Lessons From the Past
Last month marked my 50 years as a member of the California Bar. In the course of those years there were events that need to be told for the benefit of younger lawyers and citizens. The Founders pointed out the danger to freedom governments can be. Here are two examples that crossed my path. The first involved Harry Margolis, a tax lawyer the Bar will be talking about for a long time. The second involves an attorney named Robert Stanley. At first it appears to be a case of an attorney being too close to criminal clients, and being convicted and sentenced to six years in the federal penitentiary. That is the way I thought it was until 30 years later when I, by chance, learned the real story.
The Indomitable Harry Margolis
Margolis was the most flamboyant tax lawyer the nation has ever known. Some lawyers have called him the father of tax planning, but not in the view of the IRS. He was a thorn in their side and they were determined to get rid of him. He had many famous people as clients like Nat King Cole and others in the Hollywood crowd. The IRS organized a task force and they told me they had as many as 50 agents against Margolis. They then brought in the criminal division, and brought forth 34 indictments against Margolis. They made a big fanfare about their indictments in the national newspapers, that it was "a great breakthrough" after years of investigation. They brought out special prosecutors from the East to make certain to get Margolis after all their work. The trial was in San Francisco and lasted months. Margolis defended himself. Many of the charges against Margolis were dismissed by the judge after the prosecution rested. The rest went to the jury. The jury found Margolis not guilty on all charges.
It was a humiliating defeat, but the prosecution would not give up. After some years they indicted Margolis again but for only 12 counts this time. The indictments were all felony tax crimes. Again Margolis defended himself. This time the entire case never went to the jury. The court said they failed to make out a case and all charges were dismissed. At that time, Margolis was diagnosed with brain cancer and died shortly thereafter.
I had worked for Margolis for a year and then he fired me. I had criticized his tax planning as being flawed. I was talking about the civil side. No criminal charges were pending at that time. In time the civil side proved his downfall. It was unsound, but not criminal. The IRS came to me and asked me to help them against Margolis in their criminal case, as I knew his system. I said NO because I did not believe he had done anything criminal. He was aggressive but still within the law. I told them I thought he would win. The government spent millions of taxpayer funds to get Margolis, but his indomitable spirit was too much for them, even with all their power.
Criminal Defense Lawyers Beware
Robert Stanley was drafted in the 1950s and got assigned to the JAG Corp doing criminal defense work. After the army, he went on to law school at USC, and was attracted to defense work. You could say he was too successful for the Justice Department, which wanted to put him out of business. They charged him with corrupting a witness by zealously coaching him too much. He was tried in Los Angeles and found not guilty in a trial before a judge acting as his own attorney. But the prosecutors were not satisfied. They were determined to get Stanley, by hook or crook. Two men with a packet went to Stanley's office and offered to pay him $2000 to deliver the package to a bank in Chicago. He agreed. The next day he flew to Chicago. As he got off the plane he was arrested by FBI agents. The packet was filled with securities that had been stolen. He was charged with transporting stolen property across state lines. He tried to defend himself with a judge trial, but this time unsuccessfully. He was sentenced to six years in the federal penitentiary. But that is not the whole story, which I learned about 30 years later from a friend of mine going back to the 4th grade. He had been a deputy sheriff in Los Angeles just retired. He told me the story of a sting operation against an attorney, not knowing I knew about the attorney and the other side of the story.
What had really happened was a sting operation with the prosecution manufacturing a crime that did not exist the essence of entrapment. The thieves had been caught and the stolen securities were in police custody. They then hatched the plan to give the securities back to the thieves and have them take the stolen securities to Stanley for him to take them in a package to Chicago where he would be arrested. The thieves would then be given a light sentence for their part in the sting. Most of the deputies knew the real story.
I knew Stanley from high school. I was the Best Man at his wedding. He asked me to review the transcript of his trial. I could not find any basis for a new trial. I was unaware the whole thing was a set-up. I did check with Chicago attorneys and they said do not try a case in Chicago without local lawyers.
This ended his legal career but also his political career as he had run for Congress. He looked after family affairs, was involved in some business ventures in the end not too successful. He moved to Vermont living a pastoral life with a serious heart condition and died.
Thus ended two of the most unusual cases in my legal career. The lessons to be learned are frightening – that the government can turn on a citizen they do not like and destroy that person, and there is no remedy for their misdeeds. Citizens beware!
April 6, 2007