United States v. Clancy

• Decision Date: 14 April 1960
• Docket Number: No. 12815.,12815.
• Citation: 276 F.2d 617
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Thomas D. CLANCY, James F. Prindable and Donald Kastner, Defendants-Appellants.
• Court: U.S. Court of Appeals — Seventh Circuit

276 F.2d 617 (1960)

UNITED STATES of America, Plaintiff-Appellee, v. Thomas D. CLANCY, James F. Prindable and Donald Kastner, Defendants-Appellants.

No. 12815.

United States Court of Appeals Seventh Circuit.

March 24, 1960.

Rehearing Denied April 14, 1960.

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John F. O'Connell, Paul P. Waller, Jr., East St. Louis, Ill., O'Connell & Waller, East St. Louis, Ill., of counsel, for appellant.

Clifford M. Raemer, U. S. Atty., East St. Louis, Ill., Robert D. McKnelly, Asst. U. S. Atty., Danville, Ill., for appellee.

Before HASTINGS, Chief Judge, SCHNACKENBERG, Circuit Judge, and STECKLER, District Judge.

STECKLER, District Judge.

Thomas D. Clancy and James F. Prindable, two of the named defendants, were convicted in the district court of making a false statement of a material fact to agents of the United States Treasury Department, Internal Revenue Service, in violation of 18 U.S.C. § 1001; of willfully attempting to evade a substantial amount of wagering excise taxes due and owing by virtue of Chapter 35, subchapter A of the Internal Revenue Code of 1954 (26 U.S.C. § 4401), in violation of 26 U.S.C. § 7201; and of conspiring to violate that subchapter, in violation of 18 U.S.C. § 371. Donald Kastner, the other defendant, was convicted on the latter two counts, but was found not guilty of the false statement count. Trial was by jury.

Defendants raise numerous points on appeal, all of which can be classified under the following broad headings:

1. The legality of the search and seizure of defendants' books and records.

2. Whether the district court erred in overruling defendants' motions to dismiss the indictment on the grounds that the grand and petit juries were illegally drawn and constituted.

3. Whether the court committed reversible error in refusing to ask certain questions on the voir dire examination of petit jurors.

4. Whether the court erred in admitting certain exhibits into evidence, and in admitting testimony as to statements of individual defendants without cautionary instructions to the jury.

5. Whether the court erred in refusing to order the production of reports of federal agents for use by the defendants during cross-examination, pursuant to 18 U.S.C. § 3500.

6. Whether the court erred in refusing to order acquittal both before and after the verdict.

7. Whether the court erred in instructing the jury and in refusing to give certain instructions tendered by defendants.

8. Whether the court erred in refusing to grant a new trial after hearing evidence of possible misconduct on the part of a petit juror.

In order to resolve these issues, a somewhat detailed analysis of the record is essential.

There is evidence in the record that the defendants, Thomas D. Clancy, James F. Prindable and Donald Kastner, were partners in the North Sales Company, and as such were engaged in accepting wagers, principally on horse races, in East St. Louis, Illinois. The defendants, doing business as the North Sales Company, by Thomas Clancy, applied for and received the special tax stamp for the fiscal year ending June 30, 1957 as required by 26 U.S.C. § 4411. In the special tax return and application for registry-wagering, the business address of the company was designated "at Large — 2401 Ridge Ave. — E. St. Louis, Ill." However, when the application was produced at the trial by a government witness, the words "at Large" had been penciled through.¹ The defendants filed monthly tax returns of wagers accepted by them and paid the tax reported to be due thereon to the District Director of Internal Revenue at Springfield, Illinois. Defendants received a letter from H. J. White, District Director, dated April 17, 1957, which informed them that a recent examination of their tax liability for the years January, 1955 through December, 1956, indicated that no change was necessary to the tax reported and that the returns would be accepted as filed.

