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United States v. Cantone

decided: May 8, 1970.

UNITED STATES OF AMERICA, APPELLEE,
v.
THOMAS CANTONE AND IRWIN ROSEN, APPELLANTS



Moore, Friendly and Hays, Circuit Judges. Friendly, Circuit Judge (concurring).

Author: Hays

HAYS, Circuit Judge:

Thomas Cantone and Irwin Rosen appeal from judgments of conviction entered after a jury trial in the United States District Court for the Southern District of New York on an indictment charging them, together with others not named as defendants, with violating 18 U.S.C. § 371 (1964) and 26 U.S.C. § 7206(2) (1964)*fn1 by conspiring to defraud the United States in the ascertainment and collection of information used by the Internal Revenue Service in determining the tax liability of appellants and others; and with one substantive count*fn2 of aiding in the preparation of a false internal revenue form in violation of 26 U.S.C. § 7206(2) (1964). Both appellants were sentenced to one year and one day's imprisonment on each count, the sentences to run concurrently.

I.

Evidence was introduced to show that in 1964 a system of pari-mutuel betting known as the "twin double" came into use at various race tracks including the Yonkers and Roosevelt Raceways in New York. At these tracks the bettor of a twin double purchases a ticket for horses in the sixth and seventh races. If both horses win, he exchanges this ticket for one with his choice of horses in the eighth and ninth races. If the horses selected on this latter ticket are also winners, the bettor has a winning twin double ticket. Such a ticket usually entitles its holder to a substantial payoff. Until January 1966 cash was paid for winning twin double tickets. Since then Roosevelt Raceway has paid by check for all tickets worth over $5,000.

Of course gambling winnings constitute taxable income. Upon payment of winnings in excess of $600 race tracks are required*fn3 to prepare a form which includes the name, address and signature of the payee. From this form the race track prepares and files Internal Revenue Service Information Form 1099 the purpose of which is to assure that winnings will be included in the winner's income tax return.

The government sought to prove that appellants participated in a conspiracy to procure persons who would, for a commission, cash their winning twin double tickets for them, thus enabling appellants to avoid tax liability for the amounts won.

Appellants were also charged with a substantive count of aiding in the preparation of a false 1099 form with respect to a $4,196.50 ticket cashed on July 28, 1964.

II.

Rosen's Appeal

The appellants were convicted of aiding in the preparation of a fraudulent 1099 form which concealed the real name of the winner on a July 28, 1964, twin double ticket worth $4,196.50. Rosen argues that his conviction on this count must be reversed, since the evidence failed to show that he had any connection with the transaction on which the count was based.

Because of the absence of direct proof of Rosen's participation in the July 28th transaction, the government based its case against Rosen on this count on the doctrine of Pinkerton v. United States, 328 U.S. 640, 66 S. Ct. 1180, 90 L. Ed. 1489 (1946). In Pinkerton no evidence was introduced to show that one of the defendants participated directly in the commission of the substantive offenses of which he was convicted. However, the Court ruled that the defendant could be found guilty of the substantive crimes:

"if it was found at the time those offenses were committed petitioners were parties to an unlawful conspiracy and the substantive offenses charged were in fact committed in furtherance of it." Id. at 645, 66 S. Ct. at 1183 (emphasis added.)

Pinkerton holds and the trial court charged*fn4 that for the doctrine to be applicable the jury had to find beyond a reasonable doubt that the substantive crime was committed, that it was in furtherance of the conspiracy, and that at the time ...


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