Appendix — Dunkel v. United States

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1990

JAMES C. DUNKEL,

Petitioner,

Vv.

UNITED STATES OF AMERICA,

Respondent.

APPENDIX TO THE

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

DONALD W. MacPHERSON

MacCPHERSON & MCCARVILLE

3404 W. Cheryl Drive

Suite A250

Phoenix, AZ 85051

(602) 866-9566

Counsel for Petitioner

APPENDIX

App. Old*

Page Page

Opinion and Judgment of

the United States Court

of Appeals for the

Seventh Circuit,

April 16, 1990 1 (1)

Order denying suggestion

for rehearing en banc,

May 11, 1990 16 3§=©(9)

Constitutional Provisions 18 (10)

and Statutes

Excerpts from Vol. 7,

Charge Conference 20 (12)

Dl - Testimony of IRS

Agent (Expert

Witness) 45 (28)

D2 - The Charge 49 (31)

Order of United States

Supreme Court Staying the

Issuance of the Mandate of

the United States Court of

Appeals for the Seventh

Circuit, May 25, 1990 53 (34)

City of Rockford

Ordinances 55 (36)

Old page references to Appendix

previously submitted to the Court.

All corrections made per letter of

July 17, 1990.

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APPENDIX A

IN THE

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

NO. 89-1841

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

V o

JAMES C. DUNKEL,

Defendant-Appellant.

Appeal from the United States District

Court for the Northern District of

Illinois, Western Division.

No. 88 CR 20010 - Stanley J. Roszkowski,

Judge.

ARGUED DECEMBER 8, 1989 - DECIDED

APRIL 16, 1990

Before POSNER and EASTERBROOK, Circuit

Judges, and DUMBAULD, Senior District

Judge. *

EASTERBROOK, Circuit Judge. James C.

Dunkel, a dentist, decided in 1981 that

the income tax is "voluntary". S» he

* Honorable Edward Dumbauld, of the

Western District of Pennsylvania, sitting

by designation.

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quit filing tax returns. Just in case the

IRS should take a contrary view, Dunkel

also started keeping two sets of books,

excluding from one any cash receipts and

checks that were endorsed over to his

staff to pay their salaries without going

through his bank accounts. Dunkel

testified that he did these things to

obtain more "privacy" than the banking

system affords him. The jury concluded,

however, that he did these things to

evade tax, and that he also willfully

failed to file his tax returns, in

violation of 26 U.S.C. Secs. 720] and

7203. The district judge sentenced him to

three years’ imprisonment, to be followed

by five years’ probation.

Some of the evidence used to convict

Dunkel came from his refuse, which an

informant culled. After California v.

Greenwood, 486 U.S. 35 (1988), there is

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no doubt that the contents of Dunkel’s

dumpster, in which financial records were

mixed with worn-out teeth and discarded

needles, were not within that zone of

privacy to which the Fourth Amendment

applies. Nonetheless, Dunkel contends

that the dumpster was within the

curtilage of his office, so that the

informant needed a warrant (or his

consent) to approach the dumpster in the

first place. If the informant was not

entitled to reach the dumpster, the fact

that its contents had been abandoned

could not justify the search. Consider

the status of papers mixed with scrapings

from dinner plates in a garbage bag in

the kitchen. The police could not invade

the home and rifle the bag, however, free

their access to its contents would have

been, given Greenwood, once it was put

outside.

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Dunkel owned and maintained his

offices in a building that housed two

other dentists and five business tenants.

All used the same dumpster, which was

located off the parting lot of the

building, more than 55 feet from the

nearest part of the structure. Dunkel’s

patients and employees, and those

visiting other tenants of the building,

used the parking lot. Anyone in the

parking lot could walk up to the

dumpster; the trash hauler that emptied

the dumpster came in through the parking

lot and needed no key or other entree’.

After taking evidence, the district court

found that "the fact that the garbage

dumpster was being shared by other

tenants .. . [and] was accessible to the

public . . . supports the finding that

there was no reasonable expectation of

privacy; and although this dumpster was

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170 feet into the property, I think it’s

clear that that dumpster was accessible

to the public, as much as if it were

sitting in any other open lot." This

finding is not clearly erroneous.

Intoning “curtilage” does not alter

the fact that the parking lot was open to

all comers--not only Dunkel’s invitees

but also those of his seven tenants.

“What a person knowingly exposes to the

public, even in his own home or office,

is not a subject of Fourth Amendment

protection." Katz v. United States, 389

U.S. 347, 351 (1967). See Oliver v.

United States, 466 U.S. 170, 179-80

(1984) (“open fields" doctrine applied

despite "no trespassing" signs).

Dunkel’s redoubt is United States v.

Swart, 679 F.2d 698 (7th Cir. 1982),

which held that agents could not enter

the yard of an auto repair business to

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read the vehicle identification numbers

from cars there. No one other than Swart

and his employees had access to the

fenced-in yard where the cars were kept;

this is a far cry from Dunkel’s open

parking lot with 32 spaces used

throughout the day by many strangers.

