Cohen v. United States

• Decision Date: 24 August 1966
• Docket Number: No. 22505.,22505.
• Parties: Benjamin COHEN, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

363 F.2d 321 (1966)

Benjamin COHEN, Appellant, v. UNITED STATES of America, Appellee.

No. 22505.

United States Court of Appeals Fifth Circuit.

July 21, 1966.

Rehearing Denied August 24, 1966.

Jacob Kossman, Philadelphia, Pa., James J. Hogan, Miami Beach, Fla., for appellant.

John B. Jones, Jr., Acting Asst. Atty. Gen., Richard Buhrman, Atty., Dept. of Justice, Washington, D. C., William A. Meadows, Jr., U. S. Atty., Miami, Fla., Meyer Rothwacks, Joseph M. Howard, Attys., Dept. of Justice, Washington, D. C., Richard M. Roberts, Acting Asst. Atty. Gen., for appellee.

Before WISDOM and COLEMAN, Circuit Judges, and HUGHES, District Judge.

COLEMAN, Circuit Judge:

Appellant was indicted, on two counts, for attempting to evade and defeat income taxes due and owing by him and his wife for the years 1960 and 1961 in violation of 26 U.S.C. 7201.¹ The case was submitted to the Court, without a jury, in a trial which lasted fourteen days. Mr. Cohen was acquitted as to 1961, found guilty as to 1960, and sentenced to fine and imprisonment.

We are of the opinion that the conviction must be affirmed.

The prosecution was grounded on an alleged understatement of gross income. For 1960, appellant's return reflected a gross income of $43,941.53 and taxes owing in the amount of $16,745.74. The government contended, and the Court found, that appellant's gross income for that year was, in fact, $78,441.53, with resulting tax liability of $38,029.21. The $34,500 understatement is attributed to a business transaction from which appellant admittedly received payments totalling $60,000 in currency, but which he claimed was contractually due to be shared by two other men, Edward G. Rosenbaum and Charles S. Tobin.

I

The issues in the case are preponderantly factual. Sixty-one witnesses testified, 144 exhibits were received, and the transcript ran to 2871 pages. In view of the finding of guilt, we must consider the evidence in the light most favorable to the government, Chastain v. United States, 5 Cir., 1956, 237 F.2d 422; Rickey v. United States, 5 Cir., 1957, 242 F.2d 583; Walker v. United States, 5 Cir., 1962, 301 F.2d 94; Mount v. United States, 5 Cir., 1964, 333 F.2d 39, cert. den. 379 U.S. 900, 85 S.Ct. 188, 13 L.Ed. 2d 175; McDaniel v. United States, 5 Cir., 1965, 343 F.2d 785.

Mr. Cohen testified that he paid Rosenbaum $30,000 of the proceeds. Rosenbaum gave Cohen a written receipt for that amount. Moreover, he filed an income tax return admitting receipt of the money, but did not pay the taxes. The government contended that both the receipt and the return were false. This was the key factual issue.² On circumstantial evidence, the trial court found against the appellant.

There were other factual issues, however, and a recapitulation of the basic evidentiary elements is indispensable to an understanding of the appeal.

Late in the year 1959, in Miami Beach, Charles Tobin and Edward Rosenbaum had a brief conversation about the mortgage loan business. Rosenbaum stated that he had a "source" for mortgage loan money but was not able to find borrowers. Tobin said that he knew of someone in Maryland who might want a loan. Rosenbaum stated that Mr. Cohen, now the appellant, had pension fund sources for mortgage money. Tobin requested Rosenbaum to arrange an appointment. Within a day or two, Rosenbaum, Tobin, and Cohen discussed the matter in a meeting at Cohen's office. Tobin's interested borrower was Samuel Eig, a financier and real estate developer in Silver Springs, Maryland. In early 1960, Eig and Cohen succeeded in arranging a loan for one or more of Eig's motel projects in the amount of $2,350,000. During the early negotiations between the two it was agreed that the brokerage commission on the deal was to be six percent of the amount loaned. When Eig suggested that the brokerage fee should be made the subject of a written contract, Cohen replied that a written contract was not necessary at that time.

On February 25, 1960, appellant made the first collection on the brokerage fee by sending his employee and trusted friend, Howard Morris, to Eig's office in Silver Springs, Maryland, to pick up the money.³ At Cohen's request this installment amounted to $41,000, with a check being written for $11,000 and the remaining $30,000 being paid in currency in the form of three hundred $100 bills. Two of Eig's associates were present in the Silver Springs office when the cash was delivered,⁴ and after Morris' return to Miami Beach appellant called Eig and complained about the "delegation" present when the currency was picked up.

