,
should be carefully and strictly construed in order to avoid extension
beyond the limits intended by Congress.’ There is no federal precedent
for application of the federal wire fraud statute to enforce a municipal
ordinance, and its application to enforce state law has been seriously
questioned. Such a strict construction is, therefore, necessary where the
Government urges the Court to construe a federal criminal statute so that
it reaches conduct which the states should appropriately control, such as
set forth in a state criminal or revenue statute. See, e.g., United States v.
Wiltberger, 18 U.S. (S Wheat.) 76, 5 L.Ed. 37 (1820); United States v.
Kelem, 416 F.2d 346, 347 (9th Cir. 1969), cert. denied, 397 U.S. 952, 90
- §.Ct. 977, 25 L.Ed.2d 134 (1970). See also, United States v. Louderman,
576 F.2d 1383, 1388 (9th Cir.), cert. denied, 439 U.S. 896 (1978).
Moreover, in United States v. Maze, 414 U.S. 395, 405-406, 94 S.Ct.
645, 38 L.Ed.2d 603 (1974), Chief Justice Burger noted in his dissenting
opinion that the mail fraud statute:
. .. has traditionally been used against fraudulent activity
as a first line of defense. When a ‘‘new’’ fraud develops
-- as constantly happens -- the mail fraud statute becomes
a stop-gap device to deal on a temporary basis with the
new phenomenon, until particularized legislation can be
developed and passed to deal directly with the evil.
{Emphasis added.]}
Particularized federal legislation does exist relating to enforcement of
state cigarette tax laws. The Jenkins Act, 15 U.S.C. § 375, ef seq.,
enacted on October 19, 1949, requires any persons selling or disposing of
cigarettes in interstate commerce to forward to state tobacco tax
5 Mail and wire fraud statute cases generally follow each other in their development.
oe
administrators a memorandum identifying to whom shipments are made.
Violation of the Jenkins Act is a misdemeanor punishable by a fine of
not more than $1,000.00, or imprisonment for not more than six months,
or both. 15 U.S.C. § 377.
The purpose of the Jenkins Act is to assist the States in collecting state-
imposed sales and use taxes on cigarettes. S. Rep. No. 644, July 11,
1949. In particular, the need for such legislation was because: ‘‘The
avoidance of State sales and use taxes on cigarettes by interstate
shipments to consumers in States taxing cigarettes is depriving the States
of large amounts of sorely needed revenue.’’ In addition: ‘‘A further
objection to this technique of avoiding State-imposed cigarette taxes is
the fact that the United States mails are used to accomplish the
avoidance.’’
On November 2, 1978, the Trafficking and Contraband Cigarettes
Act, 18 U.S.C. § 2341, et seq. (hereinafter the ‘‘Trafficking Act’’) was
enacted. The Trafficking Act makes it unlawful for any person knowing-
ly to ship, transport, receive, possess, sell, distribute, or purchase contra-
band cigarettes. ‘‘Contraband cigarettes’’ are defined as a quantity in
excess of 60,000 cigarettes which bear no evidence of payment of the ap-
plicable state cigarette taxes. 18 U.S.C. §§ 2342(a) and 2341.
The purpose of the Trafficking Act is to provide a solution to the
“serious problem”’ ot ‘‘interstate cigarette bootlegging and to help pro-
vide law enforcement assistance and relief to cities and States.’’ S. Rep.
No. 95-962, June 28, 1978, p. 3. The Senate defined the scope of the pro-
blem as follows: ‘‘Since 1965 cigarette bootlegging has become a serious
problem for a number of States in the areas of tax administration and
law enforcement.’’ The Report noted that during 1976, New York lost
approximately 72.3 million dollars in taxes because of cigarette bootleg-
ging. /d. at p. 5.*
The Court of Appeals’ decision herein renders into insignificance the
Jenkins and Trafficking Acts. Moreover, it is clear that Congress has
ss ay pee alge cpr gg hp mb ge
with the enforcement of state cigarette tax laws. In particular, the
* Note: 18 U.S.C. § 2345, specifically provides that the Trafficking Act does not affect
the concurrent jurisdiction of a State to enac: and enforce cigarette tax laws, and to pro-
vide for penalties for violation cf such laws. 18 U.S.C. § 2345. Compare Section “‘D”’
under Reasons for Granting Petition, infra.
Trafficking Act relates to contraband cigarettes. In the present case, the
Government alleges that approximately 2,404,738 cartons of cigarettes
were transported from North Carolina to New York. Since specific
legislation exists relating to bootlegged cigarettes, the Government
should have been compelled to prosecute petitioner under either the
Jenkins or Trafficking Acts.
In United States v. Henderson, 386 F.Supp. 1048, 1050, 1051
(S.D.N.Y. 1974), the defendant, music artist Skitch Henderson, was
charged under an indictment with an alleged attempt to evade the pay-
ment of substantial income taxes by use of back-dated and fraudulent
documents and false statements designed to obtain the benefit of .tax
deductions of charitable donations. The charges against Henderson
arose from his deductions f sr charitable donations of musical scores and
arrangements to the music library at the University of Wisconsin.
Count I of the indictment was based upon a letter dated December 31,
1969, mailed by the defendant to the University of Wisconsin in which he
proposed to donate the music library and stated, allegedly falsely, that
Leonard Bernstein, Henry Mancini, Victor Alpert and he were of the
view that a fair evaluation per selection in the library was $650.00.
Defendant, Henderson, contended that the mail fraud statute was not in-
tended by Congress to apply to any scheme to defraud the United States,
or a state, in an attempt to evade the payment of taxes.
In dismissing the mail fraud counts against Henderson, the district
court held that it was beyond the purpose and thrust of the mail fraud
statute (18 U.S.C. § 1341), predecessor of the wire fraud statute, which is
clearly limited to protecting the public, more precisely, the ‘‘gullible
public’’ against the various fraudulent schemes that the ‘‘cunning of
some trickster might devise.’’ Moreover, the district court indicated that
over the entire course of the statute’s broad application by the courts, it
had generally been ‘‘confined to schemes of a type designed to defraud
members of the community at large, in the sale of commodities and ser-
vices, rather than schemes to defraud the Government.’ Id. at p. 1053.
Henderson noted that predecessor legislation to the mail fraud and
wire fraud statutes was enacted in 1889, and that:
{I]t was directed primarily at confidence men who engag-
ed in schemes to sell counterfeit currency. The bill as
finally passed encompassed schemes to obtain money by
x =
what is commonly called the ‘‘sawdust swindle,’’ or
‘counterfeit mail fraud,’’ or by dealing or pretending to
deal in what is commonly called ‘‘green articles,’’ ‘‘green
coin,’’ ‘“‘bills,”’ “‘paper goods,’’ ‘‘spurious Treasury
notes,’’ ‘‘United States goods,’’ ‘‘green cigars’... Jd.
at p. 1052.
Citing Chief Justice Burger’s dissent in Maze, supra, Henderson held
that in revenue or taxation matters there is no need to use the mail fraud
statute as a ‘‘stop-gap device’’ after ‘‘particularized legislation’’ is
enacted to ‘‘deal directly with the evil,’’ since Congress and/or the state
legislatures will have afforded adequate protection of the public interest
in the collection of such taxes or revenues. As a result, the district court
determined that the mail fraud statute, and by analogy the wire fraud
statute, are ‘‘confined’’ to schemes of a type designed to defraud
members of the community at large, e.g. , the public, rather than schemes
to defraud the New York state or federal governments. /d. at 1053.
THE INDICTMENT REPRESENTED AN ATTEMPT BY THE
GOVERNMENT TO DESCRIBE AS A FEDERAL OFFENSE
ACTS WHICH, AT MOST, CONSTITUTED BREACH OF A
STATE OR MUNICIPAL MISDEMEANOR LAW.
The district court’s subject matter jurisdiction in this matter was based
on the use of interstate telephone calls to further the alleged scheme to
defraud New York state and city. United States v. Hammond, 598 F.2d
1008 (Sth Cir. 1979). The petitioner moved the district court herein to ar-
rest judgment.
In United States v. Beall, 126 F.Supp. 363, 365 (N.D. Cal. 1954), the
court ruled that the fifteen counts of the indictment dealing with the
alleged mail fraud scheme to embezzle charitable funds failed to state an
offense under the mail fraud statute.
The basic difficulty with Counts VI through XX is that
they represent an attempt to describe as a federal offense
acts which clearly constitute a breach of the laws of a
state.
-10-
In the present matter, the Government has similarly attempted to
describe as a federal offense, to wit, violation of the wire fraud statute,
acts which clearly constitute, if anything, a breach of the revenue/tax
laws of the state or city of New York. In so ruling, the Beall court
followed Kann v. United States, 323 U.S. 88, 95, 65 S.Ct. 148, 151
(1944), which held that:
The federal mail fraud statute does not purport to reach
all frauds, but only those limited instances in which the
use of the mails [or wires] is a part of the execution of the
fraud, leaving all other cases to be dealt with by ap-
propriate state law.
[See also, Tenth Amendment to the United States Constitution.]
THE WIRE FRAUD STATUTE WAS IMPERMISSIBLY
USED BY THE GOVERNMENT TO INCREASE
PETITIONER’S SENTENCE.
The courts have repeatedly expressed ‘‘misgivings’’ over use of the
mail or wire fraud statutes as a basis for additional counts in an indict-
ment, the gravamen of which was violation of another federal or state
criminal statute.’ United States v. Mangan, 575 F.2d 32, 49 (2d Cir.
1978); and United States v. Dixon, 536 F.2d 1388, 1398, 1401 (2d Cir.
1976). This Court has increasingly recognized the potential for prosecu-
torial abuse under the wire fraud statute as protected against by the Fifth
Amendment. Ashe v. Swenson, 397 U.S. 436, 445, fn. 10, 90 S.Ct. 1189,
’ A former Chief of Business Frauds Prosecutions of the United States Attorney’s of-
fice for the Southern District of New York has stated: ‘‘To federal prosecutors of white
collar crime, the mail [and wire] fraud statute is our Stradivarious, our Colt 45, our
Louisville Slugger, our Cuisnart - and our true love.’’ Rakoff, ‘‘ The Federal Mail Fraud
Statute,’’ 18 Duq. L. R. 771 (1980). Mail/wire fraud was the second-most frequently
charged white-collar offense in the Southern District of New York in the years 1963-1976.
Hagan & Nagel, White-Collar Crime, White-Collar Time: The Sentencing of White-
Collar Offenders in the Southern District of New York, 20 Am. Crim. L. Rev. 259, 286
(Table 6) (1982). Statistics published by the Department of Justice show that 1981
criminal filings under the mail and wire fraud statutes accounted for 3.8% of the total
criminal filings. In 1980 that figure amounted to 3.4% and in 1979, 3.5%. United States
Attorneys’ Office, Statistical Reports, Fiscal Year 1981, 1980 and 1979.
yes
25 L.Ed.2d 569 (1969). As the dissent herein notes, some ‘‘line
drawing”’ is needed.
Henderson, supra, 386 F.Supp. at p. 1054, held that the Government’s
use of the mail fraud statute to provide additional counts upon essential-
ly the same allegations as required to sustain tax evasion improperly per-
mits the ‘‘pyramiding of sentences in the event of conviction.’’ As a
result, the district court dismissed the three (3) wire fraud counts because
they were ‘‘impermissibly used’’ by the Government in an attempt to
reach the same offenses and increase the same penalties in the event of
conviction, beyond the intent of Congress.’
