Court Opinion

ID: 9636601
Source: CourtListenerOpinion
Date Created: 2023-08-22 14:34:59.538447+00
Date Added: 2024-06-11T12:12:40.486073
License: Public Domain

McCORD, Circuit Judge
(dissenting).
The overwhelming weight of the evidence in this case points unerringly to the guilt of this defendant, and his conviction should be sustained. The majority decision is just another illustration of how rigid adherence to the dangerous yoke of so-called authority and case precedent, rather than to right and reason under the evidence, can permit technical requirements of proof to feast and fill and fatten on justice.
The majority predicate their reversal on the sole ground that the evidence was insufficient to make out a prima facie case against the defendant on a net worth-expenditure basis, for the reason that the testimony of the government auditor did not expressly exclude the hypothesis that some of the large expenditures by defendant “might have been from sources other than current business income.” This is sheer speculation and conjecture, and an unwarranted presumption in favor of defendant’s innocence after he has been fairly tried and convicted. Moreover, it is an unreasonable hypothesis which has already been rejected by the jury as manifestly incredible and unworthy of belief. The ultimate effect of the decision is to shackle the government to a practically insurmountable burden of proof in net worth-expenditure cases concerning matters which are peculiarly within only an evading defendant’s knowledge.
In all cases, such as hear, where a defendant has either destroyed his records, or they are otherwise unavailable, the government must of necessity resort to other indirect methods of proving unreported income, such as (1) by an analysis of the defendant’s bank deposits; (2) by showing an increase in net worth on the net worth-expenditure basis; or (3) by evidence of purchases, expenditures and investments made during the tax years on which the prosecution is based. Many tax offenders of the worst type would go unwhipped of justice if the government were not allowed to establish unreported taxable income by this type of circumstantial evidence. Each of the above methods is predicated upon the sound legal proposition that evidence of a large amount of unexplained funds or property in the hands of a defendant during the tax years under scrutiny establishes a prima facie case of understatement of income during that period. United States v. Johnson, 319 U.S. 503, 517, 519, 63 S.Ct. 1233, 87 L.Ed. 1546; O’Brien v. United States, 7 Cir., 51 F.2d 193; United States v. Miro, 2 Cir., 60 F.2d 58. It is then incumbent upon the defendant to go forward and offer proof in explanation of this unreported excess income, much in the same manner as would be required under the “possession of recently stolen goods” rule. Yielding v. United States, 5 Cir., 173 F.2d 46, 48; Janow v. United States, 5 Cir., 141 F.2d 1017; Levi v. United States, 5 Cir., 71 F.2d 353. It would be manifestly unreasonable to re*228quire the Government to give such a defendant a bill of particulars on his own hidden and unreported income, or to offer proof to exclude the possibility that such other secret income does not in fact exist. United States v. Kushner, 2 C.ir., 135 F.2d 668, 673; United States v. Skidmore, 7 Cir., 123 F.2d 604, 607; Tinkoff v. United States, 7 Cir., 86 F.2d 868; Paschen v. United States, 7 Cir., 70 F.2d 491.
The usual contention on behalf of a defendant in this type of case is that the unexplained increase in net worth results from expenditure of funds accumulated and secreted in earlier years, for which tax prosecutions are then barred by the statute of limitations. Obviously, because of the difficulty and inaccessibility of such proof, the Government could not possibly wholly rebut such a contention, as only the defendant himself knows whether the defense is made in good faith. In such instances, after the Government has offered all proof available, the defendant should not be permitted to stand silently by and thwart'-a conviction on the claim that a failure to prove unknown assets does not satisfy net worth requirements. Manifestly, the truth and good faith of such a defense is for the jury alone. Malone v. United States, 7 Cir., 94 F.2d 281, 288; Guzik v. United States, 7 Cir., 54 F.2d 618, 620; Oliver v. United States, 7 Cir., 54 F.2d 48, 50; United States v. Johnson, 319 U.S. 503, 63 S.Ct. 1233 ; 87 L.Ed. 1546.
