Benatar v. United States
| Decision Date | 03 February 1954 |
| Docket Number | No. 13638.,13638. |
| Citation | 209 F.2d 734 |
| Parties | BENATAR et al. v. UNITED STATES. |
| Court | U.S. Court of Appeals — Ninth Circuit |
COPYRIGHT MATERIAL OMITTED
Leo R. Friedman, San Francisco, Cal., for appellants.
Lloyd H. Burke, U. S. Atty., Robert F. Peckham, Asst. U. S. Atty., Robert G. Thurtle, Trial Atty., Enforcement Division, Bureau of Internal Revenue, San Francisco, Cal., for appellee.
Before DENMAN, Chief Judge, ORR, Circuit Judge, and LEMMON, District Judge.
A retail drug corporation, its president, its office manager, and the faithless chief accountant in the office of the Collector of Internal Revenue at San Francisco — these were the protagonists of the venal conspiracy involved in this appeal.
When caught, the tax official attempted suicide. He later pleaded guilty to falsifying and destroying Government records, and was sentenced to prison. The office manager of the corporation was found guilty under the present indictment, was fined, and has not appealed.
The two other conspirators were the appellants herein.
As used herein, "Benatar" refers to Morris V. Benatar and "Benatars" refers to the corporate appellant.
Benatar, president of Benatars; Benatars, a California corporation; and Samuel W. Potter, the office manager of Benatars, were all three charged with a conspiracy "to defraud the United States by impairing, defeating, and obstructing the proper and lawful functions of the United States, towit, the Bureau of Internal Revenue, etc., in ascertaining, computing, levying, assessing and collecting taxes, and penalties which may be due thereon," etc.
"The object of the conspiracy was to be accomplished as follows":
Benatar and Potter were to file withholding and employment tax returns for Benatars in a timely manner, but without the payment of the taxes due thereon; by the payment of the said taxes by Benatar and Potter on behalf of Benatars, at a time when penalties and interest were required to be added thereto; and by the acceptance by Edwin M. Furtado, in his official capacity, of said payment of taxes without the payment or addition of accrued penalties and interest, and without making demand, etc.; thereby to deprive the United States of $6,000.
Furtado, named as a conspirator but not as a defendant, was Chief of the Accounts Section, Wage and Excise Tax Division, in the office of the Collector of Internal Revenue at San Francisco.
It is alleged that the conspiracy commenced on November 1, 1948, and continued until the filing of the indictment, April 15, 1952.
Fourteen overt acts are set forth.
On October 3, 1952, the jury found all three defendants guilty as charged. On October 24, 1952, Benatar was sentenced to imprisonment for one year and a day; Benatars, to pay a fine of $10,000 and to bear with Benatar the costs of prosecution, jointly and severally; and Potter, to pay a fine of $2,500. Potter has not appealed.
The record and exhibits are voluminous. It would serve no useful purpose to attempt an extended summary of their contents. For an understanding of this appeal, it will be sufficient to outline a few of the salient facts.
Frank Lewit Blote, an inspector for the Bureau of Internal Revenue, testified regarding the procedure relating to the collection of withholding and Social Security taxes during 1949-1951. He stated that when a return is received without a remittance, "the return is processed on an assessment list". Blote continued:
In other words, "Form 17 was always issued after the time for payment had gone by".
Leo Schmidts, accountant-auditor for Benatars for ten and a half years, testified that while he was handling these tax returns, the custom was to send the check with the tax return.
After 1947, however, the defendant Potter supervised the preparation of tax returns. Then it became "the custom to wait until the first demand, the Form 17, was sent" before paying the tax.
Already we see a dilatory policy on the part of Benatars in the payment of its lawful taxes. As the appellee correctly observes, "Benatar's motive for not making the timely payments to the Collector was simply to use the government's money in the operation of his business".
We shall see presently that this policy of delay soon crystallized into one of downright evasion, subterfuge, and falsification.
At the time that he testified at the trial, Furtado was serving a sentence in a Federal prison, having pleaded guilty on four counts of falsifying Government records and destroying assessment sheets in the Internal Revenue office.
It was not long before Furtado and Benatars became "as thick as thieves". In 1951 "he was there possibly almost every day". At various times he left money at Benatars, and it was placed into the store safe. At other times he would "leave money in the cash booth to be left in an envelope; and he would take it out at various times".
In a sworn statement to special agents of the Intelligence Division, Bureau of Internal Revenue, Benatar declared that he saw Furtado "very often"; that Furtado was "always very friendly"; that "we" bought some "appliances" for Furtado and "charged him a little over cost"; that Benatar thought that "Potter complained to me about the liberties Mr. Furtado took in our office", but that Benator "didn't take any steps to attempt to stop Mr. Furtado from these practices"; and that "On one occasion in 1951 Mr. Furtado told me he borrowed some money and wanted to leave it in my store and told me I could use it for a short while if I needed it".
Furtado did some shopping at Benatars too. His method of making his purchases and paying for them was similarly unique. He testified:
We come next to "The Affair Of The Backdated Letter".
David L. Moonie, a certified public accountant, performed some services for Benatars in the fall of 1948, in connection with an additional assessment of the unemployment tax for 1946. He invited Furtado to come over to lunch and gave him the papers in the case; namely, "in the nature of a bill for penalty and interest", together with "some supporting documents". Moonie introduced Furtado to Potter.
When Furtado took the stand, he stated that the tax in question "was not a penalty tax, but a tax for failure to pay the State of California on or before the due date". He testified that he told Potter and Moonie that he Continuing, Furtado testified:
"I told Mr. Potter that if I could have a letter dated February 1 — I mean, dated prior to January 30, I could put that in the file and then when I made this claim the file clerk naturally, checking the files, making this claim, would then be accepted by the Bureau."
Furtado explained that he meant January 30, 1947, and that he made this statement to Potter in September, 1948.
Potter followed the dishonest suggestion, and, "some time in September or October, 1948", Furtado received the following letter, dated January 28, 1947, signed by Potter, and addressed to the Collector of Internal Revenue at San Francisco:
Furtado took this letter and placed it into the files, and then prepared the claim for abatement and gave it to Potter for signature and notarization, in November, 1948. The appellants do not deny that Benatar signed the claim, but assert that "he merely signed a paper presented to him by Mooney (sic), believing it was the proper and correct thing to do". Benatar's intent when he subscribed to the document was for the jury to determine, after considering all the circumstances of the case. The jury apparently decided against Benatar's innocent intentions. In this and in other respects, there was substantial evidence to support the verdict.
The conspiracy to defraud the Government of the United States was now in full swing.
Furtado testified that, some time in the latter part of March, 1951, he received from Benatars a check, No. 2677, dated February 11, 1951, for $14,335.29, representing the corporation's tax liability for withholding and social security taxes for the quarter ending December 31, 1950. He put the check underneath the blotter on his desk — and let it repose there for a while.
The following month he found another account for approximately the same amount of money....
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