Foley v. United States

• Citation: 290 F.2d 562
• Decision Date: 07 June 1961
• Docket Number: No. 16552.,16552.
• Parties: Philip A. FOLEY, Appellant, v. UNITED STATES of America, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)

290 F.2d 562 (1961)

Philip A. FOLEY, Appellant, v. UNITED STATES of America, Appellee.

No. 16552.

United States Court of Appeals Eighth Circuit.

May 12, 1961.

Rehearing Denied June 7, 1961.

Sidney M. Glazer, St. Louis Mo., made oral argument for the appellant. Morris A. Shenker, St. Louis, Mo., was with him on the brief.

Frederick H. Mayer, Asst. U. S. Atty., St. Louis, Mo., made oral argument for the appellee. William H. Webster, U. S. Atty. St. Louis, Mo., was with him on the brief.

Before SANBORN, VAN OOSTERHOUT, and MATTHES, Circuit Judges.

MATTHES, Circuit Judge.

On February 5, 1959, Philip A. Foley, hereinafter referred to as "defendant," was indicted in two counts for attempting to evade and defeat income tax due and owing by him and his wife for the years 1952 (Count I) and 1953 (Count II) by filing false and fraudulent joint income tax returns. The indictment alleged that the 1952 return showed a net income of $4,053.27, and a tax due thereon of $500.22, whereas the true net income for that year was $8,684.78, upon which there was owing a tax of $1,597.66;¹ that the return for 1953 showed a net income of $4,231.34, and a tax due thereon of $672.96, whereas the true net income for that year was $11,805.60, with a tax owing thereon of $2,627.62.²

After a jury trial of nine days, the defendant was found guilty on both counts and thereafter sentenced to a prison term of three years under each count to run and terminate concurrently, and was fined $2,500 under each count, or a total of $5,000.

On this appeal the defendant does not challenge the sufficiency of the evidence to sustain the conviction, therefore a detailed résumé of the evidence is unnecessary. We have examined and considered the voluminous record, consisting of six volumes of testimony, and find that the factual statement appearing in defendant's brief fairly and accurately summarizes the pertinent and relevant evidence.

The defendant is a lawyer, and has been engaged in the practice of his profession, with offices in Clayton, St. Louis County, Missouri, since 1926, when he was admitted to the bar. He could properly be described as a general practitioner and while he was admitted to practice before the Treasury Department, the bulk of his practice consisted of divorce cases and the defense of persons accused of crimes.

Concededly, the defendant failed to keep adequate records for the purpose of recording his income and deductible expenses; rather, he relied upon his memory and bank book which disclosed his deposits. Apparently he would total the deposits for the year, deduct therefrom items which were not taxable, such as amounts due clients included in the deposits and then he would add an arbitrary amount which ran between $1,500 and $2,100 estimated by him to represent cash receipts. In order to reconstruct the true income, the Government brought into court numerous former clients of the defendant who testified as to the amounts paid by them. Of the total of 130 witnesses who testified in behalf of the Government, 113 were former clients and others called to establish legal fees paid to defendant during the two years in question. There were, in addition, stipulations received in evidence of 58 other clients who had paid defendant legal fees during the period under consideration. It was also stipulated that 7 attorneys who had officed in the same suite with defendant, paid defendant $2,254.63 in 1952 and $2,637.69 in 1953, as their share of rent, secretarial assistance and office expense. None of the amounts so received by defendant was reported as gross income, but it appears that defendant deducted as a business expense only his share of these expenses, the amount not covered by payments from other attorneys.

The trial of the case was somewhat unusual, in that with the exception of one Roy Graham, there was no effort made by defendant to discredit any of the witnesses or their testimony. Thus, the issue which was litigated and resolved by the jury was whether the misstatement of income was the result of unintentional error or mistake on the part of one wholly unfamiliar with the exacting requirements of the revenue laws, as contended by defendant, or whether the defendant filed false and fraudulent returns for the purpose of evading taxes, which was the Government's position throughout the trial.

