United States v. Petti, 71-1123.

• Citation: 448 F.2d 1257
• Decision Date: 27 September 1971
• Docket Number: No. 71-1123.,71-1123.
• Parties: UNITED STATES of America v. Louis PETTI, Appellant.
• Court: U.S. Court of Appeals — Third Circuit

448 F.2d 1257 (1971)

UNITED STATES of America v. Louis PETTI, Appellant.

No. 71-1123.

United States Court of Appeals, Third Circuit.

Argued May 18, 1971.

Decided September 27, 1971.

John Patrick Walsh, Walsh & Savitt, Philadelphia, Pa. (David N. Savitt, Philadelphia, Pa., on the brief), for appellant.

Richard M. Meltzer, Asst. U. S. Atty., Philadelphia, Pa. (Louis C. Bechtle, U. S. Atty., Philadelphia, Pa., on the brief), for appellee.

Before SEITZ, VAN DUSEN and ADAMS, Circuit Judges.

OPINION OF THE COURT

SEITZ, Chief Judge.

Defendant is known as a "ten-percenter," that is, a person who cashes race-track tickets for the true winner in exchange for 10% commission. In order to cash a Big Exacta ticket worth $600 or more the ten-percenter must provide some identification and sign Form 1099. This form is required by the Internal Revenue Service in order to see whether such winnings are reported for tax purposes. Since the ten-percenter rather than the true winner signs, the Service has no record of the true winner who, of course, does not report his winnings for tax purposes. The ten-percenter reports his winnings but is able to offset his "losses" against his "winnings." Thus, in the normal course of events, the ten-percenter practice deprives the government of income tax.

Defendant, Petti, appeals his conviction by the district court of willfully attempting to evade or defeat the payment of income tax by one Allen J. McIntyre, in violation of 26 U.S.C. § 7201. That section provides that:

"Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof * * * shall be guilty of a felony."

Based on the competent trial evidence the facts, stated most favorably to the Government, are as follows: Defendant was observed by Special Agents of the Treasury Department approaching and speaking to various persons in the cashier's line for "Big Exacta" pay offs. Defendant presented a winning ticket and signed the Internal Revenue Form indicating that he had won $1,218.20 on the date of the events described. Later, in a men's room at the track, an agent observed defendant passing a large sum of money to a person later identified as McIntyre who then handed defendant a smaller amount of money. The agents immediately took McIntyre aside for questioning.

Defendant contends that one of the prerequisites to a conviction under 26 U.S.C. § 7201 is proof of the existence of a tax deficiency, citing Sansone v. United States, 380 U.S. 343, 351, 85 S.Ct. 1004, 13 L.Ed.2d 882 (1965). The Government admittedly did not prove a tax deficiency for McIntyre for the year involved. Indeed, the Government concedes that there are numerous cases holding that proof of a tax deficiency is a prerequisite to conviction under the statute here involved. It points out, however, that the statute does not explicitly contain such a requirement. From this statement we infer that the Government disagrees with the holding of the cited cases. But we are not legally free to disagree with such controlling Supreme Court precedents as Sansone v. United States, supra, and a similar decision of our own court. United States v....