Sherwin v. United States

• Decision Date: 08 August 1963
• Docket Number: No. 18200.,18200.
• Citation: 320 F.2d 137
• Parties: Marvin SHERWIN, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

320 F.2d 137 (1963)

Marvin SHERWIN, Appellant, v. UNITED STATES of America, Appellee.

No. 18200.

United States Court of Appeals Ninth Circuit.

June 11, 1963.

Rehearing Denied August 8, 1963.

John V. Lewis and Richard H. Foster, San Francisco, Cal., for appellant.

Cecil F. Poole, U. S. Atty., and David R. Urdan, Asst. U. S. Atty., San Francisco, Cal., and Lawrence K. Bailey, Atty., Dept. of Justice, Washington, D. C., for appellee.

Before POPE, BARNES and JERTBERG, Circuit Judges.

POPE, Circuit Judge.

The appellant in this case was convicted on all six counts of an indictment which charged him with offenses under 26 U.S.C. (I.R.C.1954) § 7201 and 26 U.S. C. (I.R.C.1954) § 7206(1).

The first three Counts, drawn under § 7201, were substantially identical except that Count 1 charged willful and knowing attempt to evade and defeat a large part of the income tax due and owing by the defendant and his wife for the calendar year 1954; Count 2 made a similar charge with respect to the tax for the calendar year 1955; and Count 3 alleged the attempt to evade and defeat the income tax due and owing for the calendar year 1956.¹ Counts 4, 5 and 6, referring to the income tax returns for the same years 1954, 1955 and 1956, alleged that the defendant did willfully and knowingly make and subscribe and file and caused to be filed joint income tax returns for those respective years in his name and the name of his wife, verified as specified in the statute, which returns the defendant did not believe to be true and correct as to every material matter in that the defendant stated that the income of himself and his wife were in certain specified amounts, whereas he had additional income which he failed to disclose on the return.²

Upon appeal, although appellant specifies error on account of the court's denial of a motion for acquittal, no portion of his briefs is devoted to an argument that the evidence was insufficient to warrant the verdict of the jury insofar as the first three counts are concerned.³

It appears to us to be too plain for argument that in each of the years involved the appellant filed income tax returns which omitted a substantial number of items of income received, and this under circumstances which warranted the jury's finding that the omissions were willful attempts to evade or defeat the taxes owing by him, that is to say, that the defendant had the specific intent required by Spies v. United States, 317 U. S. 492, 63 S.Ct. 364, 87 L.Ed. 418, and as defined in Holland v. United States, 348 U.S. 121, 75 S.Ct. 127, 99 L.Ed. 150.

During the years here in question the appellant was a Judge of the Superior Court of the State of California for the County of Alameda. In 1955, when he filed his return for 1954, he was 53 years of age. He was a graduate of the law school of the University of California at Berkeley, Class of 1926. He practiced law in Oakland from 1926 until he went on the bench in the Fall of 1953. For eight years prior to this he was a member of the Legislative Assembly of the State of California and during the latter portion of that time he was a member of the Assembly's Revenue and Taxation Committee. He had no special experience in tax matters as an attorney and he testified that the Assembly Committee, of which he was a member, relied on experts for technical advice with respect to tax law. He knew the difference between ordinary income and capital gains and he knew that he was making his returns upon a cash receipts basis.

From the year 1945 on appellant was associated with a Mr. Tarman in certain real estate ventures. About 1948, Tarman, Sherwin and one Bechtel organized a corporation whose stock they owned and whose business was that of constructing housing projects and building houses upon subdivisions located in Alameda and Contra Costa Counties. In connection with the operation of this corporation, referred to as the Bechtel corporation, a number of other corporations were formed by these parties which were used to carry out and facilitate the main business of the Bechtel corporation itself. These will be referred to hereafter.