Graham, the controversial witness, was a professional bondsman and he also operated a tavern known as "Graham's Grill." Until about August, 1953, Graham and defendant were close friends. During the year 1952 Graham gave defendant five checks totaling $2,837.35, and in 1953 five checks totaling $3,154.38. Graham testified that defendant had represented him and taken care of his legal matters since 1933, without compensation; that in 1952 Graham found himself in a financial position where he was able to pay defendant for past services, and although not requested by defendant to do so, Graham paid defendant the amounts represented by the checks above mentioned. Graham emphatically denied that he had a partnership arrangement with defendant whereby the latter was to receive one-half of the net income derived by Graham from signing appearance bonds. On the other hand, defendant's version was that he had been instrumental in procuring bond business for Graham, in that he had, in early 1952, prevailed on the Sheriff of St. Louis County, Missouri, to permit Graham to sign appearance bonds; that in consideration for this service Graham had agreed to split all net bond income with the defendant, that is, all expenses were to be first deducted, and, as an additional consideration, Graham agreed to pay defendant's share of the tax on the income received by the latter.³

Not only did defendant fail to report the income so received from Graham, but concededly he did not deposit any of the checks in his bank account. Defendant testified that Graham gave him small amounts of cash from time to time, and each time defendant received a check, he would endorse it and Graham would give him the cash difference above those sums previously advanced. Graham made a record of the checks so furnished and endorsed them "Graham's Grill," after which they were deposited in Graham's bank account. Graham did not produce any of his records at the trial, claiming that they had been destroyed after the records had been fully and completely investigated and checked by the Internal Revenue Service and after Graham had paid additional taxes on his income.

The third point briefed and presented by defendant which we shall first consider, goes to the failure of the district court to dismiss the indictment. By a pre-trial motion upon which evidence was heard, the defendant urged that the indictment of defendant shortly before expiration of the statute of limitations and the unreasonable delay in presenting the matter to the grand jury, constituted a deprivation of defendant's right to a speedy trial in violation of the Sixth Amendment.⁴ Defendant also relies upon Rule 48(b) of the Federal Rules of Criminal Procedure, 18 U.S.C.A., which provides:

"If there is unnecessary delay in presenting the charge to a grand jury or in filing an information against a defendant who has been held to answer to the district court, or if there is unnecessary delay in bringing a defendant to trial, the court may dismiss the indictment, information or complaint."

The rule is firmly established that the protection afforded by the Sixth Amendment has no application until after a prosecution is instituted, and here the defendant concedes there was no delay in bringing him to trial subsequent to the time the indictment was filed. See Hoopengarner v. United States, 6 Cir., 270 F.2d 465, 469; D'Aquino v. United States, 9 Cir., 192 F.2d 338, 350, certiorari denied 343 U.S. 935, 72 S.Ct. 772, 96 L.Ed. 1343.

Neither do we find any substance in the contention that there was unnecessary delay in presenting the charge to the grand jury within the purview of Rule 48(b).⁵ On this score the defendant's argument is that the rule was violated inasmuch as the criminal investigation was commenced in the early part of January, 1954, but the indictment was not returned until February 5, 1959, and that the lapse of approximately five years constituted an unusual and unnecessary delay. He points to evidence taken upon the hearing of the motion to dismiss tending to prove that the investigation was completed in 1954 and 1955, urging that the case was allowed to lie dormant, was abandoned or ensnarled in administrative proceedings thereafter.

Under the facts as developed in the trial, we conclude that defendant has little standing to complain of the period of investigation and certainly if there was a delay, we find no justification for holding that it was unreasonable. From the factual background which we have previously summarized, it is obvious that investigation and preparation for presentment of the indictment was of necessity a commodious task. The defendant failed to turn over any books or records to the investigating agents and it became necessary for them to reconstruct defendant's income for the taxable years in question. From the nature of defendant's law practice, this required locating and interviewing former clients who had paid fees during the years in question. Some of these clients were deceased, many had removed themselves from the State of Missouri, several of the divorce clients had re-married, and in many cases, it was necessary to establish individual fee payments through the testimony of two or more witnesses. The magnitude of the Government's task is illustrated by the large number of witnesses who were called to testify regarding payments made to defendant and by the stipulations of many others which were entered in the record. There is no evidence of intentional or vexatious delay on the part of the Government or of unreasonable harassment of the defendant. We have considered the...