U.S. v. Normile

• Decision Date: 12 January 1979
• Docket Number: No. 78-5372,78-5372
• Citation: 587 F.2d 784
• Parties: 79-1 USTC P 9151, 3 Fed. R. Evid. Serv. 1175 UNITED STATES of America, Plaintiff-Appellee, v. James H. NORMILE, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 784

587 F.2d 784

79-1 USTC P 9151, 3 Fed. R. Evid. Serv. 1175

UNITED STATES of America, Plaintiff-Appellee, v. James H. NORMILE, Defendant-Appellant.

No. 78-5372.

United States Court of Appeals Fifth Circuit.

Jan. 12, 1979.

C. W. Meadows, Jr., J. Gregory Jackson, Dallas, Tex., for defendant-appellant.

John H. Hannah, Jr., U. S. Atty., T. J. Baynham, Jr., William E. Gordon, Jr., Asst. U. S. Attys., Tyler, Tex., for plaintiff-appellee.

Appeal from the United States District Court for the Eastern District of Texas.

Before GEWIN, GEE and RUBIN, Circuit Judges.

ALVIN B. RUBIN, Circuit Judge:

Convicted of income tax evasion for 1972 ¹ on the basis of a bank deposits-cash expenditures analysis, James H. Normile, who sold auto parts under the trade name Barney's Auto Supply in Denton, Texas, contends that a proper foundation for use of this indirect method of proof was not laid because the government failed to establish the opening cash balance and that various other prejudicial errors occurred during his trial. Because we perceive no such errors, we affirm.

We have recently reviewed the prerequisites for circumstantial proof of tax evasion in United States v. Boulet, 5 Cir. 1978, 577 F.2d 1165, and it would be supererogatory to repeat what we said there. Among other duties, the government is required to conduct a full and adequate investigation in order to establish with reasonable certainty the amount of cash the taxpayer had in his possession at the start of the taxable period and the opening balance in his bank accounts. The defendant's first objection is that the government failed to conduct such an inquiry here in that it did not discover two bank accounts that in fact existed.

At the start of the investigation, Normile was approached by IRS Special Agent David Black who interviewed him extensively about his financial affairs. During this interview, Normile stated that he seldom kept more than about $100 on hand in cash, did not have a safety deposit box, and had checking or savings accounts at specified banks only. He also denied receiving any income from non-taxable sources during 1972. The government examined every account Normile disclosed; this included checking accounts at Denton County National Bank, and savings accounts and certificates of deposit at North Texas Savings and Loan, Denton; Farmers and Merchants Bank of Krum; Denton County National Bank; and First State Bank of Denton. When, during the trial, for the first time the government learned of the existence of two other accounts one in the name of University Service Station at the First National Bank of Denton, of which the taxpayer was in fact the owner, and the other in his wife's name it immediately investigated the account controlled by the taxpayer. This account's balance at the start of 1972 was only $442, an amount that could not make any appreciable difference in the government's calculations. No evidence as to the cash balance in Mrs. Normile's account was introduced because the taxpayer's counsel both expressly disclaimed any intention of arguing the existence of such an account and vehemently objected on Fifth Amendment grounds to any court order compelling production of her records. ²

The investigation, however, was adequate without respect to the concession by counsel. The Internal Revenue Service agent questioned Normile and thoroughly investigated every bank account he mentioned. The government was not obliged to bay down rabbit tracks and check every bank in the area in the hope of locating other monetary scents. The taxpayer suggests that, if the investigator had examined every one of the deposit slips in the taxpayer's accounts, he would have found a "lead" to Mrs. Normile's account; but the investigator was not obliged to search out every conceivable link to other evidence and to exhaust every possibility of proof. A full and adequate investigation is required, not a universal probe. See, e. g., United States v. Beasley, 5 Cir. 1978, 585 F.2d 796; United States v. Hiett, 5 Cir. 1978, 581 F.2d 1199; United States v. Esser, 7 Cir. 1975, 520 F.2d 213.

The defense also alleges that the government's failure to corroborate Normile's statement that he had only $100 on hand at the beginning of 1972 mandates reversal. With respect to cash on hand in currency the government had no way of determining this save by interrogating the taxpayer. He freely and voluntarily told agent Black that he kept no more than $100 in cash because he did not feel safe having larger amounts around. ³ It was not necessary for the government to seek to corroborate the taxpayer's statement; indeed the inherent secrecy of the cash hoard makes it impossible for any but the keeper to know even of its existence, let alone the amount.

The requirement of corroboration of admissions in tax evasion cases was discussed in Smith v. United States, 1954, 348 U.S. 147, 75 S.Ct. 194, 99 L.Ed. 192. In that case, the Court said

"The Government may provide the necessary corroboration by introducing substantial evidence, apart from petitioner's admissions, tending to show that petitioner willfully understated his taxable income. This may be accomplished by substantiating the opening net worth directly, . . . (or) by independent evidence concerning petitioner's conduct during the prosecution period, which tends to establish the crime of tax evasion without resort to the net worth...