# Petition for Writ of Certiorari — Pepersack v. Hall > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385601_0998%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1963 - **Citation:** 374 U.S. 809 ## Text &s Offhice-Supreme Court, U.S. re FIilED e APR 24 1963 ’ . ef JOHN F. DAVIS, CLERK é A .IN THE | “ae Supreme Curt of. the United States OcToBER eh 1962. No. 1046 : Fan f “ ef : METRO M. HOLOVACHKEA, : Petitioner, ne | UNITED 3 STATES OF AMERICA, Respogdent. Petition For Writ Of-Certiorari To The United States Court Of Appeals ~ for The Seventh Circuit 6 RQBERT J DOWNING, lo >. LaSalle Street, . Chivage 3,. U1 lineis, Counsel for Petitroner. ° ¢ Midwest Law Printing Co. 326 No Michigan Ave thitaes Telephone Financial 6 398s e ; INDEN, III. Pa The Opinion Of The Court Of Appeals Reduces To A Meaningless° Shibboleth The Established . Standards In Income Tax Evasion Cases On The ll - _ * Net Worth-expenditure Technique, Thereby De priving Petitioner Of Due Process Of Law o “A. Starting point not established —...... B. The Government's expert ‘witness un- constitutionally invaded the provinee of the — jury in preparing the Government’s net worth — Necro sg, Ne Feta ues (. Current taxable income and likely source _D. Fraudulent intent was not established : IV. ; The Petitioner's Constitutional Rights Were Violated When The Trial Court, Gagged The Peti- tioner And Denied Him The Opportunity Of Pre- senting A Fair Rebuttal To The Government's EEE OE Apinctescsaciscroer enna ua baetnaeeeae LSet eae Conclusion ........... Creare oe Pee EU ee SU nr | Appendix ‘A — Opinion of the United States Court . Of Appeals for the Sev OO IE ssc ccesn:. Appendix ** B’? — Judgment of the U nited States Court of Appeals for the Seventh Cireuit AN resi oeinee eee. : 7 bei teas “or — Constitutional Provisions and Stat- | a lb lt 7% SF . 4 Cir bloNs + w Curses: “ Beck vo USS. 9 Cir, 298 F. 2d 622 Blumentield v.U.S..8 Cir, 284 BL 2d 46 Bollenbach vo US, 326 US. 607” Continental Baking Company v. U. Sy 6. Cir, 281 Bo2d 130 Mpapeeaa » i aac Fen Pde ; Delaney -v. US 0 Cir. 199K. 2d 107 Dunn v: whee s., 5 Cir. Wir Jie t. .. Sabet Ieee Ford ve Ul. 555 TLS. SS, reversed, amended with directions to vacate judgment in 2 Cir, 237) F. >." ar Ate sree a eeNe Pe, Ford v. UL S.05 Cir, 210 FL 2d 318 ‘. Fuller v. Comm. 6 ee ., 313 BF. 2d 75 17. Glasser ve UL S315 °U S. 60 Grayson v. items 10 Cir, 256 F. : 61 ee Grubb v. Comm., 6 Cir., Sic l4edt. 4/9/63 (Cunre- nha, ae ARISEN CEP Ne De aer ees eh re, ae Gunn v2 Comm, & Cir. 247 F. Od: SI... me Heidel vo ULS., 6 Cir, 150 F.2d 493 | “a ~ Holland v. tes S.. 348 U.S. 121 |... Ts, ~ Kashat v. Commn., 6 Cir., 220 -F.. bd 282 Kotteakos v. UL S., 328 US. 750. ere Phillips’ Estate v. ¢ omim., 9 Cir. 46 F. 2a 200...” 14, Salinger v. Loisel, 265 U.S, 224 Schultz, Bavid Ho. 30 ise IG Smith v. Jie B48 0. at Nien Steele ve UL S05 Cir, a9.) P. 20 Ge ..........: Saeeee. a Thiel v. S@uthern Pacific Ry. Co. 328 U.S. 217 Thomas v. C omm., 1 C ir, 232, F. 2d 320....... 17, 18 Thomas v. C.LR., 6 Cir, 223 F.2d 880”. 17, U.S. ve Calderon, 548 U.S. 160°. U.S. v. Johnson, 323 U.S. 273 ‘ourt Northérn District of In- t.. & District diana ... Ge‘ Miscellancous: Mertens, Law of Federal Taxation, Vol. 10, Sec. Rothwacks, Meyer, Chief, Criminal Section, Dept. é WA, 7a at p. 127 Sd eS gah EASIER po A ee A eee Gecxehbueete ¢ eid eieds spveshaetiaSconiged lors: 8) eR HTN Dy VeadTa of Justice; "A Payer Submitted at a Symposium | « of the American Bar Association, Section of Tay- ation on Tax Fraud Procedures and Law” dated ge gel 19, 1950 (not an official paper)... U.S. Bureau of Census, Dept of Commerce ........ Wino (3rd Ed.), Vol. 1, See. : 3g, p. 423 and Vol. See. 2, (Re eis Ee W ott s Criminal Evidence, (12th Ed.) Nol. l, " , See. a 431, SEER inl SIO = achat A oo ‘ ; ss . = ¢ s : rs —_ & iv nt See. Constitution. and Statutes: The Fifth Amendment 0... 00 ..4......... 22, 94, 35a The Sixth Amendment . rh ace sete pee aN 9, 12, dha e -26-US.C.A, See. 7201 200. anes ieee 4, 35a 28 ULS.CLA. See. Rea eae ree cacsasssbaacs. ROR AN 4 °28: US.C.A,, See. 1865 (a) £0 Raa Th Se See ne DH 12, SSa Federal Rules of Criminal Proedare: Pat - dt Saceaieceniescss Kove When aebene ec: 7... 9 12, 36a nin chill Ae Nate ea cess: re eaeaan 9, 12, 36a: PO PENI ioe voepssceasticccee SSSR Ree aan 29, 12, {Ga General Information and Orders per ts ff iN THE Supreme Court of the United States Ocroper Term, A.D. 1962. No. +) METRO M. HOLOVACHKA, Petitioner, a | vs. 4 ? UNITED STATES OF AMERICA, Respondent. e Petition For Writ Of Certiorari To The United States Court Of Appeals For The Seventh Circuit ~ a ° 2 Ys | . a s Petitioner, Metro M. Holovachka, prays that a writ ot 5 certiorari be issued to review ‘a judgment of the United States Court of Appeals foi the Seventh Cireuit, enter ed on February 18, 1963. a : “2 OPINIONS BELOW. ._ The District’ Court wrote’ no opinion. The opinion ot the Court of Appeals, attached hereto as Appendix “A” infra p. la is*reported in 314 F. 2d 345. a3 é > impartial trial. JURISDICTION. - Pan The judgment of the Court. of Xppéals Was entered February 18, 1963. (Appendix “B" infra p. 38a) Petitions for rehearing were denied March 28, 1963. The jurisdic- tion of this Court. . ‘invoked under 28 CLSLC. Section 154(1). 