Pappas v. United States, 4809

• Decision Date: 26 October 1954
• Docket Number: No. 4809,4810.,4809
• Citation: 216 F.2d 515
• Parties: George PAPPAS, Appellant, v. UNITED STATES of America, Appellee. Harry PAPPAS, Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

216 F.2d 515 (1954)

George PAPPAS, Appellant, v. UNITED STATES of America, Appellee.

Harry PAPPAS, Appellant, v. UNITED STATES of America, Appellee.

Nos. 4809, 4810.

United States Court of Appeals Tenth Circuit.

October 26, 1954.

David L. Stine, Ogden, Utah (J. A. Howell and Neil R. Olmstead, Ogden, Utah, on the brief), for appellants.

C. Nelson Day, Asst. U. S. Atty., Salt Lake City, Utah (A. Pratt Kesler, U.S. Atty., Salt Lake City, Utah, H. Brian Holland, Asst. Atty. Gen., Ellis N. Slack, David L. Luce, Joseph M. Howard and Dickinson Thatcher, Sp. Assts. to Atty. Gen., on the brief), for appellee.

Before PHILLIPS, Chief Judge, and HUXMAN and PICKETT, Circuit Judges.

HUXMAN, Circuit Judge.

Appellant, George Pappas, has appealed in Number 4809 and appellant, Harry Pappas, has appealed in Number 4810 from judgments of conviction on informations charging them with wilfully and knowingly failing to furnish to the Collector of Internal Revenue information as to partnership assets and liabilities as required under the Internal Revenue Code and Treasury Regulation No. 111 and specifically Schedule I of Partnership Return of Income, in violation of Section 145(a), Internal Revenue Code, 26 U.S.C.A. § 145(a), for the year 1951. Although separate appeals are taken, the questions are identical and reference will be made as though only one appeal was involved.

Appellants' quotation of Section 145 (a) in their brief omits some of the essential parts of that Section. Section 145(a) so far as material requires taxpayers to make a return or declaration, keep records and supply information for the purpose of computation, assessment or collection of any estimated tax and provides that anyone who wilfully fails to pay such estimated tax, or make a return, or keep records, "or supply such information * * * required by law or regulations"¹ shall be guilty of an offense.

On April 18, 1952 appellants filed the partnership return required of partners by 26 U.S.C.A. § 187, but did not include in the return the information required by Schedule I. Schedule I was adopted under Treasury Regulation No. 111 and called for beginning and ending balance sheets, showing the partnership assets, liabilities and net worth at the beginning and ending of the year. This schedule was left blank. Repeated efforts on the part of internal revenue agents to obtain this information were unavailing. Finally appellants were informed that criminal prosecution against them had been recommended. Even that failed to elicit the required information. They were given a final date of October 31, 1952, to supply the information. They did not furnish the required information and did not ask for extensions of time. The criminal information was filed April 22, 1953.

The first assignment of error urged for reversal is that the trial court erred in refusing to sustain appellants' motion to dismiss the information and appellants' motion for directed verdicts of acquittal.

In support of their contention that the information failed to state an offense, appellants merely cite the case of United States v. Carroll, 345 U.S. 457, 73 S.Ct. 757, 97 L.Ed. 1147, without pointing out in what manner that case is controlling. In that case Treasury Regulations required that, together with the income tax return form 1096, there be filed informational returns on forms 1099, showing payments to every person receiving $600 or more in any calendar year. Defendants were prosecuted for refusing to fill out the informational forms. The Supreme Court held that since the return specified in Section 145 (a) was that provided in form 1096, failure to file 1099 which was not required by statute did not constitute a violation of Section 145(a). But here the basic law, Section 145(a), requires taxpayers to make a return and to supply all information required by the Act or properly promulgated regulations under the Act and makes wilful non-compliance a criminal offense. We think the information stated an offense.

Appellants' main contention is that the evidence did not establish wilfulness or evil intent and that the court, therefore, erred in not directing a verdict at the conclusion of the Government's case. There is abundant evidence in the record sustaining the finding that appellants wilfully and intentionally failed to furnish the information required by Schedule I.

The record reveals that appellants had in former years consistently withheld such information from their partnership returns and that during those years the Collector of Internal Revenue had attempted, without success, to correct these deficiencies. For the year in question, after having consistently refused to furnish this information, appellants were finally informed that criminal prosecution had been recommended against them and in numerous conferences with the Internal Revenue agents they were given the opportunity to correct their returns by giving the information called for in Schedule I. They were given a final date of October 31, 1952, but still they refused to furnish this information and did not request an extension of time. For nearly six weeks after the criminal cases were filed against them they did nothing. Finally on June 8, 1953, they furnished an amended return. Even then the information was not complete in that the amount of cash was not stated. A few days before trial in October, 1953, this information as to cash was still not given. Since August 11, 1949, the Government had been seeking information from appellants concerning their personal cash and the partnership cash on hand. These earlier efforts were pursuant to an income tax investigation for the years 1942 through 1947. A special agent for the bureau had interrogated appellants regarding their personal cash and partnership cash as of January 1, 1942. Conflicting statements were made from time to time by them as to the amount of cash on hand. George Pappas stated that on January 1, 1942, the partnership had from six to eight thousand dollars cash; that he had substantially no cash on hand January 1, 1942. On August 30, 1949, he said that his personal cash on hand January 1, 1942, was $39,000 and that he carried this money with him to and from work in a size No. 22 paper sack. He had verified a financial statement on February 13, 1942, in which he showed personal cash on hand December 31, 1942, in the amount of $1,198.77.

In August, 1949, a special agent interrogated Harry Pappas with regard to his personal assets and the partnership assets on January 1, 1942. In answer to nearly all questions he said that he could not remember. No information was furnished as to his personal or partnership cash on hand January 1, 1942. On September 27, 1951, he said that on January 1, 1942, he had $80,000 in his home in an iron box. On July 17, 1951, the instant investigation was commenced with regard to appellants' partnership returns for 1949 and 1950. Over a period of ten...