Cohen v. United States

• Decision Date: 05 February 1953
• Docket Number: No. 13202.,13202.
• Citation: 201 F.2d 386
• Parties: COHEN v. UNITED STATES.
• Court: U.S. Court of Appeals — Ninth Circuit

201 F.2d 386 (1953)

COHEN v. UNITED STATES.

No. 13202.

United States Court of Appeals Ninth Circuit.

January 6, 1953.

Rehearing Denied February 5, 1953.

COPYRIGHT MATERIAL OMITTED

Morris Lavine, Los Angeles, Cal., for appellant.

Walter S. Binns, U. S. Atty., Ray H. Kinnison, George M. Treister, Asst. U. S. Attys., and Ernest R. Mortenson, District Counsel, U. S. Treasury Department, Los Angeles, Cal., for appellee.

Before HEALY, BONE and ORR, Circuit Judges.

ORR, Circuit Judge.

Appellant Cohen stands convicted on three of five counts of an indictment charging income tax evasion and one count based upon a false financial statement given to Treasury Department agents. Two counts were dismissed.

Cohen was sentenced to imprisonment of five years on each count and a $10,000 fine, the sentences to run concurrently and the payment of $10,000 to satisfy the fines in full. Hence, the total of the sentences imposed did not exceed the maximum provided by law for each count.

Counts One, Three and Five of the indictment charged appellant with wilful and knowing evasion of his income taxes for the years 1946, 1947 and 1948 within the meaning of 26 U.S.C.A. § 145(b).¹ The Government's proof was based upon the so-called "expenditure method." This method involves determination of the taxpayer's net worth at the beginning of a period and computation of the taxpayer's expenditures during the period. If such expenditures exceed reported income for the period and net worth has remained constant or changes otherwise accounted for, the conclusion may be drawn that total income was not properly reported. In the instant case the Government claims to have established that the appellant's net worth did not exceed $3,110.82 on January 1, 1946, and relies on oral statements made by appellant to police officers on November 17, 1945, and also a written document labeled "Net Worth Statement," which appellant gave to Treasury agents on January 3, 1950. The Government called to the stand more than one hundred witnesses, the sum total of whose testimony was to the effect that during the three years in question appellant expended not less than $345,933.53 while reporting as income only $72,777.52. Much evidence was also introduced to disprove appellant's contention that he had borrowed $172,500.00 during the three-year period.

Count Six charged appellant with knowingly and wilfully making false statements to Treasury agents within the meaning of 18 U.S.C.A. § 1001.² Treasury agents engaged in an investigation of appellant's income tax liability had asked appellant's tax adviser for a statement relating to his financial affairs. During a conference with appellant and his tax adviser lasting nearly an hour, appellant signed a document designated "Net Worth Statement," previously prepared by his tax adviser, which purported to show that during the three years in question appellant had borrowed from various named individuals the total sum of $172,500 and during the same period expended $244,163.15. There was considerable discussion at that time concerning the various items listed. The Government's evidence tended to show that appellant had borrowed no more than $23,000 during the period and expended a total sum of $345,933.53.

Since identical concurrent sentences of five years and $10,000 fine were imposed upon appellant, and, as a result thereof, this sentence did not exceed the maximum sentence which could have been imposed under each count on which he was convicted, the judgment will not be reversed if any one count is free from error. Ex parte Cohen, 9 Cir., 1951, 191 F.2d 300; Brandon v. United States, 9 Cir., 1951, 190 F.2d 175; Lowden v. United States, 9 Cir., 1951, 187 F.2d 484; Danziger v. United States, 9 Cir., 1947, 161 F.2d 299, certiorari denied 332 U.S. 769, 68 S.Ct. 81, 92 L.Ed. 354.³ Where one count is free from error in such a situation, possible error in other counts is not prejudicial.

Appellant raises a number of questions as to the validity of his conviction on the counts pertaining to wilful and knowing evasion of income taxes. We need not examine these contentions because we find, after careful consideration of appellant's arguments, that conviction on Count Six, the false statements count, was free from error. We also note the general assignments of error made by appellant which affect the entire trial.

