U.S. v. Burkhart

• Decision Date: 29 August 1974
• Docket Number: No. 74-1269,74-1269
• Citation: 501 F.2d 993
• Parties: 74-2 USTC P 9661 UNITED STATES of America, Plaintiff-Appellee, v. Floyd E. BURKHART, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 993

501 F.2d 993

74-2 USTC P 9661

UNITED STATES of America, Plaintiff-Appellee, v. Floyd E. BURKHART, Defendant-Appellant.

No. 74-1269.

United States Court of Appeals, Sixth Circuit.

Argued June 17, 1974.

Decided Aug. 29, 1974.

John Kennedy Lynch, Cleveland, Ohio, for defendant-appellant.

J. Edward Friedland, Asst. U.S. Atty., Cleveland, Ohio, for plaintiff-appellee; Frederick M. Coleman, U.S. Atty., Robert R. Bauer, First Asst. U.S. Atty., Cleveland, Ohio, Scott P. Crampton, Asst. Atty. Gen., Dept. of Justice, Washington, D.C., on briefs.

Before PHILLIPS, Chief Judge, and CELEBREZZE and PECK, Circuit Judges.

CELEBREZZE, Circuit Judge.

Appellant Floyd E. Burkhart was indicted on April 12, 1973, on five counts of wilfully and knowingly understating income tax due for the years 1966 through 1970, in violation of 26 U.S.C. 7201. A jury found him not guilty on counts I, II, III and V, but convicted him on count IV, pertaining to 1969. This is a direct appeal from his conviction and sentence of ten days' imprisonment and a $3500 fine.

The Government introduced items of unreported income from the operation of Appellant's farm in Bucyrus, Ohio. Evidence showed that for 1969 Appellant had reported taxable income of $8,868.51, but had not reported other taxable income of $32,261.21, resulting in an omitted tax due of $12,222.31. There was evidence that Appellant knew at the time he filed his 1969 return that it incorrectly stated his income, and there was sufficient evidence for the jury to infer that the understatement had been wilful.

Appellant makes four objections on appeal.

First, Appellant claims that in order to prove its case the Government must establish not only that Appellant received certain unreported items of income but also that Appellant actually received the amount of income that he did report. Appellant's argument is that by not corroborating the receipt of income reported in his 1969 return, the Government failed to prove that Appellant actually received a substantial amount of farm subsidy income which Appellant reported on his 1969 return. If farm subsidy income was $0 in 1969, rather than the amount reported, Appellant argues, the unreported income would not substantially exceed the amount reported, so that there would be no understatement of income.

Appellant's superficially ingenious argument confuses the rule requiring corroboration of certain extrajudicial admissions ¹ with the Government's burden in a tax evasion case. The Government must prove a substantial understatement of income. In so doing, it may take the taxpayer's reported income as an admitted amount earned from designated sources. If it can then show that considerable additional amounts were received but not reported, it has established a prima facie case of substantial understatement. Cf. United States v. Campbell, 351 F.2d 336, 339 (2d Cir. 1965), cert. denied, 383 U.S. 907, 86 S.Ct. 884, 15 L.Ed.2d 662 (1966); United States v. Shavin, 320 F.2d 308, 311 (7th Cir.), cert. denied, 375 U.S. 944, 84 S.Ct. 349, 11 L.Ed.2d 273 (1963); United States v. Doyle, 234 F.2d 788, 794 (7th Cir.), cert. denied, 352 U.S. 893, 77 S.Ct. 132, 1 L.Ed.2d 87 (1956); United States v. Bender, 218 F.2d 869, 872 (7th Cir.), cert. denied, 349 U.S. 920, 75 S.Ct. 660, 99 L.Ed. 1253 (1955); Schuermann v. United States, 174 F.2d 397 (8th Cir.), cert. denied, 338 U.S. 831, 70 S.Ct. 69, 94 L.Ed. 505, reh. denied, 338 U.S. 881, 70 S.Ct. 156, 94 L.Ed. 541 (1949). The Government need not corroborate the receipt of income which Appellant reported on his 1969 return.