7 a QUESTIONS PRESENTED. (1)2 Whether the trial court's unilateral action in’ changing the petit jury panels and compelling petitioner to be tried by an out-of-division jury amounted to a com. pulsory change of venue, or otherwise resulte@ in a vio- lation of petitioner’s constitutional right to a fair and *3 (2) Whether the requirements of due process of- law were violated ir an income tax evasion case by permitting: (a) the respondent to accuse the petitioner, a former Lake ° County(Indiana) prosecuting attorney, of recFiving money: from “Graft’? when in fact no evidence of graft was in tiie record, and (b) numerous other -prejudicial errors which occurred threughout the trial? . (3) Whether the safeguards and standards established by this Court in income tax evasion cases on the net worth- expenditure theory, e.g.. in Holland vy. United States, 348 U.S. 121 and related cases, were satisfied, particularly (but without limitation) as to starting point, burden of proof, current taxable income, likely souree, corrobora- tion? . ° > > 4 « —- .j9—— . ‘ ae (4) Whether the trial court's action in preventing pe titloner from on™ hix own theory of defense vie Fated petitioner constitutionab right of due process ol law? ‘ é * 5 CONSTITUTIONAL PROVISIONS AND ° STATUTES INVOLVED. Sf are. > A pepe wedar OO" ; Ierean The Fifth Amendment . predires Shen The Sixth Amendment” : pahsre Shona 26. ULS.CLA,, See. 7201. page ha’ 28 ULS.CLA,, See. 1865(a) pate hoa Mederal Rules of Criminal Procedure | ~ Rule IS rs . pas Oa Rule 19 3 : page Sha Rule 21(2) pace Sa General Information and Orders, U.S. District Court Northern Di-- triét of Indiana pate va ‘ + ; > d pa geen : STATEMENT OF THE CASE. The petitioner’ was indicted on three counts iinet ineony tax evasion (26 UWS.CAL. See 72. see intra App. “on p. doa) for the: veare of 1955, 1956. and sys Tite soveTninent, at the trial, relied on, * so-called “net worth-expenditure” techitique to establish ite proof. The urry fond the petitioner guilfy ds charged. The ‘indict- ment alleged petitioner had reported an income tay’ li- ability "of SI1S893.8P for 1955, $10486.75 for 1956 and FLESOOST for 1957, whereas his correct: tax liability. for those’ vears Waser S22 D 14, $31,923.01 and $2498.48 ‘re- ‘spectively. The district. court) imposed coneirrent ° . . ©) The instant indictment was returned January 12, 1962. , Identical itidictments had been returned on May 12, 1961, and September 28, 1961, the former for 1955 and 1956, the latter for 1957, Trial on the 1961 indictments commenced on November 13, 1961. Petitioner moved to qugsh the petit jury list on the basis that said jury was not properly drawn pur- suant to 28 U.S.C., Sections 1861-1869. After 29 jurors were examined (only 2 excused for cause) -it was obvious the jurors were obtained only froin ** P.T.A.” lists. The govern- ment thereupon joined in said motion and the jury was dis- missed.-Upon re-indictment by a new ‘grand jury, the 1961 indictments were dismissed. ~ wry. ha -% g ° g : —j— ra : a South Bond and Qamnond Divisions Che Aistret esur hag~ provided: rn its “Gi weral futorm tion and (yf fae Np Cp haa cet) Hht—eattiers—of—artron rot Hatimond Division arising in the eounties of hake an: Porter shall be filed? at) Hlamumond, whereas causes ot action arising im The remmuning @ counties of the lar tuond Division? Shall be filed: at Lafayette. Court i@ eld im Elatinend or Latavett? depending, on the ortfim of the Cys. | ag : © * . CR Ae APA APA PEELS ’ J 3 “Pertisuer was bern in’ Gary, Wake. County. tates. of Tmnuerdint parents from Czechoslovakia. Bxeept te: Ae . . syd 5 ie \ _ a few years while attending school, petitioner livedk al! of his S4 wears in Gaty. He pratticed law and was activ in polities as a Demoecgatein Gary and Lake County During the indictment vears fe served (elected) as Pros o ~ ecutine Attorney of Lake County. As prosecuting attornes he was not) prohibited “from practise daw nor did tie represent the county in civil matters. On danuary 2. 1962. a petit Jury list of 74 porsones. Fesidents of Lake sand Porter Cadjoining) Counties Wits drawn for the instunt trial On January. 