United States v. Dawson

• Decision Date: 12 August 1968
• Docket Number: No. 327,Docket 31191.,327
• Citation: 400 F.2d 194
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. William J. DAWSON, Defendant-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

400 F.2d 194 (1968)

UNITED STATES of America, Plaintiff-Appellee, v. William J. DAWSON, Defendant-Appellant.

No. 327, Docket 31191.

United States Court of Appeals Second Circuit.

Argued April 29, 1968.

Decided August 12, 1968.

Certiorari Denied January 13, 1969.

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John M. Brant, Joseph M. Howard, Attys., Dept. of Justice, Mitchell Rogovin, Asst. Atty. Gen., Justin J. Mahoney, U. S. Atty., George B. Burke, Asst. U. S. Atty., for appellee.

Benjamin Ungerman, Ungerman & Harris, Albany, N. Y., for appellant.

Before WATERMAN, FRIENDLY and KAUFMAN, Circuit Judges.

Certiorari Denied January 13, 1969. See 89 S.Ct. 632.

WATERMAN, Circuit Judge:

On April 30, 1965, William J. Dawson, then chairman of the Democratic Committee of the city of Cohoes, New York, was charged in a three-count indictment with having violated Section 7201 of the Internal Revenue Code of 1954, 26 U.S. C. § 7201,¹ in that he had wilfully attempted to evade and defeat the income tax owed by him for the years 1959, 1960, and 1961, by filing false and fraudulent joint income tax returns for him and his wife. In May 1966, after a suppression hearing had resulted in no evidence being suppressed, trial commenced in the United States District Court for the Northern District of New York, before Port, J., and a jury; appellant and over one hundred other witnesses testified, and a trial record of more than 2300 pages of transcript was built. The jury found Dawson guilty on counts 1 and 3 (1959 and 1961) and not guilty on count 2 (1960). He was sentenced to two years imprisonment on count 1 — on count 3 an imprisonment sentence was suspended and three years probation was imposed upon condition that appellant pay any tax arrears for 1959 and 1961. Upon this appeal, appellant makes no less than thirteen distinct assignments of error which range from allegations that the trial court made erroneous evidentiary rulings to a claim that the sentence imposed on count 1 is so excessive that it is cruel and unusual punishment violative of the Eighth Amendment. We hold that no error was committed which was prejudicial to appellant, we affirm the judgment of conviction, and find that the sentence was not unconstitutionally imposed.

COUNT 1

Under count 1, the Government sought to prove that there were two specific items of income which appellant did not report on his 1959 return. First, the Government attempted to show that appellant had received $1,750 in cash from a business partnership operating under the name Mazra Homes with the result that, a few days after the cash had changed hands, the City of Cohoes began to install water and sewerage facilities for the partnership's real estate development. Both of the partners testified that they gave the money to appellant because they had been told that appellant "ran things" in Cohoes. One partner, Michalik, testified that he went to see appellant, whom he did not know personally, and placed an envelope containing the $1,750 on appellant's desk. The other partner, Rosonoff, testified that he had previously cashed a business check for $1,750 and had given the cash to Michalik to be passed on to appellant. The Government corroborated this testimony by placing in evidence, over appellant's objection, the canceled check for $1,750 made out to "cash" and the portion of the Mazra Homes books and records which disclosed a cash disbursement of $1,750 on the day in question, noted in the records as "Cohoes for water."

Second, the Government put in evidence that appellant had made a profit of $1,300 on a sale of land in 1959 and had not reported this on his 1959 return. Joseph Simonek testified that he paid appellant $1,500 in cash for a piece of land and later received back $150 because of a defect in the title. Appellant had bought the land six years earlier from the City of Cohoes for $50. One half of this $1,300 long-term capital gain, $650, was taxable. Appellant conceded that he had not included this item in his 1959 return but claimed that property taxes and other expenses he incurred while he owned the property wiped out any profit he may have made on the sale. However, property taxes would have no effect on the amount of capital gain reportable on the sale of appellant's property, and appellant proved no specific items of expense which would have had the effect of increasing the cost basis of the property while it was in his hands.