In the present matter, had DeFiore been convicted under the Jenkins
Act, it would have been a misdemeanor requiring a fine of and/or im-
prisonment of not more than six (6) months. Under Article XX of the
New York Statutes, § 481, the penalty for violation is imprisonment of
not more than one (1) year (a misdemeanor). By contrast, DeFiore was
prosecuted for ten (10) counts of wire fraud, carrying a potential
sentence of $10,000.00 in fines and/or fifty (50) years in prison. He was
sentenced to three (3) years in prison. It is not difficult to see the ar-
bitrary sentencing parameters, and potential for abuse, available to
federal prosecutors under the wire fraud statute. The Fifth Amendment
protects against such multiple, cumulative punishments for the same of-
fense. Blockburger v. United States, 284 U.S. 299, 304, 52 S.Ct. 180,
182, 76 L.Ed. 306 (1932); Brown v. Ohio, 431 U.S. 161, 97 S.Ct. 2221,
2225-2226, 53 L.Ed.2d 187 (1977).
The test in determining whether there was one offense, or multiple of-
fenses, is whether each count of the indictment requires proof of an
* “For at common law, and under early federal criminal statutes, offense categories
were relatively few and distinct. A single course of criminal conduct was likely to yield
but a single offense [and count}. [Citation.] In more recent times, with the advent of
specificity in draftsmanship and the extraordinary proliferation of overlapping and
related statutory offenses, it became possible for prosecutors to spin out a startlingly
numerous series of offenses [and counts] from a single alleged criminal transaction. . . .
The federal courts soon recognized the need to prevent such abuses through the [Fifth
Amendment}... .””
* District Judge Weinfeld noted that: ‘The policy of the prosecution of fragmentizing
charges which center about the filing of an alleged false tax return, by applying the mail
fraud statute under three separate counts, two of which include the mailing of the very in-
come tax returns at issue, with the result that a conviction would permit multiple
sentences reaching staggering, if not utterly unrealistic, years of imprisonment, has its
outer limits. In my view the outer limits were set by Congress. . . ."’ [Emphasis added.]
Id.
- 12-
additional fact which another count does not require. Brown, supra, 97
S.Ct. at p. 2225. Based upon such a test, the indictment, and sentencing
herein were improperly multiplicious. See also, United States v. Wilson,
565 F.Supp. 1416, 1431 (S.D.N.Y. 1983).
IV.
THE TELEPHONE CALLS SET FORTH IN THE
INDICTMENT WERE NOT SIGNIFICANTLY RELATED
TO THE ALLEGED SCHEME(S) TO DEFRAUD.
The use of the wires must be a step in the execution of the scheme
charged in the indictment, and not incidental thereto, in order to con-
stitute an essential element to an offense under 18 U.S.C. § 1343. The
entire conduct of the particular scheme to defraud must be dependent
upon the use of the wires or mails. United States v. Hopkins, 357 F.2d
14, 17 (6th Cir. 1966), cert. denied, 385 U.S. 858 (1966). The telephone
use must be an ‘“‘integral part’’ of the transaction or scheme to defraud.
United States v. Ashdown, 509 F.2d 793, 799 (Sth Cir. 1975), cert.
denied, 423 U.S. 829 (1975). The telephone calls from Piedmont to
Citibank were not central to the scheme as alleged in the indictment
herein.
In United States v. Maze, 414 U.S. 395, 94 S.Ct. 645, the defendants
stole a credit card and fraudulently used it to obtain food and lodging at
motels. The mails were used by the motels to obtain payment on invoices
from banks. In Maze, this Court noted that, if anything, such mailings
‘increased the probability that [the] respondent would be detected and
apprehended.’’ /d. at p. 402, 94S.Ct. at 694.
In the instant matter, the Government produced no evidence what-
soever, nor did it make any other showing, that the success of the scheme
as alleged in its indictment depended in any way on the various telephone
conversations between Piedmont Corporation and Citibank’s Brooklyn
Branch. Therefore, it cannot be reasonably determined, or inferred cir-
cumstantially, that such telephone conversations by Piedmont were ‘‘for
the purpose of executing a scheme or artifice [to defraud] within the
meaning of 18 U.S.C. § 1343.”’ United States v. Huber, 603 F.2d 387,
399-400 (2d Cir. 1979), cert. denied, 445 U.S. 927 (1989).
- 13 -
Vv.
THE GOVERNMENT FAILED TO PROVE THE CONTENT
OF THE ALLEGED TELEPHONE CALLS.
In a federal wire fraud case, the Government must do more than prove
that certain telephone calls were made; but rather, it bears the greater
burden of proving the content of the telephone calls. Osborne v. United
States, 371 F.2d 913, 927 (9th Cir.), cert. denied, 387 U.S. 946, 87 S.Ct.
2082, 18 L.Ed.2d 1335 (1967). See also, United States v. Garner, 633
F.2d 834, 838 (9th Cir. 1981). As in the instant matter, in Osborne, the
Government presented telephone company records indicating that cer-
tain telephone calls had been made. Witnesses who made the telephone
calls, however, were unable to identify exactly to whom they had spoken
or to recall and testify to the specifics of each of the conversations. The
court concluded that this evidence was ‘‘of no aid in proving what the
telephone calls were about, or any of their content. We can pretty well
surmise their content, but we cannot convict defendant. . . on surmise.”’
Id. at p. 928. [Emphasis added.] As a result, the Osborne court reversed
the wire fraud convictions because it could not assume that ‘‘an
unknown . . . conversation had an unlawful purpose, without a record to
support that assumption.’’ /d. at p. 929.
In the present case, Cox testified that he could not recall making the
telephone calls enumerated in the indictment, much less recall the con-
tent of any of those telephone calls. [R.T. 226-228.] The Government
was unable to prove the content of any of the telephone calls alleged in
the indictment.
Based on the foregoing, it is obvious that the jury was compelled to
speculate as to the content of the telephone calls listed in the indictment
in convicting the petitioner. The requisite nexus between use of interstate
wires and an alleged scheme to defraud may ‘‘not turn on time or
space,’’ as the Government suggests in the present matter. United States
v. La Ferriere, 546 F.2d 182, 187 (Sth Cir. 1977). The Osborne holding,
supra, dictates that the jury may not convict based on such speculation
or ‘‘surmise.’’ Therefore, the Government failed to meet its burden
herein.
This Court is empowered to grant a writ where it deterinines that there
was insufficient evidence as a matter of law, or the indictment was
without requisite evidentiary support. Washington v. United States, 357
site
U.S. 348, 78 S.Ct. 1373, 2 L.Ed.2d 1368 (1958); and Thompson v.
Louisville, 362 U.S. 199, 80 S.Ct. 624, 4 L.Ed.2d 624 (1960).
CONCLUSION
For the foregoing reasons, a Writ of Certiorari should issue to review
the judgment and opinion of the United States Court of Appeals for the
Second Circuit.
DATED: March 22, 1984
Respectfully submitted,
MILLER, BOYKO AND BELL
By
EDGAR PAUL BOYKO,
Counsel of Record, and
H. PAUL KONDRICK
Attorneys for Petitioner
APPENDICES
A-l
UNITED STATES of America, Appellee,
v.
Paul DeFIORE, Joseph Coppola and Robert Galler,
Defendants-Appellants.
Nos. 1206, 1319 and 1332, Dockets 82-1447, 83-1014 and 83-1025.
United States Court of Appeals, Second Circuit.
Argued July 11, 1983.
Decided Nov. 2, 1983.
The appealing defendants were convicted in the United States District
Court for the Eastern District of New York, Edward R. Neaher, !., of a
scheme to defraud the Department of Taxation and Finance, State of
New York, and the finance department, city of New York, of substantial
cigarette tax revenues, in violation of wire fraud statute. On appeal, the
Court of Appeals, Maletz, Senior Judge, sitting by designation, held
that: (1) as to the element of interstate commerce, evidence with respect
to content of telephone calls was sufficient to sustain conviction on eight
counts, but no nexus was shown between two telephone calls and scheme
to defraud, and convictions of two defendants on two counts of indict-
ment were accordingly not sustained by evidence; (2) despite particular
defendant’s contention that cigarettes were packaged in plain brown
cardboard cartons and that he could not be charged with knowledge that
he was transporting untaxed cigarettes, evidence was sufficient to sustain
his conviction for aiding and abetting, it being not necessary that such
defendant know all details of the criminal venture to be considered a par-
ticipant in its criminal purpose; and (3) no other claim of error was
established.
Conviction of two defendants reversed as to counts five and eight;
judgments of conviction otherwise affirmed.
Winter, Circuit Judge, filed opinion concurring in part and dissenting
in part.
A-2
1. Telecommunications — 362
Federal wire fraud statute focuses upon misuse of wires, not regulation
of state affairs, and applies to schemes to defraud federal or state
governments of taxes due them. 15 U.S.C.A. §§ 375-378; 18 U.S.C.A.
§§ 1343, 2341-2346.
2. Telecommunications — 362
Congress has authority to regulate such misuse as use of wires to
defraud federal or state governments of taxes due them. 18 U.S.C.A. §
1343.
3. Criminal Law — 1144.13(1)
Defendant advancing claim based on insufficiency of evidence to sus-
tain conviction bears very heavy burden.
4. Telecommunications — 363
As to element of interstate commerce, in prosecution for wire fraud,
evidence with respect to content of telephone calls was sufficient to sus-
tain conviction on eight counts, but no nexus was shown between two
telephone calls and scheme to defraud, and convictions of two defend-
ants on two counts of indictment were accordingly not sustained by
evidence. 18 U.S.C.A. § 1343.
5. Telecommunications — 363
Despite particular defendant’s contention that cigarettes were packag-
ed in plain brown cardboard cartons and that he could not be charged
with knowledge that he was transporting untaxed cigarettes, evidence in
prosecution for wire fraud was sufficient to sustain his conviction for
aiding and abetting, it being not necessary that such defendant know all
details of the criminal venture to be considered a participant in its
criminal purpose. 18 U.S.C.A. §§ 2, 1343.
6. Criminal Law — 863(2)
_ In view of fact that trial judge upon objection immediately explained
how supplemental charge related to ten counts of indictment, there was
no error, much less plain error.
7. Criminal Law — 384
Where evidence of acts and transactions prior to five-year statute of
limitations period went directly to establish intent, as well as
A-3
preparations and plans that went into scheme to defraud such evidence,
was admissible even though it antedated the limitations period.
Fed.Rules Evid. Rule 404(b), 28 U.S.C.A.
8. Criminal Law — 1036.2
Witnesses — 240(1)
In evidence rule stating that leading questions ‘‘should not’’ be used
on direct examination of witness except as may be necessary to develop
his testimony, words ‘‘should not’’, are words of suggestion, not com-
mand, and absence of contemporaneous objection or even request for
cautionary instruction with regard to prosecutor’s use of leading ques-
tion obviated need of Court of Appeals to consider bare claim of pre-
judice. Fed.Rules Evid.Rule 611(c), 28 U.S.C.A.
9. Criminal Law — 636(3), 1035(6)
Jury — 142
Defendant can waive his right to be present during period of often
routine voir dire questioning and may also waive any defect relating to
judicial officer who presided over voir dire of petit jurors, and where no
contemporaneous objection was made to jury selection process, the ob-
jection would not be considered for first time on appeal. U.S.C.A. Con-
st. Art. 3, § 1 et seq.; 28 U.S.C.A. §§ 631 et seq., 636.
Edgar Paul Boyko, San Diego, Cal. (Miller, Boyko & Bell, San Diego,
Cal., and Albert J. Brackley, Brooklyn, N.Y., on the brief), for
defendant-appellant DeFiore.
Phylis Skloot Bamberger, Legal Aid Society, Public Defender Services
Unit, New York City, for defendant-appellant Coppola.
