Costello v. United States

The Defendant, Frank Costello, was indicted for willfully attempting to evade payment of income taxes to the federal government for three consecutive years. The charge was that the Defendant falsely and fraudulently reported less income than he and his wife actually received. The Defendant filed a motion for inspection of the minutes of the grand jury and for a dismissal of the indictment. His motion was based on an affidavit stating that he was firmly convinced that there could have been no legal or competent evidence before the grand jury which indicted him since he had reported all his income and paid all taxes due. The motion was then denied. At the subsequent trial, the government offered evidence to show increases in the Defendant’s net worth in an attempt to prove that he had gotten more income during the years in question that he had reported. The government introduced 368 exhibits and 144 witnesses. The prosecution ended its case by calling three government agents. Their investigations had produced the evidence used against the Defendant at trial. They were allowed to summarize the large amount of evidence already heard and to introduce computations showing, if correct, that the Defendant and his wife received far more income than they had reported.

At trial, the Defendant’s counsel asked each government witness whether he had appeared before the grand jury which returned the indictment. This was to develop the fact that the three investigating officers had been the only witnesses before the grand jury. The Defendant then moved again to dismiss the indictment on the ground that the only evidence before the grand jury was hearsay since the officers had no first hand knowledge of the transactions upon which the computations were based. The Defendant contended that his indictment from the grand jury violated his rights under the Fifth Amendment since it was based solely on hearsay.