This is an income tax prosecution, in which the Government computed the defendant's net income on the basis of bank deposits and currency used in each taxable year, and attempted to corroborate that proof by the increase in net worth method. We have delayed decision of the appeal until we could have the benefit of the opinions of the Supreme Court in the four cases decided December 6, 1954. Holland v. United States, 75 S. Ct. 127; Friedberg v. United States, 75 S. Ct. 138; Smith v. United States, 75 S. Ct. 194; United States v. Calderon, 75 S. Ct. 186.

The appellant was convicted of having violated Section 145(b) Internal Revenue Code, 26 U.S.C.A. § 145(b), by willfully and knowingly attempting to defeat and evade income tax. The tax years involved were 1946, 1947 and 1948. The jury found the defendant guilty for the latter two years and the court sentenced him to 18 months imprisonment and $1,000.00 fine.

The first specification of error is that the court erred in failing to provide the defendant an opportunity to object to the charge of the court out of the hearing of the jury as required by Rule 30, Federal Rules of Criminal Procedure, 18 U.S.C.A. See also Rule 51, Federal Rules of Civil Procedure, 28 U.S.C.A. What occurred is set out in the footnote.1 Whether that amounted to a compliance with Rule 30 or not is probably immaterial because there seem to be no errors in the charge. The only errors suggested relate to two passages quoted in another footnote2, both of which are so obviously sound as not to merit discussion.

Specification 2 is that: "The District Court erred in requiring the sequestration of a certified public accountant proposed to be used by the defendant as an expert witness." "Where `the rule' is invoked as to witnesses, the mode and manner of its enforcement is confided largely to the discretion of the court, and the exercise of that discretion will not be disturbed except in clearest cases of abuse." 53 Am.Jur., Trial, Sec. 31, p. 47; cf. Jennings v. United States, 5 Cir., 73 F.2d 470, 471.

Specification 3 is that: "The Court was in plain error in refusing to permit the witness Griffin to testify as to his opinion of the adequacy of the records of the Turf Exchange." This specification is bottomed upon 26 U.S.C.A. § 413 which the Supreme Court in Holland v. United States, 75 S. Ct. 127, held not to be applicable to the net worth method. For the reasons stated in Dupree v. United States of America, 5 Cir., 218 F.2d 781, also decided today, we hold that that section does not apply to the bank deposits and current expenditures method of proof primarily employed in this case though supported by the increase in net worth method. If by any chance that holding should be mistaken, and if that section should apply to a case like the one before us, we, nevertheless, find that the record does not support appellant's contention that the court erred in rejecting the testimony.

The revenue agent had testified for the Government that the records of the Turf Exchange did not adequately reflect the income of the defendant and his partners. The accountant testifying for the defendant was asked the following question, to which the Government's objection was sustained: "I will ask you if in your opinion the win and lost sheets that you have just shown constitute an adequate set of records?" The defendant's counsel did not pursue the subject, re-phrase the question, nor make it any more definite that the inquiry was directed to whether the records clearly and truly reflected the defendant's income from the Turf Exchange. The form of the question was certainly objectionable.

Moreover, it was self-evident that unless gains and losses from gambling were truthfully and accurately entered in the "Win" and "Lost" columns of the accounting sheets, they did not truly reflect the income of the defendant and his partners in that enterprise. The most adequate method of accounting will not clearly or truly reflect income unless the items of receipt and expenditure are truthfully entered. The adequacy of a set of records, the backbone of which consists of entries in the columns "Win", "Lost" is within the comprehension of the ordinary juror and hardly requires the opinion of an expert witness. The jury were really concerned not with a set of bookkeeping entries, but with the facts concerning the defendant's income. This specification of error is without merit.

The remaining specifications of error relate to the sufficiency of the evidence to sustain the conviction, as presented by the motion for judgment of acquittal at the close of the Government's case and at the close of all of the evidence and renewed after verdict and judgment along with an alternative motion for new trial. We review the case "bearing constantly in mind the difficulties that arise when circumstantial evidence as to guilt is the chief weapon of a method that is itself only an approximation." Holland v. United States, supra, 75 S.Ct. at page 132.

The taxpayer defendant had given to the special agent of the Internal Revenue Department a sworn statement dated March 8, 1951, which was introduced in evidence without objection and in which, among other things, the defendant said:

"No, I haven't filed any income tax except the first one when they checked Conners and Jones about 1933 or 1934, and since then. When they told me and Gene about the government checking them, they told us to start making income tax returns, which I did — the first one I ever made. I had never heard of gamblers paying income tax; I didn't think we were supposed to. Johnny came out of the war, I think, with a lot of money.