12, 1962, the trial court suggested a change of venue to Lutasetse, ‘about TOO qniles from Hammond. Thies sUguestion’ was ‘ objetted to by. petitioner who refused to consent to a change ‘of venue. . . So . , On January 17, 1962. oyer petitioner's objection, ‘the trial court on its own motion struck the entire Lake anc’ Porter County panel of January 2. Thereupon petit jurors were drawn from the South Bend Division and Lafayette area of the Hammond Division, Speciticallyrexcluding yu rors from Lake aad Porter Counties, Over objection, pe titioner was tried #y said jury summoned from outside * Ss e * roa, , . iP ‘ ; wee s > ome’ the viemity or locality of the alleged offense. The petit jury was sequestered during the trial The government’s case is based on its summary on the “net worth-expenditure technique. Pts expert witness ad mitted that the only eviderice in the record of income not reported by. the. petitioner on the 1955-56-57 tax. return. Was the amount the expert computed on his “net worth” summary for those vears (Gov. Ex. 186, App. Soap. The government used December 31, 1951 as its starting point. According to the government's summary, petitia ers taxable income not reported for 1955 was SIS T1S.06 196 wae FLL 529402, 1 was FIO SSH : _ o Government's E Nhibes, ING ~The Governine nt’s Summary of the Net Worth and Expenditares” Was prepared by Speeiak Agent Boyll. Ino preparing said) exhibit he ad mitted that he had to pass upon and deeidt certain -vi dentiary issues’ in dispute both in and outside the. ree ofd, in le ‘termining whether certain items and or INOUNT should or should not be ineluded on 4iovernirent’s Exhibit IkG. Petitioner's objection to said exhibit yas denied by the trial court and completely- disregarded in’ the opin ion of the Court of Appeals. The disputed items involved . amounts applicable to the. starting point, as well as the specifi vears. : Petitioner attempted to introduce a net worth-expendi- ture suinmary (Def. Ex. 22). It was, based on his theory of the evidence as,to the proper treatment in the sum- mary of $168,541 representing a tax-free return of peti- tioner’s invystment in special assessment bonds known as Barrett Bonds. Petitioner's theory was that this amount Was current non pxable income and as such wae a de- ductive adjustifent in the summary, ‘This defense was wu reeper@tcnud fo\ tha trial eourt The petitioned Wils competed Toontrodwes goceet Worth tpemedit ares tars bipsed cai! eeverutnent cone Trctl court's thers vas ote the eruenal ... . S ysstie ot the qoroper inethod oof Fisting om sag stumiipies the tas free return of investigent from: the Barrett: Bonds, This dispute vitaliv affeet~ the question of whether or not sie coveriguent’s sthnary is aecurate. ° ° The goverpment established that) petitioner recerved during the vemrs 1955-1957 the a:neunt of SIOSAT as a fe. free return oon dus investment in the Barrett Bond-.! \ The government's summary fisted? as an asset as of December 3b for each vear from P52 through IW97 the het balance, of petitioner's Barrett Bond investment. (ice. ‘etmoney invested minus money returned for each vear). Petitioner dealt) in Furreney to aevreat extent. Tle ex- eg plained this Was a habit of his people and al practice taught him by his parents. The govermment illustrated that pesitioner hadsaund ney transactions between 192 through 157 in tH mount of S429190. Lowever, on the govern Inent’s net worth stmimary he was not credited with one eent of cash oon hand, either at the stars or or at tiny other Vecieend dimime ‘hat period, rg. . - ° “—* j . . . Phe? sovernment” did not offer any evidenee of likely : ps4 ee . ¢ se sattvee: did not offer any evidence that its met worth in ereases Were attributable to current taxable income: did . _ - —— a Son — Barrett Bonds were issued by the City of Gary in connection with certain local improvements performedew. in the city, such as sffeets, curbs, gutters and sewe t though there was a difference of opinion at the trial be- teeen the Treasury and Justice Departments, it is agreed that inthe instantetrial the return of principal is tax-free. bs) rnin —S— not offer any affirmative proof of falsity of petitioner's. meomne taxcreturns ? and did net offer any evidenersto cor ‘roborate the alleged net worth bulge a® computed on its ~Ulnmary. é > On cross examination of the petitioner, the prosecution asked Af petitioner received any monex-tnr—“qrattpay- Ld . . ments (App. D133). The court admonished the jury, to disregard the qdiestion but denied petitioner’s motion for mistrial. . ; / Other trial ineidents were-claisned by the: petitioner to e have deprived him of a fair trial. The trial ronsumed 19 days, 49 witnesses, 177 exhibits tincluding two net-worth statements, 9 tax returns of the defendant and a stipulation of 46 pages), appreximately 2700) reported pages of testimony, and instructions res ported on 38 pages. The sequestered jury deliberated only + houre 15 minutes. | The Court of Appeals affirmed the petitioner's convie- tion. The petitioner is presently free on hail. The mandate of the Court of Appeals has been staved pending disposi- tion of@this petition. | o> ee Pa . @ 4 REASONS FOR GRANTING THE WRIT I. THE TRIAL COURT'S UNILATERAL ACTION IN CHANG. ING PETIT JURY PANELS AND IMPORTING JURORS FROM UTSIDE THE VICINAGE OF THE ALLEGED OFFENSE ANGUNTED TO A COMPULSORY CHANGE OF VENUE AND ESTABLISHES DANGEROUS PRECEDENTS VIOLATIVE 6F THE ‘CONSTITUTIONAL SAFEGUARDS FOR A FAIR D IMPARTIAL TRIAL = The court below departed from the accepted and usual course of — proceedings by holding vs @LS.0.4 Ps650a) CApp. CO infra p. Sagan be emplowed to tea! away the right toa trial by ameitap@tial jury guaranteed by the fh daendgeent to the Lyte: States Constifution and the rights of a defendant im acetiminal trial unde: Riles 18. 