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The United States subsequently presented additional evidence to the grand jury, and an eight-count Superseding Indictment was filed on October 1, 1990 . On May 3, 1991 , Pollen entered a plea of guilty in the United States District Court for the District of New Jersey to Counts One, Two, Three, and Five of this Superseding Indictment. Each of these four counts charged Pollen with attempting to evade and defeat payment of his personal income taxes for the same group of seven years: 1967, 1970, 1972 through 1975, and 1982. In return for Pollen's guilty plea on these counts, the government moved to dismiss Counts Four, Six, Seven, and Eight of the Superseding Indictment and Count One of a related indictment, the only count of that indictment in which Pollen was named.

Count One of the Superseding Indictment charged that on or about April 8, 1984, Pollen knowingly and willfully attempted to evade the payment of more than $400,000 in federal income taxes for the years 1967, 1970, 1972 through 1975, and 1982 by "placing part of his assets out of reach of the United States Government by causing approximately $690,000 in gold to be brought to the Swiss Bank Corporation, Toronto, Canada, with instructions to further transfer the gold to a nominee account" in Switzerland. When pleading guilty to this count Pollen admitted that he owned this gold, that at the time of the transfer he knew that he owed substantial taxes to the IRS, and that he made this transfer in an attempt to evade payment of these taxes. Supplemental Appendix (" S.A. ") at 017-018.

Count Two charged that on or about June 12, 1984 , Pollen attempted to evade taxes owed for the same seven tax years through transporting an additional $285,000 to the Swiss Bank Corporation in Toronto , Canada , with instructions that it be transferred to the nominee account in Switzerland . In pleading guilty to this count Pollen admitted that he owned this gold and that he made the transfer for the purpose of evading taxes that he knew he owed to the IRS. S.A. at 018-019.

Count Three charged that between October 5, 1981 , and December 18, 1984 , Pollen attempted to evade and defeat the payment of taxes due for the same seven years by engaging in a continuous scheme and course of conduct to conceal assets from the IRS. In pleading guilty to this count Pollen admitted that as part of this course of conduct he used currency, money orders, and cashiers checks to buy assets and pay expenditures and that he used nominees to conceal his expenditures. ⁶ Pollen also admitted that when he engaged in this course of conduct he knew that he owed the federal government substantial taxes and he conducted these transactions in this manner for the purpose of evading their payment. S.A. at 019-021.

Finally, Count Five charged that on or about August 22, 1990, Pollen attempted to evade and defeat the payment of his taxes owed for the identical seven years through placing assets out of the reach of the United States "by maintaining more than $350,000 in gold bars and coins, jewelry, and gems in safety deposit boxes at the First Union National Bank of North Carolina" under a fictitious name. When pleading guilty to this count Pollen admitted that he owned these assets and that he placed them in the safety deposit boxes specifically for the purpose of evading the payment of taxes that he knew he owed. ⁷ S.A. at 021-022.

Prior to sentencing, Pollen objected to his presentence report's calculation of the amount of tax that he owed and its recommended four-level Sentencing Guideline offense level increase for Count Five, intended to reflect his leadership role in that offense. Both parties presented evidence concerning the disputed sentencing issues at a three-day sentencing hearing held July 29-31, 1991 . Evidence also was presented indicating that the IRS has not yet recovered all of Pollen's secreted assets, particularly those hidden in other countries. ⁸ At the close of this hearing, the district court imposed a sentence of five years imprisonment for Count Five, the sole Guidelines count. This sentence was based on a Sentencing Guideline calculation of an adjusted offense level of 23 and a criminal history level of 3, which produced a guideline sentence range of 57-71 months. ⁹ On this count Pollen was also sentenced to a three-year term of supervised release, with special conditions including restrictions on international travel, the repayment of all taxes and the payment of interest, penalties, a fine of $75,000, and a special assessment of $50. The court imposed sentences of five years for each of Counts One, Two, and Three to run concurrently with each other and consecutively with the sentence imposed for Count Five. A special assessment of $50 was also imposed on Count Three.

On August 12, 1991 , Pollen filed a notice of appeal from this sentencing determination. We have jurisdiction over this appeal from a sentence imposed in a criminal case by virtue of 28 U.S.C. §1291 and 18 U.S.C. §3742(a) & (e). Our review of the district court's application and interpretation of the Sentencing Guidelines is plenary. United States v. Murillo, 933 F.2d 195, 197 (3d Cir. 1991). Factual findings concerning sentencing issues are subject to clearly erroneous review, and if "a judicial finding involves mixed questions of law and fact, the standard and scope of review takes on greater scrutiny, approaching de novo review as the issue moves from one of strictly fact to one of strictly law." Id. at 198.

II.

Pollen first contends that the four counts to which he pleaded guilty were impermissibly multiplicitous. ¹⁰ A multiplicitous indictment charges the same offense in two or more counts and may lead to multiple sentences for a single violation, a result prohibited by the Double Jeopardy Clause. See United States v. Stanfa, 685 F.2d 85, 86-87 (3d Cir. 1982). The interest protected by the Double Jeopardy Clause in this multiple punishment context is confined to "ensuring that the total punishment did not exceed that authorized by the legislature." Jones v. Thomas, 491 U.S. 376, 381, 109 S.Ct. 2522, 2525 (1989). According to Pollen, Counts One, Two, Three, and Five each charge the same offense: evasion of the payment of taxes for the identical group of seven years. ¹¹ As a result, Pollen maintains, he has received multiple punishment for the same offense, in violation of the Double Jeopardy Clause. ¹²

In response, the government first argues that because Pollen did not enter either a conditional guilty plea or a plea of nolo contendere under Rule (a) of the Federal Rules of Criminal Procedure, he is barred from pressing a Double Jeopardy challenge to his sentences on appeal. By pleading guilty, in the government's view, Pollen waived his right to appeal any alleged multiplicity of the sentences imposed. We disagree.

The Supreme Court, addressing this question of whether a Double Jeopardy claim of multiple punishment is barred by a defendant's guilty plea, has explained that

[j]ust as the defendant who pleads guilty to a single count admits guilt to the specified offense, so too does a defendant who pleads guilty to two counts with facial allegations of distinct offenses concede that he has committed two separate crimes.

