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United States v. Martin

September 5, 1975

UNITED STATES OF AMERICA, APPELLEE,
v.
JAMES G. MARTIN, APPELLANT



Appeals (1) from judgment of conviction after jury trial in the Southern District of New York, Richard Owen, District Judge, on two counts of income tax evasion, and (2) from judgment by the court holding defendant in criminal contempt during the trial for refusal to obey a lawful order of the court directing defendant as a witness to answer a question.

Smith and Timbers, Circuit Judges, and Bryan, District Judge.*fn*

Author: Timbers

TIMBERS, Circuit Judge

James G. Martin appeals (1) from a judgment of conviction entered November 15, 1974 after a six day jury trial in the Southern District of New York, Richard Owen, District Judge, finding him guilty on two counts of income tax evasion in violation of 26 U.S.C. § 7201 (1970), and (2) from a judgment of criminal contempt entered September 30, 1974 by the court during the trial pursuant to 18 U.S.C. § 401(3) (1970) for refusing to obey a lawful order of the court*fn1 directing defendant as a witness to answer a question. For the reasons below, we affirm.

I.

Viewing the evidence in the light most favorable to the government as we must at this stage, there was evidence from which the jury could have found as follows with respect to the income tax evasion charges.

The government established by the specific items method of proof that Martin failed to report and pay taxes on income of $14,603.59 for 1967 (Count 1) and $9,064.28 for 1968 (Count 2).

Martin had been associated with St. Agatha's Home for Children in Nanuet, New York, a non-profit child care agency run by the Sisters of Charity, from 1952 until June 1969 when his services were terminated. He worked as a bookkeeper and eventually became Director of Finance in 1964. He was in charge of all money coming in and going out, including the payroll, and was in charge of all financial reports. The Home's budget was between $2 million and $3 million during this period.

In 1968 the Home's outside accountants were unable to certify their audit because of missing bank statements, cancelled payroll checks, expense statements and cancelled expense checks. A subsequent investigation disclosed that, in addition to regularly recorded payroll checks which had been drawn payable to Martin (and which accounted for the gross income reported on his 1967 and 1968 returns), other checks which were unrecorded on the books of the Home also had been drawn payable to him, or to others and endorsed by him.

Some twenty-five witnesses testified, with respect to checks that purported to bear their endorsements, that they had not endorsed the checks made payable to them; that they had not authorized anyone else to do so; and that they had not received the proceeds of such checks. A handwriting expert who had examined these checks testified that in his opinion Martin had endorsed the checks.

The totals of such unrecorded checks which had been drawn payable to or endorsed by Martin, and which had been cashed by him, in 1967 and 1968 were $14,603.59 and $9,064.28, respectively. These are the amounts of unreported income on which Martin failed to pay income taxes for 1967 and 1968.

Martin, who testified on his own behalf, admitted that he had drawn unrecorded checks payable to himself and to others and that he had endorsed them. He acknowledged going to the race track several times a week and obtaining loans from finance companies to cover his gambling debts. He denied, however, that he had embezzled any funds from the Home. He claimed that he had used the proceeds from the checks he had cashed to pay the Home's debts, including payments to the government for delinquent withholding taxes. He claimed that he drew the bogus checks to help cover up shortages amounting to approximately $200,000.

When pressed on cross-examination as to the details of this defense, Martin gave only vague, contradictory answers. He claimed to have first discovered shortages in the late 1950's. At times during his testimony, he stated that he did not know who was responsible for the shortages or why it was necessary to cover them up. At other times, he intimated that he did know who was responsible and that the cover-up was necessary to protect the person whom he refused to name and to avoid being blamed himself for the shortages. He claimed to have told someone - but refused to identify the person - about the shortages in the late 1950's. He admitted that since that time he had not reported the shortages either to his superiors at the Home or to its outside accountants.

Martin's credibility was undermined in numerous other respects, including his admission that he had lied when he testified that he did not recall who his superior was in the late 1950's and by evidence that he had claimed four dependent children on his income ...


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