Goldfine v. United States

• Decision Date: 14 August 1959
• Docket Number: 5461.,No. 5460,5460
• Citation: 268 F.2d 941
• Parties: Bernard GOLDFINE, Defendant, Appellant, v. UNITED STATES of America, Appellee. Mildred PAPERMAN, Defendant, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — First Circuit

268 F.2d 941 (1959)

Bernard GOLDFINE, Defendant, Appellant, v. UNITED STATES of America, Appellee.

Mildred PAPERMAN, Defendant, Appellant, v. UNITED STATES of America, Appellee.

Nos. 5460, 5461.

United States Court of Appeals First Circuit.

July 24, 1959.

Rehearing Denied August 14, 1959.

COPYRIGHT MATERIAL OMITTED

Harold Rosenwald, Boston, Mass., with whom Burton L. Williams, Boston, Mass., James R. McGowan, Westwood, Mass., and Paul A. Powell, Brookline, Mass., were on brief, for appellants.

Andrew A. Caffrey, Asst. U. S. Atty., Boston, Mass., with whom Anthony Julian, U. S. Atty., and George H. Lewald, Asst. U. S. Atty., Boston, Mass., were on brief, for appellee.

Before MAGRUDER, Chief Judge, and WOODBURY and HARTIGAN, Circuit Judges.

MAGRUDER, Circuit Judge (Retired).

These appeals arise out of perhaps the most publicized cases heard this year. We are unable, however, to find any substance in appellants' contentions.

It appears that during the summer of 1958 the Internal Revenue Service started looking into the tax liabilities of five corporations in which Bernard Goldfine had an interest, namely, the Lebanon Woolen Mills Corporation, Lebandale Mills, Inc., George Mabbett & Sons Company, Strathmore Woolen Company, and Northfield Mills, Inc., at least some of which corporations had filed no income tax returns for several years.

Appellant Goldfine was president and treasurer at all material times of three of these corporations, Lebanon Woolen Mills Corp., Lebandale Mills, Inc., and Strathmore Woolen Co. He was also president of George Mabbett & Sons Co. It is undisputed that by virtue of such offices Goldfine has had, during all material times, the control of the records of these corporations, and that appellant Mildred Paperman has at all material times been in actual control of the records of Strathmore Woolen Co. and of Northfield Mills, Inc.

Pursuant to administrative subpoenas issued by the Internal Revenue Service to assist in its current investigations, the records of these five corporations were made available to agents of the Service at Goldfine's office, 35 Kneeland Street, Boston, Massachusetts. Goldfine instructed the various bookkeepers, including appellant Paperman, to cooperate fully with the Internal Revenue Service.

Subsequently, at the request of counsel for the corporations, the investigation by the Internal Revenue Service was suspended for sixty days so that agents of the corporations could have exclusive access to the corporate records for the purpose of preparing and filing their delinquent income tax returns. At this time it was made clear to appellants' counsel that the government was not abandoning its subpoenas and its investigation but merely suspending a portion of its inquiry for the sole purpose stated. "Accordingly, when we resume our examination, our audit will not be deemed a new inspection of the taxpayers' books of account within the purview of Section 7605(b), Internal Revenue Code of 1954."

