(This is the fourth in a series of occasional articles on the historical role played by women in the field of taxation. The first article dealt with the role of taxation in the women’s suffrage movement. The second described the progress, or lack thereof, made by women in the profession of tax. The third profiled Ethel Ayres Purdie, the first licensed female accountant in the U.K.)
While in recent decades women have attained some of the highest government positions, one of the first to break through Washington’s glass ceiling took over the Justice Department’s tax division almost a century ago.
Mabel Walker Willebrandt’s rise to fame as a dogged pursuer of bootleggers and the lawyer who came up with the strategy that eventually put Al Capone behind bars was anything but presaged by the humble circumstances of her birth. She was born in 1889 in a sod dugout house in Woodsdale, Kansas, a prairie town that no longer exists. At 20, she married Arthur Willebrandt. The couple later moved to Los Angeles where Willebrandt taught elementary school to put herself and her husband through the University of Southern California (USC) law school. The combination of teaching, commuting, attending law school, doing household chores, and taking care of Arthur and his mother, strained the marriage to the point that Willebrandt moved out in 1916. The couple divorced in 1924.
In her final semester at USC, Willebrandt began working in police court handling “women’s cases,” involving mostly prostitutes. In the book, Mabel Willebrandt, A Study of Power, Loyalty, and Law (1984), biographer Dorothy M. Brown wrote that Willebrandt averaged over 50 cases a month, and became so disgusted with the lack of effort made to apprehend the prostitutes’ customers that “she began to take advantage of a court procedure that allowed the defendant to request a jury trial in which the appearance of the ‘john’ involved could be required.” According to Brown, the resulting increase in court costs caused the police court judges to gradually change their procedures.
Off to Washington
In 1918 Willebrandt was appointed chair of a local legal advisory board that reviewed claims of conscientious objector status and other pleas for exemption from military service during World War I. As a progressive Republican, she became active in her party’s causes. The combination of her work ethic and party activism led to a 1921 appointment as assistant attorney general in the Warren G. Harding administration.
Willebrandt’s new responsibilities included control over federal income and estate tax cases, federal prison management, and enforcement of the 1919 National Prohibition Act (the Volstead Act). At 31, Willebrandt became the second woman to ever serve as an assistant attorney general and the first to head the Justice Department’s tax division.
In 2010 Jasper L. Cummings, Jr., of Alston & Bird LLP and Alan Swirski of Skadden, Arps, Slate, Meagher & Flom LLP did an “interview” with Willebrandt that was published in the ABA Section of Taxation News Quarterly. (Cummings told Tax Notes that he and Swirski occasionally did interviews for the publication with prominent people who were no longer alive, using quotes from previously published sources. Willebrandt died in 1963 of lung cancer.) Asked why she had been appointed to enforce the Volstead Act, Willebrandt replied that nobody else in the Justice Department wanted the job.
When Willebrandt started her job, she had three assistants. Eight years later, she had over 100 with many times that number in the field, according to Brown.
The income tax cases that Willebrandt argued in the early 1920s were primarily related to Prohibition. By 1925 Willebrandt started representing the government in tax cases before the U.S. Supreme Court, especially when the issue represented either a new interpretation of existing law or an extension of a previous statute. “In the [ Edwards v. Chile Copper Co. ] case (270 US 452, 1926), she convinced the court that a $90 million holding corporation engaged in financing its subsidiaries was at least ‘a sentient form of corporate life’ and therefore subject to capital stock tax,” Brown wrote.
In 1928 the high court agreed with Willebrandt’s position that gains realized by shareholders after receiving distributions of assets out of the earnings and profits of a dissolved corporation were taxable, and not exempt dividends as claimed by the taxpayers ( Hellmich v. Hellman, 276 U.S. 233).
