Campodonico v. United States, 14089.

• Citation: 222 F.2d 310
• Decision Date: 27 May 1955
• Docket Number: No. 14089.,14089.
• Parties: Michael CAMPODONICO, Appellant, v. UNITED STATES of America, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

222 F.2d 310 (1955)

Michael CAMPODONICO, Appellant, v. UNITED STATES of America, Appellee.

No. 14089.

United States Court of Appeals Ninth Circuit.

April 27, 1955.

Rehearing Denied May 27, 1955.

Willens & Boscoe, Donald D. Boscoe, Stockton, Cal., Emmet J. Seawell, Sacramento, Cal., for appellant.

H. Brian Holland, Asst. Atty. Gen., Lloyd H. Burke, U. S. Atty., Clyde Maxwell, Jr., Atty., I.R.S., San Francisco, Cal., Thomas J. Sullivan, Atty., I.R.S., Los Angeles, Cal., for appellee.

Before MATHEWS, HEALY and LEMMON, Circuit Judges.

LEMMON, Circuit Judge.

Unlike many other trapped tax-evaders, the appellant does not maintain, like Abimelech of Gerar, that "In the integrity of my heart and innocency of my hands have I done this".¹ With his admitted record of gambling, bootlegging, embezzlement, perjury, and prostitution, such a protestation of purity would hardly be convincing.

On the contrary, the appellant relies upon such technical defenses as these:

"The case at bar is not a proper case in which to apply the net worth theory as it did not clearly and accurately establish by competent evidence the net worth of the appellant for any one of the tax years in question, nor did it produce evidence that excluded all possible sources of taxable income from which any increase of net worth and the excess expenditures could have been derived.

"`A strict interpretation of corroboration requirements for circumstantial evidence when used to establish a beginning net worth has been established\' by four Supreme Court cases."

Our task, then, is to examine these and similar finespun arguments with the requisite amount of dispassionate judicial calm.

1. Statement Of The Case

The indictment, in five counts, charged violations of 26 U.S.C.A. § 145(b), which punishes "Failure to collect and pay over tax, or attempt to defeat or evade tax." Count One alleged that, for the year 1946, the appellant filed a fraudulent joint income tax return for his wife and himself, understating their income tax by $11,730.98. Count Two made similar allegations regarding the appellant's separate return for 1947, charging an understatement of $2,237.47. Count Three dealt with the wife's tax for 1947, alleging that he filed a fraudulent return for her showing the tax due to be $2,317.97 less than the correct amount. In Count Four, it was alleged that the appellant's joint return for 1948, for himself and his wife, was fraudulently $488.52 less than the correct amount. Count Five alleged that the appellant fraudulently understated the joint income tax of his wife and himself for 1949 by $4,775.94.

The appellant waived a jury trial on May 13, 1952, when the taking of testimony began. On May 14, 1952, at the close of the appellee's case, the appellant moved for a judgment of acquittal. The trial was continued in order that briefs might be submitted and that the appellant's motion might be considered by the Court. On August 8, 1952, the trial judge denied the motion for acquittal, and the appellee reopened its case in chief by putting on another witness. The appellant renewed his motion for acquittal, which was denied. The case was continued to September 5, 1952, for final argument.

On June 13, 1953, the trial judge filed a "memorandum and order" adjudging the appellant guilty on each of the five counts, and fixing July 3, 1953, as the date for "judgment and sentence". On July 17, 1953, the appellant filed a motion in arrest of judgment, alleging that the Court was "without jurisdiction of the offense and the defendant, in that the defendant has been deprived of a speedy trial in violation of the Sixth Amendment * * *." This motion was denied. On the same day, the Court sentenced the appellant to eighteen months' imprisonment and fined him $5,000 on Count One, and sentenced him to eighteen months' imprisonment on Count Two, the sentences to run concurrently. No sentence was imposed as to Count Three, and the appellant's motion for acquittal was granted as to Counts Four and Five.

In view of the appellant's argument, to be discussed hereafter, based upon the Sixth Amendment, the chronology of the trial has been given somewhat fully.

2. The Appellee's Evidence

It is hornbook law that even in a criminal case tried to the court, an appellate tribunal will consider the evidence most favorably to the prosecution and will resolve all reasonable intendments in support of the verdict or the judgment.² In the instant case, however, our task is further simplified by the fact that the appellant put no witnesses upon the stand but presented his case in the form of certain stipulations that need not be rehearsed here.

The appellee's case, then, may be briefly summarized as follows:

From 1943 or 1944 to May, 1947, the appellant was a bouncer, floor man, and substitute manager of a gambling house in Stockton, California. We have already referred to some of his other activities.

