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United States v. Marcus

decided: September 20, 1968.

UNITED STATES OF AMERICA, APPELLEE,
v.
CHARLES MARCUS, APPELLANT



Lumbard, Chief Judge, and Friendly and Hays, Circuit Judges.

Author: Lumbard

LUMBARD, Chief Judge:

Charles Marcus appeals from his conviction on nine counts for tax evasion and for making false statements in tax returns filed by some of his wholly owned corporations. He received a prison sentence of one year and fines totalling $30,000 after a trial before a jury, Judge Irving Ben Cooper presiding. On appeal Marcus challenges the sufficiency of the evidence, numerous rulings on the admissibility of evidence, the refusal of the trial judge to grant a mistrial following certain remarks made by the prosecutor during summation, and the propriety of portions of the judge's charge to the jury. Since we find no error in the trial judge's rulings and conduct of the trial we affirm the conviction.

The first four counts of the indictment charged Marcus under 26 U.S.C. § 7201 with attempting to evade his personal income taxes by filing false and fraudulent returns for the years 1959 through 1962. The remaining counts charged Marcus under 26 U.S.C. § 7206(1) with making false statements in the tax returns of five corporations which he wholly owned and controlled: Ben Frank, Inc., for the fiscal years ending January 31, 1960 and 1961; the Casa Trading Corp. for the years ending January 31, 1960 and 1963; the Taca Trading Corp. for the years ending January 31, 1960 and 1961; the Aritor Corp. for the year ending August 31, 1962; and the Baritor Corp. for the year ending August 31, 1962.

The evidence at trial showed that Marcus, a certified public accountant, had as his principal source of income the business of cashing checks for a fee through 43 checking accounts which he maintained at 10 banks. Most of these accounts were in the names of the five corporations named in the indictment, but some were in the names of friends, some in the names of fictitious individuals and companies, and five accounts were in Marcus' own name. Marcus also used the checking accounts of businesses for whom he did accounting, concealing this activity by using the cash of the businesses for his check cashing and depositing the checks he cashed in the business accounts. The evidence showed that Marcus charged fees ranging from 1/2% to 3% for cashing checks. Although Marcus cashed more than ten million dollars of checks during the years 1959 through 1962 he claimed that he kept no books. Consequently the government established its case through the testimony of numerous witnesses from banks, persons for whom Marcus cashed checks, and persons whose accounts he used, and through the introduction of a large number of bank records.

Marcus told Special Agent Ferrise that he received a fee of 1/2% for his check cashing services. In computing Marcus' income the government applied this fee to his total check deposits, with the exception that a higher fee of up to 3% was applied to transactions in which clients testified they had paid this higher amount. To this total was added Marcus' income from interest on savings bank accounts and from his accounting fees. The government's computations showed that Marcus had underreported his taxable income for the years in question by amounts ranging from $9,000 to $26,000, as follows:

Taxable Income Government's

Year Reported Computation Deficiency

1959 $3,555.87 $12,618.81 $9,062.94

1960 $5,784.50 $18,191.92 $12,407.42

1961 $3,729.55 $19,326.05 $15,596.50

1962 $21,600.00 $48,136.43 $26,536.43

There is no merit in appellant's argument that the government's evidence was insufficient to establish beyond a reasonable doubt that Marcus underreported his income. A review of the record shows that there was an abundance of evidence to support the conviction. Appellant's argument to the contrary seems based on the mistaken premise that the government must establish the precise amount by which income was underreported. In fact the prosecution meets its burden when it shows that income was underreported by a substantial amount. Swallow v. United States, 307 F.2d 81, 83 (10th Cir. 1962), cert. denied 371 U.S. 950, 83 S. Ct. 504, 9 L. Ed. 2d 499 (1963); Olender v. United States, 237 F.2d 859, 867 (9th Cir. 1956), cert. denied 352 U.S. 982, 77 S. Ct. 382, 1 L. Ed. 2d 365 (1957).

The testimony of Special Agent Ferrise concerning certain admissions made to him by Marcus was vital to the government's case. Ferrise testified he had been told by Marcus that Marcus received a fee of 1/2% on each of the checks he cashed, that he deducted this fee at the time he cashed the checks, that he paid to himself the fees received by his corporations, and that he suffered no losses from bad checks. It is settled that these admissions are not competent evidence unless they are corroborated by independent evidence tending to establish either that the admissions were reliable or that the crime charged was in fact committed. Smith v. United States, 348 U.S. 147, ...


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