It thus appears that the defendant was a man of parts and experience in business activities and concerns. His law practice was at times substantial, although he testified that it diminished somewhat in later years when his activities in connection with the Tarman partnership and the Bechtel corporation increased. Notwithstanding this, Sherwin kept no regular books of accounts. He noted his income and expenses in his check book, and cash receipts not deposited would be noted on his check stubs. In each of the three years here in question, Sherwin, for the purpose of aiding in the preparation of his income tax return, prepared a work sheet from his check stubs showing his income during the year in question and his deductible expenditures. He made a summary of these which he gave to one Joyce who was a public accountant and known to Sherwin because he was employed by Tarman and by the partnership of Tarman and Sherwin in keeping accounts and in making tax returns. Joyce prepared the 1954, 1955 and 1956 income tax returns for the defendant from work sheets and summaries furnished him by the defendant. Joyce also had knowledge of the partnership income tax returns for the years in question and inserted in the tax returns prepared by him at the appropriate places Sherwin's share of the partnership income for the appropriate year.⁴

The evidence shows, without contradiction, that the tax return for the year 1954 omitted income from some nine different sources. Some of those items of income were substantial in amount, and all of them were of such character that whether entered upon Sherwin's stubs or not, it would be most unlikely that he would forget them. They came to him through 27 items of payment and none of those 27 items found their way to the tax returns.

The nine sources of omitted income are shown in the following table:

                  Ayer (5 checks)            $ 2,708.32*
                  Beckwith Estate
                    (1 check)                    911.86*
                  Beresa (1 check)               250.00
                  Beresa credit card
                    Shell Oil                    669.78*
                  Chip Steak (1 check)         3,833.07*
                  Culp (4 checks)                682.26
                  McGee (12 monthly
                    payments)                    245.41*
                  Nichols, Richards, et al
                    (2 checks)                 2,807.71*
                  Tarman (1 check)             1,500.00
                                             __________
                                             $13,608.41
                

The items marked with an asterisk were stipulated to be omissions of properly taxable income for that year; the others were admitted to be properly taxable items during the course of appellant's testimony.⁵

In Holt v. United States, 9 Cir., 272 F. 2d 272, 274, we held that evidence of a consistent pattern of not reporting large amounts of income was sufficient to support an inference of willfulness.⁶

There was other significant evidence having bearing upon the question of willfulness. In September, 1957, an Internal Revenue agent who had been interviewing Sherwin in connection with an investigation of the latter's tax returns for these years, requested Sherwin to bring to him certain records disclosing his receipts and disbursements. Sherwin brought in some bank statements from the Central Bank of Oakland and from the Oakland Bank of Commerce; he told the agent that the Central Bank account was "what he called a trustee account for his law practice" and the Oakland Bank of Commerce account was used for his personal household matters. On September 6, 1957, in a telephone conversation with Sherwin, the agent discussed his bank accounts again and made arrangements for him to come in later with more of his records.

The agent's testimony was "But I also asked him at this time in the telephone conversation whether he had any bank accounts other than the Central Bank account and the Oakland Bank of Commerce account, which he told me he had, and he said he had no other bank accounts. And I had indicated to him that there was some indication he might have had an account in Sacramento and he said, no, he did not. I did not know that he had a bank account in Sacramento, and I asked him, and I asked him if he had a bank account in Sacramento and he said, no, he never had one there."

Sherwin's statement to the agent was proven to be false for the evidence shows that he had other bank accounts and some of those bank accounts not disclosed to the agent were the ones in which the unreported receipts were deposited. Among these were an account of "Beresa Corp. Sherwin Trustee" in the Bank of America at Oakland; and another in the name of "E. O. Thompson, Trustee", in the American Trust Company of Oakland. He also had two accounts in Sacramento, one a Tarman & Sherwin Partnership account, and one which Sherwin described as a "temporary account" in the year 1953 in American Trust Company in Sacramento. He also had what he called a "temporary account" in the Crocker Bank in Oakland.

Sherwin explained the account in the name of "E. O. Thompson, Trustee", which was his own account and used for his funds only, as having been put in that name for protection against his creditors who he thought might try to attach his bank accounts. The same reason is indicated for his use of the account in the name of "Beresa Corp. Sherwin Trustee". Whatever his reason for maintaining these accounts this was no justification for his attempts to conceal them from the revenue agent.

In Clark v. United States, 8 Cir., 211 F.2d 100, 104, the appellant's returns had been prepared by an accountant who had not been given access to the records; the figures used by the accountant had been compiled by the appellant himself. When the revenue agent inquired about the appellant's bank account he gave him only one bank name and failed to give him the names of three other banks in which he had accounts. The court said: "All of these items of evidence...