United States v. McCue

• Decision Date: 10 November 1959
• Docket Number: 9798.,Crim. No. 9799
• Citation: 178 F. Supp. 426
• Parties: UNITED STATES of America v. James O. McCUE, Sr., Defendant. UNITED STATES of America v. James O. McCUE, Jr., Defendant.
• Court: U.S. District Court — District of Connecticut

178 F. Supp. 426

UNITED STATES of America v. James O. McCUE, Sr., Defendant.

UNITED STATES of America v. James O. McCUE, Jr., Defendant.

Crim. Nos. 9799, 9798.

United States District Court D. Connecticut.

November 10, 1959.

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Harry W. Hultgren, Jr., U. S. Atty., District of Conn., Hartford, Conn., W. Paul Flynn, Asst. U. S. Atty., District of Conn., New Haven, Conn., Eldon F. Hawley, John Burke, Vincent P. Russo, Dept. of Justice, Washington, D. C., for the Government.

George F. Lowman, Cummings & Lockwood, Francis J. McNamara, Jr., Stamford, Conn., Charles W. Steadman, Cleveland, Ohio, for defendants.

ANDERSON, District Judge.

This is a motion to dismiss the separate indictments brought against each of the accused in these actions. Each defendant claims that the indictment against him should be dismissed because the offenses alleged were the subject matter of and included within the terms of a compromise agreement made on April 15, 1957 by defense counsel, on behalf of each of them, with the United States Attorney for the District of Connecticut and because the Government is estopped to prosecute on the charges in the indictments.

The indictment against McCue, Sr., is in three counts. The First Count alleges that in the course of an interrogation of him by special agents of the Internal Revenue Service on or about August 13, 1954, concerning his personal income tax liability for the years 1946 to 1952 and the corporation income tax liability of the Stamford Rolling Mills Co. for the years 1947 to 1951, that he, when asked about certain travel vouchers in connection with the business of the company, made a false statement when he said that he was in certain parts of the United States other than Stamford on particular dates.

The Second Count alleges that in the course of the same interrogation he made a false statement when he said that he had forbidden the Independent Oil Company to continue billing the Rolling Mill for fuel oil delivered to his own personal estate.

The Third Count alleges that during the same interrogation he made a false statement when he asserted that he had nothing to do with procuring the services of the Stephen B. Church Co. in drilling a well on his own personal estate.

The indictment against McCue, Jr., is in three counts. The First Count alleges that in the course of an interrogation of him by special agents of the Internal Revenue Service on or about August 31, 1954, concerning his personal income tax liability for the years 1946 to 1952 and the corporation income tax liability of the Stamford Rolling Mills Co. for the years 1947 to 1951, he, when asked about certain travel vouchers in connection with the business of the company, made a false statement in representing that he was in certain parts of the United States other than Stamford on particular dates.

The Second Count alleges that in the course of the same interrogation he made a false statement when he said that he had no knowledge that fuel oil delivered at his own home was charged to the company as a business expense and deduction.

The Third Count alleges that during the same interrogation he made a false statement when he declared that he knew nothing about who negotiated for the services of a well drilling company which drilled a well on his personal estate at the expense of the Stamford Rolling Mills Co.

Prior to the present indictments, McCue, Sr., had been indicted on March 13, 1957 in Criminal No. 9476 in two counts for willfully and knowingly attempting to evade and defeat his income taxes due for the calendar years 1950 and 1951, respectively, by filing false and fraudulent income tax returns for those years on March 15, 1951 and March 10, 1952. The offenses charged in that indictment against McCue, Sr., were alleged violations of Title 26 U.S.C. § 145(b).

McCue, Jr., had similarly been indicted on March 13, 1957 in Criminal No. 9477 in two counts of willfully and knowingly attempting to evade and defeat his income taxes due by filing false and fraudulent income tax returns for the calendar year 1950, by return of March 15, 1951, and for the calendar year 1951, by his return of March 14, 1952.

Subsequent to the return of these 1957 indictments certain conferences were held between counsel for both of the McCues and Simon S. Cohen, Esquire, then U. S. Attorney for the District of Connecticut. Thereafter on April 15, 1957, after two chambers conferences with the court attended by defense counsel and the U. S. Attorney, McCue, Sr., pleaded nolo contendere to a lesser offense included in the indictment and was found guilty of a violation of § 145(a). D.C., 160 F.Supp. 595. He was fined $10,000 on each of the two counts and was sentenced to one year imprisonment on each count, sentences to run concurrently; the execution of the sentences was suspended and he was placed on probation for two years. The indictment in Case 9477 against McCue, Jr., was dismissed by the court on representation by the U. S. Attorney that the Government did not have evidence to convict McCue, Jr., as he was nothing more than the innocent agent of McCue, Sr.

