United States v. Grunewald, 95

• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
• Citation: 233 F.2d 556
• Docket Number: No. 95,Docket 23604.,95
• Parties: UNITED STATES of America, Appellee, v. Henry W. GRUNEWALD, Daniel A. Bolich and Max Halperin, Appellants, and Max Steinberg, Harry T. Scherm, Milton Hoffman, Irving Davis and Samuel Schopick, Defendants.
• Decision Date: 10 April 1956

233 F.2d 556 (1956)

UNITED STATES of America, Appellee,
v.
Henry W. GRUNEWALD, Daniel A. Bolich and Max Halperin, Appellants, and
Max Steinberg, Harry T. Scherm, Milton Hoffman, Irving Davis and Samuel Schopick, Defendants.

No. 95, Docket 23604.

United States Court of Appeals Second Circuit.

Argued November 15 and 16, 1955.

Decided April 10, 1956.

Rehearing Denied June 1, 1956.

233 F.2d 557

COPYRIGHT MATERIAL OMITTED

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Corbin, Bennett & Delehanty, New York City (Harold H. Corbin and Edward J. Bennett, New York City, of counsel), for appellant Grunewald

Frank Aranow and Rudolph Stand, New York City (Frank Aranow and Rudolph Stand, of counsel), for appellant Bolich.

Henry G. Singer, Brooklyn, N. Y. (Henry G. Singer and Harry Silver, Brooklyn, N. Y., of counsel), for appellant Halperin.

Paul W. Williams, U. S. Atty., for Southern District of New York, New York City (Howard A. Heffron and Miriam R. Goldman, Asst. U. S. Attys., New York City, of counsel), for appellee.

Before FRANK, MEDINA and HINCKS, Circuit Judges.

MEDINA, Circuit Judge.

The case involves the activities of a tax-fixing ring in Washington and New York generally, and especially in connection with the taxpayers Pattullo Modes, Gotham Beef Company and at least one other. The indictment was filed on October 25, 1954, against appellants Henry W. Grunewald, Daniel A. Bolich and Max Halperin and others: in Count 1 all defendants are charged with conspiracy to defraud the United States in the exercise of its governmental functions of administering the internal revenue laws and of detecting and prosecuting violations of the internal revenue laws free from improper influence, dishonesty, fraud and corruption, and in the right and interest of the government in the

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conscientious, honest and faithful services, judgments, determinations, and actions of the defendants who were members of the Bureau of Internal Revenue, and to conceal the acts of the conspirators, in violation of the general conspiracy statute, 18 U.S.C. § 371; in Count 2 substantially the same charge is made against Bolich, Steinberg and Scherm, as employees of the Bureau of Internal Revenue, in violation of 26 U.S.C. § 4047 (e) (4); and in Counts 5, 6 and 7 appellant Halperin is charged with having corruptly endeavored to influence witnesses before the Grand Jury in the Eastern District of New York to give false testimony concerning certain of the transactions involved in the tax-fixing scheme alleged in Count 1, in violation of 18 U.S.C. § 1503 and § 1505. The general, continuing conspiracy is alleged to have been in operation from January 1, 1946 to the return date of the indictment; and the activities of Halperin, charged in Counts 5, 6 and 7, are alleged to have taken place in March, 1952. Counts 3 and 4 were dismissed and are not involved on this appeal

Steinberg and Scherm were acquitted; the appellants were found guilty as charged. Grunewald was sentenced to five years imprisonment and $10,000 fine on the conspiracy charge; Bolich was sentenced to five years imprisonment and $10,000 fine on the general conspiracy charge and to three years imprisonment and $5,000 fine on the charge of conspiring while an employee of the Bureau of Internal Revenue, the prison sentences to run concurrently; and Halperin was sentenced to five years imprisonment and $5,000 fine on the conspiracy charge and two years imprisonment and $1,000 fine on each of the three charges of corruptly endeavoring to influence witnesses, the prison sentences to run concurrently. Halperin testified in his own defense; the others did not.

Each of the appellants contends that the evidence is not sufficient to support a finding that he was a party to the conspiracy as charged; that the charge of conspiracy to conceal, coupled with the fact that overt acts were alleged to have taken place in 1951 and 1952, constituted a mere device to avoid the running of the Statute of Limitations which is said to be a bar to prosecution of the conspiracy charges; and that each of the appellants was deprived of a fair trial by reason of numerous allegedly erroneous rulings.

