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UNITED STATES v. POLLOCK

January 26, 1962

UNITED STATES OF AMERICA, PLAINTIFF,
v.
HARRY N. POLLOCK, EMILY SHOFFEY, AND JACK SOBOL, DEFENDANTS.



The opinion of the court was delivered by: John E. Miller, Chief Judge.

The ultimate question to be determined is whether the defendants are guilty of criminal contempt in failing to comply with the order of this court of January 10, 1962, directing them to deliver to the United States Attorney, as custodian for the use of the grand jury, on or before 5 o'clock, Wednesday, January 17, 1962, the records, documents and papers enumerated in paragraphs I through 6, both inclusive, in the subpoenas which were served on them on January 5, 1962.

A grand jury for the Western District of Arkansas was impaneled on January 8, 1962. Prior to the convening and impanelment of the grand jury, the United States Attorney and two special attorneys from the Tax Division of the United States Department of Justice had caused subpoenas duces tecum to be issued and served upon the defendants requiring them to produce for use by the grand jury the following records:

    "1. All petty cash vouchers for the General
  Office Account of Pollock Stores Company, Inc.,
  Talihina, Oklahoma, with General Offices at 823
  Garrison Avenue, Forth Smith, Arkansas, for
  fiscal years ending January 31, 1956, through
  January 31, 1958.
    "2. All General Office Accounts Receivable
  Ledger Sheets of Pollock Stores Company, Inc.,
  Talihina, Oklahoma, with General Offices at 823
  Garrison Avenue, Fort Smith, Arkansas, for fiscal
  years ending January 31, 1956, through January
  31, 1958.
    "3. All General Office Accounts Payable Ledger
  Sheets of Pollock Stores Company, Inc., Talihina,
  Oklahoma, with General Offices at 823 Garrison
  Avenue, Fort Smith, Arkansas, for fiscal years
  ending January 31, 1956, through January 31,
  1958.
    "4. All Main Cashier's Reports of Daily Cash
  Receipts, and all monthly summaries thereof
  (entitled `G.O. Cash Receipts') of Pollock Stores
  Company, Inc., Talihina, Oklahoma, with General
  Offices at 823 Garrison Avenue, Fort Smith,
  Arkansas, for the period commencing February 1,
  1955, and ending July 31, 1958, both dates
  inclusive.
    "5. All Daily Activity Reports of Arcade
  Furniture Store (also known as store #20), and
  all other reports and records of Arcade Furniture
  Store (also known as store #20), showing sales,
  receipts on accounts, cash sales, and all deposit
  slips of this branch of Pollock Stores Company,
  Inc., Talihina, Oklahoma, with General Offices at
  823 Garrison Avenue, Fort Smith, Arkansas, for
  fiscal years ending January 31, 1956, through
  January 31, 1958.
    "6. All Purchase Journals showing the purchases
  of all branches of Pollock Stores Company, Inc.,
  Talihina, Oklahoma, with General Offices at 823
  Garrison Avenue, Fort Smith, Arkansas, for fiscal
  years ending January 31, 1956, through January
  31, 1958."

The grand jury was engaged in conducting an investigation of the income tax liability of Pollock Stores Company, Inc., the defendant, Harry N. Pollock, and certain other persons. On January 10, 1962, the grand jury reported in open court that the defendants had appeared in response to the subpoenas but had stated that the records called for by the subpoenas were neither in their possession or available, and had refused to answer as to the location of the subpoenaed records.

Following the failure of the defendants to produce the records in accordance with the order of the court, the plaintiff on January 18, 1962, filed its petition asking the court to issue a show-cause order requiring the defendants to appear and show cause, if any there be, why they should not be held in criminal contempt of the court.

On the same date the court issued its order to show cause. At the time such order was issued the defendants were in court with their attorneys and had filed a response to the petition of the plaintiff asking that a show-cause order be issued.

The order was addressed to the defendants and recited that pursuant to Rule 42(b), Fed.R.Crim.P., 18 U.S.C.A. "you are hereby ordered to appear at 9:00 o'clock a.m. on the 19th day of January, 1962, before this court at Fort Smith, Arkansas, and show cause, if any you have, why you should not be held in criminal contempt for obstructing the administration of justice," by failing to comply with the order of the court entered January 10, 1962.

On the next day, January 19, 1962, at the hearing on the question presented by the show-cause order, the parties stipulated:

    "The defendants and each of them failed to
  deliver records itemized in subpoenas served on
  them on January 5, 1962 to the United States
  Attorney for the Western District of Arkansas on
  or before 5 o'clock p.m. Wednesday, January 17,
  1962, as directed by Order of this Court entered
  and served upon the defendants January 10, 1962.
    "That Harry N. Pollock, Emily Shoffey, and Jack
  Sobol are and have been respectively since
  February 1, 1955, President, Secretary and
  Comptroller of Pollock Stores Company, Inc.,
  Talihina, Oklahoma.
    "That Pollock Stores Company, Inc., Talihina,
  Oklahoma, is and has been since February 1, 1955,
  a Corporation chartered under the laws of the
  State of Oklahoma and authorized to do business
  in the State of Arkansas."