United States v. Broce, 488 U.S. 563, 570, 109 S.Ct. 757, 763 (1989) (emphasis added). Consequently an accused advised by competent counsel who enters a voluntary and intelligent guilty plea may not bring a collateral Double Jeopardy challenge to the sentences subsequently imposed. Id. at 574, 109 S.Ct at 765. The Court noted, however, that there is an exception to this rule if the defendant's claim of multiplicity can be proven by reference solely to the indictment and existing record. Id. at 574-76, 109 S.Ct. at 765-66.

Broce thus establishes the principle that a defendant who pleads guilty to a criminal charge may subsequently assert a claim of multiple punishment in violation of the Double Jeopardy Clause "only if the violation is apparent on the face of the indictment or record." Taylor v. Whitley, 933 F.2d 325, 328 (5th Cir. 1991) (collateral attack on a guilty plea). See also United States v. Makres, 937 F.2d 1282, 1286 (7th Cir. 1991) (same); United States v. Quinones, 906 F.2d 1924, 1927 (2d Cir. 1990) (explaining, in the context of a direct appeal from a guilty plea, that "the test that apparently emerges from Broce seems to turn on whether the claim of Double Jeopardy may be adjudicated on the face of the record or requires supplemental evidence"), cert. denied, 111 S. Ct. 789 (1991); United States v. Montilla, 870 F.2d 549, 552-53 (9th Cir. 1989) (applying principle of Broce in a direct constitutional challenge to a guilty plea). If an indictment does not raise Double Jeopardy concerns on its face, and the defendant who has pleaded guilty would only be able to demonstrate a Double Jeopardy violation through an evidentiary hearing, then such claim, whether brought by collateral attack or direct appeal, must be rejected. See Dermota v. United States , 895 F.2d 1324, 1326 (11th Cir.) (collateral attack on guilty plea), cert. denied, 111 S.Ct. 107 (1990); Montilla, 870 F.2d at 552-53 (direct appeal from guilty plea).

In this case, Pollen asserts that the defect in his indictment is apparent on its face and that the legality of his sentences can be determined from the existing record. We will, therefore, examine the record to determine if Counts One, Two, Three, and Five are impermissibly multiplicitous, i.e., does Pollen's indictment in fact charges the identical offense in several counts.

Neither party disputes that it would have been proper to charge Pollen, in separate counts, with attempting to evade taxes for each of the seven years specified in his indictment. See, e.g., United States v. Minker [63-1 USTC ¶15,458 ], 312 F.2d 632, 636 (3d Cir. 1962), cert. denied, 372 U.S. 953, 83 S.Ct. 952 (1963). It is also permissible under section 7201 to charge tax evasion covering several years in a single count as a "course of conduct" in circumstances "where the underlying basis of the indictment is an allegedly consistent, long-term pattern of conduct directed at the evasion of taxes for these years." United States v. Shorter [87-1 USTC ¶9127 ], 809 F.2d 54, 58 (D.C. Cir.), cert. denied, 484 U.S. 817, 108 S.Ct. 71 (1987). Pollen's indictment, however, raises a unique question: whether a defendant can be charged and punished separately for several distinct affirmative acts of evasion committed with regard to taxes owed for the identical set of years.

To adjudge whether the counts of Pollen's indictment properly charge separate offenses we must ascertain the allowable unit of prosecution under the relevant statutory provision, section 7201 . See, e.g., United States v. Langford, 946 F.2d 798, 802 (11th Cir. 1991), cert. denied, 112 S.Ct. 1562 (1992). We have explained that the basic inquiry in this process

is whether proof of one offense charged requires an additional fact that proof of the other offense does not necessitate. . . . Also of central importance is whether the legislature intended to make separately punishable the different types of conduct referred to in the various counts.

Stanfa, 685 F.2d at 87 (quoting United States v. Carter, 576 F.2d 1061, 1064 (3d Cir. 1978)). In practice, the second inquiry is usually determinative of the multiplicity question. Id. Accord United States v. Cooper, 966 F.2d 936, 942 (5th Cir. 1992) (in determining the allowable unit of prosecution for a statutory provision, the "task is to discern Congress' intent by looking first to the plain language of the statute and then to legislative history and the overall statutory scheme of which it is a part"). Indeed, the Supreme Court has emphasized that "[i]t is Congress, and not the prosecutor, which establishes and defines offenses." Sanabria v. United States , 437 U.S. 54, 69, 98 S.Ct. 2170, 2181 (1978). Whether "a particular course of conduct involves one or more distinct 'offenses' under the statute depends on this congressional choice." ¹³ Id. at 70, 98 S. Ct. at 2182.

In this case the offense charged is tax evasion, in violation of 26 U.S.C. §7201 . To identify the congressionally intended units of prosecution for this offense, we first look to the language of this statute. See Cooper, 966 F.2d at 942; United States v. Song, 934 F.2d 105, 108 (7th Cir. 1991). If this language is ambiguous, we will look next to the provision's legislative history. See Song, 934 F.2d at 108. Finally, if the legislative history sheds no light on Congress' intended units of prosecution, we will apply the rule of lenity. See United States v. Marino, 682 F.2d 449, 455 (3d Cir. 1982). Under this rule, when ambiguity in a criminal statute cannot be clarified by either its legislative history or inferences drawn from the overall statutory scheme, the ambiguity is resolved in favor of the defendant. Id. (citing Rewis v. United States, 401 U.S. 808, 812, 91 S.Ct. 1056, 1059 (1971)).

Section 7201 provides, in relevant part:

Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall . . . be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 . . . or imprisoned not more than five years, or both, together with the costs of prosecution.

