United States v. Pepe

• Decision Date: 11 October 1962
• Docket Number: Cr. A. No. 1417.
• Parties: UNITED STATES of America v. Michael J. PEPE.
• Court: U.S. District Court — District of Delaware

209 F. Supp. 592

UNITED STATES of America v. Michael J. PEPE.

Cr. A. No. 1417.

United States District Court D. Delaware.

October 11, 1962.

Stanley C. Lowicki, Asst. U. S. Atty., Wilmington, Del., for the United States.

Robert C. O'Hora and John P. Daley, Wilmington, Del., for defendant.

LAYTON, District Judge.

On January 12, 1962, Michael J. Pepe was charged with (1) engaging in receiving wagers for or on behalf of an unknown person engaging in the business of accepting wagers, and wilfully failing to pay the special wagering occupational tax, in violation of Title 26 U.S.C. § 4411, and § 7203, (2) wilfully failing to register, contrary to Title 26 U.S.C. § 4412 and § 7203, and (3) having failed to register, wilfully having failed to pay the ten percent excise tax levied on wagers received by him, contrary to 26 U.S.C. § 4401 and § 7203. All three counts are misdemeanors.

Trial was held on February 15 and 16, 1962. At the close of the government's evidence, defendant made no motions. At the close of the defendant's case, defendant moved for a judgment of acquittal, which was denied by the Court. The jury returned a verdict of guilty on all three counts.

On or about February 26, 1962, defendant filed a motion for judgment of acquittal, pursuant to Federal Rules of Criminal Procedure, Rule 29, 18 U.S. C.A., or in the alternative a new trial, pursuant to Rule 33, Federal Rules of Criminal Procedure, on the ground that the evidence was insufficient to prove the element of wilfulness required by each count and that the verdict on each count as to wilfulness was against the weight of the evidence.

The test applicable to a motion for judgment of acquittal is somewhat different from that applicable to a motion for new trial. In the former, the Court scrutinizes the evidence from the point of view most favorable to the government and assumes the truth thereof. If there is substantial evidence justifying an inference of guilt, irrespective of the evidence adduced by the defendant, the Court must deny the motion. In the latter, where the ground is that the verdict is contrary to the weight of the evidence, the Court weighs the evidence of both sides, considers the credibility of the witnesses and, if the verdict is against the weight of the evidence, a new trial must be granted. United States v. Robinson, 71 F.Supp. 9 (D.C.D.C.).

The defendant did not deny that he accepted nine bets on five different days. Nor did he deny that he had no $50 wagering stamp valid at the time as required by law. His defense was that he had a stamp and did not realize that the period covered by the stamp had expired. Therefore, he contends, his acts, though illegal, were not wilful as required in order to convict under 26 U.S.C.A. § 7203. In order for a criminal act to be wilful, it must not only be committed deliberately and knowingly but with a bad motive or evil intent. U. S. v. Palermo (3rd Cir.Ct.), 259 F.2d 872. Simply stated, in order for the government to convict here, it must prove beyond a reasonable doubt that this defendant deliberately committed the specified violations with the intention of getting away with it.

Inasmuch as the offenses charged here are misdemeanors, the government is not held to such an exacting burden of proof as if there were felonies involved. Thus, in Spies v. United States, 317 U.S. 492, 497, 63 S.Ct. 364, 367, 87 L.Ed. 418 the Supreme Court of the United States had this to say:

"The difference between willful failure to pay a tax when due, which is made a misdemeanor, and willful attempt to defeat and evade one, which is made a felony, is not easy to detect or define. Both must be willful, and willful, as we have said, is a word of many meanings, its construction often being influenced by its context. United States v. Murdock, 290 U.S. 389 54 S.Ct. 223, 78 L.Ed. 381. It may well mean something more as applied to nonpayment of a tax when applied to failure to make a return. Mere voluntary and purposeful, as distinguished from accidental, omission to make a timely return might meet the test of willfulness. * * * We would expect willfulness in such a case to include some element of evil motive and want of justification."

* * * * * *

"We think that in employing the terminology of attempt to embrace the gravest of offenses against the revenues, Congress intended some willful commission in addition to the willful omissions that make up the list of misdemeanors. Willful but passive neglect of the statutory duty may constitute the lesser offense, but to combine with it a willful and positive attempt to evade tax in any manner or to defeat it by any means lifts the offense to the degree of felony. * * * "By way of illustration, and not by way of limitation, we would think affirmative willful attempt may be inferred from conduct such as keeping a double set of books, making false entries or alterations, or false invoices or documents, destruction of books or records, concealment of assets or covering up sources of income, handling of one's affairs to avoid making the records usual in transactions of the kind, and any conduct, the likely effect of which would be to mislead or conceal."

With these principles in mind, let us examine the record insofar as it concerns defendant's motions for judgment of acquittal as to Counts I, II and III.

Count I charges wilful failure to pay the $50 occupational stamp fee. Here, the agent testified that when he arrested defendant, he (Pepe) admitted that his stamp had expired. For the purposes of a motion for acquittal, I must accept this as true. Defendant also admitted receiving nine bets on five days. Since he admitted his stamp had expired, inferentially, he was admitting that he had knowingly failed to renew it for a period of five months. This substantial lapse of time would bear heavily on whether or not defendant's failure was wilful. Moreover, there was a whole series of violations. The business was conducted back of a false front. Obviously, this constitutes substantial evidence to justify an inference of guilt. The motion is denied as to Count I.

Count II charges that defendant wilfully failed to register and make application for the gambling stamp. Accepting the evidence most favorable to the government, defendant admitted knowingly not renewing his stamp (by registering, making application for, and purchasing a stamp) for a period of five months during which he admitted operating his gambling business. There is definite evidence of the nine bets received in December and of the operation behind a false front. Again the lapse of five months would weigh heavily against his contention...