McCarty v. United States

• Citation: 409 F.2d 793
• Decision Date: 05 June 1969
• Docket Number: No. 9986.,9986.
• Parties: J. D. McCARTY, Appellant, v. UNITED STATES of America, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (10th Circuit)

409 F.2d 793 (1969)

J. D. McCARTY, Appellant, v. UNITED STATES of America, Appellee.

No. 9986.

United States Court of Appeals Tenth Circuit.

April 7, 1969.

Rehearing Denied June 5, 1969.

John C. Moran, Oklahoma City, Okl. (James W. Bill Berry, Oklahoma City, Okl., with him on the brief), for appellant.

Willard C. McBride, Washington, D. C. (Mitchell Rogovin, Asst. Atty. Gen. of the United States, and Joseph M. Howard and Richard B. Buhrman, Attys., Dept. of Justice), for appellee.

Before MURRAH, Chief Judge, SETH, Circuit Judge, and CHRISTENSEN, District Judge.

CHRISTENSEN, District Judge.

Appellant was indicted on three counts charging willful attempts to evade his income taxes for 1960, 1961, and 1962 by filing false and fraudulent returns in violation of Section 7201 of the Internal Revenue Code of 1954, 26 U.S.C. § 7201, and on three counts charging the willful subscribing of returns for those years which he did not believe to be true, in violation of Section 7206(1) of the Code, 26 U.S.C. § 7206(1). The jury acquitted on all counts relating to the years 1960 and 1961, but found him guilty on the 1962 charges. In this appeal from the trial court's judgment of conviction and sentence appellant claims that the evidence was insufficient to justify the verdict, that the trial court erred in receiving summary exhibits and that the instructions to the jury were deficient or erroneous.

A reading of the record is convincing that the evidence supports the verdict and that it was not error for the trial court to deny appellant's motion for judgment of acquittal.

While smaller, though substantial, disparities were indicated by the evidence for the prior years, the government's net worth proof for the year 1962 tended to show that the appellant had received $34,114.59 in taxable income and had reported $13,427.33, leaving an unreported deficiency of $20,687.26. The reconstructed 1962 income tax was $11,626.50, as compared with $3,317.39 submitted on his return. The specific item proof served to confirm substantially these figures. The government's proof of specific items indicated that there was $22,038.22 of unreported income for 1962. Indeed, the appellant's experts did not question that by both the net worth and specific item proof failure to report substantial income was shown.¹

Appellant does not question substantial deficiencies so much as proof of willfulness. He relies on the established rule that willfulness cannot be inferred from a mere understatement of income, and that proof of specific intent to evade known tax liability is essential to a felony conviction. Spies v. United States, 317 U.S. 492, 63 S.Ct. 364, 87 L.Ed. 418 (1943). It is argued that appellant's books and records appeared correct on their face, that "his bank deposits in fact disclosed the proved deficiency", and that absence from his office and the inexperience of his clerical help are consistent with innocent mistake or omission.²

We think that there were proved circumstances beyond mere unreported tax liability from which the jury reasonably could have found that the understatement for 1962 was willful.

The government specifically proved that in 1962 the appellant received twelve monthly checks, each in the amount of $1,000, from the Oklahoma City Chamber of Commerce as fees for services rendered, none of which was reported in his return either as to amount or source. These specific items alone were within $2,000 of the total taxable income he reported for the year. In addition, the government proved by direct evidence that appellant had received in 1962 $10,038.22 of unreported income from insurance commissions and counseling.³ The very fact that the deposit tickets, notwithstanding the absence of an indication of specific source, were readily available and were not misplaced or incorrectly noted by clerical personnel, could support rather than detract from proof of willfulness. The accountant who prepared his 1962 return did not examine any of the basic records but relied upon the information furnished him orally and in writing by appellant. Appellant indicated to the agents that he accumulated his income figures for tax purposes by examining his bank deposits with his secretary. The omission of every one of twelve monthly payments totaling $12,000 would render an inference of willfulness not unreasonable in view of all of the evidence. There was evidence tending to show that during the year appellant purchased and paid for about $22,000 worth of securities, deposited $1,500 in a savings account and made personal expenditures of about $10,000, which was another indication from which the jury could have inferred that he knew that he was making substantially more than the $13,427.33 reported on his 1962 return.

