United States v. McCue

• Decision Date: 20 March 1962
• Docket Number: Dockets 26693,No. 27,28,26694.,27
• Citation: 301 F.2d 452
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. James O. McCUE, Jr., Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. James O. McCUE, Sr., Defendant-Appellant.
• Court: U.S. Court of Appeals — Second Circuit

301 F.2d 452 (1962)

UNITED STATES of America, Plaintiff-Appellee, v. James O. McCUE, Jr., Defendant-Appellant.

UNITED STATES of America, Plaintiff-Appellee, v. James O. McCUE, Sr., Defendant-Appellant.

Nos. 27, 28, Dockets 26693, 26694.

United States Court of Appeals Second Circuit.

Argued December 15, 1961.

Decided March 20, 1962.

Certiorari Denied June 25, 1962.

John P. Burke, Washington, D. C. (John B. Jones, Jr., Acting Asst. Atty. Gen., Joseph M. Howard, Eldon F. Hawley, Attys., Dept. of Justice, Richard B. Buhrman, Atty., I. R. S., on the brief), for plaintiff-appellee.

Simon H. Rifkind (of Paul, Weiss, Rifkind, Wharton & Garrison), New York City (Samuel J. Silverman, John G. Simon, Allan L. Blumstein, New York City, of counsel, and George F. Lowman, Cummings & Lockwood, and Francis J. McNamara, of Stamford, Conn., on the brief), for defendants-appellants.

Before LUMBARD, Chief Judge, and MOORE and HAYS, Circuit Judges.

Certiorari Denied June 25, 1962. See 82 S.Ct. 1586.

HAYS, Circuit Judge.

Defendants appeal from judgments of conviction entered, after separate trials, upon jury verdicts finding them guilty under 18 U.S.C. § 1001¹ of making false statements to Special Agents of the Internal Revenue Service. McCue, Jr., who was convicted on two counts, was fined $5000 and sentenced to one year in prison on each count, the terms to run concurrently and to be suspended after service of four months, after which he is placed on probation for one year. McCue, Sr., who was convicted on one count, was fined $5000 and sentenced to one year in prison, with the same provision for suspension after four months and for a year's probation. We affirm the judgments.

The McCues, father and son, were respectively President and Vice-President of the Stamford Rolling Mills Company, a corporation operating a plant for the rolling of strip copper and brass at Springdale, a suburb of Stamford, Connecticut. All of the stock of the corporation was owned by the McCue family and family trusts, McCue, Sr. owning between seventy and eighty percent of the common stock.

Sometime prior to 1952 the Internal Revenue Service undertook an investigation of the tax returns of the McCues and of the Company which eventually covered the years 1946 to 1952. From 1952 onward this investigation was in the immediate charge of Special Agent Richard Baker.

1. McCue, Sr.

On August 13, 1954, McCue, Sr., having volunteered to do so, appeared before the Treasury agents who were conducting the investigation, and testified under oath. In the course of the examination McCue, Sr. was questioned with regard to a water well which was drilled on property owned by him and occupied as a home, and which was paid for by the Company. He testified that negotiations for the work on the well were carried on by one Jack McCue, his brother, who had acted on his own initiative and without orders from McCue, Sr. When McCue, Sr. was asked: "You didn't have a thing to do with it?", he replied, "Not a thing."

The one count of the indictment on which McCue, Sr. was convicted was based upon the falsity of this answer. There was ample evidence of falsity. This evidence established that McCue, Sr. had in fact on several occasions discussed his need for more water with Downey, the purchasing agent of the Company, and sometime late in 1950 or early in 1951, in his own office and in the presence of McCue, Jr., had instructed Downey to have wells drilled on his property and on the property occupied as a home by McCue, Jr. Downey engaged the services of a company in the business of drilling wells and the two wells were drilled. Downey discussed with McCue, Sr. certain difficulties which were encountered in the course of drilling the wells. The well on the property of McCue, Sr. was about three hundred feet from his house and the derrick used in drilling it was about forty or fifty feet high. The drilling equipment makes a noise like a pile driver.

The bills for drilling the wells were paid by the Company and charged to "Repair Expenses," which were taken as a deduction in the corporate income tax return.

Jack McCue had nothing whatever to do with the well drilling or the negotiations, and the men in charge of the drilling had never even heard of him.