Max Sayah, Asst. U.S. Atty., Brooklyn, N.Y. (Raymond J. Dearie,
U.S. Atty., and Mary McGowan Davis, Asst. U.S. Aity., Brooklyn,
N.Y., on the brief), for appellee.
Before NEWMAN and WINTER, Circuit Judges, and MALETZ,
Senior Judge.*
MALETEZ, Senior Judge:
*Of the United States Court of International Trade, sitting by designation.
re
? =p
SRL 3
A-4
Defendants-appellants Paul DeFiore, Joseph Coppola and Robert
Galler were convicted under a ten count indictment which alleged a
scheme to defraud the Department of Taxation and Finance, State of
New York, and the Finance Department, City of New York, of substan-
tial cigarette tax revenues. The scheme allegedly involved secretly
transporting cigarettes from North Carolina to New York on which no
New York cigarette taxes had been paid, and thereafter selling them in
New York. Ten telephone calls, corresponding to the ten counts charged
in the indictment, allegedly brought the scheme within the federal wire
fraud statute, 18 U.S.C. § 1343 (1976).' Defendants DeFiore and Galler
were convicted on all ten counts, defendant Coppola on all but counts
five and eight.
Defendant DeFiore advances essentially five arguments in support of
his appeal. He first argues that the wire fraud statute was not intended
for the prosecution of schemes designated to \ioiate state tax laws.
Assuming the applicability of the wire fraud statute here, DeFiore’s
second contention is that the evidence offered at trial to prove either a
scheme to defraud or use of the wires was insufficient.
The balance of DeFiore’s arguments are all addressed to an assortment
of alleged trial defects which, he contends, require reversal: (1) a pur-
portedly erroneous supplemental charge by the trial court in response to
a jury question, (2) the admission into evidence of prior similar acts by
DeFiore predating the commencement of the statute of limitations, and
(3) prosecutorial misconduct in the form of leading questions to govern-
ment witnesses and prejudicial summation.
Defendant Coppola raises two arguments on his appeal. First, he sub-
mits, the government failed to adduce sufficient evidence of his knowing
participation in the fraudulent scheme. Coppola further contends that
voir dire of prospective jurors by the United States magistrate, even
1. 18 U.S.C. § 1343 provides:
Whoever, having devised or intending to devise any scheme or artifice to defraud,
or for obtaining money or p.operty by means of false or fraudulent pretenses,
representations, or promises, transmits or causes to be transmitted by means of wire,
radio, or television communication in interstate or foreign commerce, any writings,
signs, signals, pictures, or sounds for the purpose of executing such scheme or ar-
tifice, shall be fined not more than $1,000 or imprisoned not more than five years, or
both. .
Defendants were also indicted under 18 U.S.C. § 2 which provides in part:
Whoever commits an offense against the United States or aids, abets, counsels,
commands, induces or procures its commission, is punishable ‘as a principal.
A-5
though conducted pursuant to local court rule, was violative of the
Magistrates Act, 28 U.S.C. § 636, and Article III of the Constitution.
Defendant Galler has filed no briefs, but by letter of counsel has
adopted the points raised by his co-defendants.
For the reasons that follow, we reverse the convictions of defendants
DeFiore and Galler on counts five and eight of the indictment. In all
other respects, the judgments of conviction are affirmed.
]
Background
The scheme to defraud was fairly simple in nature. As testified to by
John Cox, the president of Piedmont Wholesale Company (Piedmont), a
North Carolina wholesale distributor of cigarettes, Piedmont was
authorized to affix only North Carolina tax stamps on cigarettes. Never-
theless, in 1974 Cox and DeFiore struck a deal whereby DeFiore and
Galler would place telephone orders with Cox for cigarettes to be
transported to New York but which were untaxed under New York law.
At that time the North Carolina tax on cigarettes was two cents per pack
compared to the New York tax of 23 cents per pack. The cost to defen-
dants was slightly higher than the price of cigarettes generally charged by
Piedmont, but less than the price of cigarettes in New York. In this way
the parties to the scheme would be able to realize a mutual profit.
Initially, DeFiore carried cash—in the range of $20,000—to North
Carolina from New York to pay for the cigarettes. Shortly thereafter, at
DeFiore’s suggestion, Cox opened a bank account at First National City
Bank in Brooklyn in the name of Piedmont in order to eliminate the in-
convenience of transporting large sums of cash to North Carolina. Two
employees of that bank testified that DeFiore made weekly cash deposits
to the Piedmont accounts. Using the bank’s customer service number,
Cox would verify that a deposit had in fact been made to that account.
Telephone toll records of Piedmoni reflecting the dates of long-distance
calls to the bank coincided with the dates of DeFiore’s large cash
deposits.
~Both DeFiore and Galler ordered cigarettes from Cox. After confirm-
ing DeFiore’s deposit to Piedmont’s account Cox would release the
cigarettes. Some packs of cigarettes which Cox sold bore North Carolina
stamps, but others bore no stamps whatsoever. Cox testified that as for
A-6
this latter group, the tax stamps were destroyed, although the North
Carolina taxing authorities had been paid the two-cent-per-pack tax. The
orders were packed at the Piedmont warehouse in High Point, North
Carolina, ten packs of cigarettes to a carton, thirty cartons to a case.
Each case was constructed of plain brown cardboard sealed with brown
tape, marked only by numbers. There were no distinguishing marks on
the cases to indicate to the casual observer that they contained cigarettes.
Once packed, the cases of cigarettes were moved from High Point to a
barn owned by a Piedmont employee, Howard Sechrest, for subsequent
loading and shipment. These loading and shipment operations were not
in the normal course of Piedmont’s business.
As part of the arrangement between Cox and DeFiore, Cox purchased
two vans and a truck. The latter vehicle was ostensibly designed to carry
four-inch diameter pipe, but had been specially designed to secretly
transport cases of cigarettes. The truck, bearing the marking ‘‘Tri-State
Plumbing’’ on the cab door, had 2 removable side panel which concealed
an interior compartment. This truck had been registered to several dif-
ferent persons, including Galler, and was last registered in New Jersey
under the name of Tri-State Plumbing Company. The vehicle’s cer-
tificate of ownership was signed by Joseph Coppola on behalf of Tri-
State. A certificate of doing business issued by the State of New Jersey
to Tri-State Plumbing Supply Company was also signed by Coppola in
the capacity of owner. As it turned out, Tri-State’s New Jersey business
address on the latter certificate was fictitious.
Once loaded at Sechrest’s barn the trucks would be driven to New
York. Testimony was adduced that the trucks were unloaded at a ware-
house in Brooklyn, and that Galler assisted in the unloading. An agent
of the Bureau of Alcohol, Tobacco and Firearms testified that on April
4, 1978 he observed the pipe truck leave the Brooklyn warehouse and
cross the Verrazzano Narrows Bridge. On April 6 he observed Coppola
driving the truck into the warehouse.
Other evidence of Coppola’s involvement shows that on one occasion
a Piedmont employee, Wayne Sexton, drove the pipe truck loaded with
cigarettes to a truck stop in Warrington, Virginia, where he switched
vehicles with Coppola. Sechrest testified that defendant Coppola was
present when the pipe truck was loaded at his barn. Coppola was further
identified by Sechrest as one of the drivers who picked up cigarettes. The
government produced receipts signed by Coppola evidencing that he had
stayed at a motel in North Carolina on six occasions in 1978.
A-7
Finally, a government witness testified that during 1978 he regularly
purchased cartons of cigarettes without New York tax stamps from
Galler.
With this background we first consider DeFiore’s contention that the
federal wire fraud statute may not be utilized to prosecute schemes to
defraud a state of taxes due it.
Il
The Applicability of the Wire Fraud Statute
[1,2] DeFiore’s argument that section 1343 was not intended to cover
the fact situation alleged in the indictment is two-fold in nature. First, he
submits, the wire fraud statute should not apply to schemes to defraud
federal or state governments of taxes due them. As a corollary DeFiore
adds that the indictment here is a thinly veiled effort to prosecute as a
federal offense acts which clearly are a violation of state law.
We find no room for agreement with DeFiore. Indeed, four circuits
before us have squarely applied the federal fraud statutes to state tax law
violations. See United States v. Melvin, 544 F.2d 767 (Sth Cir.1977)
(mail fraud in connection with interstate sale of cigarettes); United States
v. Brewer, 528 F.2d 492 (4th Cir.1975) (same); United States v. Mirabile,
503 F.2d 1065 (8th Cir.1974) (mail fraud in connection with false state
tax return), cert. denied, 420 U.S. 973, 95 S.Ct. 1395, 43 L.Ed.2d 653
(1975); and United Siates v. Flaxman, 495 F.2d 344, 349 (7th Cir.) (‘‘Just
because the State . . . was the victim and makes such a scheme illegal does
not preclude the Federal Government from prosecuting the perpetrators
under . . . federal law’’), cert. denied, 419 U.S. 1031, 95 S.Ct. 512, 42
L.Ed.2d 306 (1974). Moreover, United States v. Henderson, 386
F.Supp. 1048 (S.D. N.Y. 1974), upon which defendant places great
reliance, involved the use of section 1343 in connection with a federal in-
come tax fraud prosecution. Cf. United States v. Miller, 545 F.2d 1204,
1216 n. 17 (9th Cir. 1976) (Henderson rejected in the context of federal
tax violations), cert. denied, 430 U.S. 930, 97 S.Ct. 1549, 51 L.Ed.2d 774
(1977).
Section 1343 on its face is not limited in the manner suggested by
DeFiore, nor does it purport to exempt the conduct in which he engaged.
It plainly applies to ‘‘any scheme or artifice to defraud’’ in which the
jurisdictional means—the wires—are employed. Its focus is upon the
A-8
misuse of the wires, not the regulation of state affairs. Congress clearly
has the authority to regulate such misuse.’ See Brewer, 528 F.2d at 495;
Mirabile, 503 F.2d at 1067. In short, principles of federalism do not pro-
vide a basis for reversal. See also United States v. Corey, 566 F.2d 429,
430-31 & n. 2 (2d Cir.1977) (defendant’s claim of improper federal
jurisdiction over what is essentially a state offense is ‘‘wholly without
merit’’ and ‘‘frivolous’’).
Ill
Sufficiency of the Evidence
[3] We turn next to a consideration of DeFiore’s and Coppola’s
claim that the evidence was insufficient to convict them as a matter of
law. A defendant advancing a claim based on insufficiency of the
evidence bears a very heavy burden. See, e.g., United States v. Carson,
702 F.2d 351, 361 (2d Cir.1983); United States v. Losada, 674 F.2d 167,
173 (2d Cir.), cert. denied, 457 U.S. 1125, 102 S.Ct. 2945, 73 L.Ed.2d
1341 (1982). Our inquiry is
whether the jury, drawing reasonable inferences from the evidence,
may fairly and logically have concluded that the defendant was guilty
beyond a reasonable doubt. ... In making this determination, we
must view the evidence in the light most favorable to the government,
. . . and construe all permissible inferences in its favor, . . .
Carson, 702 F.2d at 361 (citations omitted).
Applying this standard of review to the facts in this case we are left
with the firm conviction that, with the exception of counts five and eight
2. When Congress enacted the Jenkins Act, 15 U.S.c. §§ 375-378 (1976)—which re-
quires cigarette distributors to file reports to appropriate state authorities—it voiced
no objection to prosecutions under the wire or mail fraud statutes in connection with
state cigarette tax evasion. See S.Rep. No. 1147, 84th Cong., Ist Sess. (1955),
reprinted in 1955 U.S.Code Cong. & Ad.News 2883-85.
