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United States v. Kabot

decided: November 13, 1961.


Author: Smith

Before LUMBARD, Chief Judge, and FRIENDLY and SMITH, Circuit Judges.

J. JOSEPH SMITH, Circuit Judge.

This is an appeal from concurrent eighteen month sentences for offering and giving a $25,000 bribe to one Keyser, an Internal Revenue Agent, to influence him in an income tax matter. 18 United States Code, Section 201. The judgment is affirmed.

Appellant attacks the conviction on numerous grounds, including the denial of a pre-trial motion to dismiss the indictment for unnecessary delay in filing, the failure to call Gillis, an Internal Revenue Agent, as a witness, refusal to produce statements and grand jury testimony of Gillis and one Sweeney, an investigating agent who died during the trial, the admission in evidence of recordings of Kabot's conversations with Keyser, the exclusion of a recording of a conversation between Keyser and Gillis, instructions to the jury on character evidence and on evidence relating to the merits of the tax case, and refusal of instructions on a theory of enticement. We find no reversible error.

Appellant Abraham Kabot was accountant for Salomon and Bart van Berg, diamond merchants, and their wives and for two New York corporations which they controlled, Van Berg Diamonds, Inc. and Rough Diamond Co., Inc., as well as for other clients, many of whom were also in the diamond business. One Keyser was an agent of the Internal Revenue Service in the International Operations Division, stationed in Washington, D.C. An agent of the Service in Puerto Rico reported that there was a question concerning the withdrawal by Salomon van Berg from a Puerto Rican van Berg corporation, Brilliants, Inc. of $2,000,000 and of allocation of profits and expenses between Brilliants, Inc., and Van Berg Diamonds, Inc., to which Brillants sold virtually all its output. Keyser was thereupon in July 1958 assigned to audit the individual returns of the van Bergs for 1954 through 1957, the corporate returns of Van Berg Diamonds for the same years, and the corporate returns of Rough Diamonds, Inc. for the fiscal years 1955, 1956 and 1957. Keyser telephoned Salomon van Berg for an appointment. Van Berg had Kabot call Keyser back and an appointment was made for September 8. On that date Keyser came to New York, called on Kabot at Kabot's office and explained the two major questions pending. He then went with Kabot to van Berg's office and explained the issues to van Berg.

Keyser on the 8th mentioned to Kabot that he had an acquaintance with one Gillis, an agent in the New York Internal Revenue office. On or about the 9th of September Keyser mentioned to Gillis' superior that he was acquainted with Gillis, who was called in to greet Keyser. Keyser was at van Berg's office conducting the audit on September 9 and 10, returning to Washington September 12. Keyser had arranged to come back to New York September 29. Someone representing himself as Keyser's superior, Moysey, called Kabot and told him rather abruptly that there was too long a delay. The appointment was moved up to September 25. In the latter part of September and in October Keyser was at the van Berg office about a dozen times. At about this time, according to Kabot, Gillis stopped in at Kabot's office and told Kabot that Keyser wanted him to know that he was a pretty good agent and could get very rough. On being asked how Keyser would like it if the conversation were reported, Gillis was said to have asked Kabot to forget about it; and to have pleaded with Kabot not to say anything to Keyser. Sometime after Gillis had talked with Kabot, Keyser called Gillis and had dinner at Gillis' house. Keyser testified that there was no mention of the case at Gillis' house. On October 27 Gillis was invited to and did accompany Keyser and Kabot to lunch.

About October 9 Keyser had told Kabot and van Berg that he was going to recommend that the $2,000,000 withdrawal be taxed as a dividend to van Berg and that he would work up a figure on the reallocation of profits and expenses between the Puerto Rican and New York corporations. He also mentioned another questioned item of a $300,000 credit on the books of Van Berg Diamonds. Keyser returned to Washington, coming back to New York on October 27. He informed Kabot that he was recommending that the $2,000,000 withdrawal and $300,000 credit be taxed as dividends resulting in an added individual tax of $1,929,000, and that the corporate tax be increased $460,000 as a result of reallocation of profits and expenses. Kabot asked if the case could be disposed of at Keyser's level. Later, walking back after a visit to van Berg's office, according to Keyser, Kabot said that he apologized for bringing the matter up, but that Gillis said it would be all right to ask if there was anything he could do to make everybody happy and dispose of the case without carrying it to a higher level.

