Evening star., 1951-05-06

criminal gangs still hourish-in-
GLIDING a reactivated Capone
gang-with ties to wealth-accumu-
lating gamblers and Government
officials, but that some OF them at
least are still getting away with
income tax murder" At least,
that is the public's impression
from watching television and read
ing the newspapers.
This impression that the crooks
are getting around the thing that
brought AL Capone's downfall was
fortified this week by publication
of the Senate Crime Committees
report. Its 1875 pages are pep
pered with references to the Fed
eral income and alcohol taxes and
to their inadequate enforcement
by the Internal Revenue Service
of the Treasury Department. To
the latter charge the service does
not plead guilty. However, it ad-
mits that it needs to be strength
ened with more powers and per-
sonnel, if best results are to be
achieved. From Capitol Hill there
are plain indications that Congress
will act In the matter.
Loopholes in Enforcement
The committees charges Of tax
evasion are pointed. They read
In part as follows:
1.-THE Treasury Of the United
States has been defrauded Of huge
sums Of money in tax revenues by
racketeers and gangsters engaged
In organized criminal activities.
Huge sums in cash handled by
racketeers and gangsters are not
reflected In their income tax re-
turns. Income tax returns filed
with the Federal Government
have been inadequate since, as a
rule, they contained no listing Of
the sources of income nor any
itemization of the expenses. Gang
sterS and racketeerS, moreover, do
not keep books and records from
which it might be possible to
check tax returns.
''Mobsters and racketeers have
been assisted by some tax &C
countantS and tax lawyers in de-
frauding the Government. These
accountants and lawyers have
prepared and defended income tax
returns which they knew to be in
adequate. At the very least. those
who are guilty of such practices
could be convicted of a mis-
demeanor and sent to jail for a
year for every year in which they
have failed to comply with the
law.
THE Bureau of Internal Reve-
nue. states that it has been
investigating these returns. It
states further that when it pur-
sues the case of one of these indi-
viduals, it prefers to set up
against him a case Of criminal tax
evasion which is a felony. rather
than the lesser offense of failing
to keep proper books and records,
which is a misdemeanor.
Despite this, the committee be-
lieves that the bureau could, and
should, make more frequent use
of the sanctions provided fcr
failure to keep proper books and
records than it has heretofore.
In any event, the bureau should
insist on adequate returns and
proper books. :"
Examples From Record
The hearings disclosed numer-
Gus examples Of income tax prac-
tices by and on behalf of gam
blers, gangsters and others, not
available to the ordinary tax
payer. Thus, in Cleveland the
committee found that "Alvin
Giesey presents the familiar pat
tern Of an accountant who had
numerous gangster and racketeer-
ing clients. The cream of the
Cleveland underworld had their
tax returns prepared by Giesey.
GieSey actually had a share in
the illegal enterprises Of his eli
ents There was absolutely
no way of guaranteeing the accu-
racy for tax purposes of the figures
submitted to Giesey by the gam
bling enterprises. Before the
figures of income and outlay were
submitted to Giesey, hundreds of
thousands of dollars were prob
ably taken of the top of the bank
roll"
The Committee sensed close tie
ups between tax evaders and law
enforcement officers. In New Or
leans, where it studied gambling
activities, the committee reports,
Costello and Kastel were tried in
1899 on charges of trying to evade
payment of $500.000 in Federal in
come taxes on 1867 income
from slot machine, but were ac-
quilted.
The committee looked into the
case of the elaborate Club Forest
and found proof that the books
had been juggled, even though,
as presented by the public ac-
countants who maintained them,
they were a model of bookkeeping
practice. Also, the club wrote off
in one year ''the astronomical
sum Of $372. 900" with the expla-
nation that this represented un-
recovered loans to players and
customers. OF this "incredulous
theory" the committee said:
Equally amazing sums have been
charged off through the years
without apparent action by the
tax authorities to question or dis
allow"
In California. to take another
case, the committee found similar
laxity in the returns of that al
most unbelievable character, Ar
ther H. Samish," alias "Mr. Big.
1t also came across a conspicuous
case of corruption among a few