United States v. Henderson, S-74 Cr. 866.

• Decision Date: 20 November 1974
• Docket Number: No. S-74 Cr. 866.,S-74 Cr. 866.
• Citation: 386 F. Supp. 1048
• Parties: UNITED STATES of America, v. Lyle C. HENDERSON, a/k/a "Skitch" Henderson, Defendant.
• Court: U.S. District Court — Southern District of New York

386 F. Supp. 1048

UNITED STATES of America, v. Lyle C. HENDERSON, a/k/a "Skitch" Henderson, Defendant.

No. S-74 Cr. 866.

United States District Court, S. D. New York.

November 6, 1974.

Reargument November 20, 1974.

COPYRIGHT MATERIAL OMITTED

Paul J. Curran, U. S. Atty. for the Southern District of New York, New York City, for United States of America; Thomas D. Edwards and David A. Cutner, Asst. U. S. Attys., of counsel.

Louis Bender, New York City, for defendant; Sandor Frankel, New York City, of counsel.

EDWARD WEINFELD, District Judge.

MOTION TO DISMISS THE INDICTMENT

The mere fact that another, who allegedly committed the same offense for which the defendant has been indicted, has not also been indicted does not, by itself, establish the defense of selective prosecution. The defendant has the burden of establishing prima facie (1) that he has been singled out for prosecution, while others who committed the same offense have not generally been proceeded against; and (2) that the alleged discriminatory selection of him was motivated by vindictiveness or bad faith, such as impermissible considerations of race, religion or a purpose to prevent him from exercising his constitutional rights. United States v. Berrios, 501 F.2d 1207 (2d Cir., 1974). There has been no such showing here.

The request for a hearing to take testimony with respect to the person allegedly favored by nonprosecution — in effect, to try that alleged violation in this court — is so palpably a fishing expedition and a dilatory tactic as to require no other comment.

Finally, the simple and undeniable fact is that there are hundreds of prosecutions for income tax evasion, which essentially is the basic charge against the defendant here. The method allegedly used to achieve the violation does not change the nature of the offense.

The motion is denied.

MOTION TO DISMISS COUNTS 1, 2, 3 and 8

This is a motion by the defendant, named in an eight count indictment, to dismiss counts 1, 2, 3 and 8. Cutting through the technical and at times prolix allegations of the various counts of the indictment, the hard core of the charges against the defendant is an alleged attempt to evade the payment of substantial income taxes for the calendar years 1969 and 1970, by the use of back-dated and fraudulent documents and false statements designed to obtain the benefit of deductions for charitable donations as permitted under the law prior to July 25, 1969. Thus a basic charge of tax evasion in two years has proliferated into an eight count indictment which charges: (1) the use of the mails in furtherance of a scheme to defraud — counts 1, 2 and 3;¹ (2) an attempt to evade and defeat payment of a large part of the income taxes due for 1969 and 1970 — counts 4 and 6;² (3) subscribing on each of the returns to false and fraudulent statements which defendant did not believe to be true — counts 5 and 7;³ and (4) corrupt obstruction of the due administration of law by the submission to the Internal Revenue Service during an audit of a false, fictitious and back-dated document — count 8.⁴

The charges against the defendant revolve about deductions for charitable donations of musical scores and arrangements. Congress amended, effective July 25, 1969, the income tax laws, so that the creator of musical compositions could deduct charitable donations made by him of such compositions, only to the extent of his basis in the property,⁵ and not the fair market value (as was the case prior to the amendment).

The first branch of the defendant's motion to dismiss is directed to the first three counts, the "mail fraud" counts. To put the motion in proper perspective, it is desirable to analyze counts 4 and 6, the basic income tax evasion counts. Count 4, which relates to the 1969 calendar year, alleges that the defendant attempted to evade or defeat a large part of the income taxes owed by him and his wife for that year, by "signing" and "mailing" to the Internal Revenue Service an income tax return, which was false and fraudulent in that he claimed a personal deduction for the "donation of a music library to the University of Wisconsin consisting of 1,000 original music scores and arrangements of Skitch Henderson the defendant fair market value at date of gift of $350,000;" that to support this claim he annexed to the return a forged and fraudulent document which had been back-dated by one year; that the donation in fact had not been made in the year 1969 but thereafter, and defendant knew he was not entitled to the deduction if the donation occurred after July 25, 1969; further, that in any event, the donation did not have a fair market value of $350,000, but was virtually worthless, as he also knew. Count 6, based upon substantially the same allegations of fraudulent conduct, charges an attempt to evade or defeat payment of taxes due in 1970, by claiming a personal carry-over deduction for the donation.