Someone who tosses documents into a

dumpster to which hundreds of people have

ready access has no legitimate

expectation of privacy in the dumpster or

its contents. United States v. Michaels,

726 F.2d 1307, 1312-13 (8th Cir. 1984),

cited with approval in Greenwood, 486

U.S. at 42.

Only three of Dunkel’s eight

remaining arguments (most with multiple

sub-parts) bear comment. Dunkel insists

that the charges under Section 720] are

duplicitous because that statute creates

two crimes: evading the assessment of

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taxes (as by fooling the IRS about your

income) and evading the payment of taxes

(as by secreting assets after taxes have

been assessed). To charge both in one

count, Dunkel maintains, is to confuse

both the defendant and the jury. Not so.

Section 720] creates only one crime: tax

evasion. Section 7201 makes it a crime

to “attempt in any manner to evade or

defeat any tax imposed by this title or

the payment thereof." Just as you can

rob a bank in a dozen ways (blow the door

off the vault, tunnel from next door and

empty the till in the dead of the night,

stick up the teller, scoop money out of

the cash drawer during business hours

when no one is looking, and so on), so

you can evade taxes in multiple ways.

Sometimes it is convenient to say

that different methods are different

"crimes," as the Supreme Court once said

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about Section 7201. Sansone v. United

States, 380 U.S. 343, 354 (1965); see

also United States v. Dack, 747 F.2d

1172, 1174 (7th Cir. 1984). Whether

Section 720] creates multiple offenses in

the sense that one who evades his taxes

for a single year both by creative

bookkeeping and by transferring assets

(as the jury could conclude Dunkel did)

could be given cumulative punishment is a

different matter entirely. If Dunkel

were right, he could be punished twice,

so long as the government took care to

charge the events of a single year in two

counts. We need not decide whether

Congress has authorized this. It is

enough to say that nothing in the text or.

history of Section 720] requires an

indictment to treat Section 720] as if it

were two sections of the United States

Code. The grand jury must let the

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accused know the nature and basis of the

charge. Dunkel’s indictment did so: it

listed six specific ways in which he

evaded taxes (five in 1981, three in

1983, with two methods used in each

year). He knew exactly what he had to

prepare the defend against, and the jury

knew its role as well. United States v.

Shorter, 809 F.2d 54, 58 (D.C. Cir.

1987); United States v. Hawkins, 781 F.2d

1483, 1484 (11th Cir. 1986).

Dunkel contents caat 26 8.6,

Section 7203 is unconstitutionally vague

because it requires a taxpayer to "make"

a return. No one could understand this,

Dunkel insists. Maybe it means "fill in"

a return; maybe it means "send in" a

return; maybe it even means "construct a

return out of raw materials." The

district judge thought this frivolous and

threatened sanctions. Dunkel’s lawyer,

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Donald. W. MacPherson, filed in the

district court a blizzard of

"unnecessary, duplicative and spurious

motions, causing the Court to spend

valuable time searching through 110 pages

of motions which appear to be

‘boilerplate’ motions duplicated from a

word processor." Although this court’s

Rule 30(a) requires the appellant to

attach to his brief the opinions under

review, MacPherson deleted from the

district court’s opinion the portion

chastising him and warning that worse

could follow. See In re Becraft, 885

F.2d 547 (9th Cir. 1989).

Statutes are not unconstitutional

just because clever lawyers can invent

multiple meanings. It is enough that a

reasonable person can see what Congress

is driving at. United States vy. Powell,

423 U.S. 87, 93 (1975). Dunkel knew full

lla

well that he had to fill in a return and

file it. He had done both through the

1980 tax year. Making a tax return is a

term of art for the combination of

completing and filing; any accountant or

lawyer would have told Dunkel so, had he

asked. (Dunkel’s accountant actually

completed his 1981 return; Dunkel decided

not to file it.) Marginal cases of

genuine ambiguity can be tackled as they

arise. United States v. Bradley, 38:92

F.2d 634, 636-37 (7th Cir. 1990). This

is not one.

Both Section 720] and Section 7203

require the district court to impose, as

part of the punishment, the "costs of

prosecution.” Neither statute defines

"costs," so courts regularly look to 28

U.S.C. Section 1920 for specification of

the permissible amounts. E.g. United

States v. Procario, 361 F.2d 683 (2d Cir.

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1966); United States v. Vaughn, 636 F.2d

921, 922 (4th Cir. 1980). Section

1920(3) defines "(fjees and disbursements

for printing and witnesses" as part of

costs; in turn 28 U.S.C. Section 1821(b)

limits to $30 per day the "witness fee"

an adversary must pay on top of those

expenses. See Crawford Fitting Co. vy.

J.T. Gibbons, Inc., 482 U.S. 437 (1987).

