United States v. Sidney A. Brodson ( 1957 )

SCHNACKENBERG, Circuit Judge.

Plaintiff appeals from an order entered by the district court which inter alia sustained defendant’s motion to dismiss an indictment charging defendant with willful attempted evasion of his income tax for each of the years 1948 to 1950 inclusive, in violation of section 145(b) of the Internal Revenue Code of 1939.¹ Pri- or to the return of the indictment, a jeopardy assessment was made and tax liens were filed against the defendant in the amount of $342,120.37 for income taxes and additions thereto for fraud, plus interest, for the years 1945 to 1950, inclusive.

In a bill of particulars, the government indicated it intended to prove the allegations in the indictment by the net worth and expenditures method.

The pertinent grounds of defendant’s motion to dismiss are that the initiation of a criminal prosecution for tax evasion during the pendency of a jeopardy assessment and accompanying tax liens deprives him of liberty and property without due process of law and the effective assistance of counsel for his defense, in violation of the Fifth and Sixth Amendments to the United States constitution, and specifically that defendant will be unable to get a fair trial and will be deprived of assistance of counsel for his defense, because the jeopardy assessment and liens prevent him from using his assets to insure adequate preparation for trial and representation at the trial. Affidavits were submitted by each side.

The defendant argued in support of the motion that, as a result of the pending jeopardy assessment and tax liens, he was without funds to defray the expenses of his defense, particularly to engage the services of an accountant to aid in meeting the government’s net worth proof. The district judge indicated that, if defendant filed an affidavit as to his financial .inability and if the government did not then see fit to release the tax liens in part and to place a reasonable amount of defendant’s assets in escrow with the clerk of the court for the purpose of defraying the expenses of the defense, he would be inclined to the view that defendant was being deprived of his constitutional right to a fair trial. Such an affidavit was filed. The government informed the court that it was without authority in law to release any part of the assets subject to the tax liens.

In granting the motion to dismiss, the district court held defendant could not, in the court’s opinion, effectively refute the government’s evidence without the extensive assistance of a trained accountant. ¡

Defendant contends that under the circumstances the district judge “has the authority and duty to dismiss the indictment”, because the prosecution of this case “denies to defendant due process of law and effective assistance of counsel guaranteed to him'by the Fifth and Sixth Amendments to the United States constitution.”

Citing the cases of Powell v. State of Alabama, 1932, 287 U.S. 45, 53 S.Ct. 55, 77 L.Ed. 158 and Avery v. State of Alabama, 1940, 308 U.S. 444, 60 S.Ct. 321, 84 L.Ed. 377, Rule 17 of the Federal Rules of Criminal Procedure, 18 U.S.C.A., 23 A.L.R. 1382, and 54 A.L.R. 1225, he contends that “at each step in the process of attempted conviction, safeguards are erected to insure an honest and fair trial, even for the igiiorant and the pauper.” He adds that in this case we have “an attempt by the government not only to infringe these rights and destroy these protections, but to stkp from the defendant all financial means for preparing an adequate defense, and this is being done in an action which ¡the United States Supreme Court has recognized contains many pitfalls and ensnarements. Holland v. U. S., 1954, 348 U.S. 121, 75 S. Ct. 127, 99 L.Ed. 150.”

He quotes from Rochin v. People of California, 1952, 342 U.S. 165, at page 173, 72 S.Ct. 205, 208, 210, 96 L.Ed. 183:

« *• * * Due process of law, as a historic and generative principle, precludes defining, and thereby confining, these standards of conduct more precisely than to say that convictions cannot be brought about by methods that offend ‘a sense of justice.’ * *

Defendant states that the Powell decision rejects the premise that the Fifth and Sixth Amendments impose mere formal, rather than ¡substantive, standards. He asserts that the right guaranteed by the Sixth Amendment is an absolute right, relying upon Betts v. Brady, 1942, 316 U.S. 455, 462, 62 S.Ct. 1252, 1256, 86 L.Ed. 1194 and Johnson v. Zerbst, 1938, 304 U.S. 458, 467, 58 S.Ct. 1019, 1024, 82 L.Ed. 1461.

In each of the cases thus cited by defendant the court was reviewing a final judgment of conviction. He has cited no case and we have been unable to find a case in which any court has held that a trial to be held at some time in the future will not be a fair trial and hence dismissed an indictment without a trial. The nonexistence of such a decision is probably because no judge has ever undertaken on such a motion to forecast what will occur at a trial. On the other hand, in retrospection with knowledge of what has occurred at a criminal trial, a court would be in a position to apply to the facts thus established, any applicable constitutional requirements. No court possesses the prescience to effectively apply those principles to presently unascertainable facts. Perhaps the futility of such an attempt at anticipation cannot be illustrated more aptly than by considering the circumstances existing in the case at bar.

It is not unreasonable to assume that events happening between the entry of the order, from which this appeal was taken, and a trial on the merits may remove or make irrelevant the alleged present financial inability of defendant to procure an accountant. In fact, defendant’s affidavit presages the possibility of the occurrence of events any one of which might solve the difficulty in which defendant says he is involved. His affidavit shows that, since the jeopardy assessment was made and the tax liens filed, he borrowed to pay debts, insurance premiums and living expenses. He listed fourteen loans totaling $17,482.58 made from April 14, 1952 to December 31, 1954. Included in the list is an advancement of $1,000 on August 27, 1954, by Martin Brill to Lipton, an attorney retained by defendant.² The other lenders are unidentified. In view of the fact that these sources of financial relief were available to defendant despite the pendency of the jeopardy assessment and liens, the possibility of further financial relief from such sources cannot be ignored. These transactions took place despite the contention of defendant’s counsel that the assessment and liens prevent such transactions.

