At the request of the Government, as a matter of precaution, the jury was specifically instructed 'that you may return verdicts of guilty only against those defendants charged under those counts (Counts 1 and 2) that you find to have had a proprietary interest in the wagering operations subject to the definition of wagers as previously given'. (Tr. 701-704). This instruction was given in view of Ingram v. United States, 360 U.S. 672, 676-680, 79 S. Ct. 1314, 3 L. Ed. 2d 1503 (1959). This instruction was more favorable to the defendants than necessary. We view the Ingram case merely as holding that in that case there was not sufficient evidence to show that the employees there concerned had knowledge of their employers' tax liability or engaged in a conspiracy to defeat its payment. The case does not actually hold that employees cannot under any circumstances be co-conspirators in such a conspiracy, or that only persons having a proprietary interest in the business can be such co-conspirators. In any event the conviction of Sams, Phillips, and Ciancutti on Count 1, in the light of the instructions given, if it be thought that a proprietary interest is requisite, may be taken as a finding that the jury found the necessary proprietary interest in these three defendants.
In the Ingram case the employees who were held not to be co-conspirators were not themselves subject to any of the taxes involved. They were clerical employees in a 'numbers' business, and were neither 'writers' nor 'bankers'. 360 U.S. at 675, 79 S. Ct. at 1317. Hence they were not subject to tax. United States v. DiPrimio, 209 F.Supp. 137, 140 (W.D.Pa., 1962). In the case at bar, however, each of the defendants convicted for conspiracy (except Ciancutti) was shown to have accepted or received bets himself. Hence such individuals would themselves be liable for the special stamp tax imposed by 26 U.S.C.A. § 4411. That tax is imposed both upon persons liable for the ten percent excise tax under 26 U.S.C.A. § 4401 as proprietors or principals and also upon persons engaged as agents in receiving wagers for or on behalf of any person so liable. Both the person who 'accepts' and the person who 'receives' wagers is liable for this tax. Hence the mere fact that the defendants in case at bar might have been employees instead of proprietors would not necessarily have excluded them as co-conspirators engaged in an attempt, inter alia, to defeat their own tax liability. Count 1 specifically alleges conspiracy to defraud the Government of tax revenue due under 26 U.S.C.A. § 4411 as well as under 26 U.S.C.A. § 4401.
It now remains to discuss the particular position of the defendant Ciancutti. Primarily he was engaged in conducting a dice game, which was concededly not subject to federal tax, by reason of the above-quoted exemption provisions in the definition of 'wager'. However, the testimony showed that he had free access to the railed-in area or enclosure behind the counter in the horse office, which was restricted to certain individuals (Tr. 143-44, 390, 397). He was also seen to handle money and to provide money for the operation of the horse office and to assist Sams and Phillips in going over the horse-bet slips. (Tr. 178-79). He met regularly with others at the Ken-mawr Hotel (Tr. 192). Ciancutti contends that he operated his business separately from the horse business, and merely leased half of the premises for use by Phillips (Tr. 202). Cf. United States v. Comer, 288 F.2d 174 (C.A. 6, 1961). The Government agents testified that they never saw Ciancutti accept a horse bet (Tr. 227).
It would seem that the method in which the Structure of the business was set up could have been taken to be a complex 'front'
rather than a genuine separation of Ciancutti's individual business from the horse betting business. By acquitting Ciancutti on Counts 13 and 14 the jury evidently indicated its belief that he was not active during the period of time covered by those counts (the months of April, May, and June, 1960). By acquitting him on Count 2 it would appear that the jury felt that he did not have the knowledge necessary to amount to wilfulness with respect to the tax return filed by Phillips in October, 1961. However, this is not incompatible with his being a member of a general conspiracy or proprietorship to defeat the collection of the ten percent excise tax on the huge volume of horse race business done at the establishment.
There is likewise no merit in the contention that there is a merger between the offenses set forth in 26 U.S.C.A. § 7262 and 26 U.S.C.A. § 7203, so that they constitute the same crime and only one sentence should be imposed for a violation of both provisions. The gist of the offense created by 26 U.S.C.A. § 7203 is wilful failure to pay tax. The conduct forbidden by 26 U.S.C.A. § 7262 is not simple failure to pay tax, but rather the performance of a taxable act without having paid the applicable tax. One count of the indictment in the Diprimio case, supra, was quashed by this Court for failure to observe that distinction. A clear statement of this point was given by the late Chief Judge Laws in United States v. Bowman, 137 F.Supp. 385, 387 (D.C.1956), illustrating the distinction by comparison with the offense of driving an automobile without a license. See also United States v. Shaffer, 291 F.2d 689, 693 (C.A. 7, 1961).
Division of labor and specialization is possible in an illegal enterprise just as much as in a legitimate partnership or corporate enterprise. That a particular executive may not have the personal knowledge necessary to show wilful intent with respect to one particular transaction handled in another department does not negate his participation in the overall program of the enterprise. Ciancutti's connection with the gambling establishment in the Garibaldi Building was sufficiently proved to warrant the jury in finding him a participant in the general overall conspiracy charged in Count 1.
Hence all the motions of the various defendants for new trial, judgment of acquittal, or arrest of judgment should be denied, and the defendants directed to appear in due course for sentence.