Nor did Congress voice such objection in 1978 when it passed 18 U.S.C. §§ 2341-
2346 (Supp. IV 1980), entitled ‘‘Trafficking in Contraband Cigarettes’’. See S.Rep.
No. 962, 95th Cong., 2d Sess. (1978), and H.R.Rep. No. 1629, 95th Cong., 2d Sess.
(1978), reprinted in 1978 U.S.Code Cong. & Ad.News 5518-35. In fact, Congress ex-
pressed no preference for which federal law should be employed to curb the bootleg-
ging of cigarettes. Congress did make it clear, however, that by passage of this statute
it was increasing the avenues available to federal law enforcement personnel by which
they could counteract the rapidly growing illegal cigarette trade. /d. See also United
States v. Melvin, $44 F.2d 767, 774 & n. 14 (Sth Cir. 1977); United States v. Brewer,
528 F.2d 492 (4th Cir.1975).
A-9
of the indictment, the gover»ment presented sufficient evidence upon
which a reasonable jury could find the existence of a scheme to defraud
and use of the wires in furtherance thereof beyond a reasonable doubt as
to all three defendants.
A
The Evidence Against DeFiore
[4] Based on the entire record presented here, in particular the telling
testimony of Cox describing the raison d’etre for the Brooklyn bank ac-
count, the specially designed pipe truck with the false compartment, and
the destruction of the North Carolina tax stamps at the time cigarettes
were sold to DeFiore, coupled with other testimony showing that untax-
ed cigarettes wer: snloaded and sold in New York City, DeFiore’s claim
of insufficiency a. to the scheme to defraud is untenable. See, e.g.,
United States v. Von Barta, 635 F.2d 999, 1005-06 n. 14 (2d Cir.1980)
(‘‘Government need not show that the scheme’s victims were in fact
defrauded . . . 'only] that some actual harm or injury was at least con-
templated’’), cert. denied, 450 U.S. 998, 101 S.Ct. 1703, 68 L.Ed.2d 199
(1981); United States v. Curtis, 537 F.2d 1091, 1095 (10th Cir.) (‘‘it is not
necessary to show that any person was in fact defrauded’’), cert. denied,
429 U.S. 962, 97 S.Ct. 389, 50 L.Ed.2d 330 (1976); United States v.
Reicin, 497 F.2d 563 (7th Cir.), cert. denied, 419 U.S. 996, 95 S.Ct. 309,
42 L.Ed.2d 269 (1974). See also United States v. Tramunti, 500 F.2d
1334, 1338 (2d Cir.) (‘‘the evidence . . . must be viewed in light of the
totality of the Government’s case, since one fact may gain color from
others’’), cert. denied, 419 U.S. 1079, 95 S.Ct. 667, 42 L.Ed.2d 673
(1974).
DeFiore’s contention that the government failed to prove the content
of the telephone calls by sufficient evidence must fail. Given the
devastating testimony of Cox that he called the bank regularly to verify
that DeFiore had made the cash deposits, together with the telephone toll
records, bank deposit slips, and testimony of bank tellers who took
DeFiore’s deposits, a strong link was established between the scheme to
defraud and the eight transmissions by wire ‘rom North Carolina to
Brooklyn. [here was thus proof sufficient to convict on these eight
counts.
We find baseless DeFiore’s argument that the government failed in its
proof simply because Cox could not recall the specific content of
A-10
individual telephone calls made four to five years prior to trial. While it
is true that the government has the burden of proving the contents of the
telephone calls, proof of that may be established by circumstantial
evidence. See, e.g., United States v. Garner, 663 F.2d 834, 838 (9th
Cir.1981). And it is clear from the evidence that the government met its
burden of proving that the calls from Piedmont to Brooklyn were ‘‘for
the purpose of’’ committing wire fraud. See United States v. Tramunti,
500 F.2d at 1338. For Cox testified that he clearly remembered telephon-
ing Brooklyn regularly to verify whether deposits had been made to the
Piedmont account. In our view, this testimony, when juxtaposed with
the dates of DeFiore’s bank deposits and the dates of long-distance calls
to Brooklyn from Piedmont, leads to the inescapable inference that Cox
telephoned Brooklyn on the eight occasions listed in the indictment in
order to verify DeFiore’s deposits to Piedmont’s account.
In sum, the eight telephone transmissions from Piedmont to New York
bore a sufficient connection to the realization of the scheme to be con-
sidered as made for the purpose of executing the scheme, United States v.
Pollack, 534 F.2d 964, 971 (D.C. Cir.), cert. denied, 429 U.S. 924, 97
S.Ct. 324, 50 L.Ed.2d 292 (1976), and to support conviction on separate
counts. Jd. at 971-72; Melvin, 544 F.2d at 770-77 & n. 5. The jury could
permissibly infer from the telephone and bank records and from Cox’
total testimony that the calls from Piedmont to New York listed in the in-
dictment were made to verify the bank deposits.
By contrast, we agree with DeFiore’s contention insofar as counts five
and eight of the indictment are concerned. Those two counts are based
on collect calls from a telephone number in Garden City, New York to
Piedmont. However, no nexus was shown between those two calls and
the scheme to defraud. In fact, there was no evidence linking those calls
to any of the defendants, either in connection with verifying a deposit to
Piedmont’s Brooklyn bank account or with placing a cigarette order. In-
deed, it was not even shown that the telephone number in question was
listed in any of defendants’ names. Accordingly, the convictions of
DeFiore and Galler on counts five and eight of the indictment are revers-
ed.
A-ll
B
The Evidence Against Coppola
[5] The proof of Coppola’s knowing participation in the illicit
scheme is also sufficient to sustain his conviction. His basic contention is
that inasmuch as the cigarettes were packaged in plain brown cardboard
cartons he cannot be charged with knowledge that he was transporting
untaxed cigarettes.
On this record we find ample evidence from which a jury could
reasonably infer that Coppola was aware of the nature of the goods con-
cealed within the truck. For one thing, Coppola was present when the
pipe truck was loaded in North Carolina with cigarettes into the secret
compartment. He was seen driving the pipe truck on April 6, 1978.
Moreover, he continued to drive to North Carolina after that date, as
evidenced by six signed motel registrations dated from April 25, 1978 to
October 30, 1978. Further, Coppola was the registered owner of two Tri-
State Plumbing trucks, one of which was the bogus pipe truck, and was
also the registered owner of Tri-State Plumbing Company.
To be an aider and abettor under 18 U.S.C. § 2, it was not necessary
that Coppola know al! the details of the criminal venture to be con-
sidered a participant in its criminal purpose, cf. United States v.
Garguilo, 310 F.2d 249, 253 (2d Cir.1962). For on the basis of the
evidence detailed above, a jury was entitled to infer that Coppola, fre-
quently the driver of the truck with the concealed compartment, would
have known its contents and had knowledge of the criminal venture when
he signed the vehicle registration and the certificate of doing business for
Tri-State Plumbing. Thus, it is clear that Coppola satisfies the re-
quirements this court has established for the offense of aiding and abet-
ting: ‘‘‘that he in some sort associate himself with the venture, that he
participate in it as in something that he wishes to bring about, that he
seek by his action to make it succeed.’’’ United States v. Bommarito,
524 F.2d 140, 145 (2d Cir.1975) (quoting United States v. Peoni, 100
F.2d 401, 402 (2d Cir.1938)).
We turn next to DeFiore’s claim of trial errors.
A-12
IV
The Alleged Trial Defects
DeFiore assigns as reversible error a supplemental charge given in
response to a jury question, the admission into evidence of similar acts
predating the statute of limitations, the use of leading questions by the
Assistant United States Attorney curing his direct examination, and pre-
judicial summation.
{6} In the supplemental charge the trial judge further defined the wire
fraud law. The only objection to it was that the judge did not fully ex-
plain how that charge related to the ten counts of the indictment—which
he then immediately did. In none of this do we see any error, much less
plain error.
{7} DeFiore’s second alleged trial error is equally without merit. He
contends that it was improper for the trial court to permit the introduc-
tion into evidence of acts and transactions prior to the five-year statute of
limitations period. This contention is easily disposed of. Rule 404(b) of
the Federal Rules of Evidence provides:
(b) Other crimes, wrongs, or acts. Evidence of other crimes,
wrongs, or acts is not admissible to prove the character of a person in
order to show that he acted in conformity therewith. It may, however,
be admissible for other purposes, such as proof of motive, opportuni-
ty, intent, preparation, plan, knowledge, identity or absence of
mistake or accident.
Clearly, the prior act evidence adduced here went directly to establishing
DeFiore’s intent, as well as the preparations and plans that went into the
scheme to defraud, see Corey, 566 F.2d at 431 & n. 4, and such evidence
is admissible even though it antedates the limitations period. United
States v. Ashdown, 509 F.2d 793, 798 (Sth Cir.), cert. denied, 423 U.S.
829, 96 S.Ct. 48, 46 L.Ed.2d 47 (1975); United States v. Blosser, 440 F.2d
697, 699 (10th Cir.1971).
[8] DeFiore’s final contention regarding prosecutorial misconduct is
likewise unavailing. Fed.R.Evid. 611(c) states that ‘‘[ljeading questions
should not be used on the direct examination of a witness except as may
be necessary to develop his testimony.’’ (Emphasis added). These are
words of suggestion, not command. In addition, as indicated in the Ad-
visory Committee’s Note to this rule, ‘‘[a]n almost total unwillingness to
reverse for infractions has been manifested by appellate courts.’’ As for
A-13
allegedly prejudicial summation by the government attorney the absence
of a contemporaneous objection or even a request for a cautionary in-
struction obviates our need for considering DeFiore’s bare claim of pre-
judice. See Malley v. Manson, 547 F.2d 25, 28 (2d Cir.1976), cert.
denied, 430 U.S. 918, 97 S.Ct. 1335, 51 L.Ed.2d 598 (1977).
V
Jury Voir Dire by the Magisirate
[9] We address finally Coppola’s argument that the voir dire of pro-
spective jurors in this case was improperly delegated to the federal
magistrate contrary to 28 U.S.C. § 636 (1976) and Article III of the Con-
stitution. Local court rule 25 of the Eastern District of New York
authorizes magistrates to conduct voir dire of petit jurors. Coppola
argues, however, that the delegation of certain duties to a magistrate in
felony cases extends only to pretrial matters under the Magistrates Act,
and that the selection of a jury is not a pretrial matter. See The Virgin
Islands v. George, 680 F.2d 13, 15 (3d Cir.1982).
However, no contemporaneous objection was made to the jury selec-
tion process. We, therefore, see no reason to consider this objection for
the first time on appeal. See United States v. Lieberman, 608 F.2d 889,
900 (Ist Cir.1979), cert. denied, 444 U.S. 1019, 100 S.Ct. 673, 62
L.Ed.2d 649 (1980). What is more, since a defendant may waive his right
to be present during the period of often routine voir dire questioning, see
The Virgin Islands v. George, 680 F.2d at 15; The Virgin Islands v.
Brown, 507 f.2d 186, 189 (3d Cir.1975), we believe it would be
anomalous to hold that a defendant could not also waive any defect
relating to the judicial officer who presided over the voir dire of petit
jurors.
VI
For the foregoing reasons, the judgments of conviction of defendants
DeFiore and Galler are reversed as to counts five and eight. In all other
respects, the judgments of conviction are affirmed.
