U.S. v. Citron, 1178

• Decision Date: 08 August 1988
• Docket Number: D,No. 1178,1178
• Citation: 853 F.2d 1055
• Parties: -5357, 88-2 USTC P 9552, 26 Fed. R. Evid. Serv. 601 UNITED STATES of America, Appellant, v. Ira Paul CITRON, Appellee. ocket 88-1035.
• Court: U.S. Court of Appeals — Second Circuit

Page 1055

853 F.2d 1055

62 A.F.T.R.2d 88-5357, 88-2 USTC P 9552,

26 Fed. R. Evid. Serv. 601

UNITED STATES of America, Appellant, v. Ira Paul CITRON, Appellee.

No. 1178, Docket 88-1035.

United States Court of Appeals, Second Circuit.

Argued May 23, 1988.

Decided Aug. 8, 1988.

John Gleeson, Asst. U.S. Atty., Brooklyn, N.Y. (Andrew J. Maloney, U.S. Atty., David C. James, Dennis E. Milton, Asst. U.S. Attys., Brooklyn, N.Y., on the brief), for appellant.

Jules Ritholz, New York City (Nora E. Plesent, Kostelanetz, Ritholz, Tigue & Fink, New York City, on the brief), for appellee.

Before NEWMAN and PRATT, Circuit Judges, and TELESCA, District Judge. ^*

JON O. NEWMAN, Circuit Judge:

The United States brings this interlocutory appeal from an order of the District Court for the Eastern District of New York (Jack B. Weinstein, Judge) suppressing evidence in the retrial of Ira Citron on charges that he evaded income taxes for the year 1978. The District Court held that the Government was precluded on collateral estoppel grounds from offering evidence that Citron owned certain stock accounts at E.F. Hutton & Co. and that Citron committed tax law violations for the years 1977 and 1979. Additionally, based on its collateral estoppel ruling, the Court precluded the Government from using the "cash expenditures" method of proving unreported income. We conclude that collateral estoppel does not bar the Government's proof in the retrial because Citron failed to establish that the jury verdict in his first trial necessarily determined the facts at issue in his favor.

Background

In 1984, Citron was indicted on nine counts of tax law violations for the years 1977, 1978, and 1979. The indictment charged that in each of these years, Citron evaded tax in violation of 26 U.S.C. Sec. 7201 (1982) (counts 1-3), filed false returns in violation of 26 U.S.C. Sec. 7206(1) (1982) (counts 4-6), and aided and assisted his parents in their filing of false returns in violation of 26 U.S.C. Sec. 7206(2) (1982) (counts 7-9). At trial, the Government's case on the evasion and false returns counts consisted primarily of evidence that Citron, a broker at E.F. Hutton, failed to report as his income funds that were deposited in five Hutton stock accounts, as well as interest, dividends, and capital gains earned on these accounts. Though Ira Citron maintained the stock accounts in the names of his parents, Joseph and Rose Citron, the Government contended that the accounts actually belonged to Ira. With respect to the aiding and assisting counts, the Government's proof was that Ira prepared returns for his parents that falsely listed as their income earnings from the Hutton accounts. In response to the Government's evidence, Citron sought to show that the Hutton accounts belonged to his parents and that both his and their returns were therefore accurate. In order to explain the sizable deposits made to the accounts in 1977-79, Citron claimed that his father had accumulated a large cash hoard from which the deposits had been made.

The jury convicted Citron of tax evasion for 1978 (count 2) and filing false returns for 1977 and 1979 (counts 4 and 6). He was acquitted of tax evasion for the years 1977 and 1979 (counts 1 and 3) and of all the aiding and assisting counts (counts 7-9). Pursuant to instructions from the Court, the jury did not reach the 1978 false statement charge because it convicted Citron of the greater offense of evasion for that year.

On a prior appeal, this Court vacated the tax evasion conviction for 1978 and ordered a retrial because the trial judge had erroneously admitted a summary chart. United States v. Citron, 783 F.2d 307, 316-17 (2d Cir.1986). Additionally, the Court vacated the convictions for false statements in the 1977 and 1979 returns and dismissed these counts on the ground that since the evidence at trial presented no disputed factual element distinguishing them from the evasion charges for 1977 and 1979, the lesser-included false statement counts should not have been submitted to the jury. Id. at 312-14. A chart in the margin shows the charges, verdict, and outcome on the prior appeal for each of the nine counts. ¹

Following the remand, the Government sought to retry Citron on count 2, tax evasion for 1978. Citron moved to dismiss that count or, in the alternative, to suppress on collateral estoppel grounds evidence regarding facts that the jury in his first trial had determined in his favor. Judge Weinstein initially rejected Citron's contentions in all respects. Upon reconsideration, however, the Judge granted Citron's motion to suppress evidence. The Judge ruled that the doctrine of collateral estoppel barred the Government from offering proof that Citron rather than his parents owned the Hutton accounts in any years and that Citron committed tax law violations for 1977 and 1979. The Judge also precluded the Government from proceeding under the "cash expenditures" method of proving unreported income because in the Judge's view, that method would involve evidence of Citron's financial activities in 1977 and 1979.