The district court included as part of

the judgment $2,037.36 in travel and

subsistence costs of Terrence Catalina,

the IRS case agent who was also the

principal witness against Dunkel. He

submits that these expenses are not

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allowable "costs" because Catalina is an

employee of his adversary. Yet nothing

in either Section 19290 or Section 1821

excludes a litigant’s expenses in

producing its employee as a witness, and

S&S U.S.C. Section 5537(a)(2), which

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prevents a federal official from

receiving witness fees, does not speak to

expenses. Catalina is not based in

Rockford, Illinois (the site of Dunkel’s

trial). But for Dunkel’s actions, the

United States would not have incurred the

expenses of transporting Catalina to

Rockford and feeding and housing him

there. So although no case we can find

addresses the point (an oddity in view cf

the number of years these statues have

been in force), we hold that the "costs"

reimbursable under Section 1920, and

therefore Section 7201 and 7203, include

the expenses of transportation and

subsistence for witnesses employed by the

United States. Cf. Gleckman v. United

States, 80 F.2d 394 (8th Cir. 1935).

None of Dunkeél’s other contentions

requires comment. We were surprised to

discover, however, that the district

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judge allowed Dunkel’s lawyer to present

evidence, and to argue to the jury, that

a person’s belief that "taxes are

voluntary" is a defense to a criminal

prosecution. Although only willful

evasion or failure to file is criminal,

in this circuit a mistaken view of the

law does not negate willfulness in the

defendant’s legal belief is objectively

unreasonable. E.g. United States v.

Cheek, 882 F.2d 1263 (7th Cir. 1989),

cert. granted, 110 S.Ct. 1108 (1990).

Like the Lord High Executioner in the

Mikado, we’ve "got a little list" of

beliefs that are objectively

unreasonable, such as that the 16th

Amendment was not properly ratified and

that wages are not income. See United

States v. Buckner, 830 F.2d 102, 103 (7th

Cig. 1967). We add to that list the

belief that payment of income taxes is

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"voluntary." Juries should not be

invited to decide for themselves whether

it is "reasonable" to believe that the

income tax is voluntary. Lawyers

sometimes joke that the estate tax is a

"voluntary tax" in the sense that with

careful planning you can avoid it. No

tax is "voluntary" in the sense that if

you meet the statutory criteria for its

imposition, you may elect not to pay. A

goodly part of the business of district

courts is creating object lessons of that

fact. Dr. Dunkel has become another.

AFFIRMED

A true Copy:

Teste:

Clerk of te United States

Court of Appeals for the

Seventh Circuit

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APPENDIX B

UNITED STATES COURT OF APPEALS

FOR THE SEVENTH CIRCUIT

CHICAGO, ILLINOIS 60604

MAY 11, 1990

Before

HON. RICHARD A. POSNER, Circuit Judge

HON. FRANK H. EASTERBROOK, Circuit Judge

HON. EDWARD DUMBAULD, Senior District

Judge*

UNITED STATES OF Appeal from the

AMERICA, United States Court

for the Northern

Plaintiff- District of Illinois,

Appellee, Western Division.

Vv.

JAMES C. DUNKEL, No. 88 CR 20010

Stanley J. Roszkowski

Defendant-

Appellant.

)

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)

)

)

No. 89-1841 )

)

)

)

)

)

Order

Defendant-Appellant filed a petition

for rehearing and suggestion of rehearing

en banc on April 30, 1990. No judge in

regular active service has requested a

vote on the suggestion of rehearing en

banc, and all of the judges on the panel

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have voted to deny rehearing. The

petition for rehearing is therefore

DENIED.

*Honorable Edward Dumbauld, of the

Western District of Pennsylvania, sitting

by designation.

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APPENDIX C

CONSTITUTIONAL PROVISIONS AND STATUTES

The Fourth Amendment to the United

States Constitution provides in part:

The right of the people to be

secure in their ... papers and

effects, against unreasonable

searches and seizures shall not

be violated ...

The Fifth Amendment to the United

States Constitution provides in part:

No person shall ... be deprived

of life, liberty or property

without due process of law...

The Sixth Amendment to the United

States Constitution provides in part:

In all criminal prosecutions, the

accused siiall enjoy the right to

a speedy and public trial by an

impartial jury of the state and

district wherein the crime shall

have been committed..., and to be

informed of the nature and cause

of the accusation; ... and to

have the assistance of counsel

for his defense.

26 U.S.C. Sec. 7201 provides in part:

Any person who willfully attempts

in any manner to evade or defeat

any tax imposed by this title or

the payment thereof shall in

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addition to other penalties

provided by law be guilty of a

felony and upon conviction

thereof shall be fined not more

than $100,000 ... or imprisoned

not more than five years or both,

together with costs of

prosecution.

