United States v. Ben J. Slutsky and Julius S. Slutsky D/B/A "The Nevele,"

514 F.2d 1222, 35 A.F.T.R.2d (RIA) 1472, 1975 U.S. App. LEXIS 15059
CourtCourt of Appeals for the Second Circuit
DecidedApril 18, 1975
Docket332, 406, Dockets 74-2004, 74-2041
StatusPublished
Cited by80 cases

This text of 514 F.2d 1222 (United States v. Ben J. Slutsky and Julius S. Slutsky D/B/A "The Nevele,") is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
United States v. Ben J. Slutsky and Julius S. Slutsky D/B/A "The Nevele,", 514 F.2d 1222, 35 A.F.T.R.2d (RIA) 1472, 1975 U.S. App. LEXIS 15059 (2d Cir. 1975).

Opinion

MOORE, Circuit Judge:

In 1973 Ben and Julius Slutsky were tried before a jury in the United States District Court for the Southern District of New York and convicted of attempted income tax evasion 1 (three counts each, covering the years 1965-67) and of filing false partnership tax returns. 2 (Ben Slutsky, two counts; Julius Slutsky, one count). The district court imposed both prison sentences and fines on the defendants, the prison sentences on each count to run concurrently, but the fines to be cumulative. On appeal, this court affirmed the convictions on the evasion counts but reversed and vacated the false filing convictions and the sentences imposed thereon. United States v. Slutsky, 487 F.2d 832 (2d Cir. 1973), cert. denied, 416 U.S. 937, 94 S.Ct. 1937, 40 L.Ed.2d 287 (1974). The net result of this action was that each defendant had a remaining sentence of five years imprisonment and a $30,000 fine, the sentences imposed by the district judge for the evasion counts. 487 F.2d at 846 n. 18.

Thereafter, the Slutskys made two motions in the district court. The first was a motion for a new trial, or, in the alternative, for a hearing to determine the issues raised by the motion, brought pursuant to Fed.R.Crim.P. 33. The second was a motion under Fed.R.Crim.P. 35 for reduction of sentences. Judge MacMahon denied both motions in all respects, and the Slutskys filed this appeal.

*1224 I.

The motion for a new trial was based on newly discovered evidence, 3 but before discussing the nature of this evidence a brief background discussion is in order. 4 )

During the years in question, 1965-67, Ben and Julius Slutsky were the only partners in The Nevele Hotel, a resort complex located in the Catskills. After a routine IRS audit conducted in 1967 uncovered certain irregularities involving bank deposits which exceeded reported income, a full investigation was started, culminating in the nine-count indictment on which the Slutskys were ultimately convicted.

At trial, the government proved its case using the “bank deposits” method of proof. That is, the government showed the size of deposits in the bank accounts used by the Hotel and its owners, adjusted this figure to give the taxpayers credit for properly claimed deductions and identifiable non-income items, and showed that this adjusted figure exceeded reported income for the relevant years. The burden was then on the Slutskys to explain the discrepancy.

As summarized by the court in the Slutskys’ previous appeal, 5 the government’s investigation and the evidence at trial showed some $18,000,000 in total bank deposits over the period 1965-67. Some $5,700,000 was eliminated as non-income and the remaining $12,300,000 was charged as gross income for the purposes of the bank deposits analysis. Of this total, $2,800,000 consisted of specifically identified items, but most of the deposits, some $8,600,000, were in checks of less than $1,000 and were unidentified. Another $1,000,000 in deposits were cash and therefore also unidentified. 487 F.2d at 841. Allowing for deductions from the $12,300,000 total and subtracting the income actually reported, the amount which the government’s proof showed was omitted from the Slut-skys’ tax returns was $T,200,000, for a total tax deficiency of approximately $750,000.

The evidence alleged to be newly discovered which formed the basis of the Slutskys’ motion for a new trial was uncovered by the attorneys engaged to prepare a petition for a writ of certiorari to the Supreme Court. While conducting an independent examination of the facts relating to their clients’ case, the lawyers came across financial statements of the Nevele Acres, another enterprise owned and operated by the Slutskys. The statement showed an obligation in excess of a million dollars due and owing from the Nevele Hotel to Nevele Acres. 6 According to the “Attorney’s Affirmed Statement” in the motion papers, further inquiry showed that it was customary to effect large transfers of funds from Nevele Acres and two other cash-rich Slutsky enterprises to the Nevele Hotel in order to permit the Hotel to cash the payroll checks of its employees. The payroll checks were thereafter deposited into two of the Hotel’s bank accounts and therefore would have been reflected in the total deposits figure used by the government in its bank deposits analysis. The appellants contend 7 that all the payroll cheeks were in face amounts of less than $1,000 and thus were unidentified items attributed by the government to income sources. However, the Slutskys argue, cash transferred to the Nevele Hotel from another partnership to meet payroll needs cannot be considered income to the Hotel, and therefore deposits of the cashed payroll checks actually represent non-income items. And since *1225 cashed payroll checks account for more than $1,500,000 in deposits over the relevant three-year period, 8 a sum which exceeds the $1,200,000 which the appellants were accused of not reporting, there is a potential explanation for the discrepancy between the size of the deposits and reported income. As a consequence, they argue that the district court erred in denying their motion for a new trial.

Motions for new trials based on newly discovered evidence “are not held in great favor,” United States v. Catalano, 491 F.2d 268, 274 (2d Cir.), cert. denied, 419 U.S. 825, 95 S.Ct. 42, 42 L.Ed.2d 48 (1974). To succeed on such a motion a defendant must show, inter alia, (1) that the evidence was discovered after trial, (2) that it could not, with the exercise of due diligence, have been discovered sooner, (3) that it is so material that it would probably produce a different verdict. United States v. Costello, 255 F.2d 876, 879 (2d Cir.), cert. denied, 357 U.S. 937, 78 S.Ct. 1385, 2 L.Ed.2d 1551 (1958), citing Berry v. State, 10 Ga. 511, 527 (1851). We believe that the district court was amply justified in concluding that the Slutskys had not fulfilled the first two requirements, and we need not decide whether, if true, the evidence would have mandated an acquittal. 9

There is no question that the appellants must have known of payroll check-cashing practices at the Hotel. As principals of both the transferor and transferee enterprises, they were actively involved in management and most assuredly would have been aware of large transfers of funds between the concerns.

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Bluebook (online)
514 F.2d 1222, 35 A.F.T.R.2d (RIA) 1472, 1975 U.S. App. LEXIS 15059, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-ben-j-slutsky-and-julius-s-slutsky-dba-the-nevele-ca2-1975.