U.S. v. Ready, 76-2050

• Decision Date: 05 June 1978
• Docket Number: No. 76-2050,76-2050
• Citation: 574 F.2d 1009
• Parties: 78-1 USTC P 9412 UNITED STATES of America, Plaintiff-Appellee, v. Frank Edward READY, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1009

574 F.2d 1009

78-1 USTC P 9412

UNITED STATES of America, Plaintiff-Appellee, v. Frank Edward READY, Defendant-Appellant.

No. 76-2050.

United States Court of Appeals,

Tenth Circuit.

Argued and Submitted Jan. 27, 1978.

Decided March 28, 1978.

Rehearing Denied June 5, 1978.

James P. Buchele, U. S. Atty., Topeka, Kan. (E. Edward Johnson, former U. S. Atty., Topeka, Kan., and Douglas B. Comer, Asst. U. S. Atty., Prairie Village, Kan., on the briefs), for plaintiff-appellee.

Thomas M. Dawson, Leavenworth, Kan., for defendant-appellant.

Before SETH, Chief Judge, and DOYLE and LOGAN, Circuit Judges.

LOGAN, Circuit Judge.

Appellant Frank E. Ready was convicted by a jury in the District Court for the District of Kansas on all counts of an indictment charging: in one count, conspiracy with his wife and possible others to defraud the United States by filing false income tax returns claiming refunds; in separate counts, the filing of five specified false and fictitious tax returns; and in two additional counts, cashing of refund checks obtained as a result of such filings; in violation of 18 U.S.C. §§ 286, 287, 641 and 2. He appeals to this Court from such conviction.

Ready alleges that a number of errors were made by the trial court, including its rulings on his motion to suppress certain documents taken in a search of his room at the Leavenworth Penitentiary honor camp; refusal to grant him additional time to prepare after the Government filed a new indictment five weeks prior to the trial; failure to order severance of counts for separate trials; denial of separate trials for Ready and his wife. He also argues, inter alia, that the Court erred in not giving him the use of a tax expert to help prepare his case, in admitting evidence by a handwriting expert, and in charging him under Title 18 instead of under Title 26, which carried lesser penalties.

Since this is a review of a conviction by the jury below the evidence must be viewed in the light most favorable to the Government. United States v. Downen, 496 F.2d 314, 318 (10th Cir. 1974).

The Internal Revenue Service became interested in the defendants in March 1976 when an employee at the Austin Service Center noticed on a computer printout that two refunds scheduled for payment were based on returns having similarities in the address and claimed status, with both seeking refunds for amounts in excess of $9,000. These returns of Francis E. Ready and M. J. Ready were brought to the attention of the Austin Chief of Intelligence who initiated an investigation by the Wichita District Office and alerted the Kansas City Regional Center that a multiple filer scheme might exist.

The Kansas City Center searched its files using the names and social security numbers received from Austin and recovered seven returns filed during tax years 1973 to 1975. All of the returns bore the surname Ready or Wood except one 1974 return bearing the name Reedy. Further inquiry revealed six refunds, five of them exceeding $9,000, had been issued on these returns. The seventh refund was stopped in process as a result of the investigation and no check was issued on it.

The Government's evidence at trial included testimony of employers represented on returns as the source of income, bank employees where Mrs. Ready maintained her account, IRS agents related to the investigation, and witnesses having contact with one or the other of the defendants during the period in question.

The 1973 return of Melinda Jean Wood claimed a refund of $4,121.82 based on income received from Beckman Industries as a secretary. The wage administrator for Beckman Industries confirmed her employment there during 1973 but stated that the large entertainment and travel deductions claimed were not usual or likely for a secretary. Mrs. Ready admitted filing the return but testified she merely copied the figures supplied by Frank Ready and did not question the size of the refund based on total income of $6,000. Frank Ready testified that though he was not married to her in 1973, he claimed his deductions for 1973 on Melinda's return but did not report his entire income on the return, and his understanding was that the regulations permitted this. The 1974 returns of Francis E. Ready, the Ready's 21/2-month-old son; Patrick F. Reedy, an alias used by Ready; and M. J. Ready each claimed a refund between $9,487.07 and $9,792.09 based on incomes received from Allstate Mobile Home and Recreational Vehicle Repair. Frank Ready admitted filing all the returns and testified they were based on income received from Allstate which he divided up among his wife, child, and himself according to ownership, even though it resulted in $41,000 income for his 21/2-month-old son listed on the return as an outside sales manager with a $34,000 casualty loss which Ready could not explain. Employees of the IRS testified that a search of the employer identification number listed on Allstate's W-2 forms revealed no withholding or tax return filings by Allstate for the tax years 1972 through 1975.