19 and tha). Ledéral Rules of Grimimnal Poo dive (X pp. CC" intra pe. Sa). Petitioner, a life long reside mt of hake Connty, Pndiana Was tried and convieted In i jury Hinported: froan the South Bend Dervision and that portion of fhe Hanunetf Pivision outside of Lake and Porter Counties. By ans luteral ad hoc order of the trial court, a panel of petit jurors drawn from Lake and:Porter Counties was stricken 12 days before the trial was to commence. No objections Had been made toethe jurors from Lake and Porter Coun ties, The only applieable loeal distriet. court rule is one of the “General Intormation and Orders? (App. "CO" infra p. 37a) which states ghat causes of action arising. in ‘he counties of Lake and Porter shall be filed in’ Hammond. The rule intends that if the action is’ filed in] Hammond, & ° —10—- it shall be tried in Hammond by a jury from Lake and Porter Counties. The divtriet court in ite announced rea sony failed to Stipport’ its action. by any statute, decision, local rule. custom or practice. The Court ot " Appeal cites 5 only the trial court as its authority. E The gei tl court justified its action on the alleged theors thyt because petitioner in 1961 objected to 1998-1959 mews a , : re > paper stories, therefore petitioner was unable to obtain in 1962 fair and impartial jurors from Lake and Porter Counties. Phe Court of Appeals opinion coneluded that petitioner's reference to 1958 and) 1959 oS. sthe trial court's action, even though in Beck vf. 5. 2 Cir. JUS BF. 2nd 622 and Delaitey ve UL S21 Cir. 199 F 2d WT at 112. it was held that the she iadicial effeet of publicity is not a continuing thing. Petitioner also ob- jected on November 13, 1961 and . January a), 162, to heWs stories obviously planted by government representa tives. : . te z ; Nowhere in the long record did petitioner at anu tim: directly or mdirectly suggest to the district court thet efair and impartial jurors, legally selected, could not bi olitained from Lake and Porter Counties. In taet peti tioner maintained he could not receive a fair trial if jurors from Lake and Porter Counties were exeluded. The ree. ord contains no showing that any of the January 2 panel harbored any prejudice against the (Pitioner or were in any way biased ‘against him. The trial court’s reasons are a strained, incorrect-twisting of petitioner's motions. The action establishes a subjective test to be applied by trial coufts resulting in an@emaseulation of the historic rights of a defendant to have something to say ahout the c selection of the jurors. . ee ° on dG os t ° ° On simian 12, 62, prior to etriking the Jamuary 2. Ol. petit jury panel, the taal court attempted to pet ide the petitioner to aecept a ehange of venne te Lata The petitioner objected to any change of venue, The State of pe ix divided inte two distinctly, total ly different areas. One is the Calumet Region (Lake and Porter Counties) the other, the balance of the Atate. Lake County is highly industrialized, has a large percentage of immoigrants, and for vears has been politically Demio- cratic. Its 1960 population (per U.S. Bureau of Censu\, Department of Commerce) is 512.569. Porter County ix 60270. Their combined population represents approxs- mately 41 of the entire South Bend and Hammond Divi- =lons. Another significant: Bureau of Census statistie is that 11600 in Lake County 11.969 residents were born in Cvechoslovakia (birth place of defendant's parents) Where ax in St. Joeeph County (which comprises about Bae oof the population of-the South Bend Division) only O71 were horn in said country, The customs of immigrant parents, their practices with respect to handling cash, residents with knowledge of the habits and practices of the citizens of Gary, all Vital issues in the trial, could be understood and ap preelated only yy the people from the Calumet Rewion, especially Like County. i - The grand jury which returned the instant indictment on danuary 12. 