We cannot accept the argument that beyond the willfulness to be inferred from this record some express evidence of "fraud" or evil intent, such as the willful falsification of records apart from the return in question, was indispensable to any conviction. Notwithstanding various means of proof, the gist of the charges was willfulness in making a false return, not fraud or deceit in an abstract sense or in different context. We conclude that the question of willfulness was for the jury.⁴

The appellant's contention that the government improperly used "false testimony" and summary exhibits incorporating that testimony to convict him arises in view of evidence tending to prove: In 1961, a bill was pending before the Oklahoma House of Representatives to legalize pari-mutuel betting on horse races. Appellant was then Speaker of the House of Representatives. There was a group interested in seeing that this bill was passed with a view to managing a race track in Oklahoma. Among them were Dillon, Wallace and Barron. They talked at Albuquerque, New Mexico, of obtaining a license and of "publicity and whatever it might take to get the race track going" in Oklahoma City. For the purpose of advancing the project Wallace obtained a cashier's check for $5,000 payable to Oklahoma City; but when Barron said this check wasn't any good to him because cash was necessary, the check was converted into currency and the currency, according to Wallace and Dillon, delivered as such to Barron pending the latter's trip to Oklahoma City. Barron testified that he did not receive currency as such but a "bulky envelope" from either Wallace or Dillon. He said he did not definitely know that this envelope contained currency and was precluded by defendant's objection from testifying what "it was alleged to contain". Barron traveled to Oklahoma City within a few days, had a conference concerning the race track project with others there and then visited appellant at the State Capitol where in the course of a conversation concerning the pending bill he handed the envelope to appellant who put it in a drawer of his desk. Following their initial introduction and before the delivery of the envelope appellant volunteered that he understood Barron was with a group that was interested in the racing picture and said that the chances of the bill's passing looked favorable. Barron further testified that when he handed appellant the envelope nothing was said about it by either one of them but that appellant put the envelope in a drawer of his desk. There was testimony from a fellow legislator that subsequently he was asked by appellant not to take the floor in opposition to the bill but to let the sponsor make a good show and that the bill was not going to pass anyway. The appellant testifying in his own behalf denied positively that he had received any envelope or money from Barron and testified that he had no recollection of ever having met him, although as to the latter he "could be in error".

Appellant did not object in the first instance to the admission of the circumstantial evidence now in question, but before the government had rested unsuccessfully moved generally to strike the testimony of three of the four witnesses called by the government on the subject, objected to the "conclusions" of the government expert in identifying the $5,000 item in the summary exhibits covering the year 1961 offered in evidence by the government, and objected to the admission of the summaries themselves by reason of the inclusion of that item. While only the rulings denying the last two objections have been argued on this appeal, all were presented to the trial court on the theory that the government's related proof was speculative and conjectural and did not sufficiently tend to establish the receipt by the appellant of the $5,000 included in the government's summary.

The trial court instructed the jury concerning the function of summary exhibits, including a reminder "that it is the books, the records, the testimony and the documents which are in evidence and the summaries are admitted only to assist you in considering that evidence for that purpose, and you are entitled to consider them."⁵ No exception was taken to this instruction and its sufficiency is not attacked here. The appellant having denied receiving any envelope or any money from Barron, the $5,000 item was omitted from the summary presented by his expert. We are really concerned not so much with the summaries as with the evidence on which they were based.

The problems presented to the trial court during the taking of evidence concerned admissibility. At the close of the evidence it was not called upon nicely to weigh the sufficiency of the circumstances to warrant an inference that $5,000 was received by appellant; appellant's motion for acquittal at the close of all of the evidence was made in general and no motion to strike was then interposed.

In the practicalities of a trial, the fragmenting of attacks upon circumstantial evidence usually is not feasible; and a trial court in determining sequential admissibility of the parts may not be held strictly accountable for final evaluation in advance of...