U.S. v. Greenberg, 1192

• Decision Date: 21 May 1984
• Docket Number: D,No. 1192,1192
• Citation: 735 F.2d 29
• Parties: 84-1 USTC P 9509 UNITED STATES of America, Appellee, v. Jack GREENBERG, Defendant-Appellant. ocket 83-1391.
• Court: U.S. Court of Appeals — Second Circuit

Page 29

735 F.2d 29

84-1 USTC P 9509

UNITED STATES of America, Appellee, v. Jack GREENBERG, Defendant-Appellant.

No. 1192, Docket 83-1391.

United States Court of Appeals Second Circuit.

Submitted May 3, 1984.

Decided May 21, 1984.

Raymond J. Dearie, U.S. Atty., E.D.N.Y., Brooklyn, N.Y. (Edward A. McDonald, Attorney-in-Charge, Organized Crime Strike Force, Brooklyn, N.Y., and Anthony J. Siano, Special Atty., New York City, of counsel), for appellee.

Michael G. Dowd, Kew Gardens, N.Y., for defendant-appellant.

Before LUMBARD, MANSFIELD and KEARSE, Circuit Judges.

KEARSE, Circuit Judge:

Defendant Jack Greenberg appeals from a judgment entered in the United States District Court for the Eastern District of New York after a jury trial before Jacob Mishler, Judge, convicting him on one count of filing a materially false corporate income tax return, in violation of 26 U.S.C. Sec. 7206(1) (1982); two counts of filing materially false personal income tax returns, in violation of Sec. 7206(1); and one count of willfully failing to file a federal income tax return, in violation of 26 U.S.C. Sec. 7203 (1982). Greenberg was sentenced to a prison term of a year and a day. On appeal, he contends that his convictions should be reversed because the issue of materiality should have been submitted to the jury rather than decided by the court as a matter of law, and because in any event his misstatements were not material. Finding no merit in his contentions, we affirm.

BACKGROUND

The sufficiency of the government's evidence to prove that Greenberg filed, and assisted in filing, false income tax returns is not disputed. Greenberg was an accountant who was also a participant in a joint venture called P.R.P. Industries, Inc. ("PRP"). With respect to the charge that Greenberg aided and abetted the filing of a false corporate income tax return for PRP's 1978 fiscal year, in violation of Sec. 7206(1), government witnesses testified that Greenberg had instructed them, inter alia, to classify as PRP business expenses expenditures that were solely for the personal benefit of Greenberg's co-venturer, and to classify as loans payments that in fact were investments in other businesses or were compensation to the co-venturers. Notwithstanding these misallocations, PRP reported more income than it should have for that fiscal year, and its net taxable income was stated in the proper amount.

With respect to the charges that Greenberg filed, jointly with his wife, false personal income tax returns for the years 1976 and 1977, in violation of Sec. 7206(1), the evidence was that for each of those years, Greenberg overreported his wife's income and underreported his own. For 1976, Mrs. Greenberg was reported to have had a gross income of some $32,000, when in fact she had none; Greenberg was reported to have had earnings of some $4400, when in fact his earnings were approximately $25,000. For 1977, Mrs. Greenberg was reported to have had gross income of some $35,000, when in fact she had none; Greenberg was reported to have had gross receipts of some $66,000, when in fact his gross receipts were more than $100,000. Greenberg testified that the purpose of these false allocations was to present a picture that would enable Mrs. Greenberg to obtain credit in her own name despite having no occupation. Notwithstanding these misallocations, the variance between the taxes paid by the Greenbergs and the taxes actually owing under a proper allocation was $48.

In its charge with respect to the counts alleging violations of Sec. 7206(1), the court instructed the jury that there could be no violation unless the false statements were material and that the court had found as a matter of law that the misstatements were material. Greenberg contends that the court erred in not submitting the materiality question to the jury and in not finding the misstatements immaterial. We disagree with both contentions.

DISCUSSION

Section 7206(1) of 26 U.S.C. makes it unlawful for a person to "[w]illfully make[ ] and subscribe[ ] any return ... under the penalties of perjury ... which he does not believe to be true and correct as to every material matter." The cardinal question in this case is the meaning of the term "material."

Where a false statement is made to a public body or its representative, materiality refers to the impact that the statement may reasonably have on the ability of that agency to perform the functions assigned to it by law. The question is not what effect the statement actually had; its actual effect would plainly present an issue of fact. The question is rather whether the statement had the potential for an obstructive or inhibitive effect. A consideration of this potential requires an analysis of the responsibilities of the public agency--responsibilities that are assigned by law--and analysis of the relevance of the statement to those responsibilities. Both relevance and the nature of a duty are traditionally questions of law to be decided by the court. Perforce the interrelationship of these two legal questions is a question of law.

The question of the nature of materiality in the context of a prosecution under Sec. 7206(1) has not previously been decided by this Court. When confronted with this issue in the context of false statements alleged to violate the perjury-type provisions of title 18, however, we have uniformly concluded that materiality was a question of law to be decided by the court. See e.g., United States v. Elkin, 731 F.2d 1005, at 1009 (2d Cir.1984) (18 U.S.C. Sec. 287; alternative holding); id. (18 U.S.C. Sec. 1001; alternative holding); United States v. Alu, 246 F.2d 29, 32 (2d Cir.1957) (18 U.S.C. Sec. 1621); United States v. Moon, 718 F.2d 1210, 1237 (2d Cir.1983) (18 U.S.C. Sec. 1623). We see no basis for reaching a different conclusion with respect to 26 U.S.C. Sec. 7206(1).

We note that our conclusion that materiality under Sec. 7206(1) is a question of law is consistent with virtually all of the decisions of our Sister Circuits. See, e.g., United States v. Whyte, 699 F.2d 375, 379 (7th Cir.1983); United States v. Gaines, 690 F.2d 849, 858 (11th Cir.1982); United States v. Strand, 617 F.2d 571,...