Johnson v. United States, 6130.

• Decision Date: 03 December 1963
• Docket Number: No. 6130.,6130.
• Citation: 325 F.2d 709
• Parties: Ernest W. JOHNSON, Jr., Defendant, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — First Circuit

325 F.2d 709 (1963)

Ernest W. JOHNSON, Jr., Defendant, Appellant, v. UNITED STATES of America, Appellee.

No. 6130.

United States Court of Appeals First Circuit.

Heard October 10, 1963.

Decided December 3, 1963.

Edward O. Proctor, Jr., Boston, Mass., with whom Chester M. Howe and Ely, Bartlett, Brown & Proctor, Boston, Mass., were on brief, for appellant.

A. David Mazzone, Asst. U. S. Atty., Boston, Mass, with whom W. Arthur Garrity, Jr., U. S. Atty., Boston, Mass., was on brief, for appellee.

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

ALDRICH, Circuit Judge.

The defendant was convicted on eight counts of an indictment charging him with wilfully aiding in the preparation and filing of false and fraudulent corporate excise tax returns in violation of section 7206(2) of the Internal Revenue Code of 1954. On this appeal he attacks the admissibility of certain evidence, the sufficiency of the evidence to convict, and the correctness of a portion of the charge. We are not helped by the fact that in both brief and oral argument he recites and treats the evidence in the light most favorable to himself when, at this stage of the proceedings, the reverse is required. Glasser v. United States, 1942, 315 U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680; Smith v. United States, 1 Cir., 1954, 210 F.2d 496, aff'd, 348 U.S. 147, 75 S.Ct. 194, 99 L.Ed. 192. The consequences are particularly conspicuous in that much of the testimony relied on by defendant came from his brother, who could be found to have exhibited more solicitude for the defendant than complete candor, and from defendant himself. Such testimony need not be considered against the jury verdict. Conway v. United States, 1 Cir., 1960, 278 F.2d 710.

During the years in question (1956-1958) the defendant, in addition to certain other duties, was a bookkeeper for Gordon's Inc., which operated a retail jewelry store in Framingham, Massachusetts. His brother was the company's president. An accountant prepared the other tax returns, but defendant kept corporate books and prepared quarterly returns for the retail dealer's excise tax. The company's gross income was not derived exclusively from the retail sales of articles subject to this tax (hereinafter "taxable articles") and on his own admission defendant determined the amounts reportable for the periods in question simply by applying a self-determined formula to total gross receipts. Individual sales were not entered in the corporate books, at least in such fashion that it could be ascertained whether they were of taxable or nontaxable items, and at the time of the tax audit only the most recent sales slips (for a period immediately following that of the indictment) had been retained. Examination of these revealed a gross understatement for that period. The government's evidence to show an understatement for the indictment quarters consisted largely of certain so-called green sheets, and the results of an investigation conducted by one O'Brien, a revenue agent. The propriety of these two sources of evidence presents the only questions.¹

At the government audit the examiner, in response to a request to a corporate officer for the company's records which would support the excise returns, was given, along with other papers that clearly were corporation records and others that clearly were not, a cardboard folder containing sixteen green sheets. These contained columned dollar and cent figures compiled and entered daily by the defendant under the following heads: Net Suburban, Tax, Total Gross, Gross Suburban, and Intown. All figures except those under the headings Tax and Net Suburban, accurately reflected other (summary) entries in the corporate books. The Net Suburban entries were the computed differences between Gross Suburban and Tax. The latter figures had no counterpart. Hence, while the Tax column was not confirmed by other records, by the same token it was not contradicted.

Under the circumstances the jury was warranted in finding these figures to be what on their face they purported to represent. Defendant's proferred explanation that the sheets were "just like my own personal record of daily business" is a meaningless characterization.² His further explanation that the tax entries were purely ficticious, purposely exaggerated to be used solely against suburban gross sales for determining the rent due under the company's percentage lease, at most created a question of fact. It is understandable that as between the two the defendant would now prefer to take the position of having defrauded the landlord than the government, but this is not necessarily a free choice. Furthermore, the contention, and more particularly defendant's own testimony, concedes that there was a business purpose to the records, viz., to compute the monthly net suburban sales and rent figures for submission to the landlord. We cannot say that the jury could not accept so much of the testimony as claimed that the green sheets were maintained in part for this purpose, but reject the further assertion that the tax figures were fictional. The government's burden under 28 U.S.C.A. section 1732 in this case did not go to the extent of proving the records accurate, but only that they were prima facie regular and kept for the management and operation of the business.³

The green sheets were properly admitted. Thereafter, the issues of their ultimate authenticity, United States v. Tellier, 2 Cir., 1958, 255 F.2d 441, 448, cert. den. 358 U.S. 821, 79 S.Ct. 33, 3 L.Ed.2d 62, 7 Wigmore, Evidence § 2135 (3d ed. 1940), and probative effect were for the jury. We hold they warranted a finding of substantial understatement.

Further to show that the tax had been understated the government offered evidence of the company's purchases of taxable articles from its various suppliers. This was done through revenue agent O'Brien in a manner which would have been precisely within the strictures of Greenberg v. United States, 1 Cir., 1960, 280 F.2d 472, but for the fact that defendant made the following stipulation.

"* * * if a duly authorized representative of any of the suppliers of Gordon\'s, Inc. were called to the witness stand and was requested to produce a transcript of his company\'s account with Gordon\'s, Inc. for the years 1956 to 1961 inclusive, designating those purchases subject, upon resale, to the federal retail jewelry excise tax; and if, after objection, he was permitted to produce such records, he would produce the records which have been given Special Agent Daniel O\'Brien in response to his such request, subject to the defendant\'s motion to strike." (Ital. suppl.)

Unfortunately, much of the trial was devoted to disputes as to what was the stipulation's effect. Pursuant to it O'Brien was permitted to introduce evidence resulting in total yearly figures of allegedly confirmed purchases of taxable articles by the company. Taking the year 1957 as an example, this amounted to $22,228. On gross figures (undisputed) taken from the green sheets O'Brien computed that the amount of taxable sales attributable to the suburban sales⁴ for that year was $18,099,⁵ which would have meant a tax of $1,810. The tax actually declared was $669. Defendant attacks O'Brien's testimony on several grounds. (1) That all the suppliers' responses to O'Brien were...