Forman v. United States, 15324.

• Citation: 259 F.2d 128
• Decision Date: 27 October 1958
• Docket Number: No. 15324.,15324.
• Parties: William R. FORMAN, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

259 F.2d 128 (1958)

William R. FORMAN, Appellant, v. UNITED STATES of America, Appellee.

No. 15324.

United States Court of Appeals Ninth Circuit.

September 15, 1958.

Opinion Modified on Denial of Rehearing October 27, 1958.

George W. Mead, S. J. Bischoff, Portland, Or., for appellant.

Charles P. Moriarty, U. S. Atty., Seattle, Wash., John S. Obenour, Jr., Asst. U. S. Atty., Tacoma, Wash., for appellee.

Before HEALY, POPE and FEE, Circuit Judges.

Opinion Modified on Denial of Rehearing October 27, 1958. See 261 F.2d 181.

POPE, Circuit Judge.

Appellant Forman was found guilty and sentenced under the fifteenth count of a fifteen count indictment returned against him and one Seijas. The first fourteen counts of the indictment stated charges against Seijas only, and they are not involved in this appeal. In the fifteenth count it was charged that Seijas and Forman entered into a conspiracy to defraud the United States and to violate certain sections of the Internal Revenue Code and the Criminal Code, among them section 145(b) of the Internal Revenue Code (1939),¹ relating to attempts to evade or defeat income tax. As the case is presented here the key portions of this count were stated in paragraphs "C" and "D", as follows:

"C. To violate Section 145(b) of the Internal Revenue Code, 26 U.S.C., Section 145(b), by knowingly and willfully attempting to defraud and evade a large portion of the income taxes owed by Armador A. Seijas and his wife, Betty L. Seijas, and others to the United States for the years 1942 to 1945, inclusive, upon their share of the unreported income of the afore-mentioned partnerships.

"D. To violate Section 1001 of the New Criminal Code, 18 U.S.C., Section 1001, and Section 145(b) of the Internal Revenue Code, 26 U.S.C., Section 145(b), by furnishing officers and employees of the Treasury Department false books and records, and false financial statements, and by making false statements to such officers and employees for the purpose of concealing from the Treasury Department their share of the unreported income of the aforesaid partnerships, and for the purpose of concealing from the Treasury Department the true income tax liability of Armador A. Seijas and his wife, Betty L. Seijas, for the years 1942 to 1945, inclusive."

The count listed 33 overt acts alleged to have been committed in furtherance of the conspiracy.

Seijas in a separate trial was found guilty, under counts 9 through 13, of substantive offenses pertaining to the evasion or attempt to evade his tax and that of his wife for the years 1946 through 1948. He pleaded guilty to the charge against him in count 15. Forman was tried alone upon that count and Seijas, who was then serving his sentence under the other counts, was produced as a witness for the Government.

The evidence tended to show that during the years 1941-1945, inclusive, Seijas and Forman, as partners, were conducting the business of operating pinball machines in Kitsap County, Washington; that they carried on this business under an arrangement whereby the pinball machines were placed in taverns and other locations; that the coins in the machines were collected by employees of the partnership and the amounts so taken would be divided equally between the partnership and the proprietor of the pinball location; that instead of accounting for all of the collections made, the collectors by direction of the partners held out a portion of the actual amounts collected and turned over to the partnership bookkeeper for entry in the partnership books only a portion of the actual collections; that in this manner some $172,400 was held out of the pinball receipts during the years 1942 through 1945; that this amount was neither reported to the location owners nor entered in the partnership books, nor reflected in the income tax returns, — it was split between Forman and Seijas neither of whom reported any part of these sums upon his own tax returns.

Forman's participation in the setting up of this arrangement and in the handling of the partnership books and the making of the partnership information returns, so as to conceal the receipt of these funds during the years 1942 to 1945, was proven by credible evidence, and there was abundant proof of Forman's participation in a conspiracy such as that described in paragraph C quoted above, namely, one to defraud and evade Seijas' income taxes for the years 1942 through 1945.

