Source: http://www.chanrobles.com/usa/us_supremecourt/360/672/case.php
Timestamp: 2017-10-23 00:49:03
Document Index: 608441746

Matched Legal Cases: ['§ 4411', '§ 7203', '§ 4412', '§ 7272', '§ 4401', '§ 4412', '§ 371']

The petitioners and twenty-two others were indicted and tried for conspiracy to evade and defeat the payment chanroblesvirtualawlibrary
At the trial, it was established by overwhelming evidence that the petitioners had engaged with numerous others in a closely organized and large-scale operation of the numbers game in Atlanta, Georgia, during the years chanroblesvirtualawlibrary
In addition to the conspiracy count, the indictment under which the petitioners were tried also contained two additional counts charging them with the substantive offenses of willful failure to pay the special tax imposed by § 4411 of the Internal Revenue Code, [Footnote 5] in violation of § 7203 of the Code, [Footnote 6] and of failure to register as required by § 4412 of the Code, [Footnote 7] in violation of § 7272 of the chanroblesvirtualawlibrary
In sum, what this record presents, then, is a picture of a large-scale and profitable gambling business conducted in Atlanta over a period of several years by petitioners Ingram and Jenkins. The business involved many participants, including the petitioners Smith and Law. It was a business made criminal by the laws of Georgia, and everyone in the organization participated in trying to keep its operation secret. Ingram and Jenkins were liable for the federal taxes imposed by §§ 4401 and 4411 of the Internal Revenue Code, and willfully failed to pay them. They were required by § 4412 of the Code to register with the official in charge of the Internal Revenue District, and they failed to do so. Smith and Law were not themselves subject to any of the taxes here involved. The question presented is whether this factual foundation is sufficient to support a conviction of the petitioners, or any of them, for conspiracy to attempt to evade or defeat federal taxes, chanroblesvirtualawlibrary
It is fundamental that a conviction for conspiracy under 18 U.S.C. § 371 cannot be sustained unless there is "proof chanroblesvirtualawlibrary
Indulging, as of course we must, in that view of the evidence most favorable to the Government, we simply cannot discern adequate foundation in the present record for a finding that Smith and Law had such knowledge of Ingram's and Jenkins' wagering tax liability. The record is completely barren of any direct evidence of such knowledge. It was not shown, for example, that any reference had ever been made by any of the petitioners to possible tax liability, or that they had filed a return or paid a tax in previous years. The Government relied instead upon evidence which, it asserts, circumstantially proved the requisite knowledge on the part of Smith and Law. These circumstances were simply the intimate connection of Smith and Law with the operation of the lottery itself, chanroblesvirtualawlibrary
Yet these circumstances actually are colorless as to the vital issue of knowledge on the part of Smith and Law that their superiors owed federal wagering taxes. Certainly the secrecy of the operation did not go to show that knowledge. This is not a case where efforts at concealment would be reasonably explainable only in terms of motivation to evade taxation. Here, the criminality of the enterprise under local law provided more than sufficient reason for the secrecy in which it was conducted. A conspiracy, to be sure, may have multiple objectives, United States v. Rabinowich, 238 U. S. 78, 238 U. S. 86, and if one of its objectives, even a minor one, be the evasion of chanroblesvirtualawlibrary
319 U.S. at 319 U. S. 711. Smith and Law were not liable for the wagering tax. United States v. Calamaro, supra. They could not, therefore, have been convicted of the crime which they were charged with having conspired to commit. To sustain their conviction on this record would make of the crime of conspiracy just that "dragnet to draw in all substantive crimes" against which the Court warned in Direct Sales. Cf. Gebardi v. United States, 287 U. S. 112. chanroblesvirtualawlibrary
In this case, the Government has, in effect, sought to bypass Calamaro by the simple expedient of indicting persons connected with a lottery operation not for the substantive offenses proscribed by the Internal Revenue Code, but instead for conspiring with those members of the lottery operation who are personally subject to the relevant excise taxes to evade payment of those taxes. Two essential elements of the crime, first, knowledge that the taxes are due, and, second, a "willful and positive chanroblesvirtualawlibrary
But I think that the very considerations which lead the Court to reverse the conviction of Smith and Law equally require a reversal as to Ingram and Jenkins. An indispensable element of the crime of tax evasion is knowledge that a tax is imposed. This knowledge may be proved directly or circumstantially. Here, there is no direct proof, and the sole circumstantial evidence relied on by the Government is the fact of concealment of the lottery operation. But if, as the Court holds, "certainly the secrecy of the operation did not go to show . . . knowledge" by Smith and Law that their superiors were liable for a federal tax, I am at a loss to understand how this factor can at the same time suffice to show knowledge on the part of petitioners Ingram and Jenkins that they themselves were liable for a federal tax. The latter, no less than the former, must be shown to have actual knowledge that a tax is owing before they can be convicted of a conspiracy to evade that tax, and the Court's reasoning plainly demonstrates to me that the Government has made no such showing in this case. chanroblesvirtualawlibrary