United States v. Branker

• Decision Date: 13 May 1968
• Docket Number: No. 271,30936.,272,Dockets 30935,271
• Citation: United States v. Branker, 395 F.2d 881 (2nd Cir. 1968)
• Parties: UNITED STATES of America, Appellee, v. Percy BRANKER, Grover Cooper, John L. Lacey, David Lopez, Charles Moore and John A. Ross, Jr., Defendants-Appellants.
• Court: U.S. Court of Appeals — Second Circuit

395 F.2d 881 (1968)

UNITED STATES of America, Appellee, v.Percy BRANKER, Grover Cooper, John L. Lacey, David Lopez, Charles Moore and John A. Ross, Jr., Defendants-Appellants.

Nos. 271, 272, Dockets 30935, 30936.

United States Court of Appeals Second Circuit.

Argued March 13, 1968.

Decided May 13, 1968.

A. Edward Grashof, New York City, (John T. Baker, New York City, on the brief), for appellant Branker.

Alan B. Adler, Yonkers, N. Y. (Adler & Adler, Yonkers, N. Y., on the brief), for appellant Cooper.

John F. X. Peloso, New York City, for appellant Lacey.

Louis Bender, New York City(Lloyd A. Hale, New York City, on the brief), for appellant Lopez.

Albert J. Krieger, New York City(Leonard H. Sandler, New York City, on the brief), for appellant Moore.

Sidney Meyers, New York City, for appellant Ross.

John E. Sprizzo, Asst. U. S. Atty. (Robert M. Morgenthau, U. S. Atty. for the Southern District of New York, and David M. Dorsen and James W. Brannigan, Jr., Asst. U. S. Attys., on the brief), for appellee.

Before KAUFMAN and HAYS, Circuit Judges, and RYAN, District Judge.^*

HAYS, Circuit Judge:

The six appellants,¹ two of whom are former employees of the Internal Revenue Service and four of whom are persons with whom these employees dealt, were convicted after a nine-week jury trial of various offenses arising out of fraudulent schemes to avoid payment of income taxes and to obtain tax refunds to which the recipients were not entitled.Appellants were tried together with two other defendants² on eighty-one counts drawn from two indictments consolidated for trial.The first count charged a conspiracy among all defendants.The other counts charged substantive offenses involving defendants both singly and in various combinations.At the close of the government's case, the trial judge dismissed the conspiracy count³ and eighteen substantive counts as to all defendants, and dismissed five counts as to certain of the defendants named therein.The jury acquitted appellant Cooper on a count charging him with impersonating an officer and employee of the United States, but convicted the appellants and defendantCatherine Wood⁴ on all of the remaining counts in which they were charged.

Appellants' principal contention on appeal is that their motions for separate trials should have been granted after the conspiracy count was dismissed at the close of the government's case.An understanding of this issue requires some familiarity with the charges in the indictments and the evidence adduced to support them.

THE INDICTMENTS

The consolidated indictments, which contained eighty-four counts, named twelve persons as defendants and six additional persons as co-conspirators.Four defendants were granted severances prior to trial.⁵

Count one charged all defendants with a conspiracy to commit various crimes relating to income tax returns.In essence, the count alleged that the conspiracy was designed to enable certain persons to avoid payment of taxes which were due and owing and to secure for these persons and others income tax refund checks to which they were not entitled.

The substantive counts can be classified in several categories:

1.Thirty-eight counts charged various defendants with making opportunities for a number of persons to defraud the United States in violation of 26 U. S.C. § 7214(a)(5):

Counts 2 through 20⁶ charged appellant Lacey with causing defendant Neely to process certain tax returns so as to avoid an audit.

Counts 21 through 37 charged appellant Ross with causing Neely to process certain other tax returns so as to avoid audit.

Count 83 charged appellants Moore and Cooper with causing defendant Neely to process Moore's 1959 tax return so as to make it appear that the tax due and owing had been fully paid.

Count 84 charged appellants Moore, Cooper and Lacey and defendant Bayley with causing Bayley and defendant Neely to transfer an Unidentified Taxpayer's Account to Moore's account although they knew that he was not entitled to it.The trial court dismissed this count as to Moore and Cooper.

2.Eighteen counts charged various defendants with making and causing to be made false, fictitious and fraudulent claims against the United States in violation of 18 U.S.C. § 287:

Counts 38 through 49 charged appellants Cooper and Branker with presenting and causing to be presented for payment tax refund checks payable to Branker although they knew that he was not entitled to such refunds.