1962, coytained residents from Lake and Porter Counties. After the trial coureonelfided that fair and impartial petit jurors could not be obtained from Lake and Porter Counties, he denied petitioner's motion to diemiss the indictment, holding, in effeet. that gr: and é 7 eS Ps - a ‘ pal, . _ ©. , | “jurors from Lake and Porter Counties “were ‘not biased. This inconsistency inereasoning was approved by the Court of Appeals. : | | Eos Rules 18, 19 and 21(a), Federal Rules of Crmimal Pro- codure, clearly require the consent of a defendant for a change of venue from the division in which the alleged of- fense was ¢ommitted. Thes® rules are additional eafe- guards for se¢uring a fair and impartial jury. As Mr. Jus-_ tice Frankfurter said in United States v. Johnson, 3253- US. 273 at 276, “Questions of venue in criminal cases are not merely matters of formal legal procedure. They raise deep issues of public policy in the light of which legisla- tion must be eonstrued.” The C@urt of Appeals has sanctioned a practice amount- ing to 2 compulsory change of venue. There is no real difference between being compelled to try a case in Lafay- ette before jurors from Lafayette and being compelled to try a case at Hammond before jurors from Lafayette and South Bend. To do either without the consent of a defend- ant violates the said Rules 18, 19 and 21(a). The court's action ts in confliet. with Salinger vo Loisel, 265 U.S. 224. 28: U.S.C. Section 1865(a) was not intended by Congress in any way to abrogate the aforesaid venue privileges of a defendint. Yet the Court of Appeals’ intepretatigm con fliets with the rights of a defendant protected by the 6th Antendment to enjoy a trial by an impartial jury. Other- wise,.28 U.S.C.A. 1865(a) is unconstitutional in that it violates rights protected by the 6th Amendment, : : o , : ’ The effect of the action below is to provide a jury that ix not a cross-section and is not. representative of a defend- eant’s community. This action is in direct conflict with the > ° ; F, principles set forth by this Courtoin Glasser ve PS. ons - ° ° Pw = ae E E . a LLS. 60,86; Thilv. Southern Pacific Ry. Co. 328 US. 2M . To appreciate the potential of the instant opinion one need @nly consider two simple hypothetienis. Ao prominent Cook County (Hlinois) politician, possibly with the statu of Chieago’s Maver. on trial in the Northern Distriet ot Hlinois, astern Dyyision, and the trial judge reaches be vond Democratic Cook County inte the traditionally Re publican gine anti-Cook County cotntios of they Western Division of the Northern District of Hlmois. Or a proms nent Negro in Lake County, Indiana, where negroes con stitute approximately 1.56 cof the total population of © Lake and Porter Counties can now te tried by jurors im ported from the Lafawette portion of the Hanuunond Divi ston Where negroes constitute only OUST. of the total population. The announced reason~ for said action could he the same specious, subjective basis asin the instant case, AD sophisticated, political minded jurist need only meint tothe ooinion below to accomplish his result, to satis fy a temptation, and abuse criminal justice. The court's action of striking the jury panel without either ao miotion of the petitioner or a coire dire examina tion on the alleged theory of protecting the petitioner's constitutional rights is specious and ludierous. This ai lateral action based on the alleged desire to proteet peti otioner from adverse uewspaper publicity, confliets with the requirements for establishing the effect of adverse publicity in selectifRe a petit jury, see US. vy. Moran, 2 Cir. . 194 F. 2d 623, 625: Blamenfield vo US. 8 Cir. 284 F.2d 46, 00.51. Tf there was any valid basis for dismissing the petit jury, the court should have also dismissed the grand jury ‘indictment. 4 seattle sn . To sequester am imported jury in an incometax cass Violated: the petitioner’s constitutional rights toa faireand aparti: il jury. The petivioner was given no opportunity to determine in the voire dire examination the possible effect of said action, The effect of this surprising and un justified action on the jury can never be honestly deter mined. On the other hand, the jury on the 2ortday of being ‘locked up concluded its jury deliberation at 12:4) 2M. after only 4+ hours and 15 minutes deliberation. Who can honestly say that this speedy conclusion to a lengthy and complicated Frial was not the jury's stampede to uns shackle itself from this involuntary incarceration ! II. - > ‘THE CONSTITUTIONAL SAFEGUARDS FOR.A FAIR AND IMPARTIAL TRIAL WHRE VIOLATED BY THE PROSECU- TION WHEN IT meager SUGGESTION OF ‘‘GRAFT,’’ ‘‘RACKETS,” AND ‘‘O UNRELATED CRIMES’’ WITH- OUT SUPPORTING EVIDENCE Il THE RECORD. On cross examination, the prosecutoT asked (App. 1155) if in 1955, 1956 and T9457 the petitioner received any money in graft payaients. The prosecutor admitted that there was no evidehce in the regord to indivate the receipt of “graft” ‘or to show where the net worth “bulges” came from. The use of the,word “graft™ was a knowing and deliberate at- tempt to prejudice the jury. ‘The trial court denied peti- tioner’s motion for mistrial but admonished the jury to disregard the question. ’ Another purpose of the “graft” question was to suggest 1 “likely source.” In the courts below the, government ae considerable time in justifying the question, relying primarily en Ford v. U. S., 2 Cir. 237 F. 2d 57. The Court i KF. | SS, « --15- of Appeals’ opinion completely: tenored the opoisonous “eraft™’ question, its purpose and damning effect. “ “The basis lor the “graft