United States v. Anthony Joseph Accardo , 298 F.2d 133 ( 1962 )

KILEY, Circuit Judge.

This is an appeal by defendant from a judgment, upon a verdict, convicting him, after a trial of nearly nine weeks, on three counts charging violations of § 7206(1) ¹ of the Internal Revenue Code of 1954. He was sentenced to a total of six years in prison and fined $15,000.00.

Defendant, before 1956, reported income from gambling and undisclosed sources. In February, 1954, the District Director of Internal Revenue wrote him ordéring him to maintain detailed records “from that time forward.” On October 5, 1955, the Director wrote asking him to submit records to support income and deductions reported in his 1954 return. His attorney told the Director there were no records.

In 1956 defendant reported income of $42,862.25 from Premium Beer Sales, Inc. In an “addenda” he scheduled “expenses incurred in promoting beer sales and automobile expenses” to support a deduction of $515.51. In 1957 he reported income from Premium of $67,540.85 and claimed deductions of $1,726.76 for automobile expense as “agent” for Premium. In 1958 he reported income from Premium of $68,871.70 and claimed automobile expense deduction of $1,753.66 as “agent” for Premium. April 25, 1960, the January Special Grand Jury indicted him.

The indictment is in three counts,² each charging substantially the same violations in 1956, 1957, and 1958. In essence, it is charged that defendant stated in his income tax returns that he was employed by Premium and falsely stated that 80% of his automobile expenses were incurred by him in promoting beer sales in 1956, and 90% of that expense as “agent” for Premium in 1957 and 1958.

Defendant’s motion to dismiss the indictment was denied. We see no merit in his claim that this was error. The several counts are substantially in the words of § 7206(1) and are sufficient, United States v. Foster, 7 Cir., 253 F.2d 457, 459 (1958), to tell defendant what the charges against him were, and are not duplicitous. The charges of falsehood are sufficiently broad to include charges that he did not use the automobile at all in “promoting beer sales” or as “agent” for Premium. Finally, the Special Assistants and the Special Grand Jury do not, in themselves, indicate a “crash” enforcement program criticized in United States v. Bufalino, 2 Cir., 285 F.2d 408, 419 (1960) (concurring opinion).

The next question is whether there was substantial evidence to support the verdict. The Government’s theory of proof was that though defendant stated he was employed as a promoter of beer sales or as agent for premium, he did nothing to warrant the statements and that consequently he could not have used his automobile in the way he swore that he had in the return.

The Government introduced the following evidence: Although defendant had an employment contract with Premium, the latter was reimbursed by Fox Head Brewery for the contract payments to defendant. Defendant was unknown and unseen at Premium’s office at any time by Premium’s office supervisor of salesmen ; by Fox Head salesman whose desk was at Premium and whose “contacts” were with the latter’s salesmen; by Premium’s bookkeeper who saw the salesmen each day; by six Premium salesmen who attended salesmen’s meetings; and by two salesmen-drivers and eight Premium sub-distributors. No president of Fox Head after November 1956 nor those in charge of its production, sales or fiscal affairs had ever seen defendant. Its Illinois division manager had never seen him. There were no reports in Premium’s records of sales promotion or sales by defendant. He was paid more than either the owner or president of Premium.

Viewed in the aspect most favorable to the Government, this evidence and reasonable inferences drawable from it give substantial support to the verdict. Neubauer v. United States, 8 Cir., 250 F.2d 838, 839 (1958). Testimony that defendant rendered no service, “did nothing” and had never “done anything” was inadmissible as invading the province of the jury.

Defendant contends the court erred in denying various motions, for mistrial and to poll the jury, based upon prejudicial newspaper publicity.

The selection of the jury began September 12, 1960. The court directed and ordered the jurors, at the end of the first day of voir dire, not to read the daily press or listen to television or radio accounts in connection with the case. That afternoon and evening, and the next morning, newspapers reported that defendant had been arrested fourteen times with “no major conviction”; that he had been found guilty of disorderly conduct; that in 1930 he was indicted for carrying concealed weapons; that in 1948 he was charged with conspiracy to defraud the Government as a result of a trip under an assumed name to visit “syndicate hoodlums” at Leavenworth. “He beat both charges * *

The morning of September 14 there' was a newspaper headline: “THERE’S A CAPONE ECHO AT ACCARDO TRIAL.” The article compared defendant’s trial with that of “A1 Capone” twenty-nine years before, and said “In the villain’s part this time was Chicago’s jet-age Capone — stony-faced * * * Accardo, the master of muscling legitimate business.” The article said the evidence that convicted Capone was “practically negligible.”

