United States v. Costello

352 F.2d 848
Court of Appeals for the Second Circuit·Decided October 29, 1965·No. Nos. 481-484, Dockets 29524-29527·Published·Cited by 36 cases

Opinion

FRIENDLY, Circuit Judge.

These three appeals, along with United States v. Piecioli, 352 F.2d 856, and United States v. Markis, 352 F.2d 860, this day decided, stem from a raid carried out by Internal Revenue Service agents and state police in Bridgeport, Connecticut, on October 8, 1964. Appellants Frank Costello, James “Totto” Marchetti and Arthur Gjanci were tried together and convicted on all counts before Chief Judge Timbers and a jury under four indictments. Three two-[850] count indictments similar in form charged each of them with violations of 26 U.S.C. § 7203 in that, being engaged in the business of accepting wagers or receiving them for one so engaged, they wilfully failed (1) to purchase the occupational wagering tax stamp required by 26 U.S.C. § 4411 and (2) to register as required by § 4412. The fourth indictment charged all three with conspiring to fail to purchase the occupational tax stamps. Costello and Marchetti received concurrent one-year prison sentences and $10,000 fines in the conspiracy case and under Count 1 of their individual indictments; the imposition of sentence was suspended and probation for two years was imposed under Count 2. Gjanci’s sentences differed in that the fine was $2,500.

Certain points are common to the three appeals and, to some extent, to the two others mentioned. After outlining the facts of this case, we shall deal first with these common points and then consider arguments peculiar to various appellants.

In the summer of 1964 Special Agent John Ripa of the I. R. S. was detailed to work in Bridgeport as an undercover agent, posing as a person wishing to make numbers and horse bets and later as a would-be bookmaker. He placed numerous bets with Gjanci and Marchetti at the Lafayette Diner or, in some instances with respect to Gjanci, at the Greek Coffee House. On October 2, he placed bets with Costello, paying with two marked $20 bills which were found in Costello’s pocket on the latter’s arrest. Earlier, on September 3, he had asked Gjanci if he could set up an arrangement to turn in bets and receive a commission. Gjanci said he would speak to Marchetti to arrange this, and also that he would talk to his “bosses' — Totto and Frank” about letting Ripa place bets at a local variety store; Gjanci referred to Costello as the “big boss of Bridgeport.” On September 9, Marchetti arranged for Ripa to “book on 50 %” with “Tony,” with settlement to be made with Marchetti. On several later instances Costello made inquiries and gave directions whence the jury could infer that he was indeed “a boss” — if not indeed “the boss” — in the enterprise. At trial Costello denied any involvement in the wagering business; Marchetti admitted accepting some bets from Ripa but denied others and also denied Costello’s involvement; Gjanci did not testify.

I.

Appellants’ most basic point concerns the constitutionality of the federal wagering tax. Recognizing that these provisions were sustained in United States v. Kahriger, 345 U.S. 22, 73 S.Ct. 510, 97 L.Ed. 754 (1953), appellants say their situation differs in two respects. One is that statements of the prosecutor and the judge demonstrated that the purpose of the Government’s applying the statute against them was not to collect revenue, concededly the only available source of federal power, but to promote the enforcement of state laws against gambling; the other is that the enlargement of the self-incrimination clause of the Fifth Amendment to include federal compulsion of the admission of crime against the states, see Murphy v. Waterfront Comm’n, 378 U.S. 52, 53 n. 1, 77-78, 84 S.Ct. 1594, 12 L.Ed.2d 678 (1964), overruling United States v. Murdock, 284 U.S. 141, 52 S.Ct. 63, 76 L.Ed. 210 (1931), and recent emphasis that the clause embraces all statements save those that “cannot possibly” tend to incriminate, see Malloy v. Hogan, 378 U.S. 1, 12, 84 S.Ct. 1489, 12 L.Ed.2d 653 (1964), place the Kahriger holding on self-incrimination in question.1

[851] With respect to the first contention, apart from questions as to what effect on constitutionality statements by prosecutors and judges can have, nothing in the present record goes materially beyond what the Supreme Court characterized in Kahriger as “suggestions in the debates that Congress sought to hinder, if not prevent the type of gambling taxed.” 345 U.S. at 27 n. 3, 73 S.Ct. at 512, 97 L.Ed. 754. If “the verbal cellophane of a revenue measure,” 345 U.S. at 38, 73 S.Ct. at 518 (dissenting opinion of Mr. Justice Frankfurter), was sufficiently opaque for a majority of the Supreme Court twelve years ago, it remains so for us now. Whether the judge impermissibly allowed considerations unrelated to the nonpayment of the tax to enter into sentence, a claim raised only by Piceioli, is a different problem which we will discuss in the opinion in his case.

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