Successes notwithstanding, Willebrandt took setbacks personally. In 1928, a year in which the tax division handled 226 appeal cases, Willebrandt wrote her parents to say that she had suffered a “solar plexus blow about a part of my own work in which I have taken a great deal of pride.” The comment came after a circuit court judge who had previously worked for Willebrandt sent her a letter saying that her division had submitted a shoddy brief and handled a case poorly. “It would be possible for any [assistant attorney general] to have his name emblazoned on the outside of a brief and if that brief were poor, and the [government] lawyer sent out to argue presented it inadequately, no one would give the matter more than a shrug, but my name attracts notice and comment,” Willebrandt wrote, according to Brown.
Dastardly Evasion of Taxes
While Willebrandt gained fame primarily because of her pursuit of rumrunners, she said in the ABA interview that 50 percent of the division’s time was spent on tax cases. “Of course, there is a substantial overlap between the two because one of the chief vices of the bootlegger is the dastardly evasion of taxes,” she said.
In one case, frustrated with the difficulty involved in pursuing cases directly under the Volstead Act, Willebrandt sent federal agents to collect evidence that the Haar family of Savannah, Georgia, was using fast boats to transport Bahamian and Scottish alcohol into the Georgia swamps. Willebrandt dispatched 58 agents to protect witnesses and jurors from intimidation during the Haars’ tax-evasion trial. All gang members were convicted on November 24, 1922. “Wonderful news making a real Government Thanksgiving,” Willebrandt wrote in a telegram to the lead prosecutor in the case.
In his book, One Summer: America, 1927, Bill Bryson addresses Willebrandt’s decision to use the tax code to go after bootleggers. “Prosecuting criminals for tax evasion is such a common ploy now that it is easy to overlook how brilliantly original — how stunningly out of left field — the idea was when she first came up with it. Many judicial authorities thought it was completely insane.”
Judge Martin Thomas Manton of the Second Circuit Court of Appeals said in Steinberg v. United States (14 F.2d 564, 569 (2d Cir. 1926)), a case in which Willebrandt employed the tactic, that it was difficult to accept that Congress had ever intended to receive taxes from a criminal operation. “It is incredible to believe that it was intended that a bootlegger be dignified as a taxpayer for his illegal profit, so that the government may accept his money for governmental purposes, as it accepts the money of the honest merchant taxpayer,” Manton said.
The case that ultimately settled the issue involved Manly Sullivan, an attorney in Charleston, South Carolina, who ran a lucrative side business as a bootlegger. When the federal government prosecuted Sullivan for tax evasion, he argued before the lower courts that his Fifth Amendment rights against self-incrimination would be violated if he were forced to report his illegal income on a tax return.
The Second Circuit Court of Appeals ruled that although income from illegal activities such as rumrunning was taxable, Sullivan was protected from prosecution under the Fifth Amendment for failing to file a tax return that would have disclosed his illegal activities (15 F.2d 809 (4th Cir. 1926), rev’d, 274 U.S. 259 (1927)). “As a practical matter, this decision evidently meant that the government could collect taxes from a bootlegger if it could prove, without aid from him, how much income he received, but that no criminal penalties could be imposed unless he filed a demonstrably false return instead of none at all,” wrote Boris J. Bittker, a professor of law at Yale University, in 1974 (see Bittker, “Taxing Income From Unlawful Activities,” 25(1) Case Western Reserve Law Review (1974)).
Willebrandt appealed the decision to the Supreme Court in United States v. Sullivan , 274 U.S. 259 (1927). The outcome set the stage for bringing Al Capone to book in 1931, when the notorious gangster was sentenced to 11 years in prison. “Thanks to United States v. Sullivan, Al Capone’s days were numbered, though neither he nor almost anyone else realized it yet,” Bryson wrote.
“We see no reason . . . why the fact that a business is unlawful should exempt it from paying the taxes that, if lawful, it would have to pay,” wrote Justice Oliver Wendell Holmes. “It would be an extreme if not an extravagant application of the Fifth Amendment to say that it authorized a man to refuse to state the amount of his income because it had been made in crime. But if the defendant desired to test that or any other point, he should have tested it in the return so that it could be passed upon. He could not draw a conjurer’s circle around the whole matter by his own declaration that to write any word upon the government blank would bring him into danger of the law.”
