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United States v. Garguilo

decided: May 3, 1977.

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
ANDREW GARGUILO, DEFENDANT-APPELLANT



Appeal from a judgment entered by Judge Pratt in the Eastern District after convictions by a jury on two counts of wilful failure to file an income tax return, 26 U.S.C. § 7203. Affirmed.

Lumbard and Timbers, Circuit Judges, and Oscar H. Davis, Judge, Court of Claims.*fn*

Author: Lumbard

LUMBARD, Circuit Judge:

Andrew Garguilo appeals from judgment entered on December 10, 1976 by Judge Pratt in the Eastern District after convictions by a jury on two counts of wilful failure to file income tax returns for the years 1969 and 1972, 26 U.S.C. § 7203. Appellant's principal claims are that the evidence on his income in 1969 and 1972 was insufficient to support convictions, that there was a variance between indictment and proof, and that the court erred in admitting into evidence estimates of gross income and tax liability made by a government expert. Finding no merit to the appeal, we affirm.

Appellant and his brother Anthony Garguilo were tried jointly for conspiracy to evade taxes, 18 U.S.C. § 371. Anthony was charged with having filed false personal income tax returns for 1970, 1971, and 1972, 26 U.S.C. § 7206(1), in which he failed to report income from his gambling business; for 1971, appellant was charged with the same crime as his brother. It was also charged that appellant had wilfully failed to file tax returns for the years 1969, 1970, and 1972, even though he had operated a gambling business that yielded sufficient income in those years to require the filing of a return, 26 U.S.C. § 7203.

At trial, several witnesses testified that they had participated in a regular weekly blackjack game with appellant at various times in 1970, 1971, and 1972. One witness testified that the game had begun in 1969. Originally, the game was held at the Brooklyn home of Benny Balsamo, the brother-in-law of appellant's wife. Appellant's brother Anthony was an occasional participant. Appellant often handed out the chips at the beginning of the evening and he or Balsamo would handle the settling up among the players at the end. On evenings when the game was full, a house cut would be taken from each pot and would range from $500 to $1500 per night; some of this went to pay for food and refreshments, waitresses, and dealers.

Balsamo died in May 1972, and later that year the game was moved to an apartment in Manhattan rented by appellant's brother Anthony. Several witnesses testified that a house take continued to be removed from each blackjack pot. Appellant handled much of the settling up of winnings and losses, which was conducted either at the end of the evening or at a later date.

In addition, the government witnesses testified that appellant and his brother were involved in a sports bookmaking operation which handled bets of several hundred dollars on a regular basis. Wagers were placed by telephone to a "Mr. Wilson", appellant and his brother would collect the losers' payments and pay out on winning bets.

One of the customers, Herbert Haskell, testified that by 1972 he owed $120,000 to the book. Haskell was a stockholder and chairman of the board of DJH Industries, a textile firm. To pay off his debt, he transferred 10,000 shares of DJH stock to the brothers in the summer of 1972, a 5000 share certificate to Andrew and a 5000 share certificate to Anthony. Haskell testified that the stock was restricted and also that he had the brothers sign an agreement not to sell it on the open market for two years. The market value of the stock at that time was $22 per share, but because of the nonnegotiability Haskell estimated that only 25 to 35 percent of his value was immediately realizable by the brothers.

The government also introduced proof that in 1969 appellant had an account with a stock brokerage firm and had realized $6,219.69 in short-term capital gains. Checks totalling $26,000 were sent to him from the firm in June 1969.

An Internal Revenue Service representative testified that appellant submitted returns for 1966, 1967, 1968, and 1971, but none for 1969, 1970, or 1972.

Over defense objections, Irving Wax, an IRS agent, testified as an expert witness to estimates of appellant's income. Based on the testimony at trial Wax concluded that Andrew Garguilo had realized $16,219.69 in gross income in 1969 and $45,965 in 1972. These estimates were based on the $6219.69 in short-term capital gains in 1969, $27,500 for the value of the DJH stock received in 1972, one-half the approximate house cut from the blackjack games in 1969 and 1972, and some other income from bookmaking in 1972. Without taking into account possible deductions, Wax calculated that appellant's tax liability would have been $3411.68 in 1969 and $13,638.20 in 1972.

The defense contended that none of the alleged income was chargeable to the Garguilos. Balsamo's widow testified that the blackjack game and the bookmaking operation were her husband's. She said that the appellant, who was one of the regular blackjack players, sometimes helped out on nights when Balsamo was sick and sometimes made collections for Balsamo's bookmaking operation, and that Balsamo paid appellant small amounts for these services. She testified that in order to conceal income from his gambling operations Balsamo had used Garguilo as a nominee to buy and sell stock.

Mrs. Balsamo also testified that the blackjack game at her husband's home did not begin until March 1970 and it was played in a first-floor apartment that had previously been occupied by John Polizzi. Polizzi testified that he had lived in the apartment from October 1969 to March 1970 and that no blackjack had been played there during that time. Gas and telephone bills paid by Polizzi confirmed the dates of his occupancy. However, the prosecution pointed out that its witnesses had said only that the game ...


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