United States v. William Greene

698 F.2d 1364, 12 Fed. R. Serv. 989, 51 A.F.T.R.2d (RIA) 760, 1983 U.S. App. LEXIS 30984
CourtCourt of Appeals for the Ninth Circuit
DecidedJanuary 28, 1983
Docket81-1405
StatusPublished
Cited by28 cases

This text of 698 F.2d 1364 (United States v. William Greene) is published on Counsel Stack Legal Research, covering Court of Appeals for the Ninth 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. William Greene, 698 F.2d 1364, 12 Fed. R. Serv. 989, 51 A.F.T.R.2d (RIA) 760, 1983 U.S. App. LEXIS 30984 (9th Cir. 1983).

Opinions

WALLACE, Circuit Judge:

Greene appeals his conviction on two counts of willfully attempting to evade federal income taxes in violation of 26 U.S.C. § 7201. A jury found that Greene had understated his taxable income for the years 1973 and 1974. Greene raises numerous contentions on appeal, none of which requires reversal of his conviction. We affirm.

I

After a routine audit of Greene’s 1973 and 1974 income tax returns, the Internal Revenue Service (the Service) began an investigation which was subsequently referred to the Criminal Investigation Division and assigned to Special Agent Stephens. Stephens encountered resistance from both Greene and his attorney: Greene refused to answer any of his questions or provide any of his records. Therefore, Stephens used the net worth method to ascertain whether Greene had evaded income taxes. Essentially, the government estimated the increase in Greene’s net assets and determined what his tax should be.1

Invoking the net worth method at trial, the government introduced the testimony of 59 witnesses and 345 exhibits in order to prove that Greene had unreported income in 1973 and 1974 upon which a tax of $97,-000 was due. The government’s final witness, a Service agent, qualified as an expert, drew conclusions from the evidence. A net worth summary he had prepared was distributed to the jurors without objection. The agent testified that during the years in question, Greene maintained 19 bank accounts, 5 impound accounts, 10 notes receivable, 23 brokerage accounts at 9 brokerage houses, and 32 properties. After reviewing Greene’s various liabilities during the period in question, the agent explained how he had arrived at net worth, adjusted gross income, and finally unreported income. The agent further testified that there was evidence revealing that Greene had received income from the sale of property, from his closely held corporation, American Equities, and from interest income on loans to individuals, none of which was reported on his 1973 and 1974 returns.

In his defense, Greene testified that the increase in his net worth, which the government ascribed to unreported income, was actually attributable ,to money repatriated from foreign bank accounts opened in the 1960’s. He testified that he had moved to Europe in order to avoid litigation with his estranged wife and transferred substantial assets to these accounts. McNaughton, a twice-convicted felon, testified that he had received funds from Greene in 1972, 1973, and 1974, which came from a bank in Liechtenstein. McNaughton testified that after depositing these funds in his own account, he returned virtually all of the money to Greene. Although Greene had supplied certain information to the government pursuant to a pretrial motion for reciprocal discovery, he did not disclose the existence of the alleged Liechtenstein bank account, identified only by a number, until after trial had begun. Furthermore, although Greene called two expert witnesses who testified as to the effect of the alleged foreign bank accounts on the government’s net worth computations, neither expert could point to any evidence that any foreign account was in fact Greene’s.

The principal issues raised in this appeal are whether the district judge erred when he denied Greene’s motion to dismiss the indictment on the ground of selective prose[1368]*1368cution, whether Count I of the indictment was returned within the six-year statute of limitations, whether there was substantial evidence of a tax deficiency to support the jury’s verdict, and whether the prosecution’s inquiry into Greene’s pretrial silence deprived Greene of his fifth amendment rights.

II

Greene brought a pretrial motion to dismiss the indictment based upon selective prosecution. The district court denied the motion and we affirmed on an interlocutory appeal. United States v. Greene, No. 81-1124 (March 30, 1981). During trial, Greene contended that new evidence demonstrated that the government intentionally misrepresented its motives for prosecution. This new information was contained in Agent Stephens’s report which states in part:

Consideration should be given to Greene’s prosecution since he is actively instructing seminars in “tax avoidance” in how to make millions without paying taxes. The prosecution of Greene may act as a deterrent to further attempts by other individuals to evade income taxes.

Greene claims that this statement is inconsistent with Stephens’s declaration filed in opposition to the original motion to dismiss in which he stated that his recommendation to prosecute was based solely on his investigation which showed that Greene had willfully failed to report substantial amounts of taxable income on his 1973 and 1974 tax returns. Obviously Stephens’s report produced at trial is inconsistent with his declaration. Nevertheless, we agree with the district court that Greene has not carried his burden of showing improper selective prosecution.

To succeed on a claim of selective prosecution, the defendant has a two-part burden. He must establish both “that others similarly situated have not been prosecuted and that the allegedly discriminatory prosecution ... was based on an impermissible motive.” United States v. Ness, 652 F.2d 890, 892 (9th Cir.), cert. denied, 454 U.S. 1126, 102 S.Ct. 976, 71 L.Ed.2d 113 (1981). See aiso United States v. Wilson, 639 F.2d 500, 503-04 (9th Cir.1981). Greene has failed to make an adequate showing of either prong of this test. Ruling on Greene’s pretrial motion to dismiss, the district court found that Greene had offered no evidence that others similarly situated were generally not prosecuted for such conduct. Greene has still failed to make that required showing; Stephens’s report is relevant only to the question of impermissible motive. But even as to that issue, Stephens’s report, in and of itself, does not provide adequate proof. Stephens’s recommendation for criminal tax prosecution was reviewed by the Chief of the Criminal Investigation Division, the District Director, the District Counsel, and the Tax Division of the Department of Justice. As we observed in United States v. Erne, 576 F.2d 212 (9th Cir.1978), “the ultimate decision to prosecute is several steps removed from the revenue officer.” Id. at 216. Thus, even assuming that Stephens’s initial role in referring the matter for prosecution involved an improper discriminatory motive, such a showing would be “insufficient to taint the entire administrative process.” Id. at 216-17. The district court did not err in refusing to dismiss the indictment for selective prosecution.

Ill

Greene contends that Count I of the indictment, charging him with evasion of income taxes for the year 1973, was time barred. Title 26 U.S.C. § 6531 provides that an indictment for tax evasion must be returned within six years after the commission of the offense. However, where third-party summons enforcement proceedings are necessary, as in this case, 26 U.S.C. § 7609(e) operates to suspend the limitations period.2 Thus, although the indict[1369]

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698 F.2d 1364, 12 Fed. R. Serv. 989, 51 A.F.T.R.2d (RIA) 760, 1983 U.S. App. LEXIS 30984, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-v-william-greene-ca9-1983.