Mixing Religion, Politics, and Booze
Willebrandt’s crusading enforcement of the Volstead Act made her the most famous and controversial woman in the country by 1928, according to Brown. Perhaps her most highly publicized assault on the illegal trade in alcohol came in June of that year, when she sent 160 federal agents to raid a score of nightclubs in midtown Manhattan. The raids dovetailed neatly with the 1928 election campaign of Republican presidential candidate Herbert Hoover, who was running against Democratic candidate Al Smith, the Catholic New York governor and staunch opponent of Prohibition.
Given Willebrandt’s high profile, the Republicans sent her out on the hustings in support of Hoover, who was a “dry” when it came to Prohibition. In campaign speeches to Protestant church groups, Willebrandt attacked Smith for New York’s failure to enforce Prohibition laws. Following the speeches, Democrats accused Willebrandt of being anti-Catholic — a charge she denied (she converted to Catholicism later in life) — and Smith hung the nickname of “Prohibition Portia” on her.
“She prosecuted bootleggers and, for her efforts, was named ‘Prohibition Portia’ by politicians and the press,” said Kathryn Keneally, who served as head of the tax division of the Justice Department from 2012 to 2014 (see Keneally, “From Clique to Community: The Power of Inclusion,” 68(2) Tax Lawyer (2015)). “Apparently, a fictional Shakespearean character who was not actually a lawyer was the best female role model for the time,” Keneally said.
A few months after the presidential election, Willebrandt resigned her post. She was disappointed by Hoover’s failure to publicly come to her defense, and her efforts to be nominated to the federal courts had come to naught. “Eventually, the opposition of the wets kept me from being appointed as the first female federal judge,” she said in the ABA interview.
Private Practice
Willebrandt then went into private practice. An early client was Fruit Industries Ltd. She did groundbreaking legal work for firms in the fledgling fields of radio and aviation and for years represented some of the biggest names in the film industry back in California, including Metro-Goldwyn-Mayer and the Screen Directors Guild.
In 1950 Willebrandt drafted a loyalty oath for the Screen Directors Guild amid the “red scare” Communist hysteria in the film industry. Brown wrote that Willebrandt later wrote to a friend that a law firm in a 1956 court case involving Warner Bros. was a “very pinko law firm.”
While venturing into law beyond taxation, Willebrandt continued to handle tax disputes on behalf of private sector clients. In a 1932 speech to the Nebraska State Bar Association, she described her changed perspective on tax law now that she was no longer in government service. “In those days, the Treasury Department was my client, and I was inspired and zealous with a patriotic fervor to insist that the taxpayer must fully and completely meet his tax obligation to his country,” Willebrandt said.
In her speech, Willebrandt advocated for a constitutional limit to be placed on taxes to rein in congressional spending. “A check on the mad rush of Congress to spend is the fundamental solution for high taxes,” she said.
Brown wrote that one of Willebrandt’s more notable tax cases involved the widow of an executive of Royal Dutch Shell. The woman had been advised by her lawyer at Goldman Sachs that there would be an estate tax liability of at least $1 million on her husband’s Shell stock and other holdings. The widow asked Willebrandt for a second opinion. “In typically thorough and practical fashion, Willebrandt checked with the Dutch consulate in San Francisco for a briefing on Dutch law and discovered that, at the pledge of the marriage vows in Holland, the husband’s property automatically becomes the wife’s and the wife’s holdings automatically belong to the husband,” Brown wrote. “A surviving spouse cannot inherit what she already owns.”
Impressed by Willebrandt’s work, Goldman Sachs flew her to New York to give a seminar to its legal staff. “Willebrandt’s advice to the chagrined lawyers and her friends in California was succinct: ‘If you marry again, marry a Hollander,’” Brown wrote.
Had She Worn Trousers
Willebrandt resigned her job as assistant attorney general in 1929. It was 60 years before another woman, Shirley Peterson, was appointed to head up the Justice Department’s tax division.
