Lisansky v. United States

• Decision Date: 09 April 1929
• Docket Number: No. 2758.,2758.
• Parties: LISANSKY et al. v. UNITED STATES.
• Court: U.S. Court of Appeals — Fourth Circuit

67 ALR 67, 31 F.2d 846 (1929)

LISANSKY et al. v. UNITED STATES.^*

No. 2758.

Circuit Court of Appeals, Fourth Circuit.

April 9, 1929.

COPYRIGHT MATERIAL OMITTED

Isaac L. Straus, of Baltimore, Md. (M. Albert Levinson, of Baltimore, Md., on the brief), for appellants.

A. W. W. Woodcock, U. S. Atty., of Baltimore, Md., for appellee.

Before WADDILL and PARKER, Circuit Judges, and McCLINTIC, District Judge.

PARKER, Circuit Judge.

This is an appeal from a conviction under section 37 of the Penal Code, 18 USCA § 88, of a conspiracy to defraud the United States of income taxes due by defendants through the making of false returns. The defendants were Morris Lisansky and his brother, David Lisansky, partners engaged in the business of money lending in the city of Baltimore. The indictment charged that the plan of the conspiracy was for them to file a false partnership return for the year 1923, showing therein the income of the partnership at much less than it actually was, and to file individual returns based thereon. It charged as overt acts the preparation and filing of the returns.

On the hearing of the case it was proven that the partnership during the year 1923 collected various items of income, which were not included in the partnership return. The total income reported was $15,662.56, with deductions of $6,082.50 for losses and expenses, leaving a net income of only $9,580.06. Items of income amounting to approximately $20,000 were shown to have been received and not reported. Defendants admitted receiving and not reporting these items, but gave as an excuse that they were offset by a loss of approximately $33,000 sustained during the year as the result of the failure of the United States Yarn Company, one of their debtors. They also contended that these items of income were not taxable, because they represented profits on usurious loans not repaid during the year. The government denied that the alleged loss from the failure of the yarn company had actually been sustained and controverted the position that profits from usurious loans were not taxable in the year in which they were received. As bearing on the good faith of these contentions of defendants, it introduced evidence tending to show that defendants were keeping a false set of books. There was much testimony pro and con on these contentions, and to set forth even the substance of it would prolong this opinion beyond all reasonable lengths. The case was fairly submitted to the jury under a charge which placed upon the government the burden of proving the conspiracy beyond a reasonable doubt, and which impressed upon them that, if defendants were telling the truth as to why they failed to report the additional income of $20,000 and the loss of $33,000, they should be acquitted. The jury, however, did not accept their version of the matter.

The point most strenuously pressed by the able counsel for defendants is that the court should have directed a verdict in their behalf, on the ground that, inasmuch as they were partners, they could not be guilty of the conspiracy charged. The contention is that as partners, they were required to make a partnership return (U. S. Comp. Stat. 1923 Supp. § 6336 1/8l 42 Stat. 250), and that the making of a false return in an attempt to evade the tax is in itself punishable as a crime (U. S. Comp. Stat. 1923 Supp. § 6336 1/8v 42 Stat. 268). They argue that the crime of making a false partnership return in an attempt to evade the tax is one which requires the co-operation of the partners, and that, consequently, the partners could not be guilty of conspiracy to commit it. In support of this position, they rely upon a line of cases holding that, where a crime is such that concert of action between two or more persons is logically necessary to its completion, a charge of conspiracy to commit it will not lie against such persons, as, for instance, in cases of adultery, bigamy, incest, or dueling. 2 Wharton, Criminal Law, § 1339; 5 R. C. L. 1072. They cite, among other cases, U. S. v. Dietrich (C. C.) 126 F. 664, applying the rule where the charge of conspiracy was that one of defendants should give and the other receive a bribe; U. S. v. New York Cent. & H. R. R. Co. (C. C.) 146 F. 298, applying it to a charge of conspiracy to give and receive an unlawful rebate; and U. S. v. Katz, 271 U. S. 354, 355, 46 S. Ct. 513, 70 L. Ed. 986, applying it to charge of conspiracy between one who buys and one who sells whisky.