* * * * * *

"Q. Mr. Bostwick, on December 31, 1941, could you tell me how much cash you had invested in the Turf Exchange? A. I couldn't hardly tell you. I imagine we could have had $10,000.00 or $20,000.00. We had a bank roll of $10,000.00 especially to pay off horses. Then the bank roll of the Turf Exchange never run more than $5,000.00 or $6,000.00, but if it did, it would be cut down. I imagine the total bank roll would run around $15,000.00 all told.

"Q. And one-fourth of that would be yours? A. That is right. When I drew out down there, I drew $5,000.00.

"Q. Did you have any other cash on hand December 31, 1941? A. Yes, sure I had money.

"Q. Could you tell us how much you had on hand at that time? A. No, I can't tell you about 1941, but I know what I had in 1939 — that is when I got married. I told my wife what I had. I had around $50,000.00. I had that in cash money. When I got married, I had an apartment house and one other house, an automobile, and some diamonds, and stock. This is besides my $50,000.00 in cash. I probably had some mortgages because I had some money loaned out. I didn't really put my money to working until I adopted this child about 1944 or 1946. When I got married, I started saving my money; I quit throwing it away."

During the course of this investigation, the agent examined the bank records pertaining to the various accounts of the defendant, his wife, and small adopted daughter, the defendant's stock account with Merrill, Lynch, Fenner & Beane, brokers, the defendant's local tax assessments, all of the Probate Court records in Montgomery and adjoining counties, and formally interviewed and took sworn statements from the defendant, his wife, his partners and other persons associated with him in the Turf Exchange, and also interviewed the persons to whom, according either to the mortgage records or to defendant's statement, he had made loans.

Starting then with cash on hand December 31, 1939, $50,000.00, the agent made detailed calculations for each year thereafter, adding the income as reported in defendant's return, any loans repaid, proceeds from sale of stock, etc., subtracting estimated cash living expenses and amounts traced to defendant's investments for the year and any other expenditures, and arrived at an amount of cash remaining on hand on December 31, 1945 as $26,920.47.

The agent then computed the defendant's net income for each of the years 1946, 1947, and 1948 on the basis of the bank deposits and currency used for such year. He added the total deposits to all bank accounts and the currency shown to be used, eliminated loans repaid, proceeds from sale of stock and any depletion of currency on hand as of the end of the previous year, subtracted allowable expenditures and non taxable income and calculated the defendant's net taxable income for the year 1946 as $33,963.16 instead of $12,714.08 as reported; for 1947, $51,547.77 instead of $9,876.16 as reported; and for 1948 as $34,031.65 instead of $11,891.52 as reported.

The agent then made a computation of net worth of the defendant and his wife as of December 31, 1945, 1946, 1947 and 1948, and arrived at practically the same amounts that he had reached on the basis of bank deposits and currency used during those years.

The defendant on his part showed some matters not considered by the revenue agent, for example that he had purchased 30 shares of Alabama Power Company preferred stock in 1937 and 1938 and sold them in 1940; that he had sold a diamond to Sol Monsky for $2,400.00 on May 23, 1946; that he had made a loan to Edward F. Taylor of $5,000.00 in June, 1939, which was repaid in the amount of $2,000.00 in 1941, and $3,000.00 in 1942. The defendant also introduced a statement purporting to show his net worth as of December 31, 1939 as $96,974.00, but upon analysis it was found to contain only the following items, which had not been taken into consideration by the revenue agent:

  1. Reynolds Loan ___________ $ 5,000.00
  2. Diamonds ________________   3,000.00
  3. Taylor Loan _____________   5,000.00
  4. Golden Loan _____________   5,000.00
  5. Socony Stock ____________   1,600.00
  6. Alabama Power Stock _____   3,300.00
                               __________
     Totaling ________________ $22,900.00

The revenue agent testified in rebuttal that assuming that the defendant's net worth statement as of December 31, 1939 is correct in every detail, it would reduce the total of defendant's net income for 1946, but would have no effect on the 1947 and 1948 results. The jury found the defendant guilty only under Counts 2 and 3 of the indictment covering 1947 and 1948. We think that the evidence was clearly sufficient for the jury's consideration on the question of the amount of the defendant's net taxable income for each of the years in question.

The question remains as to whether the jury could reasonably find that the defendant "did wilfully and knowingly attempt to defeat and evade a large part of the income tax due and owing by him to the United States of America for the calendar year 1947" and for the year 1948, as charged in the indictment. From the manner in which the records were kept, the deposit of money in the name of M. W. Bostwick instead of William C. Bostwick, the keeping of a safe deposit box in the name of Frank B. Cyphers, the failure to keep records of the gambling which the defendant admitted outside the Turf Club, the large amounts of understatement of net income for each of said years, and all of the other circumstances of the case, we conclude that the question of defendant's intent also was for the jury. Spies v. United States, 317 U.S. 492, 499, 63 S. Ct. 364, 87 L. Ed. 418; Holland v. United States, supra, 75 S.Ct. at page 137.

Finding no reversible error in the record, the judgment is

Affirmed.