United States v. Jack L. Lewis and Edward E. Lane
475 F.2d 571
5th Cir.
1973
Check Treatment

*2 WISDOM, Before GODBOLDand RO- NEY, Judges. Judge: RONEY, Circuit Jack L. Lewis and Edward E. Lane were business accepting wagers. They were con each victed on counts two of criminal viola tions which resulted from their pursuant tax returns the Federal wagering excise tax laws. Under Mar chetti they and Grosso2 could not punished now be had not filed having all, returns filed the (1) sepa were indicted willfully rate counts for making subscribing false returns in correctly did not show their single addresses, (2) business in a attempting both for by filing evade the excise tax understating gross wagers. As to first, find that our decision States, Kolaski v. United (5th 1966), requires reversal, second, Marchetti and Grosso effectively prosecution. bar We there- properly person 1. Those who assert the constitu 2. A cannot be convicted for willful privilege against tional the Federal excise tax on criminally prosecuted payment not be for fail because the comply incriminating ure to with the Federal vide information viola- statutes, privilege either as to tion of his Fifth Amendment registration, payment. self-incrimination. 88 S.Ct. (1968). (1968). 19 L.Ed.2d 889 19 L.Ed.2d 906 registration ent sections of both de- convictions fore reverse the regula tax statutes and fendants. tions, prospective in nature any wagering apply has tak I. 44:6071-1(b). place. en 26 C.F.R. § counts was *3 pe squarely This ease falls within the willfully and know- each defendant did of of rimeters the decision this Circuit ingly Special Tax make and subscribe a supra, States, in Kolaski v. which United Registry- Application for Return and reg occupational this involved same pe- Wagering, 11-C, Form for the fiscal istration form. Kolaski ending 30, 1967, riod which he June he a Form in which 11-C in believe to be true correct stated that between dates of October incorrectly his the return showed busi- 26, 30, 1965, he 1964 and had address, June the same his ness resi- taking agents engaged employees or in proved that both dence address. It was wagers, when in fact em he such engaged wagering in ployees. The Form was filed 11-C itself government charged address, which the guilty 26, pled on October 1964. He their business should have been listed as charging willfully he indictment Code, 26 The address. Internal Revenue made return which he felony 7206(1) for makes U.S.C. § in did not believe was true and correct any willfully person make sub- sought regard. this He thereafter relief penalties per- of scribe return under judg under 2255. We set aside his § jury to be true believe ment of and sentence on the conviction every and correct as material matter. ground being statement, the false Form 11-C the return to be is prospective, more than a by subject filed one who is to the annual intent. He was of imposed by 26 tax of $50 3 of with a false statement intent. any person on who en- U.S.C. 4411 is § gaged receiving wagers, in or who is lia- We said: imposed ble for the on excise tax 10% per- is “The statute here involved wagers under 26 U.S.C. 4401.4 § general jury in statute. As stat- 1621, 28, perjury, June his on ute on 18 U.S.C.A. § period commencing July gist of a false state- the offense is ment, willfully made, 1966. Lane on 29 filed his return June of a material period. for the same consist This was must be with matter. The statement Imposition sepa- 3. subchapter 4411. as a § U.S.C. Taw. has been collected imposed person placing shall “There tax of such rate year per paid by person wager, $50 each shall the amount so collected is liable who for under section be excluded. engaged receiving wagers (c) or who is for taw. —Each liable Persons any person or person on behalf of so liable.” in the business is accepting be liable for shall 4. pay 26 U.S.C. this § the tax sub- and shall under Imposition wagers placed chapter taw with him. on all (a) Wagers. any wager- person shall be im- Each who conducts —There posed lottery wagers, ing pool on defined section shall be liable for or equal percent’ an excise tax this sub- and shall the tax under wagers placed chapter of the amount thereof. on such all (b) wager. Any lottery. person Amount pool determin- or —In ing' any wager register amount 4412 who re- under section purposes subchapter, this or behalf of an- ceives on placing having person registered incident of such other without wager included; except place shall be name and under section 4412 the establishes, person if the in accord- of such other shall residence regulations prescribed by ance with Secretary the tax be liable for and shall under delegate, subchapter or his this all such equal by imposed to the ceived him. respect to a fact facts. United Prior Grosso, to Marchetti Debrow, States v. 74 S. normally persons Ct. 98 L.Ed. 92. See Williams v. ceeded in defendants’ position by prosecution 5th 239 F.2d Cir. 748. The such that statement must be file a return or an amended return falsity susceptible showing of it is truth or the address where Slutzky, proof. States was known to have been conducted. 3rd Cir. 79 F.2d 504. truth and Grosso now falsity re the statement foreclose such a course of action. time the statement lated 6th

