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United States v. Venuto.

decided.: May 29, 1950.

UNITED STATES
v.
VENUTO.



Author: Leaderle

Before BIGGS, Chief Judge, HASTIE, Circuit Judge, and LEDERLE, District Judge, sitting by designation.

LEDERLE, District Judge.

This is an appeal from a judgment of conviction and sentence after trial by a jury on a four count indictment charging defendant with willfully and knowingly attempting to defeat and evade some $34,000 in individual income taxes for the calendar years 1942 to 1945, inclusive, in violation of Section 145(b) of the Internal Revenue Code, 26 U.S.C.A. ยง 145(b).

Defendant asks for judgment of acquittal or, alternatively, a new trial, claiming that the Government failed to establish any taxable deficiency beyond a reasonable doubt, that he was deprived of his constitutional right to consult with his counsel during trial, and that the trial court erred in the admission of evidence, in restricting closing arguments, and in his charge to the jury.

Defendant entered the United States from Italy in 1923 at the age of twenty-three. He has spent the intervening twenty-seven years in Philadelphia. He is a butcher by trade, and was so employed with various meat dealers in Philadelphia from 1923 to 1941. He started working in Philadelphia for $3 a week, and was associated with meat dealers at progressively advancing compensation until he opened his own meat store in 1941.

During the prosecution years, 1942-1945, defendant rented and occupied a three-story building, where he operated a retail meat store on the first floor and resided above. Prior to 1942, defendant acquired eight pieces of income-producing property. In 1942, he purchased a slaughterhouse in Philadelphia for $9500. In 1943, he acquired an additional piece of property for $3400, and in 1944, two additional pieces of property for $30,000. Most of these acquisitions were paid for outright by check.

During the four years in question, defendant's income was derived from operation of his retail meat store and slaughter-house and from rental income on the properties previously mentioned. He maintained no books of account other than check stubs.

Evidence was introduced tending to prove that all receipts from defendant's slaughterhouse, meat store and rentals were deposited regularly and currently in four bank accounts in Philadelphia, and all expenses were paid therefrom by check. Counsel stipulated that these four bank accounts showed deposits totalling $1,009,535.35 for the four years. Counsel also stipulated that third party records and defendant's check stubs showed that defendant's purchases of merchandise bought for sale were understated nearly one-half in his tax return for each year in question. Stipulated actual purchases for the four years aggregated approximately $825,000. Reported purchases approximated $450,000.

Government agents testified that they reconstructed defendant's income picture for the years in question in the following manner. They analyzed the bank accounts and defendant's check stubs and cancelled checks, verifying through third party suppliers, actual purchases of merchandise bought for sale. As to real estate income, this was verified through statements of receipts and disbursements prepared by the real estate firm which managed all of defendant's real estate business and remitted monthly to defendant net income after deducting expenses and commission. The agents determined that bank deposits constituted business receipts except for some $18,000 of non-income items for the four years. For each year in question, these non-income items were first deducted from the respective annual bank deposits.The balance was considered gross business receipts, from which the actual stipulated meat purchases were deducted. No change was made in any other expense deductions appearing in defendant's returns, as to which full credit was allowed as claimed. Upon such reconstructed income figures, the tax deficiencies were computed. The following tabulation shows the discrepancy between the Government agents' computations and those reported in defendant's returns as to gross business receipts less purchases of merchandise bought for sale.

Government Figures

1942 1943 1944 1945

Gross receipts $192,523.81 $273,071.57 $331,210.78 $172,100.00

Stipulated purchases 164,121.14 245,231.62 ...


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