UNITED STATES оf America, Plaintiff-Appellee, v. Charles W. LAWRENCE, Jr., Joseph A. Bertucci, and Norah S. Bertucci, Defendants-Appellants.
Nos. 90-1614, 90-1630.
United States Court of Appeals, Seventh Circuit.
Argued Oct. 26, 1990. Decided June 10, 1991.
934 F.2d 868
In my view, the evidence against Hunter, though clearly not insignificant, was not “overwhelming” either. I recognize that the state has presented and the majority has pointed to a good deal of circumstantial evidence linking Hunter to the robbery. In the end, however, this seems to me, at its core, a one-eyewitness case in which two of the other people testifying against Hunter did so, at least in part, in order to avoid prosecution.2 A third witness, Tracy Williams, appears to have identifiеd Hunter for the first time in court, five months after the robbery took place. While I do not question the admissibility of Williams’ identification, I note the suggestive nature of first-time in-court identifications. See Moore v. Illinois, 434 U.S. 220, 229-230, 98 S.Ct. 458, 465-466, 54 L.Ed.2d 424 (1977).
Although I recognize that the failure to give the no-inference instruction may, in some cases, be harmless, I cannot lightly discount the possible prejudicial effects of such error. The right to receive a no-inference instruction was created in recognition of the fact that “many, even those who should be better advised, view [the fifth amendment] privilegе as a shelter for wrongdoers. They too readily assume that those who invoke it are guilty of crime....” Carter, 450 U.S. at 302, 101 S.Ct. at 1120 (quoting Ullman v. United States, 350 U.S. 422, 426, 76 S.Ct. 497, 500, 100 L.Ed. 511 (1956)). Viewing the evidence against Hunter with these cautions in mind, I am constrained to agree with the district court that the Indiana trial court‘s failure to give the no-inference instruction may have substantially affected the jury‘s evaluation of the credibility of Smith and Thompson. This is no doubt a close case on the question of harmless error; given the nature of the evidence against Hunter, I, like the experienced district court judge in this case, cannot conclude with confidence that the trial court‘s failure to honor Hunter‘s instruction request was harmless beyond a reasonable doubt.
Nathan A. Fishbach, Deputy U.S. Atty., Office of the U.S. Atty., Milwaukee, Wis., for plaintiff-appellee.
Thomas E. Brown, Marna M. Tess-Mattner, Gimbel, Reilly, Guerin & Brown; and Terry E. Mitchell and Paul N. Brandau, Mitchell, Baxter & Zieger, Milwaukee, Wis., for defendants-appellants.
Before BAUER, Chief Judge, CUMMINGS and RIPPLE, Circuit Judges.
This is an appeal from a criminal tax prosecution of three business partners, Joseph and Norah Bertucci, who are husband and wife, and Charles W. Lawrence, Jr. (collectively, “Defendants“). The threе owned and operated two bookstores in Wisconsin: Paradise Books in Milwaukee, and Popular News (LOK, Inc.) in Oshkosh. The bookstores sold “adult oriented” books, magazines, films, and other products. The stores also operated video arcades featuring sexually explicit films. Whenever a customer purchased merchandise over the counter, the sales clerks carefully noted the type and quantity of the product on a daily sales sheet and rang up the sale on a cash register. Video arcade sales were hаndled differently. Clerks kept bags of 200 tokens worth fifty dollars at the counter. In order to enter the arcade area, a customer was required to purchase a minimum of two dollars’ worth of tokens for use in a private viewing booth. When a clerk sold a bag of tokens, he would take the fifty dollars generated from the sale, band it, and place it in the safe. Video arcade token sales were not rung up
The government theorized that Defendants were skimming off a portion of the receipts from the sale of tokens to avoid paying federal taxes on the undisclosed amounts and that they “washed” the skimmed money by concocting phony loans from stockholders and frоm Norah Bertucci‘s sister, Morel Fry. In January 1986, Steven J. Facik and John R. Schlicht, Special Agents with the Internal Revenue Service (“IRS“) Criminal Investigation Division, visited Popular News and informed the Bertuccis that their 1982, 1983, and 1984 personal income tax returns were under investigation. Fifteen minutes into the interview, Lawrence showed up, and the agents questioned all three Defendants together. They were asked about the source of the income generated by their partnership, L & B Enterprises, and also about their purchases of real estate, stock, a bоat, and other items. The agents also asked Defendants if they had deposited all the receipts generated by the token sales into the bookstores’ corporate bank accounts, and if these undeposited amounts were reported on their tax returns.