26 U.S.C. §7201 .

In support of the contention that his indictment is multiplicitous, Pollen emphasizes the phrase "evade or defeat any tax imposed." In his view, this language evidences the section's focus on the evasion of a specific tax, rather than on the willful attempt or attempts to evade that tax. Simply put, according to Pollen, the allowable unit of prosecution is the tax year. It is irrelevant whether the government proves one or multiple attempts to evade: section 7201 is intended to punish the evasion of any tax, and the precise attempts made to evade the tax are irrelevant for the purposes of punishment. Through charging in distinct counts several specific acts of evasion of the taxes owed for an identical group of years, Pollen contends, the government has arbitrarily and impermissibly splintered the crime of tax evasion into potentially innumerable offenses.

We cannot agree that Congress intended section 7201 's phrase "any tax" to be elevated in importance above the rest of that provision. There is nothing in the language of this section to indicate as much. In fact, when considered in its entirety, the language of section 7201 is straightforward: it prohibits "willful attempts in any manner to evade or defeat any tax." It proscribes "attempts" to evade or defeat any tax and thus speaks in terms of the act of evasion, as well as the taxes evaded. Cf. United States v. Coiro, 922 F.2d 1008, 1014-15 (2d Cir.) (ascertaining the allowable unit of prosecution under 18 U.S.C. §1510(a)), cert. denied, 111 S.Ct. 2826 (1991). Indeed, an affirmative act of evasion is an element of a section 7201 violation. See Sansone v. United States [65-1 USTC ¶9307 ], 380 U.S. 343, 351, 85 S.Ct. 1004, 1010 (1965) (the elements of a section 7201 violation include willfulness, the existence of a tax deficiency, and an affirmative act constituting an evasion or attempted evasion of the tax). Thus the offense of tax evasion can be completed when a person willfully "attempts in any manner" to evade or defeat income tax. See United States v. McGill [92-1 USTC ¶50,268 ], 964 F.2d 222, 230 (3d Cir. 1992) (the offense of tax evasion "is complete when a single willful act of evasion has occurred"); United States v. Kirkman, 755 F.Supp. 304, 306 (D. Idaho 1991) (concluding, for statute of limitations purposes, that tax evasion is not a continuing offense). See also Norwitt v. United States [52-1 USTC ¶9252 ], 195 F.2d 127, 133-34 (9th Cir.) (tax evasion is not a continuing offense), cert. denied, 344 U.S. 817, 73 S.Ct. 11 (1952). The plain language of this section, therefore, evinces the congressional intent to allow distinct, significant, affirmative acts of tax evasion to constitute separate section 7201 offenses. ¹⁴

In this case, Pollen made several international transfers of hundreds of thousands of dollars and secreted equally valuable assets in the United States , in attempts to evade payment of his taxes owed for a total of seven tax years. During his guilty plea colloquy Pollen admitted that at the time of these actions he knew that he owed substantial taxes and willfully undertook these actions in order to avoid their payment. However, Pollen repeatedly emphasized that although he was aware that he owed substantial taxes at the time of this conduct, he did not know for which years he owed which portion of the taxes he was attempting to evade. Logically, then, on the facts of this case it is clear that Pollen attempted to evade all of the taxes he owed for the group of years in question through the several significant affirmative acts of evasion charged in the counts to which he pleaded guilty. Under these circumstances, where the acts of evasion charged in each count involve funds far greater than the taxes owed for any particular year, and, as Pollen himself indicated, each act was intended to evade payment of all taxes owed, not merely those owed for a particular year, we conclude that section 7201 permits a unit of prosecution based on separate significant acts of evasion. Each willful attempt to evade taxes that involves funds of an amount that cannot logically be broken down and classified as relating to a particular tax year is an allowable unit of prosecution under the plain language of this section and so can be separately charged as evasion of the taxes owed for a group of tax years. Pollen's indictment, therefore, is not impermissibly multiplicitous, and his claim pressed under the Double Jeopardy Clause fails. ¹⁵

We agree with the government that the unit of prosecution we recognize in this opinion is particularly appropriate in a case charging tax evasion committed through the evasion of payment. ¹⁶ In cases charging evasion of the assessment of tax, the alleged fraudulent action of a defendant often directly affects assessment for a particular tax year. ¹⁷ Consequently, it is logical in that type of case to charge attempts to evade the assessment of taxes for distinct years in separate counts. Evasion of payment cases, however, stand in sharp contrast to evasion of assessment cases. A defendant attempting to evade payment of taxes may, as in this case, engage in transactions designed to conceal assets from the IRS in an attempt to evade the payment of taxes due for a number of years. As a result in evasion of payment cases it is logical to charge distinct, significant attempts to evade the payment of tax for the same group of tax years in separate counts.

Finally, we emphasize that our holding is circumscribed by the facts of this case: that for taxes owed for the years 1967, 1970, 1972 through 1975, and 1982, Pollen attempted to evade payment in April 1984 by transferring gold through Canada to Switzerland (Count One); he attempted to evade payment in June 1984 by transporting an additional $285,000 through Canada to Switzerland (Count Two); he attempted to evade payment between October 5, 1981, and December 18, 1984, by using currency, money orders, and cashiers checks to buy assets and pay expenditures and by using nominees to conceal his expenditures (Count III); and he attempted to evade payment in August 1990 by placing gold bars, coins, jewelry, and gems in safety deposit boxes in North Carolina under a fictitious name. ¹⁸ The unit of prosecution which we have recognized does not encompass the charging of a number of separate acts of evasion of a single year's taxes in distinct counts. We do not, therefore, need to reach the much more difficult question of whether the language of section 7201 would support the splintering of the offense of tax evasion into a number of attempts greater than the number of calendar years for which taxes were evaded. ¹⁹

III.

Pollen next contends that the district court erred in calculating the sentence imposed for Count Five, ²⁰ the only count governed by the United States Sentencing Guidelines. Chapter 3, Part B of the Sentencing Guidelines permits a sentencing court to adjust a defendant's offense level in relation to the role that defendant played in committing the offense in order to reflect the defendant's culpability. ²¹ See U.S.S.G. §3B (Introductory Commentary); United States v. Murillo, 933 F.2d 195, 198 (3d Cir. 1991). Section 3B1.1 instructs the court to increase the offense level if a defendant was an "organizer," "leader," "manager," or "supervisor" in an offense. ²² In calculating Pollen's Count Five sentence, the district court increased the offense level by four levels pursuant to section 3B1.1(a) to reflect what it deemed to be Pollen's aggravating role in that offense. In doing so, the court explained that it found by a preponderance of the evidence that at least five individuals knew of Pollen's attempted tax evasion, and that "the evidence clearly shows that these people would not have been where they were for the purpose of attempting to retrieve secreted items unless in fact they were, as the government contends, orchestrated by the defendant."