The defendants filed a response to the petition of the plaintiff for the issuance of the show-cause order, in which response they alleged that they had advised the grand jury on January 10, 1962, of their inability to produce said records and accordingly they were for that reason unable to produce the subpoenaed records as ordered by this court on January 10, 1962.

(Attached to the response was an affidavit of each of the defendants, but since the affidavits were not introduced in evidence at the hearing, neither the affidavits or the statements contained therein are being considered by the court.)

The defendants did not testify nor introduce any witnesses, but the plaintiff introduced five witnesses in an effort to prove that the records, documents and papers subpoenaed were in existence and that the defendants should be compelled to produce them for examination by the grand jury. The facts testified to by the witnesses are not disputed, but it is the inferences and conclusions that may be drawn therefrom which cause the difficulty.

As stipulated, the defendants are officers of Pollock Stores Company, Inc., Talihina, Oklahoma, and have been officers since the organization of the corporation in 1955. It is engaged in the operation of several stores.

Prior to July 1, 1958, a Mr. Kenneth B. Coger, Special Agent, Internal Revenue Service, was assigned to investigate the tax liability, if any, of the corporation and the defendants. He first contacted Harry N. Pollock on July 1, 1958, and worked in the office of the corporation during the early part of that month. After working in the office a few days, it was agreed by the defendants and the certified public accountant of the corporation with the Special Agent that the records and files which he desired to examine would be delivered to the office of the accountant located in the First National Bank of Fort Smith, Arkansas. Accordingly, all the records which the Special Agent requested at that time were delivered to the agreed place. It developed that the accountant, Douglas Walker & Co., did not have sufficient office space to house the records, and either the accountant or the defendants rented two additional rooms adjoining the office of the accountant where the records were stored. At no time was a list of the records that were delivered introduced in evidence, but apparently the Special Agent was not entirely satisfied, and on September 1, 1959, he issued and served a subpoena for the defendant, Emily Shoffey, under the authority of 26 U.S.C. § 7602, summoning her to appear before him on September 17, 1959, and to produce for examination the following documents:

    "1. General Office petty cash vouchers for
  fiscal years ending January 31, 1956 thru January
  31, 1959, inclusive.
    "2. General Office accounts receivable for
  fiscal years ending January 31, 1956 thru January
  31, 1959, inclusive.
    "3. Arcade Furniture Store, Fort Smith,
  Arkansas, All daily sales activity reports,
  including copies of deposit tickets for fiscal
  years ending January 31, 1956 thru January 31,
  1959, inclusive.
    "4. All work papers and supporting documents
  relating to bonus payments other than cancelled
  checks for fiscal years ending January 31, 1956
  thru January 31, 1959.
    "5. All records of memorandum charges to Harry
  N. Pollock paid by his personal check on First
  National Bank, dated January 30, 1957, for
  $5,129.89.
    "6. The original lease agreements between
  Pollock Stores Company, Inc., and the following
  lessee: (1) Hazel Beauty Clinic, Hazel Reynolds,
  (2) James L. Jacobs Liquor Store, (3) Stuart
  Wholesale Electric Co., M.E. Stuart, and any
  other lease agreements in effect during the above
  period."

On December 10, 1959, he issued and served a similar subpoena on the defendant, Jack Sobol, summoning him to appear on December 29, 1959, and produce for examination the following books, records and papers:

    "1. General office petty cash records,
  including vouchers, Pollock Stores Co., Inc., for
  period February 1, 1955, thru January 31, 1958.
    "2. General office accounts and notes
  receivable, including memo charges, Pollock
  Stores Co., Inc., for period February 1, 1955,
  thru January 31, 1958.
    "3. All daily sales activity reports Arcade
  Furniture Store, including copies of deposit
  tickets, for period beginning February 1, 1955,
  thru July 31, 1958.
    "4. All work papers and supporting documents
  relating to bonus payments by Pollock Stores Co.,
  Inc., other than canceled checks, for period
  beginning February 1, 1955, thru January 31,
  1958.
    "5. Purchase invoice register for period
  February 1, 1955, thru January 31, 1959."

On January 29, 1960, the Special Agent issued and served upon the defendant, Harry N. Pollock, a similar subpoena, summoning him to appear on February 11, 1960, and to produce for examination the following books, records and papers:

    "1. All general office petty cash records,
  including vouchers and paid invoices for the
  period February 1, 1954 through January 31, 1959.
    "2. All ledger sheets and supporting documents
  relating to the general office accounts and notes
  receivable, including memo charges, work papers,
  spreads, etc. for the period February 1, 1954
  through January 31, 1958.
    "3. All daily sales activity reports of Aracde
  Furniture Stores, Fort Smith, Arkansas, together
  with copies of all bank deposit tickets of Arcade
  Furniture Store for the ...

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