The five returns for 1975 of Frank P. Ready, Frank E. Ready, Francis E. Ready, M. L. Ready, and M. J. Ready each claimed a refund between $9,685.64 and $9,910.36 based on incomes from one of several employers. Representatives of the employers testified that their company records indicated none of the persons named as filers of the various returns were employees in 1975. Each representative explained peculiarities with respect to the W-2 forms or returns with which their company's name was associated. These included evidence that few or no company employees received salaries in the totals reported, that no outside salesmen were on the company payroll, that the W-2's were on different forms than used by the company, and typed on different typewriters, and in one case that erroneous or obsolete company identification numbers were used. It was shown that prison inmates at Leavenworth known to Ready had actually been employed by those companies in prior years.

The testimony of bank employees at the First National Bank of Leavenworth and other witnesses traced refund checks based on the returns. The bank employees recounted receiving deposits of government checks by Mrs. Ready on two occasions, which matched the refund amounts requested on the 1975 returns of Francis E. Ready and M. J. Ready.

An attorney retained by Frank Ready in 1975 to represent Ready on appeal of an earlier conviction testified that he received a government check payable to Patrick F. Reedy which Frank Ready endorsed and requested the attorney put in trust to be disbursed as defendant Ready directed. Mrs. Ready in 1975 brought in a government check payable to Melinda Wood in the amount of $9,664.90 which was deposited in the Ready account.

Frank Ready's defense on the 1975 returns was that he did not make them; but he never denied receiving some of the refund checks based on the 1975 returns. He accepted the checks because, he states, his understanding was they were part of a claim he had against the Government for $29,000 from earlier tax years.

An IRS agent identified various letters sent by Ready to his wife discussing tax matters as letters he obtained from trash located on property of Mrs. Ready's landlord. The landlord testified that on one occasion he disposed of some trash at Mrs. Ready's request which he dumped on his farm. Another agent testified that during a search of Mrs. Ready's home certain letters, social security card stubs and two rebate checks for $100 each for the tax year 1974 payable to Patrick F. Reedy and Francis E. Ready were found. Frank Ready admitted having seven social security numbers, but explained the stubs found were for another inmate and not for his use.

Several prison officials testified as to tax materials Frank Ready possessed in prison. His caseworker testified on one occasion in late 1974 or early 1975 Ready received in the mail in excess of one hundred tax forms. Ready admitted obtaining tax manuals under the Freedom of Information Act and requesting tax forms.

Shortly before the indictment against Ready was entered the security supervisor directed Ready be moved from the honor camp to the prison. During the inventory of Ready's property at the honor camp various items of correspondence were taken to the security supervisor based on his earlier instructions. He and another prison official searched through the property and found 1975 tax return forms and a notebook containing references to tax matters which were turned over to IRS agents.

Finally, a handwriting expert testified for the Government. Based on comparison of the tax returns in evidence with known exemplars he expressed an opinion that the printing on the returns was by one or the other co-defendants.

Upon this evidence the jury convicted defendant Ready on all eight counts, and his wife upon the conspiracy and cashing of refund check counts. We have before us only an appeal by Frank Ready.

Appellant Ready contends that the warrantless search and seizure of papers in his honor camp room at the time of his transfer to the main penitentiary was in violation of his Fourth Amendment rights, and that evidence obtained in the search should have been suppressed. This raises the question of a prisoner's right to privacy while incarcerated.

In Lanza v. New York, 370 U.S. 139, 143, 82 S.Ct. 1218, 1221, 8 L.Ed.2d 384 (1961) the Supreme Court, considering electronic eavesdropping of the visitors' room of a public jail, in dicta, called the claim that a public jail is entitled to Fourth Amendment protection, "at best a novel argument." It said:

. . . Yet, without attempting either to define or to predict the ultimate scope of Fourth Amendment protection, it is obvious that a jail shares none of the attributes of privacy of a home, an automobile, an office, or a hotel room. In prison, official surveillance has traditionally been the order of the day. . . .

That case was...