Opposition Brief — Goldbaum v. United States

Opinion below

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Questions presented

Statute involved

CITATIONS

Cases:

Berger v. United States, 295 U.S. 78____.____..

Bogardus v. Commissioner, 302 U.S. 34_______.

Calderon v. United States, 207 F. 2d 377, certiorari

granted, 347 U. S. 1008, No. 25 this Term____

Commissioner v. Jacobson, 336 U.S. 28___.____.

Montgomery v. United States, 203 F. 2d 887____.

Old Colony Trust Co. v. Commissioner, 279 U. S.

Powers v. United States, 223 U.S. 303___..____-

Smith v. Manning, 189 F. 2d 345______._._____

United States v. Block, 88 F. 2d 618, certiorari

se Ge OD inccnnnedanunucdccecce

United States v. Heitner, 149 F. 2d 105, certiorari

OF

Rik elas

ee Van

denied sub nom. Cryne v. United States, 326

SEE nae A een

Wilson v. United States, 162 U.S. 613

Statute:

Internal Revenue Code of 1939, Sec. 145 (26

U.S. C. 1952 ed., See. 145)

(1)

316317—54

RRL ALE A OTS EM OS

Gnthe Supreme Court of the United States

OctoserR TERM, 1954

No. 249

Lester H. BURDICK, PETITIONER

v.

UNTTED STATES OF Awenica

ON PETITION FOR A WRIT OF CERTIORARI TO THB

UNITED STATES COURT OF APPEALS FOR THE THIRD

CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINION BELOW

The opinion of the Court of Appeals (Pet. 28-

38) is not yet reported.

JURISDICTION

The judgment of the Court of Appeals (Pet.

39) was entered July 1, 1954. The petition for

a writ of certiorari was filed July 29, 1954. The

jurisdiction of this Court is invoked under 28

U. S. C., Section 1254 (1). See also Rules 37

(b) (2) and 45 (a), Federal Rules of Criminal

Procedure.

(1)

6 LE CE aE MN aL

2

QUESTIONS PRESENTED

1. Whether the evidence was sufficient to sup-

port the verdict.

2. Whether petitioner was entitled to suppres-

sion of a net worth statement he gave to a rev-

enue agent, on the ground that the agent failed to

warn him of his constitutional right not to in-

criminate himself.

3. Whether the trial court should have de-

clared a mistrial because of alleged misconduct

on the part of the prosecutor.

STATUTE INVOLVED

Internal Revenue Code of 1939:

Sec. 145. PENALTIEs.

-_ * * * *

(b) Failure to collect and Pay Over Taz,

or Attempt to Defeat or Evade Taz.—

Any person required under this chapter

to collect, account for, and pay over any

tax imposed by this chapter, who will-

fully fails to collect or truthfully account

for and pay over such tax, and any per-

son who willfully attempts in any manner

to evade or defeat any tax imposed by this

chapter or the payment thereof, shall, in

addition to other penalties provided by law,

be guilty of a felony and, upon convie-

tion thereof, be fined not more than $10,-

000, or imprisoned for not more than five

years, or both, together with the costs

of prosecution.

* * * - *

(26 U. S. ©. 1952 ed, See. 145.)

POOR COPY

mt ee 3 ere rer tear

3

STATEMENT

On September 17, 1952, petitioner was indicted

in the United States District Court for the Dis-

trict of New Jersey on charges of wilfully at-

tempting to evade income taxes for the years

1946 through 1950 by filing fraudulent returns,’

in violation of Section 145 (b) of the Internal

Revenue Code. '. 1, 5-8.)* The amounts of

net income and the taxes due thereon, as re-

ported in the returns and as corrected, were al-

leged to be as follows:

Pe EPP RD LEY

*,

eee

f

f,

Reported Corrected x

ee :

Income Tax Income Tax :

-—_- —— ee — Se. - | s

Count I (1946)... ............ $2, 986, 20 $282.49 | $13, 496. 76 $3, 228. 47 :

. | ( eee 2, 376. 70 261. 57 15, 422. 55 4, 235. 67 »

Count IIT (1948)... .... ° 3, 077. 92 311.74 8, 881. 48 1,376. 72

Count IV (1949)... . 2,174.17 161. 72 8, 495. 60 1, 302.04

Count V (1950)... ... nes 4, 868. 00 41.72 11, 106. 58 1,047.90

After a jury trial petitioner was found guilty

as charged, and on May 15, 1953, he was sen-

tenced to concurrent terms of imprisonment for

a year and a day on each of the five counts.

