United States v. Aaron

During the years 1941 and 1942, appellant Aaron and his stepson, appellant Freidus, were in partnership with their wives doing business in the city of New York under the firm name of Aaron Machinery Company. The partnership business, which was conducted by the appellants, was that of buying and selling second-hand machinery which was in great demand at that time, and the purchases and sales were extensive. Adequate books of account were kept but it was proved, without dispute, that not all of the receipts from sales were entered in them. Ordinarily, consecutively numbered invoices were sent to purchasers and the payments received entered in the books to be used in the computation of taxes due the government. But whenever the appellants saw fit to depart from this practice an unnumbered invoice was used to cover a sale, and when this was done the payments received were not entered upon the partnership books or deposited in the active banking account of the partnership. Instead, they were deposited in three other banks in each of which an account was carried in the name of the partnership. Records of these accounts were in charge of an employee maintained at the address where the partnership had formerly had its principal office and place of business, but no record of them was kept at the current principal office of the partnership. It was shown that during the two years above mentioned sales approximating $282,942 were not carried into the partnership books but were by the appellants diverted to these secret bank accounts and eventually withdrawn by the partners untaxed. By so doing the appellants, so the government contended, attempted to defeat and evade taxes due the United States from themselves and their wives.