made. Smith v. United would have us holding 1948, 169 follow the F.2d 118. Sixth Carabbia, United States v. *4 may It be noted that informa- the (6th 1967) reasoning and the of the charge a tion false statement dissenting opinion in Kolaski. employees in the an intent to have panel a of this Court cannot a overrule gambling. It in future prior Circuit, decision of the en banc 26, 1964, that, he on October being required. consideration See F.R. employees en- he no stated that had any event, Carabbia, A.P. Rule 35. In gaged gambling period in the Oc- Kolaski, like listing involved a of em 26, 1964, tober June and ployees and would not dictate the same that he then and there well knew that involving result in a case addresses of employees engaged he in did fact have places subsequent of business to Mar gambling period in of October chetti and Grosso. it June Since impossible would been the 26, 1964, appellant, on October to have II. fact, employees there, and in then had charge upon The second which Lewis eight period for a more than months alleged and Lane were convicted beginning, then the made statement they jointly attempted to evade the 10% information could be true and excise imposed gross tax the truth of such was not The exact proof.

susceptible of The information important argument to their it (362 does not an state offense.” F.2d allege constituting failed to facts an of- 848) p. at fense under 26 U.S.C. 7201 which § vides : After Marchetti Grosso not be defendants could “Any person willfully attempts failing complete file return. As any any manner to evade or defeat suming wagering ad imposed by pay- tax or this title separate dresses would constitute of guilty ment thereof shall ... be law, fenses under state see LSA-R.S. felony of a . . . .” 14:90, of Marchetti rationale proceed prevent Grosso would criminal The indictment that Lewis ings against jointly engaged and Lane were register any wagering address where business at- conducting wagering operations, tempted wagering even to evade the excise though they may by filing returns, have waived tax their Form right 730, which, combined, when understated by registration. gross wagers.5 other addresses Louisiana, 5. “Count VIII of the Indictment. in the Eastern District ED- LANE, City VIII. Count WARD E. a resident of the April 3, 1967, That on or Metairie, Louisiana, about State May 5, Orleans, Louisiana, City LEWIS, at New JACK L. resident wagers report partnership tax re must excise vidual When filed, personal return, cannot or that can turn has been an individual his prosecuted partnership’s duty criminally report under 26 fulfill be U.S.C. filing willfully attempting by an individual. § provi recognize imposed partner- defeat laws entity. ship as a sions of 26 U.S.C. 4401 notwithstand distinct is issued § ing stamp regardless taxes but one excise of the the fact that owing. partners Marchetti v. it See due and number has. 26 C.F. Liability supra, 44:4902, v. R. of Partners. (“Any doing States, supra. persons number of business place co-partnership shall one dur- contended that tax.”). one February, the month accepted and Grosso Prior $41,329.00. No return was possible, such as this a case partners filed. The two one, to consider that the totaling reported returns which attempt merely an return was dividual govern- $33,447.00. this, They mask, up, taxpayer’s true cover charged, partnership liability would have portion This proper partnership been disclosed on a the defendants Shaffer, return. *5 return, partnership to with failure file a 1961), per- (7th Cir. six filing false in- nor them of accuse conspiracy to sons were indicted for charged of evasion dividual returns. operated wagering evade taxes. The six partnership the gambling partners, business as Only one partnership filed no return. argue that this and Lane defendant, Wyatt, indi- named charge nothing indirect more than return, return vidual and this substan- punish ly attempt failure to them for to tially tax due the of understated return, partnership Marchet file a when partnership. held The court from the punishment ti direct and Grosso forbid jury properly the could conclude that agree. for such failure. We conspired use to that the six defendants assump- Implicit in this is the magnitude Wyatt’s the return mask part- operate a tion that can defendants gambling enterprise, thus and approve nership the will and the rationale of taxes. the evade While discharge partnership tax lia- of their undeniably applicable is decision Shaffer bility pay on file and us, think set of the facts reporting wa- the light in the that the result cannot stand gers. under- then were so If Supreme in Gros- of decision the Court’s personal could of one’s States, supra. so v. United part- to evade not constitute an was convict- nership in Grosso stat- The defendant taxes. Yet wagering regulations excise an indi- the ed failure to indicates of ute or Louisiana, Metairie, wlio showed wherein of of Forms State accept- gross wagers jointly engaged for when combined of in the business their during $33,447.00 ing wagers sporting were the sum of events month said February tax due amount of month of $3,344.70, wilfully attempt where- and defeat the sum evade thereon was and knew, as, well ex- then and there amount of the substantial lay-off wag- including wagers owing by gross them to the cise due and tax $41,329.00, accepted the sum America for the montli United States of ers gross wagers they February causing by filing upon owed and which said wager- of America a Director of filed with the District $4,132.90. the Internal Reve- excise tax of Internal for Revenue Orleans, Internal at New In violation of Section nue District of New Or- U.S.C., leans, Louisiana, 7201.” Code 26 false and Revenue returns, tax fraudulent excise Judge GODBOLD, (specially conspir taxes, concurring): payment taxes. acy of these to evade holding payment of the wa After II, part I concur in the As to result compelled gering would have tax excise grounds reversal is but on himself, the Court Grosso to incriminate given by Judge from Ro- those conspiracy to the conviction reversed ney. The is that offense stating, taxpay tax, “a excise evade the jointly engaged in the busi- conspiracy er convicted attempted accepting ness of tax, if the consti payment evade wagering excise tax and defeat evade properly prevent privilege would tutional owing by their due and filing failure to his conviction willful (individual) false and fraudulent p. p. at it.” 390 S.Ct. gross U.S. on which their combined Mackey United the case they were. in fact were less than 28 L.Ed.2d partnership re- Defendants did not file comment Mr. Justice White turns, were not with failure deci ed on Marchetti and Grosso and, under Marchetti1 to do so regis gambling sions “The as follows: charged. But could not Grosso2 be so held requirements were tration forgive do those cases present cases) substantial those [in individual) accepts (partnership or and therefore risks liability tax. Nor from unenforceable; imposition of crim partners do those cases insulate non-compliance penalties inal responsibility for efforts criminal impermissible exercise on the burden long the effort which p. 672, privilege.” 91 S. responsibility is basis criminal p. Ct. at not a mere to file a return. In this instance these statements We take effort to case, mean, applied present took the form of understatement *6 Lane convict re- partnership that Lewis and individual on the attempting voluntarily ed evade the filed. The offense turns it, if, attempting excise tax than thus is no less an offense charge perjury done more than fail committed required grand jury to take actions cannot be a witness who could scope testify required because volun- fall within elected but privilege. so, tarily Fifth Amendment to do no less an offense nothing more, joint sending IRS, voluntarily in a in an Lane have done capacity, than partnership taxes, partnership attempt than to file a fail to evade partnership stating, “We swear false affidavit wager- punish partnership The them for seeks to our indictment we have ceased doing attempt just please us operations, that. don’t bother punished partnership for fail taxes.” Since cannot be more about wagering tax, proper ure as government theory the its To sustain privi sertion Amendment of the Fifth with to come forward lege of Marchetti and under the rule proof (1) the individual protects prosecution them from wagers, or, partnership con- cluded some payment. for an to evade such not do versely, the individuals This dismissed. should have been individual much defendant Both of each convictions leading said, inference to an turns the indictments should are reversed and partnership composed the excess was be dismissed. wa- wagers, wagers re- gers in the total of included Reversed. 2. Grosso 1. Marchetti v. United (1968). (1968). 19 L.Ed.2d 19 L.Ed.2d 889 88 S.Ct. ported less than come

