United States v. Meriwether, 72-2474.

• Decision Date: 07 December 1973
• Docket Number: No. 72-2474.,72-2474.
• Citation: 486 F.2d 498
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. George D. MERIWETHER, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

486 F.2d 498 (1973)

UNITED STATES of America, Plaintiff-Appellee, v. George D. MERIWETHER, Defendant-Appellant.

No. 72-2474.

United States Court of Appeals, Fifth Circuit.

October 23, 1973.

Rehearing and Rehearing Denied December 7, 1973.

COPYRIGHT MATERIAL OMITTED

Fournier J. Gale, III, Cabaniss, Johnston, Gardner & Clark, Birmingham, Ala., court appointed for defendant-appellant.

Wayman G. Sherrer, U. S. Atty., Birmingham, Ala., Scott P. Crampton, Asst. Atty. Gen., Meyer Rothwacks, Atty., Dept. of Justice, Washington, D. C., Henry I. Frohsin, Asst. U. S. Atty., Birmingham, Ala., Robert E. Lindsay, Dept. of Justice, Washington, D. C., for plaintiff-appellee.

Before TUTTLE, GODBOLD and MORGAN, Circuit Judges.

Rehearing and Rehearing En Banc Denied December 7, 1973.

LEWIS R. MORGAN, Circuit Judge:

Meriwether was convicted by a jury for willfully attempting to evade his and his wife's federal income tax for the years 1962, 1963, and 1964, by filing false returns in violation of 26 U.S.C. § 7201. We reversed that conviction and remanded the case for a new trial.¹ Upon retrial, the government premised its case upon the same three-count indictment utilized in the first trial,² but relied exclusively upon specific items of income received to prove its case, declining altogether to use the net worth theory which we had held was insufficiently proven in the first trial. Again, Meriwether was convicted by a jury on all three counts, and was sentenced to three concurrent three-year terms of imprisonment.

Prior to and during the indictment years, Meriwether was vice-president of the First National Bank of Tuscaloosa, Alabama, in charge of the installment loan department. The prosecution undertook to prove that Meriwether demanded and received money from specific bank customers as a condition for handling their commercial paper, and that these sums received were never reported as income. Meriwether allegedly received payments in varying amounts from J. B. Carl, Henry Dozier, and Raburn Hall from 1962 through 1964.

I

The bill of particulars claimed that Meriwether had received from J. B. Carl and his company, Dixie Air, Inc., a total of $8,436.12 in 1962. At trial, proof was offered that Meriwether had received $11,426.12 in 1962 from Carl. These sums represented significantly more than half of Meriwether's allegedly unreported income during 1962, the period covered by Count 1 of the indictment.³ The alleged income from Carl being such a substantial portion of the government's case on Count 1, the insufficiency of this evidence would require us to reverse the conviction as to this count.

J. B. Carl having died prior to the time of trial, the government's case concerning 1962 payments by Carl to Meriwether consisted entirely of circumstantial evidence. While it cannot be doubted that the jury could convict Meriwether of receiving these payments solely on the basis of circumstantial evidence, it could not convict him if this evidence was not "sufficient to exclude in the minds of the jury every reasonable hypothesis other than guilt of the defendant." Ford v. United States, 210 F.2d 313 (5th Cir. 1954).

The sole evidence before the jury concerning the alleged payments by Carl to Meriwether⁴ came from Jim Kirby, a First National Bank employee in the installment loan department who had subsequently become vice-president in charge of that department. Kirby testified that particular checks made out to J. B. Carl were never deposited in the Dixie Air reserve account. He also explained in depth the mechanics within the bank of the reserve account agreement.

Dixie Air, Kirby testified, had entered into a dealer financing agreement with the bank. Under the terms of that agreement, the difference between the rate of interest charged by the bank and the rate charged by the dealer to its customer was to be withheld and deposited in a reserve account. This account protected the bank against contingent liability of the endorsing dealer, who would be liable for the commercial paper in the event of default by the purchaser of an airplane purchased from Dixie Air. Defendant Meriwether, as vice-president in charge of the installment loan department, was in 1962 responsible for preparation of the agreement setting up a four and a half percent reserve fund for Dixie Air. Thus, the jury could reasonably infer that Meriwether did know of Dixie Air's obligation to deposit the checks in controversy in its reserve account. Kirby's testimony also showed that, when the bank made out checks for the amount of the difference between the two rates of interest, these were approved at the bottom by Meriwether before being cashed at various teller's windows by J. B. Carl.

