Beaty v. United States, 6760.

• Decision Date: 14 June 1954
• Docket Number: No. 6760.,6760.
• Citation: 213 F.2d 712
• Parties: BEATY v. UNITED STATES.
• Court: U.S. Court of Appeals — Fourth Circuit

213 F.2d 712 (1954)

BEATY v. UNITED STATES.

No. 6760.

United States Court of Appeals, Fourth Circuit.

Argued June 1, 1954.

Decided June 14, 1954.

COPYRIGHT MATERIAL OMITTED

John W. Muskoff, Jacksonville, Fla., and Llewellyn A. Luce, Washington, D. C. (W. M. Nicholson, Charlotte, N. C., on brief), for appellant.

James M. Baley, Jr., U. S. Atty., Ashville, N. C., for appellee.

Before PARKER, Chief Judge, and SOPER and DOBIE, Circuit Judges.

SOPER, Circuit Judge.

Keith M. Beaty was convicted of violating Section 145(b) of the Internal Revenue Code, 26 U.S.C.A. § 145(b), under an indictment in three counts, of which the first count related to the tax year 1945 and charged that the defendant did wilfully and knowingly attempt to defeat and evade a large part of the income tax due and owing by him to the United States for that year by maintaining or causing to be maintained false books and records, by concealing assets and covering up sources of income, by preparing or causing to be prepared a false income tax return and by filing and causing to be filed with the Collector of Internal Revenue for the Internal Revenue Collection District of North Carolina a false and fraudulent income tax return wherein he stated that his net income for the calendar year was the sum of $48,490.98 and that the amount of tax due thereon was the sum of $24,350.55, whereas as he then and there well knew, his net income for the calender year was $254,701.83 upon which he owed to the United States an income tax of $209,785.06.

The second and third counts in similar terms charged attempts to defeat and evade the income tax for the years 1946 and 1947 alleging in the second count as to 1946 a false and fraudulent return of income of $75,265.42 and a tax due of $42,526.74, whereas the income was $174,715.24 and the tax due was $125,565.03 for the year; and alleging in the third count as to 1947 a false and fraudulent return of income of $48,283.69 and a tax due of $22,937.04, whereas the income was $86,077.04 and the tax due was $50,960.08.

The District Judge entered judgment of imprisonment for two years as to each of the counts of the indictment, the sentences to run concurrently and not consecutively. In addition the court imposed a fine of $10,000 on the first count of the indictment, a fine of $5,000 on the second count, and a fine of $5,000 on the third count, the fines to be cumulative, making a total fine of $20,000, in addition to the court costs.

The principal contentions on this appeal are that the court lacked jurisdiction over the offenses charged in the indictment and that the evidence was insufficient to sustain the verdict of the jury. The statute, 26 U.S.C.Int.Rev. Code, § 53(b), requires that the income tax return of an individual shall be made to the collector for the district in which is located the taxpayer's legal residence or principal place of business. Beaty resided and was engaged in several business enterprises in Charlotte, North Carolina, in the Western District of North Carolina, in which the indictment was found and the case was tried; but the office of the Collector (now Director) of Internal Revenue was located in Greensboro, North Carolina, in the Middle District of North Carolina, where the tax returns of the defendant were filed. Hence it is contended that the offenses charged were triable only in the Middle District of North Carolina and the court below was without jurisdiction.

This contention, however, overlooks the fact that the defendant was not indicted for wilfully failing to make returns and pay the taxes in violation of Sec. 145(a), or for making returns which he did not believe to be true and correct as to every material matter, in violation of Section 145(c) of the statute, but for attempting to evade or defeat the payment of the taxes by maintaining false books and records, by concealing assets, and covering up sources of income, and by preparing and filing false and fraudulent income tax returns. It has been held in cases where the charge was confined to an attempt to evade the tax by filing a fraudulent return that the offense was committed where the returns were filed. See the conflicting decisions in United States v. Aaron, D.C.N.D.W.Va., 117 F.Supp. 952, and United States v. Albanese, D.C.S.D. N.Y., 117 F.Supp. 736. The charge in the case at bar, however, includes the making of false records and the concealment of assets, and if any of these acts are proved to have occurred in the Western District of North Carolina, the case is made out and the trial court had jurisdiction.

