La familia

1996, where he served as a border inspector at the San Luis, Arizona, Port of Entry. A December 1997 fight with his wife, Veronica, led her to report him to his supervisors for bribery. Veronica had noticed unexplained cash and a number of expensive items Ronnie had acquired, and she had overheard his telephone conversations between Ronnie and his uncle, Pablo Cordova-Barva, in which they seemed to be speaking in code about smuggling items over the border. When she inquired, Brickey had told her that, "I just had to close my eyes and I would get $15,000 per car. My uncle was the one arranging the cars that would go across the border."

After Veronica reported him, Brickey bought her a diamond bracelet, and he and his attorneys tried to get her to recant her statements. An IRS investigation showed that Brickey had 1987 income of $149,730.70, rather than the $25,315 he reported on his return. The

understatement meant that his actual tax liability was $46,448.71, rather than the reported $4,413.

eyes to allow drug cars across the border. He also denied that any of the money he spent during 1997 was income to him for that year, claiming instead that all of the funds had come from savings he had accumulated. He was charged in the District of Arizona with one count of attempting to evade taxes, in violation of § 7201, and one count of willfully making a false federal income tax return, in violation§ 7206(1). On July 21, 2000, the jury returned verdicts finding him guilty on both counts.

Besides the argument that he was unfairly sentenced based on his position of trust, Brickey’s main argument on appeal was that that there is no evidence that the allegedly

unreported 1997 income was received during 1997 instead of 1996. This argument was rejected by the Ninth Circuit:

The government's proof at trial, when viewed in the light most favorable to the prosecution, clearly establishes that a rational trier of fact could conclude that Defendant received substantial income during 1997 that he did not report on his federal income tax return for that year. The evidence at trial

established that during 1997, $23,345.23 was deposited into Defendant's bank accounts and Defendant made cash expenditures totaling $130,264.01. The government's evidence also proved that the $130,264.01 in unreported cash was income that Defendant should have reported on his federal income tax return. The testimony of Defendant's former wife also supports this conclusion. She testified about their finances during the relevant period. She was responsible for paying household bills during her marriage to Defendant, and, as his spouse, knew of his disposable income, his lifestyle, and spending habits. Given all of the evidence produced at trial, a rational factfinder could easily conclude that Defendant received substantial income in 1997 that he did not report on his federal income tax return for that year.

United States v. Brickey, 289 F.3d 1144, 1151 (9th _{Cir 2002).}

7.7 Fleecing the Unions

Although they are not public officials, union leaders have a fiduciary obligation to their membership. Criminal tax charges sometimes help redress instances in which this trust is violated, a prosecutorial practice that goes back several decades. For example:

• In 1968, Aniello Dellacroce received 22,500 shares of Yankee Plastics, Inc. stock (valued at approximately $123,000) for services rendered by Dellacroce and his assistant, Michael Catalano, to help Yankee Plastics, Inc. acquire a company known as Mr. Hanger, Inc, and to insure “labor peace” at the acquired company. In order to avoid showing this stock as imcome to Dellacroce, the stock was placed in the name of a nominee, Preston Smith, and the stock certification were never in Dellacroce’s physical possession.

United States v. Catalano, 491 F.2d 268 (2nd _{Cir. 1974)}

• John Cody was a salaried official at a Teamsters local that represented truck drivers who deliver building materials to construction sites throughout the New York metropolitan area and Long Island. In the late 1970s, he used his position to extort home construction services, chauffering services, and the use of a rent-free luxury condominium from contractors hoping to avoid a union organizing drive by their employees or expensive labor costs on future construction projects. In addition to racketeering, Cody was charged with tax fraud for failing to report and pay taxes on some of the kickbacks. United

States v. Cody, 722 F.2d 1052 (2nd Cir. 1983).

• The boss of the Luchese crime family, Vic Amuso, gained control of the union responsible for window replacement in New York City, Local 580 of the Architectural and Ornamental Ironworkers, and extorted illegal payoffs from window replacement companies in exchange for labor peace. In

addition to fourteen murders which charged Amusa approved, the indictment Amuso with a tax fraud conspiracy. United States v. Amuso, 21 F.3d 1251 (2nd Cir 1994).

