Case Name: UNITED STATES of America and O. Gordon Delk, Acting Commissioner of Internal Revenue, Appellees, v. Richard GOODMAN, also known as Dick Goodman, Appellant
Court: United States Court of Appeals for the Fourth Circuit
Jurisdiction: United States
Decision Date: 1961-03-30
Citations: 289 F.2d 256
Docket Number: No. 8135
Parties: UNITED STATES of America and O. Gordon Delk, Acting Commissioner of Internal Revenue, Appellees, v. Richard GOODMAN, also known as Dick Goodman, Appellant.
Judges: 
Reporter: Federal Reporter 2d Series
Volume: 289
Pages: 256–267

Head Matter:
UNITED STATES of America and O. Gordon Delk, Acting Commissioner of Internal Revenue, Appellees, v. Richard GOODMAN, also known as Dick Goodman, Appellant.
No. 8135.
United States Court of Appeals Fourth Circuit.
Argued Oct. 12, 1960.
Decided March 30, 1961.
Sobeloff, Chief Judge, dissented.
Kenneth Carroad, New York City (Harry Spilka, Norfolk, Va., Theodore Propp, New York City, and Edwin L. Wolf, Garden City, N. Y., on the brief), for appellant.
Norman H. Wolfe, Atty., Dept, of Justice, Washington, D. C. (Charles K. Rice, Asst. Atty. Gen., Lee A. Jackson, Meyer Rothwacks and Burt J. Abrams, Attys., Dept, of Justice, Washington, D. C., and Joseph S. Bambacus, U. S. Atty., Richmond, Va., on the brief), for appellees.
Before SOBELOFF, Chief Judge, BOREMAN, Circuit Judge, and STANLEY, District Judge.

Opinion:
BOREMAN, Circuit Judge.
Having been ordered by the United States District Court for the Eastern District of Virginia to answer certain questions propounded to him in a Tax Court proceeding, Richard Goodman prosecutes this appeal, asserting that the court erred in denying his claim of privilege under the Fifth Amendment to the Constitution of the United States.
For several years before 1950, Goodman was employed by Associated Barr Stores, Inc., the latter being hereinafter referred to as "Associated," which owned and operated a chain of retail jewelry stores with a principal office in Philadelphia. Goodman was manager of Associated's Norfolk, Virginia, store. In 1949 and 1950, the Internal Revenue Service was investigating the tax liability of Associated for the years 1944 through 1947. When Goodman was interrogated by Internal Revenue Agents in 1950, he signed an affidavit relating that Samuel Berman, Secretary of Associated, who resided in Philadelphia, had directed him not to ring up on the cash register or enter in the books certain receipts from cash sales of jewelry but to forward this money by Railway Express to Berman at the main Philadelphia office. Goodman had prepared a memorandum of these alleged instructions and had placed it in his safe deposit box in a Norfolk bank. He took the agents to the box and they extracted therefrom the memorandum confirming this arrangement. They found in the box another paper, purportedly a summary of the amounts of cash sent by Railway Express in packages to the Philadelphia office of Associated, marked for the attention of Samuel Berman. In his affidavit, Goodman claimed to have received $5,000 from Mr. Berman for following instructions. Goodman's employment was terminated in 1950, following his disclosures to the agents, and he was then employed by a competitor in Norfolk where he continued to reside until early 1957.
In June of 1953, Associated was notified by the Commissioner of Internal Revenue that he had' determined certain tax deficiencies and penalties against it for the years 1944 to 1948. In September of the same year, Associated instituted a proceeding in the Tax Court seeking a re-determination of these deficiencies. At the hearing before the Tax Court on June 13, 1955, and after Associated had presented evidence, the Commissioner called Goodman, who had been served with a subpoena duces tecum, as his first witness. Goodman, however, on the advice of counsel, refused to answer several questions relating to his activities with Associated before 1950 and to his affidavit. He invoked his Fifth Amendment privilege against self-incrimination. At the Government's request, the Tax Court hearing was then adjourned and the Government filed a motion in the District Court seeking an order compelling Goodman to answer.