We have had occasion to consider kindred questions in a number of earlier cases. In Bowles v. United States, 4 Cir., 73 F.2d 772, we held that a resident of the District of Columbia, which is part of the Revenue Collection District of Maryland, was triable in the District Court for the District of Maryland for wilful failure to make an income tax return for 1930 and for a wilful attempt to evade the income tax of 1931 by filing a false and fraudulent return. In Reass v. United States, 4 Cir., 99 F.2d 752, we held that a defendant indicted for making a false statement to influence the action of a Federal Home Land Bank in Pittsburg, was triable in Pennsylvania where the statement was presented to the bank, and not in Maryland where the statement was prepared, since the essence of the crime was the act of delivering the statement to the bank. In Newton v. United States, 4 Cir., 162 F.2d 795, however, we held that a defendant indicted for aiding in the preparation of a false and fraudulent claim in connection with an amended income tax return was triable in the Western District of Virginia where the claim was prepared, although the claim was filed in the office of the Collector of Internal Revenue in Richmond, in the Eastern District of the State. From the decision in the last mentioned case it appears that the crime there under consideration is committed by any person who "aids" or "assists in" the preparation of the return, and that the acts performed by the defendant in the preparation of the return took place in the Western District of Virginia. Resting the decision on this phrase Judge Dobie pointed out, 162 F.2d 796:

"`All federal crimes are statutory, and these crimes are often defined, hidden away amid pompous verbosity, in terms of a single verb. That essential verb usually contains the key to the solution of the question: In what district was the crime committed? Without the exact language of the statute, particularly this verb, paraphrases and loose citations in this field are more than inaccurate; they are positively misleading. When, as is so often the case, the statute enumerates several such verbs, only scrupulous, even meticulous, nicety in exact quotation can prevent these statutes, as well as the decisions under them, from proving a snare and a delusion to the unwary\'."

See also United States v. Johnson, 319 U.S. 503, 514, 63 S.Ct. 1233, 87 L.Ed. 1546; Shurin v. United States, 4 Cir., 164 F.2d 566. Cf. United States v. United States District Court, 6 Cir., 209 F.2d 575.

In Spies v. United States, 317 U.S. 492, 63 S.Ct. 364, 87 L.Ed. 418, the court held that the wilful failure to make a return and to pay the tax, which are made misdemeanors by Sec. 145(a) of the statute, do not without more constitute attempts to evade or defeat the tax which is made a felony by Sec. 145(b). The court said, 317 U.S. 498, 499, 63 S.Ct. 368:

"The difference between the two offenses, it seems to us, is found in the affirmative action implied from the term `attempt,\' as used in the felony subsection. It is not necessary to involve this subject with the complexities of the common-law `attempt\'. The attempt made criminal by this statute does not consist of conduct that would culminate in a more serious crime but for some impossibility of completion or interruption or frustration. This is an independent crime, complete in its most serious form when the attempt is complete and nothing is added to its criminality by success or consummation, as would be the case, say, of attempted murder. Although the attempt succeed in evading tax, there is no criminal offense of that kind, and the prosecution can be only for the attempt. We think that in employing the terminology of attempt to embrace the gravest of offenses against the revenues Congress intended some willful commission in addition to the willful omissions that make up the list of misdemeanors. Willful but passive neglect of the statutory duty may constitute the lesser offense, but to combine with it a willful and positive attempt to evade tax in any manner or to defeat it by any means lifts the offense to the degree of felony.

"Congress did not define or limit the methods by which a willful attempt to defeat and evade might be accomplished and perhaps did not define lest its effort to do so result in some unexpected limitation. Nor would we by definition constrict the scope of the Congressional provision that it may be accomplished `in any manner\'. By way of illustration, and not by way of limitation, we would think affirmative willful attempt may be inferred from conduct such as keeping a double set of books, making false entries or alterations, or false invoices or documents, destruction of books or records, concealment of assets or covering up sources of income, handling of one\'s affairs to avoid making the records usual in transactions of the kind, and any conduct, the likely effect of which would be to mislead or to conceal. If the tax-evasion motive plays any part in such conduct the offense may be made out even though the conduct may also serve other purposes such as concealment of other crime."^*

We reach the conclusion that the District Court had jurisdiction in the case at bar since the prohibitory words of the statute are directed against "any person who wilfully attempts in any manner to evade or defeat any tax imposed by this chapter," and the...