United States v. Gibson
| Decision Date | 14 March 1980 |
| Docket Number | No. CR-1-79-23-1.,CR-1-79-23-1. |
| Citation | 486 F. Supp. 1230 |
| Parties | UNITED STATES of America, Plaintiff, v. John F. GIBSON, Defendant. |
| Court | U.S. District Court — Southern District of Ohio |
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James C. Cissell, U. S. Atty., Anthony M. Nyktas, Patrick J. Hanley, Asst. U. S. Attys., Cincinnati, Ohio, for plaintiff.
F. Lee Bailey, Anthony Cardinale, James Merberg, Boston, Mass., Timothy A. Hickey, Cincinnati, Ohio, for defendant.
This matter is before the Court on defendant John F. Gibson's motion for judgment of acquittal on two counts of the instant indictment. Fed.R.Crim.Pro. 29(c). We are presented with two issues: first, whether the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1961 et seq., encompasses the violations of the Labor-Management Reporting and Disclosure Act (LMRDA), 29 U.S.C. § 401 et seq., charged in this case, and second, whether evidence of financial transactions during a single year is sufficient to support a conviction for false statement on an income tax return.
Defendant John F. Gibson, who is General Secretary Treasurer of the Hotel and Restaurant Employees' and Bartenders' International Union ("the Union"), was the subject of an eighteen count indictment filed in March, 1979. Count I charges violation of RICO, asserting that Gibson embezzled Union funds on several occasions. Counts II, III, and V through XVI charge criminal violations of the LMRDA by embezzlement of Union funds and making false entries on Union records. Count IV charges a conspiracy to embezzle Union funds, and Counts XVII and XVIII charge that Gibson filed false individual income tax returns for the years 1974 and 1975.
Counts III and VII and part of Count I were dismissed prior to trial on the government's motion. The remaining charges were tried before a jury. At the conclusion of the government's case defense counsel moved for a judgment of acquittal on all the charges tried. Fed.R.Crim.P. 29(a). The Court took the motion under advisement and the defendant's case was presented. At the conclusion of all the evidence the Court denied the motion for judgment of acquittal as to Counts II through XVI but kept the motion under advisement as to Counts I, XVII, and XVIII. Fed.R.Crim.P. 29(b).
The jury returned verdicts of guilty on Count XVII and not guilty on Counts IV, X through XVI, and XVIII. No verdict was returned on Counts I, II, III, V, VI, VIII, and IX, and the Court declared a mistrial as to these counts.
After the jury was discharged the Court ordered submission of memoranda of points and authorities to aid its determination of the motion for judgment of acquittal on Counts I and XVII.1 Oral argument also was allowed.
While our discussion of these two counts is separated below, the same standard of review applies in determining the motion as to each of them. We must view the evidence in the light most favorable to the government, Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 469, 86 L.Ed. 680 (1941), and determine whether there is sufficient evidence from which a jury can find guilt beyond a reasonable doubt. Fed. R.Crim.P. 29(a); United States v. Grimes, 332 F.2d 1014, 1016 (6th Cir. 1964); Wright, Federal Practice and Procedure: Criminal § 467 at 254-257 (1969). This standard is not altered when, as in the case of the tax count, only circumstantial evidence is offered by the government. United States v. Scott, 578 F.2d 1186, 1191-92 (6th Cir. 1978), cert. denied, 439 U.S. 870, 99 S.Ct. 201, 58 L.Ed.2d 182 (1978); United States v. Bradley, 421 F.2d 924, 926 (6th Cir. 1970); United States v. Conti, 339 F.2d 10, 12-13 (6th Cir. 1964); Wright, supra, at 257-259.
After thorough consideration, the Court concludes that judgment of acquittal must be entered both on Count XVII and on Count I. As to Count XVII, we find that the prosecution's method of proof was wholly inadequate to prove false statement beyond a reasonable doubt. As to Count I, we conclude that the prosecution has incorrectly analyzed the statute (RICO), and that the acts alleged and proven do not amount to a RICO violation. More particularly, the record is devoid of evidence that Gibson conducted the Union's affairs through a pattern of racketeering activity. In this connection we feel compelled to note that our conclusion suggests nothing as to whether Gibson is guilty of acts of embezzlement from the Union. He may be reprosecuted on those embezzlement counts on which the jury did not reach a verdict.
