UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
December 29, 1966
UNITED STATES of America, Libelant,
UNITED STATES CURRENCY IN the AMOUNT OF $2,813.37, One Victor Adding Machine, Serial No. 1504-074, One Westinghouse Portable Transistor Radio, Serial No. 2304, Respondent
The opinion of the court was delivered by: NEALON
NEALON, District Judge.
In this action, the Government, pursuant to the provisions of Title 26 U.S.C. § 7302, seeks forfeiture of $2,813.37 in United States currency, one Victor Adding Machine and one Westinghouse Transistor Radio, allegedly being property intended for use in the furtherance of the business of accepting wagers in violation of the Internal Revenue Code.
An answer has been filed by one Dominic Mussoline in which he alleges that he is the owner of the property sought to be forfeited; that it was not used or intended for use in the business of accepting wagers; that the libel filed by the Government should be dismissed and the property returned to him forthwith. A hearing was held October 12, 1966, testimony taken, and the matter is now ripe for determination.
Before proceeding to the merits, certain guidelines should be recognized and applied. A forfeiture proceeding under § 7302 is one of a civil nature as distinguished from a criminal case and the measure of proof required from the Government is merely a preponderance of the evidence. United States v. $4,298.80, 179 F. Supp. 251 (D.C.Md.1959). While forfeitures are not favored under the law, nevertheless, revenue statutes are construed and applied less narrowly than penal statutes. United States v. Ryan, 284 U.S. 167, 52 S. Ct. 65, 76 L. Ed. 224 (1931). Moreover, an acquittal of the criminal offense would not bar the forfeiture, as an acquittal in a criminal action is considered merely an adjudication that the proof was not sufficient to overcome all reasonable doubt of the guilt of the accused. United States v. Burch, 294 F.2d 1 (5th Cir. 1961); United States v. Currency in Total Amount of $2,223.40, 157 F. Supp. 300 (N.D.N.Y.1957). This rule of law is mentioned at this point inasmuch as the same Dominic Mussoline was indicted in two counts and charged with violation of Title 26 U.S.C. § 7203, in that he engaged in the business of accepting wagers and willfully, knowingly and unlawfully failed to pay the Special Occupational Tax as required under Title 26 U.S.C. § 4411, and failed to register with the District Director as required under Title 26 U.S.C. § 4412. A motion for judgment of acquittal was granted on the ground that the Government's proof was insufficient to show that Mussoline knew of the necessity of registering and purchasing a $50 gambling tax stamp and that such knowledge is a necessary prerequisite to a conviction for violating the Federal tax laws. See United States v. Russo, 335 F.2d 299 (7th Cir. 1964); United States v. Magliano, 336 F.2d 817 (4th Cir. 1964); United States v. McGonigal, 214 F. Supp. 621 (D.C.Del.1963). Mussoline was acquitted on the criminal charge, not because there was insufficient evidence of gambling activity, but because there was insufficient evidence to show that he had knowledge of the tax obligation. This analysis demonstrates the wisdom of the principle that acquittal of the criminal offense does not bar the forfeiture proceedings because the issues involved are quite different. In one, the issue is the criminal responsibility of a named defendant; in the other, the issue is the civil determination of whether certain property was intended for use in violation of the Internal Revenue Code. The latter is obviously an in rem proceeding. United States v. Burch (supra).
Section 7302 provides, inter alia:
"It shall be unlawful to have or possess any property intended for use in violating the provisions of the internal revenue laws * * *" and further, that "* * * [a] search warrant may issue * * * for the seizure of such property * * *"
The property involved herein having been seized by the Government and Mussoline having admitted that this property was his, the only question remaining is whether such property was intended for use in violating the internal revenue laws. The word "intended" in the statute does not refer to intention to evade tax, but to the use to which the property is to be put. United States v. Five (5) Coin-Operated Gaming Devices and Contents, 154 F. Supp. 731 (D.C.Md.1957), affirmed 4 Cir., 253 F.2d 794. Of course, proof of the intended use need not be direct, but may be established by circumstantial evidence. United States v. One 1955 Mercury Sedan, 242 F.2d 429 (4th Cir. 1957).
Turning to the facts of this case, it would call for a ludicrous and naive evaluation of the evidence for one to conclude that the premises involved herein, 113-115 East Diamond Avenue, Hazleton, Pennsylvania, was not being used for the furtherance of the business of accepting wagers. The evidence militating such a conclusion is overwhelming. It is as follows:
The premises at 113-115 East Diamond Avenue, Hazleton, Pennsylvania, is owned by Dominic Mussoline and Helen Mussoline, his wife. There are two telephones on that portion of the premises with which we are concerned and the dialing numbers were identified as 455-2525 and 455-5083. Mr. William Connors, Jr., a Special Agent with the Internal Revenue Service, dialed the number 455-2525 on five occasions and placed bets on horse races - once with a man who identified himself as "Lefty" and four times with a man called "Junior." On May 4, 1963, Kentucky Derby Day, agents of the Internal Revenue Service entered the premises on East Diamond Avenue in the process of executing a search warrant. To accomplish this the agents knocked down a large, locked and reinforced door and broke through the wall. Mussoline was observed emerging from the basement through a trap door stairway and the agents, upon investigation in the basement, detected papers burning in the stoker. Among the items seized, some of which are not important here, were a copy of the American Racing Manual; fourteen issues of the horse racing newspaper, The Morning Telegraph, including the issue of May 4, 1963, which contained markings; a telephone index; scratch pads; two slips of paper on the top of a wooden desk which the agents testified contained markings of horse race bets, e.g., "Affectionately 10, Never Bend 10/10, Bonjour 5, No Robbery 2 2 2"; three slips in the center drawer of a steel desk which contained markings of horse race bets, e.g., "7 NY Saidam 2 2 X, 7 Ch Bonjour X 2 X", and four slips in the center drawer of the wooden desk which contained markings of horse race bets, e.g., "7 Ch Bonjour 2 2 X, 7 Ch No Robbery 6 X X" and which were held together with $149.00 in cash by a clip and rubber band. In a locked safe on the premises the agents located the sum of $2,482.01, and wrapped around this money, and secured with a rubber band, was a slip which appeared to contain the following names and numbers:
1900 Apr. 26
� - Bonzo
45 - Nick
10 - Len (Rice)
- 60 - Jr. Sal. (Apr. 28.)
- 41 - Dom. Cer.
5 - Larry Con.
힝 - Gabe
19 - P. Col
- 14 - Mag.
16 - Tony
- 95 - Mag.
16 - P. Col.
75 - Mrs. G1.
- 13 - Lenny (Com)
85 - Mike Pam.
20 - Wang.
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