On September 27 Joseph Bronge, Jr., a Government witness, testified that Accardo worked for his father as a distributor of Fox Head beer, that he knew Accardo, had visited his home; that his father was now dead; and that he had heard defendant was engaged in the sale of beer.

The next morning there were front page headlines: “MURDER VICTIM’S SON TAKES STAND AGAINST ACCARDO” and “GANGSTER UPSET BY TESTIMONY OF BRONGE.” On page 14 appeared the headline: “ACCARDO JURY HEARS SON OF GANG VICTIM.” The stories related that the father of the witness appeared before the grand jury which indicted Accardo, had been indicted for perjury, and was murdered “in a West Side beer war last year”; that “the shooting was blamed on fear by hoodlums that he would tell how they forced him and other beer distributors to put them on the payroll.”

The jury separated each night and was exposed to the prejudicial publicity. In view of that fact and of defendant’s publicity value, it was essential that the judge frequently, prior to separation, call the attention of the jurors specifically to the possibility of newspaper accounts carrying statements of facts about the case. Coppedge v. United States, D.C.Cir., 272 F.2d 504, 507 (1959).

The judge’s general admonitions at the beginning of the jury selection, his assumption of their effectiveness, and his instructions, were inadequate protection. His general inquiry during the voir dire examination ³ did not supply the deficiency. There is no certainty that all jurors would volunteer information about violating the admonitions or admit that they were influenced by the publicity. Coppedge v. United States, D.C.Cir., 272 F.2d 504, 508 (1959). He should have, by the careful examination of each juror, out of the presence of the others, determined the effect of the articles on those who had read them and whether they had discussed the articles with others. Coppedge v. United States, D.C. Cir., 272 F.2d 504, 508 (1959). These individual interviews would have tended to overcome reluctance to speak out.

The published material would have been inadmissible in evidence because it would prejudice defendant. Its effect would be at least as great if it reached the jury through news accounts. Marshall v. United States, 360 U.S. 310, 312-313, 79 S.Ct. 1171, 3 L.Ed.2d 1250 (1959).

Each case must rest on its “special facts.” Marshall v. United States, 360 U.S. 310, 79 S.Ct. 1171, 3 L.Ed.2d 1250 (1959); United States v. Shaffer, 7 Cir., 291 F.2d 689 (1961), cert. denied, 82 S.Ct. 192 (Nov. 14, 1961). In the instant case there was no careful examination of the individual jurors nor offer to defendant of unlimited peremptory challenges, as there were in the Shaffer case. And the instant case cannot be distinguished from Marshall v. United States, as Shaffer was distinguished from Marshall by this court, on the ground that in Marshall the prejudicial articles were read during the trial with no opportunity to secure other jurors. The Bronge incident was during the trial, as in Marshall.

The motions for mistrial during voir dire and later, and the motion to poll the jury after the Bronge incident, were addressed to the court’s discretion. Marshall v. United States, 360 U.S. 310, 79 S.Ct. 1171, 3 L.Ed.2d 1250 (1959); United States v. Shaffer, 7 Cir., 291 F.2d 689 (1961), cert. denied, 82 S.Ct. 192 (Nov. 14, 1961). Under the “special facts” of this case, however, we conclude that the rulings failed to provide adequate precautionary measures in aid of defendant’s right to a fair trial.

There was prejudicial error also in the trial court’s admission, over objection, of evidence of defendant’s income tax returns for the years 1940 through 1955. The court admitted the evidence to show “motive, intent or willful conduct.”

No case has been cited, or found, which would support the instant ruling. Government relies upon United States v. Iacullo, 7 Cir., 226 F.2d 788 (1955), cert. denied 350 U.S. 966, 76 S.Ct. 435, 100 L. Ed. 839 (1956). That case is not applicable because there evidence of a prior similar violation was held admissible under an exception to the general rule,⁴ the earlier transaction was “in remarkable conformity” to the pattern of the offenses charged, and there was not a jury. Here there was a jury; and most of the disputed evidence, indicating violations of Illinois anti-gambling laws,⁵ showed no “remarkable conformity” to the offenses charged in the instant indictment, since it has never been claimed that the prior returns violated the law.

