the escrow account. When any item became income to the defendant, the fee would be transferred from the escrow account to the personal account. Michaels would then compute the defendant's income by comparing the two bank statements at the end of the year.
If an item of income did not reach these accounts, it would escape Michaels' attention and would not be included as income on the tax return. Michaels testified he did include the defendant's salary from the Pennsylvania Utilities Commission, but he stated the defendant never gave him any indication he received income from his private practice other than the items listed in the bank statements. He stated he was not aware of the existence of the WSFS "escrow" account.
The defendant's testimony in the support proceeding corroborated this method of accounting, but he stated there that he sometimes received cash fees and he sometimes cashed settlement checks for clients. He maintained, however, that he supplied his accountant with these cash figures orally.
The government produced three former clients of the defendant, the witnesses Flaxman, Keilman and Schleinkofer. Each identified settlement checks from insurance companies dated in 1967. The witness Tanitsky, a claims manager with American Mutual Liability Insurance Company, identified two additional settlement checks payable to a Helen Gladfelter in 1967. Flaxman, Keilman and Schleinkofer testified that after endorsing their checks, the defendant paid them their share of the settlement in cash or by issuing another check. All five of these checks have the statement on the back "pay to the order of Goodbody and Company."
The government also produced two letters on the defendant's stationery addressed to Goodbody and Company. These letters, dated September 28, 1967, and January 2, 1969, list a number of checks which were enclosed in payment of bills for the purchase of securities. The letters state that the Flaxman, Keilman, Schleinkofer and Gladfelter checks are enclosed.
At the support proceeding, the defendant also outlined the method by which he raised money for the $100,000 in real estate partnership investments. He said he would pledge savings certificates and then pay off the loans out of income when it was earned. He said "to some extent" he paid off the loans the same way he paid for the stocks -- with endorsed settlement checks. (N.T. 4-76)
Finally, the government produced notes representing loans totalling $90,000 made to the defendant by First Federal Savings and Loan Association in the prosecution years.
The first of these notes for $25,000 is dated September 11, 1968, less than one month before the formation of Peoria Towers Associates in which the defendant invested $25,000. This note was paid off by November 20, 1968. The payment slips show it was paid in part by checks in the amounts of $325.00, $2500.00, $1,000.00, $10,382.80, $600.00, $1500.00, $1700.00, and $1,800.00.
The second of these notes, in the amount of $15,000 is dated January 6, 1969, less than one month before the formation of Allegheny Industrial Associates in which the defendant invested $25,000. This note was paid off by January 28, 1969, with payments of $15,000 and $5.69.
The third note, for $25,000, is dated June 2, 1969, about a month-and-a-half before the formation of Triester Riviera Oaks Associates in which the defendant invested $25,000. This note was paid off by August 15, 1969. The payment slips indicate payment by checks in the amounts of $3,900.00, $1,989.00, $400.00, $1,200.00, $500.00, $ 13,000.05 and $10,000. The amounts credited as payments on three occasions are $10,000, $8,000 and $7,127.03. The total amount of the checks exceeded the amount of the payment made by $5,873.02 on one occasion and by $489.00 on another occasion.
The last note, for $25,000, is dated August 14, 1969, less than one month before the formation of Triester Coach and Four Associates in which the defendant invested $25,000. This note was paid off by September 8, 1969. The payment slips indicate payments by checks of $10,124.15, $9,002.83, $35.17 and $5,873.02. The government also introduced a copy of a check for $10,124.15 dated September 2, 1969, drawn on the Western Savings Fund account the defendant claimed was an escrow account. It was made payable to First Federal Savings and Loan. The $10,124.15 payment on this last note was made on September 5, 1969.
As an alternative theory for the source of the $100,000 invested in 1968 and 1969, defense counsel read in a portion of the transcript from the support proceeding in which the defendant stated his tax returns for those years did not accurately reflect the amount of cash he had available because the business expenses he deducted "may have been exaggerated." (N.T. 4-65).
In response, the prosecutor had the following question and answer from the same transcript read to the jury:
Q. But either they are exaggerated, in which case you had a lot more cash, or if they are not exaggerated, then it's a fair question as to where you got the hundred thousand dollars from. Isn't it?
A. That's a possible theory. It could have been exaggerated. There might have been more money there. Maybe there was cash I didn't report. Maybe there was transactions that I haven't presented to the Court which grew out of other transactions. There may be -- yes, there are maybes. (N.T. 4-71).