Kirby refused, however, to draw any inference from the bank's practices to the effect that Meriwether's knowledge of the reserve agreement or approval of the checks would require that Meriwether investigate the status of Dixie Air's reserve account. Moreover, noting that his testimony was derived only from the records of the bank, Kirby declined to infer that Meriwether had received any of the checks cashed by J. B. Carl which were not deposited, as the agreement required, in the reserve account.⁵ Despite Kirby's disclaimers, the court admitted his testimony on this very limited basis:

The court, however, indicating that at this point in time it hasn\'t been shown to be relevant to what the defendant is charged with, and that although it is allowed into evidence, that allowance is conditional upon there being other evidence presented in the case which might connect this to the defendant. (Emphasis added).

No such further evidence was ever introduced. The government does not contend that any further evidence was admitted concerning the payments to Carl, but argues that evidence concerning other specific transactions (payments by Dozier and Hall to Meriwether) gave the jury sufficient evidence to infer that Meriwether received Dixie Air's reserve fund payments.

This evidence was not sufficient to go to the jury. There was not even a connecting inference between the cashing of the checks and any receipt of Meriwether of unreported cash income. J. B. Carl, from the evidence presented, could have kept the cash himself or could have channeled it back into Dixie Air for other purposes. The only theory which might support the inference the jury evidently drew would be that of "once a thief, always a thief." To convict a man of a felony on no more than this theory plus the fact that he was a responsible employee in the bank where the check was cashed would permit a conviction to be based on pure surmise. There is just nothing here to permit the jury the jury to draw an inference that Meriwether received funds illegally from Carl.

Under similar circumstances, we have held that evidence was insufficient to convict a defendant. In Ford v. United States, supra, a witness testified that she had left $100 in cash "at the defendant's office" and that she had made regular payoffs "to the police department" of $100 per month. The connection sought to be made was that the defendant, a former police chief, had received these payoffs. The court held that there was insufficient evidence connecting the defendant with the payoffs, and that admission of this evidence was both erroneous and highly prejudicial.

There was no sufficient proof that the defendant received the payoffs or any part of them, and a conclusion to that effect cannot be permitted to be based upon mere conjecture or suspicion. We have previously had occasion to comment on the necessity for safeguarding a defendant against the prejudice and danger inherent in this type of testimony. Montgomery v. United States, supra, 203 F.2d 887 at page 891....

The evidence sufficiently disclosed that in the defendant\'s office of Chief of Police he had opportunities of receiving income from graft, payoffs, or other illegal sources. There can, of course, be no presumption that the defendant was guilty of such gross misconduct as to be the recipient of such ill gotten gains. The presumption is to the contrary. It was nevertheless within the jury\'s province to say whether that presumption had been overcome, or to infer that the defendant had some other source of income, from the testimony that the expenditures so far exceeded the available resources disclosed by the evidence, and from the evidence that such expenditures could not be accounted for by accumulated assets or by non-taxable receipts. But to undertake to aid the jury in this function by the admission of testimony of this woman as to payoffs with which the defendant was not shown to be connected was both erroneous and highly prejudicial. Ford v. United States, 210 F.2d at 317-318.

See also Blumberg v. United States, 222 F.2d 496 at 500 (5th Cir. 1955).

We cannot view this as a case in which there was evidence that the illegal payments were known to have been received by the defendant, as in Azcona v. United States, 257 F.2d 462 (5th Cir. 1958), or a case in which the jury was admonished to disregard the prejudicial testimony and where independent evidence of unreported income during the indictment period was sufficient to show unreported taxable income. United States v. Ford, 237 F.2d 57, 67 (2nd Cir. 1956). We therefore reverse the conviction as to Count 1 of the indictment.

II

On Count 3 of the indictment, the government alleged that Meriwether had in 1964 received $3,000 in unreported income from Henry Dozier. The evidence adduced to support this charge was totally insufficient, a position which the government virtually admits.⁶ In response to a question by the prosecution as to whether this amount was paid to Meriwether on February 4, 1964, Dozier said:

A. I do not know I couldn't say this particular one. I would have to refer back to my books.

Thereafter, the trial court allowed Dozier to review testimony at the first trial, after which the following exchange...