Hearings were held in the District Court in December 1955 and May 1959. On June 14, 1956, Goodman submitted to the court an affidavit purporting to disclose his reasons for declining to answer in the Tax Court and to show his good faith in the claim of his constitutional privilege. One of the several reasons assigned was that many of the assertions in his 1950 affidavit were false and that if he were forced to disclose the actual facts he might be implicated in a continuing conspiracy to evade the federal income tax law. Another reason was that from 1944 through 1950 he was engaged in certain business transactions other than those connected with his immediate employment and to disclose them might give rise to a prosecution on the theory that certain amounts had been omitted from his gross income. It was intimated, as a further reason, that he might have been charged with embezzlement since he had been making reimbursements to Associated out of salaries and commissions for a period of more than one year prior to termination of his employment.
The long delays in holding hearings were attributed by the District Court to counsel for both the Government and Goodman and to the congested condition of court dockets. Finally, in January 1960, the District Court entered the order from which this appeal was taken. It directed Goodman to answer the questions propounded in the Tax Court proceedings, to give testimony with respect to all matters embraced or included in the sworn statement given to the Internal Revenue Agents and to produce the documents and other data called for by the subpoena duces tecum. The order further provided that, in event of noncompliance therewith, Goodman should appear before the District Court, as he might be directed, to show cause why he should not be required to obey the order and why he should not be held in civil contempt. The court held that there was no possibility of self-incrimination since any illegal activities suggested by the evidence ended upon termination of Goodman's employment in 1950 and prosecution for a continuing conspiracy was thus barred by the six-year statute of limitations; and that prosecution for other suggested possible offenses was barred by the appropriate limitations statutes.
The District Court, after reviewing the facts purportedly disclosed in the 1950 investigation, stated [178 F.Supp. 342]:
"Such facts, assuming that a criminal act has been committed, suggest that Goodman was a party to a conspiracy to fraudulently evade and defeat the payment of income taxes."
The court concluded:
"Assuming arguendo that Goodman had not waived his privilege of self-incrimination, and that the period of limitation had not expired on June 13, 1955, when he refused to answer certain questions in the Tax Court, it is abundantly clear that Goodman may no longer be prosecuted, tried, or punished for any federal crime committed in connection with the handling of cash sales of the corporate taxpayer."
The court further held that in view of the appropriate statutes of limitation, Goodman could not, at the date of the final order, be prosecuted for possible perjury committed in 1950, for embezzlement of his employer's funds, for possible tax evasion for failure to report his own income prior to 1950 or for conspiracy with representatives of Associated, which conspiracy ended in 1950. We cannot say that the District Court erred in these particulars.
In determining whether a witness is or is not entitled to invoke his Fifth Amendment privilege against self-inerimination, certain basic principles must be considered and applied. Many cases are to be found in which such privilege has been asserted and has been either denied or upheld. It is quite unnecessary, even if it were possible, to here attempt to refer specifically to all of these cases and point out their distinguishing features. In selecting persuasive applicable authority from which general principles may be deduced, each case must be analyzed in the light of the factual situation there presented.
The Government suggests that Goodman's disclosures to the federal agents in 1950 constituted a waiver of his Fifth Amendment privilege asserted in the Tax Court hearing. This argument is entirely without merit and has been repeatedly rejected by the courts. It has been uniformly held that a prior disclosure to investigating officials cannot constitute a waiver of the privilege with respect to the same matter in a subsequent legal proceeding. A waiver of the privilege must occur in the same proceeding in which it is sought to be invoked. Poretto v. United States, 5 Cir., 1952, 196 F.2d 392; Marcello v. United States, 5 Cir., 1952, 196 F.2d 437; In re Neff, 3 Cir., 1953, 206 F.2d 149, 36 A.L.R. 2d 1398; and United States v. Miranti, 2 Cir., 1958, 253 F.2d 135.
Of course, if by reason of the statute of limitations there remains no possibility that a prosecution of the witness could result from or be assisted by his answers to questions, he is not justified in refusing to answer. Brown v. Walker, 1896, 161 U.S. 591, 16 S.Ct. 644, 40 L.Ed. 819; Hale v. Henkel, 1906, 201 U.S. 43, 26 S.Ct. 370, 50 L.Ed. 652.
