Appeal by Salvatore and James Cirami from convictions for attempted evasion of taxes and aiding in the preparation of false information returns, after trial before a jury in the United States District Court for the Eastern District of New York, Mark A. Costantino, District Judge.
Mulligan and Winter,*fn* Circuit Judges, and Newman,*fn** District Judge.
Salvatore and James Cirami appeal from multi-count convictions for revenue law violations. The appellants are principal officers of Air Package Distribution Service Ltd. (hereinafter "the corporation"), a trucking company that provides pickup and delivery service to airlines. The corporation sought to classify its truck drivers as independent contractors, rather than employees, thereby attempting to evade its obligation for paying taxes imposed by the Federal Insurance Contributions Act (social security) and the Federal Unemployment Tax Act.
A nineteen-count indictment charged the Ciramis with three sets of violations. Counts 1 through 14 alleged that they attempted to evade social security taxes due for fourteen calendar quarters in 1967 through 1970 by filing false and fraudulent employer's quarterly tax returns understating the amount of taxable wages paid, in violation of 26 U.S.C. § 7201 and 18 U.S.C. § 2. Counts 15 through 17 alleged similar violations with respect to attempted evasion of federal employment taxes for the years 1967, 1968, and 1969. Counts 18 and 19 alleged that the appellants, in violation of 26 U.S.C. § 7206(2), aided and assisted in the preparation of false United States Information Returns (form 1099) for the years 1968 and 1969, which stated that the recipients of payments from the corporation were independent contractors rather than employees. After a trial before Judge Mark A. Costantino and a jury, appellants were convicted on eighteen of the nineteen counts, Count 16 having been dismissed. Appellants were sentenced to pay fines on each of the eighteen counts resulting in conviction, and were also placed on probation.
Appellants' attack upon the sufficiency of the evidence is without merit, and no useful purpose would be served by detailing the circumstances from which the jury was abundantly justified in concluding, under unchallenged and proper instructions, that the truck drivers were regular employees of the corporation and that both appellants wilfully participated in the attempt to evade corporate taxes by filing false returns that concealed the employee status of the drivers.
The principal issue on appeal arises because of a mistake made by the Government in drafting for the Grand Jury's consideration the first seventeen counts of the indictment. Count 1, set out in full in the margin,*fn1 was drafted in an effort to follow the standard form for alleging attempted evasion of corporate taxes by responsible corporate officials. The manner of attempted evasion was alleged to be the filing by the appellants of false employer's quarterly returns. The falsity was alleged by comparing the wages reported to have been paid some employees and the taxes due thereon with the higher amount of wages actually paid to all employees and the corresponding higher amount of taxes due thereon. The mistake occurred when it was alleged that the higher amount of taxes was owed by the appellants, rather than by the corporation. After alleging the correct amount of wages to be $39,401.82, Count 1 continued: "upon which wages the defendants owed to the United States of America federal income taxes withheld from wages and Federal Insurance Contributions Act taxes due in the total amount of $3,467.36." The deletion of the quoted words, and of corresponding language from Counts 2 through 17, upon motion by the Government after it had rested, is challenged by appellants as a denial of their Fifth Amendment right to trial upon an indictment of a grand jury.
Ever since the Supreme Court announced in Ex parte Bain, 121 U.S. 1, 30 L. Ed. 849, 7 S. Ct. 781 (1887), that an indictment cannot be amended except by resubmission to a grand jury, the law has been in a "confused state," United States v. Edwards, 465 F.2d 943, 950 (9th Cir. 1972), as to whether any alteration is permissible and if so, how any appropriate changes may properly be made. While a "no amendment" rule has been stated, e.g., Dodge v. United States, 258 F. 300 (2d Cir.), cert. denied, 250 U.S. 660, 63 L. Ed. 1194, 40 S. Ct. 10 (1919), changes of various sorts have in fact been approved, e.g., United States v. Colasurdo, 453 F.2d 585 (2d Cir. 1971), cert. denied, 406 U.S. 917, 32 L. Ed. 2d 116, 92 S. Ct. 1766 (1972). See cases collected in Heisler v. United States, 394 F.2d 692, 695-96, nn. 2-6 (9th Cir.), cert. denied, 393 U.S. 986, 21 L. Ed. 2d 448, 89 S. Ct. 463 (1968). The Supreme Court has stated that a "useless averment" of an indictment may be ignored, Ford v. United States, 273 U.S. 593, 602, 71 L. Ed. 793, 47 S. Ct. 531 (1927), and courts have regularly permitted juries to disregard as surplusage language in an indictment not essential to the allegations of the offense charged. See, e.g., United States v. Archer, 455 F.2d 193 (10th Cir.), cert. denied, 409 U.S. 856, 34 L. Ed. 2d 100, 93 S. Ct. 135 (1972); United States v. Colasurdo, supra.
