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UNITED STATES v. JASKIEWICZ

January 2, 1968

United States of America
v.
Frank A. Jaskiewicz


Troutman, District Judge.


The opinion of the court was delivered by: TROUTMAN

TROUTMAN, District Judge:

This matter is before the Court for disposition of several motions made by defendant in advance of trial.

 On or about November 22, 1966, the defendant, Frank A. Jaskiewicz, was indicted in this Court for attempting to evade or defeat a large part of his individual income tax for the calendar years 1960 to 1963, inclusive. *fn1" On or about December 14, 1966, the defendant was arraigned in this Court and entered a plea of not guilty as charged.

 We have before us for disposition the defendant's motions for a bill of particulars, to suppress certain evidence and to dismiss the indictment. In that each of the several motions involve different factual and/or legal issues, they will be discussed seriatim.

 Motion for Bill of Particulars

 In item one of his motion, the defendant requests the Court to direct the attorney for the United States to inform him of the method of computation to prove alleged unreported income; if it is the net worth and expenditure method of computation the defendant seeks additional information concerning the period during which the Government will offer proof of the defendant's net worth, the date of the opening net worth and the opening and closing net worth for each year in the period the Government will offer its proof, including specific items for each year in the period as set forth in his motion. The attorney for the Government has advised counsel for the defendant that the Government is relying on the net worth and expenditure method of computation; the defendant has withdrawn his motion with respect to the remaining particulars requested in item one. Accordingly, in that the parties have amicably resolved their differences with respect to item one, no further comment need be made with respect thereto.

 In item three of his motion, the defendant requests the Court to direct the attorney for the Government to inform him of the source of the alleged unreported income, specifying whether it is from criminal activity; and, if it is from criminal activity, specify the nature of the alleged criminal activity. In item two of his motion, the defendant requests the Court to direct the attorney for the Government to furnish him with a list of the names and addresses of witnesses the Government intends to use at the trial; however, since the filing of his motion, the defendant has limited his request for the names and addresses of witnesses to those that the Government intends to use to identify the defendant with the source of the alleged unreported income, if that source be criminal.

 An application for a Bill of Particulars, made pursuant to the provisions of Rule 7(f) of the Federal Rules of Criminal Procedure, *fn2" is one addressed to the sound discretion of the Court. Wong Tai v. United States, 273 U.S. 77, 71 L. Ed. 545, 47 S. Ct. 300 (1927); United States v. Kafes, 214 F.2d 887 (3rd Cir. 1954). In exercising its discretion, it is the function of the Court to insure that the Government has presented its allegations with sufficient particularity and definiteness to unequivocally inform the accused of the specific nature of the charges upon which the indictment is laid. The extent to which the accused should be so informed must be considered in the light of the recent amendment to Rule 7 (f) which, in eliminating the necessity of showing cause for the grant of a Bill of Particulars, was "designed to encourage a more liberal attitude by the courts toward bills of particulars, without taking away the discretion which courts must have in dealing with such motions in individual cases." See Advisory Committee's Note to 1966 Amendment to Rule 7(f), Federal Rules of Criminal Procedure.

 The net worth method of proving that a taxpayer has understated his net taxable income involves a comparison of the taxpayer's net worth at the beginning of the taxable year with his net worth at the end of the year, with appropriate adjustments for nontaxable receipts and nondeductible expenditures. A group of Supreme Court decisions affirmed convictions in four cases where the net worth method was used; but the opinions expressed grave concern for the potential abuses of the method, and attempted to set the permissible limits for this type of prosecution. Holland v. United States, 348 U.S. 121, 99 L. Ed. 150, 75 S. Ct. 127 (1954); Friedberg v. United States, 348 U.S. 142, 99 L. Ed. 188, 75 S. Ct. 138 (1954); Smith v. United States, 348 U.S. 147, 99 L. Ed. 192, 75 S. Ct. 194 (1954); United States v. Calderon, 348 U.S. 160, 99 L. Ed. 202, 75 S. Ct. 186 (1954). One such limitation is that the Government must show more than an increase in net worth; i.e., evidence must be introduced which will support an inference that the net worth increase is attributable to currently taxable income. To sustain its burden in this regard, the Government must establish that there is a likely source of or negate all possible nontaxable sources for the net worth increase. Holland v. United States, supra; United States v. Massei, 355 U.S. 595, 2 L. Ed. 2d 517, 78 S. Ct. 495 (1958).