wagers.3 The it. evidence

forward the defendants shows that record accepted $41,329 of of the in- that the combined

.and $33,447. But for dividual only know, included the returns all we cannot,

attempts do, shift to

obligation prove correctness conviction.

the returns face presumption is no

criminal case there a civil

governmental as with correctness

assessment. reversed, not must be

The convictions an offense failure

. charged, and prove the offense further remanded

the case should

proceedings. Jr., ESHERICK, Petitioner-

Fred M. Appellant, PERINI, Superintendent,

E. P. Respondent-Appellee,

No. 72-1797. Appeals, Court Sixth Circuit.

Argued 1973. Feb. March

Decided Youtt, Harry Cleveland, Ohio, E.

petitioner-appellant; Bernard A. Berk- man, Ohio, Cleveland, on brief. question whether some are so in- included and those not face AYeneed an offense— cluded all (1) are constitute alone would misleading govern- arguably is, remains on the burden prove alleged, reporting what it which is under- regard partnership wagers, return without an individual part- reported only part- taxpayer, misreporting whether such whether mingled nership nership all. bets less than bets, underreporting. cannot be ad- here dictment understate. duce that he evidence evidence me that Also seems Thus, until come for- (1) to shift is not sufficient alone (1) coming (cid:127) forward with evidence on ward the burden were not to rebut. either evidence return, or that included