In reviewing the development of applicable principles, we note the case of Counselman v. Hitchcock, 1892, 142 U.S. 547, 12 S.Ct. 195. Involved was a grand jury investigation of possible violations of the Interstate Commerce Act, 49 U.S.C.A. § 1 et seq., by a certain railroad. Counselman, who had received rates from this particular road, declined to answer whether he had ever been offered or had obtained any rebates, drawbacks or commissions. The court upheld him in refusing to answer and stated 142 U.S. at page 562, 12 S.Ct. at page 198:
"It is impossible that the meaning of the constitutional provision can only be that a person shall not be compelled to be a witness against himself in a criminal prosecution against himself. It would doubtless cover such cases; but it is not limited to them. The object was to insure that a person should not be compelled, when acting as a witness in any investigation, to give testimony which might tend to show that he himself had committed a crime."
This statement could well have been amplified by adding "for which he might be prosecuted" at the end of the above quotation.
Brown v. Walker, supra, 161 U.S. 591, 16 S.Ct. 644, was a similar interstate commerce case where, as a result of the decision in the Counselman case, Congress had statutorily provided that persons testifying in such matters should have complete immunity from prosecution. The court upheld the immunity statute and held that it furnished an absolute protection against subsequent prosecution, noting, however, that the privilege against self-incrimination was not to be invoked in cases where the testimony-could not possibly be used in a prosecution against the witness or where prosecution would be a mere imaginary possibility, remote and improbable. The court, by way of caution (161 U.S. 600, 16 S.Ct. 648), said this:
"The danger of extending the principle announced in Counselman v. Hitchcock is that the privilege may be put forward for a sentimental reason, or for a purely fanciful protection of the witness against an imaginary danger, and for the real purpose of securing immunity to some third person, who is interested in concealing the facts to which he would testify. Every good citizen is bound to aid in the enforcement of the law, and has no right to permit himself, under the pretext of shielding his own good name, to be made the tool of others, who are desirous of seeking shelter behind his privilege."
The claim of constitutional privilege against self-incrimination was upheld in Hoffman v. United States, 1951, 341 U.S. 479, 71 S.Ct. 814, 95 L.Ed. 1118, United States v. Miranti, 2 Cir., 1958, 253 F.2d 135, and Internal Revenue Agent v. Sullivan, D.C.W.D.N.Y.1923, 287 F. 138. But in each of those cases there existed a fact situation which provided a reasonable basis for the determination, in effect, that it was impossible to assess the practical possibility of future prosecution resulting from the answers to the posed questions. Those cases are easily distinguishable fi'om the instant case.
In Mason v. United States, 1917, 244 U.S. 362, 365, 37 S.Ct. 621, 622, 61 L.Ed. 1198, the court denied Mason's claim of privilege and stated:
"The constitutional protection against self-incrimination 'is confined to real danger, and does not extend to remote possibilities out of the ordinary course of law.' Heike v. United States, 227 U.S. 131, 144 [33 S.Ct. 226, 57 L.Ed. 450]; Brown v. Walker, 161 U.S. 591, 599, 600 [16 S.Ct. 644]."
And at 244 U.S. at page 366, 37 S.Ct. at page 622, the following appears:
" ' We think that a merely remote and naked possibility, out of the ordinary course of the law and such as no reasonable man would be affected by, should not be suffered to obstruct the administration of justice. The object of the law is to afford to a party, called upon to give evidence in a proceeding inter alios, protection against being brought by means of his own evidence within the penalties of the law. But it would be to convert a salutary protection into a means of abuse if it were to be held that a mere imaginary possibility of danger, however remote and improbable, was sufficient to justify the withholding of evidence essential to the ends of justice.' "
*
" Ordinarily, he [the trial judge] is in much better position to appreciate the essential facts than an appellate court can hold and he must be permitted to exercise some discretion, fructified by common sense, when dealing with this necessarily difficult subject. Unless there has been a distinct denial of a right guaranteed, we ought not to interfere."
While the case of Rogers v. United States, 1951, 340 U.S. 367, 71 S.Ct. 438, 95 L.Ed. 344, rehearing denied 341 U.S. 912, 71 S.Ct. 619, 95 L.Ed. 1348, involved the question of waiver of privilege against self-incrimination, the court stated that some real danger, more than a mere imaginary possibility, must be apparent if the witness is to be sustained in his claim of privilege.
With the disclosed factual background here, Goodman argues that his testimony, which was sought to be elicited and which he declined to give, would expose him to the possibility of prosecution on the theory of a continuing conspiracy to evade the payment of Associated's income taxes. The District Court concluded there was no such possibility and we agree.
