Taxes: Bitter Victory

After eleven months of embarrassing headlines and two courtroom trials—the first of which ended in a hung jury—Manhattan Broker J. (for James) Truman Bidwell, 59, former chairman of the board of governors of the New York Stock Exchange, was last week acquitted of income tax evasion.

There were many in Wall Street who thought that Bidwell had been made a victim. The charges that the Government brought against Bidwell last February accused him and his wife of two major offenses: 1) deliberate failure to report $15,500 in capital gains from stock transactions in 1956; 2) overstating their business and charity deductions in 1956 and 1957 by $78,000. Well before his indictment, Bidwell had negotiated a settlement with the Internal Revenue Service under which he increased his 1956 and 1957 tax payments from $55,000 to $98,000. But the Government chose to prosecute him anyway on a charge of intent to defraud.

In his defense Bidwell said that he had failed to report the capital gains because his secretary forgot to include them in the worksheets which he used in preparing his returns. As for his deductions, Bidwell insisted that these were not excessive for a man earning some $200,000 a year. He also argued that the bulk of his business expenses and gifts to charity had not come out of current income at all but out of a $60,000 to $70,000 cash reserve that he and his wife had built up from family gifts dating back to their marriage in 1929. And though Government Attorney Stephen E. Kaufman argued that it was "inherently improbable" that anyone would keep so much of his wealth in cash, the jury obviously did not agree.

Bidwell himself professed delight with his acquittal "which vindicates my faith in the jury system.'' But the case left a bitter aftertaste. Each year, just as the public is settling down to fill out its federal income tax forms, the Internal Revenue Service, by what it insists is pure coincidence, brings tax evasion charges against someone prominent enough to ensure national publicity for the case.

Many Wall Streeters believe that Bidwell was chosen as the IRS pigeon for 1962—a suspicion reinforced by the fact that although the Government began investigating Bidwell's returns in 1958, it did not get around to asking for an indictment against him until after he became chairman of the N.Y.S.E.'s governors. Legally, all this was within the Government's rights, and legally Bidwell came out of the experience undamaged. But it was also true that a case which was not strong enough to convince a jury had obliged Bidwell to resign his Stock Exchange chairmanship.