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June 23, 1964

Martin J. FRONEK and Helen Fronek Zadylak

The opinion of the court was delivered by: ROSENBERG

This is here on a motion for a new trial after a jury verdict of guilty on all counts in the indictment.

Count one charges Martin J. Fronek and Helen Fronek Zadylak, the defendants, with attempting to evade and defeat a large part of the income tax due and owing by Martin J. Fronek to the United States of America for the calendar year 1956, by filing and causing to be filed a false and fraudulent income tax return in violation of 26 United States Code, § 7201.

 Count two is similar to count one, but pertains to the calendar year 1957.

 Count three charges Martin J. Fronek with wilfully and knowingly making and subscribing a United States Partnership Return of Income, Form 1065, for the calendar year 1956, which return he did not believe to be true and correct as to every material matter in violation of 26 United States Code, § 7206(1).

 Count four is similar to count three, but pertains to the calendar year 1957.

 Count six is similar to count five, but relates to the false partnership return of income as set forth in count four.

 Martin J. Fronek, one of the defendants, was the owner in partnership with his mother of a mottling company known as the Whistle Bottling Company at Connellsville, Pennsylvania. The mother was a silent partner. In 1952, Fronek received a franchise to sell Canada Dry products. It was not, however, until 1956 that Fronek noticed a substantial increase in the business. Fronek's sister, the second defendant Helen Fronek Zadylak, kept books for her brother and made all the entries during these years with the exception of some short periods of time when Fronek himself did it.

 When tried before a jury, the Government presented a great deal of evidence of many undeductible amounts posted in a variety of ways. Among these deductions were personal and household expenses of Fronek and amounts of money paid to a brother. Sums of money during the years 1956 and 1957 were shown to be the bank account balances over and above the showing of the books of account.

 At the conclusion of the Government's case in chief, the defendants made a motion for judgment of acquittal. The motion was based on the contention that the evidence adduced by the Government was insufficient to permit the jury to find the necessary element of wilfulness. That motion was denied. The defendants then put in a defense and at the conclusion of all the evidence, counsel for the defendants renewed the motion for judgment of acquittal. No additional reasons were given for the motion, and that motion was denied. The jury returned a verdict finding each defendant guilty as charged.

 The defendants contend that their motion for a directed verdict of acquittal should have been granted because (a) there was no showing of wilfulness on their part and (b) the admission into evidence of the income tax payments in the prior years and the bank balances in the tax-short years were not only erroneous but prejudicial to the defendants.

 The defendants argue that the failure of a showing of wilfulness as to both defendants is reflected in the defendants' evidence as submitted at the trial of the case that Fronek was an uneducated man and knew nothing about bookkeeping entries; that Mrs. Zadylak made all the entries in the books without direction from Fronek in accordance with previous custom and for the purpose of providing a book balance; that Fronek did not take all allowable credits due him on real estate taxes and the like; that Mrs. Zadylak took no salary; that the brother to whom the $ 400 amounts were paid each month during these two years was actually an employee of Fronek; that the defendants honestly believed, although ignorantly, that they were doing nothing wrong and that while erroneous entries were made in the business books no actual alterations were made.

 The difficulty with the defendants' arguments here is that the jury heard not only the evidence as presented by the defendants in these regards, but also heard all of the other evidence in the case and then arrived at its verdicts. This additional evidence consisted in part of the facts that: Mrs. Zadylak was a high school graduate and knew that such ordinary deductions as she made in the bottling business would not be allowable in her household; that while Fronek held only an incompleted education, he was capable of keeping club books as a steward; and that while all book entries were made, except when made occasionally by Fronek, by Mrs. Zadylak, Fronek, nevertheless, had the final look at the income tax returns and the amounts payable as taxes and of such balances in the bank as he had during these two years. Although Mrs. Zadylak worked for no salary, it was nevertheless a matter for the jury's determination to see, if for nothing, whether as a matter of generosity, although this in itself could not be immunizing.

 The defendants' motion enumerates seven grounds, but by the submitted brief counsel urges these points:

 I. The Court erred in denying defendants' motion for judgment of acquittal since the evidence of wilful intent adduced by the Government was insufficient to justify the submission of that issue to the jury.

 II. The Court erred in admitting, over defendants' objections, evidence as to the amount of taxes paid by Martin J. Fronek ...

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