4. Prejudicial remarks of the United States Attorney:
(a) Concerning the immorality of Silberstein, and
(b) Comment on the defendant's failure to show his books.
5. The Court erred in refusing to charge that a cash investment is not necessary in order to have a capital gain.
6. Newly discovered evidence of one Massey who was involved in these transactions with Schwartz.
While the Court considers some of these points as being of no merit we will consider them all.
One of the Government's witnesses was a Mr. Borenstein, who computed the defendant's tax liability based on the evidence adduced at the trial. This is the usual and correct procedure in tax evasion cases. Cave v. United States, 159 F.2d 464, 468 (8 Cir. 1947). The defendant contends that this was an expression of opinion on the issue which the jury ultimately had to decide. The evidence which Borenstein summarized was only that which was introduced at the trial. It is difficult to see how he invaded the province of the jury. Friedberg v. United States, 348 U.S. 142, 75 S. Ct. 138, 99 L. Ed. 188 (1954). In fact, Borenstein was prevented by the Court from expressing an opinion as to whether he thought certain items were ordinary income (NT 382, 384). The admission of the testimony of an expert witness consisting of computations based on substantially the entire evidence in the record is not an invasion of the province of the jury. United States v. Johnson, 319 U.S. 503, 63 S. Ct. 1233, 87 L. Ed. 1546 (1942). The defendant, himself, on cross-examination of the Government's agent Catrambone specifically asked him for and received his opinion that these items were ordinary income (NT 348).
The Court refused to allow Leonard Ettinger to testify that he had advised the defendant these items were capital gain transactions. Leonard Ettinger is an attorney in Philadelphia. He was an associate of the defendant. At no time during this trial was it ever shown that an attorney-client relationship existed between Schwartz and Ettinger. Yet, Schwartz sought to clock himself with the defense of reliance upon the advice of counsel. This was not the fact and the Court refused to allow this fiction to be foisted upon the jury. In spite of the Court's ruling, Schwartz, himself, testified that he asked Ettinger for his advice. (NT 512). Also Ettinger, himself, testified that he thought some of these items were capital gains and he advised Schwartz to speak to the Internal Revenue agent regarding same. (NT 392). Schwartz further testified that he asked the Internal Revenue agent's advice as to whether the Masterpiece item was a capital gain (NT 511). Even with the Court's rejection of Ettinger's direct statements concerning any advice to Schwartz, sufficient testimony was obtained regarding this fact. That testimony, however, cannot rise above the premises upon which it is based. Williams Company v. Serpas, 5 Cir., 261 F.2d 857 (1959).
The third contention of the defendant is that the Court erred in deleting what he calls major portions of agent Silberstein's deposition before it was read to the jury. It is important to point out that the defendant made no objection to the Court's action when this deposition was read to the jury by counsel. This deposition of Silberstein can best be described as a haranguing colloquy which generated more heat than light. It is replete with arguments, and frequently it deteriorated to the level of a personality clash among the parties present.
The defendant objects to the Court's refusal to allow portions of the deposition to be read concerning Silberstein's illness and impending operation. It appears that the defendant wanted to import to this deposition the character applicable to a dying declaration. This we could not and would not countenance under the facts of this case. The fact of the deponent's illness and operation had no relevancy to the issue in this case. The deponent was ill, but there was no indication his case was hopeless and he had given up all hope of survival. This deposition was not a dying declaration and never could be designated as such under the rules of evidence. 5 Wigmore § 1432 (3d ed. 1940). This Court has the discretion to exclude parts of this deposition which bear no probative value in this case. The Judge is not a mere umpire at the game of trial. 1 Wigmore § 21 (3d ed. 1940). The admissibility of a given piece of evidence is for the Judge to determine. 9 Wigmore § 2550 (3d ed. 1940). Any part or all of a deposition so long as it is admissible under the rules of evidence may be used at a trial. Rule 26(d), Fed.R.Civ.P. The usual rules of evidence must restrict the use of depositions at trial, Barron & Holtzoff (Wright ed.), Vol. 2A § 654, Federal Practice and Procedure. Objectionable evidence in depositions ought to be ruled out at the trial, and some was ruled out in this case, including hearsay, leading questions and personal remarks. Kemp v. Government of Canal Zone, 167 F.2d 938 (5 Cir. 1948). The defendant objects because Silberstein was not allowed to say that in his opinion these items were capital gain transactions. The Court refused to allow this question and answer the same as it refused to allow the Government's witness to express a similar opinion. In spite of this ruling, Silberstein's deposition was allowed in as to his opinion of General Public Warehouse as being a capital gain (NT 404). Also, Agent Silberstein was allowed to state in his opinion that in all these years which he investigated he found no evidence of evasion by the defendant. (NT 412). The defendant points out the case of Lebeck v. Jarvis, 250 F.2d 285 (3 Cir. 1957), as holding contra to our action in ruling out certain questions and answers in the deposition. In Lebeck, the witness was present in Court. The Court then interrogated him and recalled the jury. Then the Court read the questions and answers to the jury. In so reading, the Court gave the jury the impression that only two persons were concerned in the testimony when in fact three persons were involved. This is entirely different from this case, since Silberstein was never in Court and nobody's identity was changed in the course of reading of this deposition. No confusion resulted, and quite to the contrary, the jury was spared the burden of listening to irrelevant quarrels and unrelated speeches of counsel contained in this deposition.