His income tax returns for 1945 to 1949, inclusive, were prepared by Mrs. Eva M. McNabb, his employer's bookkeeper.

Chester R. Taynton, an Internal Revenue Agent, investigated the appellant's income tax liabilities. He asked for the appellant's books and records, but was given none. The appellant said that he kept no books. The Revenue Agent then attempted to assemble information with respect to the appellant's net worth. He found no evidence of any cash on hand at the end of 1945, but discovered that at the end of 1946 the appellant had cash on hand amounting to $23,247.25. The appellant's entire assets as of December 31, 1945, totaled $10,525.00.

Taynton examined the public records, inquired at all local banks, and made an audit of the Capitola Liquor Store, in which the appellant had a one-half interest.

The Internal Revenue Agent testified that the appellant said "his personal living expenses ran around $60 a month, and the Bureau's records of taxes paid showed $166.76 in 1946, $143.74 in 1947, $804.73 in 1948, and $295 in 1949".

For the year 1946, the increase in net worth was $34,296.67; for 1947, it was $23,140.77; for 1948, the gain was $6,297.08; and for 1949, the increase was $20,190.78.

In his reply brief, the appellant challenges the appellee's statement "that appellant was well known as a gambler during the years involved". Says the appellant:

"Consider this bald statement in the light of the testimony of all the Government witnesses that he is not a gambler." (Emphasis is the appellant\'s.)

The foregoing statement is grossly erroneous. Rosario Mandalari testified that he played cards with the appellant for money.

When Revenue Agent Taynton asked the chief of police of Stockton "if he could give me any information on Mike Campodonico, * * * he said, `Mike Campodonico, oh, yes — a pimp and a gambler'."

Taynton asked the appellant "where he got all the money to buy all the assets when he hadn't reported that much income", and the latter replied that "he made it gambling" — that "he was a gambler".

Wareham Seaman, a tax attorney, retained by the appellant, testified concerning a meeting held in his office on May 4, 1950, at which Shirley S. Atkin, a Special Agent of the Intelligence Unit of the Bureau of Internal Revenue; Taynton, Seaman, and the appellant were present. At that conference the appellant made a sworn statement which, at a meeting held in Seaman's office on May 31, 1950, the appellant refused to sign "because it did not represent the truth". Atkin requested that the appellant make another statement that would be the truth, but the appellant, according to Seaman, "stated that he would not make this statement, upon my advice".

During the cross-examination of Seaman, counsel for the appellant announced that the attorney-client privilege was being "waived completely".

Thereupon Seaman gave some illuminating testimony relative to the appellant's four separate and distinct explanations for "The entire increase in his assets for the years '46 to '49". The conflicting versions or "positions" were given to Seaman, his own lawyer:

1. "Well, as originally reported to me, and as stated in the statement of May 4, he stated that his income had been accumulated prior to 1943. It had been accumulated from, as I said, gambling and prostitution, bootlegging * * * Going back, as I recall, as far as in the twenties. * * * That was his first position.

2. "As I recall, his next position was that he had accumulated all but $45,000, or approximately that, up until 1943, and that was from embezzled funds subsequent to \'43; any increase since that was from embezzled funds.

3. "As I recall, his third position was that all of it had been accumulated from embezzled funds.

"Q. Not just the forty-five?

"A. Just the forty-five.

4. "I believe his final position on that was that the $40,000 had come from other than embezzled funds.

"Q. From what source?

"A. Gambling, from gambling.

"The Court. During what period?

"The Witness. From \'43 on."

From the foregoing, it is clear that the appellant did not heed Mrs. McNabb's advice: "Never lie to your doctor or your attorney".

3. The Appellee Presented Substantial Evidence Of A Beginning Net Worth For The Appellant, As Well As Evidence Of His Assets And His Expenditures For 1946 and 1947.

As we have seen the appellant kept no books. In such a situation the appellee had a right to resort to the net worth increase-expenditures method of arriving at the appellant's income tax liability. In Holland v. United States, 1954, 348 U.S. 121, 129, 75 S.Ct. 127, 132, the Supreme Court, while recognizing the "pitfalls inherent in the net worth method", was careful to add that the "pitfalls" cannot be said to "foreclose its use".

"Evidence of unexplained funds or property in the hands of a taxpayer establishes a prima facie case of understatement of income. It is then incumbent on the defendant to overcome the logical inferences to be drawn from the facts proved." United States v. Hornstein, 7 Cir., 1949, 176 F.2d 217, 220.

In the...