Relying on our decision in United States v. Murillo, 933 F.2d 195 (3d Cir. 1991), Pollen now argues that this four-level increase was in error: in making this offense-level adjustment the district court improperly considered all of his "relevant conduct," as that phrase is defined by the Guidelines, rather than only conduct directly relating to the specific offense of conviction charged in Count Five. ²³ Had the district court properly limited its section 3B1.1 inquiry to conduct relating to the offense charged in that count, Pollen maintains, the court could not have concluded that he orchestrated at least five participants in criminal activity in connection with that offense.

Pollen, however, did not raise this objection to the calculation of his offense level at sentencing and therefore failed to preserve this issue properly for appeal. As a consequence, we review the matter only to assure that "plain error" was not committed. See, e.g., Fed. R. Crim. P. 52(b); United States v. Gonzalez, 918 F.2d 1129, 1138 (3d Cir. 1990) (reviewing sentencing calculations for plain error), cert. denied, 111 S.Ct. 1015 (1991); United States v. Castro, 776 F.2d 1118, 1128 (3d Cir. 1985) (objection to jury instruction that is not preserved will be reviewed for plain error), cert. denied, 475 U.S. 1029, 106 S.Ct. 1233 (1986). Under this standard, we are "concerned only with errors that seriously affect substantial rights or compromise the fairness of the proceedings." United States v. Martinez-Zayas, 857 F.2d 122, 134 (3d Cir. 1988). See also United States v. Schreiber, 599 F.2d 534, 539 (3d Cir.) (Seitz, J. concurring) (explaining that "[t]he price an appellant pays for his failure to object is a heavier burden of persuasion. He must show that the error was plain"), cert. denied, 444 U.S. 843, 100 S.Ct. 86 (1979).

In Murillo we resolved this question of the proper scope of a defendant's conduct to be considered in adjusting an offense level pursuant to Guideline section 3B.1. ²⁴ Though recognizing that generally under the Guidelines all "relevant conduct" should be considered in determining offense levels, we noted that the Background to section 1B1.3 explained that it established a rule for determining the range of conduct relevant to calculating offense levels only "in the absence of more explicit instructions in the context of a specific guideline." Murillo, 933 F.2d at 198. We concluded that Guideline section 3B1.1 contained a more explicit instruction and found that "the common sense reading of 'the offense' as used in §3B1.1 is 'the offense of conviction.'" Murillo, 933 F.2d at 198-99. Consequently,

when determining role in the offense for all offenses committed before November 1, 1990, a court should look both to the acts or omissions of the defendant that satisfied the specific elements of the offense of conviction and to those that brought about the offense of conviction, i.e., all acts or omissions that were in furtherance of the offense of conviction.

Id. at 199-200. Murillo thus explicitly adjudged it inappropriate for a sentencing court to consider all of a defendant's "relevant conduct" when following Guideline 3B1.1 to adjust an offense level to reflect a defendant's role in the offense.

Our review of Pollen's presentence report and the transcript of his sentencing hearing reveals that Pollen is correct: neither the district court at sentencing nor that portion of the presentence report adopted by the court as portraying the evidence relating to this decision analyzed Pollen's alleged leadership role in relation to the specific offence charged in Count Five. Instead, the district court increased Pollen's offense level by four points pursuant to section 3B1.1(a) as a consequence of what it deemed to be his leadership role without determining whether the individuals allegedly orchestrated by Pollen were in any way involved in that specific offense.

In fact, the government now concedes both that Murillo governs this issue and that the district court did not conduct a specific analysis of Pollen's alleged leadership role with regard to Count Five. Nevertheless, the government asserts that there are several factors to support a finding that this failure to comply with section 3B1.1(a) does not rise to the level of plain error. First, in the government's view, the miscalculation of Pollen's offense level should be adjudged harmless, for although no specific analysis of the evidence was conducted, it was clear that the actions of at least two individuals, Valerie and Carlos Garrett, were orchestrated by Pollen in direct connection to the Count Five offense. Pursuant to 3B1.1(c), therefore, a two level increase in Pollen's offense level would have been appropriate. Further, according to the government, the district court at sentencing intimated that it would have departed upward from a lower Guideline range to impose the same statutory maximum five-year sentence.

Second, the government contends that the adjustment of Pollen's offense level did not amount to a manifest miscarriage of justice, and so is not plain error, because just months after Pollen's Count Five offense the Guidelines were amended to specify that all relevant conduct, and not merely conduct relating to the offense of conviction, should be considered in making this type of adjustment in offense level.

We cannot agree. The district court clearly failed to examine the evidence concerning Pollen's leadership role specifically in connection with the offense charged in Count Five. Absent this appropriate analysis, we are unwilling to assume that the sentencing court would have found appropriate a two-level adjustment for Pollen's role in the offense pursuant to section 3B1.1(c). Furthermore, we decline to engage in the type of speculation urged by the government concerning whether the district court would have made an upward departure from a properly calculated Guideline sentence range. See 18 U.S.C. §3742(f)(1). ²⁵ We are dealing here with an egregious case of tax evasion. However, speculation on our part as to whether the district court would determine that Pollen's outrageous conduct warranted an upward departure is inappropriate in light of the fact that a sentencing court's decision to depart or not from the Guidelines is inherently discretionary and is not subject to appellate review. See United States v. Colon, 884 F.2d 1550, 1554-56 (2d Cir.), cert. denied, 493 U.S. 998, 110 S.Ct. 553 (1989); United States v. Denardi, 892 F.2d 269, 272 (3d Cir. 1989) (approving the Colon analysis). The improper four-level increase in Pollen's offense level resulted in a Guideline sentence range of 57-71 months, rather than the 46-57 month range if a two level increase had been imposed under §3B1.1(c) or the 37-46 month range if there had been no upward adjustment for a leadership role. Where, as here, there is such a discrepancy between the sentence imposed and the correct sentencing range that the district court may ultimately find, we will not assume that such an error was harmless.