The Supreme Court has said that it would “expect willfulness” in felonies of this class ⁶ “to include some element of evil motive and want of justification * * * ” Spies v. United States, 317 U.S. 492, 498, 63 S.Ct. 364, 368, 87 L.Ed. 418 (1943). The Court there equated “bad faith” and “evil motive.” Morissette v. United States, 342 U.S. 246, 265, 72 S.Ct. 240, 96 L.Ed. 288 (1952). And in United States v. Murdock, 290 U.S. 389, 394, 54 S.Ct. 223, 225, 78 L.Ed. 381 (1933) the Court said that in a criminal statute willful generally means “an act done with a bad purpose * * * ; without justifiable excuse * * * ; stubbornly, obstinately, perversely * * *. * * * also * * * to characterize a thing done without ground for believing it is lawful * * * or conduct marked by careless disregard whether or not one has the right so to act, * * It is because of this element that a defendant is entitled to produce evidence, and to an instruction, with respect to his good faith and actual belief. United States v. Murdock, 290 U.S. 389, 396, 54 S.Ct. 223, 78 L.Ed. 381 (1933).

The income tax returns were introduced, and several witnesses testified to the preparation of the returns and to conversations with defendant about the sources of his income for those years. A Government witness testified to a summary of the returns and the written summary was introduced into evidence. The effect of all this testimony was to show that defendant had an income from gambling in 1940 through 1955 of about “one million two hundred thousand dollars.”

The element of willfulness or motive, in the sense of “bad faith,” involved in the offense charged is in the implied charge of an affirmative deliberate claim of a business expense deduction made when defendant knew he was not lawfully entitled to the deduction. The willful, or “bad faith,” element is the deliberate making of the false statement, not the making of an honest mistake of judgment. Spies v. United States, 317 U.S. 492, 63 S.Ct. 364, 87 L.Ed. 418 (1943); United States v. Murdock, 290 U.S. 389, 54 S.Ct. 223, 78 L.Ed. 381 (1933). The motive for the willfulness is not an element. Testimony that defendant was not employed furnishes a basis upon which the jury may draw inferences that defendant knew or ought to have known that he was not a “promoter of beer sales,” or “agent,” for Premium and therefore could not lawfully claim the deduction, and consequently was willful in making the false statement. So far as the offense charged is concerned, proof of an ulterior motive or intent of defendant in making the “switch” in reporting income in 1956 or in creating a “facade” ⁷ is not a relevant circumstance to support an inference that defendant was willful, in the sense of harboring “bad faith,” in making the false statement. The disputed evidence is not admissible on authority of the illustrations given in Spies v. United States, 317 U.S. 492, 499, 63 S.Ct. 364, 87 L.Ed. 418 (1943). The Court there was discussing the willful element in a tax evasion case, and not the willful element in a charge under § 7206(1).

The impact of this testimony on the trial judge indicates the probable prejudicial impact the testimony had on the jury. In denying the defendant’s motion for a new trial, the trial court said:

“I don’t know how a defendant could have been engaged in that kind of enterprise, it would seem to me, without relying on the connivance of certain public officials. That is not in evidence, but I think that a reasonable inference from the record in this case. * * * I think the only conclusion one can draw from the huge amounts of income reported by the defendant and as revealed from the evidence is that this is a malignancy, this professional gambling, which has penetrated all levels of our society, and that it is a national calamity.”

We conclude that the highly prejudicial evidence was not relevant and was inadmissible, that the court had no discretion to admit it, and that the careful instruction with respect to the evidence could not cure the error because the evidence should not have been admitted.