question had no support in the record even faintly comparable to the use of “graft” in PT id Ford vo U. _ ar US. 38 Wherein this court vacatedgthe judggnent of conviction (2 Cir, 237 F.2d ST) with diree: tione to dismiss the indictment. It alse confliets with /wrd v. OS. oo Gir., =10 B22 31S: Dane ve OS. 5 Cin, 307 Prosecuters need have no fear in the future Cexeept to have the questiow stricken) when they suggest by ques- “tion that a defendant obtatbhed money from graft, view. » 7 murde ‘or by pushing he roin toftee abagers. The case below ean be used hy prosee utore: as authority on this tremen dously iuport int principle. The second government witness referred: to the Senate (eo a Labor-Mandgement (McClellan) Committee as the “Rackets” committee. The, trial court failed to advise the jury to disreg rird the improper ‘testimony. Thereafter the government during thea rial frequently made reference to the committer under its proper name, The only purpose of all this action was te produc eaconstant dose of prejue dice to the jury,.not to establish the essential elements of the crime charged. : During the cross examination of the petitioner, the proweitor suggested through questions that he committed three alleged Violations of Indiana law. The facet that the government failed ‘to legally cetablish these allegations or to establish their mnateriality and-relevancy to the crime of income tax evasion was inconspquential to the Court, of Appeals, The govermnent did “not. believe ‘they were inconsequential. The experienced prosecutor asked the: . Nee - - ay - - + *» (7 period 1952 through 1957 that petitioner had curreti¢ ¢ 16— question for onlycene purpose, to preyudice the minds of the: jurors. The foregoing are the principal illustrations of some of the prejudice ‘ial acts which, taken together as a whole, violated the constitutional rights off a defend: int 40 a fair and impartial trial. Rach aet cannot b@ treated ina Yaeuum: The action of the imstant case danctioried by the Court f Appeals conflicts with thre utandards of this Court set ious in, rapes v. US. BBS US. TAO: Bolle nbach v. MOS. 326 US: 607, | at III. THE OPINION OF THE COURT OF APPEALS REDUCES . TO A MEANINGLESS SHIBBOLETH THE ESTABLISHED STANDARDS IN INCOME TAX EVASION CASES ON THE NET WORTH-EXPENDITURE TECHNIQUE, THEREBY DE- PRIVING PETITIONER OF DUE PROCESS OF LAW. A. Starting Point Not Established. The govermnment's net worth starting point wae Decem- her 31, 1951. Its computation of petitioner’s net worth was then $70,321.42. The government's evidence also indicated that in the late 1940's petitioner had a net worth of between 68 to 78 thousand dollars. > Two disputed items affecting th® government's starting point were handled in error by the government. These are: 1 Cash on hand. The government's ewiimary did not include at the starting point, or for any year, one cent of cash on hand. The government claimed (a) Tor the transactions of $842,919; (b) that petitioner had no cash- on-hand on December 31, 1951; and (¢) that in 1952 he handled $64,592 in cash (Gov, Ex. 187). Special Agent Peli — . Fy Bovll, the poccTimeNt’s expert Withess, stated mo eashoon hand was included because petitioner could not speeitficalls recall (for as long as S years) the amount on’ hand) on specific dates. This arbitrary action’ squarely confliet- with Thomas ve CLR 6 Cir, 223 F.2d 85, 88-905 Thon: v. Comm... Cir. Bae. Pd 520, 524-590: Crane ve Conn * 8 Cir. 247 F.2d 3590, 362-3205; Fuller vo Comm... G Cirg 3h BL 2d 02-77; Phillips’ Estate v. Comm. 4-Cir., 246 F.2d 200), 21, Bd Genbh vio Comm. 6 Cin, 4/9/63 No. 14744, (unreported), all of which hold occh an arbitrary ‘ywuess" by the wovernment as te cash-on-hand is not justified. j ee x Ete submitted that the government's facts do violence: , to its expert's conelusion. there was ono cash on hand, | must alse be remembered that the governments surimags Was presented at the conclusion of its case and inust be (especiallyein this case) an. integral part of its burden ot proof, 4 . The govertment’s error in omitting cash on hand fron " the starting point and for all vears was actually motivated hy: the dack of a case. Cash Gn hand at the start would have materially weakened its case. rs 2 The Lovelace Matter. ‘Viee covernment offergd one Witness and six- exhibits concerning certain improved red! estate to establish an asset of petitioner, A tentative net worth statement prepared by a revenue agent listed this property as petitioner's asset in T9531 and. 1952. Boyl testified that he did not include this property as petitioner’s asset in the government's net worth aacuat eae because it was his opinion that this was not an asset of petitioner in TOT and 1952, notwithstanding all of the government's evidence, The record established the value of thik asset as of 12/31/51 (starting point) was $11,121.71. 