As a result of information garnered during the investigation, the case went to a federal grand jury in Milwaukee. On March 7, 1989, the grand jury returned an indictment against Defendants charging them with conspiracy to impede the IRS in violation of
Defendants raise several contentions with regard to the daily sales sheets from Paradise Books and Popular News, compiled during the period between July 31, 1983, to April 7, 1984. On many of the sheets, there appeared two handwritten numbers, one at the top right hand corner, and one at the bottom right hand corner. The government used these sheets to bolster its skimming theory by hypothesizing that the top number represented the number of bags of tokens available at the beginning of the day, and the bottom number represented the number left at day‘s end. The difference between these amounts represented the value of the tokens sold during the day. According to the government, because some weekly bank deposits were less thаn the amounts that should have come in using this method, Defendants must have been skimming off a portion of the token sales for their personal use.
Defendants argue that the trial court abused its discretion by admitting the sheets into evidence without requiring that they be properly authenticated as business records under
In a pretrial motion, the government argued that the bookstores’ records (including the daily sales sheets) were authenticated adequately because Defendants admitted to the investigating agents that the bookstores made and kept the records in connection with their corporations, and because Defendants’ attorney produced the records in response to the government‘s summonses and subpoenas. The district court rejected Defendants’ contention that the documents can be authenticated only by a witness who is an employee or agent of the organization familiar with the organization‘s practices and procedures. Pronounсing our decision in United States v. Brown, 688 F.2d 1112 (7th Cir.1982) (Bauer, J.), “controlling,” the court held that “once a defendant voluntarily produces documents and implicitly represents them to be the subpoenaed corporate records, he cannot be heard to contend that they are not so.” United States v. Bertucci, (E.D.Wis.1989).
In Brown, the defendant had been subpoenaed to appear before a grand jury with company records pertinent to his indictment for embezzlement of federal funds. The defendant negotiated an agreement whereby his attorney would produce the documents without the defendant having to appear. At a pretrial hearing, the defendant refused to authenticate the records and was held in contempt of court. The records then were identified by an Assistant United States Attorney and an FBI Special Agent. Both testified that the defendant‘s attorney delivered the records to them, representing that he was the defendant‘s agent, and that the records he was delivering were the records that had been subpoenaed. The court admitted the records on the basis of this testimony. On appeal, the defendant maintained that identification by the government witnesses was not proper authentication. We held that once the defendant voluntarily produced the records and implicitly represented them to be the company records, he could not later complain that the documents did not originate from the company. Further,
With Brown‘s principles in mind, we conclude that the trial court did not abuse its discretion in admitting the daily sales sheets as properly authenticated business records. The subpoenaed documents were delivered by Defendants’ attorney and they were identified by the government witnesses. Other factors lend reliability tо the documents as well. Defendants admitted to Special Agent Facik during the investigation that they kept various records, including daily sales sheets, as part of their method of operation. In addition, the collective testimony of several of Defendants’ employees—testimony of custodians or otherwise qualified witnesses who can explain the recordkeeping of the organization—established the regular practices and procedures under which the records were created, the very elements necessаry for a finding of trustworthiness. Michael Traudt, Robert Frank, Steven Bong, and Thomas Martin, clerks from Defendants’ stores, and Raymond Manis, a manager of Popular News, testified that numbers were placed at the top and bottom right hand corners of the daily sales sheets, indicating the number of bags of tokens that were available at the beginning and end of each day. Manis instituted a system to give Joseph Bertucci a daily count of sales. He testified that he used the daily sales sheets to prepare a deposit ticket for the receipts from the weekly token sales. He also provided the daily sales sheets and deposit tickets to either Joseph Bertucci or Lawrence. Frank testified that he discussed
