United States v. Yeoman-Henderson, Inc., 10445.
| Citation | 193 F.2d 867 |
| Decision Date | 17 January 1952 |
| Docket Number | No. 10445.,10445. |
| Parties | UNITED STATES v. YEOMAN-HENDERSON, Inc. |
| Court | United States Courts of Appeals. United States Court of Appeals (7th Circuit) |
Eugene T. Devitt, G. R. Scheib, John D. O'Connor, and Amos J. Coffman, all of Chicago, Ill., for appellant.
Otto Kerner, Jr., U. S. Atty., Irwin N. Cohen and Robert J. Downing, Assts. U. S. Atty., Chicago, Ill., for appellee.
Before MAJOR, Chief Judge, and DUFFY and LINDLEY, Circuit Judges.
This is an appeal from judgment entered upon verdicts of a jury finding each of the defendants guilty of willfully and knowingly attempting to defeat and evade a large part of the income taxes due and owing by each of them for the years 1944, 1945 and 1946. Defendants' motions for a judgment of acquittal at the close of the plaintiff's case and at the close of all of the evidence were respectively denied, as were the motions for a new trial. The court imposed a general sentence upon defendant Roy R. Yeoman of imprisonment for a term of one year and a day, and a fine of $100 upon the corporate defendant.
Prior to and during the years 1944, 1945 and 1946, the defendant Roy R. Yeoman (hereinafter called "Yeoman"), as president and treasurer of Yeoman-Henderson, Inc. (hereinafter called "company"), operated a jewelry store in Waukegan, Illinois, owned by the company. Although his wife, Marion, was the secretary of the company, Yeoman personally maintained the books and records of the company, preparing its income tax returns as well as his own. The company was in fact a one-man corporation.
The income tax returns filed by Yeoman for himself and for the company showed net income and taxes due as follows:
Net income Tax due
of Roy R. by Roy R. Net Income Tax due
Year Yeoman Yeoman of Company by Company
1944 ........ $2,160.00 $133.00 $1,575.35 $357.44
1945 ........ 2,160.00 133.00 1,222.08 364.63
1946 ........ 2,160.00 192.00 (1,058.88)* 0.00
Defendants contend that the evidence does not sustain the verdicts and judgment, the principal attack being leveled at a net worth statement of defendant Yeoman. Error is also claimed in admitting evidence of the purchase by Yeoman in 1941 of an automobile which he placed in the name of a third party without the latter's knowledge or consent.
Revenue Agent O'Hanlon testified that Yeoman informed him that during the years in question he had no other source of income than his jewelry business; that all deposits in his personal checking account, in his savings account, and in his wife's checking account at the First National Bank at Waukegan represented receipts from his jewelry business.
The evidence disclosed total deposits in Yeoman's checking account as follows: 1944, $26,976.91; 1945, $48,778.19; and 1946, $50,591.91. In 1944 the sum of $1,861.00 was deposited in Yeoman's savings account, and $2,613.30 in Marion Yeoman's checking account; in 1945, $1,830.00 and in 1946, $3,235.00 was deposited in her account. None of the deposits listed in this paragraph was entered in the books and records of the company.
Commencing in 1945 Yeoman maintained a second accounts receivable book, in which he entered company sales. Practically all of such sales were not recorded in the regular corporation accounts receivable, nor were such sales reported in computing the corporation income tax return. Yeoman's excuse for maintaining the second accounts receivable book was that the rental of his store building was based on a percentage of gross sales, and that he considered the rental on that basis to be exorbitant.
Sales of $5,247.22 for 1945 were listed in this second book, but only $24.25 thereof was included by Yeoman in the company's 1945 income tax return. Sales of $11,371.43 were listed for 1946, but only $75.50 were included in the company's 1946 income tax return.
Revenue Agent Willis computed from the exhibits and testimony in evidence the company's tax liability was $14,787.67 for 1944, $20,896.48 for 1945, and $1,517.37 for 1946. He likewise computed Yeoman's tax liability was $440.00 for 1944, $2,963.81 for 1945, and $1,161.79 for 1946.
In a memorandum prepared by Yeoman he admitted expending $7,976.10 in 1944 and $1,276.19 in 1945 in remodeling and repair of his residence. Yeoman also told Agent O'Hanlon that in 1944, 1945, and 1946 his living expenses were approximately $3,000 a year and that obviously he could not live on the $2,160 salary which he reported in his income tax returns. On December 14, 1948, Yeoman gave Agent O'Hanlon a net worth statement prepared by Yeoman which indicated his net worth as of December 31, 1941, through 1947. The agent testified he had absolutely nothing to do with the preparation of this net worth statement.
The defendants called two witnesses: McEwen and Lynch. McEwen told of a business deal where he turned over to Yeoman $10,000 in cash in 1945, and $5,000 additional in 1946, and that Yeoman put this money in his safe; that in 1948 Yeoman gave him his bank book and told him to go to the bank and withdraw the $15,000 from Yeoman's savings account, which he did. But Agent O'Hanlon testified that he had two conversations with McEwen in 1948 in which he asked for all records of his transactions with Yeoman, but that nothing was mentioned about the alleged $15,000 transaction.
Lynch, a certified public accountant, questioned many of the results reached and computations made by the agents who testified for the government, but he did admit that the company owed a tax to the United States in excess of the amount of tax shown on the company's income tax returns for 1944, 1945 and 1946.
Lynch testified that the statement of Yeoman's net worth introduced into evidence over defendants' objection was a hybrid of a cash basis and an...
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