7 , 0 SR eR, “This is another illustration of the government's failure te include known iteins in evidence in-the starting point. The reason is’ obvious. To do so would increase the net worth ‘at the starting point and automatically reduce or, eliminate the so-called unreported) taxable Income. The govefument’s opening net worth was clearly imac curate. Thus it) directly conflicts. with the requirement set by this Court that the opening net worth must be estab lished ¢by competent evidence with reasonable certainty. _ Holland ¥, ao S., 3A BES. 121, 132. See also Fuller vi Comm.. 6 Cir 3 FL 2 xd 75, We. Thomas v. CLLR. 6 Cir, 225 4. 2d SO, SO: rome . Ge. 2 Eats a Jb Pd 920, A24-526 - Phillips Extate ve CLLRS Cir, 246, F.2d 209, 215, 214: Grubb v. Comm. 6 Cw. 4.9/65 Na. 174 (unreported). ° B. The Government’s Expert Witness Unconstitutionally In- -vaded the Province of the. Jury in tite the Government's - Net Worth Summary. 4 : Meee 4 The burden of proof in criminal inebme tax evasion cases ix still on the government, according to the Holland ease, p. 138. In diseliarging it- burden in circumstantial evidence Ces such, as the net worth-expeanditure tw hyique: the: governinent. Uses an “expert™ witnes to summarize the eVidence. This practice is permitted in these complicated cases on the belief that laymen jurors cannot intelligently summarize the evidence, See Grayson Vv. Wolliams, 10 Cir. 26 F.2d 61, 63. . 5 In the instant case, Spec iaPAigent B oyll Was the govern’ nient’s expert. He prepared thfe net worth summary. In nine instaness, Bovil acted as the “13th juror” while also testifving as an “erpert.” Three of the nine instances “in *, e A ee : summary afer (1) cash on hand: (2) Lovelace matter (see pp. 16, 1% herein): and (3) Barrett: Bonds (see pp. 25-27 herein), Mes » . e In each of the other six items af the. covermment’ s OVI dence, Boyll obviously did-not be lieve the evidence. The sovernment’s net worth summary as.to these nine itepss was ¢Anputed on the basis evidentiary issues.-Boyll presented to the jury his opinion as to the ultumate fact to be decided hy the Jury-gnamely, ‘that all thee fact dispufes which he resolved, and all the elementary iesues, when evaluated as shown on his sii mary, establish “unreported taxable income. Phe full ine pact of this conclusion by the so-called expert in the tinal stages of triak was left to settle Ike ao shroud) of euilt over the petitioner. -- : ‘ ve i = a The 2 - Petitioner's motion-to strike government's summary on, the basis that it wae Bovis assim ptign, craluation and conclusion of disputed evidence was denied. As each dis putecd item was an integral part of the government's eam mitation, Bovll bad to act as av “3th juror” in order go J : decide these crucial evidentiary problewis in favor of the . t . . coverninent, The * goveriment, ‘could not risk permitting . . wae . . the jury to decide, one by one, each erucial item and then- compute the final resulfS4n Approving Dove's conduct, the court's ecaaipres ie in conflict with the acceptable con- duct ofan “expert” as announced in 0. S.v. Ward, 3 Cir. 160 BF. ad 460, 46:2" 463: Stecle vo US. CLE, De? F.2d. HIS-GIT ; ° Kaci of the nine crucial evidentiary questions was solely for the jurv. Yet, by Boyll deciding how to treat them on the net worgh summary, each question leses its identity and becomes buried in the final result of the government’s ~ of Bovll’s decision. of these S 0 Y inmary. It is naive to believe that any jury-—in feur a houre—could consider and evaluate each evidentiary issue, then adjust the end result (up or down on a summary) by their own decision. Thus the invasion of thre jury's function hecomes complete merely by virtue of the nature of the complicated net worth summary cases. - C. Current Taxable Income and Likely Source. There was no direct evidence of willfully unreported, « current taxable Income or of a likely sour@ for 1995. 156 and 1997. In the Hollantwease (p. 437) this Court held that in net worth cases, thare must be evidence supporting the inference that the net. worth increases are attributable to currently taxable income. This Court recognized that the net worth theory of proce- . . - . * .. cution based on etrcumstantial evidence as to guilt is the chief weapon of a method that is itself only an Approx ima tion, Halland case at p. 120. ‘The government's theory in the trial-court CApp. 100) ‘Was te plant in the minds of the jury that petitioner's un- reported meome stemmed trom “gratt.’ Of course, there. was no such evidence, of any variety, in the record. There- ‘foreéthe government planted the prejudicial “graft” and “rackets” references at the start and tinish of the trial te provide: a “likely source.” Before the Court of Appeals the government suggested that the “bulge” in its net worth summary could) be inferred) from = “graft™:. therefore “eraft’’ was the unreported current taxable income and + - XS Mhely soures. The Court of Appeals avoided the “graft” theor® and adopted a new concept “sane tarable. source of income” * . (emphasis supplied) (Opinion App. Sl ares ‘p. 26a). ; 2 a] . e . @ 2 53: © and US. ve Calderon. 