26 U.S.C. Sec. 7203 provides in part:

Any person ... required by this

title or by regulations made

under authority thereof to make a

return ... who willfully fails

-+- to make such return ... at

the time or times required by law

or regulation shall in addition

to other penalties provided by

law be guilty of a misdemeanor

and upon conviction thereof shall

be fined not more than $25,000

-++- Or imprisoned not more than

one year or both together with

the cost of prosecution.

18 U.S.C. Sec. 3231 provides in part:

The district courts of the United

States shall have original

jurisdiction exclusive of the

courts of the states of all

offenses against the laws of the

United States.

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APPENDIX D

UNITED STATES

OF AMERICA, Docket No. 88CR20010

Vv. Rockford, Illinois

1990

9:00 o’clock a.n.

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) Thursday, February 9,

JAMES C. DUNKEL, )

)

Defendant. )

VOLUME VII

TRANSCRIPT OF TRIAL

BEFORE THE HONORABLE

STANLEY J. ROSZKOWSKI,

and a jury

(Excerpts) pages 888-902; 928-930;

942-944; 1043-1046

- THE COURT: ... All right. 31. The

same ruling on 31 that I made back on the

question of willfully. This is simply the

statute, and I think that’s all that’s

necessary.

What’s your objection to 31? You

Say you want knowingly in there, too?

MR. MACPHERSON: No, sir, not

knowingly in this part. I think my

objection here is the problem of -- I

have to see the statute.

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THE COURT: Yes. I didn’t have a

copy of the statute at home with ne,

either.

MR. MACPHERSON: Oh, okay. Now I

know. Okay. Now I know my objection.

It’s an objection I’ve made from day

one in this case, and that is -- and as

the Seventh Circuit has recognized the

Ninth Circuit case of U.S. v. Voorhies,

there’s two charges under this section,

willful attempt to evade the assessment

-- and that’s the part, any tax imposed

-- and willful attempt to evade the

payment.

So, I still don’t’ know which he’s

charged with and --

THE COURT: It says evade or defeat.

MR. MACPHERSON: Well, but it’s got

both charges. It’s got tax imposed.

That’s the assessment part. Or it’s got

the “or payment thereof," and that’s the

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payment part.

So, we have duplicity. We have a

statute that permits two different

charges, and I think the government

should have elected -- and they still

don’t want to elect, and I still don’t

know what their theory is, whether he’s

charged with attempt to evade and defeat

the assessment, tax imposed, or attempt

to evade and defeat the payment of the

tax that was assessed or imposed.

THE COURT: What do you say to that,

John?

MR. MCKENZIE: Well, your Honor,

we’ve held by our position from the very

get-going in this. We’ve told counsel

repeatedly in pleadings, I’ve told him

repeatedly in meetings, that the

government’s theory of the case is based

on tax evasion. It’s based on evading or

defeating the tax imposed.

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Counsel continues to bring up this

Voorhies, which has been recognized by

the Seventh Circuit; and if the court

goes back to Voorhies, it recognizes that

Voorhies is talking about a very specific

fact pattern. It’s 7201, involves both

evasion of tax and after an assessment of

the tax the evasion by hiding assets.

There has been no allegation in the

affirmative acts that that’s what

occurred. There has been no allegation in

the indictment that that’s what occurred.

There has been no allegation in any

pleadings that that’s what occurred, nd

there’s been no evidence that’s been

presented to this court that that’s what

occurred.

And I think he’s continually

bringing this up, and it’s a red herring

to the court. I’m not saying he’s doing

it under bad faith to the court, but I

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just think that this is an -issue that

resolved against him and --

THE COURT: I agree, and I don’t see

any point in going on. I’m going to

overrule the objection, and I’m going to

give 31.

MR. MACPHERSON: May I say one la

thing on it?

THE COURT: Sure.

MR. MACPHERSON: I don’t mean to

belabor it. I disagree with this

characterization that we’ve been put on

notice as to the pleadings or --

THE COURT: Well, I’ve been in this

courtroom for eight days, or whatever it

is now, and I’ve heard no other attempt

to put any evidence in on any other

subject.

MR. MACPHERSON: Well, then the "or

the payment thereof" should not be

included because that’s not what he’s

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charged with.

From what I understand the

government is saying, he’s charged with

attempting to evade the tax imposed,

- which is the assessment of the tax. So,

the payment, he’s not charged --

THE COURT: What you’re saying is

that that should end “Evade or defeat any

tax imposed."

MR. MACPHERSON: Yes, sir.

THE COURT: What do you say to that,

John?

MR. MCKENZIE: If that’s his only

objection, then I’1ll be glad to change

it, your Honor.

THE COURT: Strike out "or the

payment thereof"?

MR. MACPHERSON: Yes, sir....

THE COURT: All right. I’1ll give it

as amended. 31.

32. This actually tracks exactly

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what was in the previous statutory

instruction, isn’t it?...

MR. MACPHERSON: May I just have a

moment to look at 32?

THE COURT: Sure....

MR. MACPHERSON: Judge, on 32, I

knew there was something else. The second

element did say evade or defeat the

assessment of the tax -- or just the

assessment.