Finally, we also reject the government's contention that the miscalculation did not amount to a manifest injustice. The fact that the Guidelines were later amended has no bearing on the calculation of Pollen's Count Five sentence. If the Sentencing Guideline in effect at the time an offense is committed is more favorable to a defendant, it must be applied. See United States v. Chasmer, 952 F.2d 50, 52 (3d Cir. 1991), cert. denied, 112 S.Ct. 1703 (1992). The district court's improper calculation of Pollen's offense level, resulting in a significantly higher Guideline sentencing range, certainly is an error that seriously affected Pollen's substantial rights, and so amounts to plain error. Accord United States v. Plaza-Garcia, 914 F.2d 345, 348 (1st Cir 1990) (finding plain error where government conceded on appeal that Sentencing Guideline calculations were erroneous). Consequently, we will vacate Pollen's sentence on Count Five, and remand to the district court for further sentencing proceedings in light of this decision and our opinion in Murillo.

IV.

Pollen's contention that the district court clearly erred in concluding that he owed approximately $488,000 in taxes merits little discussion. According to Pollen, credible evidence presented at his sentencing hearing demonstrated that the IRS applied the receiver's payments to reduce the total amount, including tax, penalty, and interest, owed for each year, rather than only each year's actual tax liability. ²⁶ Had these payments been allocated only to delinquent taxes, exclusive of penalties and interest, Pollen asserts that he would now owe slightly less than $100,000 in taxes. In Pollen's view, because the Sentencing Guidelines only take into account the actual amount of tax owed, regardless of the interest and penalties also due to the IRS, see U.S.S.G. §2T1.1 (Commentary, Application Note 2), ²⁷ the district court's failure to recalculate his taxes owed in this manner is clear error: in effect he has received a longer sentence as a consequence of the receiver's failure to request that the IRS depart from its standard procedure for allocating tax payments. ²⁸

We cannot adjudge the district court's calculation of the tax owed is clearly erroneous. The Sentencing Guidelines provide that sentences imposed for violations of section 7201 are to be based on "the total amount of tax that the taxpayer evaded or attempted to evade." U.S.S.G. §2T1.1.(a) (emphasis added). A preponderance of the evidence presented at the sentencing hearing demonstrated that Pollen attempted to evade every penny of the taxes he owed. Consequently, the district court would not have committed clear error even if it had sentenced Pollen based on the full tax debt he attempted to evade, without any credit for the receiver's payments to the IRS. It is thus not clearly erroneous for the district court to refuse to accept Pollen's calculation of the amount of taxes owed, a calculation that assumes that the IRS should have allocated the payments made by the receiver in a manner more favorable to Pollen. ²⁹

V.

Finally, Pollen argues that by imposing consecutive sentences for his pre-Guidelines and Guidelines counts, the district court abused its discretion by double-counting all of the taxes he owed for the tax years in question. Emphasizing the fact that the statutory maximum penalty for a violation of 26 U.S.C. §7201 is five years (60 months), Pollen asserts that, even assuming that the calculation of a sentence range of 57-71 months is correct, if all of the counts charged had been governed by the Guidelines, a consecutive sentence of at most eleven months would have been permissible. ³⁰ In Pollen's view, the district court abused its discretion through not imposing a consecutive sentence of a comparable length for his pre-Guidelines counts.

It is well settled that, with regard to pre-Guideline counts, "the district court has virtually unfettered discretion in imposing a sentence if it falls within the statutory limits." United States v. Matthews, 773 F.2d 48, 52 (3d Cir. 1985). In keeping with this discretion, our review of such a sentence is extremely circumscribed: if the sentence falls within the statutory maximum it is not reviewable on appeal unless there is a showing of illegality or abuse of discretion. United States v. Fischbach & Moore, Inc., 750 F.2d 1183, 1188 (3d Cir. 1984), cert. denied, 470 U.S. 1029, 105 S.Ct. 1397 (1985).

With regard to offenses committed before the effective date of the Sentencing Guidelines but sentenced after that date, we have stated that "the preexisting law will apply to all substantive matters including the imposable sentence." United States v. Sussman, 900 F.2d 22, 24 (3d Cir. 1990) (quoting S. Rep. No. 225, 98th Cong., 2d Sess. (1983), reprinted in 1984 U.S.C.C.A.N. 3182, 3372). Further, the fact that a defendant is also convicted of Guidelines offenses does not affect a sentencing court's discretion in sentencing on the pre-Guidelines counts. Accord United States v. Lincoln , 1925 F.2d 255, 257 (8th Cir.) ("it is not an abuse of discretion to impose consecutive sentences when a defendant stands convicted of related pre-Guidelines and Guidelines offenses--even if the Guidelines would mandate concurrent sentences if both offenses were subject to them"), cert. denied, 111 S.Ct. 2838 (1991); United States v. Watford, 894 F.2d 665 (4th Cir. 1990) (same); United States v. Garcia [91-1 USTC ¶50,030 ], 903 F.2d 1022 (5th Cir.) (same), cert. denied, 111 S.Ct. 364 (1990). Thus Pollen's assertion that his one Guideline count of tax evasion has some limiting effect on the district court's discretion to impose consecutive sentences for his pre-Guideline counts fails.

VI.

For the foregoing reasons, we will vacate the judgment with respect to Count Five and remand to the district court for further sentencing proceedings in light of this opinion. The district court's sentencing determinations will be affirmed in all other respects.

¹ Specifically, Pollen pleaded guilty to Counts One, Two, Three, and Five of his Superseding Indictment.

² Count Five charged an offense which occurred after November 1, 1987 , the effective date of the Sentencing Reform Act of 1984, and so required that a sentence be imposed under the United States Sentencing Guidelines. ("U.S.S.G."). Counts One, Two, and Three charged offenses occurring prior to that date.

