U.S. v. White, s. 81-1420
| Decision Date | 26 February 1982 |
| Docket Number | Nos. 81-1420,81-1421,s. 81-1420 |
| Citation | 671 F.2d 1126 |
| Parties | 82-1 USTC P 9220, 9 Fed. R. Evid. Serv. 1551 UNITED STATES of America, Appellee, v. Jack E. WHITE, Appellant. UNITED STATES of America, Appellee, v. Gene KUYKENDALL, Appellant. |
| Court | U.S. Court of Appeals — Eighth Circuit |
John F. Murray, Acting Asst. Atty. Gen., Michael L. Paup, Robert E. Lindsay, Wilmer Parker, III (argued), Attys., Tax Div., Dept. of Justice, Washington, D. C., for appellee.
Bradley D. Jesson, Fort Smith, Ark. (argued), Betsy Hall, Van Buren, Ark., E. J. Ball, Kenneth R. Mourton, Stephen E. Adams (argued), Ball & Mourton, Fayetteville, Ark., for appellant White.
P. H. Hardin, Hardin, Jesson & Dawson, Fort Smith, Ark., for appellant Kuykendall.
Before GIBSON, Senior Circuit Judge, BRIGHT, Circuit Judge, and LARSON, Senior District Judge. *
Jack E. White, manager of the Farmers Co-op of Arkansas and Oklahoma (the Co-op), and Gene Kuykendall, an independent auditor of the Co-op, appeal their jury convictions of conspiracy to defraud the United States by impairing or impeding the Internal Revenue Service (the IRS) in the ascertainment and collection of corporate income taxes from the Co-op, in violation of 18 U.S.C. § 371 (count I), and of willfully subscribing to false and fraudulent Co-op income tax returns in 1973 and 1974, in violation of 26 U.S.C. § 7206(1) (counts II and III). 1
On appeal, defendants contend that (1) comments by the trial judge, evidentiary rulings, and the jury instructions denied them due process by precluding them from presenting their theory of defense to the jury; (2) that the court erred in failing to require the Government to disclose to defendants exculpatory or favorable evidence under the Jencks Act, 18 U.S.C. § 3500, and Brady v. Maryland, 373 U.S. 83, 83 S.Ct. 1194, 10 L.Ed.2d 215 (1963), and (3) that the statute of limitations bars conviction on the conspiracy charge in count I. After careful review of the record, we affirm the convictions on all counts.
The Farmers Co-op of Arkansas and Oklahoma was organized in 1946, and from 1948 until the early 1970's, it enjoyed tax-exempt status. 2 In 1973, an IRS auditor proposed revoking the Co-op's tax-exemption after reviewing the Co-op's books and records for 1971 and 1972. The Co-op agreed to the revocation and then filed corporate income tax returns (Forms 1120) for 1973 and 1974.
In December 1975, IRS agent Frank Matthews began an examination of the Co-op's 1973 and 1974 income tax returns. Matthews referred the case to the Criminal Investigation Division of the IRS in February 1976. The Government subsequently obtained an indictment against Jack E. White, general manager of the Co-op, and Gene Kuykendall, a public accountant who had prepared the Co-op's tax returns for the years in question.
The indictment charged that White had engaged in a course of self-dealing with the Co-op, and that White and Kuykendall had conspired to conceal from the IRS the true nature of White's transactions with the Co-op. In addition, the indictment charged that White and Kuykendall knowingly made false income tax returns on behalf of the Co-op in 1973 and 1974.
White and Kuykendall contend that the trial court's evidentiary rulings, comments, and instructions to the jury denied them due process by precluding them from presenting their theory of defense to the jury.
IRS agent Frank Matthews testified for the Government regarding a course of self-dealing between White and the Co-op. In 1974, the Co-op decided to finance the construction of new Co-op facilities through an industrial development bond issue authorized by Ark.Stat.Ann. § 13-1601 et seq. ("Act 9" bonds). The Co-op itself had sufficient funds available to pay for construction of the new facility; however, at the instance of Jack White the Co-op entered into a convoluted financing arrangement with the City of Van Buren, Arkansas. On behalf of the Co-op, the City of Van Buren issued industrial development bearer bonds in a principal amount of $1,500,000. The bond agreement obligated the Co-op to pay bondholders interest at the rate of eight percent per annum over the twenty-year life of the bonds. The interest was purportedly tax-exempt under I.R.C. § 103.
The bond underwriter refused to market the bonds out of concern that the local market serviced would not readily purchase the bonds. Because the Co-op itself could not purchase the issue and retain a federal tax exemption on the interest, White arranged an interest-free loan of $1,500,000 from the Co-op to himself, which he used to purchase the entire issue of bonds. White, in turn, sold bonds to other individuals, and transferred the funds he received from these sales to the Co-op in repayment of his loan. He never executed a note to the Co-op evidencing this loan. 3
In 1975 and 1976, Jack White received from the Co-op $77,200 and $72,400 respectively in interest on the Act 9 bonds he held. White's personal income tax returns for those years, which Gene Kuykendall prepared, did not report the interest as income. By manipulating the books and records of the Co-op, White and Kuykendall masked the true nature of the industrial development bond arrangement, and disguised payments of taxable compensation to White as purportedly tax-exempt interest. See infra pp. 1131-1133 ().
