Swygert, Chief Judge, Castle, Senior Circuit Judge, and Pell, Circuit Judge.
Defendant Jordan M. Scher, M.D., a psychiatrist practicing in Chicago, was charged in a three-count indictment with willfully and knowingly attempting to defeat and evade payment of a portion of his federal income taxes due for 1964, 1965, and 1966,*fn1 in violation of 26 U. S. C. § 7201.*fn2 After a bench trial, Dr. Scher was found guilty on all counts and received a sentence of three years' probation, the first 90 days to be served in a jail-type institution.
Scher concedes that there were understatements in each of the indictment years resulting from the cashing of patients' fee checks. The sole issue on this appeal is whether the evidence was sufficient to establish that the defendant had the requisite criminal intent.
As an appellate court, we cannot, of course, decide anew the defendant's guilt or innocence. See Kotteakos v. United States, 328 U. S. 750, 763, 90 L. Ed. 1557, 66 S. Ct. 1239 (1946). Rather, our task in this case is to determine if a rational trier of fact could have found beyond a reasonable doubt that Dr. Scher violated 26 U. S. C. § 7201. In so doing, we must view the evidence and all reasonable inferences therefrom in the light most favorable to the Government. See Glasser v. United States, 315 U. S. 60, 80, 86 L. Ed. 680, 62 S. Ct. 457 (1942).
Scher's certified public accountant for the years in question, Frank Baker, relied on the doctor's bank deposits to compute the gross income from his medical practice. During those years, Scher had only one checking account. From the defendant's office files or from his employees, Baker obtained the monthly bank statements. He then totalled the deposits made during the calendar year. Next, he deducted certain items, such as patients' returned (NSF) checks, from the annual deposits total. Because Dr. Scher was paid primarily by check, if these checks were not cashed but were deposited in the bank account, that account over a year's time would reflect the defendant's gross income from his medical practice for that year.
Beginning in 1963, however, Dr. Scher, or one of his employees at his direction, cashed some of the incoming checks at two currency exchanges near the doctor's office. According to deposits journals that the defendant's staff maintained, checks were cashed at least sixteen times during the three-year period covered by the indictment. Each transaction involved from one to twenty-one checks and from $1024.80 to $4019.72. Dr. Scher personally endorsed the checks to be cashed. After each transaction, the proceeds were given to the defendant, who placed them in a private safe in his office.
The accounting method adopted by Baker differed from that used by his predecessor, Erwin Waxler, who had prepared Dr. Scher's returns for the calendar years 1960 through 1962. In addition to reviewing the defendant's bank statements and cancelled checks, Waxler analyzed a receipts journal containing the names of the patients billed, the amounts received, and the dates of receipt and a disbursements journal, both of which were kept in Scher's office. Waxler would then compare the total amount of the receipts as recorded in the receipts journal, which, inter alia, listed all checks received, whether deposited or cashed, with the total amount of the deposits indicated on the bank statements. For the years that Waxler prepared the returns, the total bank deposits agreed with the total entries in the receipts journals. However, during these years, Scher was depositing in his bank account substantially all the patient fee checks he received.
At trial, Baker stated that he had never discussed with Scher the method by which he computed Scher's income. Exclusive reliance on the "bank deposits method" of determining income supposedly had been his own idea. Waxler also testified that when he had worked for Scher he had not explained to him how he calculated the income.
Scher contends that this and other testimony disproves the validity of the trial judge's finding of willfulness. The maintenance of accurate records by Scher's employees and the defendant's openness in cashing the checks allegedly were inconsistent with a willful intent to evade taxes. Apparently Scher attributes the understatement of his income in 1964, 1965, and 1966 to poor communication between Baker and himself and to the accountant's "sloppiness" or incompetence. Defendant relies on United States v. Pechenik, 236 F.2d 844 (3d Cir. 1956), in which the Third Circuit overturned the conviction of a corporation president for willful evasion because the record failed to reveal probative evidence linking the defendant with the corporation's erroneous accounts books and tax returns.
Although both Pechenik and the present case involve charges of individual criminal liability for tax evasion, there could well be underlying differences between the situation of a corporation officer who perforce must depend upon bookkeepers, auditors, and accountants for the preparation of books relating to financial matters not under his personal dominion and the situation of a person dealing with his own individual income all of which was derived from personal services rendered by him.
We first note that "a taxpayer cannot shift the responsibility for admitted deficiencies to the accountants who prepared his returns if the taxpayer withholds vital information from his accountants, or takes positive action designed to mislead them." Bender v. Commissioner of Internal Revenue, 256 F.2d 771, 774 (7th Cir. 1958). That Scher did not conceal his check cashing from his employees does not foreclose the conclusion that he was consciously reticent about telling his accountant ...