Blauner v. United States

• Decision Date: 11 September 1961
• Docket Number: No. 16497.,16497.
• Parties: Robert J. BLAUNER, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

293 F.2d 723 (1961)

Robert J. BLAUNER, Appellant, v. UNITED STATES of America, Appellee.

No. 16497.

United States Court of Appeals Eighth Circuit.

August 18, 1961.

Rehearing Denied September 11, 1961.

Roberts P. Elam, St. Louis, Mo., for appellant.

William C. Dale, Jr., Asst. U. S. Atty., St. Louis, Mo., for appellee; William H. Webster, U. S. Atty., St. Louis, Mo., on the brief.

Before VOGEL and BLACKMUN, Circuit Judges, and BECK, District Judge.

VOGEL, Circuit Judge.

Robert J. Blauner, Homer W. Stanhope and Robert A. Blauner were indicted by a grand jury in three counts based on charges of willfully attempting to evade income taxes owed by American Lithofold Corporation for the years 1950 and 1951. More specifically, Count 1 charged that the defendants attempted to evade and defeat a large part of the taxes due and owing by Lithofold for the calendar year 1950 by filing and causing to be filed a false and fraudulent return. Count 2 made a similar charge with reference to the year 1951. Both Counts 1 and 2 were alleged to be in violation of § 145(b), Title 26 U.S.C.A. (1939). Count 3 charged that the defendants did willfully and unlawfully conspire, combine, confederate and agree together with the American Lithofold Corporation and with others to defraud the United States of income taxes due and owing it by Lithofold for the years 1950 and 1951, in violation of § 371, Title 18 U.S.C.A.

Count 1 of the indictment was dismissed by the court on the motion of the defendants because of the running of the six-year statute of limitations, 26 U.S.C.A. § 6531 (1954). The defendant R. A. Blauner never having been served and not being present, the court ordered a severance of the charges as to him. Upon trial, the jury returned a verdict of guilty on both Counts 2 and 3 as to Robert J. Blauner. Thereon he was sentenced to concurrent terms of imprisonment for 30 months on each of Counts 2 and 3 and additionally sentenced to pay a fine of $10,000 on Count 2. Homer W. Stanhope was found not guilty. Accordingly, Robert J. Blauner is the sole appellant.

Appellant's first specification of error concerns the court's overruling of his motion made at the close of all the evidence for a judgment of acquittal on both counts. He argues that the evidence was insufficient for the jury to find that he "filed" or "caused to be filed" the 1951 income tax return of American Lithofold Corporation. He also contends that there is no direct evidence to show nor was there evidence from which there could be inferred that he willfully and knowingly attempted to evade or defeat taxes due the United States from Lithofold for the calendar year 1951 or conspired so to do.

In view of the claim of insufficiency, we have found it necessary to review the entire record in detail. In so doing, and in summarizing the testimony and other evidence here, we have in mind the rule expressed in Phelps v. United States, 8 Cir., 1947, 160 F.2d 858, 868, rehearing denied June 13, 1947, 8 Cir., 161 F.2d 940, certiorari denied, 334 U.S. 860, 68 S.Ct. 1525, 92 L.Ed. 1780:

"* * * It is not for us, on an appeal from a conviction, to weigh the conflicting facts, circumstances and inferences of the trial proceedings, but only to consider whether the evidence in its most favorable aspect to the Government is legally capable of allowing a jury to become persuaded of guilt. Miller v. United States, 8 Cir., 138 F.2d 258, 259; Braatelien v. United States, 8 Cir., 147 F.2d 888, 893."

And Myres v. United States, 8 Cir., 1949, 174 F.2d 329, 332, rehearing denied June 13, 1949, certiorari denied, 338 U.S. 849, 70 S.Ct. 91, 94 L.Ed. 520:

"In determining the sufficiency of the evidence to support the verdict of the jury, this Court must take that view of the evidence which is most favorable to the government, and give to the government the benefit of all inferences which reasonably may be drawn in its favor. Affronti v. United States, 8 Cir., 145 F.2d 3, 5, and cases cited."

See, also, Castle v. United States, 8 Cir., 1956, 238 F.2d 131, 132; Kansas City Star Company v. United States, 8 Cir., 1957, 240 F.2d 643, 660-661, rehearing denied March 13, 1957, certiorari denied, 354 U.S. 923, 77 S.Ct. 1381, 1 L.Ed.2d 1438; Connelly v. United States, 8 Cir., 1957, 249 F.2d 576, 585, rehearing denied December 13, 1957, certiorari denied, 356 U.S. 921, 78 S.Ct. 700, 2 L.Ed.2d 716, rehearing denied, 356 U.S. 964, 78 S.Ct. 991, 2 L.Ed.2d 1072; Northcraft v. United States, 8 Cir., 1959, 271 F.2d 184, 187.

