U.S. v. Quinto

• Citation: 582 F.2d 224,47 A.L.R.Fed. 621
• Decision Date: 07 August 1978
• Docket Number: No. 914,D,914
• Parties: , 78-2 USTC P 9633, 3 Fed. R. Evid. Serv. 1097 UNITED STATES of America, Plaintiff-Appellee, v. Michael E. QUINTO, Defendant-Appellant. ocket 78-1027.
• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)

Page 224

582 F.2d 224

47 A.L.R.Fed. 621, 78-2 USTC P 9633,

3 Fed. R. Evid. Serv. 1097

UNITED STATES of America, Plaintiff-Appellee, v. Michael E. QUINTO, Defendant-Appellant.

No. 914, Docket 78-1027.

United States Court of Appeals Second Circuit.

Argued May 9, 1978.

Decided Aug. 7, 1978.

Frederic Block, Smithtown, N. Y., Hull, Block & Grundfast, Smithtown, N. Y., for defendant-appellant.

Mary McGowan Davis, Asst. U. S. Atty., Brooklyn, N. Y. (David G. Trager, U. S. Atty., Eastern District of New York, Brooklyn, N. Y., of counsel), for plaintiff-appellee.

Before WATERMAN, INGRAHAM ^* and MANSFIELD, Circuit Judges.

WATERMAN, Circuit Judge:

While it is superfluous to say that the intent of a tax evader is to try "to screw the government out of some cash if (he can)," what makes this contested tax evasion case remarkable is that, according to the government, Quinto, the alleged tax evader here, was gracious enough to acknowledge to two Internal Revenue Service agents when interviewed by them that that is precisely what he was hoping to accomplish by failing to report approximately $15,000 of income over a two-year period. Not surprisingly, though, Quinto's recollection of his interview with the IRS agents, as developed during his testimony in his own defense at his trial before Judge Pratt and a jury in the United States District Court for the Eastern District of New York on two charges of tax evasion (26 U.S.C. § 7201) and two charges of willfully subscribing false income tax returns (26 U.S.C. § 7206(1)), is somewhat different.

The legal issue which we are required to resolve on this appeal from Quinto's conviction on all counts of the four-count indictment brought against him was precipitated by the government's unwillingness to rely solely upon the revenue agents' in-court testimony regarding their interview. More particularly, to rehabilitate one agent's damaged credibility and further to prove that Quinto had indeed made certain extremely incriminatory remarks to his inquisitors, the government sought to introduce, and, after initial refusals by the judge, was permitted to introduce an elaborate IRS memorandum recounting in extraordinary detail what had purportedly transpired during Quinto's interrogation by the IRS agents and two federal prosecutors. Inasmuch as we agree with Quinto that the district court erred by admitting the memorandum as a prior consistent statement under Fed.R.Evid. 801(d)(1)(B) and that the court's erroneous admission of the document severely prejudiced Quinto's right to a fair trial, we reverse the judgment order of conviction and remand for a new trial on all counts of the indictment.

The four-count indictment upon which Quinto was prosecuted charged him with two counts of income tax evasion, in violation of 26 U.S.C. § 7201, for the calendar years 1974 and 1975, and with two counts of willfully subscribing false income tax returns, in violation of 26 U.S.C. § 7206(1), for those same two years. Following a six-day jury trial in the United States District Court for the Eastern District of New York, Quinto was convicted on all four counts. Upon his four convictions, Quinto was sentenced to a two-year term of imprisonment on each count, the sentences to be served concurrently with two months of each two-year term to be served in a "jail-type" institution. Quinto was also fined $2,500 on each of the four convictions, the total of the fines so imposed being $10,000. Execution of sentence was stayed and Quinto has been free on bail pending disposition of this appeal.

Michael Quinto is a full-time employee of the Suffolk County (New York) Land Management Bureau, serving in the capacity of Senior Right of Way Agent. Since 1965, however, Quinto had also performed services on a part-time basis for the architectural and engineering firm of Wiedersum Associates. Because of Quinto's numerous business and personal contacts with school board members throughout Suffolk County, Wiedersum had retained him as a "public relations man or sales representative" who might be able to arrange interviews for the firm with Suffolk County school boards interested in obtaining architectural or engineering services of the type provided by Wiedersum. Quinto's arrangement with Wiedersum provided that if, as a result of the interviews Quinto arranged, the firm were selected to perform professional services for a school district, Quinto's compensation would amount to 41/2-5% Of Wiedersum's gross architectural fee. It was understood, however, that, as a general matter, Quinto would not be reimbursed by Wiedersum for any of the business expenses he might incur while performing services for Wiedersum. Beginning in 1965 Quinto received $50 per week from Wiedersum as an advance against the commissions it was expected he would earn and in 1966 the size of the weekly advance was increased to $100 per week. Quinto continued to receive these weekly payments until 1975. Moreover, the firm would also occasionally make lump-sum payments to Quinto to cover commissions he had earned.

