The opinion of the court was delivered by: KAUFMAN
Defendants move for a dismissal of Counts I and III of an indictment which charges them in four counts with attempting to defeat and evade a large part of the taxes due and owing by them to the United States in violation of Title 26 U.S.C.A. § 145(b).
The ground urged by the defendants for dismissal is that the offenses referred to 'are not alleged to have been committed in the Southern District of New York.'
Count I charges that the defendant Philip Albanese willfully attempted to defeat and evade a large part of the income tax due the United States for 1947 by willfully preparing and causing to be prepared and mailed in the Southern District of New York a false and fraudulent income tax return for the year 1947 which was filed with the Collector of Internal Revenue at Albany, New York. The count alleges that the return was fraudulent in that Philip Albanese alleged that he was an employees of a loading business, whereas in truth and fact he was the employer and had received a net income from the business substantially greater than was set forth in the return.
Count III charges that both Philip Albanese and Rosario Albanese willfully attempted to defeat and evade a large part of the income tax owing by Philip Albanese to the United States for the calendar year 1949, by preparing and causing to be prepared and mailed in the Southern District of New York a false and fraudulent tax return which was filed with the Collector of Internal Revenue at Albany, New York, wherein the net income of Philip Albanese was falsely stated at $ 2,340.73 instead of $ 13,127.59, the actual figure.
The defendants' contention is that since the returns were filed in Albany, the offense, if any, was committed there and that prosecution in this district on the aforesaid two counts is faulty in the light of Rule 18, Federal Rules of Criminal Procedure, 18 U.S.C.A., which provides in part that
'* * * prosecution shall be had in a district in which the offense was committed * * *.'
The defendants' motion is based upon an erroneous interpretation of Section 145(b) of the Internal Revenue Code, under which they have been indicted. Section 145(b) reads as follows:
'Failure to collect and pay over tax, or attempt to defeat or evade tax. Any person required under this chapter to collect, account for, and pay over any tax imposed by this chapter, who willfully fails to collect or truthfully account for and pay over such tax, and any person who willfully attempts in any manner to evade or defeat any tax imposed by this chapter or the payment thereof, shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, be fined not more than $ 10,000, or imprisoned for not more than five years, or both, together with the costs of prosecution.' Title 26 U.S.C.A. § 145(b).
It is to be noted that the statute involved here does not make filing the essential element constituting the offense. Indeed, the subsection contains no reference to filing or to tax returns whatever. The statute specifically states that it is an offense for any person willfully to attempt 'in any manner to evade or defeat any tax * * *' and, indeed, while the willful failure to file a return for a calendar year or a failure to pay a tax is a misdemeanor, Section 145(a), the willful attempt by affirmative acts to evade and defeat a tax is a felony, under Section 145(b).
Hence, in Spies v. United States, 1943, 317 U.S. 492, at page 499, 63 S. Ct. 364, 368, 87 L. Ed. 418, the Supreme Court interpreted the language of Section 145(b) as follows:
'Congress did not define or limit the methods by which a willful attempt to defeat and evade might be accomplished and perhaps did not define lest its effort to do so result in some unexpected limitation. Nor would we by definition constrict the scope of the Congressional provision that it may be accomplished 'in any manner'. By way of illustration, and not by way of limitation, we would think affirmative willful attempt may be inferred from conduct such as keeping a double set of books, making false entries or alterations, of false invoices or documents, destruction of books or records, concealment of assets or covering up sources of income, handling of one's affairs to avoid making the records usual in transactions of the kind, and any conduct, the likely effect of which would be to mislead or to conceal. If the tax-evasion motive plays any part in such conduct the offense may be made out even though the conduct may also serve other purposes such as concealment of other crime.'
It is clear therefore that a successful prosecution under Section 145(b) does not require a filing of a false return. The Section punishes fraudulent conduct which comprises 'attempts in any manner to evade or defeat any tax'. The acts of filing the false returns alleged in Counts I and III were but the final steps in the alleged fraudulent attempts committed in this district to defeat or evade the tax. The acts of filing, however, do not constitute the gravamen of the offense defined in Section 145(b).
Title 18 U.S.C.A. § 3237, is pertinent for it provides in part:
'Except as otherwise expressly provided by enactment of Congress, any offense against the United States begun in one district and completed in another, or committed in more than one district, may be inquired of and prosecuted in any ...