United States v. Chapman, 9369.

• Decision Date: 04 August 1948
• Docket Number: No. 9369.,9369.
• Parties: UNITED STATES v. CHAPMAN.
• Court: U.S. Court of Appeals — Seventh Circuit

168 F.2d 997 (1948)

UNITED STATES v. CHAPMAN.

No. 9369.

Circuit Court of Appeals, Seventh Circuit.

June 18, 1948.

Rehearing Denied August 4, 1948.

Henry W. Dieringer and Michael F. Mulcahy, both of Chicago, Ill., for appellant.

Otto Kerner, Jr., U. S. Atty., and Jack A. Welfeld and Lawrence J. Miller, Asst. U. S. Attys., all of Chicago, Ill., for appellee.

Before SPARKS and MINTON, Circuit Judges and DUFFY, District Judge.

SPARKS, Circuit Judge.

Appellant was convicted of attempting to evade payment of income tax alleged due for the year 1943, in violation of section 145(b) of the Internal Revenue Code, 26 U.S.C.A.Int.Rev.Code, § 145(b). The principal errors urged on this appeal relate to the bill of particulars, the use of allegedly prejudicial testimony relating to appellant's receipt of moneys in addition to the regulation prices charged for the sale of meat by the corporation of which he was an officer and principal stockholder, and the use of an allegedly uncorroborated extra-judicial admission to prove one of the essential elements of the offense.

Appellant is the president and principal stockholder of the Empire Packing Corporation, engaged in the processing and sale of meat. The indictment charged him with attempting to evade a large part of his individual income tax by filing a fraudulent return showing gross income of $90,124, instead of an actual gross income of $301,405, including an item of $282,115 listed in the indictment as "other income," and by concealing from the Collector the true gross and net income received by him during the year and the sources thereof.

Appellant asked for and the court allowed a bill of particulars as to the item of "other income." The Government thereupon filed a bill stating that it was prepared to prove that appellant expended the amount alleged in the indictment over reported income but that it did not possess the information necessary to specify in detail the amount of every item making up the aggregate of $282,115, or by whom each item making up this aggregate amount was paid to appellant, or the character or manner of payment. Appellant then moved to dismiss on the ground that this admission on the part of the Government that it lacked knowledge as to the income alleged voided the indictment. Subsequently, the Government was permitted to amend its bill of particulars to state that appellant expended during the year 1943 an amount in excess of the total of his available declared resources, and to file supplemental bill to the effect that the source of the "other income" was the illegal sale of meat at overceiling prices, the details of which transactions were matters peculiarly within the knowledge of appellant. The motion to dismiss was overruled, and the court denied a motion for a more specific bill of particulars.

We find no error in this action of the District Court. The bill of particulars as amended and supplemented sufficiently apprised appellant of the theory of the charge against him and of the general character of the evidence the Government expected to rely upon to sustain that charge. He was not entitled to more. United States v. Skidmore, 7 Cir., 123 F. 2d 604; United States v. Gorman, D.C., 62 F.Supp. 347. The granting or denying of a bill of particulars is, of course, a matter within the sound discretion of the court. We find here no abuse of that discretion.

In presenting its case, the Government undertook to show that appellant's private expenditures for the year 1943 greatly exceeded his available declared resources, and that he had sources of income for that year from which the additional funds could have been derived.

As a starting point in ascertaining appellant's net worth, the Government established by his books and records that his total assets as of January 1, 1942, amounted to $246,668. Appellant himself corroborated this. According to the testimony of Revenue Agent Loyd who conducted the examination of the books, he stated that, except for a few dollars in his pocket, he had no other cash on hand and no currency in any safety deposit box, and that the work papers prepared by the agents showing assets and liabilities as of January 1, 1942, were substantially correct. The agent added to the amount of appellant's net worth as of January 1, 1942, the total of income reported for the year 1942 and, with adjustments for certain items, ascertained his net worth as of January 1, 1943, to be $282,227. As of December 31, 1943, the evidence indicated a net worth of $533,538, or an increase for that taxable year of $251,310 which, together with $51,304 of nondeductible expenditures and property transfers, resulted in a taxable income of $302,614.

The evidence as to the increase in the net worth during the year 1943 consisted largely in proofs of currency expenditures during that year in amounts greatly in excess of the $90,131 income reported by appellant for the year 1943, and of all his declared available resources. The largest single expenditure was of $100,000, paid in two installments for the purchase of a farm, $45,000 in currency of small denominations up to $50 bills, the latter part of March, 1943, and the balance, $34,000 of which was in currency, shortly thereafter. This farm was carried on appellant's records at an original cost of $55,000 which appellant told Loyd, upon inquiry by Loyd as to the discrepancy in the figures, was all he paid. In addition, the evidence showed large expenditures on the farm including $73,546 for improvements, $128,925 for cattle and hogs, $33,559 for feed, and $10,821 for miscellaneous items.

Appellant also told Loyd that the $71,000 miscellaneous income reported in his 1943 return was from "commissions" which he also said constituted the source of the money paid for the farm and the large expenditures thereon. These commissions he explained to Loyd as "tips" paid to him for telling people where they could buy meat. However, he said he could not remember the names of any such persons, nor where he had sent them to procure the meat. When Loyd pointed out to him that their investigations indicated that he had spent two or three hundred thousand dollars more than he had available according to his 1943 income tax return, and asked him to explain the difference, where the money had come from, he replied that he could not offer any explanation as to where it had come from.

In addition to the large currency expenditures by appellant, amounting to $283,455, the record also showed that appellant used two bank accounts in the name of an agent, none of the transactions of which was entered in his own books and records. The total of deposits in these two accounts amounted to $91,971 for the year 1943, none of which was reflected in appellant's books. In addition, appellant also had an account in his own name in one bank, not shown in his books, and deposits in this account aggregated $85,499. Loyd testified that he questioned appellant about this latter account, and appellant denied having any such account. The Government construed this as evidence of appellant's concealment of his resources and transactions. The evidence showed a total of $151,909 expenditures of which there was no record whatever in appellant's books and records. As a further part of this pattern of concealment, the evidence showed that appellant had on record two mortgages aggregating $37,500 on properties owned by him which were in fact dummy mortgages, representing no indebtedness on the part of appellant. The evidence also showed that on several occasions he had his agent purchase cashier's checks for him from several different banks, aggregating $35,000, paying cash furnished by himself therefor.

To establish the fact of a possible source of the income indicated by appellant's huge expenditures, the Government introduced the evidence of seven meat peddlers all of whom testified that during the year 1943, they paid overceiling prices for meat purchased from the Empire Packing Company, paying the excess in currency either to Chapman direct, or to one of two salesmen both of whom testified that they received payments for the excess which they turned over to appellant who directed them not to keep any record of such payments. In each case, payment was made to Empire for the regulation price. Only one of the peddler witnesses testified as to exact amounts, and he stated that his over-payments started in April, 1943, and continued through December of that year, amounting to six or seven thousand dollars in all, paid to the two salesmen who testified that they collected overceiling prices for appellant. This evidence was not introduced to prove the amount of appellant's receipts from illegal sources, — in fact the Government made no attempt to prove the total of such receipts. It was only to establish the possible source of the funds used for the expenditures which so substantially exceeded appellant's declared available resources.

Appellant contended that his admittedly large currency expenditures were made from accumulations of currency over a period of years, kept by him in safety deposit boxes. To establish this defense he introduced a witness, Hirsch, who testified that early in 1943 he accompanied appellant to a bank where the latter had a safety deposit box, and while there had...