Hayes v. United States

• Decision Date: 23 June 1969
• Docket Number: No. 23540.,23540.
• Citation: 407 F.2d 189
• Parties: Robert Gordon HAYES, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

407 F.2d 189 (1969)

Robert Gordon HAYES, Appellant, v. UNITED STATES of America, Appellee.

No. 23540.

United States Court of Appeals Fifth Circuit.

January 29, 1969.

Rehearing Denied March 28, 1969.

Certiorari Dismissed June 23, 1969.

Wilfred C. Varn, Robert M. Ervin, Tallahassee, Fla., for appellant.

Mitchell Rogovin, Asst. Atty. Gen., Joseph M. Howard, Burton Berkley, Attys., Dept. of Justice, Washington D. C., Clinton Ashmore, U. S. Atty., Stewart J. Carrouth, Asst. U. S. Atty., Tallahassee, Fla., for appellee.

Before JONES and GODBOLD, Circuit Judges, and SCOTT, District Judge.

Certiorari Dismissed June 23, 1969. See 89 S.Ct. 2133.

JONES, Circuit Judge.

The appellant, Robert Gordon Hayes, and his wife, Ruth, were indicted on January 11, 1965, in the Southern District of Florida for wilfully attempting to evade and defeat income taxes due the United States for the years 1958, 1959 and 1960 in violation of 26 U.S.C.A. Sec. 7201. Pursuant to a motion filed by the defendants, the cause was transferred to the Northern District of Florida. At a jury trial, appellant Hayes was convicted and his wife acquitted on each of the three counts contained in the indictment. Subsequently, a fine of $2,000 was levied and concurrent sentences of fifteen months' imprisonment on each count were imposed. From this judgment and sentence, Hayes has appealed.

Appellant's first specification of error challenges the jurisdiction of the Southern District of Florida to return the indictment. Hayes filed his income tax returns for the years 1958, 1959 and 1960 with the District Director in Jacksonville, Florida, which, when the returns were filed, was within the Southern District of Florida. On July 30, 1962, an area including Jacksonville was transferred into the simultaneously created Middle District of Florida. 28 U.S. C.A. Sec. 89(b). It is asserted that, because the indictment was returned after Jacksonville became a part of the Middle District, a grand jury of the Southern District had no jurisdiction to return the indictment.

In answering appellant's jurisdictional challenge, reference to 18 U.S. C.A. Sec. 3240 is particularly appropriate. This section provides:

"Whenever any new district or division is established, or any county or territory is transferred from one district or division to another district or division, prosecutions for offenses committed within such district, division, county, or territory prior to such transfer, shall be commenced and proceeded with the same as if such new district or division had not been created, or such county or territory had not been transferred, unless the court, upon the application of the defendant, shall order the case to be removed to the new district or division for trial."

Because there is no question but that the Southern District could have indicted Hayes had the Middle District not been created, Holbrook v. United States, 5th Cir. 1954, 216 F.2d 238, it seems clear that the above statute permits the Southern District to do so, although the place of the alleged offenses had been transferred to a new district after the time alleged for the commission of the offenses.

Appellant asserts that Quinlan v. United States, 5th Cir. 1927, 22 F.2d 95, requires a contrary interpretation of Section 3240. In that case, this Court expressed the view that 18 U.S.C.A. Sec. 121, which is the statutory predecessor of 18 U.S.C.A. Sec. 3240, had no effect on cases begun after the creation of a new district, and that the statute merely enabled the court in the old district "to retain jurisdiction of pending criminal cases which properly could not be begun in that court after the creation of the new district." Quinlan v. United States, supra at 98. If this interpretation of 18 U.S.C.A. Sec. 3240 is followed, appellant's contention would be upheld. However, both the plain meaning of the statute and a subsequent Supreme Court decision convince us that the above statement is not declaratory of the controlling principle.

In Lewis v. United States, 279 U.S. 63, 49 S.Ct. 257, 73 L.Ed. 615, the Supreme Court determined that the Eastern District of Oklahoma had jurisdiction to indict and try an offense committed in a county which had been transferred out of the Eastern District into the newly created Northern District after the commission of the offense but before the return of the indictment. While it is true, as is pointed out by the appellant, that this decision rested in part upon the language of the jurisdictional provisions of the act creating the new Northern District, the Supreme Court clearly stated that the result reached was also in accord with 28 U.S.C.A. Sec. 101. See Lewis v. United States, supra, at 71. This interpretation of the statute is consistent with the clear import of the language used therein. Section 3240 empowers an altered district to commence prosecutions after the change by indicting for offenses committed within its prior boundaries before alteration "the same as if such new district or division had not been created * * *" Mizell v. Vickrey, 10th Cir. 1929, 36 F.2d 327. The district court here was correct in refusing to dismiss the indictment for lack of jurisdiction.