THE COURT: What do you say to that,

John?

MR. MCKENZIE: Well, your honor, I

think it’s confusing to the jury.

Moreover, the courts, when you track the

statutory language, you’re instructing

correctly on the law, and that’s what

this instruction tries to do. It tracks

the statutory language.

The Seventh Circuit has an

instruction for 7201, and that’s found

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on, I think, Page 138 of the blue book.

The problem with that instruction is

that instruction is geared towards a

different factual pattern that’s before

the court. As you can read through it,

that’s when somebody files a return, and

they fail to include all of their income

on it.

It’s also a fairly cumbersome

instruction, and it doesn’t seem to track

the language of the statute directly.

And what we’ve tried to do in the

government’s instruction is track exactly

what the statute requires and track the

fact pattern before the court.

MR. MACPHERSON: But it’s not clear.

Again, I’m back to what he’s charged

with, and 32 isn’t clear as to whether

he’s charged with, and 32 isn’t clear as

to whether he’s charged with defeat the

assessment or defeat the payment.

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So, just saying defeat the tax, that

could be either payment or assessment.

MR. MCKENZIE: That’s the crime

charged in 7201, evade or defeat the tax.

And, as you noted in the previous

instruction, "or the payment thereof,"

that’s not in it.

THE COURT: Well, that’s certainly

what he’s charged with. I don’t quite

understand your objection to it.

You’re saying that it’s specifically

intent to what? Evade the assessment or

what? Avoid assessment?

MR. MACPHERSON: i’m saying that the

second element should read as the Seventh

Circuit Pattern on 138, which is the

defendant intended --

THE COURT: Maybe I’m on a different

instruction 1 I’m on 37.

MR. MACPHERSON: Oh, I’m sorry. I

hadn’t finished with 32.

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THE COURT: I thought we were done

with 32.

MR. MACPHERSON: No. I think you and

John had moved to it, and I still had a

problem with it.

THE COURT: What’s your statement on

that?

MR. MACPHERSON: The second element

should read as the Seventh Circuit’s

Pattern on 138, and that is the defendant

intended to evade or defeat the

assessment.

THE COURT: Or payment?

MR. MACPHERSON: No. The “or

payment," that’s the other charge. So,

it should be assessment of the additional

tax.

THE COURT: What’s your position on

that, John?

MR. MCKENZIE: Judge, I think you

have to go back to the statute. This is

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the one I was referring to, and I don’t

think I was clear, your Honor, that this

is the charge that really -- this

instruction is really directed towards

when someone files a return and

understates their income on it. It’s

drafted for those factual patterns.

THE COURT: Here he didn’t file a

return.

MR. MCKENZIE: That’s correct. And

I think this court would be safer in

following the language of the statute.

The statute says evade or defeat the tax

and payment thereof.

Now, we’ve agreed that the "and

payment thereof" is not what he’s charged

with. He’s not charged with having been

assessed a tax and avoiding payment

thereof by hiding his assets.

THE COURT: Well, I think the

instruction accurately tracks the factual

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situation here, and I’m going to give it.

Let’s go to 37. And I take it that

your objection would be the same on this

one?

MR. MACPHERSON: Just a moment,

please. Right. Now we’re talking about

payment. I think they keep switching

horses midstream with me, Judge. rt’s

difficult to defend when -- well, I’ve

said it enough times.

THE COURT: All right. Just a

minute. To evade or defeat a tax, which

it was a legal duty of the defendant.

MR. MACPHERSON: It should be

assessment, defeat the assessment, and

forget the payment part.

THE COURT: Why couldn’t we amend

this slightly to say it was a legal duty

of the defendant --

MR. MACPHERSON: The Seventh Circuit

has a pattern on it, Judge, on 140; and I

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think we should follow the pattern, which

would be given -- now that they’ve

clarified what he’s charged with, it

should be specific intent to avoid

assessment of the tax.

THE COURT: What do you say to that,

John?

MR. MCKENZIE: Well, Judge, again,

as in the other one, this particular

instruction is drafted in the factual

scenario of someone who files a return

and doesn’t report all their income.

It’s not drafted towards what we have

here.

And again, I think the best way of

doing this is the instruction we’ve

tendered. It follows the facts before the

court and before the jury, and it also

tracks the law.

And I’d have some strong objections,

your Honor, if it’s changed in some way

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to all of a sudden talk to the jury about

assessment. That’s not what he’s charged

with. He’s charged with evasion, evading

or defeating the tax. That’s the

statute.

MR. MACPHERSON: [e*s:. se

understanding he’s charged with willfully

and knowingly attempting to evade the

assessment of the tax. That’s the

election, I understand.

MR. MCKENZIE: There’s no election,

Mac. I’ve gone over that. He’s been

charged with the crime. There’s no

election needed.

I mean, you can call it election for

the record, but that doesn’t make it

election.