 Recognizing the potential abuses inherent in the net worth method, and the consequent burden placed upon the Government in establishing its case, it would appear that an accused in a net worth case is not only entitled to be informed of the nature of the charge or claim against him, but the charge or claim must be so distinct and so specific as to minimize the potential abuses inherent in a net worth prosecution. Since the Supreme Court has directed, as a condition precedent to conviction in a net worth case, that the Government introduce evidence which will support an inference that the net worth increase is attributable to currently taxable income, the accused should have a reasonable opportunity to rebut that inference. To afford an accused such an opportunity, it is essential that he be informed in advance of trial of whether the Government intends to prove the existence of a likely source, and if so, the nature of that source, or intends to negate all possible nontaxable sources. This is especially true today when the criminal discovery rules are being liberalized to afford the defendant the opportunity to more adequately prepare his defense. In commenting upon the liberalization of the criminal discovery rules in connection with a net worth case, the District Court, in United States v. Rosenfeld, 264 F. Supp. 760 (N.D. Ill. 1967), in compelling the Government to disclose the likely sources of the alleged unreported income, stated at page 763:

 
"* * * The time is rapidly approaching when 'surprise' will be eliminated from the criminal trial, and the 'sporting theory of justice' will be a relic of the past for criminal defendants as it is already for civil litigants. See e.g. Brennan, The Criminal Prosecution: Sporting Event or Quest for Truth, 1963 Wash.: U.L.Q. 279; Everett, Discovery in Criminal Cases - In Search of a Standard, 1964 Duke L.J. 477."

 Accordingly, assuming the Government intends to prove a likely source, we grant defendant's motion for a Bill of Particulars with respect to item three, to the extent the information requested therein is available to the Government.

 While a Bill of Particulars may require disclosure of certain items, it is not a device by which a defendant may compel the Government to disclose its evidence in advance of trial. Wong Tai v. United States, supra. The "more liberal attitude" suggested by the Advisory Committee in their Amendment to Rule 7(f) is not meant to alter the primary purpose of a Bill of Particulars which is to apprise the defendant of the crime charged with sufficient particularity so as to enable him to prepare a proper defense and avoid prejudicial surprise at trial. The names and addresses of witnesses are normally an evidentiary matter and since the defendant is not charged with "treason or other capital offense" the defendant's motion for their disclosure is addressed to the discretionary power of this Court. *fn3" The only reason advanced by the defendant for his request is that were it denied it would be "exceedingly and unreasonably difficult. " Although " . . . it is not uncommon for the Government to be required to disclose the names of some potential witnesses in a bill of particulars, where this information is necessary or useful in the defendant's preparation for trial" ( Will v. United States, 389 U.S. 90, 19 L. Ed. 2d 305, 88 S. Ct. 269, opinion of 11/13/67, No. 36, at p. 9), this Court is of the opinion that the reason advanced by the defendant in the case sub judice, if indeed it be a reason, is not so compelling as to warrant this Court in deviating from the general rule that the names and addresses of witnesses are purely an evidentiary matter and their disclosure is not required in advance of trial. United States v. Diliberto, 264 F. Supp. 181 (S.D.N.Y. 1967); United States v. Baker, 262 F. Supp. 657 (D.C.D.C. 1966); United States v. Chase, 372 F.2d 453 (4th Cir. 1967); United States v. Margeson, 261 F. Supp. 628 (E.D. Pa. 1966). Accordingly, the defendant's motion with respect to item two is denied.

 Motion to Suppress

 In item one of his motion, the defendant requests the Court to suppress the testimony and workpapers of his accountant, Allen Speiser, on the ground that his compelled testimony would violate the accountant-client privilege created by a Pennsylvania statute which provides:

 
"§ 9.11a Privileged communication
 
"Except by permission of the client or person or firm or corporation engaging him or the heirs, successors or personal representatives of such client or person or firm or corporation, a certified public accountant or a person employed by a certified public accountant shall not be required to, and shall not voluntarily, disclose or divulge information of which he may have become possessed relative to and in connection with any professional services as a certified public accountant other than the examination of audit of or report on any financial statements, books, records or accounts, which he may be engaged to make or requested by a prospective client to discuss. The information derived from or as the result of such professional services shall be deemed confidential and privileged: Provided, however, That nothing herein shall be taken or construed as modifying, changing or affecting the criminal or bankruptcy laws of this Commonwealth or of the United States. 1947, May 26, P.L. 318, § 11.1, added 1961, Sept. 2, P.L. 1165, § 8."
 
(See 63 P.S. § 9.11a)

 In the absence of a statute, there is no privilege with respect to communications made to an accountant by an employer for the purpose of preparing financial statements or doing other work characteristically performed by accountants. Since the privilege is in derogation of the common law and an exception to the general rule that all persons having knowledge of the facts are required to testify, the Pennsylvania statute creating the privilege must be strictly construed. Indeed, Professor Wigmore has cautioned against the expansion of privileges, stating:

 
"For more than three centuries it has now been recognized as a fundamental maxim that the public (in the words sanctioned by Lord Hardwicke) has a right to every man's evidence. When we come to examine the various claims of exemption, we start with the primary assumption that there is a general duty to give what testimony one is capable of giving and that any exemptions which may exist are distinctly exceptional, being so many derogations from a positive general rule:
 
* * *
 
"(3) * * * The investigation of truth and the enforcement of testimonial duty demand the restriction, not the expansion, of these privileges. They should be recognized only within the narrowest limits required by principle. Every step beyond these limits helps to provide, ...

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