U.S. v. Drape, 81-1284

• Decision Date: 14 January 1982
• Docket Number: No. 81-1284,81-1284
• Citation: 668 F.2d 22
• Parties: 82-1 USTC P 9145 UNITED STATES of America, Appellee, v. Gardner S. DRAPE, Defendant-Appellant.
• Court: U.S. Court of Appeals — First Circuit

Page 22

668 F.2d 22

82-1 USTC P 9145

UNITED STATES of America, Appellee, v. Gardner S. DRAPE, Defendant-Appellant.

No. 81-1284.

United States Court of Appeals, First Circuit.

Argued Oct. 8, 1981.

Decided Jan. 14, 1982.

Burton E. Atkins, Cambridge, Mass., for appellant.

Robert D. Luskin, Atty., Dept. of Justice, Washington, D. C., with whom Edward F. Harrington, U. S. Atty., Boston, Mass., and William C. Bryson, Atty., Dept. of Justice, Washington, D. C., were on brief, for appellee.

Before CAMPBELL and BOWNES, Circuit Judges, BONSAL, Senior District Judge. ^*

BONSAL, District Judge.

Appellant appeals from his conviction by a jury in the United States District Court for the District of Massachusetts of filing a false and fraudulent income tax return, 26 U.S.C. § 7206(1), and of filing a false claim against the United States, 18 U.S.C. § 287. On April 7, 1981 he was sentenced to six months' imprisonment and a fine of $5,000 on the tax count, and to one year's imprisonment and a fine of $5,000 on the false claim count. The sentencing judge suspended the prison sentences and the fines and appellant was placed on probation for a period of two years, conditioned on his making full payment of all taxes due within six months and on his performing, over the two-year probation period, at least 600 hours of "alternative work service."

In 1976 appellant received $215,678 from the sale of his stock in a family-owned fish processing business, Ell Vee Dee, Inc. In February 1977 appellant furnished his income figures for the calendar year 1976 to Theroux, a licensed public accountant and a social friend, as had been his practice for the past fifteen years. Theroux prepared appellant's 1976 income tax return, which showed a tax due of $81,109, and forwarded it to him on March 17, 1977. At about this time, appellant's brother-in-law recommended that appellant contact Garfinkle, an attorney, to review his tax situation. Garfinkle promoted a number of coal tax shelters. Appellant and his wife visited Garfinkle at his office on March 27, and appellant showed him the tax return which had been prepared by Theroux. Garfinkle informed appellant that he could put him into a coal tax shelter which would result in appellant's not having to pay any taxes for 1976 and which might result in a refund for taxes paid by him in prior years. In the course of the meeting, appellant signed several documents presented to him by Garfinkle, including papers relating to Garfinkle's two coal tax shelter partnerships, SJ and G&O, a promissory note in blank, a power of attorney, and an offeree representative disclosure note. At trial, appellant testified that when he signed these documents there were no dates on them and he did not observe that some of them required notarization. However, several of the documents which were received at trial were dated December 15, 1976 and were notarized. Garfinkle informed appellant during the meeting that his accountant, Shocker, would prepare appellant's 1976 Federal and State income tax returns to reflect his new investment in the coal tax shelters. Appellant's wife testified at the trial that she questioned Garfinkle about the legality of the transactions and that he assured both of them that they were legal.

Two days after appellant's meeting with Garfinkle, appellant's wife sent Garfinkle a check for $30,000, which was supplemented by a later payment of $45,000 after the Drapes received a tax refund.

Shortly after his meeting with Garfinkle, appellant received from the tax shelter partnerships federal income tax forms K-1, which they were required by law to furnish to each investor. The K-1s reflected substantial net operating losses for 1976 and the headings stated that appellant had entered the partnerships in 1976.

At Garfinkle's request, the K-1 forms together with the tax return prepared by Theroux were forwarded to Shocker, who then prepared a revised 1976 tax return for appellant. The revised tax return showed that the losses of the partnerships in 1976 The testimony at trial indicated that although appellant had frequent contacts with Theroux during the spring, summer and fall of 1977, he never mentioned to Theroux his investment in the tax shelters, nor did he tell him that he had filed a revised tax return with resulting tax savings of over $100,000. Thereafter, appellant relied on Shocker to prepare his income tax returns for 1978 and 1979.

($514,194) more than offset appellant's taxable income. In the revised tax return, appellant claimed a refund of $58,542. Shocker also prepared a Form 1045 claiming a refund for all the federal income taxes paid by appellant from 1973 to 1975. On October 5, 1977 the completed documents were sent by Shocker to appellant, who signed them and filed them with the IRS. In November 1977, appellant and his wife received refunds totalling $114,000 for taxes paid by them from 1973 to 1976. They contacted Garfinkle, who directed them to send him an additional $45,000.

DISCUSSION

Appellant makes two points on his appeal. He contends that the evidence was insufficient to establish beyond a reasonable doubt that he acted with the requisite knowledge or intent under either 26 U.S.C. § 7206(1) or 18 U.S.C. § 287 and that therefore the district court should have granted his motion for an acquittal. He asserts that he did not know that the documents which he signed had later been backdated; that he knew nothing about tax shelters and that he relied on Garfinkle's professional advice.

Appellant's second point on appeal is that the district court erred in failing to grant judicial immunity to Garfinkle so that he could testify at the trial and, presumably, confirm appellant's testimony.

We conclude that the evidence at the trial was sufficient for the district judge to submit the case to the jury and for the jury to find the appellant guilty. Appellant only saw Garfinkle on one occasion, on March 27, 1977. Two days later, on March 29, his wife sent Garfinkle a check for $30,000. The documents had been backdated to 1976 because 1976 was the last year in which the coal tax shelter using non-recourse promissory notes were recognized. The tax return prepared by Theroux showed a tax payable by appellant of $81,109. The tax return prepared by Shocker through the use of the tax shelter showed a loss of $514,194 which appellant could carry back to 1973, 1974 and 1975 income. It is inconceivable that this raised no questions in appellant's mind. The record shows that although Shocker invited him to ask questions, he did not do so, nor did he question the backdating to 1976 of documents which he signed in 1977.

It is significant that throughout 1977 appellant met regularly with Theroux, his friend and financial adviser who had prepared his original 1976 return. He saw him monthly in connection with Theroux's auditing duties at the seafood company where appellant worked and they played golf occasionally. Appellant never mentioned to Theroux either that he had invested in tax shelters or that he had subsequently filed a 1976 tax return prepared by Shocker. Nor did he mention the substantial tax saving which he had obtained. Thereafter, appellant no longer used Theroux to prepare his returns, using Shocker for this purpose.

In considering the evidence, we must determine whether there is sufficient evidence from which reasonable persons could find appellant guilty beyond a reasonable doubt. United States v. Leach, 427 F.2d 1107, 1111 (1st Cir.), cert. denied, 400 U.S. 829, 91 S.Ct. 57, 27 L.Ed.2d 59 (1970). The evidence is to be evaluated in the light most favorable to the prosecution, with such inferences as may legitimately be drawn. Glasser v. United States, ...