WINTER, Circuit Judge, concurring in part and dissenting in part:
The indictment was framed to allege ten counts, each of which involv-
ed a particular phone call placed on a particular date. Two of the calls
A-14
were never connected to the defendants and I concur in the majority’s
dismissal. The remaining eight calls were all placed from a particular
phone in North Carolina to a bank in New York. The indictment alleged
that each of these calls was a separate crime since each furthered a single
scheme to defraud the State and City of New York and to deprive these
authorities of tax revenue due on the sale of cigarettes.
The evidence showed that the defendants were engaged in purchasing
cigarettes without a North Carolina tax stamp for resale. The seller
customarily confirmed by phone that the purchase money had been
deposited in a particular bank account in New York. Each of the eight
counts involves such a phone call. The cigarettes were then loaded either
into a truck camouflaged so as to make it appear that it was carrying pipe
or into vans of ordinary appearance. Some of the cigarettes were
transported to New York City and sold there. However, as the govern-
ment conceded on oral argument, there was no proof as to where the
great bulk of the cigarettes were transported and sold, and no connection
was made between any one of the phone calls named in each count and
the transportation and sale of cigarettes in New York.
Analysis must begin with the question of what the government was re-
quired to prove under the indictment as framed. Had the indictment
alleged in one count a conspiracy to commit wire fraud, the proof was
clearly sufficient. Had the indictment alleged in one count a scheme to
defraud New York City and New York State of tax money and the use of
the wires in furtherance of the scheme, the proof was also sufficient. Had
the evidence shown that each call resulted in the use of the camouflaged
truck to transport cigarettes to New York for resale there, | would join
the majority in affirming the eight counts on the grounds that a deceptive
act resulting in a fraud of New York had been proven.
Under the caselaw cited by the government, it must prove a scheme in-
volving a false statement or other deception intended to cause a
designated governmental authority to lose tax revenue. All the evidence
showed, however, was a scheme to purchase and, presumably, sell
cigarettes without a tax stamp. If deception of New York was proven, it
was only in the occasional use of the camouflaged truck, one trip in that
truck to New York City, and the sale of a small number of cigarettes
there. None of the calls alleged in the eight counts involved the truck, the
trip to New York or the sales. As framed, therefore, the indictment thus
raises the very troublesome question of whether each and every use of the
wires in any connection with a single scheme to defraud can be alleged
and proven as a separate count.
A-15
Although there appears to be little authority directly on point, it would
seem to me that some line drawing is in order. Congress surely did not
intend that the exposure to criminal liability should be so dependent
upon the number of phone calls or wire transmissions made. For one
thing the exposure is entirely random not only because small frauds may
include multiple uses of the wires while large ones do not, but also
because relatively innocuous uses of the wires are as criminal as those ac-
tually involving fraudulent communications. The theory of the govern-
ment would render as criminal a would-be swindler’s phoning for a pizza
to allow him to eat while working as a call which is itself a fraudulent act.
For another, the constitutional protection against double jeopardy
becomes relatively meaningless since successive prosecutions need only
allege different calls.
Sucn line drawing is not difficult. For example, the Congressional
purpose would be fully effectuated by allowing a separate count for each
conspiracy, a count for each scheme to defraud utilizing wire transmis-
sions, and a separate count for each actual fraudulent act utilizing a wire
transmission.
Under such a rule, the eight count indictment in the present case was
not proven. Having chosen to frame the indictment as it did, the govern-
ment was obligated to prove each element on each count. United States
v. Robinson, 545 F.2d 301 (2d Cir.1976). This it failed to do. First, there
is no proof that the cigarettes purchased as a result of any of the eight
phone calls were sold in New York. That the laws, tax or otherwise, of
that state or some other were violated, is simply assumed. Second, there
has been no proof of either deception or a false statement in connection
with any particular phone call. An act of deception might have been pro-
ven had the government shown use of the camouflaged truck in connec-
tion with the eight phone calls but it did not.
The legal theory of the conviction, therefore, is either that every use of
the wires with some connection to a single scheme to defraud is a crime or
that a wire fraud is made out by the use of a phone in connection with the
simple non-payment of state or local taxes without proof either of decep-
tion or the identity of the taxing authority involved. I cannot accept
A-16
either theory and, therefore, dissent.'
1. Affirmance renders into insignificance the Jenkins Act, 18 U.S.C. §§ 2341 ef seq., a
federal criminal statute which specifically regulates trafficking in contraband cigaret-
tes. This legislation, intended to provide federal assistan:e to states in collecting
revenue due for the sale of cigarettes, spells out in detail the kinds of trafficking in
contraband cigarettes which Congress believed to be sufficiently serious to cail for
federal intervention. For example, more than 60,000 cigarettes must be involved
which contain no evidence of compliance with the state law where they are found if the
particular state requires a procedure such as stamping. If the wire fraud legislation
reaches every non-payment of state taxes on cigarettes, however, no federal pro-
secutor will ever have a reason to use the Jenkins Act even though it, rather than the
wire fraud statute, is the product of Congressional study of the problem of contra-
band cigarettes.
B-1
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
Docket No. 82-1447
UNITED STATES OF AMERICA,
Appellee,
--against--
PAUL DeFIORE,
Appellant.
PETITION FOR REHEARING
To: The Honorable Judges of the United States Court of Appeals for
the Second Circuit:
Petition For Rehearing
Pursuant to Fed. R. App. P., Rule 40, petitioner, Paul DeFiore, ap-
pellant herein, respectfully petitions the Judges of this honorable Court
for a rehearing of the appeal in the above-entitled cause. In support of
this Petition, petitioner states that:
1. Indictment/Background: The ten (10) count Indictment herein
alleges a scheme by Paul DeFiore (‘‘DeFiore’’) to defraud the City and
State of New York of substantial cigarette tax revenues. The scheme
allegedly involved transporting cigarettes from Piedmont, a company in
North Carolina, to New York where they were sold without New York
cigarette taxes being paid.
The Indictment specifically alleges that DeFiore, in conjunction with
co-defendants, Robert Galler, Joseph Coppola and Lawrence Kerns
(charges against Kerns were dismissed), transported or caused to be
B-2
transported from North Carolina to New York approximately 2,404,738
cartons of cigarettes, thereby defrauding the City and State of New York
of approximately $5,530,897.00 in cigarette tax revenues. As part of the
scheme, substantial cash deposits were made in Piedmont’s account at
the Citibank, Brooklyn Branch. Thereafter, persons from Piedmont
telephoned Citibank to verify the cash deposits. Ten (10) telephone calls
from Piedmont to Citibank, corresponding to the ten (10) counts of the
Indictment, allegedly brought the scheme under the Wire Fraud Statute,
18 U.S. Code § 1343. The district court convicted DeFiore on all ten (10)
counts.
2. Decision: On November 2, 1983, this Circuit Court reversed con-
viction of DeFiore on counts five and eight of the Indictment. In all
other respects, the Judgment of Conviction was affirmed.
In affirming the judgment as to the remaining eight (8) counts, the
Court rejected DeFiore’s argument that it was improper for the Govern-
ment to apply the wire fraud statute to an alleged scheme to defraud pay-
ment of taxes to a state government, especially where the Wire Fraud
Statute was used to reach the same offense as proscribed by specific
federal statute and where the overall effect was to increase the penalty
upon conviction.
3. Summary of Evidence: John Cox, president of Piedmont, the
North Carolina wholesale distributor of cigarettes, testified that Pied-
mont was authorized to affix North Carolina stamps on cigarettes. The
North Carolina tax was two cents ($.02) per pack compared to the New
York cigarette tax of $.23 per pack. In 1974, DeFiore began purchasing
cigarettes from Piedmont. Cox opened a bank account at Citibank,
Brooklyn Branch, in the name of Piedmont in order to eliminate the in-
convenience of having to transport large sums o7 cash to North Carolina.
Using the Citibank’s customer service number, Piedmont verified the
deposits. Piedmont’s telephone toll records were admitted into evidence
through the testimony of Federal Bureau of Alcohol, Tobacco and Fire
Arms agent, Napoli. Napoli testified that deposits were made in the
Citibank account within three (3) to ten (10) days of a telephone call
from Piedmont to Citibank. After confirming the deposit, Piedmont
shipped the cigarettes. The cigarettes sold often bore North Carolina
cigarette stamps. Cox testified that his conduct did not violate any state
or federal laws.
B-3
To deliver the cigarettes, Cox purchased two vans and atruck. Testi-
mony was adduced that the truck was seen at a warehouse in New York
on one occasion in or about April 1978. Finally, a witness testified that
during 1978 he purchased cigarettes without New York stamps from
Galler.
4. In rejecting DeFiore’s argument that the Government should not
be permitted to apply the Wire Fraud Statute to an alleged scheme to
defraud state governments of taxes especially where the Statute is used to
reach the same offense otherwise proscribed by federal statute and to in-
crease the penalties in the event of conviction, this Court cited four cases
from other Circuits' that applied the Mail Fraud Statute to enforce state
tax laws. DeFiore relies upon United States v. ‘‘Skitch’’ Henderson, 386
F.Supp. 1048 (S.D. N.Y. 1974), discussed below, to support his argu-
ment for dismissal. The Court has, through its decision, impliedly
adopted and affirmed Henderson. Nonetheless, the Court distinguished
Henderson in that it ‘‘involved the use of § 1343 [the Wire Fraud Statute]
in connection with a federal income tax fraud prosecution,’’ and
therefore, the Wire Fraud Statute could be applied to state tax fraud.
[Emphasis not added.]
5. For reasons discussed in greater detail, below, including that
Henderson is not an 18 U.S. Code § 1343 (wire fraud) case, DeFiore sub-
mits that the Court overlooked or misapprehended the law and facts
relating to the present matter.
6. The Government Should Not Be Permitted to Apply the Wire
Fraud Statute where Congress has Enacted Particularized Legislation
Dealing Directly with Schemes to Defraud States of Tax Revenues
Resulting from Contraband Cigarettes: In United States v. Henderson,
supra, 388 F.Supp. at pp. 1050-1051, Skitch Henderson was indicted for
evasion of federal income taxes. The counts were based upon a letter and
two income tax returns mailed by Henderson.
The district court, the Honorable Edward Weinfeld, dismissed the
three mail fraud counts, holding that they were beyond the scope and
purpose of the Statute which was specifically limited to protecting the
' United States v. Mirabile, 503 F.2d 1065 (8th Cir. 1974), cert. denied, 420 U.S. 973
(1975), United States v. Flaxman, 495 F.2d 344 (7th Cir. 1974), United States v. Brewer,
$28 F.2d 492 (4th Cir. 1975), and United States v. Melvin, $44 F.2d 767 (Sth Cir. 1977).
B-4
public against various fraudulent schemes. Judge Weinfeld noted that
application of the mail fraud statute has generally been ‘‘confined to
schemes of a type designed to defraud members of a community at large,
in the sale of commodities and services, rather than schemes to defraud
the government.’”’ Id.
Moreover, Chief Justice Burger of the United States Supreme Court
stated in United States v. Maze, 414 U.S. 395, 405-406, 94 S.Ct. 645, 651,
38 L.Ed.2d 603 (1974), (dissenting opinion), that the mail fraud statute:
... has traditionally been used against fraudulent activity
as a first line of defense. When a ‘‘new’’ fraud develops
-- aS consistently happens -- the mail fraud statute
becomes a stop-gap device to deal on a temporary basis
with a new phenomenon, until particularized legislation
can be developed and passed to deal directly with the evil.
{Emphasis added.]
Citing Maze, supra, the Henderson district court dismissed the mail
fraud counts, finding that there was no need to use the mail fraud statute
as a ‘‘stop-gap device’’ until ‘‘particularized legislation’’ was enacted ‘‘to
deal directly with the evil’’ of avoiding payment of the taxes since Con-
gress had enacted legislation. 386 F.Supp. at p. 1053. Henderson should
not be narrowly interpreted to relate only to federal taxes.
