Defendants, father and son, were charged in two separate indictments, each containing three counts, with wilfully and knowingly attempting to defeat and evade income taxes alleged to be due the United States of America for the calendar years 1947, 1949 and 1950. The indictments were laid under Section 145(b) of the Internal Revenue Code, 26 U.S.C. § 145(b). Following pleas of not guilty, the cases were tried together and under date of December 21, 1953, a jury returned verdicts of guilty on all counts as to both defendants. No motions were filed for new trial, but a motion for judgment of acquittal was filed in each case, which motions are before the Court for disposition.
While many witnesses were called on behalf of the Government as to individual transactions involving the partnership of A. Lindstrom & Son, the substance of the case as presented to the jury involved the testimony of only two witnesses, Mrs. Regina Lindstrom, the daughter-in-law and sister-in-law respectively of the two defendants, and Clement W. Bowen, a Certified Public Accountant. The evidence disclosed that for many years Mrs. Regina Lindstrom had been bookkeeper for S. A. Lindstrom & Son. The defendants were engaged in business at Lansdowne, Pennsylvania, as structural steel erectors, and they also engaged in the business of construction equipment rental.
The only bank accounts which were incorporated in the books of the company as kept by Mrs. Regina Lindstrom reflected deposits in the Landdowne National Bank in an account entitled 'S. A. Lindstrom & Son', an account of Samuel A. Lindstrom, Sr., in the same bank, and an account in the Clifton Heights National Bank, Clifton Heights, Pennsylvania, in the name of S. A. Lindstrom, which latter account was used solely for the purpose of depositing withholding and social security taxes deducted from payrolls. The evidence disclosed that in addition thereto S. A. Lindstrom, Sr., maintained a personal account with the Corn Exchange National Bank, Philadelphia, Pennsylvania, and one with the Ventnor City National Bank, Ventnor, New Jersey. For many years one Frank Deady had handled the accounting affairs of the Lindstroms and had made up their tax returns. It was the custom of Mrs. Lindstrom to turn over all her books and records to Mr. Deady for the purpose of making up tax returns and whatever other necessary information, if any, was supplied to Deady by the Lindstroms. The returns for the years in question were prepared by Mr. Deady and his name appears on the returns. In February of 1951 Deady was contacted by two agents of the Internal Revenue Service with respect to the returns of the Lindstroms for the years in question. On May 31st of that year, Deady sustained a very serious cerebral hemorrhage and a stroke, as a result of which he was incapacitated both physically and mentally to the extent that not only was he unable to testify at the trial but following that date was unable to even intelligently discuss the matters involved with the Revenue Agents. Thereupon, Mr. Bowen was retained by the defendants to represent them and he started work in August of 1951 to compile figures to determine their tax liability. For some months he conducted an investigation of the books and took off preliminary figures on the basis of there being only three bank accounts, the two accounts in the Lansdowne National Bank and the account in the Clifton Heights National Bank. He was unable to obtain any satisfactory accounting picture until sometime in November when the younger Lindstrom advised him of the existence of the other two accounts with the Corn Exchange National Bank and the Ventnor City National Bank. He was then able from all of the records, including the bank records of these two additional accounts, to obtain a complete accounting picture so that his figures substantially agreed with the data which had already been compiled by the Revenue Agents. The data as finally compiled by Bowen and testified to at the trial presented the following picture:
As to S. Lindstrom & Son (Partnership)
Year Income reported on return Income as established
//-- ///////////////////////-- by all records (based
on Bowen's examination)
1947 $ 25,644.03 (loss) $ 75,906.00
1949 $ 34,707.36 * $ 55.613.76
1950 $ 17,909.74 $ 48,226.65
* Note -- No partnership return filed in 1949.
Figure taken from individual returns.
As to S. A. Lindstrom, Sr.
Year Net taxable Tax paid Net income Tax due
//-- income reported //////-- subject to tax ////--
on return (based on
1947 $ 12,822.02 (loss) None $ 37,577.04 $ 16,935.28 *
1949 $ 17,353.68 $ 2,446.98 $ 23,806.88 $ 5,879.02 *
1950 $ 8,059.39 $ 908.08 $ 20,113.34 $ 4,811.98 *
As to S. A. Lindstrom, Jr.
1947 $ 12,822.01 (loss) None $ 33,863.30 $ 15,932.43 *
1949 $ 17,353.68 $ 3,291.76 $ 25,006.88 $ 6,335.00 *
1950 $ 8,059.38 $ 1,148.34 $ 21,313.31 $ 5,226.94 *
* Note -- The tax liability for the income determined by Bowen was
testified to by an Internal Revenue Agent after making allowance
for all claimed and other deductions and exemptions allowed by
the Internal Revenue Code.