We may assume, as did the District Court, that the evidence strongly sug gested Goodman's participation in a conspiracy to conceal the receipt of a portion of the income of Associated through irregular procedures for several years, beginning in 1943. Undoubtedly any such conspiracy could not have been continued after 1950 in the same manner as before. It was then that Goodman's employment by Associated and the master and servant relationship were terminated. Indeed, Goodman testified that he resigned because he was sure he was about to be discharged. Thereafter, Goodman was in no position to continue the manipulation and handling of receipts from cash sales. In United States v. Zwillman, 2 Cir., 1940, 108 F.2d 802, 803, it was held: "If a conspiracy was shown in those earlier years it would continue unless abandoned and the defendant would have to prove abandonment in order to take advantage of the statute of limitations." In the instant case the District Court found abundant proof of such abandonment.
In addition to the termination of relationships growing out of Goodman's employment, in early 1950 he disclosed to Internal Revenue Agents his participation in withholding and forwarding cash receipts. The District Court found that he voluntarily delivered to the agents his records of instructions and of the amounts of cash allegedly sent by Railway Express, discussed these matters with the agents and executed an affidavit summarizing his acts relating to these transactions. He began working for a competitor of Associated. In February of 1950, after consulting an attorney and obtaining legal advice, Goodman filed amended income tax returns reflecting the amounts said to have been paid to him by Berman for his assistance and cooperation in manipulating the receipts from cash sales. In June of 1954 he was continuing to cooperate with the Internal Revenue Service by having his attorney deliver to a Revenue Agent for use at the trial in the Tax Court the original papers taken from his safe deposit box, copies of which were attached to his 1950 affidavit. Goodman testified before the District Court that since 1950 he had not had any discussion with any one connected with the Associated organization about his 1950 affidavit or Associated's tax problems. He asserted that he had not been in Associated's office in Philadelphia or in the offices of the corporation's attorneys since 1950; that when contacted by representatives of Associated by telephone, he did not enter into a discussion of Associated's tax problems but referred the representatives to his attorney. The testimony of Goodman's attorney supports the strong inference that Associated had, through this attorney, threatened Goodman with civil action or prosecution for embezzlement of Associated's funds. Instead of evidencing a continuation of a conspiracy, these facts would support a conclusion that the conspiracy, if one existed, had ended and that Goodman and representatives of his former employer, his possible co-conspirators, were distinctly and definitely at odds. In addition, in his affidavit submitted to the court in 1956 in which he sought to convince the court of his good faith in claiming his privilege, he would have the court draw the inference that no such conspiracy ever existed and that his earlier statements to the agents were pure fabrications.
If Goodman was engaged in a conspiracy prior to 1950 which in that year was affirmatively terminated and abandoned, no subsequent agreement between the alleged conspirators to conceal the original conspiracy would be deemed a part thereof, nor would such agreement extend its duration and continuation. In Grunewald, 353 U.S. at page 405, 77 S.Ct. at page 974, the court said:
" But a vital distinction must be made between acts of concealment done in furtherance of the main criminal objectives of the con spiracy, and acts of concealment done after these central objectives have been attained, for the purpose only of covering up after the crime."
Following the entry of the order of the District Court but prior to the presentation of this appeal, the Supreme Court handed down its decision in the case of Forman v. United States, 1960, 361 U.S. 416, 80 S.Ct. 481, 4 L.Ed.2d 412. Goodman claims that this case supports his argument that, if evidence could be produced to show a conspiracy in which he participated and that he took positive steps to conceal criminal activities which had previously taken place, it is obviously possible that he might be criminally implicated in a continuing conspiracy by reason of the attempt to conceal. In the Forman case, partners held out and failed to report as income certain cash receipts, and Forman and his partner were indicted and charged with conspiracy, extending from 1942 to 1953, to attempt to evade income taxes of Forman's partner and wife for the period 1942 to 1945. The indictment did not allege that one of the objects of the conspiracy was to conceal the acts of the conspirators as in Grünewald v. United States, supra. Of the thirty-three overt acts charged, some were shown by the evidence to have been committed as late as 1953, the year of the indictment. It is of particular importance to note that in the year 1953, and not before, one of the partners first revealed the "hold-out" income and the indictment charged that the conspiracy continued only until that time. In the instant case there is nothing in the evidence to even suggest that the conspiracy, if it ever existed, continued beyond the termination and abandonment thereof in 1950. We find no support in the Forman case for Goodman's contentions.