Sufficiency of Proof

The proof of the existence of a single, over-all conspiracy is simply over-whelming. The complicity of Halperin, as well as Davis, Hoffman and others, is established beyond peradventure of a doubt. The evidence is no less convincing against Grunewald and Bolich, and the jury were warranted in drawing the conclusion that all the circumstances taken together established beyond reasonable doubt that Grunewald and Bolich were not only members of the conspiracy, but that they were "the fixers."

The first reference in the proofs to the Pattullo Modes case is to a time in 1947. Bolich was then Special Agent in charge of the Intelligence Unit of the Bureau of Internal Revenue in New York City. In the fall of 1948, he became Assistant Commissioner of Internal Revenue, with his office in Washington and his living quarters in part of a suite, in the Hotel Washington, maintained as an office by Grunewald and at his expense. The intimacy between Bolich and Grunewald during the time of the events relevant to this case is amply proved. Scherm was a Civil Audit Agent in New York and Steinberg was his superior. These two play a minor role.

Schopick, Davis and Hoffman were named as defendants and as co-conspirators, but the case as to them was severed. The first two, partners in the law firm of Schopick & Davis, were not adverse to letting it get around that they could do a good job in income tax fraud cases, irrespective of the merits. Hoffman was employed by them as a business chaser, receiving a split of the fees on the business brought in by him. Occupying office space with the firm, was appellant Halperin, who happened to be an old

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friend of Grunewald. Schwaeber & Saver, another law firm, was brought into the Pattullo Modes case by Schopick & Davis under circumstances which will again be briefly referred to, and they played an innocent but nonetheless effective role in the operation of the conspiracy

Pattullo Modes was a New York dress manufacturing concern controlled by family stockholders. From 1942 through 1946 Pattullo Modes had defrauded the government of corporate and individual income and other taxes by the simple expedient of making off-the-record sales and "jacking up the travel and entertainment accounts," putting the cash proceeds of over $300,000 in a safe deposit box.

Louis M. Berman and his brother as partners were the owners of Gotham Beef Co., ship chandlers. Monroe Tobias, associated with H. Merdinger & Co., was the Gotham Beef Co. accountant. Gotham Beef Co. had failed to report income from sales of meat at above ceiling prices on their partnership and individual income tax returns, claiming that this income was offset by unreported purchases at over ceiling prices. The off-the-record sales were in the neighborhood of $100,000, and the documentary proof of the cash premium payments over the ceiling prices amounted to only between 10 and 20 per cent of the over ceiling sales.

In the spring of 1947 Scherm who had been making an audit of Pattullo Modes told Smith, the Pattullo Modes accountant, that an examination of a customer of Pattullo Modes had revealed that "there were certain sales or certain income that was missing" and that a Form 917 disclosing such information was out against them. The effect of this on the Pattullo Modes' people need not be described. It was in June, 1947, that the Gotham Beef Co. case reached a critical stage.

The sordid details of how both cases found their way to the law offices of Schopick & Davis were related at the trial. The upshot of the testimony of the taxpayers and of Davis and Hoffman, all of whom turned state's evidence, was that, after a number of preliminary moves to obtain assurances of no criminal prosecution had proved futile, Davis told Halperin that they needed some "real help." Halperin suggested that such help might be obtained from Grunewald in Washington, an old friend of his and, far more important, "a close personal friend" of Bolich, the Agent in Charge in New York. In due course Pattullo Modes produced $100,000 in cash and Gotham Beef Co. produced $60,000 in cash, for "the man in Washington," to be paid over to him when the assurances of no criminal prosecution were officially given.

Another case, that of "the Glovers," comes in only incidentally because it ended in an impasse over price. Davis testified that Halperin told him that Grunewald wanted "something in the neighborhood of $175,000 or $200,000," and that he and his associates withdrew from the case when "the Glovers" said $100,000 was as high as they would go.

There is abundant and convincing evidence of how the taxpayers raised the huge amounts of cash said to have been demanded by Grunewald, without disposing of assets, cashing checks or leaving other traces of their having done so; of the details of counting the money and putting it in various safe deposit boxes with safeguards that delivery to Grunewald should not be made until official announcement was made that there would be no criminal prosecution of the taxpayers. There was no direct proof that any part of these sums reached the hands of Bolich; nor did any witness testify to the delivery of either sum to Grunewald. However, in October, 1948, after the Gotham Beef case was closed out "on a no prosecution basis," Tobias called Greenstein, co-escrowee with Halperin, and told him he could release the money to Halperin. A few days later Greenstein told Tobias that he had done so; and Halperin informed Davis that he had taken the money to Washington and delivered it to Grunewald. Hoffman testified that, after the official decision not

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to prosecute Pattullo Modes was made, he went with Halperin to Halperin's safe deposit box in the Chemical Bank and Trust Company. Together they counted the $100,000,...