U.S. v. Penello, 81-5126

• Citation: 668 F.2d 789
• Decision Date: 22 January 1982
• Docket Number: No. 81-5126,81-5126
• Parties: 9 Fed. R. Evid. Serv. 1226 UNITED STATES of America, Appellant, v. Julian A. PENELLO, Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (4th Circuit)

Page 789

668 F.2d 789

9 Fed. R. Evid. Serv. 1226

UNITED STATES of America, Appellant, v. Julian A. PENELLO, Appellee.

No. 81-5126.

United States Court of Appeals, Fourth Circuit.

Argued Nov. 6, 1981.

Decided Jan. 22, 1982.

Larry W. Shelton, Asst. U. S. Atty., Norfolk, Va. (Justin W. Williams, U. S. Atty., Alexandria, Va., on brief) for appellant.

George H. Bowers, Jr., Norfolk, Va. (Breeden, Howard & MacMillan, Norfolk, Va., on brief) and Stanley E. Sacks, Norfolk, Va. (Sacks, Sacks & Larkin, Norfolk, Va., on brief) for appellee.

Before WINTER, Chief Judge, and WIDENER and K. K. HALL, Circuit Judges.

PER CURIAM:

Julian Penello was indicted for four counts of tax evasion and four counts of subscribing to false income tax returns in violation of 26 U.S.C. § 7201 and § 7206(1). His first trial ended in a hung jury. Before the second trial, the district court held a suppression hearing to review the evidence and ordered the government to exclude the testimony of an IRS agent concerning a statement made by Penello. The government filed an appeal pursuant to 18 U.S.C. § 3731. We affirm. ¹

Penello operates a fishing boat in Norfolk, Virginia. The IRS began investigating him for unreported income for tax years 1972 through 1975. Penello concedes that he did not report certain amounts of income during the period, but contends that the money was put aside as a tax-exempt capital fund for use in purchasing a new engine for his boat. ² The government counters that he never established a capital fund, and that he intended to evade taxes.

To prove intent, the government sought to introduce the testimony of two IRS agents who held a five-hour interview with the defendant. During this interview, Penello told the agents that he had sold "shack fish" ³ to the fisheries for cash. The fisheries paid for these fish from a petty cash fund and required Penello to sign a voucher to acknowledge receipt of the proceeds. Penello told the agents that he occasionally signed fictitious names to these vouchers because he had heard that other fishermen had been getting into trouble for not reporting the income. However, he was never indicted for failure to report shack fish proceeds. The district court made a determination under Fed.R.E. 403 that the prejudicial effect of the evidence outweighed its probative value, and ordered it excluded. ⁴ The issue on appeal is whether the district court abused its discretion in making such a ruling.

The parties agree that the standard for overturning a Rule 403 determination is whether the district court acted in an "arbitrary or irrational" manner. United States v. Masters, 622 F.2d 83 (4th Cir. 1980). We see nothing irrational or arbitrary about the court's decision here. The government had only the agents' statement that Penello admitted to signing a fictitious name on shack fish vouchers. There was no proof that he actually received any money. ⁵ The fictitious signature is hardly probative of Penello's intent to avoid taxes if he did not even take the money. Given the certain prejudice the jury would attach to this testimony, we find that the district court properly excluded the evidence.

Accordingly, the decision of the district court is affirmed.

AFFIRMED.

WINTER, Chief Judge, concurring:

While I concur in the opinion and the judgment, I am constrained to add a few words to explain my concurrence and to express my understanding of the scope of the majority's decision.

There is present in this case the nice jurisdictional question of whether, after a mistrial was granted and the accused was once placed in jeopardy, the government can appeal from the denial of a pretrial motion to admit certain evidence, when the motion is made after the mistrial was granted and before the new trial began and when that motion related to evidence which had been ruled inadmissible at the original trial. The question is neither noticed by the majority, notwithstanding a court's duty to be cognizant of its own jurisdiction, nor raised by the defendant. The government, however, is apparently aware that its right to appeal is fairly debatable, because it argues in its brief that it has a right to appeal under 18 U.S.C. § 3731 as applied in United States v. Barletta, 644 F.2d 50 (1 Cir. 1981). ¹ It is not my purpose to indicate how I would decide the issue but merely to assert that the answer is not self-evident. ² I agree, however, that even if we have jurisdiction, the appeal is lacking in merit. Because of this conclusion and the further understanding that by deciding the case on the merits, the majority does not rule on the question of whether the order excluding evidence, under...