The Net Worth Case

A man was indicted for wilfully attempting to evade his federal income taxes for 1947, 1948 and 1949 by reporting far less income than he actually received. At trial the government used the net worth method, calling 144 witnesses and introducing 368 exhibits about his business dealings and spending, and three government agents then summarised the evidence with calculations said to show his unreported income. But the only witnesses heard by the grand jury that indicted him had been those three investigating officers, none of whom had first-hand knowledge of the transactions. The defence argued that an indictment resting entirely on hearsay violated the Fifth Amendment's grand jury guarantee, so the charges should have been dismissed before trial.