COUNT XVII
Count XVII charges Gibson with making a false statement on his 1974 individual federal tax return in violation of 26 U.S.C. § 7206(1).2
The government contends that Gibson overstated by at least $5,147.66 the amount of his nonreimbursed employee business expenses on the 2106 form which was attached to his 1040 form. See 2 CCH Std. Fed. Tax Rpts. ¶ 1350.025 at 17,011 (1980). Such expenses are deductible from adjusted gross income and could reduce tax liability. 26 U.S.C. §§ 63, 72, 161, 162.
Defendant's 1974 tax return claims nonreimbursed employee business expenses of $16,320 (GX 74-15, Form 2106). This figure is an estimate obtained by taking 272, which is the number of days defendant was out of town on Union business during 1974, times $60, which is the estimated average daily amount of out-of-pocket cash outlays for business purposes made by defendant when out of town on Union business (GX 74-14, accountant's notation).
The government presented evidence intended to show that defendant did not have enough cash on hand during 1974 to incur the claimed expenses. Internal Revenue Service agents Kurt Greber and John Byrne testified they reviewed and summarized Gibson's financial records in an effort to determine how much cash he had available to make the claimed expenses. To arrive at a cash availability figure for 1974 they first analyzed all income and other receipt items received by Gibson during 1974, and then analyzed his disbursements during that year.
Records summarized by the IRS agents showed Gibson received $119,943.40 during 1974 (GX 74-12). The receipt items summarized consisted of payroll, per diem and reimbursement checks from the Union, Veterans Administration checks, interest paid and principal returned on certificates of deposit and Treasury bills, interest on savings accounts, and unidentified deposits. Of the $119,943.40 received, the IRS agents testified that $113,159.88 was deposited to defendant's savings and checking accounts at a Cincinnati bank. The remaining $6,783.52 was traced to Union and Veterans Administration checks that were exchanged for cash.
The IRS agents' summary of disbursements from Gibson's bank accounts showed that he negotiated $11,015.82 in personal checks payable to "Cash" or "John F. Gibson" during 1974 (GX 74-12). The summary also shows these personal checks were cashed on a fairly regular basis, about two or three a month, and usually were in the amount of $500 (GX 74-12).
The $11,015.82 from cashed personal checks and the $6,783.52 from the other cashed checks total $17,799.34. According to the records summarized by the IRS agents, this figure was the total amount available to the defendant for cash outlays in 1974 (Byrne trans. at 19; GX 74-12).
The IRS agents next summarized records of cash expenditures by defendant in 1974 for personal items, that is, items that are not tax deductible (GX 74-11). These expenditures totaled $6,627. The agents testified that this amount should be subtracted from the $17,799.34 they had determined to be the total amount of cash available to defendant during 1974 in order to show the amount of cash he had available for deductible business expenses that year (Greber trans. at 26-28, Byrne trans. at 19-20). Subtracting $6,627 from $17,799.34 yields a difference of $11,172.34. The agents also testified that the $11,172.34 difference was a maximum available cash figure because it did not reflect undocumented cash outlays for personal items such as groceries and haircuts (Greber trans. at 28, Byrne trans. at 23).
Based on his analysis of the records summarized, IRS agent Byrne concluded that defendant's claim of $16,320 for nonreimbursed business expenses in 1974 is not accurate (Byrne trans. at 22). He testified that defendant had no more than $11,172.34 in cash available to make the claimed expenditures and, therefore, the $16,320 figure overstated employee business expenses by at least $5,147.66 (Byrne trans. at 21-23).
Only evidence of defendant's 1974 financial transactions was presented to support the government's contention that he did not have enough cash available during that year to make the expenditures claimed on his 1974 tax return. No documents or testimony was adduced as to defendant's financial condition prior to 1974, and no figure was proffered for defendant's cash on hand at the beginning of 1974.
The IRS agents testified that they did not assume defendant had no cash on hand at the beginning of 1974, but rather that defendant's cash on hand was static throughout 1974 (Greber trans. at 57-60, Byrne trans. at 49-51). If one assumes that Gibson's cash on hand was the same throughout the year, agent Greber testified, it is unnecessary to take into account cash on hand in determining cash availability for the claimed expenses, because cash on hand would not affect the flow of cash during the course of the year (Greber trans. at 57-58). Agent Byrne testified that his summaries of Gibson's 1974 financial dealings did not include a figure for cash on hand because he found no evidence of sources of cash other than those in the records summarized (Byrne trans. at 50).
Gibson did not provide the IRS agents with any leads to other sources of cash (Greber trans. at 43-44), nor did he offer any explanation at trial for the discrepancy between his claimed cash expenses and the available cash figure developed by...
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