Second, Appellant argues that he was deprived of a fair trial because the prosecutor commented on Appellant's failure to call his wife to the stand. Appellant had argued that some farm income had been unreported because he was operating the farm in a joint venture with his parents, who were entitled to the unreported income. Appellant's wife was privy to essential conversations bearing on the credibility of his defense, and in his closing argument the prosecutor asked the jury to disbelieve the joint venture defense, partly on the basis that Appellant had not called his wife to testify. Appellant did not object to this statement.

This circuit recently outlined the requirements for allowing a prosecutor to comment on a defendant's failure to produce certain witnesses. In United States v. Blakemore, 489 F.2d 193, 195 (6th Cir. 1973), we held that prosecutorial comment on failure to produce a witness was proper only where the witness is peculiarly within the defendant's control and the witness' testimony would elucidate the transaction in question. Both conditions are satisfied here, because Appellant was in control of his wife's testimony and because her testimony would have elucidated the transactions which were the basis of Appellant's 'joint venture' defense. Furthermore, in this case Appellant injected his wife's testimony into the dispute. He challenged the testimony of two Government witnesses by asking whether his wife had made statements to them which would undermine their claims. Yet, he failed to call his wife to the stand to verify what he claimed she had told the witnesses. Thus, Appellant attempted to use his wife's silence as implicit support for her statements, since the jury would assume that her testimony would support Appellant, and as implicit refutation of the Government's witnesses. In such a circumstance, we must permit the Government to argue the contrary inference that Appellant's failure to call his wife to the stand meant that her testimony would have damaged him. Cf. Himmelfarb v. United States, 175 F.2d 924, 951 (9th Cir. 1949). Any marital privilege that may have existed was waived when Appellant introduced his wife's statements during cross-examination of the Government witnesses.

Third, Appellant argues that there was no proof of venue, an essential element of the case. But Appellant failed to object to venue until after the Government's case had been completed. The objection was thereby waived. United States v. Fabric Garment Co., 262 F.2d 631 (2d Cir. 1958), cert. denied, 359 U.S. 989, 79 S.Ct. 1117, 3 L.Ed.2d 978 (1959). Furthermore, venue may be proved circumstantially, and there was sufficient circumstantial evidence to show that the 1969 tax return had been prepared in the Northern District of Ohio, a proper basis for venue. United States v. U.S. District Court, 209 F.2d 575 (6th Cir. 1954).

Appellant's fourth objection relates to a communication between judge and jury. After deliberating for about an hour and a half, the jury sent a written note to the District Judge, stating, 'If vote is not guilty, does the defendant have to pay his taxes and penalties?' The District Judge conferred with counsel and determined initially that he would answer that a not guilty verdict would have no effect on Appellant's civil liabilities for back taxes and civil penalties. The Government objected, arguing that this was not an issue in the case. The District Court agreed and wrote this response: 'The issues in this case to be considered and decided by the jury have been set forth in the Court's instructions. The question you have raised is not in issue in this case.'

Both sides agree on the legal relationship between civil and criminal tax proceedings. A not guilty verdict in a criminal case has no effect on the Government's ability to collect back taxes and penalties in a civil case. Helvering v. Mitchell, 303 U.S. 391, 58 S.Ct. 630, 82 S.Ct. 917 (1938); Heindel v. United States, 150 F.2d 493 (6th Cir. 1945). The matter of civil liability is not an issue when a jury is determining a defendant's criminal liability for tax evasion.

Appellant argues that the jury's question demonstrated that it believed Appellant was innocent but was unwilling to acquit him if it meant that Appellant would escape his tax liability. Another way to view the jury's question, however, is that the jury believed Appellant was guilty as charged but was willing to excuse him if it was assured that he would have to pay his back taxes.

Thus, the District Judge was faced with the problem of avoiding prejudice to Appellant out of jury concerns which were extraneous to a proper finding of guilt or innocence and of not encouraging the jury to acquit Appellant for similarly irrelevant reasons....