This testimony, together with Defendants’ own statements to government investigators that they kept these records in connection with their businesses and the production of those records by their attorney in response to a government subpoena, leads us to conclude that the trial court properly admitted the daily sales sheets into evidence as properly authenticated business records. Defendants contend that the “sources of infоrmation and the documents themselves indicate such a complete absence of trustworthiness that any apparent authentication under
Next, we turn to the Bertuccis’ argument that the trial court abused its discretion by granting the government‘s request for an “immunity instruction” for Morel Fry, a government witness and the younger sister of Norah Bertucci. Fry‘s testimony was relevant to the government‘s “net worth analysis” of Defendants’ finances. If the taxpayer‘s net worth at the end of a period exceeds that at the beginning of the period, and the increase cannot be attributed to reported income, an inference may be drawn that there is unreported taxable income. See United States v. Marrinson, 832 F.2d 1465, 1469 (7th Cir.1987). Part of the government‘s case was that one of the ways that the Bertuccis concealed the true source of their income was by creating false loans from Fry. The Bertuccis reaped another benefit from thе arrangement as well. Because the initial loan required repayments at 19% interest and the subsequent loan required interest payments at 17% and 15%, the Bertuccis could take a tax deduction for the interest paid on these loans.
Fry‘s testimony, therefore, was important to the government‘s case, but she refused to testify on the grounds that her answers might tend to incriminate her. Consequently, Fry testified on behalf of the government before the grand jury and during the trial under a grant of immunity. She told the jury that, in July 1982, Joseph Bertucci asked her to lend him money. Despite the fact that Fry worked as a librarian or a library administrator averaging $18,313 per year, she “loaned” her brother-in-law $53,400. When challenged as to her ability to come up with this amount, Fry indicated that she had saved $25,000 from her salary and that she obtained the remainder from her mother. She was questioned closely about this considerable financial “cushion” in light of her salary, bank transactions, and funds she had borrowed from her stepfather to purchase a car that remained unpaid.
Fry basically was a hostile witness. The government requested and received the standard Seventh Circuit jury instruction regarding immunized witnesses:
You have heard testimony ... from Morel Fry who received immunity. That is a promise from the government that any testimony or other information [she] provided would not be used against [her] in a criminal case. You may give [her] testimony such weight as you feel it deserves, keeping in mind that it must be considered with caution and great care.
It is true that the immunity instruction ordinarily is a “defense instruction.” After all, only the government can grant immunity to gain testimony from a recalcitrant witness. See
Jury instructions must be reviewed in their entirety and be taken as a whole, United States v. Ruiz, 932 F.2d 1174, 1179-1180 (7th Cir.1991), and we will not interfere if the instructions treated the issues fairly and adequately. United States v. Durades, 929 F.2d 1160, 1167 (7th Cir.1991). Immunized witnesses receive a benefit for their testimony, and their testimony may be colored. Even if, as here, the testimony of an immunized witness unexpectedly runs in favor of the defense, a trial court does not abuse its discretion by advising the jury to view it with “caution and great care.” The jury‘s function of assessing credibility and weighing testimony is aided by such an instruction, regardless of who requests it.