2. McCue, Jr.

On August 31, 1954, McCue, Jr. appeared voluntarily before the Treasury agents and was examined under oath by Special Agent Baker. He was questioned about certain travel vouchers, i. e. vouchers for reimbursement by the Company of the expenses of trips made on company business. Special Agent Baker asked him specifically: "Were you at all times at the places shown on the dates shown on these memos?" McCue, Jr. replied: "Yes. To the best of my knowledge we were; yes."

The falsity of this answer was the basis for the first of the two counts on which McCue, Jr. was convicted. The evidence amply establishes its falsity. The Government was able to show from corporate records, including the gatemen's books, cafeteria slips and telephone toll slips and from the records of the McCues' country club that they were in fact at the plant or nearby on the dates on which, according to the travel vouchers, they purported to be in other cities.

In the course of the same examination of August 31, 1954, McCue, Jr., was also asked about the wells drilled at Company expense on his and his father's property. The questions and his answers were:

"Q. Who negotiated to have this well drilled at your place? A. I haven\'t any idea, not even to this day.

"Q. Who paid for the well drilling operation? A. I don\'t know.

"Q. Did you? A. No, sir. I didn\'t need it. I didn\'t want it. I didn\'t authorize it, and knew nothing about it."

The falsity of these answers was the basis for the second count on which McCue, Jr. was convicted. The evidence amply established their falsity. McCue, Jr. ordered the well drilled, examined, discussed and accepted the proposal provided by the firm engaged for the work, and ordered them to undertake it. He was kept informed of the work on the well as it proceeded and discussed its progress with drillers. He went with them to choose a spot on his property for drilling the well. As with his father the location of the well drilling equipment, its size and the noise of the operation make it impossible that he was unaware that a well was being drilled on his property.

I. Section 1001

Appellants urge that Section 1001 is not applicable to the conduct for which they were convicted.

Analysis of the Section reveals no ambiguity. The elements of the offense are 1) a statement, 2) falsity, 3) that the false statement be made "knowingly and willfully," and 4) that the false statement be made in a "matter within the jurisdiction of any department or agency of the United States." See United States v. Silver, 235 F.2d 375 (2d Cir.), cert. denied, 352 U.S. 880, 77 S.Ct. 102, 1 L.Ed.2d 80 (1956).

However, in spite of what would appear to be the plain meaning of the statute, we are pressed by appellants to consider the legislative background. It is said to be significant that the statute in its present form resulted from amendment of a previous statute² which was designed particularly to punish the presentation to the government of false and fraudulent claims. The legislative history of the present statute as it was originally enacted in 1934 is very scanty. It shows that among the reasons for the amendments which were then adopted were the prevention of false reports on shipments of "hot oil" and false statements of wages paid on Public Works Administration projects.³ The legislative history does not suggest that the purpose of the amendment was in any way intended to be confined to the specific situations which were mentioned. The very broad language of the amendment suggests that these situations were merely cited as examples of the kind of conduct which the statute was designed to prohibit. And the quite different character of the two examples which were given may also be taken as representing the broad application intended for the statute.

"A greater variety of false statements were meant to be included. There is no indication in either the committee reports or in the congressional debates that the scope of the statute was to be in any way restricted." United States v. Bramblett, 348 U.S. 503, 507, 75 S.Ct. 504, 507, 99 L.Ed. 594 (1955).

The main thrust of appellant's argument with respect to Section 1001 is that the Section is intended to protect the processes of government from interference and obstruction and not to require "the citizen to speak truthfully to police officers."

There is no reason to believe that the administration of the tax laws and the collection of taxes is not one of the processes of government which the statute was designed to protect, or that making false statements about taxes to the representatives of the Treasury is not the kind of interference and obstruction which the statute was intended to prevent.

The case of the citizen who replies to the policeman with an "exculpatory `no'" can be left until it arises. See United States v. Davey, 155 F.Supp. 175 (S.D.N. Y.1957); United States v. Stark, 131 F. Supp. 190 (D.Md.1955). It is sufficient for the present to point out that the case at bar bears no resemblance to such a situation. Here the appellants voluntarily appeared before three representatives of the Treasury under circumstances in which they were well aware of the nature and purpose of the examination. They were accompanied by counsel and they were questioned under oath. It does not seem to us that a statute which requires truthful answers in such a situation tends in any way "to distort the relationship in this country between a citizen and his government," as the appellants would have us believe.

The great weight of judicial authority supports the applicability of Section 1001 to the circumstances of the present case. The recent cases in which the Supreme Court has...