U.S. v. McDonough, 78-1279

• Decision Date: 16 July 1979
• Docket Number: No. 78-1279,78-1279
• Citation: 603 F.2d 19
• Parties: 79-2 USTC P 9579 UNITED STATES of America, Plaintiff-Appellee, v. William J. McDONOUGH, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 19

603 F.2d 19

79-2 USTC P 9579

UNITED STATES of America, Plaintiff-Appellee, v. William J. McDONOUGH, Defendant-Appellant.

No. 78-1279.

United States Court of Appeals, Seventh Circuit.

Argued Jan. 22, 1979.

Decided July 16, 1979.

Raymond D. Pijon, Chicago, Ill., for defendant-appellant.

Thomas P. Sullivan, U. S. Atty., Charles B. Sklarsky, Asst. U. S. Atty., Chicago, Ill., for plaintiff-appellee.

Before PELL, Circuit Judge, MARKEY, Chief Judge, ^* and WOOD, Circuit Judge.

PELL, Circuit Judge.

The defendant, William J. McDonough, appeals from the judgment following his conviction by a jury on four counts of knowingly making false withholding claims in violation of 26 U.S.C. § 7205. The major issue raised by the defendant on appeal concerns the sufficiency of the proof of venue in the Northern District of Illinois. The defendant also raises evidentiary issues and challenges the sentence imposed, particularly the conditions of probation.

The first count of the information charged that in May 1974, the defendant fraudulently claimed 32 withholding exemptions while working for Arthur G. McKee & Co. of Chicago, Illinois. The second and fourth counts respectively charged the defendant with fraudulently claiming 36 and 22 withholding exemptions in 1974 and 1975 while working at Jacobs Engineering Co. in Chicago, Illinois. Finally, the third count charged the defendant with fraudulently claiming 45 withholding exemptions in 1975 while employed at Salem Engineering Corp. in Oak Brook, Illinois. The jury found the defendant guilty on all four counts.

At trial the Government introduced the testimony of Louis Neuchterlein, the Special Internal Revenue Service Agent who investigated the defendant's case. It was shown, upon the basis of the IRS investigation, that the Service had concluded that McDonough was entitled to 10 exemptions from withholding in 1974 and 4 in 1975. The Government concedes on this appeal that it was established on cross examination that the investigation was based in large part on indirect, speculative, and conclusory information. Indeed, the agent admitted at one point that he could not positively say that he had identified each and every exemption to which McDonough may have been entitled. The defendant's sufficiency claim is primarily based upon the inadequacies of the proof of the withholding allowances to which he was legally entitled for the years in question.

At trial the Government introduced copies of IRS records for 1974 and 1975 showing that McDonough filed no return and paid no taxes in those years. The defendant argues that the introduction of these records violated the Fifth Amendment. The defendant's final argument on appeal challenges the propriety of the conditions of probation imposed by the trial court.

Turning first to the alleged failure of the Government to prove that venue lay in the Northern District of Illinois, the defendant has not objected to the Northern District as the site for the trial, nor, indeed, that there was not proper venue here, but he has merely challenged the sufficiency of the Government's evidence showing that the offense was committed in the District. Although not conceding that the evidence was insufficient to prove venue, the Government urges that the defendant waived this objection.

At the close of the Government's case, the defendant filed a written " Motion for Directed Verdict and Acquittal," asking that the court "direct a verdict of acquittal based upon the evidence introduced during the government's case." When the written motion was submitted, the court inquired orally of the defense:

Well, do you have anything specifically you want to call my attention to that the government might have overlooked and therefore would justify a directed verdict?

The defendant raised three specific grounds at that time: a discrepancy between the terminology of the information and the statute, the possibility of error in the Government's calculations, and the failure of the Government to make a showing of fraudulent intent. These grounds were argued to the court with a fairly detailed oral discussion of the evidence by defense counsel. No mention of venue was made at the time. The defendant then rested his case without presenting any evidence. The Government argues that when the defendant argued these specific grounds for acquittal, he waived his right to object to venue. We agree with the Government and do not deem it necessary to express a view on the sufficiency of the evidence of venue.

In his original brief, McDonough addressed himself only to the asserted lack of evidence to establish venue. The Government responded to this argument but also argued that there had been a waiver barring raising the question in this court. The Government did point out in its brief that this circuit in United States v. Jones, 174 F.2d 746 (7th Cir. 1949), followed by United States v. Browne, 225 F.2d 751 (7th Cir. 1955), had held that a general motion for acquittal, made at the conclusion of all of the evidence properly raises and preserves the question of venue for appeal. ¹ The defendant filed no reply brief.