The trial .court erred also in precluding defendant from introducing his copies — Copies C — of the W-2 forms filed with his return for the three years in the indictment. Copies B of these forms, which had been attached to the returns filed by defendant and wife, were detached from the returns before the latter were submitted to the grand jury. The defendant was entitled, on the employment issue, to have the jury see his copies of the W-2 form. The counterparts of these — Copies D — were part of Premium’s income tax returns, and accordingly were statements, of wages paid defendant, made under penalty of perjury by Premium, relevant to the defense. Defendant’s right was not fully served by having the jury get the information by looking at his statement in his income tax return, or by testimony given with respect to the forms by Premium’s bookkeeper. Their statements would probably not have the same effect in proof of his employment as the copy of the sworn statement of Premium.

There was another erroneous ruling. The prosecution witness Cutinelli testified that in the latter part of 1958 he was interviewed by Government agent Butkovich on three occasions and his remarks were reduced to writing on these occasions. He saw two of the statements and signed them after they were read to him. One statement was turned over to defense counsel. The second one was submitted to the court in camera. The Government denied it had a third statement. Defendant moved for its production under § 3500.⁸ Government said it searched and could find none. A similar occurrence took place in connection with the Government witness Smetana. The court declined to permit defendant to prove that the statements not found by the Government were in existence. This was error, Campbell v. United States, 365 U.S. 85, 81 S.Ct. 421, 5 L.Ed.2d 428 (1961), and the ruling as to relevancy should not have been based, even in part, on statements of Government counsel.⁹ Section 3500 is construed by the Supreme Court to require the judge to make the determination. Scales v. United States, 367 U.S. 203, 258, 81 S.Ct. 1469, 6 L.Ed.2d 782 (1961); Palermo v. United States, 360 U.S. 343, 361, 79 S.Ct. 1217, 3 L.Ed.2d 1287 (1959) (concurring opinion).

No error is found by this court on other points raised by defendant but not discussed in this opinion.

For prejudicial error at the trial, the judgment is reversed and the cause remanded for new trial, consistent with the rules announced in this opinion.

1 . “§ 7206. Fraud and false statements. Any person who — (1) * * * Willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which be does not believe to be true and correct as to every material matter;

:¡: # * * # shall be guilty of a felony and, upon conviction thereof, shall be fined not more than $5,000, or imprisoned not more than 8 years, or both, together with the costs of prosecution.”

2 . Count I charges that defendant

“ * * * on or about March 20, 1957 * * * did unlawfully, wilfully and knowingly make, and subscribe a document, which contained a written declaration * * * which said defendant did not believe to be true and correct * * that * * * Aceardo * * * about March 20, 1957 made, subscribed, and filed * * * a document, to-wit, 1956 U. S. Individual Income Tax Return * * * in which * * * defendant stated in substance, that during the tax year 1956 be was employed by Premium Beer Sales * * * and paid the sum of $42,862.25, * * * that while so employed 80 percent of the automobile expenses involved in the operation of a certain Mercedes Benz automobile were incurred by him in promoting beer sales for * * * Premium * * * whereas * * * defendant then and there well knew that this statement was not true and correct in that 80 percent of the said automobile expenses wore not incurred by him in promoting beer sales for Premium * * * in violation of Section 7206(1), * * *

3 . “1 ask each and every one of you, have you followed my direction in that regard?”

4 . “As a general rule, upon the trial of an accused person, evidence of another offense, wholly independent of the one charged, is inadmissible.” 226 F.2d 788, 793.

5 . See Ill.Rev.Stat. ch. 38 §§ 324-327, 336, 341-343 (1959).

6 . Violations of § 7201 Internal Revenue Code of 1954.

7 . The Government presented the evidence to show that defendant made the alleged false statment as part of a facade behind which (in 1956) he made a switch to falsely reporting employment income from Premium instead of reporting gambling income from undisclosed sources.

8 . 18 U.S.O. § 3500. “Demarids for production of statements and reports of witnesses

*****

“ (b) After a witness called by the United States bas testified on direct examination, the court shall, on motion of the defendant, order the United States to produce any statement (as hereinafter defined) of the witness in the possession of the United States which relates to the subject matter as to which the witness has testified. If the entire contents * * * relate to the subject matter * * * the court shall order it to be delivered directly to the defendant for his examination and use.”

9 . 18 U.S.O. § 3500(c) “If the United States claims that any statement ordered to be produced * * * contains matter which does not relate to the subject matter of the testimony * * * the court shall order the United States to deliver such statement for the inspection of the court in camera. * * * ”