III. Defendant's Motion for a New Trial on Count III
Defendant alternatively moves for a new trial with regard to count three on the basis that there was, as defendant terms it, a fatal variance between the charge in the indictment and the government's proof at defendant's second trial. Defendant contends that because the government introduced evidence with regard to the two false deductions not specified in the indictment, the deductions for "Professional Fees" and "Repairs," there was a fatal variance between the indictment and the proof at trial, thereby justifying the grant of a new trial on count 3.
Under the fifth amendment grand jury clause, a defendant has the right to be tried only on charges presented in an indictment returned by a grand jury.
Stirone v. United States, 361 U.S. 212, 217, 4 L. Ed. 2d 252, 80 S. Ct. 270 (1960). See Miller, 471 U.S. at 140-41. A constructive amendment of the charges in an indictment can occur when the evidence at trial establishes the commission of an offense not charged in the indictment. In other words, the proofs may broaden the possible bases for a conviction from those considered by the grand jury.
Id. at 143. Because a defendant could be convicted on allegations which were neither presented to the grand jury nor charged in the indictment, the constructive amendment of an indictment constitutes a per se violation of the fifth amendment grand jury clause, requiring reversal of a conviction. Stirone, 361 U.S. at 217.
Count three of this indictment charges defendant with aiding and procuring the filing of a corporate tax return which was false because it improperly claimed a deduction for "Outside Services," not because it improperly claimed deductions for "Professional Fees" and "Repairs." The proofs at trial established improper deductions for all three. In Stirone, one of the offenses proved at trial was not fully contained in the indictment. Since the trial evidence had amended the indictment by broadening the possible bases for conviction from that which appeared in the indictment, the Supreme Court reversed. 361 U.S. at 217. In this case, by presenting evidence of the improper deductions for "Professional Fees" and "Repairs," the government necessarily broadened the charges upon which the defendant was tried and, thus, in effect, amended the indictment. The result was the impermissible addition to the indictment during trial. See United States v. Zauber, 857 F.2d 137, 151 (3d Cir. 1988) ("The unconstitutional amendment occurs when impermissible additions are made to the indictment during trial."), cert. denied sub nom. Scotto v. United States, 489 U.S. 1066, 103 L. Ed. 2d 810, 109 S. Ct. 1340 (1989). The jury, having received evidence that all three deductions were improper, could possibly have based defendant's count three conviction on a charge that was never presented to the grand jury, the falsity of the "Repairs" deduction or the falsity of the "Professional Fees" deduction. Since there is no way to know just which deduction was the basis of the conviction, I conclude that a new trial is warranted on count three.
See United States v. Yeo, 739 F.2d 385, 387 (8th Cir. 1984)(evidence of additional extortionate act not charged in indictment in conjunction with instruction stating that defendant could be convicted on the basis of that act amounted to a constructive amendment of the indictment, warranting reversal of conviction).
IV. Defendant's Motion for Judgment of Acquittal on Count Four
Defendant moves for judgment of acquittal on count four on the basis that the evidence at trial was insufficient to establish either willfulness or causation as to one of the respects in which The Freshie Company's 1984 tax return was allegedly false, that is, the allegation of "a deduction of $ 1,300.94 for plant expense and travel and entertainment."
This deduction corresponds to the amount Freshie paid Continental Rental and Sales for the rental of the coat racks used at defendant's home while the closets were being redone. Defendant argues further that the government did not show that the two remaining deductions set forth in count four, the deductions for amortization and depreciation, would have any effect on the tax liability of Freshie for that year and, thus, the government failed to show that these deductions were "material" within the meaning of § 7206(2).
At trial, defendant's secretary, Ida Trivelis, testified that, as a result of an innocent mistake, she had caused invoices relating to defendant's rental of coat racks from Continental Rental and Sales to be billed to The Freshie Company and subsequently paid by Freshie rather than billed to the defendant's home. The government, however, also introduced evidence that several of the Continental invoices were approved for payment by the defendant who also signed one of the checks to Continental Rental and Sales. Defendant himself testified that he approved the payment of the invoices with Freshie monies, and that the coat racks were delivered to his home. The jury was not required to accept Ms. Trivelis' testimony. Even if the jurors did accept Ms. Trivelis' explanation that she made an innocent mistake, there was sufficient evidence from which they could have concluded beyond a reasonable doubt that defendant knowingly approved the payment of the Continental invoices with Freshie monies rather than directing that they be paid with funds from his personal loan account. The jury also could have concluded that defendant, by approving payment of the invoices with the knowledge that Freshie could not claim corporate deductions for his personal expenses, willfully caused The Freshie Company to file a tax return claiming the payment to Continental for the coat racks as a business expense. There was, therefore, no failure of proof on count 4 with respect to the deduction for plant expense and travel and entertainment.
An order follows.
AND NOW, this 25th day of August, 1989, for the reasons stated in the accompanying memorandum, it is hereby ordered:
1. Defendant's motion for judgment of acquittal is denied.
2. Defendant's motion for arrest of judgment is denied.
3. Defendant's motion for a new trial with regard to count 3 of the indictment is granted.
BY THE COURT: