Milton H. Olender v. United States

237 F.2d 859 56-2 USTC P 10,077 , 56-2 USTC P 9936 Milton H. OLENDER, Appellant, v. UNITED STATES of America, Appellee. No. 14916. United States Court of Appeals Ninth Circuit. Sept. 24, 1956. Rehearing Denied Nov. 8, 1956. Leo R. Friedman, San Francisco, Cal., for appellant. Lloyd H. Burke, U.S. Atty., John Lockley, Asst. U.S. Atty., San Francisco, Cal., for appellee. Before HEALY, CHAMBERS and BARNES, Circuit Judges. BARNES, Circuit Judge. 1 This is a criminal prosecution for income tax evasion. Appellant was convicted on four counts charging him with wilfully attempting to defeat and evade federal income taxes by filing false and fraudulent returns. Counts 1 and 3 had reference to his own 1945 and 1946 income tax returns; counts 2 and 4 to his wife's 1945 and 1946 income tax returns, which he prepared. 2 The government relied on the 'net worth method' of establishing guilt. This required the government to show 'with reasonable certainty' the opening net worth of appellant as of December 31, 1944, his net worth as of December 31, 1945, and his closing net worth as of December 31, 1946, Holland v. United States, 348 U.S. 121 , 75 S.Ct. 127 , 99 L.Ed. 150 , and that appellant and…

This is a criminal prosecution for income tax evasion. Appellant was convicted on four counts charging him with wilfully attempting to defeat and evade federal income taxes by filing false and fraudulent returns. Counts 1 and 3 had reference to his own 1945 and 1946 income tax returns; counts 2 and 4 to his wife’s 1945 and 1946 income tax returns, which he prepared.

The government relied on the "net worth method” of establishing guilt. This required the government to show “with reasonable certainty” the opening net worth of appellant as of December 31, 1944, his net worth as of December 31, 1945, and his closing net worth as of December 31, 1946, Holland v. United States, 348 U.S. 121 , 75 S.Ct. 127 , 99 L.Ed. 150 , and that appellant and his wife realized taxable income which they failed to report. According to the government’s computations, appellant and his wife should have reported net taxable income of $87,999.24 in 1945, and $43,212.- *861 00 in 1946. Appellant had returned $41,-067.61 in 1945, and $23,514.62 in 1946. The figures included the income of both the husband and the wife, who reported their income on a community property basis.

The defense attempted to show that…

On Petition for Rehearing.

The Petition For Rehearing consists primarily of an endeavor to re-discuss and re-weigh the sufficiency of the evidence. On this point, our view remains unaltered.

The sole issue of substance raised by the petition for rehearing relates to an alleged misapplication of the Calderon case, to the instant facts. Appellant asserts that we have cited and relied upon Calderon .as authority for the proposition that there need not be evidence of a tax deficiency for each of the years in question, 1945 and 1946. The precise language of the case as we quoted it justifies that position.

Obviously, Calderon does not stand for that proposition, nor was it referred to for such purpose. In order to correct appellant’s misconception as to the nature of our reliance on the Calderon case, we now clarify our reference thereto.

*867 The quotation of the Calderon case should read as follows:

We are aware of, and we are bound by the Supreme Court’s statement that “the evidence as a whole must show a deficiency for each of the prosecution years”.

We affirm that the government must establish some deficiency for each of the years. Otherwise, there could be no violation.…