United States v. Coblentz, 349

• Decision Date: 10 January 1972
• Docket Number: No. 349,Docket 71-1943.,349
• Citation: 453 F.2d 503
• Parties: UNITED STATES of America, Appellee, v. Bernard W. COBLENTZ, Defendant-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

453 F.2d 503 (1972)

UNITED STATES of America, Appellee, v. Bernard W. COBLENTZ, Defendant-Appellant.

No. 349, Docket 71-1943.

United States Court of Appeals, Second Circuit.

Argued December 15, 1971.

Decided January 10, 1972.

Cono R. Namorato, Dept. of Justice, Washington, D. C. (Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks, Crombie J. D. Garrett, John P. Burke, Murray S. Horwitz, Attys., Dept. of Justice, Washington, D. C., Robert A. Morse, U. S. Atty., Brooklyn, N. Y., of counsel), for appellee.

Jacob W. Heller, New York City (Weiss, Bronston, Rosenthal, Heller & Schwartzman, Herman Schwartzman, Elkan Abramowitz, New York City, of counsel), for defendant-appellant.

Before SMITH, KAUFMAN and MULLIGAN, Circuit Judges.

MULLIGAN, Circuit Judge:

The appellant was indicted in the Eastern District of New York on February 26, 1970 on three counts of willfully attempting to evade his federal income tax for the years 1963, 1964 and 1965 in violation of Section 7201 of the Internal Revenue Code of 1954. He was tried from March 29, 1971 through April 7, 1971 before the Hon. John F. Dooling, Jr., United States District Judge. The jury returned a verdict of not guilty on the first two counts (1963 and 1964) and guilty on count three (1965). Thereafter appellant moved to set aside the guilty verdict and for judgment of acquittal or, in the alternative, for a new trial. Judge Dooling denied the motions in a Memorandum and Order on May 6, 1971. The appellant was subsequently sentenced to a one year term of imprisonment, eleven months of which were suspended, plus an uncommitted fine in the amount of $5,000. He was released on his own recognizance pending this appeal from the judgment of conviction. We affirm the conviction.

The appellant, Coblentz, is a New York attorney specializing in representing property owners in condemnation proceedings, particularly those involving the City of New York. The basis for Coblentz's indictment and subsequent conviction was his unorthodox method of reporting the fees he received in his condemnation practice on his income tax returns. When an award was made, his client would receive multiple checks from the City of New York, one of which would represent Coblentz's fee plus any advances or disbursements. The client would endorse that check over to Coblentz who would then place the check in a cabinet in his office which contained other undeposited checks which were filed chronologically. Coblentz would deposit only a portion of the checks in the year they were received. The remainder were deposited from one to four years after the year of receipt. Since the checks were drawn by the City of New York, they would be honored up to five years after the date of issue. Coblentz did not report these fees as income in the year they were received by him but usually in the year in which he deposited or negotiated the check. Pursuant to the rules of the Appellate Division, First and Second Departments, Coblentz did, however, file with the Judicial Conference of the State of New York, Closing Statements which reported the fees he received within fifteen days after they were awarded. A comparison of these Closing Statements and his income tax returns, revealed that Coblentz had received fees from 1962 through 1965 which exceeded the income he had reported for those years by about $75,000.

The government's evidence established that in 1965 Coblentz reported to the Judicial Conference that he had received fees of $47,751.93. He deposited only $7,600.33 of this amount, and reported a gross income of $22,380 which included checks received in prior years but not reported until 1965. In 1963 the Closing Statements indicated fees of $25,188.08 while the tax return reported gross receipts of $22,600. In 1964 the Closing Statements indicated fees of $58,388.39 and the tax return reported gross receipts of $21,300. There is no question but that there were substantial discrepancies during the period covered by the counts of the indictment between income received and income reported. It is also beyond any question that the receipt of these checks constituted the constructive receipt of income in the year they were received whether Coblentz elected to then take down the cash or not. Corliss v. Bowers, 281 U.S. 376, 378, 50 S.Ct. 336, 74 L.Ed. 916 (1930); Weil v. Commissioner, 173 F.2d 805, 806 (2d Cir.), cert. denied, 338 U.S. 821, 70 S.Ct. 65, 94 L.Ed. 498 (1949); Ross v. Commissioner, 169 F.2d 483, 490 (1st Cir. 1948); Hedrick v. Commissioner, 154 F.2d 90, 91 (2d Cir. 1946), cert. denied, 329 U.S. 719, 67 S.Ct. 53, 91 L.Ed. 623 (1946). Treas.Reg. § 1.451-2. See generally 2 J. Mertens, Law of Federal Income Taxation § 10.01 (1967).

Appellant's major argument on appeal is not that tax was not due and owing in 1965 but that the evidence was insufficient as a matter of law to warrant the jury's finding that he "willfully" evaded his tax. It is essential that the government establish beyond a reasonable doubt that Coblentz acted willfully and knowingly with the specific intent to evade the tax. Further, this specific intent must be established by evidence other than the mere understatement of income. Holland v. United States, 348 U.S. 121, 139, 75 S.Ct. 127, 99 L.Ed. 150 (1954).

We find that the record amply supports the jury's finding of willful tax evasion by Coblentz. From 1963 to 1965 Coblentz reported a total taxable income of $30,351.09 when in fact it should have been $109,017.42. This would have resulted in an additional tax of $5,243.98 in 1963, $21,581.44 in 1964 and $13,686.61 in 1965. This represents a consistent pattern of not reporting large amounts of income which is itself evidence of willfulness. Holland v. United States, supra, 348 U.S. at 139, 75 S.Ct. 127; United States v. Moran, 236 F.2d 361, 362 (1956), cert. denied, 352 U.S. 909, 77 S.Ct. 148, 1 L.Ed.2d 118 (1956). Since Coblentz admittedly prepared and signed the Closing Statements for the Judicial Conference there can be no question but that he was aware of this source of income. Moreover, he supplied the information which was used by his accountants to prepare the returns. See United States v. Levy, 449 F.2d 769, 770 (2d Cir. 1971). Further evidence of willfulness was established by his filing in 1961, 1962, 1963 and 1964 as the "unmarried head of household" which resulted in a lower tax than had he filed properly as "married, filing separately" (his wife was filing separately these years). The jury apparently found it incredible that he could be mistaken about his marital status and further incredible that on his 1961 tax return he could "mistak...