Opinion ID: 1253249
Heading Depth: 3
Heading Rank: 3

Heading: Affirmative Acts of Evasion

Text: Josephberg contends that, with respect to Count 1, the government's evidence was also insufficient to prove that he engaged in any affirmative act of evasion, arguing, in part, that the witnesses on whose testimony the government relied to prove this element withdrew the essential points of their direct testimony upon cross-examination (Josephberg brief on appeal at 63). This argument is doubly flawed. First, the witnesses referred to by Josephberg in making this argument are IRS Revenue Agent John Dennehy and IRS Revenue Officer Joseph Lewandoski, and for the reasons discussed in Part II.D. below, we do not agree with Josephberg's characterizations of the record. Second, as discussed in Parts II.A. above and II.D. below, it is the province of the jury as the appropriate arbiter of the truth to determine what part, if any, of a witness's testimony to credit or discredit. Josephberg also asserts that there was utterly no evidence to prove that Josephberg concealed assets or income ( id. at 63-64), and that the stock he caused to be issued in the names of his children lacked economic value ( see id. at 64). These contentions border on the frivolous. An affirmative act of evasion includes `any conduct, the likely effect of which would be to mislead or to conceal.' United States v. Klausner, 80 F.3d 55, 62 (2d Cir.1996) (quoting Spies v. United States, 317 U.S. 492, 499, 63 S.Ct. 364, 87 L.Ed. 418 (1943)). Such conduct includes `false statements made to Treasury representatives for the purpose of concealing unreported income.' United States v. Klausner, 80 F.3d at 62 (quoting United States v. Beacon Brass Co., 344 U.S. 43, 45-46, 73 S.Ct. 77, 97 L.Ed. 61 (1952)); see also United States v. Winfield. 960 F.2d 970, 973 (11th Cir.1992) (an affirmative act constituting an evasion or attempted evasion of the tax occurs when false statements are made to the IRS after the tax was due). Accordingly, concealment of assets or covering up of sources of income, [and] handling of one's affairs to avoid making the records usual in transactions of the kind are examples of conduct sufficient to create an inference of evasion. Spies, 317 U.S. at 499, 63 S.Ct. 364. As described in Part I.B. above, after the IRS began trying to collect Josephberg's tax debt following the entry of the tax court judgments, Josephberg in mid-1997 concealed the fact that he was the sole owner of Josephberg-Grosz, stating that he owned only 50 percent. In the fall of 1997, he set up JG Capital and JG Partners in order to  as he confided to his accountant Fox  place his investment banking income in accounts not bearing his name so as to avoid having the IRS seize that income. In the asset disclosure form he subsequently submitted to the IRS, Josephberg did not disclose the existence of these two entities. Further, in 1993, the year in which Josephberg received the IRS notice of deficiency with respect to the earliest years, 1977-1980, he established the stock accounts for his children into which he thereafter had his investment banking income redirected. Josephberg told Fox that he had caused the stock to be placed in his children's names because [t]he IRS had levied all of his bank accounts, [and] he had no place else to put it. (Tr. 976.) Fox testified on cross-examination that Josephberg had not been putting such stock into his children's names prior to having serious problems with the IRS. ( See id. at 1060.) Josephberg's contention that because the stock thus issued in the names of his children was restricted stock it had no value, is contrary to both the law ( see Part II.E.l. below) and the evidence. The jury was entitled to infer that the stock was not worthless in light of the evidence as to its market value, as well as the evidence that Josephberg was willing to accept it as payment of his investment banking fees totaling hundreds of thousands of dollars and that Josephberg later sold the stock for hundreds of thousands of dollars.