United States v. Knox Coal Company

• Decision Date: 21 June 1965
• Docket Number: No. 14803.,14803.
• Citation: 347 F.2d 33
• Parties: UNITED STATES of America v. KNOX COAL COMPANY, Robert L. Dougherty, August J. Lippi, Josephine Sciandra and Louis Fabrizio, August J. Lippi, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

347 F.2d 33 (1965)

UNITED STATES of America v. KNOX COAL COMPANY, Robert L. Dougherty, August J. Lippi, Josephine Sciandra and Louis Fabrizio, August J. Lippi, Appellant.

No. 14803.

United States Court of Appeals Third Circuit.

Argued October 8, 1964.

Decided June 21, 1965.

As Amended June 25, 1965.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Jacob W. Friedman, New York City, (Edwin M. Kosik, Scranton, Pa., on the brief), for appellant.

John P. Burke, Criminal Tax Div., Dept. of Justice, Washington, D. C. (Louis F. Oberdorfer, Asst. Atty. Gen., Lee A. Jackson, Joseph M. Howard, Attys., Dept. of Justice, Washington, D. C., on the brief), Bernard J. Brown, U. S. Atty., Washington, D. C., of counsel, for the United States.

Before KALODNER, GANEY and FREEDMAN, Circuit Judges.

GANEY, Circuit Judge.

The Knox Coal Company ("Company") was indicted on March 10, 1961, along with four individuals named respectively Robert L. Dougherty, Josephine Sciandra, Louis Fabrizio and August J. Lippi. The indictment contained seven counts. Six of them were based on violations of 26 U.S.C.A. § 7201¹; the other on a transgression of 18 U.S.C.A. § 371, the general conspiracy section of the Criminal Code. Count I in substance charged the Company alone with willfully attempting to evade and defeat a large part of the taxes due and owing by it for the fiscal year ended June 30, 1957, by filing and causing to be filed a false income tax return for that period when it knew that the tax due was understated therein by $80,445.45. Count II accused the four individuals with having conspired from on or about July 1, 1956, to September 12, 1957, (the date of the filing of the return) to commit the offenses of willful attempts to evade and defeat the corporate income taxes of the Company for the fiscal year ended with June 30, 1957. Count III charged the same four individuals with the substantive offense of willfully attempting to evade and defeat the payment by the Company of $80,445.45 in income taxes for the fiscal year ended June 30, 1957, by causing to be entered on the payroll records of the Company the names of persons who were not employees of the Company; causing funds of the Company to be paid in the form of wages to or in the names of those persons; causing to be entered on the books and records of the Company, and causing funds of the Company to be paid in the form of costs and expenses which they knew were not in fact costs and expenses of the Company; and causing the Company to claim falsely in its Federal income tax return for the fiscal year ended June 30, 1957, income tax deductions for those payments. Counts IV and V averred that Sciandra did willfully attempt to evade and defeat income taxes owed by her for the years 1956 and 1957. Counts VI and VII claimed that Fabrizio did also willfully attempt to evade and defeat a large part of his income taxes for the same years.

Lippi's motion to dismiss the indictment for alleged insufficiency was denied by the district court. Each of the defendants except Lippi filed a motion for severance. These motions were denied. The Company, Dougherty, Sciandra and Lippi plead not guilty to the charges against them. Fabrizio plead guilty to Counts III and VI. Immediately prior to trial, counsel for the Company withdrew from the case. Additionally, Counts II and VII, against Fabrizio, with the consent of the Government, were severed; and the Court, apprised of Dougherty's being hospitalized, stated it would proceed without him with no objection from either the Government or Dougherty's counsel. The Company, unrepresented by counsel, went to trial under Count I, Sciandra and Lippi under Counts II and III, and Sciandra under Counts IV and V. After a trial at Lewisburg, Pa., which began on April 2, 1961 and ended on April 13, the jury found the three defendants guilty on the counts under which they were tried.² Thereafter, Sciandra and Lippi filed motions for arrest of judgment, for judgment of acquittal and for a new trial. These motions were denied on December 20, 1962.³ Lippi filed a motion for a new trial on the grounds of newly discovered evidence. This motion was denied on October 10, 1963.⁴

The Company was fined $10,000. On Count II, Lippi was sentenced to pay a fine of $5,000 and to serve three years in prison. On Count III, imposition of sentence was suspended and he was placed on probation for three years to begin on his release from prison under Count II, "A condition of probation being that all delinquent taxes shall be paid." Sciandra and Fabrizio also received fines and sentences. With the consent of the district court, Counts II and VII were dismissed as to Fabrizio. Only Lippi has appealed.

I.

Lippi's first contention is that the district court erred in denying his motion for arrest of judgment as to Count II because it failed to allege a crime against the United States. That motion was based on the ground that the count fails to charge a crime against the United States because it does not, excluding the last paragraph under the overt acts, allege, as is asserted under Counts I and III, that a tax in excess of that reported by the Company was due the United States.

Happily, the rule that an indictment, to be sufficient, must contain all the elements of a crime "and sufficiently apprise the defendant of what he must be prepared to meet" is still a vital part of our Federal criminal jurisprudence. Russell v. United States, 369 U.S. 749, 763-766, 82 S.Ct. 1038, 8 L.Ed.2d 240 (1962); United States v. Deutsch, 243 F.2d 435 (C.A.3, 1957); United States v. Tornabene, 222 F.2d 875, 878, (C.A.3, 1955). At page 765, 82 S.Ct. at page 1047 of the Russell case, supra, the Supreme Court states:

"* * * `In an indictment upon a statute, it is not sufficient to set forth the offence in the words of the statute, unless those words of themselves fully, directly, and expressly, without any uncertainty or ambiguity, set forth all the elements necessary to constitute the offence intended to be punished; * * *.\' United States v. Carll, 105 U.S. 611, 612 26 L.Ed. 1135. `Undoubtedly, the language of the statute may be used in the general description of an offense, but it must be accompanied with such a statement of the facts and circumstances as will inform the accused of the specific offense, coming under the general description, with which he is charged.\' United States v. Hess, 124 U.S. 483, 487 8 S.Ct. 571, 31 L.Ed. 516. See also Pettibone v. United States, 148 U.S. 197, 202-204 13 S.Ct. 542, 37 L.Ed. 419; Blitz v. United States, 153 U.S. 308, 315 4 S.Ct. 924, 38 L. Ed. 725; Keck v. United States, 172 U.S. 434, 437 19 S.Ct. 254, 43 L.Ed. 505; Morisette v. United States, 342 U.S. 246, 270, n. 30 72 S.Ct. 240, 96 L.Ed. 288. Cf. United States v. Petrillo, 332 U.S. 1, 10-11 67 S.Ct. 1538, 91 L.Ed. 1877."

Section 7201 of the Internal Revenue Code of 1954 proclaims that any person who willfully attempts to evade or defeat any tax imposed by Title 26 in any manner shall be guilty of a felony. In Sansone v. United States, 380 U.S. 343, p. 351, 85 S.Ct. 1004, p. 1010, 13 L.Ed.2d 822 (March 29, 1965), the Court states: "The elements of § 7201 are willfulness; the existence of a tax deficiency, Lawn v. United States, 355 U.S. 339, 361 78 S.Ct. 311, 2 L.Ed.2d 321; Spies v. United States 317 U.S. 492, 63 S.Ct. 364, 87 L.Ed. 418 (1943), supra, 317 U.S. at 496 63 S.Ct. at 366; and an affirmative act constituting an evasion or attempted evasion of the tax, Spies v. United States, supra."

In its introductory part, Count II names the Company as being a corporation with its business office at Exeter, Pa.; it identifies Dougherty as having been president of the Company during the conspiracy; Fabrizio as secretary and treasurer; Sciandra as a stockholder; and Lippi as president of District 1, United Mine Workers of America. It then goes on to charge that these four individuals did unlawfully, knowingly and willfully conspire together and with other persons unknown to commit certain offenses against the United States, to wit:

"(a) The offenses of wilful attempts to evade and defeat, corporate income taxes of Knox Coal Company for the fiscal year ended June 30, 1957, a felony, in violation of Section 7201 of Title 26 of the United States Code."

This quoted portion does not incorporate by reference or refer to any other part of the count or indictment. Of course, unless the charging part of a conspiracy count specifically refers to or incorporates by reference allegations which appear under the heading of the overt acts, resort to those allegations may not be had to supply the insufficiency in the charging language itself. Joplin Mercantile Co. v. United States, 236 U.S. 531, 535, 35 S.Ct. 291, 59 L.Ed. 705 (1915); United States v. Deutsch, supra, 243 F. 2d at 436. Also see United States v. Apex Distributing Co., 148 F.Supp. 365, 370 (D.C.R.I.1957). However, the failure of the charging part to declare that a tax in excess of that reported was due is not fatal. In a conspiracy count, the conspiracy is the gist of the offense. Where, as here, the purpose of the conspiracy is the performing of acts which are made an offense by another section of the Criminal Code, every element of that offense need not be set forth. A conspiracy count need not plead the substantive offense letter-perfect because the purpose of the conspiracy may have been accomplished even though such activity fell short of completing a substantive offense. United States v. Rabinowich, 238 U.S. 78, 86, 35 S.Ct. 682, 59 L.Ed. 1211 (1915).

Lippi also claims that the count does not fully and clearly set forth the purpose of the conspiracy. In Pettibone v. United States, 148 U.S. 197, p. 203 13 S.Ct. 542, p. 545, the Supreme Court observes:

"A conspiracy is sufficiently described as a combination of two or more persons, by concerted action, to accomplish a criminal or unlawful purpose, or some purpose not in itself criminal or unlawful,

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