Appellant's first assignment of error relating to count 1 is that the canceled check and the portion of the books and records of Mazra Homes dealing with the $1,750 transaction were improperly admitted into evidence. He claims the books and records were inadmissible because Michalik, the witness whose testimony supposedly laid the foundation for the receipt of these items, was not the person who kept the books and records and that his acquaintance with those items was limited to knowledge that the books had been kept by an accountant in New York City who was not a witness. However, Michalik testified that he knew the books and records were kept in the regular course of business of Mazra Homes and that it was in the regular course of the partnership business to keep such records. This testimony was sufficient to make the relevant portions of the books and records admissible under the Federal Business Records Act, 28 U.S.C. § 1732(a),² for the person who actually keeps the books and records and makes the entries need not testify if a person does testify who is in a position to attest to the authenticity of the records. See, e. g., United States v. New York Foreign Trade Zone Operators, Inc., 304 F.2d 792, 796 (2 Cir. 1962); Bridger v. Union Railway Co., 355 F.2d 382, 391-392 (6 Cir. 1966); Wheeler v. United States, 93 U.S.App.D.C. 159, 211 F.2d 19, 22-23 (1953), cert. denied, 347 U.S. 1019, 74 S.Ct. 876, 98 L.Ed. 1140 (1954). The fact that the records offered were essentially self-serving is no bar to their admissibility under 28 U.S.C. § 1732. Compare Lind v. Schenley Industries, Inc., 278 F.2d 79, 88 (3 Cir. in banc), cert. denied, 364 U.S. 835, 81 S.Ct. 58, 5 L.Ed.2d 60 (1960). Moreover, canceled checks are clearly admissible to prove that money was drawn from an account. In any event, no prejudice to appellant can have resulted from the admission of the check and records, for that evidence was purely cumulative to the oral testimony of the parties. Compare United States v. Schabert, 362 F.2d 369, 371-372 (2 Cir.), cert. denied, 385 U.S. 919, 87 S.Ct. 230, 17 L.Ed.2d 143 (1966).

Appellant also contends that, on the basis of 26 U.S.C. § 7605(b)³ which statute provides that a second examination of a taxpayer's books and records must be preceded either by the taxpayer's consent to the examination or by a written notification from the Secretary or his delegate, the lower court should have suppressed all government evidence regarding the year 1959 obtained by Internal Revenue Agents' having audited appellant's 1959 returns. There is no merit to this contention for even if one assumes that appellant's records had once been inspected prior to the investigation which resulted in appellant's prosecution, an assumption not conceded by the Government, and even assuming further that the results of a second, unlawful inspection would be excludable,⁴ we would hold that the lower court did not err in refusing to suppress. Here there was sufficient credible evidence introduced at the suppression hearing to show that, prior to appellant's very first conference with government agents regarding the charges involved in the case, a Section 7605(b) letter was sent to him. What appellant appears to be complaining about is the extensive government investigation into his affairs through interviews with third parties and the checking of public records, bank accounts, and the detail disclosed by the 1959 tax return itself. Such an investigation is not within the ambit of Section 7605(b); the section applies only to a successive inspection of the taxpayer's private books of account. See Geurkink v. United States, 354 F.2d 629, 631 (7 Cir. 1965); De Masters v. Arend, 313 F.2d 79, 86 (9 Cir.), cert. dismissed, 375 U.S. 936, 84 S.Ct. 341, 11 L.Ed.2d 269 (1963); compare Application of Magnus, 299 F.2d 335 (2 Cir. 1962). Indeed, a preliminary investigation of the type made here is expressly contemplated in the statute: "* * * or unless the Secretary or his delegate, after investigation, notifies the taxpayer * * *." 26 U.S.C. § 7605(b) (emphasis supplied); see De Masters v. Arend, supra 313 F.2d at 86. Moreover, the evidence in the present case indicates that appellant never permitted the agents to examine his books and records and this fact provides an alternate basis for supporting the trial court's determination; it could have found that there was nothing to suppress because there was no second examination in violation of 26 U.S.C. § 7605(b).

Appellant also contends that witness Michalik's testimony that $1,750 graft was paid to appellant is incredible as a matter of law. There is no merit to this claim, for although there were minor inconsistencies in Michalik's testimony and it was brought out that Michalik neither knew appellant personally nor knew appellant's occupation, it was also brought out that Michalik knew appellant "ran things" in Cohoes. Too, Rosonoff corroborated Michalik. Obviously it was for the jury to decide whether the $1,750 was paid. Appellant apparently overlooks the fact that even if we were to accept all of appellant's contentions regarding the evidence unfavorable to him on count 1, we would still be required to uphold the conviction on that count, for he advances no assignment of error in the reception of the Government's proof that he failed to report his capital gain from the sale of land to Simonek.

This latter observation leads into appellant's final contention regarding count 1, that the sentence imposed thereunder (two...