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People v. Pintozzi

OPINION FILED NOVEMBER 24, 1971.

THE PEOPLE EX REL. WILLIAM J. SCOTT, ATTORNEY GENERAL,

v.

ROCCO PINTOZZI ET AL., APPELLANTS.



APPEAL from the Circuit Court of Cook County; the Hon. GEORGE M. LEIGHTON, Judge, presiding.

MR. JUSTICE RYAN DELIVERED THE OPINION OF THE COURT:

Rehearing denied January 27, 1972.

The State of Illinois instituted an action in the circuit court of Cook County the ultimate purpose of which is to collect from the defendants, Rocco Pintozzi and Frank Pintozzi (hereafter called principal defendants), a substantial amount of retailers' occupation tax. The original complaint named many other defendants both corporate and individuals, all of whom, except the principal defendants and their wives, were dismissed prior to the final order.

Rocco Pintozzi and Frank Pintozzi for many years have been engaged in the business of operating retail liquor stores. For several years their operation was in the nature of a partnership. About 1958 it was determined that the operation of their stores should be carried on through corporate entities. Thereafter these defendants caused to be opened and operated nine retail liquor stores located in Chicago and its suburbs. They also caused to be organized approximately 12 corporations which were involved at various times in the operation of these liquor stores. For a period of time one of the stores was licensed in the name of William Pape and later in the name of James O'Brien. Pursuant to the provisions of section 4 of the Retailers' Occupation Tax Act (Ill. Rev. Stat. 1967, ch. 120, par. 440 et seq.) the Department of Revenue made corrections in the various tax returns filed on behalf of the corporations and William Pape and made additional assessments of taxes due under the Act. Some of these assessments were reduced to judgment and others were not. The total amount of these judgments and assessments is $1,116,758.65.

The State's theory of the case is that the principal defendants were the real parties in interest in the operation of these liquor stores and that the corporate entities and individuals in whose names the operations were carried on were but facades behind which these defendants operated. They collected the tax on retail sales from the purchasers but failed to remit to the State the tax due. They accomplished this by understating the gross receipts from the stores on the tax returns filed under section 3 of the Retailers' Occupation Tax Act, thus fraudulently retaining for their own use money collected as taxes due the State of Illinois. In this action the State seeks judgment against the principal defendants for the amount of these unpaid taxes and seeks to impose a constructive trust for the satisfaction of the judgment on the property both real and personal involved in the operation of the retail liquor stores and certain parcels of realty allegedly acquired with the proceeds of the fraudulent operations. Hazel Pintozzi, wife of defendant Rocco Pintozzi, and Geraldine Pintozzi, wife of defendant Frank Pintozzi, were joined as defendants because they are owners of interests in some of the real estate upon which the State seeks to impose a constructive trust.

On motion of the State a receiver pendente lite was appointed by the court to take charge of the property, both real and personal, involved in the operation of the various businesses. The receiver was also directed to take possession of the books, records and documents concerning the operation of the businesses. The receiver took possession and control as directed.

Following lengthy hearings the court made detailed findings of facts and conclusions of law on the many issues involved and incorporated the same by reference in its decree. The court entered judgment against the two principal defendants personally for the unpaid tax in the amount of $1,116,758.65. The court declared a constructive trust on the properties acquired by the principal defendants from July 1, 1959 (the date alleged in the complaint as the beginning of the fraudulent practices) to September 28, 1967 (the date the receiver was appointed). The court also declared the places of business under the control and custody of the receiver to be part of the corpus of the constructive trust. The court directed that if the amount of the judgment is not paid within 30 days the receiver should proceed to sell the property and apply the proceeds to the satisfaction of the judgment. This appeal has been taken from that decree.

The judgment of the trial court against these two defendants can be broken down into different classifications, each being based on a different theory.

First Classification:

The Department of Revenue made an assessment of tax due against a corporation named No. 2 Countryside Food & Beverage, Inc. in the amount of $34,602.57. This amount was subsequently reduced to judgment against the corporation. Citation proceedings to discover assets disclosed that there were no assets of the corporation. The court found that Rocco and Frank Pintozzi were the officers or employees of the corporation who had the control, supervision and responsibility of filing the tax returns and paying the tax. The court found that these defendants wilfully failed to file the returns and make the payments and, under the provisions of section 13 1/2 of the Retailers' Occupation Tax Act (Ill. Rev. Stat. 1967, ch. 120, par. 452 1/2), held them personally liable for the judgment against the corporation.

The same proceeding was followed against a corporation named Double Value Liquors and Restaurant, Inc., and for the same reason said defendants were held personally liable for the judgment against this corporation in the amount of $99,432.87.

Second Classification:

On November 14, 1961, an application for a certificate of registration was filed for a liquor store located at 1423 West 55th Street in La Grange. The application was purportedly executed by William Pape who also purportedly filed the tax returns with the Department of Revenue for the periods of January 1, 1962, through December 31, 1964, and from January 1, 1965, through April 30, 1965. The Department of Revenue made assessments of taxes for the periods, and judgments were entered on those assessments against William Pape in the amount of $161,317.21 for the period from January 1, 1962, through December 31, 1964, and in the amount of $23,935.65 for the period from January 1, 1965, through April 20, 1965. These judgments were affirmed by this court in 40 Ill.2d 442. In the case now before us the trial court found that Rocco and Frank Pintozzi had the ownership, control and direction of this store from its inception and had caused the application for registration and the tax returns to be filed by persons who forged the name of William Pape thereto. The court held the two defendants personally liable for the amount of these two judgments.

Third Classification:

Judgments had been entered against the following corporations in the amounts listed for assessments of tax which had been found to be due:

Countryside Food & Beverage, Inc. d/b/a Prestige Liquor, for a period from January 1, 1962 through October 31, 1966 .................................... $362,358.70

No. 3 Countryside Food & Beverage, Inc. for a period of May 1, 1965 through February 28, 1966 ...


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