After the expiration of the sixty-day period the Service refused to grant a request for extension and tried without success to obtain the return to it of the corporate records. Finally, on December 3, 1958, Group Supervisor Pastore filed in the United States District Court for the District of Massachusetts a petition for judicial enforcement of the aforesaid administrative subpoenas as provided for in §§ 7402(b) and 7604 of I.R.C.1954, 26 U.S.C.A. §§ 7402(b), 7604. See the procedure outlined in Brody v. United States, 1 Cir., 1957, 243 F.2d 378, certiorari denied 1957, 354 U.S. 923, 77 S.Ct. 1384, 1 L.Ed.2d 1438. An order to show cause was issued, which came on for hearing before the district court on December 5, 1958. The outcome of this hearing was the issuance by the district court on the same day of a so-called "Interim Order" under which appellants were directed to produce at the office of the Internal Revenue Service, 55 Tremont Street, Boston, certain records of the corporations involved on or before a specified time on Monday, December 8, 1958. At this initial stage of the proceeding the district court elected not to issue a turn-over direction in the breadth requested by the government. Instead it chose to exclude from its interim order the records relating to all tax years with respect to which any contentions had been made by appellants that the taxing authorities had already completed an audit while the documents were previously available for their inspection, whether or not the United States admitted that such a prior audit had been completed. The district court also chose to exclude from its enforcement order the records relating to any tax year with respect to which appellants had made the contention that the statute of limitations would apply (unless fraud were found). In addition, the district court struck out from the government's proposed order a request for the "stock certificate book" and other unspecified documents of each corporation. An appeal was attempted by the appellants from this interim order. In Goldfine v. Pastore, 1 Cir., 1958, 261 F.2d 519, we denied an application by the appellants for a stay of the district court's interim order pending appeal because we thought that, although a final enforcement order would be appealable, O'Connor v. O'Connell, 1 Cir., 1958, 253 F.2d 365, this was clearly just an interlocutory order from which we were without jurisdiction to entertain an appeal as of right. Later, by order entered February 12, 1959, we dismissed this appeal for lack of jurisdiction.

Claiming that the records had not been produced as set forth in the interim order, the United States Attorney late on December 10, 1958, filed against each of the said appellants a petition for attachment for criminal contempt. The petition against Bernard Goldfine was in three counts. Count I charged that Goldfine was guilty of criminal contempt by willful disobedience of so much of the interim order as related to the production of the records of the Lebanon Woolen Mills Corp. The court found Goldfine guilty on this count. Count II related to the failure to produce the records of Lebandale Mills, Inc., and Count III referred to those of George Mabbett & Sons Co. Since the district court found the defendant Goldfine not guilty on Counts II and III, they will hereafter be disregarded.

The petition for attachment for criminal contempt filed against defendant Mildred Paperman was in two counts, the first charging willful disobedience in refusing to produce the records of Strathmore Woolen Co., and the second charging willful disobedience in the failure to produce the records relating to Northfield Mills, Inc. The district court found Miss Paperman guilty on both counts.

Appellants have taken these appeals from the respective judgments of conviction of criminal contempt. 169 F.Supp. 93.

We reject the contention that the evidence was not sufficient to establish beyond a reasonable doubt, what the district court found, that appellants deliberately and intentionally disobeyed the interim order of December 5, 1958.

The district court's memorandum finding appellants guilty of criminal contempt focused on the following seven so-called "listed records", production of which was required by the interim order:

1. Accounts receivable ledger of Lebanon Woolen Mills Corp., for 1952 through 1957. (Exhibit AA)

2. Accounts payable ledger of Lebanon Woolen Mills Corp. for 1952 through 1957. (Exhibit AB)

3. Accounts receivable ledger of Strathmore Woolen Co. for 1953 through 1957. (Exhibit E)

4. Accounts payable ledger of Strathmore Woolen Co. for 1953 through 1957. (Exhibit D)

5. Canceled checks of Strathmore Woolen Co. for 1953 through 1957. (Exhibit F)

6. Accounts receivable ledger of Northfield Mills, Inc., for April 30, 1952, through April 30, 1957. (Exhibit T)

7. Accounts payable ledger of Northfield Mills, Inc., for April 30, 1952, through April 30, 1957. (Exhibit U)

The district court correctly stated that the burden was on the government to prove beyond a reasonable doubt the presence of these six elements:

"(1) that the Court issued an order for the production at a particular time and place of a record adequately described in the order, (2) that the defendant was served with (or otherwise knew of) the order, (3) that the record existed at the time the order was served, (4) that the defendant had control (or lawful power to acquire control) of the record, (5) that the defendant failed to produce (or cause the production of) the record, and (6) that the defendant acted wilfully."

We are satisfied that these records and the time and place for their production were adequately described in the interim order, and that, as stated above, the appellants had control over them. They admittedly were served with the order, and they even attempted to appeal from it. There is no doubt that the records existed (and appellants so conceded in oral argument before us), and that they were not produced at the office of the Internal Revenue Service, 55 Tremont Street, Boston, on or before the deadline on December 8. They were actually produced by defendants in the courtroom on ...