Appellant contends that the indictment was defective in that it failed to state an offense. The indictment alleged that Hayes did:

"Wilfully and knowingly attempt to evade and defeat * * * income tax due * * * by filing * * * with the district director * * * a false and fraudulent income tax return * * * in violation of section 7201 * * *"

The indictment is sufficient. It discloses the means by which Hayes attempted to defeat the tax even though tax evasion indictments need not contain such an allegation. Lott v. United States, 5th Cir. 1962, 309 F.2d 115; Reynolds v. United States, 5th Cir. 1955, 225 F.2d 123. Both the statutory language and a reference to the specific section alleged to have been violated are incorporated within the charge. This in itself is sufficient if all the essential elements of the offense are contained in the statute. Worthy v. United States, 5th Cir. 1964, 328 F.2d 386. Hayes was sufficiently apprised of the nature of the offense charged so as to permit him to prepare a defense and successfully plead former jeopardy if brought to trial in the future for the same offense. No more is required. United States v. Strauss, 5th Cir. 1960, 283 F.2d 155. Appellant's attack on the indictment must fail.

At the trial the Government relied upon the net worth method to establish its case. As stated in Merritt v. United States, 5th Cir. 1964, 327 F.2d 820, 821, this method of proving income tax evasion

"Proceeds on the assumption that, if in a particular year the increase (not accounted for by nontaxable items) in a taxpayer\'s net worth plus his non-deductible expenditures exceeds his reported net income to a substantial extent, the excess represents unreported income and permits an inference of wilfulness on the part of the taxpayer."

An essential element of the prosecution's proof in this type of case is the establishment of an opening net worth. Hayes contends that this figure was not established "with reasonable certainty" as is required. Holland v. United States, 348 U.S. 121, 75 S.Ct. 127, 99 L.Ed. 150. In support of this contention, Hayes asserts that the Government's calculation was inaccurate with respect to three particular items used in computing appellant's opening net worth.

The Government allowed $10,000 as a reasonable figure for cash on hand in 1951. This amount was based upon information offered by an accountant of the appellant who had been given a power of attorney to represent him in tax matters. A Government agent testified as to the accountant's calculations. Appellant objects to the use of this figure on the ground that it was established by hearsay testimony and because the Government failed to investigate Hayes' assertion that he placed $64,000 in a safety deposit box in a Tallahassee bank in 1951. Neither objection has merit.

It is clear that appellant's accountant was acting within the scope of his employment and authority when he indicated his estimate of the extent of Hayes' cash reserves to the Government agent. Thus the accountant's statement is admissible against Hayes as an admission by an authorized agent. The hearsay objection is not tenable. Laird v. Air Carrier Engine Service, Inc., 5th Cir. 1959, 263 F.2d 948; Cox v. Esso Shipping Co., 5th Cir. 1957, 247 F.2d 629. It seems appropriate to note here that the accountant-client privilege under Florida Statute Sec. 473.15 (1967), is not applicable in a Federal criminal proceeding. Falsone v. United States, 5th Cir. 1953, 205 F.2d 734.

As to appellant's claim of a $64,000 cash hoard, we agree that the Government should investigate leads furnished by the taxpayer in arriving at an opening net worth. Merritt v. United States, supra. The record here shows that the Government did all that was required of it. During the investigation of this case, the Revenue agents repeatedly requested information concerning the amount of Hayes' cash on hand, yet no indication of $64,000 cash on hand in 1951 was made. Moreover, the Government agent did not learn of the Tallahassee safety deposit box until some time in 1962 at which time the funds, according to Hayes' testimony, had been depleted. Hayes had previously told a Government agent that he generally kept no more than $1,000 to $4,000 cash on hand at any one time. Under these circumstances, sufficient investigation by the Government is apparent, and the issue raised by Hayes' cash hoard claim was properly submitted to the jury.

The appellant makes an attack upon the $2,000 cost basis allowed by the Government for five and one-half acres of land sold by Hayes in 1959. Use of this basis, which was supplied by Hayes' accountant, resulted in a higher capital gain for the tax year involved. Appellant contends that use of this $2,000 basis was improper because the...