Lloyd v. United States

• Citation: 226 F.2d 9
• Decision Date: 28 October 1955
• Docket Number: No. 15207.,15207.
• Parties: E. C. LLOYD, Appellant, v. UNITED STATES of America, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

226 F.2d 9 (1955)

E. C. LLOYD, Appellant, v. UNITED STATES of America, Appellee.

No. 15207.

United States Court of Appeals Fifth Circuit.

September 30, 1955.

Rehearing Denied October 28, 1955.

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William S. Pritchard, Winston B. McCall, Birmingham, Ala., Pritchard, McCall & Jones, Birmingham, Ala., of counsel, for appellant.

Frank M. Johnson, Jr., U. S. Atty., Leon J. Hopper, Asst. U. S. Atty., for appellee.

Before RIVES, TUTTLE and CAMERON, Circuit Judges.

RIVES, Circuit Judge.

Appellant was convicted upon a jury trial under three counts of two separate indictments¹ charging him with the offense of willfully attempting to evade and defeat his federal income tax for the calendar years 1945, 1946 and 1947, by filing false and fraudulent returns in violation of Title 26 U.S.C.A. § 145(b). He was sentenced by the district court to 18 months imprisonment and to pay a $2,500.00 fine.

On a hearing of the defendant's motion for a bill of particulars, the United States Attorney represented to the court and to counsel for the defendant "that the method employed in computing the corrected net income was the specific-item adjustment method," and thereupon the court ordered the Government "to furnish the defendant with information as to the categories in which the specific item adjustments were made in said computations." The Government then informed the defendant that the items upon which adjustments were made were for 1945, receipts, merchandise purchases, and delivery expenses, and for 1946 and 1947, receipts and merchandise purchases.

The evidence tended to show that, on his bakery books and in his returns for the years involved, appellant overstated the expense of merchandise purchased by approximately $17,350.00, principally by writing five $3,000.00 checks on his bakery account, four of which were drawn on the Commercial National Bank at Anniston, Alabama, and charged on his bakery books as "flour purchases", and one of which, dated July 2, 1946, was drawn on his adopted daughter's account at that bank and shown on the bakery books as a sugar purchase, which checks were supported by no invoices or other records to corroborate appellant's claim that they actually represented payment for merchandise purchases as reflected upon his bakery books, and which actual use for such purpose was somewhat negatived by testimony of a revenue agent, Potter, revealing that on the date each check was drawn a corresponding amount was deposited to the credit of appellant's personal loan account at that same bank; that four other counter checks aggregating $1,650.00 were also drawn by appellant during 1945 and 1946 on the Anniston Cotton Oil Company, and were represented on his bakery books as "miscellaneous merchandise purchases", though the owner of that Company, J. A. Stewart, testified that he gave appellant cash for these checks and that they were not received in payment for any merchandise or services rendered by his Company either to appellant or his bakery establishment; that for the year 1945 the delivery expenses of appellant's bakery were overstated by $1,300.00, proof of which overstatement was made by testimony that three checks drawn by appellant, dated December 7, 1945, one of which was made payable to the Alabama Motor Company and the other two to C. J. Alford, were not issued or received in payment of any delivery expenses, as indicated by the books of the bakery, but were simply cashed by appellant, the witness C. J. Alford testifying that at the time appellant "laughed casually" and said he was "going to the Elks Club" to "play blackjack"; further, that appellant's bookkeeper, for about two months in 1945 and ten months in 1946, admittedly erased and altered original entries on the cash book of the bakery so as to reduce by $300.00 per week the record of actual cash receipts from merchandise sales, which alterations, according to appellant's testimony, were made so that he could use the $300.00 weekly to make necessary purchases of bakery products on the "black market" from OPA violators. In addition to this direct testimony by his bookkeeper and appellant's admission as to these false understatements of cash receipts on the bakery books, there is much circumstantial evidence of unreported cash receipts from cash deposited by appellant during the tax years involved in bank accounts in the name of his wife and adopted daughter, from cash invested in United States Savings Bonds, and from purportedly non-taxable "loans" made to appellant's bakery by his wife during the prosecution years.²

Appellant in brief assigns twenty specifications of error, each of which has been carefully considered, but we think that only those hereinafter discussed require separate treatment.