Among the items, in the 1951 and 1952 Income Tax returns of both McCues, on which the charges were based in the indictments and in the lesser included offense, were failures to disclose income derived from charging to the corporation, in the years 1950 and 1951, the cost of wells drilled on their own respective properties for the use of their own residences; fuel oil delivered to and used in their respective personal residences; and payments for travel claimed to have been performed on the business of the corporation but never in fact performed. While the Internal Revenue agents were investigating the McCues' returns for the years 1946-1952, an investigator interviewed McCue, Sr., on August 13, 1954 and McCue, Jr., on August 31, 1954 and, to a number of questions about their 1951 and 1952 tax returns each gave answers which, in the present indictments, are alleged to be false. After the charges under the 1957 indictments had been disposed of, the present indictments, based upon the 1954 false statements, were procured as violations of Title 18 U.S.C. § 1001, a general statute which forbids the making of false statements or representations to any department or agency of the United States in any matter within its jurisdiction.

The defendants have moved for the dismissal of these indictments on the grounds: (1) that the offenses charged in them were a part of and included within a compromise agreement, authorized by Title 26 U.S.C. § 7122(a), and made on April 15, 1957 just prior to the plea and disposition in McCue, Sr.'s case under the 1957 indictment; and (2) that the Government is estopped from prosecuting the present indictments because McCue, Sr., submitted himself to punishment and paid his penalties in reliance upon the District Attorney's promise that McCue, Sr.'s plea to the lesser included offenses on April 15, 1957 was in full disposition and satisfaction of any and all criminal offenses which might derive from any material in the investigative file of those cases based on acts of McCue, Sr., or McCue, Jr., or both.

The Government says in reply: (1) that no such compromise was made; (2) that the United States District Attorney was not a "delegate" of the Attorney General and had no authority to make any such compromise; (3) that Title 18 U.S.C. § 1001 is not "an internal revenue law" within the provisions of Title 26 U.S.C. § 7122(a); and (4) that the Government is not and cannot be estopped from prosecuting on the present indictments.

Taking up first, the question of whether or not the present indictments are barred by a compromise agreement under § 7122(a) between the defendants and the Government, it is apparent that there is conflicting evidence both as to the making of any compromise agreement on April 15, 1957 and, if it in fact had been made, what its terms were. These are matters which, absent the formal waiver required by the rules, would have to be determined by a jury. Rau v. United States, 2 Cir., 260 F. 131. Therefore, for the purpose of this motion to dismiss, the court must assume the facts to be what the defendants say they are. The defendants claim that on April 15, 1957 they and the then U. S. Attorney for the District of Connecticut, under the authority of Title 26 U.S.C. § 7122(a), entered into a compromise agreement which generally provided that in return for pleas of nolo contendere by McCue, Sr., to two counts of Title 26 U.S.C. § 145 (a) misdemeanor charges, the 1957 tax evasion indictments against both McCue, Sr. and Jr. would be dismissed and that McCue, Sr. and Jr. would, except for the misdemeanor charges against McCue, Sr., be granted immunity from prosecution on all possible criminal offenses disclosed in the investigative file then in the possession of the U. S. Attorney.

The interpretation placed upon these facts by the defendants and what was intended to be accomplished by the claimed agreement are reflected in their memorandum filed April 2, 1959 in support of this motion to dismiss the indictments where, on page 16, the defendants say:

"Relying upon the government's promise that he would thereby be able to settle his and his son's criminal liability arising out of the tax investigation, the defendant, James O. McCue, Sr., pleaded nolo contendere to a crime."

and in their supplemental memorandum filed April 14, 1959, page 4, where they refer to the agreement as follows:

"* * * the dismissal of the charges against him, McCue, Jr. was a part of the compromise agreement between the government and the defendants. One of the government's contractual obligations under the agreement was to consent to the dismissal of the charges against Mr. McCue, Jr. Underlying this bargain, of course, was the government's substantial doubt as to its likelihood of

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