I. Effect of the Kefauver Hearings.

The Special Committee to Investigate Organized Crime in Interstate Commerce,⁴ commonly known as the Kefauver Committee, held hearings in Los Angeles during the month of November, 1950. Appellant appeared under subpoena as a witness during these hearings and testified concerning the source and extent of his financial resources. He now contends that 2 U.S.C.A. § 192⁵ created a statutory compulsion to testify and that immunity from prosecution in the federal courts followed automatically therefrom. The cases relied upon by appellant in support of this proposition, for example, United States v. Monia, 1943, 317 U.S. 424, 63 S.Ct. 409, 87 L.Ed. 376; Smith v. United States, 1949, 337 U.S. 137, 69 S. Ct. 1000, 93 L.Ed. 1264, are not in point since they deal with testimony compelled by a so-called "compulsory testimony" statute designed as a complete substitute for the privilege against self-incrimination, U.S. Const. Amend. V. These "compulsory testimony" statutes⁶ have been enacted where Congress has been willing, in exchange for full testimony, to give immunity from prosecution in connection with the matters which were the subject of the testimony. No such statutory immunity has been granted in relation to testimony before the Kefauver Committee.

Since no "compulsory testimony" statute was applicable, appellant was fully protected by the privilege of the Fifth Amendment. In Counselman v. Hitchcock, 1892, 142 U.S. 547, 12 S.Ct. 195, 35 L.Ed. 1110, the Supreme Court held that where a statute merely prohibited the use of evidence obtained from a party by means of a judicial proceeding against that party in a federal criminal prosecution, rather than granting immunity from suit, it was not a "full substitute" for the constitutional privilege, which was therefore still available. The instant situation is comparable because the only statutory protection given appellant was a prohibition of his evidence subsequently being used against him. 18 U.S.C.A. § 3486.

Although the privilege against self-incrimination was always available to him,⁷ appellant did not see fit at any time during the hearing to claim this privilege. Therefore, since appellant was never compelled to testify after claim of his constitutional privilege, no question of automatic immunity arises.⁸ See Counselman v. Hitchcock, supra.

The further question raised concerning the Kefauver hearings involves the effect of 18 U.S.C.A. § 3486, which provides: "No testimony given by a witness * * * shall be used as evidence in any criminal proceeding against him * * *." Appellant asserts that introduction into evidence of Exhibit 20, the so-called net worth statement, violated § 3486 because a copy of this document was obtained by subpoena from appellant's accountant and tax adviser by the Kefauver Committee and appellant was questioned concerning the document on November 17, 1950, by the Committee. This argument ignores the fact that agents of the Treasury Department, in the course of their independent investigation of appellant's financial affairs, had already obtained a copy of this document on January 3, 1950. Thus it cannot be said that evidence obtained by the Committee was relied upon in any way for the subsequent criminal prosecution. D. E. Goodykoontz, Treasury Department agent, made an affidavit averring that all the information used as a basis for the criminal indictment was obtained prior to November 15, 1950. Ernest A. Tolin, then United States Attorney, made an affidavit averring that no portion of the testimony or information derived from the Kefauver Committee hearings was to be used in the prosecution of the case. There was no violation of the statutory prohibition.

II. Constitutional Application of § 1001.

The constitutionality of former § 80 of Title 18 U.S.C.A., now § 1001,⁹ has been upheld against a claim of indefiniteness. United States v. Gilliland, 1941, 312 U.S. 86, 61 S.Ct. 518, 85 L.Ed. 598. Appellant contends, however, that in order to preserve the constitutionality of the statute the courts have interpreted § 1001 and its earlier counterparts to apply only to statements alleged to be false which were required to be made by some law or regulation. We do not agree. Although the particular false statements in issue in United States v. Gilliland, supra, were contained in reports and affidavits which were required to be made, the Supreme Court did not indicate that this was an essential condition to the applicability of 18 U.S.C.A. § 80, now § 1001.

A similar question was raised on petition for rehearing in Marzani v. United States, 1948, 83 U.S.App.D.C. 78, 168 F.2d 133, affirmed 335 U.S. 895, 69 S.Ct. 299, 93 L. Ed. 431, where a State Department employee voluntarily sought an interview with his superior officer to discuss a request which had been made for his resignation. The Court held that the employee was subject to prosecution for false oral statements made in that interview despite the fact that the employee was not required to attend such an interview or make the statements. It will not suffice to distinguish the cases, as appellant urges, by noting that in the Marzani case the government employee discussed "officially" with his superior an "official" request for his resignation. The point is that the statements, as here, were voluntarily made.

Appellant asserts that § 1001 cannot be constitutionally applied in the instant situation because he had no suitable notice of the consequences if the statements made in the net worth statement were false or fraudulent, and knowingly and wilfully...