(1) Sufficiency of the evidence. Appellant insists that language from the

recent decision of the Supreme Court in Holland v. United States, 348 U.S. 121, 125-129, 139, 75 S.Ct. 127, and from several decisions of this Court,³ require direction of a judgment of his acquittal for insufficiency of the evidence to warrant the jury's finding of guilt beyond a reasonable doubt, particularly as to the element of willfulness essential to constitute this specific statutory offense; that the Government failed to eliminate in its computations, as available sources of funds for appellant's proven deposits, loans and purchases, amounts which had been accumulated by appellant and his wife in nonprosecution years, and failed directly to trace any unreported cash receipts into the bank accounts of either appellant, his wife or daughter, or to show that amounts entered upon his bakery books for merchandise purchases did not truly reflect deductible cash expenditures actually used for such purpose; finally, that the starting point for the revenue agents' net worth computations, under Bryan v. United States, 5 Cir., 175 F.2d 223, 227, was not established with the definiteness required to support a tax fraud conviction based upon wholly circumstantial proof. See Pollock v. United States, 5 Cir., 202 F.2d 281, 284.

It is not this Court's function to determine guilt or innocence. That judgment is exclusively for the jury, subject however to the decision of the district court reviewable by this Court as to whether the evidence is legally sufficient to sustain conviction, a matter, of course, presenting a question of law. Kotteakos v. United States, 328 U.S. 750, 763, 66 S.Ct. 1239, 90 L.Ed. 1557. In the performance of its function, the court has no right to invade the province of the jury by determining questions of credibility and weight of evidence. Goldman v. United States, 245 U.S. 474, 477, 38 S.Ct. 166, 62 L.Ed. 410; Stilson v. United States, 250 U.S. 583, 588, 40 S.Ct. 28, 63 L.Ed. 1154; Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680; Mortensen v. United States, 322 U.S. 369, 374, 64 S.Ct. 1037, 88 L.Ed. 1331. "The verdict of a jury must be sustained if there is substantial evidence, taking the view most favorable to the Government, to support it." Glasser v. United States, supra 315 U.S. 60, 62 S.Ct. 469. In circumstantial evidence cases, this Court has said that the test to be applied is whether the jury might reasonably find that the evidence excludes every reasonable hypothesis except that of guilt. Vick v. United States, 5 Cir., 216 F.2d 228, 232, and cases there cited; see also United States v. Levy, 7 Cir., 138 F.2d 429, 430, 431.

We think a fair reading of this record impels the conclusion that a jury question as to appellant's guilt was presented, certainly under the prosecution's "specific item adjustments method" of proving unreported income by means of substantial understatements of cash receipts and overstatements of merchandise purchases and delivery expenses for the tax years involved. See Spies v. United States, 317 U.S. 492, 500, 63 S.Ct. 364, 87 L.Ed. 418; Bostwick v. United States, 5 Cir., 218 F.2d 790, 794. The specific willful intent and bad motive required for conviction under this statute is, of course, inherently unsusceptible of direct proof, but as in the Bostwick case, supra, might here have been inferred by the jury from appellant's conduct, if the jury believed from the testimony that he knowingly permitted the making of false book entries and alterations to conceal cash receipts, purposely inflated his operating expenses, and thereby depreciated his net taxable income by means of fictitious flour and sugar purchases, delivery expenses, etc. See United States v. Rosenblum, 7 Cir., 176 F.2d 321, 329-330. True, appellant correctly contends that "the intent to avoid detection of price ceiling violation is not the specific intent to evade income taxes," but by the same token, "if the tax-evasion motive plays any part in such conduct the offense may be made out even though the conduct may also serve other purposes such as concealment of other crime." Spies v. United States, supra, 317 U.S. at page 499, 63 S.Ct. at page 368. That the appellant might conceivably have been found innocent had his explanations been believed by the jury is no tenable ground for attacking the submission of such cogent, prima facie proof. Cf. United States v. Fleischman, 339 U.S. 349, 360-361, 70 S.Ct. 739, 94 L.Ed. 906; Casey v. United States, 276 U.S. 413, 418, 48 S.Ct. 373, 72 L.Ed. 632.

Appellant's further reliance upon such authorities as this Court's Bryan case, supra, for the proposition that indefinite proof of initial net worth is sufficient to invalidate all subsequent computations of the revenue agents, is here misplaced, for essentially this is a "specific item adjustment" rather than a net worth tax fraud prosecution, though in support of its prima facie case based on that theory the Government introduced its net worth and circumstantial proof in anticipation of the defense that appellant had available assets at the inception of the prosecution years sufficient to account for his proven...