³ The IRS learned from an informant that the unreported income was eventually placed in accounts in Switzerland . According to the informant, on one occasion Pollen's first wife wrapped $180,000 in currency to her midsection, pretended she was pregnant, and slipped past Customs Officials to enter Switzerland .

⁴ For example, at some point during 1973, the receiver learned that Pollen had stored gold bullion in safety deposit boxes in Mexico . Before the receiver could retrieve these assets, Pollen sent an accomplice to move the gold, and it was never recovered by the receiver.

⁵ The balance was disbursed to other creditors and applied to the receiver's fees.

⁶ For example, evidence was presented at the sentencing hearing that during the latter part of 1981, Pollen used cash to pay for over $30,000 worth of swimming pool repairs and landscaping work performed at his residence in Colonia , New Jersey . In December of 1982, Pollen bought a 1983 Lincoln Town Car for $20,346 using a combination of $3,000 in cash, six cashier's checks of $2,000 each, and another check issued by a nominee. In January of 1984, Pollen purchased a 1971 Rolls Royce for $11,800, using both cash and payments from a nominee. Pollen also gave one of his accomplices $7,500 in cash to pay for Pollen's daughter's private school expenses. Between May of 1984 and May of 1985, Pollen made cash payments of $17,200 for rent on a home in Palm City , Florida . Also during this period, Pollen paid a travel agent in cash for trips to places such as Iceland , Luxembourg , London , Switzerland , Rome , Venice , Nice, Montserrat, and Saint Thomas .

⁷ After Pollen's arrest, two of his accomplices, Carlos and Valerie Garrett, attempted to gain access to these safe deposit boxes ahead of the government. The government, however, had already searched the boxes and confiscated their contents: gold bars and coins, including Mexican pesos, Canadian maple leaves, Krugerrands, platinum, silver, diamonds, sapphires, rubies, pearls, watches and other jewelry valued at approximately $350,000. The Garretts, charged in a related indictment, pled guilty to conspiring with Pollen.

⁸ For example, at the time of his arrest, Pollen possessed four keys for safe deposit boxes in Switzerland . According to the entries in Pollen's hand-held computer, these boxes contain over 3,000 ounces of gold, none of which has been recovered by the IRS.

⁹ The court imposed the statutorily set maximum penalty of 60 months.

¹⁰ The government asserts that because the district court imposed concurrent sentences on Counts One, Two and Three, we need not decide whether Count Three is multiplicitous of Counts One and Two. Under the concurrent sentence doctrine, we have discretion to decline to resolve legal issues affecting less than all counts in an indictment if at least one count can be upheld and the sentences imposed run concurrently. See United States v. American Investors of Pittsburgh, Inc., 879 F.2d 1087, 1100 (3d Cir.), cert. denied, 493 U.S. 955, 110 S.Ct. 368 (1989). This doctrine is generally not invoked if it is possible that the defendant may suffer collateral consequences, such as impaired parole eligibility. Id.

However, at oral argument Pollen's counsel conceded that because the sentences imposed for Counts One, Two, and Three run concurrently, Pollen's Double Jeopardy argument does not apply to these counts. We will, therefore, consider only the question of whether the acts of evasion charged in these counts are multiplicitous of the offense charged in Count Five, and not whether Counts One, Two and Three are themselves impermissibly multiplicitous.

¹¹ Counts One, Two, Three and Five each charged Pollen with evading taxes for the years 1967, 1970, 1972-75, and 1982.

¹² Pollen correctly acknowledges that as a consequence of his guilty plea, he cannot attack the validity of the indictment per se, but instead is limited to challenging the constitutionality of his sentences under the Double Jeopardy Clause. Cf. United States v. Bonavia, 927 F.2d 565, 571 (11th Cir. 1991) (defendant who fails to object to multiplicitous counts in indictment before trial is barred from challenging indictment on appeal); United States v. Mastrangelo, 733 F.2d 793, 800 (5th Cir. 1984) (same).

¹³ In fact, "[f]ew, if any, limitations are imposed by the Double Jeopardy Clause on the legislative power to define offenses." Id.

¹⁴ Further, nothing in section 7201 's legislative history requires us to conclude that Congress intended to limit this provision's unit of prosecution to an individual tax year. See H.R. Rep. Nos. 1337 & 2543, 83rd Cong., 2nd Sess. (1954), reprinted in 1954 U.S.C.C.A.N. 4137, 4572; 5280, 5343. Indeed, the scant legislative history of this provision simply does not address the question of its allowable unit of prosecution. Thus it provides no support for Pollen's attempt to circumvent the language of section 7201 .

¹⁵ Because we conclude that section 7201 is not ambiguous, we have no need to resort to the rule of lenity. That rule is applicable "only after it is determined that a criminal statute is ambiguous, not at the beginning of the process of construction 'as an overriding consideration of being lenient to wrongdoers.' " United States v. Rodriguez, 961 F.2d 1089, 1093-94 (3d Cir. 1992) (quoting Chapman v. United States, 111 S.Ct. 1919, 1926 (1991)).

¹⁶ The Supreme Court has described section 7201 as including "the offense of willfully attempting to evade or defeat the assessment of tax as well as the offense of willfully attempting to evade or defeat the payment of a tax." Sansone v. United States [65-1 USTC ¶9307 ], 380 U.S. 343, 354, 85 S.Ct. 1004, 1011 (1965) (emphasis in original). This language has been interpreted as indicating that section 7201 proscribes the offense of tax evasion, which can be committed either by evading the assessment or evading the payment of taxes. See, e.g., McGill [92-1 USTC ¶50,268 ], 964 F.2d at 230; United States v. Mal [91-2 USTC ¶50,518 ], 942 F.2d 682, 686-87 (9th Cir. 1991); United States v. Dunkel [90-1 USTC ¶50,243 ], 900 F.2d 105, 107-08 (7th Cir. 1990).

¹⁷ For example, attempts to evade assessment of tax often involve the filing of a false tax return or other false documents.

