Brandow v. United States

• Decision Date: 25 August 1959
• Docket Number: No. 15615.,15615.
• Parties: Del L. BRANDOW, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

268 F.2d 559 (1959)

Del L. BRANDOW, Appellant, v. UNITED STATES of America, Appellee.

No. 15615.

United States Court of Appeals Ninth Circuit.

June 24, 1959.

Rehearing Denied August 25, 1959.

William John Hyland, III, Beverly Hills, Cal., for appellant.

Laughlin E. Waters, U. S. Atty., Norman W. Neukom, Robert John Jensen, Asst. U. S. Attys., Los Angeles, Cal., for appellee.

Before CHAMBERS, BARNES and JERTBERG, Circuit Judges.

BARNES, Circuit Judge.

This prosecution grew out of an investigation being conducted by the Internal Revenue Service of the U. S. Treasury Department concerning the activities of a former agent of that service, a Mr. Charles D. Ford, appellant Brandow and Attorney William C. Rau, with respect to their endeavor to be engaged by one Delta Boren of San Diego to represent her and her husband, Clifford Boren, and their construction corporation in a matter pertaining to alleged fraud on the part of the Borens as to their income tax for the years 1950 and 1951.

Appellant was indicted for an alleged violation of 18 U.S.C. § 1001. It was charged that on October 26, 1954, he "did willfully and knowingly make false and fraudulent statements and representations in a matter within the jurisdiction of a department and agency of the United States, by signing an affidavit before * * * two * * * special agents of the Internal Revenue Service of the Treasury Department of the United States at Los Angeles, California, in the Southern District of California," which affidavit stated "that at no time during the discussions at Mrs. Boren's house did Mr. Ford or anyone else state directly or imply that Mr. Ford was willing to disclose the government's case" against Mrs. Boren for income tax evasion, and further stated:

"That Charles D. Ford at no time discussed the tax features of the Boren case with him, whereas, as he then and there well knew, he (Del L. Brandow) did state and imply during the conversation at Mrs. Boren\'s house on September 15, and September 28, 1954, that Ford had disclosed the Government\'s case to him and that Ford was willing to disclose it for Mrs. Boren\'s benefit."

The case was tried before a jury, which acquitted the appellant on Counts 1 and 5, and convicted on Count 2. The lower court had jurisdiction under 18 U.S.C. § 3231. This Court has jurisdiction on appeal. 28 U.S.C. §§ 1291, 1294.

Appellant urges as error: (1) The statement was not made in any matter within the jurisdiction of any department or agency of the United States; (2) the affidavit (Ex. 65) was immaterial; (3) error in the introduction of tape recordings without a proper foundation; and (4) insufficiency of the evidence to support the verdict.

Appellant's statement of the case is so brief and insufficient that we adopt the appellee's statement, with certain corrections and omissions, particularly omitting those references to evidence marked for identification but not introduced into evidence.¹ We agree with appellant that such evidence, including Exhibit 29, should not have been printed in appellee's brief. A reading of what remains is necessary to understand the errors here urged.

I — Jurisdiction.

Appellant's first point is that the statement of appellant taken in affidavit form by Internal Revenue Agents Sullivan and Schlick, previously assigned by their superior to investigate charges brought by taxpayer, Mrs. Boren, against the activities of Mr. Ford, Mr. Brandow and Mr. Rau, concerned a subject matter not within the jurisdiction of an agency of the United States. This is without merit. The Internal Revenue Service is a part of the Treasury Department of the United States which is an agency of the United States government. Its agents are required to see that all internal revenue taxes are properly collected, that all laws and regulations pertaining thereto are "faithfully executed and complied with," and the agents are required to "aid in the prevention, detection, and punishment of any frauds in relation thereto."²

This statutory provision remained in effect until January 1, 1955,³ a date subsequent to the date of the affidavit involved herein.⁴ Thus, by statute the officers were entitled to seek the information sought, and appellant was under a legal obligation to give the information sought, subject to his constitutional rights.

But apart from statute, this Court and other courts have previously held that a false statement made to a Treasury agent is covered by 18 U.S.C. § 1001. Knowles v. United States, 10 Cir., 1955, 224 F.2d 168, 171-172; Cohen v. United States, 9 Cir., 1953, 201 F.2d 386, 394. Cf. De Casaus v. United States, 9 Cir., 1957, 250 F.2d 150; Marzani v. United States, 1948, 83 U.S.App.D.C. 78, 168 F.2d 133, 141-142, affirmed 335 U.S. 895, 69 S.Ct. 299, 93 L.Ed. 431.

