218 F.2d 505 (9th Cir. 1954), 14109, Wolcher v. United States

Docket Nº:14109.
Citation:218 F.2d 505
Party Name:Louis E. WOLCHER, Appellant, v. UNITED STATES of America, Appellee.
Case Date:December 28, 1954
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 505

218 F.2d 505 (9th Cir. 1954)

Louis E. WOLCHER, Appellant,


UNITED STATES of America, Appellee.

No. 14109.

United States Court of Appeals, Ninth Circuit.

December 28, 1954

Rehearing Denied March 16, 1955.

Page 506

Leo R. Friedman, San Francisco, Cal., for appellant.

Lloyd H. Burke, U.S. Atty., Robert H. Schnacke, Asst. U.S. Atty., Melvin L. Sears, Regional Counsel, Robert G. Thurtle, Trial Attorney, Int. Rev. Service, San Francisco, Cal., for appellee.

Before HEALY, ORR, and POPE, Circuit Judges.

HEALY, Circuit Judge.

This matter is before us on appeal from a judgment of conviction on a charge of attempted income tax evasion.

Appellant had earlier been convicted on the same charge, and we reversed for error committed in the course of the trial. Wolcher v. United States, 9 Cir., 200 F.2d 493. The background of the case is rather fully developed in that opinion, and we shall here touch but briefly on the evidence. During the tax year involved (the fiscal year ending June 30, 1944) appellant collected large sums from the sale at wholesale of whisky at overceiling prices. Wolcher himself was not a wholesaler of whisky, but operated or was interested in a number of taverns or bars. The sales in question were made through San Francisco liquor wholesalers. The purchasers gave checks to the wholesalers in the amount of the ceiling price and paid the overceiling price in cash directly or indirectly to Wolcher. Wolcher reported no income from the sales.

The government through various witnesses established the details of these transactions, and Wolcher himself admitted them while on the stand. He contended only that he made no profit from the operations for the reason that in acquiring whisky he himself was obliged to make overceiling payments to one William Gersh in amounts which approximately offset the cash paid him by the buyers. At the former trial Gersh testified for the government that the large sum of money sent him by Wolcher was to be in payment for coin machines which Gersh thereafter attempted unsuccessfully to buy for Wolcher. He said the money was returned except for a minor amount spent in acquiring for Wolcher a number of phonographs. Gersh did not testify on the second trial.

The sufficiency of the evidence to sustain the conviction is not disputed. What is claimed is that certain prejudicial errors were committed on the trial. The assignment most heavily relied on is an alleged error in the giving of an instruction. During the course of a lengthy charge to the jury the court said: 'So that in my opinion brings the issue of the case down to a very simple (question), and that is that-- that since the Government has proved and the defendant has admitted receiving the cash over ceiling prices, the issue is whether you do or do not believe the testimony and the story told by the defendant in the case. If you believe his story, then you should return a verdict of not guilty. If you are convinced beyond a reasonable doubt that his story should not be believed, then you are justified in returning a verdict of guilty.'

It is argued that the instruction shifted the burden of proof from the government to appellant; that it took from the jury the question of whether the government's evidence established the charge beyond a reasonable doubt; that in effect it told the jury to disregard all other evidence in the case save the testimony

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and story of the defendant and to decide his guilt or innocence solely upon his testimony; and that it told the jury to discount or ignore weaknesses in the government's case if the jurors found appellant's testimony to be unworthy of belief.

Naturally the propriety of the instruction is to be considered in context. In the course of its charge the court gave the jury the following instruction: 'The presumption is that the defendant is innocent and that presumption continues until such time as the Government has proved the guilt of the defendant beyond a reasonable doubt. The Government has the burden of proving the guilt of the defendant. That burden never shifts at any stage of the proceeding to the defendant. The defendant has no obligation of any kind to go forward and prove that he is innocent.'

In immediate connection with the passage under attack, and as preliminary to it, the court gave the instructions shown on the margin. 1

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We think in the circumstances and in light of the accompanying instructions the jury could not rationally have understood the particular passage as shifting the burden of proof to the defendant, or as authorizing them to disregard frailties in the government's proof. As already said, the government had shown and the appellant had admitted that in the course of his liquor transactions during the tax year under inquiry he had received large sums in cash which he did not report as income. Obviously in such condition of the record he had some explaining to do; and, as the court indicated, he undertook specifically to show that the cash did not represent a profit because he had to pay out equivalent sums as overceiling acquisition costs.

The government had clearly established a prima facie case. Several of the circuits have held in prosecutions for income tax evasion that when a prima facie case has been made out the burden of going forward with the evidence is on the accused. United States v. Stayback, 3 Cir., 212 F.2d 313, 316-317; United States v. Smith, 3 Cir., 206 F.2d 905, 910; United States v....

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