U.S. v. Monteiro

Decision Date12 January 1989
Docket NumberNo. 88-1465,88-1465
Citation871 F.2d 204
Parties-1027, 89-1 USTC P 9246 UNITED STATES of America, Appellee, v. Anthony MONTEIRO, a/k/a Toy, Defendant, Appellant. . Heard
CourtU.S. Court of Appeals — First Circuit

Edward L. Gerstein, Providence, R.I., by Appointment of the Court, for appellant.

Craig N. Moore, Asst. U.S. Atty., with whom Lincoln C. Almond, U.S. Atty., Providence, R.I., was on brief, for U.S.

Before CAMPBELL, Chief Judge, SELYA, Circuit Judge, and PETTINE, * Senior District Judge.

PETTINE, Senior District Judge.

Defendant-appellant Anthony Monteiro appeals from his jury conviction in the United States District Court for the District of Rhode Island for conspiracy to defraud the United States, 18 U.S.C. Section 371, and aiding or assisting in the preparation and presentation of fraudulent documents under the internal revenue laws, 26 U.S.C. Section 7206(2). The charge against the defendant arose as a result of an investigation conducted by the Internal Revenue Service ("IRS") into illegal activities at Lincoln Greyhound Park in Lincoln, Rhode Island in late 1986. The subject of the investigation was "ten percenting", the practice by which one person cashes a winning pari-mutuel ticket in place of the actual winner, for which the person cashing the ticket is paid a percentage of the winnings. Appellant has raised several grounds for his appeal. None of appellant's contentions

merit reversal and therefore we affirm his conviction.

THE APPLICABLE INTERNAL REVENUE LAW

The Internal Revenue Code ("the Code") defines gross income as "all income from whatever source derived." 26 U.S.C. Section 61. Money won through wagering is to be included as gross income by the recipient for tax purposes.

Two provisions of the Code, applicable to gambling proceeds, are relevant to this case. First, in order to verify whether a taxpayer has reported all of his income (including gambling winnings) in a particular year, the IRS requires certain information from those who pay others. The Code requires that persons engaged in a trade or business and making payments to another person of $600 or more in any taxable year "shall render a true and accurate return to the Secretary, ... setting forth the amount of such gains, profits, and income, and the name and address of the recipient of such payment." 26 U.S.C. Section 6041(a). The Code further provides that "the name and address of the recipient of income shall be furnished upon demand of the person paying the income" when such action is necessary to make the provisions of this section effective. 26 U.S.C. Section 6041(c).

The Code requires that the income tax on certain kinds of income, including certain gambling winnings, be collected at its source. 26 U.S.C. Section 3402(q) delineates which gambling winnings are subject to withholding at the source. "Proceeds of more than $1,000 from ... a wagering transaction in a pari-mutuel pool with respect to horse races, dog races, or jai alai if the amount of such proceeds is at least 300 times as large as the amount wagered" are subject to withholding at the source. 26 U.S.C. Section 3402(q)(3)(C)(ii). The statute requires that: "Every person who is to receive a payment of winnings which are subject to withholding shall furnish the person making such payment a statement, made under the penalties of perjury, containing the name, address, and taxpayer identification number of the person receiving the payment and of each person entitled to any portion of such payment." 26 U.S.C. Section 3402(q)(6). The duties of the payor of such winnings are also set forth: "Every person ... making any payment of winnings which are subject to withholding shall deduct and withhold from such payment a tax in an amount equal to 20 percent of such payment." 26 U.S.C. Section 3402(q)(1).

In order to comply with these statutory requirements, Lincoln Greyhound Park has established a special window to be used for cashing tickets worth more than $600. This window is referred to in track parlance as "the IRS window" although there is no sign that so indicates. To cash a ticket paying more than $600, the holder must go to the IRS window and sign an IRS form, Form W-2G, listing his name and address. For a ticket paying more than $1,000 which has proceeds at least 300 times as large as the amount wagered, the recipient must complete the Form W-2G and the racetrack withholds 20% of the proceeds as income tax on the spot.