Despite this modern line of cases, uncertainty has persisted as to the propriety of withdrawing indictment language from a trial jury's consideration because Bain, which "has never been disapproved," Stirone v. United States, 361 U.S. 212, 217, 4 L. Ed. 2d 252, 80 S. Ct. 270 (1960), itself involved the withdrawal from the jury's consideration of language not essential to the offense charged. Bain, an officer of a banking association, was charged with making a false report with intent to deceive the Comptroller of the Currency and the agent appointed to examine the affairs of the association. The trial court eliminated the reference to the Comptroller of the Currency. The Supreme Court reversed even though the balance of the indictment adequately stated an offense. The Court was concerned that the grand jury might have indicted only because the Comptroller of the Currency had been deceived. 121 U.S. at 10. Implicit in this holding is the view that the Fifth Amendment protects a defendant from being tried on minimally sufficient allegations of an offense unless a grand jury has made the prior determination that it considers those allegations sufficient to warrant the exercise of its prosecuting discretion. See Gaither v. United States, 134 U.S. App. D.C. 154, 413 F.2d 1061 (1969).
This Court has viewed Bain as holding that some deletions of unnecessary language may work an impermissible "fundamental change" in the charge set forth in an indictment, even though a legally sufficient allegation remains. See United States v. Colasurdo, supra, 453 F.2d at 590. That type of change, involving the disregard of language that might well have had a significant bearing on the grand jury's decision to indict, may still violate the Bain rule. Even this interpretation of Bain may have been eroded by the Supreme Court's opinion in Stirone v. United States, supra, which interpreted Bain as standing for "the rule that a court cannot permit a defendant to be tried on charges that are not made in the indictment against him." 361 U.S. at 217. This view appears to express concern only with the addition of charging language, rather than its deletion.
The disregarded portions of the indictment in this case were plainly surplusage. The manner of an attempted evasion of income taxes has been deemed not essential to a valid indictment. Hayes v. United States, 407 F.2d 189 (5th Cir.), cert. dismissed, 395 U.S. 972, 89 S. Ct. 2133, 23 L. Ed. 2d 777 (1969); Heasley v. United States, 218 F.2d 86 (8th Cir.), cert. denied, 350 U.S. 882, 100 L. Ed. 778, 76 S. Ct. 134 (1955). Here, the manner of attempted evasion -- filing false returns -- was adequately stated even after the deletion, the omitted words concerning only the correct amount of taxes due. Nor do we think there is any substantial likelihood that the grand jury would have failed to indict the appellants for their actions in wilfully filing false returns even if the grand jurors had understood that the taxes were due from the corporation and not from the appellants.
Appellants further contend that the deletions that occurred here caused them prejudice because of the manner in which they chose to defend. At trial the I.R.S. special agent acknowledged, on cross-examination, that no notice had been given the corporation of its obligation to pay social security taxes for its employees, nor had any assessment been made of taxes due. Of course, no notice or assessment was necessary prior to a prosecution for attempted evasion. Ford v. United States, 233 F.2d 56 (5th Cir.), cert. denied, 352 U.S. 833, 1 L. Ed. 2d 53, 77 S. Ct. 49 (1956). In any event neither the cross-examination of the special agent, nor any other evidence developed at the trial, sought to place the obligation to pay taxes upon the appellants or to shift it to the corporation, where it belonged. The jury's attention was simply never directed to the question of who was liable for payment of taxes, an issue of no relevance in this attempted evasion case. This case is thus totally unlike United States v. Wolfson, 437 F.2d 862 (2d Cir. 1970), where substantial evidence was submitted to the jury in support of allegations subsequently withdrawn from the jury's consideration. The deletion here caused no prejudice.*fn2
One further aspect of the alteration of the indictment warrants additional comment, the manner of accomplishing the deletion. The Ninth Circuit has pointed out the anomaly of permitting trial judges to instruct juries to disregard certain portions of an indictment, yet prohibiting a physical correction of the indictment papers to reflect the deletion. Heisler v. United States, supra. Yet convictions have been overturned where language, conceded to be surplusage, had been crossed out on the face of the indictment. See, e.g., Stewart v. United States, 12 F.2d 524 (9th Cir. 1926).*fn3
In United States v. Wolfson, supra, this Court considered deletion of indictment language accomplished by covering the words to be omitted with opaque paper on which was written, "This portion of indictment stricken as a matter of law; it is not to be considered by the jury." 437 F.2d at 868. The decision did not question this physical alteration of the indictment, though convictions were ...