(R. 472-473.)

The investigation of petitioner’s returns for

the years in question began with a conference

between Special Agent Gerson, petitioner, and

‘Individually for the years 1946 and 1947, and jointly

(for himself and his wife) for the years 1948, 1949 and 1950.

* References to the Appendix for appellant will be desig-

nated “R.”, and references to the Appendix for appellee will

be designated “R.’ ”,

k

*

(

PERLE HERG ZI, we IG RY IPH EE ALE ROE --

4

petitioner’s accountant, Willits, a former in-

ternal revenue agent. Gerson stated at the out-

set that he was a representative of the intelli-

gence unit, and advised petitioner that he did

not need to answer any questions if he did not

wish to do so. Petitioner answered a great many

questions and voluntarily turned over his bank

records and cancelled checks. He said that he

had no other formal records and that he had al-

ways destroyed all informal records in the shape

of notes and memoranda as soon as his annual

return had been filed... At Gerson’s request pe-

titioner agreed to submit a net worth statement

showing his assets and liabilities as of J anuary 1,

1946, and December 31, 1950. (R. 26-27, 31-34,

42, 59-62, 417-420; R.’ 1-3.) About two weeks

later Willits brought in the statement (Gov't.

Ex. 6) which he had prepared with petitioner’s

assistance.“ (R. 27-28, 137-138, 465.)

Revenue agents made an independent investi-

gation to determine the accuracy of petitioner’s

statement, and they also analyzed his cancelled

checks to determine his nondeductible expendi-

tures for the years involved. (R. 43-57, 157-

158.) At the trial they testified to the follow-

* Willits received no information from petitioner in pre-

paring his returns except a summary statement and with-

holding forms. (R. 133-135.)

*The agents also held two subsequent interviews with

petitioner during the investigation. (R. 420-423.)

POOR COPY

é

ing results of ther mvestigation (R. 160-163,

196-223) :

g A Expenditures

196... 08 $078. 80

a aww &, 822.7

1908 ks , moe 64 12, 035. 45 ;

RRS , ; 3,716 35 7, 401.01 4

1950....... ! oe ! MEE 3 7, 668. 71

|

Petitioner’s actual net taxable income, calculated

on this basis, exceeded his reported income in the

amounts shown in the following table (R. 207-

208, 212-213, 214, 215, 216):

ee rey

Actual Reported

WE cticsecctereonsvenievenennes acces “Ko 06lUR

° ALERREE iuaainthimesadinicabia sin 14,772 47 23%”

Oth oc ssdaceianeeneninbeinenanepaiadaeeniiliies 4 035 92 2m 02

ick asetenddiessdnceibiaiossvectbbatshenalnres A237 217017

Si cccehcunsisencbseusenaimntgatntnacttemniaiaheens oand eenr.er | ms

|

}

|

|

|

$1 OS Pe aOR AGC RET TR EINE

Petitioner attacked the computation on the }

ground that some of the assets attributed to him ;

) actually belonged to his wife, i. e., two insurance

policies, Government bonds worth $3,000, and

j two parcels of real estate valued, respectively,

at $1,750 and $22,500. However, the Govern-

ment’s computation had not included the increase

in the cash surrender value of the insurance poli-

cies, but only the amount of the premiums actual-

ly paid by petitioner himself. (R. 44, 206-207,

212, 214, 215, 216.) And there was abundant

evidence to indicate that the bonds (R. 57, 430;

R.’ 2-3, 44-51) and the real estate (R. 44, 64,

78, 80, 427, 429, 437; R.’ 5, 52-57), which peti-

TRY ant an eee

lt el PL LER SOR AS I EM

ay

tioner himself had included in the statement

submitted to Special Agent Gerson (R. 465),

belonged to him rather than to his wife.