As a result of Quinto's successful public relations efforts, Wiedersum paid Quinto over $75,000 and on his federal income tax returns for the years 1965-1973 Quinto carefully reported as gross income all these amounts so received from Wiedersum. Quinto's troubles with the Internal Revenue Service, however, developed out of his failure to report on his 1974 and 1975 federal income tax returns any income he received from Wiedersum during those years. It is conceded that Wiedersum paid Quinto $10,400 (composed of $5,400 in weekly checks and a $5,000 lump-sum payment) in 1974 and $5,300 (all in weekly payments) in 1975. Quinto did not report any of this income, and he did not claim any business expenses which he might have incurred through his employment by Wiedersum. According to the testimony of an IRS official, as a result of Quinto's failure to report the payments received from Wiedersum in 1974 and 1975 Quinto underpaid his federal income tax by approximately $3,300 in 1974 and by $1,950 in 1975.

Inasmuch as the defense acknowledged that Quinto had failed to report the aggregate $15,700 received from Wiedersum during 1974 and 1975, the government's proof at trial was directed at establishing that at the time he had failed to report the income Quinto had had the willful intent that must exist for a defendant to be convicted of tax evasion (§ 7201) and of willfully subscribing false income tax returns (§ 7206(1)). To establish the willfulness of Quinto's failure to report income, the government relied upon the testimony of James Wallwork, a Special Agent in the Intelligence Division of the Internal Revenue Service. The crucial portion of the agent's testimony concerned an interview with Quinto conducted by Wallwork, Peter Fuhrman, another IRS Special Agent, and two Assistant United States Attorneys. Several days prior to August 20, 1976, the date on which the interview was conducted, a federal prosecutor had called Quinto and asked him to appear for the interview at the prosecutor's office in the United States Courthouse in Brooklyn. At the time the invitation was extended, the agents and the prosecutor were fully aware that Quinto had not reported the $15,700 he had received from Wiedersum during 1974 and 1975. Unaccompanied by counsel, Quinto appeared at the scheduled time and was ushered into the prosecutor's office. Wallwork testified at trial that, prior to the start of the interrogation, one of the two prosecutors who was present advised Quinto that he was a target of a grand jury investigation and that he was also a subject of a criminal investigation by the Internal Revenue Service. Miranda warnings were also given, and these were repeated several times during the course of the interview. After the initial warnings had been given, Quinto claimed to understand his rights and expressed his desire to proceed with the discussion. Quinto was eventually asked why he had not reported the money he had received from Wiedersum during 1974 and 1975, and according to Wallwork, Quinto, after some abortive attempts to extricate himself from his obvious predicament, blurted out: "Okay, I was trying to screw the government out of some cash if I could."

Defense counsel conducted a vigorous cross-examination of Wallwork which was designed to show that the meeting of August 20 had been more of an inquisition than an interview and that subsequent to that interview the IRS had failed to conduct an adequate enough investigation for the purpose of corroborating Quinto's story that he had had various unreported business expenses, attributable primarily to Quinto's entertainment of members of local school boards, which would counterbalance any unreported income. ¹ On Agent Wallwork's redirect examination, the government attempted to prove that the IRS had carefully investigated all business expenses which Quinto claimed he had not reported and had found that these claimed expenses simply did not exist. In particular, Wallwork testified that he personally had interviewed seven local school board members whom Quinto claimed he had entertained during 1974 and 1975 and that all seven individuals, including a Mr. O'Connell and a Mr. Fingar, denied having been entertained by Quinto.

More importantly, though, the prosecution on redirect examination elicited from Wallwork that the agents had prepared a memorandum following the August 20 "interview" with Quinto. The document, consisting of eight single-spaced, typed pages, purported to describe exactly what had happened at Quinto's session with the agents. It disclosed, among other things, that Quinto had been read the rights to which Wallwork had previously referred in his direct testimony and, in what was portrayed as a verbatim quotation of Quinto's remarks, that Quinto had confessed that his purpose in failing to report the income was "to screw the government out of some cash if (he) could." Arguing...