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United States v. Mackey

April 1, 1965


Author: Hastings

Before HASTINGS, Chief Judge, and KILEY and SWYGERT, Circuit Judges.

HASTINGS, Chief Judge.

Defendant Fred T. Mackey was indicted in March, 1963 in five counts for "willfully and knowingly [attempting] to evade and defeat a large part of the income tax due and owing by him and his wife for the calendar [years] of 1956 [through 1960] by willfully preparing and causing to be prepared * * * false and fraudulent income tax [returns] * * * [in] violation of Section 7201 Internal Revenue Code; 26 U.S.C. Section 7201."

A jury verdict and judgment entered thereon found defendant guilty on all five counts. Defendant was fined $10,000 and costs and sentenced to five years in prison on each count, the prison sentences to run concurrently. Defendant paid the fine and costs which totaled $65,000. The district court stayed the judgment pending appeal and defendant appealed.

Government used the net worth method to prove its case. Government's theory at the trial was as follows. The net worth of defendant and his wife at the starting point, December 31, 1955, was $361,461.52 and their net worth at the end of 1960 was $1,519,744.05. These amounts included assets held in the names of the Gibraltar insurance companies (discussed infra) and other nominees for the benefit of defendant. During this five-year period defendant and his wife reported $143,339.24 of taxable income.

Government contended that the Gibraltar Industrial Life Insurance Company (Gibraltar Industrial), Gibraltar Mutual Life Insurance Company (Gibraltar Mutual) and the M.W.E. & S. Investment Company, Inc.,*fn1 were entirely under defendant's dominion and control. It asserted these companies had three safes into which flowed an average of about $4000 per week in currency during the five prosecution years, in excess of the sums which could be accounted for by the combined gross receipts of the companies, plus the income reported by defendant and his wife, and that defendant helped himself to this excess at will.

Government's theory was that the source of defendant's excessive net worth increases was a policy wheel operation which defendant admitted conducting and that the excess of $4000 per week, supra, was from profits earned by defendant on this operation.

Government, in its brief, states that the main issue at the trial was whether this excess $4000 per week was from the policy wheel operation or from unrecorded and unreported premium income earned by the Gibraltar companies.

On appeal, defendant lists seventeen issues and states:

"The principal errors relied upon are: the court refused to grant defendant ten peremptory challenges as provided in Rule 24(b), Federal Rules of Criminal Procedure, and was granted only eight such challenges; numerous errors in the admission of evidence, both oral testimony and documentary; failure to strike an admittedly incorrect and inaccurate net worth summary, Gov. Ex. 800 (consisting of 50 pages) and related exhibits 801, 802 and 803; failure of the government to meet the standards set down for net worth cases and the unconstitutionality of such method as applied to this case; failure to grant many defendant motions to suppress and strike evidence and for mistrial; denial of motion for acquittal made at conclusion of the government's case and after the jury verdict; in certain instruction given and refused and in repeating certain instructions to the jury during its deliberation; prejudicial remarks of the court; and the failure to hold a post-trial hearing upon the allegation that a petit juror was secretary to the foreman of the grand jury."


Defendant contends the district court committed reversible error by invoking a rule which limited him to eight peremptory challenges rather than permitting him ten as provided by Rule 24(b), Federal Rules of Criminal Procedure, 18 U.S.C.A.

On the first day of the trial, the district court announced that Government would first have opportunity to exercise peremptory challenges and that upon exercising these challenges no further challenges would be allowed except as to new jurors who might come into the jury box as a result of challenges made by defendant. The court said the same rule would apply to defendant. The effect of this rule was to permit each side one opportunity to challenge each prospective juror. Defendant objected to this rule.

Government did not exercise any challenges on its first opportunity. Defendant exercised eight peremptory challenges and tendered the panel back to Government. Government challenged one of the eight new members of the panel, accepted the juror who replaced this member and accepted the jury as then constituted. Defendant expressed the desire to exercise one or two of his remaining two peremptory challenges as to prospective jurors other than the one who replaced the member challenged by Government. The court ruled that defendant could only peremptorily challenge the new juror. Defendant objected to this ruling and did not challenge the new juror.

The manner in which peremptory challenges are exercised is within the sound discretion of the trial court, see Pointer v. United States, 151 U.S. 396, 410, 14 S. Ct. 410, 38 L. Ed. 208 (1894), and in the absence of violation of settled principles of criminal law, federal statutes or constitutional rights of defendant, such discretion is not abused. See Id. at 407, 408, 14 S. Ct. 410.

Defendant complains he was given only one opportunity to challenge each juror and that while he had the opportunity to exercise all ten of his peremptory challenges, the court's rule denied him the effective use of two challenges.

The Supreme Court approved a rule which gave each party only one opportunity to peremptorily challenge each juror. St. Clair v. United States, 154 U.S. 134, 147-148, 14 S. Ct. 1002, 38 L. Ed. 936 (1894). The Supreme Court also approved a method which could deny a party the effective use of some of his peremptory challenges. In Pointer v. United States, supra, the trial court used a method of peremptory challenge by which all jurors were examined, thirty-seven found qualified to sit and each party given a list of these thirty-seven jurors. From these lists Government could strike five and defendant twenty names. Defendant argued, in essence, that Government may have struck some of the same names which he struck and that Government should have been required to strike names before the list was tendered to him so that he would not waste his challenges on names struck by Government. The Supreme Court in upholding this method stated:

"It is true that, under the method pursued in this case, it might occur that the defendant would strike from the list the same persons stricken off by the government, but that circumstance does not change the fact that the accused was at liberty to exclude from the jury all, to the number of 20, who, for any reason, or without reason, were objectionable to him. No injury was done if the government united with him in excluding particular persons from the jury. He was not entitled of right to know in advance what jurors would be excluded by the government in the exercise of its right of peremptory challenge. He was only entitled of right to strike the names of 20 from the list of impartial jurymen furnished him by the court." Pointer v. United States, supra 151 U.S. at 412, 14 S. Ct. at 416.

Defendant places primary reliance on Avila v. United States, 9 Cir., 76 F.2d 39 (1935). The majority opinion, which held that defendant was denied the constitutional right of trial by jury because the court denied him a peremptory challenge on the ground he had waived this challenge, appears to be based upon the trial court's failure to follow Rule 51 of the District Court for the Southern District of California. To the extent that the majority opinion does not rely on Rule 51, we disagree with it. We agree with the dissent filed in that case, to the effect that the trial court did not abuse its discretion by invoking a rule similar to the one in the instant case. 76 F.2d 43.

In the instant case, the panel of prospective jurors was examined on voir dire by the trial judge in the presence of defendant; defendant understood that he would have but one opportunity to challenge each juror; and defendant challenged eight jurors the first time the panel was tendered to him. He had an opportunity to challenge one juror the second time the panel was tendered but chose not to do so. We conclude defendant has not been denied any statutory or constitutional right and hold the district court did not abuse its discretion in the rule it invoked for the use of peremptory challenges.

We disagree with defendant's contention that a new trial is required because petit juror Dolores Watkins did not state upon voir dire examination that she was employed by Leslie Ross Bain, the foreman of the grand jury which returned the instant indictment against defendant. There is no evidence that Watkins concealed this fact. She testified ...

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