Author: Kerner; Major; Duffy
Before MAJOR, Chief Judge, and KERNER and DUFFY, Circuit Judges.
These are appeals from judgments of conviction and sentence under four separate indictments. Three indictments charged that defendants wilfully and knowingly attempted to defeat and evade income tax liability for the year 1943; the fourth charged that defendants conspired with each other, each to evade his own as well as his co-defendants' income taxes for the year 1943 in violation of § 37 of the Criminal Code, 18 U.S.C.A. § 88 now § 371. The indictments were consolidated. A jury was waived and the cases were tried by the court.
Defendants present numerous alleged errors, but grouped together, in substance, they present for consideration the following contentions: That the court erred (1) in failing to dismiss the indictments when the United States Attorney announced he had no evidence to prove that each defendant had received corporate dividends which he failed to report, (2) in consolidating the causes for trial, (3) in overruling motion to dismiss the conspiracy indictment; and (4) that there was no evidence of any wilful intent to evade the tax.
First: The three separate indictments for the substantive offense were based on § 145(b) of the Internal Revenue Code, 26 U.S.C.A. § 145(b), which provides that any person who wilfully attempts in any manner to evade or defeat any tax imposed by the chapter or the payment thereof shall be punished as therein specified. They charged each defendant with having wilfully and knowingly attempted to defeat and evade a large part of the income and victory tax due and owing by him to the United States of America for the calendar year 1943, by filing and causing to be filed a false and fraudulent income and victory tax return. In his return Rosenblum stated that his net income was $36,658.89 and the tax due thereon $18,490.95, whereas, as he then and there well knew, his net income was $210,397.21, upon which net income he owed the United States of America $157,760.36; Weiss stated that his net income was $28,051.04 and the tax due thereon $12,380.74, whereas his net income was $149,018.86 and the tax thereon was $113,032.04; and Stryk stated that his net income was $37,683.62 and the tax due thereon $18,829.26, whereas his net income was $211,421.95 and the tax thereon was $158,066.80. The returns in the indictments were alleged to be false in that Rosenblum omitted from the statement of his gross income "Dividends, $145,022.72"; Weiss omitted "Dividends, $120,967.72"; and Stryk omitted "Dividends, $145,022.74."
The record discloses that in response to defendants' request, the Government, some seven months before the actual trial of the cases, filed a bill of particulars in each case. Except for the different amounts and names, they were substantially the same. In the Rosenblum case it was said there would be no effort to prove that the $145,022.72 listed as dividends under the heading gross income represented corporate dividends; that this money represented dividends or a division for money received by the defendant from a joint venture or joint enterprise in which he, Max Stryk and Jacob Weiss were participants; and that said $145,022.72 was received from the sales of intoxicating liquors.
Based upon this state of the record, defendants contend that the court should have dismissed the indictments. They argue that the word "dividends" used in describing the gross income which defendants failed to report, is a material and necessary part of the indictment, is descriptive of the offense, and must be proved as charged. In other words, to permit evidence that defendants received money as their share of over-ceiling prices from the sale of whiskey, which they failed to report in their income tax returns, would create a fatal variance between the indictment and the proofs to be adduced.
We cannot accede to this contention. We state our reasons briefly. A variance is not regarded as material unless it is of such a substantive character as to mislead the accused in preparing his defense or place him in second jeopardy for the same offense. Berger v. United States, 295 U.S. 78, 55 S. Ct. 629, 79 L. Ed. 1314, and United States v. Ragen, 314 U.S. 513, 62 S. Ct. 374, 86 L. Ed. 383. In the state of this record, there can be no question as to each defendant being protected against another prosecution for the same offense, and it is clear that he was not surprised in any way by the character of the evidence to be adduced. Here, the gravamen or the essential ingredient of the charge was the wilful attempt to evade and defeat the tax. The statute says that every attempt to evade or defeat the payment of income tax is a violation of the law. It is sufficient to charge a defendant with acts coming within the statutory description in the substantial words of the statute. Capone v. United States, 7 Cir., 56 F.2d 927; Rose v. United States, 10 Cir., 128 F.2d 622; and Cave v. United States, 8 Cir., 159 F.2d 464. In our case, the character of the offense with which each defendant was charged, was not changed by the use of the word "dividends." The indictment set forth the facts which made up the charge against each. He was still charged with a wilful attempt to evade and defeat the payment of his income tax. Hall v. United States, 168 U.S. 632, 18 S. Ct. 237, 42 L. Ed. 607; Mathews v. United States, 8 Cir., 15 F.2d 139; Jones v. United States, 7 Cir., 72 F.2d 873; Panella v. United States, 4 Cir., 140 F.2d 71; and Ferrari v. United States, 9 Cir., 169 F.2d 353. Hence, that part of the indictment which gave the break-down of the gross income and allowable deductions was surplusage or a mere defect or imperfection in form which did not tend to the prejudice of each defendant, and as such, need not be proved.