The evidence here is amply sufficient to justify the verdict, on the authority of United States v. Chapman, 7 Cir., 168 F.2d 997, and Barrow v. United States, 5 Cir., 171 F.2d.286, 287. In any event, the conviction should be sustained on the alternative theory that abundant proof of the defendant’s large purchases, investments and expenditures during the tax period in question properly presented a jury issue as to whether he had willfully failed to report taxable income, -for the reason that a jury may properly infer from such transactions that the defendant had taxable income with which to make his proven disbursements.' United States v. Johnson, 319 U.S. 503, 517, 63 S.Ct. 1233, 87 L.Ed. 1546; O’Brien v. United States, 7 Cir., 51 F.2d 193; United States v. Miro, 2 Cir., 60 F.2d 58. This method of proving taxable income was sanctioned by our court of last resort in United States v. Johnson, 319 U.S. 503, at page 517, 63 S.Ct. 1233, at page 1240, 87 L.Ed. 1546, wherein it was stated:
“That he (defendant) had large, unreported income was reinforced by proof which warranted the jury in finding that certainly for the years 1937, 1938, and 1939, the private expenditures of Johnson exceeded his available declared resources. It is on this latter ground — namely, that presumably Johnson’s expenditures justified the finding that he had some unreported income which was properly attributable to his earnings from the gambling houses — that the court below thought that the evidence * * * [was] sufficient to go to the jury. That is enough to sustain the judgment against Johnson * *
Moreover, in the recent case of Barrow v. United States, 5 Cir., 171 F.2d 286, 287, this court stated:
“We think the Government presented evidence showing that the making and the filing of the returns by the Defendant were with knowledge that the amount of his gross sales was therein largely understated, and that the returns were made and filed after Defendant had been informed by his accountant of the true amount of such gross sales. Such evidence, we think, was sufficient to make out a prima facie case under the indictment, and thereafter it was not the burden of the United States to make proof of facts which Defendant knew or should have known, relating to the amount of his profits and net income for such years.”
It is without dispute that the defendant’s income from his gambling resorts, night clubs, and other nefarious enterprises mounted into the hundreds of thousands of dollars. He alone knew the naked facts concerning the operation of his illegal businesses, and the income derived therefrom, but he refused to take the witness stand and testify, claiming his constitutional right. This record stands complete without one shred of credible evidence in his favor. Furthermore, he had the af-frontery to request two bills of particulars as to the charges against him, and in ef-*229feet said to his Government that “while I know every detail of my crooked business, you must tell me what you know”; and now the majority opinion launders him white and he goes without a day.
I respectfully dissent.
On Motion to Amend Judgment.
PER CURIAM.
On the appeal of the accused this court set aside the verdict and sentence and ordered a new trial. This was on the ground that the evidence presented did not authorize a verdict of .guilty, one judge dissenting. The majority thinking the defect in the evidence might be supplied on another trial directed that it be had. The present motion is that we substitute a direction to enter a judgment of acquittal because such a judgment is required by Rule 29 of Criminal Procedure, 18 U.S C.A., and by the constitutional provision against double jeopardy.
As to double jeopardy, the law is well settled that “Where the accused successfully seeks review of a conviction, there is no double jeopardy upon a new trial.” State of La. ex rel. Francis v. Resweber, 329 U.S. 459, 67 S.Ct. 374, 375, 91 L.Ed. 422. “The only thing the appellate court could do was to award a new trial on finding error in the proceeding, thus the plaintiff in error himself invoked the action by the court which resulted in a further trial. In such cases he is not placed in second jeopardy within the meaning of the Constitution.” Stroud v. United States, 251 U.S. 15, 18, 40 S.Ct. 50, 51, 64 L.Ed. 103. Even when acquitted of a higher grade of offense and convicted of a lower one on securing a new trial in an appellate court he waives the question of former jeopardy as to both grades; Trono v. United States, 199 U.S. 521, 26 S.Ct. 121, 50 L.Ed. 292, 4 Ann.Cas. 773. “How far, if they had taken no steps to set .aside the proceedings in the former case, the verdict and sentence therein could have been held to bar a new indictment against them, need not be considered, because it is quite clear that a defendant who procures a judgment against him upon an indictment to be set aside may be tried anew upon the same indictment, or upon another indictment, for the same offense of which he had been convicted.” United States v. Ball, 163 U.S. 662, 672, 16 S.Ct. 1192, 1195, 41 L.Ed. 300.
As to Rule 29, the accused after verdict and within five days both renewed his motion for acquittal and moved for a new trial. In such a situation the rule provides, “If a verdict of guilty is returned the court may on sitch motion set aside the verdict and order a new trial or enter a judgment of acquittal”. The district court refused to do either. The appellate court is. not mentioned in the Rule. If we are included in the expression “The court,” our power to grant a new trial is stated therein. If we are not included, our power on finding error in the trial is as it has always been, to reverse and remand for further proceedings, which would mean a new trial, or we may “direct the entry of such appropriate judgment, decree or order, or require such further proceedings to be had as may be just under the circumstances”. 28 U.S. C.A. § 2106. This last we have done.
The acquittal under Counts 1 and 2 is of course final. There can be no further prosecution under those counts. United States v. Ball, 163 U.S. 662, 16 S.Ct. 1192, 41 L.Ed. 300.
Motion denied.