"TEN PERCENTING"

"Ten percenting" is a practice by which actual winners of gambling proceeds avoid the reporting requirements of the Code, set forth above, and the tax liability for the amounts won. The result is accomplished in this way: the actual winner meets up with a person who is agreeable to cashing a winning ticket. This meeting might be solicited by either party or arranged by a third person. The winner passes the ticket to the other person who then presents the ticket at the IRS window. This person signs the IRS Form W-2G in his name, not reporting the identity of the actual winner. In this way, the IRS is not able to attribute the wagering income to the actual winner, who avoids the tax consequences of having won the money. The person who cashed the ticket then gives the proceeds to the actual winner and is given a fee for his efforts, often 10% of the amount won.

THE FACTS

The indictment charged appellant with illegal acts on four specific dates: October On October 30, 1986, IRS Special Agent John L. Toti, Jr., acting in an undercover capacity, obtained a winning ticket worth $649 at Lincoln Greyhound park. As Toti walked toward the IRS window, he was met by appellant, who asked Toti if he had "hit the trifecta" and how much it was worth. Toti told appellant that the ticket was worth $649. Appellant then asked whether Toti wanted someone to cash the ticket for him. When the agent said yes, the appellant motioned to a third person, later identified as James Rogers. Toti then gave the ticket to Rogers.

30, November 5, November 10, and November 19, 1986. The role that appellant was alleged to have played in the ten percenting scheme was that of broker, arranging for other individuals to cash the tickets of actual winners.

The appellant remained with Toti while Rogers went to cash the ticket. Toti asked if there would be 20% taken out of the winnings. Appellant answered "No, the only time they take out 20% it's got to pay over $1,000" and then "For 649, you've just got to sign your name." Appendix I, Transcript No. 1, p. 11. When Rogers returned he gave $649 to Toti. Rogers then left, telling appellant that he would see him upstairs. Agent Toti then gave appellant $64 and the appellant told him, "I'm usually right upstairs if, uh, you know, you get lucky." Transcript No. 1, p. 13.

Agent Toti was again at the race track on November 5, 1986, this time with Special Agent Fortune who had a winning ticket worth $610. The agents approached appellant and told him that they had a $610 ticket. Appellant asked "What day was that?" and Fortune stated that the ticket was from the previous week. Appellant asked Fortune if he could wait a few minutes. After a minute or so, Rogers approached the IRS agents. He and Fortune spoke, but Rogers refused to cash the ticket because he had already cashed a ticket for that race. He said that these winnings would be added to other winnings, putting Roger's total over $1000 and therefore 20% would be taken out. But Rogers found a replacement, Tony Calio, to cash the ticket for a fee of $60.

On November 10, 1986, Agent Fortune again approached appellant and asked for his help in cashing a ticket. The agent informed appellant that the ticket was worth $720. Appellant replied, "See him. See him." Fortune asked "Tony?" and appellant responded "Ya, he's alright." Fortune followed appellant's directions and Tony Calio cashed the ticket for him for a $70 fee.

Finally, on November 19, 1986, Agent Fortune and Agent Towne approached appellant at the race track with an $800 ticket. According to the transcript, the two agents and appellant spoke briefly. Although several recorded statements are unintelligible, it is clear that appellant called for Tony, who arrived and agreed to cash the ticket for Agent Towne.

PROCEDURAL HISTORY

A grand jury indicted appellant for offenses involving his participation in the events related above. Count I charged that the appellant conspired with others to defraud the United States by impeding and defeating the lawful governmental function of the IRS in the ascertainment and collection of taxes. The four other counts charged the appellant with aiding and assisting in the preparation and presentation to the IRS of fraudulent documents on the four occasions outlined above. After trial by jury, appellant was convicted on all five counts. On May 2, 1988, the appellant was sentenced to a term of 6 months imprisonment on Counts I through IV inclusive, all four sentences to run concurrently, and a term of 18 months probation on Count V. A special assessment in the amount of $250 was imposed. The District Court released the defendant on bail pending this appeal.

ISSUES RAISED
The Jury Instructions

Appellant claims that the jury instructions given at his trial were erroneous because they did not require a determination of "whether the defendant knew he was The defendant had requested a jury instruction defining "willfulness" as requiring "a voluntary, intentional violation of a known legal duty", in accordance with United States v. Drape, 668 F.2d 22, 26 (1st Cir.1982) either as an addition or in lieu of the willfulness charge throughout the instructions.

                violating federal Internal Revenue law."    Appellant's Brief, p. 8
                

The trial judge refused to give the requested instruction. On the offense of conspiracy, he instructed the jury that:

Before you may find that a Defendant, or any other person, has become a member of a...

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