Second: The ground urged for reversal is that the court erred in consolidating the four indictments for trial. We are not to be understood as approving generally of the practice, but it is clear that these indictments could have been included in one indictment of four counts. See Rule 8(a) and (b) Federal Rules of Criminal Procedure, 18 U.S.C.A. In such a situation, the question of consolidation is vested in the sound discretion of the trial judge and his decision will be reversed only upon a clear abuse of that discretion. Cataneo v. United States, 4 Cir., 167 F.2d 820, and Rakes v. United States, 4 Cir., 169 F.2d 739. No error was committed in consolidating the cases. We think the court exercised a wise and sound discretion.
Third: Defendants contend that the conspiracy indictment should have been dismissed because (a) it did not state facts sufficient to constitute an offense against the United States; (b) it failed to allege whether the conspiracy was to commit an offense against the laws of the United States or to defraud the United States; and (c) it was vague and indefinite, and failed to set out the manner in which the alleged conspiracy would be accomplished.
A conspiracy is a partnership in crime. United States v. Socony-Vacuum Oil Co., 310 U.S. 150, 253, 60 S. Ct. 811, 84 L. Ed. 1129. A combination of two or more persons by concerted action to accomplish a purpose either criminal or otherwise unlawful comes within the accepted definition of conspiracy. United States v. Hutto, 256 U.S. 524, 528, 41 S. Ct. 541, 65 L. Ed. 1073. And the fact that income fraudulently concealed is derived from an illegal joint enterprise in no way militates against the further charge of conspiracy. It is not the form of the combination or the particular means used but the result to be achieved that the statute condemns. American Tobacco Co. v. United States, 328 U.S. 781, 809, 66 S. Ct. 1125, 90 L. Ed. 1575.
A conspiracy to commit a crime is a different offense from the crime that is the object of the conspiracy. And the parties may be punished for their agreement to commit a crime as well as for the completed crime - even though the substantive offense is charged as an overt act in the conspiracy indictment. "* * * For two or more to confederate and combine together to commit or cause to be committed a breach of the criminal laws, is an offense of the gravest character, sometimes quite outweighing, in injury to the public, the mere commission of the contemplated crime. It involves deliberate plotting to subvert the laws, educating and preparing the conspirators for further and habitual criminal practices. And it is characterized by secrecy, rendering it difficult of detection, requiring more time for its discovery, and adding to the importance of punishing it when discovered." United States v. Rabinowich, 238 U.S. 78, 88, 35 S. Ct. 682, 685, 59 L. Ed. 1211.
In Pinkerton v. United States, 328 U.S. 640, 66 S. Ct. 1180, 90 L. Ed. 1489, the defendants were indicted for violation of the Internal Revenue Code. The indictment contained ten substantive counts and one conspiracy count. Each of the substantive offenses found was committed pursuant to the conspiracy. The Pinkertons contended that the substantive counts became merged in the conspiracy count and that only a single sentence could be imposed. The Supreme Court, however, refused to accept the proposition that the substantive offenses were merged in the conspiracy. The contrary applies also. In that case, 328 U.S. at page 643, 66 S. Ct. at page 1182, 90 L. Ed. 1489, the Court said: "It has been long and consistently recognized by the Court that the commission of the substantive offense and a conspiracy to commit it are separate and distinct offenses. The power of Congress to separate the two and to affix to each a different penalty is well established."
In our case the indictment charged that the defendants "On or about the first day of January, 1942, and continuously thereafter until the return of this indictment * * * unlawfully, knowingly, wilfully, and feloniously conspired * * * together, with each other, and with other persons to the Grand Jurors unknown, to attempt to evade and defeat large parts of the income and victory taxes due and owing and to be due and owing by them, said defendants and each of them, to the United States of America for the calendar year 1943, by filing and causing to be filed with the Collector of Internal Revenue * * * false and fraudulent income and victory tax returns wherein each of said defendants would state that his taxable net income for income and victory tax purposes for said calendar year was far less than it actually was, and that the income and victory tax due from him for said calendar year was far less than the amounts actually due the United States of America on that account." The indictment also enumerated 23 overt acts averred to have been committed in furtherance of and for the purpose of carrying into effect the purpose of the conspiracy.
We conclude that the indictment stated facts sufficient to constitute an offense against the United States. It was not vague or indefinite. It clearly set forth all the necessary facts to constitute an offense against the United States. See Capone v. United States, supra, and Jelke v. United States, 7 Cir., 255 F. 264.
The point is also made that the defendants may not be convicted upon statements made by them after the alleged conspiracy has ended, and Fiswick v. United States, 329 U.S. 211, 66 S. Ct. 962, 90 L. Ed. 1004, is cited. The argument is that the evidence failed to show any unit of design and purpose or that there had been a combination of the minds of the defendants to file false individual income tax returns for 1943, and that the court based the conviction upon statements of the defendants made long after the alleged conspiracy had come to an end. We disagree. The District Court, in disposing of this contention, said: "Obviously the facts constitute beyond all doubt proof of a conspiracy. These three men * * * planned and carried out a scheme whereby, through their dummy corporations, their implements and tools, they were to and did receive $500,000 in unaccounted-for income. This is the very essence of a conspiracy."
To this it will be enough for us to say that we have examined the record, and that it discloses evidence of a conspiracy between the defendants from early in 1943 when the defendants first conceived the idea of selling whiskey at over-ceiling prices up to the time when they filed their ...