We now turn to the three counts which charge violations of the mail fraud statute.⁶ These charge that the defendant devised a scheme to defraud the Internal Revenue Service and to obtain money and property by means of false and fraudulent pretenses and representations; that it was part of the scheme that defendant would defraud the Internal Revenue Service by filing false and fraudulent personal income tax returns for the years 1969 and 1970, and by submitting additional false, fictitious, back-dated and fraudulent documents and statements to the Internal Revenue Service for the purpose of causing it to compute his income tax, and to audit and review his tax returns, on the basis of such back-dated and fraudulent documents; further, that it was a part of the scheme to defraud that defendant would obtain a tax deduction of $350,000 and a reduction of his income taxes over a period of years in a sum in excess of $100,000, to which he knew he was not entitled, by (1) falsely claiming the donation of his music library had a fair market value of $350,000, when it had a value of less than one percent of that amount; and by (2) falsely claiming that the donation had been completed prior to July 25, 1969, whereas it had not been completed until 1971, and defendant was therefore only entitled to a tax deduction of his basis in said property, which was virtually zero. Up to this point, these allegations in substance charge the same fraudulent conduct referred to in the tax counts, counts 4 and 6. However, the mail fraud counts set forth correspondence between the defendant and the University of Wisconsin and others, some of which were attached to the 1969 and 1970 returns and which contained the alleged false and fraudulent statements. Those counts continue with the final and inevitable allegations to conform to the mail fraud statute, that "for the purpose of executing and attempting to execute said scheme and artifice to defraud," the defendant mailed and caused to be mailed specific items, each of which is the subject of a separate count. Thus count 1 is based upon a letter dated December 31, 1969, mailed by the defendant to the University of Wisconsin, in which he proposed to donate the music library and stated, allegedly falsely, that Leonard Bernstein, Henry Mancini, Victor Alpert (librarian of the Boston Symphony and Boston Pops) and he were of the view that a fair evaluation per selection in the library was $650. Count 2 is based upon the mailing of the 1969 income tax return, to which was attached a memorandum dated January 12, 1969, one of the items it is charged the defendant knew was back-dated. This count repeats substantially verbatim the allegations of false and fradulent statements in count 4, which charges an attempt to evade taxes due for 1969. Count 3, the final mail fraud count, is based upon the mailing of the 1970 income tax return. The thrust of the charge is defendant's claim for a personal carry-over deduction of $316,511 for the donation to the University of Wisconsin, when (just as the 1970 tax evasion count, count 6, alleges) he knew he was not entitled to that deduction, since the said donation had not been made during 1969. There can be no doubt, despite the lengthy historical allegations under the mail fraud charges, that the scheme to defraud charges the same fraudulent conduct by which it is alleged the defendant attempted to evade payment of his taxes for the years 1969 and 1970, as charged in counts 4 and 6; further, that it charges the same conduct which is made the subject of the false statement charges as to each tax year in counts 5 and 7. The only difference is the addition of the use of the mails to effectuate the alleged scheme to defraud.

The defendant contends that the mail fraud statute was not intended by Congress to apply to a scheme to defraud the United States in an attempt to evade the payment of taxes, which is the scheme charged in counts 1-3.⁷ I am inclined to agree. Independent research by the court has failed to reveal a single instance of such a prosecution, and the government has not suggested any prior indictment under similar circumstances. Of course, "the fact that there is no reported decision involving similar factual circumstances or legal theories is not determinative"⁸ of the statute's applicability. The basic question is whether the mail fraud statute was "intended" by Congress to apply to the scheme set forth in counts 1-3.

Realistically, it is somewhat of a fiction to speak of whether Congress "intended" the mail fraud statute to apply to schemes to evade payment of federal income taxes. The predecessor to the present mail fraud statute was enacted in 1889,⁹ almost twenty-five years before the adoption of the constitutional amendment authorizing the imposition of a federal income tax¹⁰ and the passage of the predecessor of the present income tax laws.¹¹ Obviously there could have been no consideration in 1889 of the mail fraud statute with reference to laws enacted twenty-five years later under...