After Frank Matthews testified regarding the Act 9 bonds, defense counsel cross-examined him about the proper tax treatment of the Co-op's interest-free loan to White. Matthews testified that he did not question the Co-op's right to make interest-free loans to its employees, officers, or directors, as long as "it's an arms-length transaction." Defense counsel then inquired about Matthews' familiarity with several tax cases dealing with corporate loans, without interest or security, to the corporation's officers, directors, and employees. 4
At that point, without objection by the Government, the court reminded defense counsel that the court had the duty and responsibility of instructing the jury on the law applicable to the case. When defense counsel asserted the right to cross-examine Matthews as an expert on matters within his expertise, the court opined that the tax cases cited had no relevance to the instant case, but allowed the line of questioning to proceed.
When Matthews then denied familiarity with the cases cited, defense counsel attempted to frame a general question about the legal rule on interest-free loans by a corporation to an officer. The court interrupted and advised defense counsel that the court would instruct the jury on the applicable law at an appropriate time. 5
White and Kuykendall now argue that the court's action in curtailing cross-examination of Matthews denied them the right of confrontation and prevented them from presenting their theory of defense to the jury. White and Kuykendall maintain that the cases they mentioned to Matthews support their treatment of the bond interest on White's personal income tax returns. At least, appellants assert, they had a right to allude to these cases as support for their treatment of the interest income and thereby negate the Government's charges of willful tax fraud. White and Kuykendall contend that the court prevented them from presenting to the jury their theory of defense, i.e., lack of specific intent to disguise the actual form of the Co-op's financial transactions.
We do not agree. This record discloses no prejudicial error. The trial court has wide latitude in limiting the scope of cross-examination. United States v. Drake, 542 F.2d 1020, 1022 (8th Cir. 1976), cert. denied, 429 U.S. 1050, 97 S.Ct. 762, 50 L.Ed.2d 766 (1977). Here, the court did not abuse its discretion in limiting defense counsel's cross-examination of Matthews, regarding particular tax cases. Despite its expressed concern about the relevance of the cases to which defense counsel referred, the court did not prohibit the line of questioning altogether. Eventually, however, the court halted defense counsel's questioning about particular cases and "legal principles," because it is the role of the court, not the jury, to determine the issues of law. United States v. Jordan, 508 F.2d 750, 753 (7th Cir. 1972), cert. denied, 423 U.S. 842, 96 S.Ct. 76, 46 L.Ed.2d 62 (1975).
White and Kuykendall also contend that the court unfairly prejudiced their effort to defend the charges against them by indicating that it did not consider the cases relied on by defendants applicable to their case. Appellants maintain that the court's comments denied them a fair trial by portraying them as presenting an inaccurate statement of the law. We also reject this contention.
The trial court has broad discretion in commenting on evidence. United States v. Eagan, 516 F.2d 1392 (8th Cir.), cert. denied, 423 U.S. 856, 96 S.Ct. 106, 46 L.Ed.2d 81 (1975). Here, the court did not err by commenting on the relevance of cases relied on by defendants. The court has responsibility for directing the jury in matters of law, and may comment on the evidence to give appropriate assistance to the jury, Quercia v. United States, 289 U.S. 466, 469-70, 53 S.Ct. 698, 699, 77 L.Ed. 1321 (1933), so long as it does so fairly and impartially. Gant v. United States, 506 F.2d 518, 520 (8th Cir. 1974), cert. denied, 420 U.S. 1005, 95 S.Ct. 1449 (1975). In this case the court did not express an opinion on the defendants' guilt or innocence, nor did the court, by its comment, act as an advocate for the prosecution. United States v. Williams, 505 F.2d 947, 948 (8th Cir. 1974). We, therefore, conclude that the court's comments would not preclude a fair evaluation of the evidence by the jury.
White and Kuykendall argue that the trial...
To continue reading
Request your trial
-
U.S. v. Lewis
...against another where his "personal finances [are] * * * intertwined" with the object of the conspiracy. United States v. White, 671 F.2d 1126, 1132 (8th Cir.1982). See also United States v. Barnes, 604 F.2d 121, 146-47 (2d Cir.1979) (In a CCE case, income tax returns are relevant to show l......
-
Reazin v. Blue Cross & Blue Shield of Kansas, Inc.
...the transcript. A trial court has broad discretion in commenting on the relevance of evidence presented at trial. United States v. White, 671 F.2d 1126, 1130 (8th Cir. 1982). "The trial judge is not a mere moderator or umpire in the trial of a case in federal court, and, within reasonable b......
-
Arthur Young & Co. v. Reves
...occur until the minutes of the November 12, 1980, Board meeting. JA at 1070.3 This court affirmed these convictions in United States v. White, 671 F.2d 1126 (8th Cir.1982). The evidence in the criminal case showed that White had engaged in a course of self-dealing with the Co-op, and that h......
-
Robertson v. White
...their own personal ends, and that they distorted the Co-op's records of receipts subject to corporate income tax." United States v. White, 671 F.2d 1126, 1134 (8th Cir.1982). The opinion relates, inter alia, that the Co-op paid interest to White in the amount of $149,600 in 1975 and 1976, a......
-
Tax violations.
...and occurred during six-year statute of limitations period, were sufficient to defeat timeliness challenge); United States v. White, 671 F.2d 1126, 1133-34 (8th Cir. 1982) (finding last overt act was within six-year period of limitations, thus allowing prosecution of individual). Courts hav......