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UNITED STATES v. ANDERSON

April 1, 1982

UNITED STATES of America
v.
Ruth M. ANDERSON



The opinion of the court was delivered by: ROSENBERG

This matter came before me for trial non-jury of the defendant, Ruth Anderson, who was charged with the criminal offenses of attempting to evade or defeat income tax payments.

The grand jury had charged in a two-count indictment that the defendant Anderson did willfully and knowingly attempt to evade and defeat a large part of the income taxes due and owing by her to the United States of America for the calendar years 1975 and 1976, by preparing, signing, mailing and filing false and fraudulent income tax returns, wherein she knowingly understated her taxable income for the above years, and knowingly underpaid the income taxes due and owing thereon in violation of ยง 7201 *fn1" of the Internal Revenue Code.

 The Government showed by Exhibits LL and KK, and the uncontradicted testimony of revenue officer, Kenneth White, that the defendant, an elderly bookkeeper for Micro-T, Inc., reported her income for the year 1975 as $ 9,620.00 and that she asserted the amount of tax due and owing thereon was $ 1,376.00. After reporting the sum of $ 1,513.00 as being previously withheld from her pay, she then claimed a refund in the amount of $ 137.00. The defendant reported income for the year 1976 in the amount of $ 6,349.00, and asserted the amount of tax due and owing thereon was $ 588.02. After reporting the sum of $ 1,018.60 as being previously withheld from her pay, she again claimed a refund this time in the amount of $ 430.58. The Government alleged that the defendant caused thousands of dollars of Micro-T, Inc. checks to be issued for her own economic benefit, and that she failed to report all this as income.

 The defendant Anderson was employed by Micro-T, Inc. as a bookkeeper and office manager from December, 1973 until August, 1976 at a salary of ultimately $ 200 per week (or $ 10,000 annually). Her duties included general office management, preparing books of original entry such as accounts receivable and accounts payable, deducting and withholding various taxes and other charges, and making payroll and expense checks.

 The defendant Anderson was hired by the president of the corporation as a bookkeeper and office manager in December 1973. In very short order they entrusted the defendant with complete confidence and relied upon her as a dependable person in the performance of all these duties.

 The defendant was not authorized to decide which bills or expenditures were to be paid by corporate checks (other than minor office expenditures). Rather, each disbursement was required to be approved by an officer of the corporation, usually Kester for expenses, or Wood for payroll.

 The defendant was entrusted with the drafting, making, issuing, mailing and recording of the checks of the company. All checks of the company were unnumbered. It was the defendant's function to number each check as she typed them. The company also maintained a checkwriter and a slug bearing "the authorized to pay" signatures of two company officers. The checkwriter was kept outside of the safe but the slug was kept in the safe when not in use. The defendant was given the combination to the safe and authority of access to the slug for insertion in the checkwriter as needed with implicit reliance upon her to use the slug only for authorized company expenditures and prevent the unauthorized use of the slug by anyone, other than an officer who occasionally used it. Each month she received the cancelled checks and the bank statements from the Union National Bank, the check fund depository, and reconciled them without any supervision of the officers.

 The defendant prior to her resignation pointed out to Wood, one of the officers, and later to the Board of Directors, that another officer, Kester, was making what she believed to be inflated demands for expense allowances. On occasion she threatened to notify the Internal Revenue Service of violations of the Internal Revenue Code. The Board of Directors concluded that her allegations were without substance.

 After the defendant resigned in August, 1976 she was asked by the president to come back and help out for a day or two, and this she did. Her replacement had difficulty in reconciling the bank statements sent by the Union National Bank and because of this, request was made from that bank for examination of its microfilms for a considerable period in the past. This was because many of the checks were "missing" and the cash balance was short from that indicated in the records of the company.

 The microfilm examination lead to the discovery that a large number of "duplicate numbered" checks (checks to other hitherto unrecorded payees with duplicate numbers) were used. None of these cancelled duplicate numbered checks, divulged in the microfilms, were in the company files, nor recorded in the corporate books, with no explanation of what had become of them. Each of the revealed duplicate numbered checks was either for the payment of products or services for the benefit of the defendant, her sister, or son (in two different instances), and not ever for the corporation. In other words, the missing duplicate numbered checks in some way directly or indirectly related to the defendant, Ruth Anderson, as we shall presently see.

 The critical fact is that the defendant did not make any one of these duplicate numbered checks a part of the corporate records in the books of the company as the bookkeeper who had the sole responsibility to keep and continue to make entries as required and to balance out the cancelled checks when returned by the Union National Bank. In the evidence of the case, each hitherto undivulged duplicate check *fn2" was specially submitted to the officers, who had authority to make checks, to indicate what knowledge each had of such checks, and in each case the witnesses asserted they had no knowledge whatsoever of them. Furthermore, they testified that no authority was given to the defendant or anyone else to make, issue or negotiate these duplicate numbered, corporate unrecorded and previously unrevealed checks, and that none of the products or services for which the checks were issued were for the benefit of the corporation.

 Approximately 50 undivulged duplicate, unrecorded checks or groups of checks were issued by the defendant for her economic benefit or that of her sister or son. These were admitted into evidence without objection. When the defendant decided to issue an unauthorized and unrecorded check, she first used a legitimate business check for an authorized expenditure and numbered it. At the same time she made another check, which was unauthorized, and gave it the same number as the legitimately authorized check, using this duplicate numbered check to purchase something for herself. These checks as the evidence showed, beyond any reasonable doubt, were negotiated into the defendant's own personally-benefitting channels. Since the defendant also received the monthly bank balance statements and the cancelled checks, when the defendant left the employment, no unauthorized, duplicate numbered, cancelled checks were found with the other business checks which she handled in the two relevant years.

 It is inconceivable that the bank would not have returned all the relevant checks, especially when it had recorded indifferently all the authorized and unauthorized checks for these years in the past on microfilm. It is unbelievable that the bank would have, or could have had, any reason-which might have been shown if it did-to remove the duplicate numbered Anderson-benefitting checks from all the others which it sent back with the balance sheet to the checkmaker. In any event all the balance sheets for the past two years should have revealed the duplicate checks. The balance sheets and the cancelled checks came back to the company's bookkeeper in the performance of her duties. That bookkeeper was uncontradictably Ruth Anderson, the defendant. The conclusion is obvious, since Mrs. Anderson was in complete control of these records, that she had withdrawn all the duplicate checks from the corporate files. It became apparent only when these unauthorized and unrecorded checks were discovered on microfilm that the defendant might have removed them, since she was the only one who handled them when the Union National Bank returned monthly cancelled checks. As such, she would have had to do this without authority and surreptitiously.

 Set forth here are a few of the payees of these cancelled duplicate checks, which the defendant admitted were for her benefit, or that of her family. These show a factual situation as a foundation upon which a determination must depend. While the checks pertain to the interest of the defendant and as some of them bear the defendant's name, and while the evidence connects her personal interest in the bulk of them, *fn3" it is sufficient to detail only a few to exemplify the general character of all payees, amounts and purchases:

 
Exhibits G-1 and G-2. Canadian Fur Company, 1975 and 1976, defendant issued multiple company checks, to purchase for herself various fur coats, hats and capes of mink and other furs in the amounts of at least $ 3,795.20 in 1975 and $ 5,667.50 in 1976;
 
Exhibit P. Gimbels, 1975, defendant issued and endorsed a company check for $ 457.00 to the jewelry ...

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