¹⁸ As we have explained in footnote 10, under the concurrent sentence doctrine we in fact considered only whether the acts of evasion charged in Counts One, Two, and Three are multiplicitous of the offense charged in Count Five.

¹⁹ We note also that our holding is not the equivalent of concluding that, as a consequence of section 7201 's phrase "in any manner," each manner of tax evasion amounts to a separate unit of prosecution. This court has previously acknowledged the fact that the term "any," when used in a statutory definition of a unit of prosecution, fails to define unambiguously the unit of prosecution in singular terms. See United States v. Marino, 682 F.2d 449, 454 & n.5 (3d Cir. 1982). See also United States v. Coiro, 922 F.2d 1008, 1014 (2d Cir.) ("the word 'any' has typically been found ambiguous in connection with the allowable unit of prosecution") (quotation omitted), cert. denied, 111 S.Ct. 2826 (1991).

²⁰ Count Five charged Pollen with knowing and willful attempted tax evasion "by placing part of his assets out of the reach of the United States Government by maintaining more than $350,000.00 in gold bars and coins, platinum, jewelry, and gems in safety deposit boxes at the First Union Bank in North Carolina in a fictitious name."

²¹ Unless otherwise indicated, all references to the Sentencing Guidelines in this opinion will be those in effect on August 22, 1990 , the date of the offense charged in Count Five, as these are the Guidelines that must be applied. See United States v. Chasmer, 952 F.2d 50, 52 (3d Cir. 1991) (if Guidelines in effect on date of offense are more favorable to the defendant, they must be applied), cert. denied, 112 S.Ct. 1703 (1992).

²² Specifically, Guideline 3B1.1 states:

Based on the defendant's role in the offense, increase the offense level as follows:

(a) If the defendant was an organizer or leader of a criminal activity that involved five or more participants or was otherwise extensive, increase by 4 levels.

(b) If the defendant was a manager or supervisor (but not an organizer or leader) and the criminal activity involved five or more participants or was otherwise extensive, increase by 3 levels.

(c) If the defendant was an organizer, leader, manager, or supervisor in any criminal activity other than described in (a) or (b) above, increase by 2 levels.

U.S.S.G. §3B1.1.

²³ Guideline section 1B1.3 defines relevant conduct as:

(1) all acts and omissions committed or aided and abetted by the defendant, or for which the defendant would be otherwise accountable, that occurred during the commission of the offense of conviction, in preparation for that offense, or . . . that otherwise were in furtherance of that offense;

(2) solely with respect to offenses of a character for which §3D1.2(d) would require grouping of multiple counts, all such acts and omissions that were part of the same course of conduct or common scheme or plan as the offense of conviction;

U.S.S.G. §1B1.3. Violations of 26 U.S.C. §7201 are covered by Guideline §2T1.1, and §3D1.2(d) requires grouping of these offenses.

²⁴ Murillo resolved this issue with regard to offenses committed prior to November 1, 1990 . Effective as of that date the Sentencing Commission amended the Guidelines to specify that the determination of the defendant's role in the offense is to be made on the basis of all relevant conduct "and not solely on the basis of elements and acts cited in the count of conviction." U.S.S.G. §3B (Introductory Commentary). See also Murillo, 933 F.2d at 198 n.1. The parties agree that these amendments do not apply to Pollen's Guidelines offense.

Although Murillo was decided on May 8, 1991 , approximately three months prior to Pollen's sentencing hearing, neither the parties nor the district court appeared at that time to have been aware of its holding.

²⁵ This section provides:

If the court of appeals determines that the sentence--

(1) was imposed in violation of law or imposed as a result of an incorrect application of the sentencing guidelines, the court shall remand the case for further sentencing proceedings with such instructions as the court considers appropriate.

18 U.S.C. §3742(f)(1).

²⁶ The IRS followed its standard procedure of applying payments against the total amount due from the taxpayer, including tax, interest, and penalty, year by year, beginning with the earliest year for which an amount is owed.

²⁷ Guideline 2T4.1, the Tax Table, provides that a defendant owing more than $70,000 but less than $120,000 in tax is to receive an offense level of 12. A defendant owing more than $350,000 but less than $500,000 is to receive an offense level of 15.

²⁸ We do not reach Pollen's additional arguments that the district court's decision to adopt the government's calculation of the amount of taxes owed was clearly erroneous because the IRS failed to assign a basis figure to certain properties sold by the receiver, and because taxes due for 1983, charged in Count Four of the indictment and later dismissed, were improperly included in the total figure. Even assuming that these decisions were in error, they would be harmless. The total amount disputed by Pollen in this regard is $89,725.50, while an offense level of 15 is appropriate if the amount of tax evaded is more than $350,000 but less than $500,000. The amount of tax evaded by Pollen would nevertheless fall within this range even if the $89,725.50 at issue in these arguments is subtracted from the total amount found by the district court.

²⁹ We pause to accept the Sentencing Commission's longstanding invitation to express our view on the efficacy and propriety of particular Guidelines. See, e.g., United States v. Parson, 955 F.2d 858, 874 (3d Cir. 1992). Guideline section 2T1.1, Application Note 2, provides that for the purposes of imposing sentence for violations of section 7201 , the tax loss considered cannot include interest or penalties. See U.S.S.G. §2T1.1. While such a limitation may be appropriate in an evasion of assessment case, it is not always so when imposing sentence for tax evasion committed through the evasion of payment.

Pollen's actions aptly illustrate this point: his repeated attempts to conceal assets were intended to evade the payment of his total debt of over $3,000,000. The Guidelines' requirement that his sentence be calculated based on only his evasion of the $488,000 in raw taxes owed, and not also on his evasion of the payment of interest and penalties, fails to reflect accurately the criminal behavior involved in this type of evasion of payment of taxes offense.

³⁰ In relevant part, Guideline section 5G1.2 states:

(c) If the sentence imposed on the count carrying the highest statutory maximum is adequate to achieve the total punishment, then the sentences on all counts shall run concurrently, except to the extent otherwise required by law.