According to Brown, Willebrandt reflected publicly on her career during a 1923-1924 series of law lectures at the Brooklyn Institute. “When you reach a place of measurable success in business or professional life, the curiosity makes you like being a circus performer walking a tightrope at the top of the tent, and every step of the trip is a fight against insistent influences that try to sidetrack you, minimize your worth, and make you angry,” Willebrandt said.
Among the “insistent influences” that might have angered Willebrandt were comments on her fashion preferences. Brown wrote that Willebrandt’s choice of wardrobe was a key device in her efforts to separate her professional and personal roles. “In the office or in court appearances, she dressed in dark, tailored suits with a carefully selected blouse softening the effect,” Brown wrote. “For her Supreme Court appearances, she added a black pin-striped suit, observing with a chuckle as she joined her male colleagues in their matching pinstripes that she was now ‘in uniform.’”
Burton Peretti discussed Willebrandt’s role in the 1928 Manhattan nightclub raids in his 2013 book, Nightclub City: Politics and Amusement in Manhattan. Peretti wrote that journalists of the era “applied standard gender rhetoric” to Willebrandt and her career. He quoted from an unnamed magazine that described Willebrandt as someone who “would have been content to play woman’s biggest role . . . if she had been happily married.”
Peretti said that The New Yorker “lapsed into trite sexism” by writing that “though she dislikes to think so, Mrs. Willebrandt is essentially feminine. At her office she wears tailored suits, at home filmy things.”
While Brown’s almost relentlessly positive biography represents the single most extensive source of information about Willebrandt, some other historians have taken a more balanced view of her career.
In a review of Brown’s book, Anne Firor Scott, professor of history at Duke University, said the book “provides an unusually good example of how an able woman could get ahead — and when she was likely to hit the ‘glass ceiling’ — in the first decade after suffrage” (see Scott, “Mabel Walker Willebrandt: A Study of Power, Loyalty, and Law,” 16(2) Western Historical Quarterly (1985)).
While the glass ceiling metaphor is perhaps the overarching theme of Brown’s book, little has been said about Willebrandt passing through the “revolving door” that separates the public and private sectors, and which is frequently criticized for exemplifying the overly cozy relationship between government officials and the businesses they regulate.
At least one writer took a dim view of Willebrandt’s first job after leaving government service. “The lawyer who devised the idea of going after criminals like Al Capone on the grounds of tax evasion . . . took a high-paying job as chief counsel for Fruit Industries Limited, a California company that grew grapes and was well known for helping people make wine at home,” wrote Bryson. “This made Willebrandt look like a hypocrite (which indeed she was) and contributed in a small but psychologically significant way to expediting the end of Prohibition.”
In a 1985 review of Brown’s book, Norma Basch tried to put Willebrandt’s career and accomplishments into perspective (see Basch, “Mabel Walker Willebrandt; A Study of Power, Loyalty, and Law by Dorothy M. Brown,” 90(1) American Historical Review (1985)). “Willebrandt is significant not so much because her career happened to converge with some of the major legal and political currents of her time, but largely because she was one of a handful of women to thrive in the upper echelons of government and the legal profession,” Basch wrote. “It is the matter of gender that transforms her moderately interesting career into an extraordinary one and provides the interpretive challenge for her biography.”
In a 1986 review, Clemson University history professor John W. Johnson wrote that Brown wasn’t sufficiently critical of Willebrandt for her handling of the religious issue in the 1928 presidential campaign and for her “red-baiting” in the McCarthy era (see Johnson, “Mabel Walker Willebrandt: A Study of Power, Loyalty, and Law by Dorothy M. Brown,” 48(2) The Historian (1986)). “In fact, the author finds it very difficult to find fault with anything Willebrandt did,” Johnson wrote. “Willebrandt was an impressive legal figure, a pioneer in several senses of the word, but even she does not merit a hagiography.”
While Willebrandt might not have deserved sainthood, chief judge of the U.S. District Court for the District of Columbia from 1971 to 1974 John J. Sirica, a lifelong friend and prominent jurist who played an instrumental role in the Watergate investigation, said that but for her gender, Willebrandt might have reached the pinnacle of U.S. politics. “If Mabel had worn trousers, she could have been president,” he said.