The Government appeals from the District Court's order suppressing evidence. The interlocutory appeal is proper under 18 U.S.C. Sec. 3731 (1982 & Supp. IV 1986).

Discussion

The doctrine of collateral estoppel, as applied in criminal prosecutions, bars the Government from relitigating an issue decided in a defendant's favor by a valid final judgment. Ashe v. Swenson, 397 U.S. 436, 443, 90 S.Ct. 1189, 1194, 25 L.Ed.2d 469 (1970); United States v. Mespoulede, 597 F.2d 329, 332 (2d Cir.1979). The burden is on the defendant "to establish that the issue he seeks to foreclose from litigation in the present prosecution was necessarily decided in his favor by the prior verdict." United States v. Cala, 521 F.2d 605, 608 (2d Cir.1975); see United States v. Medina, 709 F.2d 155, 156 (2d Cir.1983); United States v. Tramunti, 500 F.2d 1334, 1346 (2d Cir.), cert. denied, 419 U.S. 1079, 95 S.Ct. 667, 42 L.Ed.2d 673 (1974). When, as is usually the case, the previous acquittal was based on a general verdict, the court must " 'examine the record of [the] prior proceeding, taking into account the pleadings, evidence, charge, and other relevant matter, and conclude whether a rational jury could have grounded its verdict upon an issue other than that which the defendant seeks to foreclose from consideration.' " Ashe v. Swenson, supra, 397 U.S. at 444, 90 S.Ct. at 1194 (quoting Mayers & Yarbrough, Bis Vexari: New Trials and Successive Prosecutions, 74 Harv.L.Rev. 1, 38-39 (1960)). Though the court should avoid making the defendant's burden overly difficult by "straining to postulate 'hypertechnical and unrealistic' grounds on which the jury could conceivably have rested its conclusions," United States v. Mespoulede, supra, 597 F.2d at 333 (quoting United States v. Jacobson, 547 F.2d 21, 23 (2d Cir.1976), cert. denied, 430 U.S. 946, 97 S.Ct. 1581, 51 L.Ed.2d 793 (1977)), it has been recognized that "[s]ince it is usually impossible to determine with any precision upon what basis the jury reached a verdict in a criminal case, it is a rare situation in which the collateral estoppel defense will be available to a defendant." United States v. Tramunti, supra, 500 F.2d at 1346; see United States v. Seijo, 537 F.2d 694, 697 (2d Cir.1976) (defendant's burden is "a heavy one"), cert. denied, 429 U.S. 1043, 97 S.Ct. 745, 50 L.Ed.2d 756 (1977); United States v. Medina, supra, 709 F.2d at 156 n.** (same).

The defendant's burden is particularly difficult to satisfy when the jury has reached inconsistent verdicts. Such verdicts, whether based on error, confusion, or a desire to compromise, give little guidance as to the jury's factual findings. In this context, "principles of collateral estoppel--which are predicated on the assumption that the jury acted rationally and found certain facts in reaching its verdict--are no longer useful." United States v. Powell, 469 U.S. 57, 68, 105 S.Ct. 471, 478, 83 L.Ed.2d 461 (1984); see Standefer v. United States, 447 U.S. 10, 23 n. 17, 100 S.Ct. 1999, 2007 n. 17, 64 L.Ed.2d 689 (1980) (inconsistency of verdict "is reason, in itself, for not giving preclusive effect to the acquittals").

Applying the foregoing principles to the present case, we determine that the District Court's suppression of evidence was unwarranted.

A. Hutton Accounts

Citron argues that his acquittal on the aiding and assisting charges (counts 7-9) establishes that the jury necessarily decided that the Hutton accounts belonged to his parents. He asserts that the aiding and assisting charges included two elements: (1) that Citron helped prepare his parents' returns and (2) that the returns were false. Since it was undisputed that Citron prepared his parents' returns, Citron contends that the jury must have found the returns to be accurate. He argues that the only way his parents' returns, which included income from the Hutton accounts, could be accurate was if the accounts belonged to them. Thus, in Citron's view, the Government may not use deposits to and withdrawals from the accounts as evidence of Citron's income, nor may the Government attribute to him interest, dividends, and capital gains earned on the accounts.

Even if Citron's analysis of the aiding and assisting acquittals is accurate, ² he has failed to show that the verdict as a whole supports his conclusion that the jury determined the ownership issue in his favor. In addition to the acquittals on which Citron relies, the jury convicted him of evasion for 1978, the very charge that the Government seeks to retry. That conviction raises significant doubt as to whether the jury found that the stock accounts belonged to Citron's parents. As we noted on Citron's prior appeal, "[T]he jury could well have concluded, in finding appellant guilty of tax evasion, that the stock in his parents' accounts, and the income derived therefrom, belonged to him." United States...