The Government also proved that petitioner

had received numerous specific sums which he

had failed to report as income. Several wit-

nesses testified that they had paid him from $500

to $2,000 annually for services or favors which

petitioner had done for them by reason of his

position as executive clerk of the New Jersey

State Senate. Petitioner admitted receipt of all

these payments but contended that they were

gifts. (R. 388-412.) Most of the witnesses who

had made these payments characterized them as

“gifts,”’ but they also admitted that petitioner

had performed services for them in connection

with state legislation. (R. 99-131, 165-195, )

Two witnesses testified that they had made small

payments to petitioner which were clearly in-

tended to purchase “protection” for gamblers.

(R.’ 9-31.) He flatly denied one of these and

attempted to explain the other as a payment for

radio advertising. (R. 424-495; R,’ 31-39.)

The substantial nature of these specific receipts

is shown by the approximate annual totals in the

following table (R. 99-100, 107-109, 122, 124,

165, 169, 176, 182, 184-188, 389, 400, 409-410) ;

Winn ncncsnerenenescnaretenecenzecereeseuese....

7

The jury were instructed that gifts were not

taxable and that they must determine from the

evidence whether the specific payments to peti-

tioner were actually gifts or remuneration for

services performed. They were also instructed

that they must eliminate from consideration any

assets of Mrs. Burdick in determining the in-

ereases in petitioner’s net worth. (R. 453-460.)

ARGUMENT

1, Petitioner contends (Pet. 13-15) that the

Government’s net worth computation included

assets belonging to his wife, i. e., the insurance

policies, the bonds and the real estate, and that

the computation was, therefore, insufficient to

support the verdict. He argues that the only

evidence to connect him with these assets was

his own admission in the net worth statement

submitted at Agent Gerson’s request, and that

such an uncorroborated admission is insufficient

under the rule of Calderon v. United States, 207

F, 2d 377 (C. A. 9th), certiorari granted, 347

U. S. 1008, No. 25, this Term. A similar conten-

tion is urged with respect to the amount of cash

at the starting point. The argument is without

merit, for, regardless of the correctness of the

rule laid down by the Court of Appeals for the

Ninth Circuit in the Calderon case, the present

record contains abundant independent evidence

of the corpus delicti in the form of third-party

testimony as to the numerous specifie sums paid

Sr om nt aed

=

EY RES Ie LAPIN Ge ae

RGR At OE LENE BES LTE Y

to petitioner and unreported by him. Conse-

quently, there is present in this record independ-

ent proof of the corpus delicti which the Ninth

Circuit held to be fatally deficient in Calderon,

and even under the rule of that case the question

of the truth of petitioner’s conflicting and evasive

testimony as to cash on hand and his wife’s

ownership of certain assets (see, e. g., R.’ 39-57)

was correctly submitted to the jury under ade-

quate instructions (R. 453-460).

Petitioner argues further (Pet. 15-17) that the

evidence established that the unreported specific

payments were nontaxable gifts, and that the trial

court should have so ruled as a matter of law. It

is quite true that most of the Government’s wit-

nesses on this issue characterized their payments

to petitioner as “gifts”. But it is also clear

from their testimony that he was rendering them

valuable services annually through his legislative

connections. (R. 100-105, 110-111, 122, 124-125,

168-169, 171-173, 181-182, 184, 188.) Further-

more, there is evidence that petitioner did not

regard these payments as uncertain and purely

gratuitous but expected them to continue, for,

although his reported gross income for the years

involved never exceeded $6,000 (Pet. 35),° he

nevertheless stated that he had an annual income

of $10,000 when applying in 1948 for a loan on

* The reference is to the opinion of the court below. Peti-

tioner’s returns, though introduced at the trial (R. 25), are

not included in the record before this Court.