Defendants’ final challenge is to their sentences. They contend that the trial court abused its discretion by considering for purposes of sentencing conduct for which Defendants had been acquitted at trial. Out of a total of twenty-five counts in the original indictment, Defendants were acquitted on fourteen counts, including all charges relating to filing, or aiding or assisting in the preparation of, false tax returns for L & B Enterprises, and filing false joint individual income tax returns. Norah Bertucci was acquitted on two counts involving corporate returns. Prior to sentencing, Defendants objected to the inclusion of information in their presentence reports regarding the offenses of which they had been acquitted. Defendants unsuccessfully argued—as they do in this appeal—that because the facts supporting the acquitted charges were in dispute, the district court‘s consideration of these facts under a standard of proof less than beyond a reasonable doubt vitiated the jury‘s verdict.
Against all this, Defendants point to language in White that suggests that a judge ought not to undermine a jury‘s verdict of “not guilty” by considering facts underlying an acquittal for purposes of sentencing: “[I]t might make sense to treat an acquittal as a bar in order to avoid both nice questions of proof and the appearance of inconsistency.” White, 888 F.2d at 499. White was a Sentencing Guidelines case and involved a completely different issue: may drugs that were not part of the offense of which the defendant was convicted but that were part of the same course of conduct as the offense of conviction be used to compute the sentence? The answer to that question was “yes,” аnd we decline the invitation to extend White‘s dicta to the facts of this pre-Guidelines case. We note that before the enactment of the Guidelines, “judges routinely took related bad acts into account when imposing sentence.” Id. at 496. For example, in Cardi, we stated that an “acquittal does not preclude the district court from considering the information concerning [the defendant‘s] association with these activities” for purposes of sentencing. 519 F.2d at 314 n. 3. Indeed, a sentencing court may consider uncorroborated hearsay that the defendant has hаd an opportunity to rebut, illegally obtained evidence, and evidence for which the defendant has not been prosecuted. United States v. Plisek, 657 F.2d 920, 926-27 (7th Cir.1981). See generally Burke, Limitations, Under Federal Constitution‘s Guaranty of Due Process of Law, as to Consideration of Personal Information about Accused in Imposition of Initial Sentence for Criminal Offense—Federal Cases, 63 L.Ed.2d 872 (1980).
The information the district court considered in this case was tested and found reliable by “the crucible of cross-examination.” Id. The information was relevant, and the court reasonably believed that it was rеliable and accurate. Thus, the consideration of the information for sentencing purposes was proper, and the resulting sentence was not a denial of due process, particularly when the sentences imposed did not exceed the statutory maximum penalties.
For all the foregoing reasons, the Defendants’ convictions and sentences are, in all respects, AFFIRMED.
RIPPLE, Circuit Judge, concurring.
I join the principal opinion and the judgment of the court. The question of whether a sentencing judge may consider the
Nothing in either the guidelines or the Constitution prevents a judge from taking аccount of conduct in which the defendant engaged, whether or not an acquittal prevents the imposition of criminal penalties directly on that conduct. A verdict of “not guilty” does not mean that the defendant didn‘t do it; it means that the prosecution failed to establish culpability beyond a reasonable doubt.
On the other hand, in United States v. Perez, 858 F.2d 1272, 1277 (7th Cir.1988), this court appeared to limit the general rule when it wrote that “this court has upheld the trial court‘s consideration of a prior acquittal as long as the acquittal is not relied upon to enhance the sentenсe.” Furthermore, as the principal opinion points out, in United States v. White, 888 F.2d 490, 499 (7th Cir.1989), a panel of this court suggested in dicta that “it might make sense to treat an acquittal as a bar in order to avoid both nice questions of proof and the appearance of inconsistency.” Moreover, recently, in United States v. Brady, 928 F.2d 844, 851 (9th Cir.1991), a panel of the Ninth Circuit has held that “[w]e would pervert our system of justice if we allowed a defendant to suffer punishment for a criminal charge for which he or she was acquitted.”
While the holding of the Ninth Circuit and the dicta in some of the opinions in this circuit raise serious doubts, and might even carry the day if this were a matter of initial impression and a matter purely within the cognizance of the judiciary, I believe that Chief Judge Wallace was correct in his partial dissent in Brady when he noted that the statutory mandate of