• Tommy Briscoe, president of the 3,000 member Chicago Local of the

American Postal Workers Union created a loan program for postal employees he represented, and received a portion of every repayment. He also

embezzled from the union, even paying his delinquent personal tax liability with a union check. In addition to embezzlement, he was charged with tax evasion for failing to report the embezzled proceeds on his tax returns. United

States v. Briscoe, 65 F.3d 576 (7th _{Cir 1995).}

7.8 Distinction Between Bribery and Embezzlement

We saw, in the context of embezzlement, a creative defense to the corresponding tax charges: that the embezzled funds were a temporary loan that would ultimately be repaid, and therefore did not constitute income to the embezzler. Public corruption, in some cases, is a variation of embezzlement. The intersection of these two types of mischief is illustrated by the defense of an accused political operative who found himself indicted on tax charges in the 1950s.

Frank A. Wyss was the treasurer of the campaign of Henry E. Branning, who was elected mayor of Ft. Wayne, Indiana in 1947. Based on his acquaintance with Branning, Wyss received payments from persons seeking public contracts with the city. After a lengthy bench trial, Wyss was convicted of failing to report these monies on tax returns. His appeal acknowledged receipt of the funds, but argued that they were not income to him because they were either (1) “gifts” he received from long-time friends in appreciation for leads he provided them about upcoming city

procurement, or (2) embezzlement proceeds rather than bribes or kickbacks, since the payments should have been made to the city.

It was obvious why the gift characterizations would have exonerated him of the tax charge, but why would Wyss prefer to have his conduct be embezzlement rather than bribery? His prosecution occurred a decade before the Supreme Court’s James decision, when embezzlement proceeds were not considered income and the lower courts were trying to harmonize Wilcox and

Rutkin.

This odd situation – that an accused tax cheat, for strategic reasons, would prefer to be characterized as an embezzler rather than a recipient of bribes – was not lost on the Seventh Circuit Court of Appeals, whose written opinion dripped with outrage at the state of affairs that would make this position rational. It rejected Wyss’ appeal:

Following in the wake of [Wilcox], an occasional taxpayer has firmly insisted upon being recognized and classed as a self-made embezzler hoping to avoid the economic impact, and penal provisions, of the Internal Revenue Code by insulating against the majority views reported in [Rutkin]. This case is faithful to that pattern. . . .

Convicted, after a comparatively lengthy bench trial, of [filing false tax returns] through omissions of sums of money from his joint tax return for the calendar years 1948 and 1949, Wyss contends here that the amounts admittedly received and excluded by him were derived from two sources: (1) funds he “embezzled” and (2) “gifts” received by him from a long-standing friend for leads defendant supplied to prospective purchasers of soda fountain equipment. That these moneys were simply not income, illegal or otherwise, is the pith of Wyss' attack on the judgment appealed.

. . . .

[T]he defendant urges on us that the funds were not in fact or in law his regardless of his subjective attitude toward them. He contends that if the funds were 'kickbacks' they belong to the City of Fort Wayne or, in the alternative, if they were

misappropriated by him they were embezzled. Both record and briefs for the parties exhibited the undisputed fact Wyss received the moneys in question. . . . .

Detailing all the evidence is unnecessary in this opinion for it is a tragic situation where the government prosecuted on the theory of unreported bribes with the

defendant denying he was bribed but claiming he embezzled. From that thesis Wyss contends that if such funds were “kickbacks” then they constituted money which under the Wilcox case [FN1] were nontaxable because he was supposed to return or repay them. . .

[W]e are told by the defendant if they were the former then the money belonged to the City of Fort Wayne, but if they were political contributions-- donated to a political trust fund, then Wyss embezzled them and therefore in either event were nontaxable. . . . .

Until the funds in question are reclaimed if they were “kickbacks” we think they constituted taxable income despite Wyss' alleged vulnerability, if any, under Indiana law to return it when and if, or because of a duty of the Indiana Attorney General or County Attorney to institute recovery proceedings. We are not rescinding Wilcox, as defendant's anticipatory argument suggests but observing that Wyss cannot come within the Wilcox holding unless the district judge found him to be an embezzler. And as both sides unanimously agree this Court does not weigh evidence nor find facts. Defendant has confused weight and credibility with questions of law.

United States v. Wyss, 239 F.2d 658 (7th _{Cir. 1957)}

7.9 Conclusion

How does the pursuit of criminal tax charges in public corruption cases differ from their use in embezzlement and drug cases? The cases discussed in this chapter suggest that the corrupt official who fails to report his bribes cannot escape the tax fraud charges even when he succeeds in casting doubt on the illegality of the payments themselves. Unlike the embezzler, the corrupt official generally does not claim that the payment was a temporary loan that would eventually be repaid. Like the drug dealer or the attorneys who help them, the crooked

politician’s best defense to the tax charges may be that proof of the alleged illegal activity is so prejudicial that it makes a fair trial on the tax counts impossible. This claim is addressed in the next chapter.