348 US. 160 this court held affirmative adinissions of tax evasion must De corroborated to support aw conviction. There ix no re of tax agevasion im the instant case. IV. ; THE PETITIONER'S, CONSTITUTIONAL ‘RIGHTS WERE VIOLATED WHRN THE TRIAL COURT GAGGED THE PETI- TIONER AND DENIED HIM THE OPPORTUNITY OF PRE- SENTING A FAIR REBUTTAL TO THE GOVERNMENT'S 13th JUROR. - : During the vears 1952 through 1957 petitioner recessed - . . ,. . . $18,041.03 ae a tax-free return on his investment in City of Gary Improvement @ontracts and Barrett Bonds. Fer om ? —24— the vears 1955-56 and 7 the amounts of said tax Pree funds paid to petitioner were respectively $14,585.48, $7,007.81 and $1GBS8252. — : Petitioner’s expert witness offered his net worth com- putatton, (Def. Ex. 22) which, upon objection of the gov: ernment, was not admitted. Petitioner's expert theory was that as petitioner had re-invested. these tax-free funds, it Was necessary to deduct as non-tarable income the amount received each year; eg. in the adjustment section of the ease, supra, at p. 275, sinee such inerements to the taxpayer's assets are reflected in the ineréase of His net worth during the taxable wear, and since thew are nes fasabl) then must he subtracted in order to. asecrtain AN favalhl, joe fo ogatecopere « feop th. eats ti ite sf, & +, The government admitted at the trial petitioner reaegy co thes) atieunt= of nom-tasable imeomes that these tremuss Were plowed back inte the other asset. of the petitioner in tlie Vert reeeived. Pt therein follows ae eget assed were inereadaed by nen-tasable funds. Th# vovernment’- theery was that by reducing the running investment in sald bonds by the amount received eae wear the petitione: had received the proper adjustment. This theory suppose. the amount reeeived vanished and did) not) re-appear in the other assets. Yet it admits the ih-tree funds wer reinvested and are blinded to the fact that in this danger ous technique they now are charging petitioper with un reported taXable income caused by the use of said tax-free funds. e The government and the courts belowgelaim, wothowt authority, petitioner's theory ix net correct because it would Moduee a “net worth decrease, FT his illustrates a dacek of understanding of the system. [t also illustrates the system should not be used as a basis of depriving a pefson—by conviction—of hie liberty. The end resybmis nof ai net worth inerease or decrease, It is) supposed to establish unreported taxable income. The petitioner’s theory (Def ‘ etl Ex. 22) illustrates he had adequate tax-free funds on hand during the efitire period. The petitioner's theory will alse establish there was no current, unreported taxable income The petitioner was perinifted to introduce a net worth: summary (Def. Ex. 25) computed on the trial court: and government's theory, - It is fundamental that a defe ndant should have the right to explain away the force of ae rimgnal Clare. To he ‘pr ive a defendant of the right to make a explanation of the crime charged is erroneous. The gions court's action con fliets with, WD ‘atkins vo. U.S... EC ir., IE. 2d 9352, 1535, M4 : BIE MES ach, Mountamn ( Es sin Co., ct 4% 2 Cir, 161 F. XT ATG. 478,470: Heidel vo UL S.6 Cir, 190) F.2d 495, 407: Continental Bakina sania fe ie S.. G Cir. 2i F. 2a 137, 141-145; see also Wigmore, (3rd ny Vol. I, See: 34. p. 423 and Vol. Tl. See. 239. p. 3872 Wharton’s Crimina Evidence, (12th Ed.) Vol. L. See. 211, p. 451. By depriving a defendant of the right of presenting hig defense (on a transaction in which at the trial there wa- a difference between the Treasury and Justice Depart ments (App. 737)) there is now established the shocking precedent that if a defendart’s theory differs from. the voverninent, the defense can Ine reqeeted, @.2.. disputes ont the right to defer income alrgady received but not) yet earned; is a certain substance a narcotic; difference be tween ballistic expert~ over a fatal bullet. This is a signif icant departare from traditional precepts of justice. When a defendant!s eonviction hangs on the flimes thread of a technical question as to the right application of $168,347 tax-free funds when the total unreported tax able income claimed only equals $71,585, certainly due BEC ie i: process of law demands the right to present the defend. ant’s theory to the jury. In fact, it is submitted the. ques- tion really goes to whether the government's eummary (Gov. Ex. 186) is correct, and whether the defyndant’= if notion for acquittal was erroneously denied. 6 CONCLUSION. 2 . 4 It is respectfully submitted that the petition for a writ of certiorari should be granted. es . 5 Respectfully submitted, ROBERT J. DOWNING, > 105’S. LaSalle Street, Chic¢ago 3, Illinois, 2 Attorney for Petitioner. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385601_0998%3A2. Public record. Not legal advice.