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United States v. Metro M. Holovachka

February 18, 1963

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
METRO M. HOLOVACHKA, DEFENDANT-APPELLANT.



Author: Hastings

Before HASTINGS, Chief Judge, and KNOCH and CASTLE, Circuit Judges.

HASTINGS, Chief Judge

Metro M. Holovachka, defendant-appellant, was charged on January 12, 1962 in a 3-count indictment with violation of Section 7201 of the Internal Revenue Code of 1954.*fn1 The indictment charged that defendant willfully attempted to evade and defeat his income taxes for the years 1955, 1956 and 1957 by filing false and fraudulent tax returns. The indictment alleged that defendant had reported an income tax liability of $11,893.81 for 1955, $10,486.75 for 1956 and $16,850.87 for 1957, whereas his correct tax liability for those years was $22,151.54, $31,523.91 and $24,893.48, respectively.

Following a jury trial lasting three weeks, defendant was found guilty on all three counts. The district court imposed concurrent sentences of imprisonment for three years on each of the three counts and a fine of $10,000 on Count One. This appeal followed.

The instant indictment was returned and the trial was held in the United States District Court for the Northern District of Indiana, in the city of Hammond, Indiana.

The record shows that defendant was born in Gary, Indiana in 1908, the son of immigrant parents from Czechoslovakia. He was educated in the Gary public schools, attended Purdue University and was graduated from the Washington College of Law in Washington, D.C. He was admitted to the bar and has been practicing law in Gary since 1936. He served as city controller of Gary during 1952. He was elected to and held the office of prosecuting attorney of Lake County, Indiana from January, 1953 through December, 1958.

Defendant lived in Gary, was married and had one son, Demetri, age 23 years. His aged mother was living in Gary at the time of the trial. His sister, Dr.Anne Hopwood, was practicing medicine in Owensboro, Kentucky. His father-in-law, Rev. Alexander Papp, was an ordained priest of the Eastern Rite Catholic Church.

The indictment charged that defendant had attempted to evade federal income taxes by understating his and his wife's taxable income.The theory of the Government's case was that there were large annual increases in defendant's net worth in 1955, 1956 and 1957; that the only reasonable explanation for these increases was that they represented current taxable income; and that the amounts of taxable income proved at the trial were considerably greater than the amounts reported by defendant in his tax returns. This was a typical net worth case.

The errors relied upon for reversal may be generally characterized as concerning the method of impaneling and sequestering the jury; whether the evidence was sufficient to support the jury verdict; and various rulings of the trial court on evidence, motions and instructions before and throughout the trial.

I.

Defendant was first indicted on May 21, 1961 by a grand jury at Hammond charging tax evasion violations for the years 1955 and 1956. On September 28, 1961, the grand jury returned an additional indictment against defendant for the year 1957.

On June 26, 1961, defendant filed a preliminary motion to suppress certain evidence and to inspect the grand jury minutes. This motion was denied by the trial court.

The basis of this motion was that defendant, while serving as prosecuting attorney of Lake County, Indiana, was subpoenaed to produce certain personal records before the Senate Select Committee on Improper Activities in the Labor or Management Field (McClellan Committee). Defendant alleged that during the period he was under subpoena (May, 1958 until June, 1959), there appeared a series of senasational and inflammatory newspaper articles, headlines and photographs in Gary, Hammond and Chicago newspapers concerning his appearance before the McClellan Committee. Defendant alleged that the result of such publicity was to compel him, as a public official, under the "duress of public pressure," to provide his books and records to the McClellan Committee in violation of his rights under the Fourth and Fifth Amendments, which records and information were subsequently used in connection with the instant prosecution.

Government aptly points out that the motion, on its face, was insufficient to warrant granting the relief sought. It did not identify either the records defendant produced before the McClellan Committee, or the records, and information allegedly obtained therefrom, which he wished to have suppressed. Defendant's motion was based "upon information and belief" and stated that these unspecified records were presented to the grand jury. He claimed it was necessary for him to examine the grand jury minutes in order to prove the allegations of his motion.

Such a motion hardly rises to the standard required to break the secrecy of grand jury proceedings. Pittsburgh Plate Glass Co. v. United States, 360 U. S. 395, 79 S. Ct. 1237, 3 L. Ed. 2d 1323 (1959); United States v. Greenberg, D.C.S.D.N.Y., 204 F. Supp. 400, 403 (1962); United States v. Sugarman, D.C.R.I., 139 F. Supp. 878, 881 (1956); United States v. American Medical Ass'n, D.C.D.C., 26 F. Supp. 429, 431 (1939). Cf. United States v. Nunan, 2 Cir., 236 F.2d 576, 594 (1956), cert. denied, 353 U.S. 912, 77 S. Ct. 661, 1 L. Ed. 2d 665; United States v. Molasky, 7 Cir., 118 F.2d 128, 132 (1941), reversed on other grounds subnom., United States v. Ragen, 314 U.S. 513, 62 S. Ct. 374, 86 L. Ed. 383 (1942).

