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Monday, October 17, 2011

This Day in Legal History--October 17th

“There is always someone tougher than you are.” –Anonymous

“… in this world nothing can be said to be certain, except death and taxes.” –Benjamin Franklin

There should be no doubt that Al Capone was a tough man. He ordered the death of Bugs Moran and his gang from the comfort of his Florida vacation home, an order that resulted in the infamous “St. Valentine’s Day Massacre” that left 7 men dead. “Scarface” Al was tough, but the Internal Revenue Service was tougher, and on this day in 1931 Al Capone was sentenced to 10 years imprisonment for tax evasion. The story of Al Capone’s reign of terror ending in charges more likely to be brought against a shady small businessman is interesting as tax stories go, and available, with primary documentation, on the IRS web site.

As one can imagine getting a conviction for anything against Al Capone, Public Enemy No. 1, would not be an easy thing. The fact that “Al Capone never had a bank account and only on one occasion could it be found where he ever endorsed a check,” financial evidence was scarce. Getting individuals to testify was also difficult as a result of “fear of personal injury” or loyalty. And finally the agents of the Treasury Dept. had to contend with Capone’s “native Italian secretiveness”. Convicting Al Capone of anything was going to be a challenge.

A key piece of evidence against Al was the testimony of three members of a citizens’ militia that raided one of his gambling joints. In the midst of the citizens’ raid Al shows up to find out what is going on. He is admitted to the premises only after telling the crowd that he is the owner and he is later heard instructing the cashier to secure the money in the cash drawer. With this evidence of his ownership of a gambling establishment the government proceeds to base a case for tax evasion. Al Capone owns a gambling establishment, he has made profits from said establishment, and has failed to pay taxes on these profits. Tax evasion!

Capone was convicted and did time in the federal prison on Alcatraz Island and was paroled in 1939. Suffering from advanced syphilis Capone died in 1947. As I said, this is interesting for a story related to taxation. What makes it more interesting that some of the original reports filed by the investigators of the Intelligence Unit of the Bureau of Internal Revenue are available on the IRS web site. To read these reports go here.

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