United States v. Winograd

656 F.2d 279 (1981)

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United States v. Winograd

United States Court of Appeals for the Seventh Circuit
656 F.2d 279 (1981)

Facts

Harold Brady was a prolific copper trader. In fall 1974, Brady sought means to reduce his tax liability. To that end, Brady hired the Siegel Trading Company (STC) to make commodity trades intended to defer certain tax payments that were otherwise due that year. Joseph Siegel (defendant), president of STC, and Alvin Winograd (defendant), vice president of STC, decided to proceed with a strategy in which they would place tax straddles on Mexican peso futures contracts on the International Monetary Market in Chicago. Although tax straddles were legal if performed on established commodities futures exchanges and through bona fide competitive trades, the federal government believed that Siegel and Winograd prearranged the tax straddles using noncompetitive trades between various STC employees. The federal government filed a criminal action against Siegel and Winograd for conspiracy to defraud the United States through impeding the collection of income taxes, aiding in the preparation of fraudulent tax returns, and entering into fixed and uncompetitive commodity futures transactions and wash sales. Siegel and Winograd were both convicted. On appeal, Siegel and Winograd argued that the government had the burden to prove that the peso transactions were effectively risk-free and that the government failed to meet this burden. In response, the government argued that the trades were risk-free because they were prearranged and thus that there was a guaranteed buyer and seller for Brady’s positions.

Rule of Law

Issue

Holding and Reasoning (Pell, J.)

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