The reason of the rule relied on is well stated in Wharton's Criminal Law, § 1339, as follows: "When to the idea of an offense plurality of agents is logically necessary, conspiracy, which assumes the voluntary accession of a person to a crime of such a character that it is aggravated by a plurality of agents, cannot be maintained. * * * In other words, when the law says `a combination between two persons to effect a particular end shall be called, if the end be effected, by a certain name,' it is not lawful for the prosecution to call it by some other name; and when the law says such an offense — e. g., adultery — `shall have a certain punishment,' it is not lawful for the prosecution to evade this limitation by indicting the offense as conspiracy."

But, as stated in 5 R. C. L. 1072, 1073: "The principle is confined within very narrow limits. It applies where the immediate effect of the consummation of the act in view, which is the gist of the offense, reaches only the participants therein, and is in such close connection with a major wrong as to be inseparable from it. * * * It is only where the concurrence to commit an offense and the consummated act are so connected that they really constitute one act, every element inculpatory of each party, so that the separation of the whole into its constituent elements and a prosecution for each as a distinct offense would place the parties twice in jeopardy, that the rule applies." It does not apply here because, in the first place, defendants are indicted for conspiracy to defraud the United States and not for conspiracy to commit the offense of violating the provisions of the Revenue Act, and because, in the second place, even if the indictment be construed as one for conspiracy to evade the tax in violation of the Revenue Act, the offense which is the object of the conspiracy is not one which requires a plurality of agents within the meaning of the rule upon which defendants rely.

On the first proposition, it is the defrauding of the United States which is charged as the object of the conspiracy; and, as the defrauding of the United States is not necessarily an offense in itself (U. S. v. Stone D. C. 135 F. 392), it must be clear that the prosecution is not charging a conspiracy to commit an offense. The agreement to make false returns is charged, not as the object of the conspiracy, but as the plan by which its object was to be accomplished. The income tax of defendants would, of course, be assessed upon the basis of their returns. As they were engaged in business as partners, their individual returns would be checked against the return of the partnership. To carry out their fraudulent scheme, therefore, they planned, according to the charge of the indictment, that a false return should be made for the partnership and that each of them should file a false individual return. These false returns, while criminal, were not the objects of the conspiracy, but the means by which its object was to be accomplished.

It is true, however, that an attempt to evade the tax imposed by the Revenue Act is an offense against the United States, and a conspiracy to defraud the United States by evading the tax may be said to be a conspiracy to commit this offense. Section 253 of chapter 136 of the Act of November 23, 1921, 42 Stat. 268, provides:

"Any individual, corporation, or partnership required under this title to pay or collect any tax, to make a return or to supply information, who fails to pay or collect such tax, to make such return, or to supply such information at the time or times required under this title, shall be liable to a penalty of not more than $1,000. Any individual, corporation, or partnership, or any officer or employee of any corporation or member or employee of a partnership, who willfully refuses to pay or collect such tax, to make such return, or to supply such information at the time or times required under this title, or who willfully attempts in any manner to defeat or evade the tax imposed by this title, shall be guilty of a misdemeanor and shall be fined not more than $10,000 or imprisoned for not more than one year, or both, together with the costs of prosecution."

But, even if the object of the conspiracy be regarded as the attempt to evade the tax, denounced by this statute, and hence the conspiracy itself as one to commit an offense against the United States, we do not think that defendants come within the protection of the rule which they invoke. The attempt to defeat or evade the tax, whether by the making of false returns or otherwise, is not a crime which logically requires a plurality of agents and prior agreement as in the case of such a crime as adultery or dueling. On the contrary, it can be committed by a single person. Even a partnership return may be made by one of the partners. 42 Stat. 250. And there can be no question that one partner may attempt to evade the tax without the co-operation of the other partners. It is true that such attempts to evade and the falsity of returns would be more readily detected if there were no co-operation between the partners; but this very fact brings their unlawful agreement to evade the tax within the reason and spirit of the conspiracy statute. That statute was intended to reach and punish just such combination and concert of action, which is productive of law violation in that it makes crime easier to perpetrate and harder to detect. As said by Mr. Justice Pitney in U. S. v. Rabinowich, 238 U....