The appellant and Stanhope did not testify in their own behalf. They offered no witnesses and confined their defense solely to two exhibits consisting of correspondence relating to the employment of accountants Ernst & Ernst after Price Waterhouse had withdrawn as their accountant representatives plus a letter dated December 14, 1951, to a Special Agent of the Internal Revenue Service at St. Louis, Missouri, from Lithofold, signed by appellant, to which there was attached copy of a letter dated December 7, 1951, to the Collector of Internal Revenue having to do with Lithofold's 1950 income tax return.

American Lithofold Corporation is a Missouri corporation engaged in manufacturing and selling business forms. Appellant, whose story comes into the picture through statements and admissions made to government agents and others during the investigation of the case, stated to Edward J. O'Leary, Special Agent, Internal Revenue Service, that he was the president (during 1951), treasurer and the active general manager of Lithofold and that he was, in a general way, responsible for the tax return filed by Lithofold.

The American Carbon Paper Corporation is an Illinois corporation located at Chicago. It manufactures one-time carbon paper and during 1951 sold between 80% and 85% of its total output to Lithofold. It is owned by appellant and his family. A. M. Bridell, appellant's son-in-law, is its president. Appellant is its treasurer.

Robert A. Blauner is the son of the appellant, Robert J. Blauner. Robert A., during the times with which we are concerned, was an employee-agent of Lithofold. Homer W. Stanhope was secretary and comptroller of Lithofold.

Jersey Coast Sales Company was allegedly a partnership consisting of Robert A. Blauner and one Karen Katherine Stewart (Taylor). The latter testified, however, that she couldn't "remember anything definite about it"; didn't recall being in partnership with R. A. Blauner in 1950 and 1951 but might have been; didn't recall doing any work for Jersey Coast Sales or in the name of Jersey Coast Sales, and that she did not do any work during the years 1950 and 1951 for Lithofold on any government contracts in Washington; D. C. It is the government's theory that Jersey Coast Sales was a mere blind set up for the purpose of siphoning to R. A. Blauner Lithofold money improperly transmitted to American Carbon under the guise of cost of "special grade" carbon paper, thereby avoiding the corporate tax thereon.

The J-R Supply Company of Newark, New Jersey, was a partnership consisting of Robert A. Blauner and W. J. Sims. It was the theory of the government that this partnership also was set up for the purpose of siphoning Lithofold profits to Robert A. Blauner so that the books of Lithofold would not properly reflect the true nature of such payments but instead included them as business expense deductions.

Transactions between the appellant and Lithofold on the one side and American Carbon, Jersey Coast Sales and J-R Supply Company of Newark on the other, form a substantial part of the government's case. In addition, however, it is charged that other business expense deductions, particularly those of R. J. Blauner and R. A. Blauner, were highly improper and were used to pay purely personal expenses of appellant and his family, and also that substantial deductions were made which represented travel and other expense having no relationship to Lithofold or its business.

In 1951 Lithofold reported net income of $357,650.37 and taxes due thereon in the amount of $235,577.46. Count 2 of the indictment charged that Lithofold's correct net income for 1951 was $593,127 on which there was a tax due of $406,698.18. The government asserts that the difference or discrepancy was caused by an intentional overstatement of cost of goods sold by $101,621.43 and by an over-statement of business expense deductions in the amount of $133,855.20.

We consider first the evidence with reference to the government's contention that there was an over-statement of cost of goods sold by Lithofold in the amount of $101,621.43. It was the government's contention that by making an over-statement of cost of goods sold Lithofold's tax liability as reported in its 1951 return was under-stated and that the appellant filed or caused to be filed a false and fraudulent return for Lithofold for the year 1951 for the purpose and with the intent of evading a portion of Lithofold's tax for that year and that a conspiracy so to do was established.

During the years 1950 and 1951 Lithofold obtained certain United States government contracts for the manufacture of business forms. The appellant reported to other employees of Lithofold, including defendant Stanhope, that in order to obtain such contracts for Lithofold it was necessary to pay a certain amount of commission but that by reason of restrictions in a loan agreement which Lithofold had with Reconstruction Finance Corporation, the commissions would be paid to American Carbon as part of the cost of carbon paper used in the production of the business forms called for in the government contracts. Appellant's devised method of allegedly circumventing the RFC restrictions on payment of commissions was as follows: An officer of Lithofold, in making up pricing sheets and purchase orders, would add an amount equivalent to a commission of 6% to the unit price of the paper, thus allowing American Carbon its normal price and in addition thereto...