United States v. Levin, D.C.D.Colo. 1953, 133 F.Supp. 88, differs from the instant case, because there no sworn statement was involved. But see Marzani v. United States, supra. Regardless of any alleged factual differences, however, we decline to follow the reasoning of United States v. Levin, supra, or United States v. Stark, D.C.D.Md.1955, 131 F.Supp. 190, neither of which is binding on this Court. In reaching this conclusion, we prefer the reasoning of the later case of United States v. Van Valkenburg, D.C.D.Alaska 1958, 157 F. Supp. 599, as well as our earlier decisions herein cited, and our recent opinion of Pitts v. United States, 9 Cir., 1959, 263 F.2d 353.

II — Materiality.

Appellant's statement respecting Mr. Ford's alleged willingness to discuss and to disclose the government's case to appellant is urged to be immaterial.

In support thereof appellant relies on three cases cited in his brief and one submitted subsequent to argument. They are Freidus v. United States, 1955, 96 U.S.App.D.C. 133, 223 F.2d 598; United States v. Moore, 5 Cir., 1950, 185 F.2d 92; United States v. Rice Growers Ass'n, D.C.N.D.Cal.1953, 110 F.Supp. 667; and United States v. Quirk, D.C.E. D.Pa.1958, 167 F.Supp. 462, 464.

In United States v. Moore, supra 185 F.2d 94, the court ruled that "statements charged to have been `material' would have been material only if appellee was subject to the Act." There can be no doubt but that the Act in this case applied to anyone who "makes any false, fictitious or fraudulent statements or representations" in a matter we have already held was within the jurisdiction of an agency of the United States. Appellant was thus subject to the Act, and the case is not in point.

Freidus v. United States, supra, and United States v. Rice Growers Ass'n, supra, squarely support the general proposition that 18 U.S.C. § 1001 is "highly penal," and must be construed in all its parts as applicable only to material falsification, i. e., false "statements that could affect or influence the exercise of a governmental function." 96 U.S.App.D.C. 133, 223 F.2d 601. This requirement of materiality has been described as essential by the greater weight of authority, and for the purposes of this case, we approve and follow such majority rule.⁵

We then face the question, could the false statements have affected or influenced the exercise of a governmental function? In Freidus, the alleged false statement was held to be materially false only if it misrepresented a corporation's ability to repay a loan, which in turn rested upon whether its assets and liabilities had been properly stated, including the transfer of a loan into preferred stock, for the issuance of which stock no permit had been granted until after the financial statement had been submitted to the R.F.C. While the transfer was technically deficient because of a lack of a permit, the corporate action had been such as to "effectively subordinate" the loan, and hence the financial statements were found not to be materially false. Such facts are not similar to those here present.

In United States v. Quirk, supra, the defendant was accused of causing a lending institution to submit to the Veterans Administration a false application for insurance. Because the application was rejected by the Veterans Administration, appellant urged that the exercise of a government function could not have been influenced or affected by the admittedly false statements, and hence, they could not have been material. The court rejected this theory, and found the misrepresentation material, even though it recognized a "sharp conflict of opinion" as to whether the element of materiality is required by the second clause of § 1001.⁶ It is noted the first clause of § 1001 contains the word "material," the second does not.

We agree with District Judge Kraft in United States v. Quirk, supra, when he says:

"We believe that the conduct Congress intended to prevent by § 1001 was the willful submission to federal agencies of false statements calculated to induce agency reliance or action, irrespective of whether actual favorable agency action was, for other reasons, impossible. We think the test is the intrinsic capabilities of the false statement itself, rather than the possibility of the actual attainment of its end as measured by collateral circumstances."

167 F.Supp. at page 464. See also per curiam affirmance of Quirk, 3 Cir., 1959, 266 F.2d 26.

And we rule that the statements here found made by appellant were material and calculated to induce action or reliance by an agency of the United States government.

III — Admissibility of Evidence.

We find no error in the admission of the recording, Exhibit 32, covering the conversation of September 28, 1954. We understand appellant raises no question as to admissibility of recorded conversations generally,⁷ but cites state court cases which set up differing rules as to what foundation must be laid.

Here Mrs. Boren explained the circumstances surrounding the making of the recording. She testified she had heard the recording played, and that it was a recording of the conversation in which she had participated.

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