The defendant complains that the prejudicial remarks of the United States Attorney concerning the firing of Silberstein from the Internal Revenue Service for immorality warrants a new trial. The United States brought out this firing of Silberstein to show his bias as affecting his credibility since he was discharged after seventeen years' service. The United States Attorney in the heat of trial commented on this fact while eliciting testimony. However, he never overstepped the grounds of propriety as to constitute prejudicial error. Especially is this true, in view of the Court's charge to the jury that they could consider Silberstein to be as honest as any other man even though he was thus fired. The trial Court has wide discretion as to how and when bias may be proved and what collateral evidence is material. Mims v. United States, 254 F.2d 654 (9 Cir. 1958).
The comment on the defendant's failure to show his books was relevant to show the defendant's willfulness and evasive tactics during the investigation. Spies v. United States, supra; Cindrich v. United States, supra.
'Under the statutes the government has authority to examine books, papers and records (see Int.Rev.Code of 1954, § 7602, 26 U.S.C.A. § 7602; Int.Rev.Code of 1939, § 3614, 26 U.S.C.A. § 3614).' United States v. Frank, 245 F.2d 284, 286 (3 Cir. 1957).
This Court frequently protected the defendant in this regard throughout the trial and particularly in its charge to the jury which states as follows:
'As to evidence -- and I want to cover this point at this time -- there was considerable mention throughout the trial and on argument relating to the production of the books by this defendant. Now let me tell you preliminarily -- and my mind hasn't changed on this and no one has pointed out to me any reason why I should change it -- basically no person has to submit his books, because under our Constitution you don't have to do things which may tend to incriminate you. Therefore, there was no legal obligation on this man to produce his books if he didn't want to. However, the fact that he did not produce his books may be used by you to consider whether or not he was attempting to conceal something, whether or not he cooperated, whether or not it was an act on his part, along with other things I will mention later, which may lead you to believe that what he did was wilful and intentional.' (NT 600)
The defendant never took an exception to the Court's charge. In fact, he characterized it as follows:
'Thank you Your Honor for an extremely fair charge. We don't have a single exception to take.' (NT 616, 617)
Now, the defendant argues that error resulted in our not charging the jury that a cash investment is not necessary in order to have a capital gain.
Since this contention emphasizes a certain phase of the evidence it is not demandable as a matter of right. United States v. Pannell, 178 F.2d 98 (3 Cir. 1949). Also, the defendant never requested the Court to charge to this effect. In the absence of a request for charge, a new trial is justified only if the failure to instruct constitutes a basic and highly prejudicial error. United States v. Gordon, supra. The Court specifically told the jury that the defendant as a lawyer could invest in a business deal the same as anyone else (NT 630). All of the deals enumerated in this record required a cash investment for participation by the parties. None of the agreements or testimony concerning these transactions show that Schwartz was asked to contribute his services in lieu of cash. The Court charged the jury that the defendant claimed he entered these deals as investments and left it up to the jury to determine the truth of this fact.
The so-called newly discovered evidence contained in the Massey affidavit that he was kept from the trial by the United States Attorney is the weakest objection raised by the defendant. Massey was amenable to process by the defendant and he did not call him. Also, the Government can select its own witnesses and is not compelled to call every witness who has a connection with this case. There is nothing in Massey's affidavit which shows that he was actively prevented from appearing at the trial by the United States Attorney. Massey's statement in this affidavit that Schwartz was a partner in General Warehouse is contradicted by his earlier letter to this Court, fled on September 25, 1962. In paragraph one of this letter Massey states in part as follows:
'* * * In my deposition to the Internal Revenue Service Agent Catrambone, I had stated that Milton H. L. Schwartz was intended to be a partner along with Alfred J. Laupheimer and myself in General Public Warehouse and had become unacceptable as a partner to Mr. Laupheimer because of lack of further capital investment.' (Emphasis supplied.)
The defendant was fortunate in having the services of a skillful attorney, who is one of the foremost members of the Bar. This fact is borne out by the jury's disagreement on the first Count of the Indictment. Schwartz's constitutional rights were vigorously protected, and every unreasonable assault was repulsed by his counsel's advocacy.
There is sufficient evidence in this record to justify the jury's verdict. The defendant's objections have been considered at length and we find no error requiring a new trial.
AND NOW, this 14th day of January, 1963, IT IS ORDERED that the motion of the defendant, Milton H. L. Schwartz, for judgment of acquittal, or in the alternative for a new trial, is denied.
n1 Subsequent recomputation at the trial altered Schwartz's tax liability as follows:
Year Liability Return Deficiency
1954 $ 3,194.36 $ 737.38 $ 2,456.98
1955 $ 4,110.59 $ 381.15 $ 3,729.44
1956 $ 2,992.29 $ 597.97 $ 2,394.32
© 1992-2004 VersusLaw Inc.