The questions which were directed to Goodman in the Tax Court proceeding and which he refused to answer pertained only to acts which were shown by Goodman's own affidavit to have been performed during the years from 1943 and possibly up to 1950. The District Court has directed that he answer those questions, testify concerning the transactions and matters mentioned in the affidavit given to the Revenue Agents and obey the subpoena duces tecum. It was the District Court's holding that, at the time of the entry of its order, the prosecution of Goodman for any criminal acts committed by him within the period to which his testimony would relate was barred by the statute of limitations and we agree. The District Court stated [178 F.Supp. 345]:
"The peculiar facts of this case lead to the inescapable conclusion that the plea of privilege under the Fifth Amendment is no longer available to Goodman. As was said in Hoffman v. United States, 341 U.S. 479 [71 S.Ct. 814, 95 L.Ed. 1118] the cases must be decided as much on the personal perception of the trial judge in viewing the surrounding circumstances of the case as upon the evidence."
It is clear that Goodman's asserted apprehensions indicated nothing more than a fear of imaginary danger and were without substantial foundation. Such a remote, unsupported, naked and imaginary possibility, out of the ordinary course of the process of the law, should not be permitted to obstruct the administration of justice and it is not sufficient to justify the withholding of evidence which may be essential to the Government's case in defending against Associated's claim for tax refunds.
It is urged that the District Court's order is so broad, indefinite and unspecific that it cannot serve to guide Goodman in his further testimony before the Tax Court. We find this argument to be unpersuasive.
There is yet another feature of this case to which consideration must be given in reaching a final determination and disposition. It has been held that the burden of proof is on the party objecting to the invocation of the privilege not only to show that the statutory period of limitation has expired, but also that no prosecution has been begun within that period, or, if begun, that it has been discontinued in such manner as to protect the witness from further prosecution. While the Government has met its burden of showing that there is no longer any possibility that Goodman could be prosecuted for substantive offenses committed in or prior to 1950, or for a continuing conspiracy to evade the payment of income taxes, it has not been pointed out to us that the Government introduced any evidence to show, or even attempted to inform the District Court, that no prosecution against Goodman was instituted before the time when the Government claims that limitations had run. Since this duty is stated in terms of an absolute burden, we are of the opinion that we must reverse on this technical point and remand the case to the District Court for further proceedings so .as to provide the opportunity for the Government to meet this burden, if possible. The other issues in the case have been presented before this court and we express our views with respect thereto so the parties may be fully advised, in the event the Government is able to discharge its additional burden.
Affirmed in part, reversed in part and remanded for further proceedings.
. Goodman refused to identify what purported to be Ms signature on the affidavit made in 1950 and refused to state whether he signed it. He would not say whether, prior to 1943, daily reports of collections at tbe Norfolk store were mailed to the corporation's Philadelphia offices, or whether in 1943 he had been given in structions to change the method of reporting cash sales to Philadelphia. He further refused to tell if he had ever sent currency to Samuel Berman at the Philadelphia office, and if Berman had given him $5,000 between 1943 and 1947 in addition • to his regular compensation. Finally, Goodman declined to identify the memorandum found in his safe deposit box which recited the instructions he had allegedly received.
. There is no question that the appellant, a witness in a Tax Court proceeding, is entitled to the benefit of the Fifth Amendment privilege if the danger of self-incrimination exists. Counselman v. Hitchcock, 1892, 142 U.S. 547, 12 S.Ct. 195, 35 L.Ed. 1110.
. 26 U.S.C.A. § 6531.
. Grunewald v. United States, 1957, 353 U.S. 391, 77 S.Ct. 963, 1 L.Ed.2d 931; Krulewitch v. United States, 1949, 336 U.S. 440, 69 S.Ct. 716, 93 L.Ed. 790; Lutwak v. United States, 1953, 344 U.S. 604, 73 S.Ct. 481, 97 L.Ed. 593.
. O'Neil v. O'Neil, 1924, 55 App.D.C. 40, 299 F. 914, 916. See also: Moore v. Backus, 7 Cir., 1935, 78 F.2d 571, 101 A.L.R. 579, certiorari denied 296 U.S. 640, 56 S.Ct. 173, 80 L.Ed. 455; Southern Railway News Co. v. Russell, 1893, 91 Ga. 808, 18 S.E. 40; Lamson v. Boyden, 1896, 160 Ill. 613, 43 N.E. 781.