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United States v. Wortman

January 14, 1964

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
FRANK LEONARD WORTMAN AND GREGORY MOORE, DEFENDANTS-APPELLANTS



Author: Major

Before DUFFY, CASTLE and MAJOR, Circuit Judges.

MAJOR, Circuit Judge.

Defendants Frank Leonard Wortman and Gregory Moore separately appeal from judgments entered July 17, 1962, following a jury verdict finding them guilty of conspiracy. The indictment, returned January 11, 1960, originally contained nine counts, all of which were disposed of prior to trial except 1, 2, 3 and 4. Counts 1, 2 and 3 charged Frank Leonard Wortman (afterwards referred to as defendant Wortman to distinguish him from his brother, Edward Wortman) with attempted evasion of his personal income tax for the years 1953, 1954 and 1955. Count 4 charged that defendant Wortman, Elmer Sylvester Dowling, Edward Wortman, Gregory Moore, Sam Magin and George Frank conspired in the manner and for the purposes and objectives subsequently shown. Because of a physical condition, Frank was not tried. The jury was unable to agree as to Edward Wortman on the conspiracy count and as to defendant Wortman on the substantive counts (1, 2 and 3). Defendant Wortman, Moore and Dowling were convicted on the conspiracy count. Magin was acquitted. Dowling died subsequent to the trial.

After a trial which lasted more than six weeks, the case was submitted to the jury on the afternoon of Thursday, February 22, 1962. The jury deliberated the remainder of that day, all of Friday, Saturday and Sunday (9 a. m. to 9 p. m. each day), and returned the verdict above noted at about 4 p. m. on Monday, February 26.

Defendants argue that numerous prejudicial errors were committed which require a reversal of the judgments. Leaving for further consideration, if necessary, many of the issues thus advanced, we shall first consider the contention that a large amount of immaterial, incompetent and prejudicial evidence was admitted over defendants' objections and that the proof of a conspiracy, if any, was not that charged.

We think in the beginning, for reasons which we hope will subsequently become apparent, that the material averments of the conspiracy should be set forth. It alleges in customary language that defendants Wortman and Moore, together with the other persons heretofore named, from July 1, 1944, and continuously thereafter to and including the date of the filing of the indictment (January 11, 1960), conspired and agreed together:

"a. Wilfully to defraud the United States of America of income taxes due and owing for the calendar years 1944 to date from defendant Frank Leonard Wortman.

"b. Wilfully to defraud the United States of and concerning the exercise of its governmental function and right of ascertaining, computing, levying, assessing, and collecting income taxes due and owing to the United States of America for the calendar years 1944 to date by defendant Frank Leonard Wortman.

"c. To commit certain offenses against the United States, to-wit:

"(1) The crime of wilfully attempting to evade and defeat a large part of the income taxes to be due and owing to the United States of America by the defendant Frank Leonard Wortman, for the calendar years 1944 to date in violation of Section 145(b) of the Internal Revenue Code of 1939 (26 U.S.C. § 145(b)) and Section 7201 of the Internal Revenue Code of 1954 (26 U.S.C. § 7201).

(2) The crime of knowingly and wilfully falsifying, concealing and covering up by trick, scheme and device, material facts in matters within the jurisdiction of an agency of the United States, viz., the Internal Revenue Service of the United States Treasury Department, during the period from 1944 to date, in violation of Section 1001 of the Criminal Code (18 U.S.C. § 1001).

"2. It was a part of said conspiracy that the defendant would conceal and continue to conceal the nature and extent of the proprietary and financial interest of the said Frank Leonard Wortman in various partnerships, associations and corporations, and the sources, nature and amounts of his income for the calendar years 1944 to date.

"a. It was further a part of said conspiracy that the defendants would cause false and misleading entries to be made in the books and records of (1) the partnership known as Gregory Moore et al., (2) a partnership known as Plaza Amusement Company, and (3) a proprietorship known as Paddock Liquor Company, all for the purpose of concealing the financial interests therein of Frank Leonard Wortman.

"b. It was further a part of said conspiracy that the defendants would organize and operate gambling casinos in the form of partnerships, and that in the operation of said gambling casinos the defendants would fail to keep proper books and records concerning their operations, would fail to file certain partnership returns of income required by law, would file inadequate and incomplete partnership returns of income, would cause false and fraudulent books and records to be kept in connection with the casino operations, and would cause to be prepared certain false and fraudulent partnership returns of income, all for the purpose of concealing the true income of said casinos and of the said Frank Leonard Wortman.

"c. It was further a part of said conspiracy that the defendants would cause property and interests in business ventures to be concealed in the names of persons other than Frank Leonard Wortman, for the purpose of concealing the interests of Frank Leonard Wortman therein.