9

the house purchased in the name of his wife

(R.’ 4-6). Whether the payments to petitioner

constituted compensation or gifts depended on

the real intent of the donor and donee. Smith

v. Manning, 189 F. 2d 345, 348 (C. A. 3d). See

also Commissioner v. Jacobson, 336 U. S. 28,

50-51; Bogardus v. Commissioner, 302 U. S. 34,

40-42, 43, dissenting opinion 44-45; Old Colony

Trust Co. v. Commissioner, 279 U. S. 716, 730.

In view of the conflicting evidence as to the intent

of the parties here, the issue was properly left

to the triers of fact. The determination of the

jury, which saw and heard the witnesses and

which had been properly instructed on the issue

(R. 455-460), is supported by substantial evidence

and should not be disturbed.*

2. Equally without merit is the contention

(Pet. 18-23) that the net worth statement and

other evidence obtained from petitioner by Agent

Gerson should have been suppressed because the

agent did not warn him of his constitutional

right against self-incrimination. The record

does not support petitioner’s assertion (Pet. 14,

19) that he was misled by the agent into be-

lieving that the investigation was for the pur-

pose of determining his civil liability. There is

no evidence of such deception on the part of Ger-

* There is no merit in the further contention (Pet. 17) that

the evidence of wilfulness was insufficient. As the opinion

of the court below points out (Pet. 34-35), the evidence on

this issue was ample.

2 ER ES Pe OT

OPT ECR Pas 2, Pe RT =

10

son. In fact the contrary appears, for petitioner

was accompanied at the initial interview by his

accountant, Willits, formerly a revenue agent

for many years, and Gerson’s introduction of

himself as a representative of the Intelligence

Unit (supra, p. 7) can only have meant to Will-

its that a criminal investigation was already

under way. The admissibility of a defendant’s

extra-judicial admissions does not depend on

whether or not he was warned of his consti-

tutional rights. The test is whether they were

made without compulsion or inducement. Powers

v. United States, 223 U. 8S. 303, 312-314; Wil-

son v. United States, 162 U. 8. 613, 621-624,

See also Montgomery v. United States, 203 F.

2d 887, 892 (C. A. 5th); United States v. Heit-

ner, 149 F. 2d 105, 107 (C. A. 2d), certiorari

denied sub nom. Cryne v. United States, 326 U. 8.

727; United States v. Block, 88 F. 2d 618, 620-

621 (C. A. 2d), certiorari denied, 301 U. §.

690. There was no illegal search in this case,

There was no seizure. There was no compulsion.

There was no inducement. Petitioner’s net

worth statement, his records, and his answers

to the agents’ questions were all freely and un-

derstandingly given.

3. No showing has been made that the con-

duct of the prosecutor, now complained of in

the petition (Pet, 23-27 ), can have had any

11

effect upon the verdict of the jury. As is clear

from the petition itself the trial judge admon-

ished the prosecutor and made it clear to the

jury that they should disregard his remarks (see,

e. g. R. 450-452), and a similar warning was

included at the outset of the court’s charge (R.

453). Petitioner now attempts to magnify

minor incidents in a protracted and vigorously

contested trial. This was not a case such as

Berger v. United States, 295 U. S. 78, 84, in

which the prosecutor was guilty of putting words

into the mouths of witnesses, misstating facts,

assuming prejudicial facts not in evidence, sug-

gesting that statements had been made to him

out of court, bullying and arguing with wit-

nesses. The Court of Appeals correctly con-

cluded (Pet. 38) that no substantial rights of

petitioner had been affected.

12

CONCLUSION

The decision of the court below is correct, and

no question warranting review is presented. The

petition for a writ of certiorari should be denied,

Respectfully submitted.

Stuon E. Sosetorr,

Solicitor General,

H. Brian Hotianp,

Assistant Attorney General,

Eis N. Stack,

Davin L. Luce,

JosepH M. Howarp,

Davin R. Urpan,

Special Assistants to the Attorney

General.

SEPTEMBER 1954.