MR. MACPHERSON: Well, your

characterization.

THE COURT: I don’t see how it

changes the factual situation and the law

34a

in this case. The fact is that he’s

charged with attempting to evade his

taxes, isn’t he, which was a legal duty

to pay the government, which he knew was

a legal duty.

MR. MACPHERSON: But there’s two

offenses to that, as the Seventh Circuit

recognizes at 138 and then at 140

And then 140, again, they say choose

the appropriate terms, and they give the

brackets, and I agree with their

brackets, and I agree with their

assessment.

THE COURT: It says, this section --

looking at Page 138 at the bottom, it

says, "This section includes both

attempts to avoid payments of taxes and

attempt to avoid assessment of taxes."

That includes both.

MR. MACPHERSON: The 7201 includes

both. That’s what I’ve been saying.

|

4

aoe Ss See ee es eee eee ee ee eee ee Se Ul

35a

There’s two crimes under 7201, and one is

attempt to avoid payment, and one is

attempt to avoid assessment.

THE COURT: Well, let me take a look

at those when I have a chance.

MR. MACPHERSON: Yes, sir.

THE COURT: We’ll reserve ruling.

That would be what? 32 and 37?

MR. MCKENZIE: Yes, sir.

THE COURT: 32 and 37. All right.

Let me take a look at that ...

39. This is the latest direction

from the Seventh Circuit. It’s right out

of Ramsey, r.ght out of Diaz. No

question about it. I don’t know what the

objection is. It’s exact language.

MR. MACPHERSON: I know, but the

prosecutor earlier was talking about how

sometimes these instructions don’t fit

the factual pattern. This one doesn’t

fit the factual pattern here. But these

36a

other cases weren’t -- the case in which

this is taken out of, the exact language,

is not a tax case.

THE COURT: Oh, yes, it is. It’s a

case I tried.

MR. MACPHERSON: No, I mean --

THE COURT: It’s a case I tried. It’s

United States v. Ramsey.

MR. MACPHERSON: Well, I don’t think

that’s the one I’m talking about.

THE COURT: I have it right here. We

don’t need to look it up.

MR. MACPHERSON: There’s another one

then where the same language was used.

THE COURT: And there’s another one

-- there’s another one, also, that uses

the same language.

Here’s Buckner, and I think it’s

even in that case, too. But it’s in

Ramsey.

MR. MACPHERSON: It was in Diaz.

hs

37a

THE COURT: I read it yesterday.

MR. MACPHERSON : D-i-a-z, which is

THE COURT: D-i-a-z. It’s in Diaz,

too, as well.

MR. MACPHERSON: Conspiracy and

cocaine. It was a drug case in Diaz.

THE COURT: Let me see if I have it.

I have it in my briefcase, I think.

In any event, it’s exact language

taken right out of the case. No doubt of

that. I’m going to give it. I checked it

yesterday. It’s right out of United

States v. Ramsey.

In fact, they were a little bit

critical of me because I gave a little

bit different instruction, and they said,

well, it was okay, but this is better.

And Judge Easterbrook wrote the

instruction out.

And I think you took it right out of

38a

that case, didn’t you, John?

MR. MCKENZIE: Yes, sir.

THE COURT: Those two cases. Ramsey

was a 1986 case. Diaz is a 1988 case. I

don’t know how much more current I could

find, language.

MR. MACPHERSON: Probably not much

more, but I don’t think it’s supported by

the factual pattern in this case.

THE COURT: All right. Well, let

the record show it’s given over

objection.

MR. MACPHERSON: 40 -=- are we ready

for 40, your Honor?

THE COURT: Yes.

MR. MACPHERSON: 40, of course, I’ve

submitted a charge, and I realize this is

the state of the law as between more --

it’s Seventh Circuit -- this objective

versus subjective reasonably, and I’ve

submitted an instruction on that, which

29a

we’ll get to later.

THE COURT: You know, I agree that

there’s some disagreement among the

circuits; but, as I told you at the

beginning, I follow the United States

Supreme Court decisions wherever

possible. If there isn’t a Supreme Court

decision on it, I follow the Seventh

Circuit. This is right out of the Seventh

Circuit.

I had drawn one that I think is,

perhaps, more clear than this one, and I

would read it to you and see.

A good faith misunderstanding of the

law may negate willfulness. In order for

a good faith misunderstanding of the law

to negate willfulness, the

misunderstanding must be objectively

reasonable. Mere disagreement with the

law does not constitute such a

misunderstanding must be objectively

ah f

40a

reasonable. Mere disagreement with the

law does not constitute such a

misunderstanding nor a defense in this

case.

Because I think that everyone is

presumed to know the law and follow it,

whether they agree with it or not....

MR. MACPHERSON: Let me just check,

you Honor. That would be 32.

No. My position is that their 32,

which is the elements, doesn’t properly

state the elements as proposed by the

Seventh Circuit and that the second

element should read the defendant

intended to evade or defeat the

assessment of the additional income tax.

