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United States v. Pasha

May 22, 1964

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
ANDREW PASHA, PETER GRAFNER, AND ARTHUR MONACO, DEFENDANTS-APPELLANTS.



Author: Swygert

Before HASTINGS, Chief Judge, and SCHNACKENBERG and SWYGERT, CIRCUIT JUDGES.

SWYGERT, Circuit Judge.

Defendants Andrew Pasha, Peter Grafner, and Arthur Monaco were convicted by a jury on a two-count indictment, charging violations of section 7203 of the Internal Revenue Code of 1954.*fn1 Defendants received prison sentences and were fined. They appeal from the judgments of conviction.

The Sufficiency of the Indictment.

Both counts of the indictment charged that defendants were engaged in the business of accepting wagers from April 25, 1960 to April 27, 1960, and that they received wagers on their own behalf and on behalf of other persons engaged in the business. Count one charged defendants willfully failed to pay the special occupational tax on wagering for the taxable period ending June 30, 1960, as required by section 7203. Count two charged that defendants willfully failed to register with the Chicago district director of Internal Revenue and to file Internal Revenue Form 11-C, as required by law and regulations, in violation of section 7203.

Defendants contend that count one is insufficient because the names of the persons engaged in accepting wagers on whose behalf defendants acted were not named in the indictment.

Section 4401(c) of the Internal Revenue Code of 1954 requires the payment of a tax by one who is engaged in the business of accepting wagers. Section 4411 imposes a similar tax upon those who receive wagers for others whose business is the acceptance of wagers. Thus, an occupational tax is payable by one engaged in the wagering business whether he operates the business or acts as the agent for someone who does conduct the business. Here, defendants were charged both as principals and agents. There was no necessity to recite in the indictment the identity of the principals on whose behalf defendants were acting as agents because the gravamen of the offense is the engaging in the business of accepting wagers either as principal or agent.

Defendants contend that count two of the indictment failed to charge an offense defined by statute. They point out that the count charges a failure to register in accordance with section 4412(a) of the Internal Revenue Code of 1954 and also a failure to make a return on Form 11-C. They assert that the return is not required by statute. Defendants argue that the failure to file Form 11-C is not proscribed by section 7203 even though that section includes the failure to make a return "required by law or regulations."

Section 4412(a) provides that each person required to pay the occupational tax under sections 4401 and 4411 must register with the Internal Revenue Service. Section 4412(c) provides: "In accordance with regulations prescribed by the Secretary, he or his delegate may require from time to time such supplemental information from any person required to register under this section as may be needful to the enforcement of this chapter." Pursuant to section 4412(c), the Secretary of the Treasury promulgated regulation § 44.4412-1(a) which reads in part: "Every person required to pay the special tax imposed by section 4411 shall register and file a return on Form 11-C. For provisions relating to the general requirement for filing a return, see § 44.6011(a)-1."*fn2

Even though the requirement for registering and filing a return on Form 11-C originates in a regulation, it is given statutory sanction not only by section 4412(c) but also by section 6011(a) of the Internal Revenue Code of 1954. That section reads in part:

"When required by regulations prescribed by the Secretary or his delegate any person made liable for any tax imposed by this title * * * shall make a return * * * according to the forms and regulations prescribed by the Secretary or his delegate."

It is thus apparent that count two charges a statutory offense.

The Validity of the Search Warrants.

Prior to defendants' arrest, an Internal Revenue agent executed an affidavit which resulted in a search of premises located at 5129 West Diversey Avenue and 3157 North Leclaire Avenue, Chicago. The agent stated in his affidavit, "There is now being cnncealed certain property, namely * * * betting slips, betting pads, records of bets, tickets, scratch sheets, telephones, * * * calculating machines, and diverse other * * * apparatus, * * * and records, relating to the business of accepting wagers." The agent further stated that he made and supervised an investigation of these premises and had maintained a surveillance for some period prior to the search; that agents under his supervision observed the three defendants enter and leave an apartment at the Leclaire Avenue address daily, at regular hours, and that they saw defendants on several occasions at the Diversey Avenue address, a building which had lettering on its front window, Goodman Design & Engineering Co. The affidavit listed numerous telephone calls ...


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