7. Statutes, such as 18 U.S. Code § 1341 or 1343, should be carefully
and strictly construed in order to avoid extension beyond the limits in-
tended by Congress. Such construction is necessary where the Govern-
ment urges the Court to construe a federal criminal statute so that it
reaches conduct which the states should appropriately control. United
States v. Kelem, 416 F.2d 346, 347 (9th Cir. 1969). See also, United
States v. Louderman, 576 F.2d 1383, 1388 (9th Cir. 1978).
8. The Mirabile and Flaxman decisions improperly ‘‘broadly and
liberally’’ applied the Wire Fraud Statute, and they pre-date Henderson.
Mirabile, supra, 503 F.2d at p. 1066. Moreover, the Mirabile and Flax-
man (false tax return cases) decisions, and the Brewer and Melvin (mail
order cigarettes), pre-date the Trafficking and Contraband Cigarettes
Act, 18 U.S. Code § 2341, ef seqg., particularized federal legislation
relating to interstate cigarette bootlegging and the resultant loss of
cigarette tax revenues to the states, as discussed in Paragraph 9, below.
B-5
Moreover, in the Mirabile-Flaxman-Brewer-Melvin line of cases, ‘‘the
essential part’’ of the schemes was brought about through the medium of
the United States mails.
9. Particularized Federal Legislation Relating to Enforcement of
State Cigarette Tax Laws: The Jenkins Act, 15 U.S. Code § 375, et seq.
enacted October 19, 1949, requires any persons selling or disposing of
cigarettes in interstate commerce to forward to state tobacco tax ad-
ministrators a memorandum identifying to whom shipments are made.
Violation of the Jenkins Act is a misdemeanor punishable by a fine of
not more than $1,000.00, or imprisonment for not more than six months,
or both. 15 U.S. Code § 377.
The purpose of the Jenkins Act is fo assist the States in collecting state-
imposed sales and use taxes on cigarettes. S. Rep. No. 644, July 11,
1949. In particular, the need for such legislation was because: ‘‘The
avoidance of State sales and use taxes on cigarettes by interstate
shipments to consumers in States taxing cigarettes is depriving the States
of large amounts of sorely needed revenue.’’ In addition: ‘‘A further
objection to this technique of avoiding State-imposed cigarette taxes is
the fact that the United States mails are used to accomplish the
avoidance.”’
On November 2, 1978, the Trafficking and Contraband Cigarettes
Act, 18 U.S. Code § 2341, et seq. (hereinafter the ‘‘Trafficking Act’’)
was enacted. The Act makes it unlawful for any person knowingly to
ship, transport, receive, possess, sell, distribute, or purchase contraband
cigarettes. ‘‘Contraband cigarettes’’ are defined as a quantity in excess
of 60,000 cigarettes which bear no evidence of payment of the applicable
State cigarette taxes. 18 U.S. Code §§ 2342(a) and 2341. Violation of the
Trafficking Act is punishable by a fine of not more han $100,000.00, or
imprisonment for not more than five (5) years, or both. 18 U.S. Code §
2344.
The purpose of the Trafficking Act is to provide a timely solution to
the ‘‘serious problem’”’ of ‘‘interstate cigarette bootlegging and to help
provide law enforcement assistance and relief to cities and States.’’ S.
Rep. No. 95-962, June 28, 1978, p. 3. The Senate defined the scope of
the problem as follows: ‘‘Since 1965 cigarette bootlegging has become a
serious problem for a number of States in the areas of tax administration
and law enforcement.’’ The Report noted that during 1976, New York
lost approximately 72.3 million dollars in taxes because of cigarette
B-6
bootlegging. /d. at p. 5. As a result, the Cigarette Trafficking Act
became law.’
The Court’s Decision herein renders into insignificance the Jenkins .
and Trafficking Acts. Moreover, it is clear that Congress has enacted in-
creasingly particularized legislation dealing with the enforcement of state
cigarette tax laws. In particular, the Trafficking Act relates to contra-
band cigarettes. In the present case, the Government alleges that approx-
imately 2,404,738 cartons of cigarettes were transported from North
Carolina to New York. Since specific legislation exists relating to
bootlegged cigarettes, the Government was compelled to prosecute under
either the Jenkins or Trafficking Acts.
10. Wire Fraud Counts Were Impermissibly Used by the Govern-
ment to Increase Penalty: This Court has repeatedly expressed ‘‘misgiv-
ings’’ over the Government’s use of the Mail Wire Frauc statutes as a
basis for additional counts in an indictmeit the gravamen of which was
violation of other federal criminal statutes. United States v. Mangan,
575 F.2d 32, 49 (2nd Cir. 1978), and United States v. Dixon, 536 F.2d
1388, 1401 (2nd Cir. 1976).
Henderson, supra, 386 F.Supp. held that the Government’s use of the
Mail Fraud Statute to provide additional counts upon essentially the
same allegations as required to sustain tax evasion improperly permitted
the ‘‘pyramiding of sentences in the event of conviction.’’ As a result,
District Judge Weinfeld dismissed the three (3) wire fraud counts because
they were ‘‘impermissibly used’’ by the Government in an attempt to
reach the same offenses and increase the same penalties in the event of
conviction, beyond the intent of Congress.’
In the present matter, had DeFiore been convicted under the Jenkins
Act, it would have been a misdemeanor requiring a fine of $1,000.00
? Note: 18 U.S.C. § 2345 specifically provides that the Trafficking Act does not affect
the concurrent jurisdiction of a State to enact and enforce cigarette tax laws, and to pro-
vide for penalties for violation of such laws. 18 U.S. Code § 2345.
> District Judge Weinfeld noted that: ‘‘The policy of the prosecution of fragmentizing
charges which center about the filing of an alleged false tax return, by applying the mail
fraud statute under three separate counts, two of which include the mailing of the very in-
come tax returns at issue, with the result that @ conviction would permit multiple
sentences reaching staggering, if not utterly unrealistic, years of imprisonment, has its
outer limits. In my view the outer limits were set by Congress. .. .’’ [Emphasis added.]
B-7
and/or imprisonment of not more than six months. Under the Traffick-
ing Act, he would have been sentenced to a $100,000.00 fine and/or im-
prisoned for a period of not more than five (5) years. Under Article XX
of New York Tax Law, § 481, mentioned in the Indictment, the penalty
for violation is imprisonment of not more than one (1) year (a misde-
meanor). By contrast, DeFiore was prosecuted for ten (10) counts of
Wire Fraud, carrying a potential sentence of $10,000.00 in fines and/or
fifty (50) years in prison. It is not difficult to see the unreasonable and
arbitrary sentencing parameters, and potential for abuse, available under
the Wire Fraud Statute.
10. The Government Failed to Prove its Case as to Each Count of the
Indictment: A jury must consider the defendant’s guilt or innocence as
to each count of the indictment separately. 1 BE. Devitt and C. Blackmar,
Federal Jury Practice and Instructions, § 17.02 (2nd Ed. 1970). More-
over, the Government is obligated to prove each element of each count of
the Indictment, or the count(s) must be dismissed. United States v.
Robinson, 545 F.2d 301, 304 (2nd Cir. 1976).
In the instant matter, two of the phone calls in the Indictment were
never connected to the defendants, and as a result, two (2) counts were
dismissed by the Court. The Indictment alleges that each of the calls was
a separate crime since each furthered a single scheme to defraud New
York of cigarette tax revenues.
It is important to note that the Government conceded on oral argu-
ment that there was no proof as to where the great bulk of the cigarettes
were transported and sold. In addition, the Government further conced-
ed that it failed to establish a nexus or connection between any particular
phone calls in the Indictment and the transportation and sale of cigaret-
tes in New York. The Government acknowledges in its authorities that it
was required to prove a scheme involving a false statement or other
deception intended to cause New York to lose tax revenues. All the
evidence showed, however, was a scheme to purchase, and presumably,
sell cigarettes without a tax stamp. If deception of New York was pro-
ven, it was only in the occasional use of a camouflaged truck (one trip in
that truck to New York City in April 1978), and the sale of a small
number of cigarettes there. None of the calls alleged in the eight counts
involved the truck, the trip to New York, or the cigarette sales.
Having chosen to frame the Indictment as it did, the Government was
obligated to prove each element on each count. Robinson, supra, 545
B-8
F.2d at 304. It failed to meet its burden of proof here in that there was
no proof that the cigarettes were purchased as a result of any of the eight
phone calls and sold in New York. Second, there was no showing that
the laws, tax or otherwise, of New York or any other state were violated;
but rather, this was assumed by the jury. Finally, there was no proof of
either deception or a false statement in connection with any particular
phone call.
The important question presented on appeal is whether each and every
use of the wires in any connection in a single scheme to defraud can be
alleged and proven as a separate count. As the dissent noted, ‘‘some line
drawing is in order.”’
The transcript further suggests the Government’s failure to prove its
case. In specific response to the district court’s expression of concern as
to proof of its case, the Government stated that:
No one is able to state that the cails were made in fur-
therance of the conspiracy. The Government is asking
because bank deposits were made, that must mean every
call was made in that connection. [Emphasis added.]
The district court responded:
I understand what you are saying -- you are saying in
effect that the jury would have to speculate. [Emphasis
added.]
The district court further indicated:
But there is no evidence . . . that sustains any suggestion
of a shipment of cigarettes or shipments of cigarettes
which accompanies the telephone calls to the bank.
{Transcript, pp. 647 and 648.] [Emphasis added.]
Finally, under the principle of double jeopardy (whether the same
proof would be sufficient to uphold conviction on more than one count),
the Government cannot offer identical evidence on each of the separate
counts. United States v. Heffington, 682 F.2d 1075, 1081 (Sth Cir.
1982), and United States v. Hairrell, 521 F.2d 1264, 1266 (6th Cir. 1975).
The absence of differing evidence on each count precludes multiple con-
victions. Brown v. Ohio, 432 U.S. 161, 97 S.Ct. 2221, 53 Ed.2d 187
B-9
(1977). The Indictment herein is further objected to on the ground of
‘*multiplicity,’’ the charging of a single offense in separate counts which
is prohibited. /d. See also, Wright, Federal Practice and Procedure, §
142, p. 306 (1969 Ed.).
Suggestion that Case be Reheard In Banc
Pursuant to Federal Rules of Appellant Procedure, Rule 35, petitioner
further suggests to the Judges of this honorable Court that the above-
entitled cause is appropriate for consideration on hearing by all the
Judges of this Court convened in banc, and in support of this suggestion
petitioner suggests:
1. That the issues involved as set forth above, involve
questions of great public interest and present frequently
recurring questions or issues which are likely to affect
many cases before this Court.
Statement of Counsel
1, Edgar Paul Boyko, express a belief, based on a reasoned and studied
professional judgment, that the November 2, 1983 panel decision over-
looked or misapprehended certain of the legal and factual issues set forth
above, and the consideration by the full Court is necessary to secure and
maintain uniformity of decisions in this Court, to wit, United States v.
Henderson, 386 F.2d 1048 (S.D. N.Y. 1974) and United States v. Maze,
414 U.S. 395, 94 S.Ct. 645 (1974), and this appeal involves a question of
exceptional importance, to wit, whether the Government should be per-
mitted to apply the wire fraud statute in cases where Congress has
enacted particularized legislation dealing directly with schemes to
defraud state governments of tax revenues resulting from contraband
cigarettes, especially where the penalty will be increaed thereby.
WHEREFORE, petitioner respectfully requests:
1. That a rehearing of the appeal in the above-entitled cause be
granted; and
B-10
2. That the Honorable Judges of this Court order that the above-
entitled cause be heard by the Court in banc.
