Steinberg v. United States, 11793.

• Decision Date: 11 August 1947
• Docket Number: No. 11793.,11793.
• Citation: 162 F.2d 120
• Parties: STEINBERG v. UNITED STATES.
• Court: U.S. Court of Appeals — Fifth Circuit

162 F.2d 120 (1947)

STEINBERG v. UNITED STATES.

No. 11793.

Circuit Court of Appeals, Fifth Circuit.

June 12, 1947.

Rehearing Denied August 11, 1947.

George Gordon Battle, of New York City, John A. Erhard, of Dallas, Tex., Francis L. Kohlman, of New York City, and Eugene Meacham, of Washington, D. C., for appellant.

William P. Fonville, Asst. U.S. Atty., of Dallas, Tex., and Robert B. Young, Jr., U. S. Atty., of Fort Worth, Tex., for appellee.

Before SIBLEY, McCORD, and LEE, Circuit Judges.

SIBLEY, Circuit Judge.

Alex Steinberg was tried, convicted and sentenced on an indictment in four counts which charged him as to his own income for the calendar year 1943, and that of his wife in community, with wilfully attempting to evade and defeat their income and victory taxes by filing false and fraudulent tax returns and concealing the true income and taxes contrary to Internal Revenue Code, § 145(b), 26 U.S.C.A. Int.Rev.Code, § 145(b); and with wilfully subscribing said false tax returns not believing them to be true, contrary to Internal Revenue Code, § 145(c), 26 U.S.C.A. Int.Rev.Code, § 145 (c). Forty-three errors were specified on taking appeal, but only a few of them are now insisted on, they being urged as errors in themselves, and as showing that the trial as a whole was not fair and impartial. To understand them a brief outline of the evidence is made.

Steinberg since 1933 was a broker in whiskies, and held in 1943 permits from the State of Texas to do that business, and to represent certain out-of-State distilleries. In 1943 he began under some arrangement to deal for or with Robert Gould, who controlled several distilleries and bottling plants; and Steinberg was given office space in Cincinnati, Ohio, in Gould's offices there. Steinberg in 1943 is shown to have handled whisky sales, in barrels and bottles, running above two million dollars, in about three-fourths of which Gould was concerned. Whisky was scarce, and almost any price could be obtained for it. In April, 1943, ceiling prices were fixed by OPA. The prices obtained by Steinberg were far above the ceiling prices. Usually the distillery or bottling plant was paid ceiling price by check or on its draft, and the excess price was separately paid to Steinberg, in whose name the sales were made, by checks which he indorsed and collected, or in cash. More than a million dollars were thus traced into his hands. He testified that he had only a commission, or a "finder's fee" in them, acting otherwise for the sellers or buyers, and had no interest in the excess prices. He testified that in the Gould transactions Gould insisted that this excess over what was collected by the distilleries or other sellers be paid over to him in cash only, and was so paid, some being paid in person and some sent by registered mail and express in greatly undervalued packages. The distilleries' books showed only the ceiling prices charged and collected by them and other lawful expenses, such as taxes and bottling charges. No regular book record was kept by Gould or Steinberg of the excess prices, and Gould gave him no receipts; Steinberg and the purchasers, however, had the sales contracts from which the full prices could be ascertained, and the checks and drafts also showed what was paid.

Steinberg's records, made by himself, showed fully and accurately his transactions in business other than in whisky, his travel and other expenses, and his commissions on strictly commission sales. He had a record also of "brokerage" earnings, put into the tax return under that name, in which most of the whisky sales were represented, and in which earnings beyond ordinary commissions were entered which he described as "finder's fees", that is, compensation for finding whisky for a purchaser or a purchaser for the seller. It is this item of the returns about which the controversy turns, the prosecution contending that the income thus received was many times that reported and not mere fees, but a share in or the whole of the excess price paid for the whisky both in the Gould transactions and in others, and that the income was thus grossly understated, and taxes evaded on each return in an amount exceeding $400,000.

It was also shown that in November, 1944, Gould was indicted for selling whisky above ceiling prices; and he sent for Steinberg, and gave him in cash some $292,000, in addition to $60,000 which he had just previously sent, and induced him to return the aggregate of some $352,000 as income earned by Steinberg in sales in 1943, but not realized till 1944, which returns Steinberg made. Gould was convicted on his trial, though he testified that he had received no excess sales money. Government investigators testified in the present case against Steinberg that in 1946 he had stated to them in his counsel's presence that he had with Gould a rough 50-50 split arrangement during 1943 and that what Gould turned over to him in November, 1944, was about Steinberg's part under that arrangement. Steinberg has since filed claim for refund for the heavy taxes he paid on this money under his 1944 returns.

The crucial questions for the jury were the credibility as a witness of Steinberg, and of Gould, who was offered as a witness by the defense, but who testified as he had in his own trial, that Steinberg had never paid him any excess sales money, nor had he given Steinberg the $352,000 in November, 1944; and the credibility of Steinberg as to his true interest in the sales which were not Gould transactions. There was some circumstantial corroboration of Steinberg as to his paying Gould cash money. There was much testimony and documentary evidence of the large sums that went into Steinberg's hands from the whisky sales.

1. It is urged that language used in argument by prosecuting counsel requires a new trial, though no motion for a mistrial was made, and no objection offered or ruling invoked save in one instance. In that instance, the defendant having put his general character in issue, counsel was discussing that evidence and said: "Is he a law abiding citizen? Let us look at the evidence in this case. He testified to you under oath that constantly for nearly a year he engaged in the largest black market operation of which you probably ever heard, making nearly a million dollars, at a time when this nation was in a splendid effort to avoid the catastrophe of wild inflation, in a situation where demand far exceeded supply and the price of whisky was just a small part of the whole; here is a man who cynically from the stand tells you he has violated the federal law every day for nearly a year, and would have the temerity to introduce witnesses to say he has the reputation for being a law abiding citizen." Objection was made that the defendant had not cynically admitted from the witness stand that he had violated the law every day during 1943. The court said, "Well, that is a deduction of counsel. We will just let the jury weigh it." The defendant had testified to his numerous acts in aiding Gould to sell whisky at what he knew were over-ceiling prices, to lending his own name, collecting the money, and paying it over to Gould in cash. He had said he had no concern in the price, whether over-ceiling or not. Counsel, in view of the federal law that all who aid and abet another in crime are principals, was justified in arguing as he did that Steinberg was on his own testimony guilty along with Gould, and that it was cynical to testify to these facts and disclaim any moral or legal responsibility. The statement that Steinberg violated the law every day was an exaggeration, but perhaps an allowable inference. The court did not err in his ruling that the matter was to be weighed by the jury.

Other criticisms of the prosecution's speeches are not supported even by objection. The speeches are reported in full, and appear to us to be logical and not inflammatory, and not exceeding in vigor what the nature of the case authorized.

2. Unfairness is attributed to the district attorney in asking Steinberg, "As a matter of fact you did not have your defense until your Washington lawyers got down here and got ready to try this case, did you?" No objection was made and the witness answered quietly, "You are absolutely mistaken in that." The question was asked after the witness had said that his tax attorneys in Washington had advised him to ask refund of the 1944 tax, and that he was not going to give it back to Gould. He had said the $352,000 so taxed belonged to the persons who had paid it as over-ceiling price. This newly advanced idea of refund to them seems to be the defense meant. The question caused no excitement at the time and should not now.

3. Error is assigned in the fining for contempt of the Washington counsel, which though not in the presence of the...