Opinion ID: 492452
Heading Depth: 3
Heading Rank: 1

Heading: Likely Source of Income.

Text: 15 Under the cash expenditures method of proof, the government is required to show either a likely source of the allegedly unreported income or that it has negated all reasonably possible nontaxable sources of income. United States v. Mastropieri, 685 F.2d 776, 784-85 (2d Cir.), cert. denied, 459 U.S. 945, 103 S.Ct. 260, 74 L.Ed.2d 203 (1982); see United States v. Bianco, 534 F.2d 501, 506-07 (2d Cir.), cert. denied, 429 U.S. 822, 97 S.Ct. 73, 50 L.Ed.2d 84 (1976). Caswell admits that the December 1982 gambling raids produced evidence of a likely source of income for 1982, and thus, he does not challenge (under this argument) his conviction for that year. 5 Rather, he contends that this evidence could not be used by the jury to make a quantum leap and infer that the bookmaking operation was also his likely source of income in 1979, 1980, and 1981. Caswell therefore maintains that the three counts corresponding to those years must fail as a matter of law. 16 The government's response is two-fold. First, relying on United States v. Heyward, 729 F.2d 297 (4th Cir.1984), cert. denied, 469 U.S. 1105, 105 S.Ct. 776, 83 L.Ed.2d 772 (1985), and Beard v. United States, 222 F.2d 84 (4th Cir.), cert. denied, 350 U.S. 846, 76 S.Ct. 48, 100 L.Ed. 753 (1955), the government asserts that the evidence from the 1982 gambling raids was admissible to allow the jury to infer that Caswell had a gambling income in the previous three years. In both cases, the Fourth Circuit held that discovery of certain evidence of unreported income in one year did not render the evidence inadmissible to substantiate the government's claims of tax evasion in previous years. Heyward, 729 F.2d at 301 (drug laden plane discovered in 1980 admissible to prove defendant's net worth in 1978 and 1979); Beard, 222 F.2d at 92 (bookmaking evidence found in 1945 relevant to 1944 tax evasion charge). Instead, the time difference was simply a matter to be considered by the jury. Heyward, 729 F.2d at 301 (citing United States v. Wright, 667 F.2d 793, 800 (9th Cir.1982)). Second, the government maintains that there was other evidence of Caswell's betting activities in 1979, 1980, and 1981 which allowed the jury to infer that appellant's likely source of income for those years was from gambling. 17 Although we are inclined to agree with the Fourth Circuit's analysis of the issue, we do not have to reach this question as the record clearly indicates that the government introduced sufficient other evidence of Caswell's gambling activity in 1979, 1980, and 1981 to show that the likely source of his unreported income was from gambling. For example, there was evidence from which the jury could infer that Caswell acted through the alias Don Dawson in purchasing sports information from two different services in 1981. Additionally, Stephen Geist, a convicted gambler, testified that he had made bets with Caswell since 1976. Further, Ivan Mullenix testified that from 1980 through 1982, he rented Caswell, under the alias Frank or Richard Quinn, the apartment from which bets were transferred to the Caswell farm. Mullenix also testified that he made weekly bets with Caswell on NFL games during 1979 and 1980. 18 In summary, the evidence of Caswell's bookmaking and gambling was not limited to the year 1982. Accordingly, we hold that the evidence of Caswell's betting activities was sufficient to allow the jury to conclude that this was a likely source of Caswell's unreported income for the years 1979, 1980 and 1981. 19