On March 8, 1960, Morris again made the trip to Silver Springs, and the second installment on the commission was collected. On this occasion he received cash in the amount of $30,000, and again refused a request to give a written receipt. The third payment, a check for $5,000, was mailed to Cohen the next day.

Appellant employed a bookkeeping system whereby his secretary entered receipts and disbursements in appropriate journals. His cash receipts journal for the period reflected the payments by check, but no entry was made as to the $60,000 cash.

In January, 1961, appellant called McKeever, a business associate of Eig's, to discuss the remainder of the fee due on the brokerage commission. During the conversation he inquired as to how the $60,000 cash payments were carried on Eig's books. An immediate answer was not given, but McKeever wrote the next day indicating that Cohen had received $63,000 in cash and $16,000 by checks.⁵

Approximately ten days later, McKeever went to Miami. Shortly after arrival he called the appellant, who, immediately after answering the phone, asked McKeever if he had been contacted by the FBI. McKeever replied that he had not, and the appellant informed him that they would talk about it the next day. As scheduled, the parties, along with Eig and Tobin, met in appellant's office. The letter was brought up at once, with appellant complaining about the $33,000 figure and the mention of cash payments. The $3,000 mistake was acknowledged, but appellant continued to complain about the mention of cash payments, and demanded that all copies of the letter be destroyed. Another inquiry was made as to how the payments were reflected on Eig's books. When informed they were probably posted as cash disbursements in payment for brokerage fees, the appellant exclaimed that "this could not be allowed to stand". He then went on to tell those present that the normal method for handling a transaction of this nature was "to cash checks in small amounts, and accumulate the cash in a safe deposit box". Thereafter the appellant stated that McKeever was going to have to declare part of the brokerage fee on his return. A heated exchange took place and the meeting broke up.⁶

Later, several meetings took place, during the course of which the appellant expressed concern about the FBI investigation and offered to substantially increase the share of the brokerage fee to be paid to Tobin. At one such meeting, Tobin's son, an attorney, was retained by the appellant (on the promise of a $5,000 fee) to draw up a contract to cover the arrangement and distribution of the brokerage commission. The agreement, to be back-dated to the time of the original loan contract, was to indicate that the money was to be distributed as follows: $25,000 to Tobin, $15,000 to Rosenbaum, and $36,000 to the appellant. This proposed contract was taken to Eig, in Maryland, who refused to sign it. A substitute was then drawn, indicating that a commission of six percent, less service fees and appraisal charges, was to be paid to Cohen. There was also a clause that the broker could employ or act in concert with others, but no specification was made as to distribution of the funds to anyone other than the appellant. On receiving Eig's proposed contract, appellant became violently disturbed⁷ over the provisions providing for the appraisal and pension fund deductions as well as the omission of a clause indicating distribution of the money to Rosenbaum and Tobin in addition to himself.

In 1960, appellant paid Tobin, as a part of his share of the brokerage commission, two cash installments amounting to $5,500. In 1961, he made a cash payment of $4,500. Just prior to the payment of the $4,500 appellant gave Tobin a check written for this amount and requested that he hold it for a few days to give appellant an opportunity to redeem it for cash. Redemption was made, and at the time Tobin received the $4,500 in cash he signed a back-dated receipt indicating receipt of $10,000 in cash from the appellant as his share of the brokerage fee.

In March, 1961, when appellant's accountant was in the process of preparing Cohen's 1960 return, he learned for the first time that there was an additional $20,000 item, not shown on Cohen's books, to be included in the income tax return for 1960. This item was explained as being a part of the commission fee from the Eig transaction, along with the $11,000 and $5,000 items which were already reflected on appellant's cash receipts journal. In answer to the accountant's request for supporting memorandum on this figure, the appellant produced the contract agreement between him and Eig and two signed receipts — one from Rosenbaum indicating he had received $30,000 and the other from Tobin for $10,000.

Rosenbaum was jointly indicted with Cohen as an aider and abettor. His case was severed. Neither side called him as a witness at the trial.

Appellant testified that he had paid over the $30,000 and $10,000 to Rosenbaum and Tobin respectively. He produced their signed receipts indicating they had received the money, along with their tax returns which reflected that both had reported the same as income for the year.⁸ He explained that Rosenbaum had wanted his share of the proceeds in cash and it was for this reason that payment in currency was requested. He could give no explanation as to why he had demanded...