The Second Circuit, citing Jones and Browne, recognized the same rule in United States v. Gross, 276 F.2d 816, 818-19 (2d Cir. 1960), Cert. denied, 363 U.S. 831, 80 S.Ct. 1602, 4 L.Ed.2d 1525, but then proceeded in further discussion to the confinement of the rule essentially to the scope of its particular facts. The court pointed out that perhaps the bundle of legal principles grouped under the term "waiver" should more accurately be described as election and then cited various situations in which the defendant could have been said to have elected not to raise the question of venue. One of those situations was where the defendant had specified the grounds for a motion for acquittal but omitted mention of improper venue. Id. at 819. Later, the Second Circuit further elaborated on the specification of grounds as "an indication that counsel has evaluated the record and has these particular reasons for his motion," in which case the objection to venue is waived. United States v. Rivera, 388 F.2d 545, 548 (2d Cir. 1968). Indeed, Jones itself indicated "that the defendant is not required to go over the proof (of venue) for the benefit of the Government or the court, In the absence of some request for more specific information. (Emphasis added.) 174 F.2d at 748.

While we have some question about the continued viability of the Jones rule, we do not on the facts of the present case need to consider whether it should be overruled. In the case before us, while McDonough did file a written motion for acquittal in which he raised only a question of sufficiency of the evidence, the matter did not stop there. As previously noted, herein, the court asked counsel if he had "anything specifically . . . that the government might have overlooked and therefore would justify a" directed acquittal. While we will not disturb at this time the Jones rule we see no reason for extending it beyond its own narrow factual predicate. Whether it is called waiver or election, the failure to urge the matter when asked to be specific forecloses, in our opinion, raising the question on this appeal.

Venue is different from other evidentiary issues raised at the time of the motion for acquittal. The Constitution makes proof of venue a part of the Government's case, but the defendant may waive this right. It is not an essential fact constituting the offense charged, Carbo v. United States, 314 F.2d 718, 733 (9th Cir. 1963), Cert. denied, 377 U.S. 953, 84 S.Ct. 1625, 12 L.Ed.2d 498 (1964), and need only be proved by a preponderance of the evidence. United States v. Lisowski, 504 F.2d 1268, 1273 (7th Cir. 1974); United States v. Aldridge, 484 F.2d 655, 659 (7th Cir. 1973), Cert. denied, 415 U.S. 921, 922, 94 S.Ct. 1423, 39 L.Ed.2d 477 (1974).

The defendant would have us interpret the Jones rule as giving the defendant the right to conceal possible reversible error, even in the present circumstances when the grounds for objection would have been apparent or easily discovered. The Government has a lesser burden of proof on this issue, and failure to establish that the offense was committed in the district will frequently be the result of inadvertence or neglect. In the absence of a showing of prejudice to the defendant, the trial court would be well within its discretion in reopening the Government's case to admit proof of venue. Fed.R.Evid. 611(a); Maggard v. Wainwright, 432 F.2d 941, 942 (5th Cir. 1970) (per curiam), Cert. denied, 402 U.S. 946, 91 S.Ct. 1639, 29 L.Ed.2d 116 (1971); Morgan v. United States, 380 F.2d 686, 703 (9th Cir. 1967), Cert. denied, 390 U.S. 962, 88 S.Ct. 1064, 19 L.Ed.2d 1160. See United States v. Papia, 560 F.2d 827, 848-49 (7th Cir. 1977).

We decline to let what could be nothing more than gamesmanship compromise the fundamental purpose of the trial to determine the merits of the charges.

We next turn to the defendant's objection to the introduction of IRS records showing that he neither filed a return nor paid taxes in the years 1974 and 1975. The defendant filed 1040 forms for the years 1974 and 1975 containing only his name, address, and filing status. All questions pertaining to the computation of taxes were objected to on the basis of the Fourth or Fifth Amendment. Enclosed with the forms were affidavits alleging that McDonough had no income and owed no taxes and an extensive collection of newspaper clippings, court cases, and testimony intended to show that the Federal Reserve System, the monetary system, and the tax system were unconstitutional. The trial court did not admit these forms into evidence. The court, however, did admit IRS records for these years showing that the defendant filed no returns. The testimony showed that for purposes of IRS recordkeeping, forms containing insufficient information to compute the tax were not considered returns....