The outcome of this case, however, does not turn upon any such question since the court instructed the jury that a conspiracy to commit the offenses referred to in paragraphs C and D of the indictment, insofar as they were for the purpose of evading the tax liability of Seijas and wife, were subject to a six year period of limitation, and prosecution must be commenced within six years of the last overt act in furtherance of such conspiracy. The court stated to the jury:

"I charge you that the conspiracy to evade the tax liability of defendant Seijas and his wife, if any there be, was consummated upon the filing of the individual tax returns of Seijas and his wife for the year 1945 which was filed in March, 1946, and the statute of limitations would run from that time." The indictment was filed November 19, 1953.

However, as bearing upon that portion of the indictment, quoted above as paragraph D, and relating to a conspiracy to violate section 145(b) of the Internal Revenue Code, "by furnishing false books and records and making false statements, for the purpose of concealing * * * their share of the unreported income * * * and for the purpose of concealing * * * the true income tax liability" of Seijas and his wife, the court charged the jury as follows: "If you find that the defendant Seijas and Forman conspired to attempt to evade the tax liability of Seijas and his wife and others for the years 1942 to 1945, inclusive, you must find the defendant Forman not guilty unless you are convinced beyond a reasonable doubt that they also conspired to conceal the alleged conspiracy in order to prevent prosecution therefor and that such additional conspiracy was a continuing one. You cannot imply that there was a continuing conspiracy to conceal the offense from the fact that they may have conspired to attempt to evade the tax liability of Seijas and wife. That is to say, the mere fact that they may have conspired to evade the tax liability of Seijas and his wife for the years in question, if it be a fact, does not warrant the conclusion that they also conspired to conceal the commission of the offense. You would have to be convinced beyond a reasonable doubt that they actually conspired to conceal the conspiracy and that they committed an overt act or acts in furtherance of such subsidiary conspiracy. As previously stated, the understanding or agreement for such conspiracy need not have been entered into by written or formal oral expression, but may be determined from a consideration of the conduct and statements of the parties and all of the evidence as shown by the evidence in the case."² It will thus be noted that the jury were told that it was not sufficient merely to prove conspiracy to attempt to evade tax liability of Seijas and wife from 1942 to 1945, inclusive, but that the jury must be convinced beyond a reasonable doubt that they also conspired to conceal the conspiracy to evade the tax liability in order to prevent prosecution thereof and that such additional conspiracy was a continuing one. The court further made this point very clear by concluding its charge in respect to these matters as follows:

"Summarizing with respect to the statute of limitations, you must first find that Forman knowingly and wilfully conspired with Seijas to attempt to evade the tax liability of Seijas, Mrs. Seijas and others;

"Second, that part of this conspiracy was to make continuing efforts to avoid detection and prosecution under the condition just referred to;

"Third, that one or more of the alleged conspirators committed an overt act or acts within a period of six years prior to the filing of the indictment herein in furtherance of the conspiracy and during its continuance to accomplish the object of the conspiracy just referred to; namely, attempted evasion of tax liability of Seijas, Mrs. Seijas and others.

"If you cannot answer all three of these questions in the affirmative, as shown by the evidence beyond a reasonable doubt, then you must return a verdict of not guilty."

Appellant argues that the court should have granted his motions for judgment of acquittal, contending that there was not sufficient evidence to establish: "(a) a conspiracy between defendant and Seijas to evade Seijas' tax liability; and (b) a subsidiary conspiracy to conceal the aforesaid conspiracy."

As above indicated, we think the proof of the conspiracy to evade Seijas' tax liability was entirely adequate and so strong as to be almost overwhelming. Actually, as their collector testified, they "stole" from the machines. They were engaged in perpetrating a fraud upon the location operators who were supposed to receive half of the proceeds. They sent false reports to their own bookkeeper as to the partnership gross receipts. This led to the false partnership returns and the evasion of the taxes owing by Seijas.

Clear as this evidence of their guilt of a conspiracy to evade Seijas' taxes is, it is not the important part of this suit in view of the fact that this portion of the conspiracy was consummated, as the court told the jury, on the filing of Seijas' tax returns in March, 1946. As the court's instructions stated, if this is all there was to the conspiracy, the statute of limitations would run from that time and the prosecution would be barred.

As to the contention that there was no evidence to prove that there was a subsidiary conspiracy to conceal, or to prove that the conspiracy itself included the actual conspiracy to accomplish not only the evasion of the taxes but the...