DATED: December 6, 1983
Respectfully submitted,
MILLER, BOYKO AND BELL
Ze pbayife-
C4 ¢
oe “4
EDGAR PAUL BOYKO,
Appearing Pro Hac Vice as
Attorneys for Appellant,
Paul DeFiore
ALBERT J. BRACKLEY
Of Co-Counsel for Appellant,
Paul DeFiore
Certificate
As counsel for Appellant, Paul DeFiore, I hereby certify that the
foregoing Petition for Rehearing is presented in good faith and not for
delay.
EZ ae
3 - =~
Cs UR Ct
EDCan PAUL 3BUYR0 ‘
ae
C-1
CONSTITUTIONAL PROVISIONS
The Fifth Amendment to the United States Constitution provides:
No person shall be held to answer for a capital, or other-
wise infamous crime, unless on a presentment or indict-
ment of a Grand Jury, except in cases arising in the land
or naval forces, or in the Militia, when in actual service in
time of War or public danger; nor shall any person be
subject for the same offence to be twice put in jeopardy
of life or limb; nor shall be compelled in any criminal case
to be a witness against himself, nor be deprived of life,
liberty, or property, without due process of law; nor shall
private property be taken for public use, without just
compensation.
The Tenth Amendment to the United States Constitution provides:
The powers not delegated to the United States by the
Constitution, nor prohibited by it to the States, are
reserved to the States respectively, or to the people.
STATUTES
15 U.S.C. § 375 (the Jenkins Act), provides:
For the purposes of this Act [15 USCS §§ 375 et seq.]}-
(1) The term ‘‘person’’ includes corporations,
companies, associations, firms, partnerships,
societies, and joint stock companies, as well as
individuals.
(2) The term ‘‘cigarette’’ means any roll for
smoking made wholly or in part of tobacco, ir-
respective of size or shape and whether or not
such tobacco is flavored, adulterated, or mixed
with any other ingredient, the wrapper or cover
of which is made of paper or any other
substance or material except tobacco.
(3) The term ‘‘distributor licensed by or located
in such State’’ means -
C-2
(A) in the case of any State which by
State statute or regulation authorizes
the distribution of cigarettes at
wholesale or retail, or any person so
authorized, or
(B) in the case of any other State,
any person located in such State who
distributes cigarettes at wholesale or
retail;
but such term in no case includes a person who
acquires cigarettes for purposes other than
resale.
(4) The term ‘‘use,’’ in addition to its ordinary
meaning, means the consumption, storage,
handling, or disposal of cigarettes.
(5) The term ‘‘tobacco tax administrator’’
means the State official duly authorized to ad-
minister the cigarette tax law of a State.
(6) The term ‘‘State’’ includes the District of
Columbia, Alaska, Hawaii, and the Common-
wealth of Puerto Rico.
(7) The term ‘‘transfers for profit’? means any
transfer for profit or other disposition for pro-
fit, including any transfer or disposition by an
agent to his principal in connection with which
the agent receives anything of value.
15 U.S.C. § 376, provides:
(a) Any person who sells or transfers for profit cigarettes
in interstate commerce, whereby such cigarettes are ship-
ped into a State taxing the sale or use of cigarettes to
other than a distributor licensed by or located in such
State, or who advertises or offers cigarettes for such sale
or transfer and shipment, shall-
(1) first file with the tobacco tax administrator
of the State into which such shipment is made
or in which such advertisement or offer is
disseminated a statement setting forth his name
C-3
and trade name (if any), and the address of his
principal place of business and of any other
place of business; and
(2) not later than the 10th day of each calendar
month, file with the tobacco tax administrator
of the State into which such shipment is made, +
a memorandum or a copy of the invoice cover-
ing each and every shipment of cigarettes made
during the previous calendar month into such
State; the memorandum or invoice in each case
to include the name and address of the person
to whom the shipment was made, the brand,
the quantity thereof.
(b) The fact that any person ships or delivers for shipment
any cigarettes shall, if such shipment is into a State in
which such person has filed a statement with the tobacco
tax administrator under subsection (a)(1) of this section,
be presumptive evidence (1) that such cigarettes were
sold, or transferred for profit, by such person, and (2)
that such sale or transfer was to other than a distributor
licensed by or located in such State.
15 U.S.C. § 377, provides:
Whoever violates any provision of this Act [15 USCS §§
375 et seq.) shall be guilty of misdemeanor and shall be
fined not more than $1,000, or imprisoned not more than
6 months, or both.
18 U.S.C. § 1341 (the Mail Fraud Statute), provides:
Whoever, having devised or intending to devise any
scheme or artifice to defraud, or for obtaining money or
property by means of false or fraudulent pretenses,
representations, or promises, or to sell, dispose of, loan,
exchange, alter, give away, distribute, supply, or furnish
or procure for unlawful use any counterfeit or spurious
coin, obligations, security, or other article, or anything
represented to be or intimated or held out to be such
counterfeit or spurious article, for the purpose of ex-
ecuting such scheme or artifice or attempting so to do,
i
C4
places in any post office or authorized depository for mail
matter, any matter or thing whatever to be sent or
delivered by the Postal Service, or takes or receives
therefrom, any such matter or thing, or knowingly causes
to be delivered by mail according to the direction thereon,
or at the place at which it is directed to be delivered by the
person to whom it is addressed, any such matter or thing,
shall be fined no more than $1,000 or imprisoned not
more than five years, or both.
18 U.S.C. § 1343 (the Wire Fraud Statute), provides:
Whoever, having devised or intending to devise any
scheme or artifice to defraud, or for obtaining money or
property by means of false or fraudulent pretense,
representations, or promises, transmits or causes to be
transmitted by means of wire, radio or television com-
munication in interstate or foreign commerce, any
writings, signs, signals, pictures, or sounds for the pur-
pose of executing such scheme or artifice, shall be fined
no more than $1,000 or imprisoned not more than five
years, or both.
18 U.S.C. § 2341 (Trafficking in Contraband Cigarettes Act), pro-
vides:
As used in this chapter [18 USCS §§ 2341 ef seq.]-
(1) the term ‘‘cigarette’’ means-
(A) any roll of tobacco wrapped in
paper or in any substance not con-
taining tobacco; and
(B) any roll of tobacco wrapped in
any substance containing tobacco
which, because of its appearance, the
type of tobacco used in the filler, or
its packaging and labeling, is likely
to be offered to, or purchased by,
consumers as a cigarette described in
subparagraph (A);
C-5
(2) the term ‘‘contraband cigarettes’’ means a
quantity in excess of 60,000 cigarettes, which
bear no evidence of the payment of applicable
State cigarette taxes in the State where such
cigarettes are found, if such State requires a
stamp, impression, or other indication to be
placed on packages or other containers of
cigarettes to evidence payment of cigarette
taxes, and which are in the possession of any
person other than-
(A) a person holding a permit issued
pursuant to chapter 52 of the Inter-
nal Revenue Code of 1954 [26 USCS
§§ 5701 ef seq.) as a manufacturer of
tobacco products or as an export
warehouse proprietor, or a person
operating a customs bonded ware-
house pursuant to section 311 or 555
of the Tariff Act of 1930 (19 U.S.C.
1311 or 1555 [19 USCS § 1311 or
1555]) or an agent of such person;
(B) a common or contract carrier
transporting the cigarettes involved
under a proper bill of lading or
freight bill which states the quantity,
source, and destination of such
cigarettes;
(C) a person-
(i) who is licensed or otherwise
authorized by the State where
the cigarettes are found tc ac-
count for and pay cigarette
taxes imposed by such State;
and
(ii) who has complied with the
accounting and payment re-
quirements relating to such
license or authorization with
respect to the cigarettes involv-
ed; or
C4
(D) an officer, employee, or other
agent of the United States or a State,
or any department, agency, or in-
strumentality of the United States or
a State (including any political sub-
division of a State) having possession
of such cigarettes in connection with
the performance of official duties;
(3) the term ‘‘common or contract carrier’’
means a carrier holding a certificate of conve-
nience and necessity, a permit for contract car-
rier by motor vehicle, or other valid operating
authority under the Interstate Commerce Act
{49 USCS §§ 10101 ef seqg.], or under
equivalent operating authority from a
regulatory agency of the United States or of
any State;
(4) the term ‘‘State’’ means a State of the
United States, the District of Columbia, the
Commonwealth of Puerto Rico, or the Virgin
Islands; and
(4) the term ‘‘Secretary’’ means the Secretary
of the Treasury.
18 U.S.C. § 2342, provides:
(a) It shall be unlawful for any person knowingly to ship,
transport, receive, possess, sell, distribute, or purchase
contraband cigarettes.
(b) It shall be unlawful for any person knowingly to make
any false statement or representation with respect to the
information required by this chapter [18 USCS §§ 2341 er
seq.] to be kept in the records of any person who ships,
sells, or distributes any quantity of cigarettes in excess of
60,000 in a single transaction.
18 U.S.C. § 2343, provides:
(a) Any person who ships, sells, or distributes any quanti-
ty of cigarettes in excess of 60,000 in a single transaction
C-7
shall maintain such information about the shipment,
receipt, sale, and distribution of cigarettes as the
Secretary may prescribe by rule or regulation. The
Secretary may require such person to keep only-
(1) the name, address, destination (including
street address), vehicle license number, driver’s
license number, signature of the person receiv-
ing such cigarettes, and the name of the pur-
chaser;
(2) a declaration of the specific purpose of the
receipt (personal use, resale, or delivery to
another);
(3) a declaration of the name and address of the
recipient’s principal in all cases when the reci-
pient is acting as an agent.
Such information shall be contained on business records
kept in the normal course of busines Nothing contained
herein shall authorize the Secretary to require reporting
under this section.
(b) Upon the consent of any person who ships, sells, or
distributes any quantity of cigarettes in excess of 60,000
in a single transaction, or pursuant to a duly issued search
warrant, the Secretary may enter the premises (including
places of storage) of such person for the purpose of in-
specting any records or information required to be main-
tained by such person under this chapter [18 USCS §§
2341 ef seq.], and any cigarettes kept or stored by such
person at such premises.
18 U.S.C. § 2344, provides:
(a) Whoever knowingly violates section 2342(a) of this ti-
tle [18 USCS § 2342(a)] shall be fined not more than
$100,000 or imprisoned not more than five years, or both.
(b) Whoever knowingly violates any rule or regulation
promulgated under section 2343(a) or 2346 of this title [18
USCS § 2342(a) or 2346] or violates section 2352(b) of
this title [18 USCS § 2342(b)] shall be fined not more than
$5,000 or imprisoned not more than three years, or both.
C-8
(c) Any contraband cigarettes involved in any violation of
the provisions of this chapter [18 USCS §§ 2341 ef seq.]
shall be subject to seizure and forfeiture, and all provi-
sions of the Internal Revenue Code of 1954 [26 USCS §§
1 et seq.] relating to the seizure, forfeiture, and disposi-
tion of firearms, as defined in section 5845(a) of such
Code [26 USCS § 5845(a)], shall, so far as applicable, ex-
tend to seizures and forfeitures under the provisions of
this chapter [18 USCS §§ 2341 ef seq.]
18 U.S.C. § 2344, provides:
(a) Nothing in this chapter [18 USCS §§ 2341 ef seq.] shall
be construed to affect the concurrent jurisdiction of a
State to enact and enforce cigarette tax laws, to provide
for the confiscation of cigarettes and other property seiz-
ed for violation of such laws, and to provide for penalties
for the violation of such laws.
