United States v. Goodman

• Decision Date: 30 March 1961
• Docket Number: No. 8135.,8135.
• Citation: 289 F.2d 256
• Parties: UNITED STATES of America and O. Gordon Delk, Acting Commissioner of Internal Revenue, Appellees, v. Richard GOODMAN, also known as Dick Goodman, Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

289 F.2d 256 (1961)

UNITED STATES of America and O. Gordon Delk, Acting Commissioner of Internal Revenue, Appellees, v. Richard GOODMAN, also known as Dick Goodman, Appellant.

No. 8135.

United States Court of Appeals Fourth Circuit.

Argued October 12, 1960.

Decided March 30, 1961.

Kenneth Carroad, New York City (Harry Spilka, Norfolk, Va., Theodore Propp, New York City, and Edwin L. Wolf, Garden City, N. Y., on the brief), for appellant.

Norman H. Wolfe, Atty., Dept. of Justice, Washington, D. C. (Charles K. Rice, Asst. Atty. Gen., Lee A. Jackson, Meyer Rothwacks and Burt J. Abrams, Attys., Dept. of Justice, Washington, D. C., and Joseph S. Bambacus, U. S. Atty., Richmond, Va., on the brief), for appellees.

Before SOBELOFF, Chief Judge, BOREMAN, Circuit Judge, and STANLEY, District Judge.

BOREMAN, Circuit Judge.

Having been ordered by the United States District Court for the Eastern District of Virginia to answer certain questions propounded to him in a Tax Court proceeding, Richard Goodman prosecutes this appeal, asserting that the court erred in denying his claim of privilege under the Fifth Amendment to the Constitution of the United States.

For several years before 1950, Goodman was employed by Associated Barr Stores, Inc., the latter being hereinafter referred to as "Associated," which owned and operated a chain of retail jewelry stores with a principal office in Philadelphia. Goodman was manager of Associated's Norfolk, Virginia, store. In 1949 and 1950, the Internal Revenue Service was investigating the tax liability of Associated for the years 1944 through 1947. When Goodman was interrogated by Internal Revenue Agents in 1950, he signed an affidavit relating that Samuel Berman, Secretary of Associated, who resided in Philadelphia, had directed him not to ring up on the cash register or enter in the books certain receipts from cash sales of jewelry but to forward this money by Railway Express to Berman at the main Philadelphia office. Goodman had prepared a memorandum of these alleged instructions and had placed it in his safe deposit box in a Norfolk bank. He took the agents to the box and they extracted therefrom the memorandum confirming this arrangement. They found in the box another paper, purportedly a summary of the amounts of cash sent by Railway Express in packages to the Philadelphia office of Associated, marked for the attention of Samuel Berman. In his affidavit, Goodman claimed to have received $5,000 from Mr. Berman for following instructions. Goodman's employment was terminated in 1950, following his disclosures to the agents, and he was then employed by a competitor in Norfolk where he continued to reside until early 1957.

In June of 1953, Associated was notified by the Commissioner of Internal Revenue that he had determined certain tax deficiencies and penalties against it for the years 1944 to 1948. In September of the same year, Associated instituted a proceeding in the Tax Court seeking a redetermination of these deficiencies. At the hearing before the Tax Court on June 13, 1955, and after Associated had presented evidence, the Commissioner called Goodman, who had been served with a subpoena duces tecum, as his first witness. Goodman, however, on the advice of counsel, refused to answer several questions relating to his activities with Associated before 1950 and to his affidavit.¹ He invoked his Fifth Amendment privilege against self-incrimination.² At the Government's request, the Tax Court hearing was then adjourned and the Government filed a motion in the District Court seeking an order compelling Goodman to answer.

Hearings were held in the District Court in December 1955 and May 1959. On June 14, 1956, Goodman submitted to the court an affidavit purporting to disclose his reasons for declining to answer in the Tax Court and to show his good faith in the claim of his constitutional privilege. One of the several reasons assigned was that many of the assertions in his 1950 affidavit were false and that if he were forced to disclose the actual facts he might be implicated in a continuing conspiracy to evade the federal income tax law. Another reason was that from 1944 through 1950 he was engaged in certain business transactions other than those connected with his immediate employment and to disclose them might give rise to a prosecution on the theory that certain amounts had been omitted from his gross income. It was intimated, as a further reason, that he might have been charged with embezzlement since he had been making reimbursements to Associated out of salaries and commissions for a period of more than one year prior to termination of his employment.