"d. It was further a part of said conspiracy that the defendants would cause false and misleading entries to be made in the books and records of Jack Langer's Mounds Club, Inc. and Plaza Amusement Company, Inc., for the purpose of concealing the true ownership of said companies and the capital investment therein by said Frank Leonard Wortman.

"3. It was further a part of said conspiracy that the defendants would cause to be prepared and filed false and fraudulent individual income tax returns of Frank Leonard Wortman."

Then follows the enumeration of twentyfive overt acts (five of which were eliminated at the trial) alleged to have been performed in furtherance and in execution of the conspiracy.

It is significant to note from the allegations of the indictment that the alleged conspiracy was pursued by all the named defendants for a period of almost sixteen years for the benefit of and as an aid to defendant Wortman in his income tax matters in one way or another. None of the other alleged conspirators (including Moore) were to have received any benefit from or been aided by their sixteen years of concerted action.

The Government's proof in the main relates to five different business enterprises operated over a period of sixteen years: the Hyde Park Club, the National Amusement Company, the Plaza Amusement Company, the Paddock Restaurant and the Premier Club (also referred to as the Peerless Club and the Paramount Club). The testimony concerning the first three named businesses was admitted solely with reference to the conspiracy charge. That concerning the other businesses was admitted primarily on the substantive charges against defendant Wortman upon which the jury failed to agree. It appears, however, that the Government also relies upon this testimony in support of its theory of a continuing conspiracy.

THE HYDE PARK CLUB.

This Club, organized February 5, 1943 as a partnership, was engaged in the operation of a gambling casino. The partnership consisted of seventeen partners, all named and their respective interests set forth. Moore, with a 7 1/2% interest, was named as a partner. Defendant Wortman was not named. This partnership after some four years of operation terminated its business.

In 1950, Wm. C. Long, a Revenue agent and the first Government witness, commenced an examination of Moore's income tax return for 1947, during the course of which he wrote Moore, "It is noted that you only reported one half of your distributive share of net income from the partnership, 'per a partnership agreement.' Please furnish this office with a copy of such agreement for inspection purposes so that it can be established if a partnership existed as concerns your distributive share of income * * *." Moore responded, "I am enclosing the only copy of this agreement that has been duly signed and witnessed * * *." The agreement (hereinafter called the Moore-Wortman agreement), purportedly signed by Moore and defendant Wortman, bore the names of Moore's wife and his attorney, John W. Joynt, as witnesses, and recited:

"Frank Wortman, aforesaid, is to place in the custody of Gregory E. Moore, aforesaid, $5,000.00 in cash to be used if and as needed in the furtherance of the business of the Hyde Park Club and is to receive in return from said Gregory E. Moore one half of all monies received by Gregory E. Moore as profits from the Hyde Park Club.

"The name of Frank Wortman shall not appear on the partnership of the Hyde Park Club for obvious reasons. But the interests of both Wortman and Moore will be carried in the name of Gregory E. Moore in the Hyde Park Club partnership as reported to the United States Government, Bureau of Internal Revenue. This interest amounts to 7 1/2% of the profits which is to be divided 3 3/4 percent to Wortman and 3 3/4 percent to Moore. If, at a later date, the percentage of interest in the Hyde Park Club is increased to Moore the profits will still be divided on a 50-50 basis, i. e., 1/2 to Wortman and 1/2 to Moore; but the name of Wortman shall not appear on the original partnership agreement of the Hyde Park Club at any time.

"Gregory E. Moore acknowledges herewith receipt of $5,000.00 in cash from Frank Wortman on July 1, 1944.

"Frank Wortman acknowledges now that he received $6,910.14 during the year 1944 from Gregory E. Moore as profits from the Hyde Park Club; and Frank Wortman acknowledges that he received from Gregory E. Moore $7,872.75 as profits from the Hyde Park Club for the year 1945.

"This agreement dated as of January 10, 1946, as a Nunc Pro Tunc agreement for verbal agreement of July 1, 1944.

"This agreement can be terminated by either party on ten (10) days notice verbal or written.

"Signed by Frank Wortman and Gregory E. Moore. Witnessed by John W. Joynt and Mrs. Gregory E. Moore."

The correspondence between Long and Moore, together with the Moore-Wortman agreement produced by Moore, were admitted in evidence over defendants' objection that they were incompetent as hearsay and immaterial as to all defendants other than Moore. It is at once evident that these exhibits, particularly the agreement, if erroneously admitted were highly prejudicial. The conspiracy is alleged to have commenced July 1, 1944, the date on which the agreement became effective by reason of its Nunc Pro Tunc provision. The agreement constitutes the foundation upon which the Government's case is based insofar as it relates to conspiracy. It ...


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