Furthermore, if needed, an accountant might volunteer before the trial to assist defendant’s counsel, one of whom did suggest by letter to the district judge several accountancy firms who might be requested so to act. Also some friend may gratuitously furnish defendant with the services of an accountant.

Again, the presentation of the government’s case upon a trial may reveal that the services of an accountant are wholly unnecessary. For instance, a substantial increase in defendant’s assets during the taxable years in question might be shown to be the result of a gift, an inheritance, or other nontaxable acquisition. Certainly any competent tax attorney could present such evidence without the assistance of an accountant. Defendant since his indictment has been represented by lawyers skilled particularly in the field of income tax law. Palmer, one of his present counsel, stated in an affidavit that he has since October 1949 devoted himself primarily to income taxation law and been engaged in a number of “net worth” cases. Attorney Lipton stated by affidavit that he was an attorney in the office of the Chief Counsel, Internal Revenue Service, for about 10 years and handled many cases, and, in addition thereto, he has been engaged exclusively in the practice of tax law since December 1, 1950, handling inter alia criminal income tax cases. Lipton selected and employed an accountant to work in this case, for whose work he paid $800. The relevancy and adequacy of that work can be determined only on a review of a conviction where a court can come to grips with the question of whether defendant received a fair trial.

Whether defendant is correct in his contention that the constitution requires that one indicted for income tax evasion is entitled to the services of an accountant to assist his attorney in a case where the government intends to rely upon the net worth theory, we do not now decide. However, we think it is obvious that there is no such requirement invariably and as a matter of law in every such case. If there is such a constitutional requirement at all, a defendant’s right to invoke it must depend upon the particular circumstances of his case. A consideration of these circumstances must necessarily encompass the occurrences at the trial. Of course, such occurrences can be judged only in retrospect, as in a review of defendant’s conviction, if he is convicted. What occurred at the trial would then be known as a certainty, and a correct result could be reached either upon a motion in the trial court to set aside the verdict of conviction or in a court reviewing a judgment based on such a verdict. It is illogical for a court to speculate in advance of a trial on the question of whether a defendant will or will not receive a fair trial without the assistance of an accountant. Neither can a court bolster the results of its speculation by reading affidavits of persons not subjected to cross-examination under oath. It is not sound policy for a district court to summarily dispose of an indictment and free a person charged with crime by resolving a question of fact without the taking of evidence, particularly where the fact relates to a future event.

Defendant calls for the establishment of such a policy because the preparation “and analysis of a defendant’s financial history involves and requires not only legal techniques but also accounting skills and techniques.” He indicates that “the need for expert accounting assistance is the primary one in the effective preparation of defense”. It is apparent that defendant is seeking not merely the services of an expert witness but the services of an expert accounjtant who is to be used in preparation and analysis of defendant’s financial history and in assisting his counsel at and before the trial of his case.³ Such a policy, if now established, would as a matter of consistency be subject to extension ' to experts in other fields — psychiatrists, ballistics experts, chemists, physicians, and an unlimited number of other Specially trained persons. It is this natural consequence of such a policy which, in addition to the reasons above stated, dictates that, if established, it must be based upon a record containing the! actual proceedings at a trial, rather than the inferences drawn from pretrial affidavits.

Inasmuch as it ijs a fact that only by a post-trial study of: the whole case can it be determined whether defendant’s constitutional rights to a fair trial will be violated, it is well to point out that it may never be neqessary to decide that question. The necessity may be obviated by defendant’s plea of guilty, his acquittal, a dismissal of ¡the indictment on motion of the government, a directed verdict, or the death iof the defendant. All of these possibilities emphasize that the court should not on a pretrial motion prematurely decide the constitutional questions raised by defendant. The court must cross the bridge when and if it gets to it. It should not exercise its power in resolving, in the shadow of a hypothesis, a controversy which it may, in the light of reality, justly and completely settle in the future, when and if the occasion arises.

In defendant’s brief it is admitted that a jeopardy assessment may be levied without violating constitutional rights. His counsel then seek to make a distinction between a simple case of an indigent defendant and the case of a “defendant who has been rendered indigent by the state [sic], who is kept in this position by the state’s refusal to have the defendant’s tax liability determined by a court of law, and who, while in this position, is faced with losing his freedom in a criminal prosecution for tax fraud.” The distinction is without validity. If constitutional guarantees preclude the prosecution of a defendant who because of indigence is unable to employ lay experts of his own choosing, the manner in which the defendant is rendered indigent is immaterial.

Inasmuch as the only question before us at this time is that of the propriety of the order of the district court, and inasmuch as we have no jurisdiction to decide, in advance of a decision of the district court, questions which may arise in the future, for the reasons stated we reverse the order dismissing the indictment and discharging defendant’s bail bond and remand the cause, without prejudice to the right and power of the district court to conduct further proceedings not inconsistent with the views herein expressed and to take such appropriate action as may be deemed necessary and proper in this proceeding, having due regard to the rights of both the government and the defendant.

Reversed and remanded with directions.

1 . 26 U.S.C.A. § 145(b).

2 . Lipton afterwards withdrew as defendant’s attorney, prior to the court’s appointment of defendant’s present counsel.

3 . Actually defendant does not limit his requirements to expert accounting assistance in the preparation of his defense. His attorneys initimate that they must interview witnesses living in all parts of the country and defendant cannot defray the expenses incidental thereto. They also speak of long distance telephone calls. No ¡doubt a court-appointed attorney might, under such a policy, be furnished with stenographic and in-vestigational services, additional office space and many other incidentals to the practice of law, insofar as germane to the defense of the case.