The long delays in holding hearings were attributed by the District Court to counsel for both the Government and Goodman and to the congested condition of court dockets. Finally, in January 1960, the District Court entered the order from which this appeal was taken. It directed Goodman to answer the questions propounded in the Tax Court proceedings, to give testimony with respect to all matters embraced or included in the sworn statement given to the Internal Revenue Agents and to produce the documents and other data called for by the subpoena duces tecum. The order further provided that, in event of noncompliance therewith, Goodman should appear before the District Court, as he might be directed, to show cause why he should not be required to obey the order and why he should not be held in civil contempt. The court held that there was no possibility of self-incrimination since any illegal activities suggested by the evidence ended upon termination of Goodman's employment in 1950 and prosecution for a continuing conspiracy was thus barred by the six-year statute of limitations;³ and that prosecution for other suggested possible offenses was barred by the appropriate limitations statutes.

The District Court, after reviewing the facts purportedly disclosed in the 1950 investigation, stated 178 F.Supp. 342:

"Such facts, assuming that a criminal act has been committed, suggest that Goodman was a party to a conspiracy to fraudulently evade and defeat the payment of income taxes."

The court concluded:

"Assuming arguendo that Goodman had not waived his privilege of self-incrimination, and that the period of limitation had not expired on June 13, 1955, when he refused to answer certain questions in the Tax Court, it is abundantly clear that Goodman may no longer be prosecuted, tried, or punished for any federal crime committed in connection with the handling of cash sales of the corporate taxpayer."

The court further held that in view of the appropriate statutes of limitation, Goodman could not, at the date of the final order, be prosecuted for possible perjury committed in 1950, for embezzlement of his employer's funds, for possible tax evasion for failure to report his own income prior to 1950 or for conspiracy with representatives of Associated, which conspiracy ended in 1950. We cannot say that the District Court erred in these particulars.

In determining whether a witness is or is not entitled to invoke his Fifth Amendment privilege against self-incrimination, certain basic principles must be considered and applied. Many cases are to be found in which such privilege has been asserted and has been either denied or upheld. It is quite unnecessary, even if it were possible, to here attempt to refer specifically to all of these cases and point out their distinguishing features. In selecting persuasive applicable authority from which general principles may be deduced, each case must be analyzed in the light of the factual situation there presented.

The Government suggests that Goodman's disclosures to the federal agents in 1950 constituted a waiver of his Fifth Amendment privilege asserted in the Tax Court hearing. This argument is entirely without merit and has been repeatedly rejected by the courts. It has been uniformly held that a prior disclosure to investigating officials cannot constitute a waiver of the privilege with respect to the same matter in a subsequent legal proceeding. A waiver of the privilege must occur in the same proceeding in which it is sought to be invoked. Poretto v. United States, 5 Cir., 1952, 196 F.2d 392; Marcello v. United States, 5 Cir., 1952, 196 F.2d 437; In re Neff, 3 Cir., 1953, 206 F.2d 149, 36 A.L.R. 2d 1398; and United States v. Miranti, 2 Cir., 1958, 253 F.2d 135.

Of course, if by reason of the statute of limitations there remains no possibility that a prosecution of the witness could result from or be assisted by his answers to questions, he is not justified in refusing to answer. Brown v. Walker, 1896, 161 U.S. 591, 16 S.Ct. 644, 40 L.Ed. 819; Hale v. Henkel, 1906, 201 U.S. 43, 26 S.Ct. 370, 50 L.Ed. 652.

In reviewing the development of applicable principles, we note the case of Counselman v. Hitchcock, 1892, 142 U.S. 547, 12 S.Ct. 195. Involved was a grand jury investigation of possible violations of the Interstate Commerce Act, 49 U.S. C.A. § 1 et seq., by a certain railroad. Counselman, who had received rates from this particular road, declined to answer whether he had ever been offered or had obtained any rebates, drawbacks or commissions. The court upheld him in refusing to answer and stated 142 U.S. at page 562, 12 S.Ct. at page 198:

"It is impossible that the meaning of the constitutional provision can only be that a person shall not be compelled to be a witness against himself in a criminal prosecution against himself. It would doubtless cover such cases; but it is not limited to them. The object was to insure that a person should not be compelled, when acting as a witness in any investigation, to give testimony which might tend to show that he himself had committed a crime."

This statement could well have been amplified by adding "for which he might be prosecuted" at the end of the above quotation.

Brown v. Walker, supra, 161 U.S. 591, 16 S.Ct. 644, was a similar...