United States v. Louis Joseph Salerno and Frederick Arnold Pandolfo

The appellants, Louis Salerno and Frederick Pandolfo, are former employees of the Stardust Casino in Las Vegas, Nevada. They were charged under 26 U.S.C. § 7206 (2) and 18 U.S.C. § 2 with willfully aiding or assisting the preparation of false tax returns of the corporation operating the casino, and they were convicted. In this unusual case, appellants acknowledge that the government proved that there was a scheme which embezzled millions of dollars from the casino. They argue, successfully on appeal, that the government failed to prove the scheme had as a purpose the violation of the federal tax laws. Because our law requires such proof in order to convict for “willfully” aiding or assisting the preparation of a false tax return, we must reverse for insufficiency of the evidence.

Some knowledge of the operation of the casino is necessary in order to understand just what the defendants did. In order to monitor gaming revenue and prevent em-bezzlements like that which occurred here, the Stardust had an elaborate system of internal controls to inventory accurately the chips won or lost at each gaming table during each shift.

At the beginning of each shift, a count of chips was made…