Counts 62 through 64 charged appellants Lacey and Cooper and defendant McTootle with similar conduct in connection with refund checks payable to McTootle.The trial court dismissed these counts as to Lacey.

Counts 69 and 70 charged appellants Lopez and Cooper with similar violations with respect to refund checks payable to Lopez.

Count 78 charged appellant Cooper and defendant Tendrich with a similar violation in connection with a refund check payable to Tendrich.

3.The eighteen counts dismissed by the trial judge as to all defendants charged violations of 18 U.S.C. § 1001 in connection with the conduct involved in 2., supra.The court ruled that the presentation of an endorsed refund check did not involve the use of a "trick, scheme or device" to "falsify, conceal, or cover up" a material fact within the meaning of the statute.

4.Three counts charged certain defendants with making statements on their income tax returns as to payment of estimated tax which they knew to be false:

Count 75 charged appellant Moore with respect to his 1959 return.

Counts 76 and 77 charged appellant Lopez with respect to the 1960 and 1961 joint returns of Lopez and his wife.

5.Two counts charged certain defendants with concealing, removing, mutilating, obliterating and destroying Taxpayer Delinquent Account records in violation of 18 U.S.C. § 2071(a):

Count 73 charged appellants Cooper, Lacey and Lopez with respect to the records of Lopez and his wife.The trial court dismissed this count as to Lopez.

Count 74 charged appellant Cooper and defendant Wood in connection with Cooper's records.

6.Count 68 charged appellant Cooper with impersonating an officer and employee of the United States.The jury acquitted on this count.

THE GOVERNMENT'S EVIDENCE

The presentation of the government's case consumed five weeks, and nearly five thousand pages of the trial transcript are devoted to the testimony concerning this part of the case.The following summary is intended to contain only such detail as is necessary for an understanding of the issues presented on this appeal; some relevant evidence is therefore either omitted or described very generally.

The government's chief witness was Ethel Ivy Neely, who had pleaded guilty to the conspiracy count prior to trial.Mrs. Neely had been a supervisor in the Math Verification Group at the Manhattan District office of the Internal Revenue Service.Her testimony disclosed a series of schemes by which payments of taxes were avoided and unlawful refunds obtained.In addition to Neely, the principal malefactors were appellantsGrover Cooper and John L. Lacey, also Internal Revenue Service employees, who acted as intermediaries between Neely and persons seeking to avoid payment of taxes or to obtain unlawful refunds.

Neely testified that in 1955 and early 1956 Cooper induced her to process about twenty-five returns so as to avoid audit.Neely accomplished this by marking the returns with symbols indicating that the returns had been examined prior to coming into her unit and had been found not to require audit.She then placed the returns with the other work sent out of her unit for further processing.In March or April of 1956 Cooper informed Neely that he needed money and asked her to prepare and process a fictitious refund return.When she refused, Cooper told her that the returns he had previously given her were fraudulent and threatened to report her.Neely yielded and prepared a fictitious return using her own address and the name of a relative.When the refund check arrived, she turned it over to Cooper.Between 1956 and 1961 Neely prepared and processed several fictitious returns at Cooper's request.On one occasion Cooper stated that he needed money because he was in the policy business with appellantCharles Moore.

The Branker Refund Checks

In November, 1958, Cooper persuaded Neely to process so as to avoid audit a 1957 income tax return of Percy Branker calling for a refund of about $2,200.A few months later Cooper asked her to process another 1957 return for Branker.When Neely asked why Branker was filing two returns for the same year, Cooper stated that he and Branker had "worked out a scheme."Because Branker, who owned a bar, was able to cash large checks, they could obtain substantial sums by submitting fraudulent returns calling for large refunds.

From 1958 to 1962, Neely processed approximately twelve returns with Branker's name on them.On each occasion, Cooper would tell Neely the amount of money "he and Branker wanted," and she would fill out and process a return.Refunds totalling more than $80,000 were obtained in this way.After each refund check was issued, Neely ordinarily removed the corresponding return from the files and gave it to Cooper.On some occasions Cooper sent defendantFrank McClary to pick up the returns.

The testimony of other witnesses was introduced to show (1) that most of the returns were missing from the files and (2) that the refund checks were deposited in bank accounts belonging to Branker.Also introduced were portions of Branker's Grand Jury testimony in which he admitted receiving and endorsing the refund checks which he knew did not represent amounts owed to him.

The McTootle and Tendrich Refund Checks

DefendantHerman McTootle, who testified for the government, stated that a tax deficiency of $116,675.23 had been assessed against him in 1959 as a consequence of a raid on his wagering business.He described his tax problems...