On considering the conversation over-night, on October 28 Keyser decided that Kabot was referring to a bribe, and so informed his Washington office. He was instructed not to lead Kabot on, but that if he was offered a bribe he was to pretend to go along with the scheme. Investigating agents then placed a concealed Minifon recording device on Keyser's person, turning it on before he went into Kabot's office on October 28. Keyser and Kabot talked about the case at some length, for more than an hour. A recording of the conversation was in evidence at the trial and was played for the jury. Kabot was shown Keyser's work sheets. According to Keyser, after considerable discussion of the issues Kabot told Keyser that if he would cooperate he would speak to the van Bergs and maybe make it worth while. The recording reflects mention by Kabot of the van Bergs making it worth while. Later, dropping his voice so that it is inaudible on the recording Kabot told Keyser, according to Keyser's version, that if he could put this through without a dividend and just with some reasonable allocation of expenses he thought he could "get around 25 grand." The recording, after the voices again became audible, bears out Keyser's testimony that Keyser mentioned that he had a family to think of, that there was a risk. Kabot told him not to worry, the risk was his too, they could work it out, to think it over. Keyser said he would. Kabot then said he would get up some figures Keyser could use in his report.

On October 29 or 30 according to Kabot, Gillis reappeared at Kabot's office and told Kabot that Keyser had informed Gillis that Kabot and Keyser had come to a settlement of the case, to which Kabot replied that Keyser had not exactly indicated to Kabot that it was settled, but that he, Kabot, hoped so.

On October 30 Keyser, with a concealed Minifon, took Gillis out for coffee. The recording of this conversation was made available to the defense but excluded from evidence. This episode is discussed below.

Sometime prior to November 13 Kabot telephoned Keyser, told him the figures were ready and arranged to meet November 13.Keyser, again with a concealed Minifon, went to Kabot's office. The recording was later accidentally spoiled. Keyser's version, denied by Kabot, is as follows: Kabot asked whether Keyser had given any thought to their previous conversation. Keyser, on instructions from his superiors, stated that he had returned because Kabot had promised $25,000 if Keyser would revise the reports. Keyser instructed Kabot to tell the van Bergs he could make it about $25,000 additional tax for each of the three years. Keyser then returned to his hotel. Kabot later came to Keyser's room, and in a conversation recorded by agents in the next room over microphones and wires planted in Keyser's room, asked the procedures to be used in submitting Keyser's reports. Kabot then said to give him a couple of days to make the necessary arrangements.

On November 17 Keyser telephoned Kabot and arranged to meet November 19. On the morning of the 19th he went to Kabot's office with a concealed Minifon. The recording's audibility is in dispute. According to Keyser he showed Kabot his proposed reports and agreed to a further downward revision, telling Kabot it was based on Kabot's statement that he would get Keyser $25,000. Kabot is claimed by Keyser to have instructed Keyser to go back to the hotel and revise the reports. According to Keyser, Kabot explained that then both would get in a taxi and leave Kabot's office, that Kabot would have the money and give it to Keyser while in the cab, and that Kabot would then leave the cab and Keyser could go on. After lunch together, Keyser returned to Kabot's office for his briefcase, then went back to the hotel to revise the report.

At 3:00 p. m. Keyser was searched by the agents, a concealed Minifon placed on him and put in operation, and he returned to Kabot's office. He showed Kabot some forms and gave him others. In front of Kabot's office the two took a cab. According to Keyser, while riding in the cab, Kabot opened a briefcase and took therefrom a white manila envelope tied with string, which he gave to Keyser. The cab stopped, Kabot got out, and on a signal from Keyser was arrested by agents who had them under surveillance. They also pretended to arrest Keyser. The white envelope had inside it another envelope containing $25,000 in currency. Kabot denied any knowledge of the envelope or money.

Kabot was arraigned before a United States Commissioner November 19, 1958 upon a complaint charging him with violation of 18 U.S.C. ยง 201 and held to answer in $10,000 bail, which he furnished. The Commissioner's hearing was adjourned about 20 times without opposition from Kabot. Meantime, extensive investigation was carried on to determine if others were involved.Evidence was presented to the January 1960 Grand Jury, which returned an indictment of Kabot on March 8, 1960. Kabot was arraigned on the indictment March 25, 1960, stood mute, a plea of not guilty was entered by direction of the court, and bond was continued in the same amount. On April 14, 1960 appellant filed motions to dismiss, for bill of particulars and for inspection of documents.May 26, 1960 appellant's counsel requested trial adjournment to the first week in October 1960. On June 28, 1960 the motion to dismiss the indictment was denied, and the motions for bill of particulars and for inspection were denied ...

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