United States v. Eissner

• Decision Date: 18 June 1962
• Docket Number: Crim. No. 33057.
• Citation: 206 F. Supp. 103,10 AFTR 2d 5680
• Parties: UNITED STATES of America v. M. Thomas EISSNER and Marion Mae Eissner.
• Court: U.S. District Court — Northern District of New York

206 F. Supp. 103

10 AFTR 2d 5680

UNITED STATES of America v. M. Thomas EISSNER and Marion Mae Eissner.

Crim. No. 33057.

United States District Court N. D. New York.

June 18, 1962.

Justin J. Mahoney, U. S. Atty., Albany, N. Y., George B. Burke, Asst. U. S. Atty., of counsel, for the United States.

Rubin & Levey, Rochester, N. Y., for defendants. Sydney R. Rubin, Rochester, N. Y., of counsel.

JAMES T. FOLEY, District Judge.

The motion is one for a Bill of Particulars. The defendants are husband and wife charged in a five-count indictment with filing a false and fraudulent joint income tax return on behalf of themselves for the years 1955 through 1959 inclusive. Each count is in the familiar form used by the Government in this district for charges involving income tax evasion. There is simply set forth the figures of income reported by defendants and the tax paid thereon, and then the amount of income the Government claims should have been reported and the income tax amount that should be paid on such computation made by the Government. In my judgment it is a "short form indictment" in every sense of that phrase, without semblance of detail or particular.

The Government has not filed an affidavit in opposition to the motion, but in its memorandum of law submitted on its behalf the Assistant United States Attorney, George B. Burke, in charge of the prosecution, states that the Government intends to proceed by the net worth-expenditure method of proof as to Counts I through IV of the indictment and the specific items method as to Count V based upon alleged omitted interest income.

There are several similar motions pending before me in this same type of so-called net worth-expenditure case. For the guidance of the prosecution and the defense attorneys as to my policy in this two-judge district, it is necessary that a definitive and current ruling should be made in relation to the particulars I think the Government should furnish to defendants in this type prosecution. I have written in the past on questions involving the furnishing of particulars in similar cases, adopted a restrictive view and followed as persuasive the reasoning in Courts of Appeals in circuits other than the Second Circuit that limit the information to be furnished by the Government to the bare statement that it is a net worth case. (U. S. v. King, (1954), N.D.N.Y., 16 F.R.D. 124; U. S. v. Witbeck, (1954), N.D.N.Y., 122 F.Supp. 717; U. S. v. Cincotta, (1956), N.D.N.Y., 19 F.R.D. 5).

The attorneys for the defendants now earnestly urge that a recanvass be made of this attitude and disposition on my part in view of the admonition of Judge Sterry R. Waterman in U. S. v. O'Connor, (1956), 2 Cir., 237 F.2d 466, 476, that liberal construction should be given to the bill of particulars rule, together with other rules of discovery, to serve the primary purpose of enabling the accused to meet the charges presented against him. In that decision, my Witbeck and King decisions are referred to in footnote 10 as possible examples of particulars freely granted. (pg. 476).

Judge Waterman significantly writes that to a defendant seeking to prepare a defense to a net worth criminal prosecution it is no answer to say that he should have kept better records or that his memory should have been better. Together with these signs, unmistakable to me as appellate direction toward a new and more liberal approach, the attorneys for the defendants have now called to my attention a series of reported cases where decisions made by experienced trial judges in the Southern and Eastern Districts of New York are drastically contrary to my previous thinking. Together with other factors of consideration hereinafter discussed, their reasoning impels me to change my viewpoint and previous rulings in the net worth-expenditure prosecution where particulars are sought. (U. S. v. Hoornbeek, (1954), S.D.N.Y., 164 F.Supp. 657; U. S. v. Geller, (1958), S.D.N.Y., 163 F. Supp. 502; U. S. v. Brown, (1959), E.D. N.Y., 179 F.Supp. 893; U. S. v. O'Neill, (1957), E.D.N.Y., 20 F.R.D. 180; see also U. S. v. Brodson, (1955), E.D.Wis., 132 F.Supp. 729).

Judge Sugarman in Hoornbeek (not reported in the Federal Supplement until 1959) led the way in this new approach, and directed the Government to furnish particulars as to the claimed net worth figures for the opening and end of each indictment year, and then the date, payee and amount of the expenditures. A recanvass of the net worth-expenditure cases that have increased in prosecution after the noteworthy holding and approval of such method of proof in Holland v. U. S., (1954), 348 U.S. 121, 75 S.Ct. 127, 99 L.Ed. 150 teaches that the great concern expressed in that authority for judicial care and supervision to insure the proper and fair use of a complicated method of proof has not diminished to any extent, but has increased in judicial and legal circles. From my own trial experience in several substantial net worth prosecutions I have found there is little damage, if any, to the cause of the Government when fair-minded and balanced disclosure is made previous to the commencement of trial.

A good description of the net worth method of proof was given by Judge Smith in U. S. v. O'Connor, (1959) 2 Cir., 273 F.2d 358, 361. There it is emphasized, as in many other cases, that proven total assets at cost at the beginning and end of each year is an important factor to determine whether there has been an increase of assets greater than can be accounted for by reported net income plus receipts other than taxable income. Another important factor of proof noted is how much reportable income has been spent for non-exempt purposes. It is clear that approximate opening and closing figures of the indictment years, plus expenditures, are key and vital elements in the Government computation, and in reality and upon reflection are the only figures that fairly apprise the defendant of what he must meet at the trial. The opinion also shows clearly the increasing tendency of the Court of Appeals, Second Circuit, to strip away secrecy of investigative reports or methods of computation after testimony by the Internal Revenue agent at the trial.

Assistant United States Attorney Burke here, in a competent brief, points to the considerable body of authority that still maintains the restrictive interpretation that the Government need only state that the method of proof to be used will be based upon the net worth-expenditure theory. He points to the appellate cases in five other circuits that give approval to such restrictive...