(b) Nothing in this chapter [18 USCS §§ 2341 ef seq.] shall
be construed to inhibit or otherwise affect any coor-
dinated law enforcement effort by a number of States,
through interstate compact or otherwise, or provide for
the administration of State cigarette tax laws, to provide
for the confiscation of cigarettes and other property seiz-
ed in violation of such laws, and to establish cooperative
programs for the administration of such laws.
New York Statutes, Article XX, § 171 provides that in relation to its
taxing powers that:
The state tax commission shall:
First. Make such reasonable rules and regulations, not
inconsistent with law, as may be necessary for the exercise
of its powers and the performance of its duties under this
chapter.
Second. Assess, determine, revise, readjust and im-
pose the corporation taxes under articles nine and nine-a
of this chapter, and on and after July first, nineteen hun-
dred and twenty-one, have the power and perform the
duties of the state comptroller in the collection of such
taxes and the crediting of such taxes erroneously paid, as
C-9
jurisdiction thereof is vested in such commission by sec-
tion one hundred and seventy-six of this chapter.
Third. On and after July first, nineteen hundred and
twenty-one, have the powers and perform the duties of
the state comptroller in relation to the assessment, deter-
mination and collection of the tax on transfers of proper-
ty, as jurisdiction thereof is vested in such commission by
section one hundred and seventy-six of this chapter.
Fourth. On and after July first, nineteen hundred and
twenty-one, have the powers and perform the duties of
the state comptroller in the collection of the tax on
transfers of stock under article twelve of this chapter, as
jurisdiction thereof is vested in such commission by sec-
tion one hundred and seventy-six of this chapter.
Fifth. On and after July first, nineteen hundred and
twenty-one, have the power and perform the duties of the
state comptroller in the assessment, determination,
review, readjustment and collection of taxes upon and
with respect to personal income, as jurisdiction thereof is
vested in such commission by section one hundred and
seventy-six of this chapter.
Sixth. Administer, supervise and enforce the tax on
mortgages as provided in article eleven of this chapter.
Seventh. On and after July first, ninetenn hundred and
twenty-one, have the powers and perform the duties of
the secretary of state under articles eleven and eleven-a of
the highway law, in relation to motor vehicles and motor
cycles, as jurisdiction thereof is vested in commission by
section one hundred and seventy-eight of this chapter.
Eighth. Take testimony and proofs, under oath, with
reference to any matter with the line of its official duty.
Any member of such commission, a deputy tax commis-
sioner and such other officials and employees of the
department of taxation and finance as may be nominated
by such commission by resolution recorded in its minutes
may be designated for the purpose of taking such
testimony and proofs and any such member of the com-
mission, deputy tax commissioner or other official or
employee so nominated may be designated by such
-
C-10
commission for the purpose of holding any hearing
authorized or required under the provisions of this
chapter.
Ninth. Require from all state and local officers such
information as may be necessary for the proper discharge
of its duties.
Tenth. Hold meetings at an office to be assigned it in
one of the state buildings at Albany, at such times as may
be fixed by the president or a majority of the commission
or by adjournment thereof, or at such other places as it
may designate.
Eleventh. Compile and publish statistics relating to
state and local taxation.
Twelfth. Make investigations of the general system of
state taxation from time to time.
Thirteenth. Inquire into the provisions of the law of
other states and jurisdictions; to confer with tax commis-
sioners of other states regarding the most effectual and
equitable methods of taxation, and particularly regarding
the best methods of avoiding conflicts and duplication of
taxation, and to recommend to the legislature such
measures as will bring about uniformity of methods, har-
mony and co-operation between the different states and
jurisdictions in matters of taxation.
New York Statutes, Article XX, Section 471, provides, in relation to
the imposition of taxes, that:
1. There is hereby imposed and shall be paid a tax on
all cigarettes possessed in the state by any person for sale
on and after February first, nineteen hundred seventy-
two except that no tax shall be imposed on cigarettes sold
under such circumstances that this state is without power
to impose such tax or sold to the United States or sold to
or by a voluntary unincorporated organization of the
armed forces of the United States operating a place for
the sale of goods pursuant to regulations promulgated by
the appropriate executive agency of the United States.
Such tax on cigarettes shall be at the rate of seven and
one-half cents for each ten cigarettes or fraction thereof
ts
C-11
and is intended to be imposed upon only one sale of the
same package of cigarettes. It shall be presumed that all
cigarettes within the state are subject to tax until the con-
trary is established, and the burden of proof that any
cigarettes are not taxable hereunder shall be upon the per-
son in possession thereof.
2. It is intended that the ultimate incidence of and
liability for the tax shall be upon the consumer, and that
any agent or dealer who shall pay the tax to the tax com-
mission shall collect the tax from the purchaser or con-
sumer. Except as hereinafter provided, the tax shall be
advanced and paid by the agent. The agent shall be liable
for the collection and payment of the tax on cigarettes im-
posed by this article and shall pay the tax to the tax com-
mission by purchasing, under such regulations as it shall
prescribe, adhesive stamps of such designs and denomi-
nations as it shall prescribe. The tax on cigarettes may
also be paid by or through the use of metering machines if
the tax commission so prescribes. Agents, located within
or without the state, shall purchase stamps and affix such
stamps in the manner prescribed to packages of cigarettes
to be sold within the state, in which case any dealer subse-
quently receiving such stamped packages of cigarettes will
not be required to purchase and affix stamps on such
packages of cigarettes. Notwithstanding any other provi-
sion of this article, the tax commission may by regulation
provide that the tax on cigarettes imposed by this article
shall be collected without the use of stamps.
3. The amount of taxes advanced and paid by the
agent as hereinabove provided shall be added to and col-
lected as part of the sales price of the cigarettes.
New York Statutes, Article XX, Section 481, provides that the penalty
for violation of Section 471, supra, is as follows:
1. (a) An agent who or which fails to file a return or
to pay any tax within the time required by or pursuant to
this article shall thereby forfeit to the state a penalty of
five per centum of the amount of tax determined to be
due as provided in this article plus one per centum of such
amount for each month of delay or fraction thereof after
C-12
the expiration of the first month after such return was re-
quired to be filed or such tax become due; but the tax
commission, if satisfied that the delay was excusable, may
remit all or any part of such penalty. If a tax on cigarettes
under this article is not paid when due by any other per-
son, the person liable for the payment of such tax shall
forfeit to the state a penalty of fifty per centum of the
amount of such tax determined to be due as provided in
this article plus one per centum of such amount for each
month of delay or fraction thereof after the expiration of
the first month after such tax became due; but the tax
commission, if satisfied that the delay was excusable may
remit all or any part of such penalty. Such penalties shall
be determined, assessed, collected and paid in the same
manner as the taxes imposed by this article and shall be
disposed of as hereinafter provided with respect to
moneys derived from the tax.
(b) In addition to any other penalty imposed by this
article, the tax commission may impose a penalty of not
more than one hundred dollars for each two hundred
cigarettes or fraction thereof in excess of two thousand
cigarettes in unstamped or unlawfully stamped packages
in the possession or under the control of any person. Such
penalty shall be determined as provided in section four
hundred seventy-eight of this chapter, and may be review-
ed only pursuant to such section. Such penalty shall be
collected in the same manner as the taxes imposed by this
article. The tax commission, in its discretion, may remit
all or part of such penalty. Such penalty shall be paid to
the department of taxation and finance and disposed of
as hereinafter provided with respect to moneys derived
from the tax.
2. Any person other than an agent, who possess or
transports for the purpose of sale any unstamped or
unlawfully stamped packages of cigarettes subject to the
tax imposed by section four hundred seventy-one of this
chapter, or who sells or offers for sale unstamped or
unlawfully stamped packages of cigarettes in violation of
the provisions of this article, or who willfully attempts in
any manner to evade or defeat the taxes imposed by this
article, or the payment thereof, shall be guilty of a
is ss
=
C-13
misdemeanor and upon conviction thereof, for a first of-
fense, shall be sentenced to pay a fine of not more than
two thousand dollars, or to be imprisoned for not more
than one year, or both, in the discretion of the court; and
for a second offense, shall be sentenced to pay a fine of
not less than five hundred dollars nor more than five
thousand dollars, and to be imprisoned for a definite fix-
ed period which shall be not less than six months and not
more than one year. Any person who has previously been
convicted two or more times under this section, or who,
regardless of any previous convictions, possesses or
transports for the purpose of sale twenty thousand or
more cigarettes subject to the tax imposed by section four
hundred seventy-one of this chapter in any unstamped or
unlawfully stamped packages, or who, regardless of any
previous convictions, sells or offers for sale twenty thou-
sand or more cigarettes in any unstamped or unlawfully
stamped packages in violation of the provisions of this ar-
ticle, or who, regardless of any previous convictions,
willfully attempts in any manner to evade or defeat the
taxes imposed by this article or the payment thereof on
twenty thousand or more cigarettes, shall be guilty of a
class E felony.
The possession or transportation within this state by
any person other than an agent at any one time of five
thousand or more cigarettes in unstamped or unlawfully
stamped packages shall be presumptive evidence that
such cigarettes are possessed or transported for the pur-
pose of sale and are subject to the tax imposed by section
four hundred seventy-one of this chapter. Such posses-
sion or transportation shall render inoperative any provi-
sions of this title providing for a time period during which
a use tax may be paid on unstamped cigarettes or
unlawfully or improperly stamped cigarettes or during
which such cigarettes may be returned to an agent. The
possession within this state of more than four hundred
cigarettes in unstamped or unlawfully stamped packages
by any person other than an agent at any one time shall be
presumptive evidence that such cigarettes are subject to
tax as provided by this article.
C-14
Nothing in this subdivision shail apply to common or
contract carriers or warehousemen while engaged in
lawfully transporting or storing unstamped packages of
cigarettes as merchandise, nor to any employee of such
carrier or warehouseman acting within the scope of his
employment, nor to public officers or employees in the
performance of their official duties requiring possession
or control of unstamped or unlawfully stamped packages
of cigarettes, nor to temporary incidental possession by
employees or agents of persons lawfully entitled to
possession, nor to persons whose possession is for the
purpose of aiding police officers in performing their
duties.
3. Any agent or dealer who shall fail, neglect or
refuse to comply with, or shall violate the provisions of
this article or the rules and regulations promulgated by
the tax commission under this article, shall be guilty of a
misdemeanor and upon conviction, for a first offense,
shall be sentenced to pay a fine of not more than five hun-
dred dollars, or to be imprisoned for not more than sixty
days, or both such fine and imprisonment in the discre-
tion of the court; and for a second or subsequent offense,
shall be sentenced to pay a fine of not less than five hun-
dred dollars or more than one thousand dollars, or to be
imprisoned for not more than six months, or both such
fine and imprisonment in the discretion of the court.
4. Any person who falsely or fraudulently makes,
forges, alters or counterfeits any stamp prescribed by the
tax commission under the provisions of this article, or
causes to procures to be falsely or fraudulently made,
forged, altered or counterfeited any such stamp, or
knowingly and willfully utters, purchases, passes or
tenders as true any such false, forged, altered, or
counterfeited stamp, or knowingly and willfully possesses
any cigarettes in packages bearing any such false, forged,
altered or counterfeited stamps, and any person who
knowingly and willfully makes, causes to be made, pur-
chases or receives any device for forging or counterfeiting
any stamp prescribed by the tax commission under the
provisions of this article, or who knowingly and willfully
possesses any such device, shall be guilty of a felony. For
C-15
the purposes of this section, the words ‘‘stamp prescribed
by the tax commission”’ shall include a stamp, impression
or imprint made by a metering machine, the design of
which has been approved by such commission.
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.