THE COURT: But not the payment?

MR. MACPHERSON: He’s not charged --

you take out the payment. You choose one

or the other. And from what I understand

of their theory, their theory is he

4la

attempted to evade or defeat the

assessment. So that’s the language you

use.

I mean, this is a situation in which

I agree totally with the Seventh Circuit

on that element, and it’s just a matter

of choosing one or the other; and once

you choose the one, then you use the

language that they recommend.

THE COURT: What do you say to that,

John?

MR. MCKENZIE: Well, we finally have

Mr. MacPherson in agreement with the

Seventh Circuit. The problem is this

instruction doesn’t match the crime

involved. This instruction matches the

crime when someone fails to report all

their income.

And I think we’ve been over this,

and the court is aware of the

government’s position. The government

Ss ee eee ee we eS

_ i

—

*

42a

prefers to go by what the statute says,

when the Seventh Circuit hasn’t directly

addressed the issue, and that’s why we’ve

drafted Government’s 32.

THE COURT: All right. I’m going to

cut this short, and I’m going to agree

that -- I’m going to give the

government’s instruction on these and

refuse the others.

MR. BRODY: So, you’re going to give

32 and 37 and refuse 73 and 74?

THE COURT: Yes. As I look at then,

I think that’s proper in the facts in

this case. l

75.

MR. MACPHERSON: 75, Judge, I would

move to strike at the end of the

government’s case-in-chief, and I’ll move

again when we close the evidence of the

failure to file and the failure to pay.

I don’t believe it’s proper to have

43a

in the indictment affirmative acts and

the list acts that are affirmative and

then list things that aren’t affirmative

acts in that list.

I didn’t say that very well. Let me

say it again, if I may. They have listed

several things that are affirmative acts,

and they said these are the affirmative

acts. With that listing they’ve also said

the failed to file and he failed to pay

the estimated tax. Those are not

affirmative acts, and they have no

business being included in a list of

affirmative acts, and they should be

taken out of the indictment and this

instruction given.

It’s just the same as if -- ny

theory, at least, is it’s the same as if

you have a conspiracy charge and acts in

furtherance of the conspiracy, and the

government doesn’t prove them up. Well,

44a

it’s a little different in that if they

proved them up, they proved that he

failed to file nd that he failed to pay,

but the Supreme Court has said that those

aren’t affirmative acts; they’re failures

to act.

MR. MCKENZIE: Judge, we’ve been

through this before in pretrial. The

Spies case said you can’t convict on tax

evasion when you don’t have a commission,

as opposed to omission. It didn’t say

that these acts of omissions weren’t

chargeable as affirmative acts.

In fact, we’ve charged them as

affirmative acts throughout all of the

Northern District of Illinois for many

years now.

THE COURT: Yes. We’ve gone through

that, and I think it’s been covered, and

I’m going to refuse it.

45a

APPENDIX D-1

TESTIMONY OF IRS AGENT KELLEY KILCOIN

THE COURT: Do you realize, Mr.

Kilcoin, you’re still under oath?

THE WITNESS: Yes, I do.

BY MR. MACPHERSON:

Q. Sir, for the year 1983 and what’s in

evidence as to third-party checks that

the defendant endorsed over for expenses,

have you made any calculation as to what

tax would be que and owing for 1983 from

that income reflected on those checks

that were signed over for expenses?

A. I made a calculation that included

all the income that he had.

Q. My question is did you make an

independent calculation as to just the

third-party checks?

A. No, I did not.

Q. And as to 1981, same question. Did

you make an independent calculation as to

EE

46a

what tax would be due and owing just from

income reflected on the third-party

checks?

A. No, I did not.

Q. Same question for 1982 as to what

tax would be due and owing from the

receipt of the silver coins from Dr.

Dunkel (sic).

MR. MCKENZIE: Your Honor, I’m going

to object to 1982. Tax evasion is not

alleged in that year.

MR. MACPHERSON: If I said ‘82, I

meant ‘81.

THE COURT: ‘81. All right.

BY THE WITNESS:

A. No, I didn’t make any independent

calculation.

BY MR. MACPHERSON:

A. And for 1981, did you make any

independent calculation as to what tax

would be due and owing from any income

0

47a

that would be reflected on depositing and

cashing checks at an out-of-town bank?

A. No, I did not.

MR. MACPHERSON: Pass the witness,

your Honor.

THE COURT: All right.

CROSS~-EXAMINATION

BY MR. MCKENZIE:

Q. Mr. Kilcoin, it’s your testimony

when you talk about calculation of

income, that’s based on total income; is

that correct?

A. That’s true.

Q. And, in fact, when you calculate

income, you don’t go and say your income

tax on this income would be this and this

income would be this, do you?

A. No, I don’t do that.

A. You do it on a full basis?

A. Yes.

Q. Where all the facts are disclosed?

48a

A Yes

MR. MCKENZIE: Thank you, your

Honor.