The record indicates that during March, April, and early May of 1957, federal agents of the Internal Revenue Service observed activities which led them to believe that a gambling operation was being conducted on the premises located at 2300 and 2300A State Street, East St. Louis, Illinois. The first floor of the premises was occupied by a business known as "Zittel's Tavern," and the second floor, 2300A, was an apartment. According to the affidavit for search warrant, Agent Johnson placed wagers with "Heine" and "Murphy" at Zittel's Tavern, the latter being a bartender there, and observed Heine walk to a doorway behind the bar which leads upstairs over the men's toilet and place money envelopes in a stairwell area and close the door. Heine later picked up an envelope from behind the door which contained Agent Johnson's winning from a prior bet. Johnson also observed scratch sheets, racing forms, money and 4-inch by 6-inch paper pads on the bar, back bar, under the bar, on tables, in the stairwell and in the safe. Agent Mueller observed a man carrying a sack, similar to sacks furnished by banks to carry money, enter the tavern, speak to Murphy, the bartender, and go behind the bar and through a door which leads upstairs. Agent Yerly observed Charles J. Kastner, Jr., brother of the defendant Donald Kastner, and the defendant Prindable, both well known bookmakers, enter Zittel's Tavern at 7:09 and 7:17 a. m., respectively, on May 1, 1957. Agent Ryan entered the tavern shortly after Charles J. Kastner, Jr. on that morning and saw Prindable enter and go behind the bar and through a door that leads upstairs. Agent Buescher interviewed two well known bookmakers in Collinsville, Illinois, and was told by them that they picked up horse bets and ordinarily received telephone bets at Blaha's Tavern in Collinsville. Agent Busch examined a transcript of toll calls pertaining to Blaha's Tavern, using Illinois Bell Telephone records, and established that between August 11, 1956 and January 25, 1957, twenty-one (21) telephone calls were made between Blaha's Tavern and 2300A State Street, East St. Louis. The telephone at 2300A State Street was subscribed to by one John Leppy. Agent Yerly examined the application for the occupational tax stamp of Charles J. Kastner, Jr. and Prindable, which stated that their business address was 2401 Ridge Avenue.² Joseph M. Heckelbech, Chief of the Collection Division in the office of the District Director at Springfield, examined the records in his custody and determined that no gambling stamp had been issued to John Leppy, Henry D. Zittel, or any other person at 2300A State Street; and that no wagering excise tax returns had been filed by anyone at that address.

Upon this evidence, Agent Johnson applied to the district court for two search warrants, one for the first floor, and the other for the second floor of the building at 2300 and 2300A State Street. (Here on appeal we are concerned only with the search of the second floor, 2300A.) The part the other agents performed in the investigation was set forth in their separate affidavits which were, by reference, made a part of Agent Johnson's affidavit for the search warrant for the second floor. In addition, Agent Edwards corroborated much of the statement of Agent Yerly. The affidavit of Agent Johnson for the search warrant for the second floor states, in part, that he is positive the premises

"* * * are being used in the conduct and carrying on of a `Wagering Business,\' * * * against the laws of the United States, that is to say, the offense of wilfully attempting to evade and defeat a tax imposed by the Internal Revenue Laws * * * and the payment thereof, to wit, the special tax of $50 a year to be paid by each person engaged in the business of accepting wagers * * *; and the offense of wilfully failing to prepare and file with the district Director * * * the Special Tax Return and Application for Registry-Wagering (Form 11-C) * * * in the name of the operator of said business, namely, one John Doe * * *."

The district court, satisfied that there was probable cause to believe that a wagering business was being conducted on the premises described in violation of the said laws of the United States, issued the search warrants requested on May 5, 1957. The second floor warrant was addressed to "any Special Agent of the Intelligence Division of the Internal Revenue Service of the United States of America," and authorized the seizure of:

"* * * divers records, to wit books, memoranda, tickets, pads, tablets and papers recording the receipt of money from and the money paid out in connection with the operation of a wagering business on said premises, such files, desks, tables and receptacles for the storing of the books, memoranda, tickets, pads, tablets and papers aforesaid, and divers receptacles in the nature of envelopes in which there is kept money won by patrons * * * and divers other tools, instruments, apparatus, United States currency and records * * *."

On May 6, 1957, Agent Kienzler, accompanied by several other agents, executed the second floor search warrant and seized defendants' notes, books and records, currency in excess of $2,160, racing forms, scratch sheets, telephone bills, a check book, and several metal boxes. Defendant Donald Kastner was present in the apartment when the search was made and informed the agents that he, Clancy, and Prindable were partners in the North Sales Company and that the partnership had a tax stamp, which Clancy took care of. Agent Kienzler testified that he did not personally determine at that time whether the North Sales Company actually had a tax stamp, but obeyed the command of the warrant in searching and seizing the items described. Apparently no arrests were made at the time of the raid.

Subsequently, information obtained from the seized records was presented to a grand jury which, on July 25, 1957, returned a five-count indictment against the defendants. The first...