Section 134(a) of the Legislative Reorganization Act of 1946, 60 Stat. 831, 2 U.S.C.A. ยง 190b(a), provides in pertinent part:

"Each standing committee of the Senate, including any subcommittee of any such committee, is authorized to hold such hearings, to sit and act at such times and places during the sessions, recesses, and adjourned periods of the Senate, to require by subpoena or otherwise the attendance of such witnesses and the production of such correspondence, books, papers, and documents, to take such testimony * * * as it deems advisable. Each such committee may make investigations into any matter within its jurisdiction * * *."

It appears without question that the McClellan Committee was authorized by law to issue subpoenas directed to defendant and his records and that there was no deprivation of his rights under the Fourth Amendment.

The record shows that when defendant appeared before the McClellan Committee he refused to answer certain questions on the ground that the Committee lacked authority to inquire into such matters, and the following exchange then took place:

"The Chairman: Do you object on the ground that a truthful answer thereto might tend to incriminate you? I want to get the record clear.

"Mr. Holovachka: No, sir."

Defendant is correct in stating that the Fifth Amendment protects against the compulsory production of private books and records, Boyd v. United States, 116 U.S. 616, 633-635, 6 S. Ct. 524, 29 L. Ed. 746 (1886). However, by failing to invoke the privilege, defendant waived any rights afforded him under the Fifth Amendment. United States v. Murdock, 284 U.S. 141, 148, 52 S. Ct. 63, 76 L. Ed. 210 (1931).

Defendant further contends that he was prejudicially restricted at this point from establishing the relationship between the activities of the McClellan Committee and the Internal Revenue Service to the events in the instant case. He predicates this curious argument on an expression found in a resolution offered in the Senate, and adopted, on January 25, 1962, authorizing Sinclair, a former Committee staff member "to testify in a criminal case [the instant case] pending before the U.S. District Court for the Northern District of Indiana, which grew out of an investigation by the Select Committee." (Emphasis added.)

From this resolution defendant argues that the "facts clearly suggest and establish a concert of action between the Senate Committee and the Internal Revenue Service." We think defendant's conclusion in this regard is without substance. Assuming, arguendo, that it should be seriously considered, we are unable to discern anything illegal or improper in cooperation between the Executive and Legislative arms of the government. We fail to see any deprivation of constitutional rights arising out of such co-operation in the situation under consideration.

We hold that the district court did not err in denying defendant's motion to suppress and to inspect the grand jury minutes. The trial court did not abuse its discretion in so ruling. Although this motion was filed prior to the return of the count for the year 1957, it was considered as addressed to this additional charge.

On June 26, 1961, defendant filed a motion for a bill of particulars addressed to the original indictment concerning the years 1955 and 1956. This was allowed to stand as to the subsequent count for 1957.

In this motion, defendant requested particulars and details concerning the Government's claim of unreported income, disallowed deductions or exemptions and net worth statements upon which the prosecution was to be based.

In response to such motion, Government informed defendant that it proposed to prove his correct taxable income and income tax liability for each year covered by the indictment by the net worth plus non-deductible expenditure method of proof. The trial court denied the motion for a bill of particulars in the light of Government's disclosure of its theory of the case. Blackwell v. United States, 8 Cir., 244 F.2d 423, 426 (1957), cert. denied, 355 U.S. 838, 78 S. Ct. 49, 2 L. Ed. 2d 50.

We hold that the action of the trial court in so ruling was within the exercise of its sound discretion allowed under Rule 7(f), Federal Rules of Criminal Procedure, 18 U.S.C.A.*fn2 "The application for a bill of particulars is one addressed to the sound discretion of the court, and, there being no abuse of this discretion, its action thereon should not be disturbed." Wong Tai v. United States, 273 U.S. 77, 82, 47 S. Ct. 300, 71 L. Ed. 545 (1927); United States v. Doyle, 7 Cir., 234 F.2d 788, 794-795 (1956), cert. denied, 352 U.S. 893, 77 S. Ct. 132, 1 L. Ed. 2d 87; Hooper v. United States, 10 Cir., 216 F.2d 684, 686 (1954); Remmer v. United States, 9 Cir., 205 F.2d 277, 281-282 (1953), rev'd on other grounds, 347 U.S. 227, 74 S. Ct. 450, 98 L. Ed. 654; United States v. Caserta, 3 Cir., 199 F.2d 905, 910 (1952); United States v. Chapman, 7 Cir., 168 F.2d 997, 999 (1948), cert. denied, 335 U.S. 853, 69 S. Ct. 82, 93 L. Ed. 401.

Defendant was not surprised or prejudiced during the subsequent trial because of this denial. Government, with commendable fairness, entered into a pretrial stipulation of facts containing 34 specifications and covering numerous exhibits, as evidenced by Government's Exhibit 63. This proved to be a broad disclosure of its case. Government has demonstrated to our satisfaction in its brief that by using the information contained in the stipulation it was possible to substantially reconstruct the entire net worth statement it relied upon in the trial. We find no abuse of discretion on the part of the trial court in denying defendant's motion for a bill of particulars. Under the record before us, we find no occasion to adopt the more "liberal" rule defendant urges upon us.

Following the denial of the foregoing motions filed by defendant, the case was set for trial on November 13, 1961 and ...


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