MR. MACPHERSON: Briefly, your

Honor.

REDIRECT EXAMINATION

BY MR. MACPHERSON:

Q. Sir, considering that you’ve done it

on all of the income, I take it then you

wouldn’t be able to tell the jury what

amount of tax the defendant attempted to

evade by depositing the checks in an

out-of-state bank for ‘’81, using

third-party checks for ‘81, or receiving

Sliver for ‘81?

A. I wouldn’t be able to tell you about

the tax for any specific item, no.

Q. And that would be the same as to

83?

A. That’s correct.

LULU

49a

APPENDIX D-2

THE CHARGE

Title 26, United States Code,

Section 7201 provides in relevant part

as follows: Any person who willfully

attempts in any manner to evade or defeat

any tax imposed by this title shall be

guilty of the crime of willfully

attempting to evade taxes.

To sustain the charges of attempting

to evade or defeat a tax, as charged in

Count 1, tax year 1981, and Count 4, tax

year 1983, of the indictment, the

Government must prove the following

propositions:

First, a substantial tax was due and

owing by the Defendant;

Second, the Defendant intended to

evade or defeat the tax;

Third, the Defendant willfully did

some act in furtherance of this intent.

50a

If you find from your consideration

of all the evidence that each of these

propositions has been proved beyond a

reasonable doubt, then you should find

the Defendant guilty ...

The evidence need not prove each

affirmative act alleged in the indictment

for each year in question. However, to

sustain the charge of willfully

attempting to evade taxes, the Government

must show more than a failing by the

Defendant to make an income tax return to

the Internal Revenue Service.

An affirmative act of the Defendant

is an act, the likely effect of which

would be to mislead or conceal. If the

tax evasion motive plays any part of such

act, the act may be an affirmative act,

even though the act “ay serve other

purposes, as well ...

With respect to the charges of tax

od

5la

evasion contained in Count 1, 1981, and

Count 4, 1983, the term willfully means

voluntarily and intentionally, with the

specific intent to evade or defeat a tax

which was the legal duty of the Defendant

to pay to the Government and which the

Defendant knew it was his legal duty to

pay.

The word knowingly means that the

Defendant realized what he was doing and

was aware of the nature of his conduct

and did not act through ignorance,

mistake, or accident. Knowledge may be

proved by the Defendant’s conduct and by

all the facts and circumstances

surrounding the case.

You may infer knowledge from a

combination of suspicion and indifference

to the truth. If you find that a person

had a strong suspicion that things were

not what they seemed or that someone had

en ee ‘

7 =a aa hal ares

ts'>-

52a

withheld some important facts, yet shut

his eyes for fear of what he would learn,

you may conclude that he acted knowingly,

as I have used that word.

A good faith misunderstanding of the

law may negate willfulness. In order for

a good faith misunderstanding of the law

to negate willfulness, the

misunderstanding must be objectively

reasonable.

53a

APPENDIX E

SUPREME COURT OF THE UNITED STATES

No. A-819

JAMES C. DUNKEL,

Applicant,

Vv.

UNITED STATES

UPON CONSIDERATION of the

application of counsel for the applicant,

and the Solicitor General having

presented no objection,

IT IS ORDERED that issuance of the

mandate of the United States Court of

Appeals for the Seventh Circuit, case No.

89-1841, be and the same is hereby stayed

pending the timely filing of a petition

for a writ of certiorari. If the

petition is so timely filed, this order

is to remain in effect pending this

54a

Court’s action on the petition for a writ

of certiorari. Should the petition for a

writ of certiorari be denied, this stay

terminates automatically. In the event

the petition for a writ of certiorari is

granted, this stay shall continue in

effect pending the sending down of the

judgment of this Court.

/s/ John Paul Stevens

Associate Justice of the

Supreme Court of the

United States

Dated this 25th

day of May, 1990.

55a

APPENDIX F

CITY OF ROCKFORD ORDINANCES

(FROM DEFENDANT’S HEARING, EXHIBIT 9)

Sec. 13-25. Refuse not to be collected.

The following refuse shall not be

collected or disposed of by the

city:

(a) Dangerous materials or

substances such as poisons,

acids, caustics, infected

materiais ...

Sec. 13-26. Containers required.

No person owning or occupying any

building, lot or premises shall

allow any refuse to collect or

remain upon said lot or premises

except in an approved container

tightly covered ...

Sec. 13-23. Interference with

receptacles.

No person other than the owner

thereof or any officer, employee,

contractor or licensee of the

city shall move, remove or

interfere with any garbage or

waste matter receptacle or the

contents thereof.

Sec. 19-2]. Trespass.

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56a

A person commits trespass when he

knowingly:

(a) enters the property or

any part thereof of another when

immediately prior to such entry

he receives notice, either oral

or written, from the owner or the

occupant that such entry is

forbidden....