(d) If the sentence imposed on the count carrying the highest statutory maximum is less than the total punishment, then the sentence imposed on one or more of the other counts shall run consecutively, but only to the extent necessary to produce a combined sentence equal to the total punishment. In all other respects sentences on all counts shall run concurrently, except to the extent otherwise required by law.

. . .

U.S.S.G. §5G1.2

 

 

[99-2 USTC ¶50,788] United States of America , Plaintiff-Appellee v. John E. Worthen, Defendant-Appellant

(CA-10), U.S. Court of Appeals, 10th Circuit, 98-4043, 8/19/99, Affirming an unreported District Court decision

[Code Sec. 7203 ]

Criminal tax evasion: Motion to withdraw guilty plea: Failure to report income: Failure to file return: Date of criminal conduct: Acceptance of responsibility: Plea bargain.--The district court correctly denied an individual's motion to withdraw his guilty plea before his sentencing for attempted tax evasion. Although some evidence suggested that the taxpayer did not believe he owed any tax for the year at issue, he admitted that he knew he had income during the year and that he failed to file a return. In addition, he had the benefit of counsel, he had plenty of time to review his decision before entering the plea, and he repeatedly told the court he understood the plea and entered it voluntarily. Further, allowing him to withdraw his plea shortly before he was sentenced would prejudice the government and inconvenience the court.

[Code Sec. 7203 ]

Criminal tax evasion: Sentencing guidelines: Base offense level: Tax loss: Sophisticated means of concealment: Date of criminal conduct: Plea bargain.--The district court properly calculated an individual's base offense level according to the sentencing guidelines. The amount of the tax loss caused by his offense was based on stipulated facts. Moreover, the increase in the base offense level for concealing his crime by sophisticated means did not violate his plea agreement. Also, he began engaging in criminal conduct related to his offense as soon as he started receiving the unreported income, rather than when his return was due. Finally, his admission of wrongdoing did not constitute an acceptance of responsibility, especially in light of his continued assertion that he did not owe taxes on the unreported income.

Before: KELLY, MCKAY and HENRY, Circuit Judges.

è Caution: This court has designated this opinion as NOT FOR PUBLICATION. Consult the Rules of the Court before citing this case.ç

ORDER AND JUDGMENT ^*

MCKAY, Circuit Judge:

Defendant-Appellant John E. Worthen appeals the district court's denial of his motion to withdraw his guilty plea as well as various aspects of his sentence. On April 28, 1997, Defendant was indicted on the following counts: (I) attempting to evade or defeat payment of income tax in violation of 26 U.S.C. §7201 for the 1990 tax year; (II) making and subscribing a false tax return, statement, or other document in violation of 26 U.S.C. §7206(1); (III) failure to file a tax return, pay tax, or supply information in violation of 26 U.S.C. §7203; and (IV) failure to file a tax return, pay tax, or supply information on behalf of Nordic Limited, Inc., in violation of 26 U.S.C. §7203. Defendant entered a plea of guilty to Count I, attempted tax evasion, on September 22, 1997 . See Appellant's App. at 145. As part of the plea agreement, the Government agreed to urge dismissal of the remaining counts, see Addendum to Appellant's App. at 380, and it agreed not to recommend a sentence adjustment based on the use of sophisticated means to avoid detection of the offense. See Appellant's App. at 10.

On December 31, 1997 , Defendant filed a motion to withdraw his guilty plea. The court heard argument on the motion on January 5, 1998 ; held a hearing on the motion on January 15, 1998 ; held an evidentiary hearing on the motion February 2, 1998 ; and heard additional argument on February 3, 1998 . In an Order dated February 19, 1998 , the district court denied Defendant's motion to withdraw his guilty plea. See Appellant's Br. , Attach. at 2. On March 17, 1998 , the court sentenced Defendant to a term of 33 months' imprisonment followed by 3 years' supervised release.

The facts underlying the indictment indicate that Defendant was the president of Nordic Limited, Inc., which he operated out of his home in Salt Lake City , Utah . In 1990, acting on behalf of Nordic, Defendant sold mining leases owned by Nordic to Crown Resources of Colorado for $494,520. As payment for the mining leases, Crown Resources issued a cashier's check payable to Nordic. Upon presenting the check for payment, Defendant obtained five separate checks totaling $494,520 payable to five separate corporate entities over which he exercised substantial control. Defendant subsequently deposited these checks into bank accounts maintained by the corporations.

During 1990, in connection with his probation for a separate conviction, Defendant reported $57,440.19 in annual income to his probation officer. He did not, however, report the $494,520 from the sale of the Nordic mining leases to Crown Resources. In addition, the record shows that Defendant received income during the last three months of 1990 when he used corporate accounts to make personal expenditures totaling at least $88,405.21. The record does not indicate whether Defendant reported that income to the probation office.

On April 15, 1991 , Defendant filed an Application for Automatic Extension to File U.S. Individual Income Tax Return in which he reported his tax liability for 1990 as $2,235 and to which he attached a check in that amount. Defendant did not subsequently file an income tax return for 1990.

For purposes of the plea agreement, Defendant and the Government stipulated to the amount of Defendant's tax liability for 1990. The parties stipulated that Defendant's taxable income included the $57,440.19 he reported to his probation officer and the $88,405.21 he received as expenditures from corporate accounts. See Appellant's App. at 14-19. Less the $2,235 payment he sent with his extension application, Defendant's stipulated amount of tax liability for 1990 was therefore $38,601.74. See Addendum to Appellant's App. at 387.

I.

We review the district court's denial of a motion to withdraw a guilty plea for abuse of discretion. See United States v. Killingsworth, 117 F.3d 1159, 1161 (10th Cir. 1997). Rule 32(e) of the Federal Rules of Criminal Procedure provides that "[i]f a motion to withdraw a plea of guilty . . . is made before sentence is imposed, the court may permit the plea to be withdrawn if the defendant shows any fair and just reason." In determining whether a defendant has established a "fair and just reason," we consider seven factors: (1) whether the defendant has asserted his innocence; (2) prejudice to the government; (3) the defendant's delay in filing his motion; (4) inconvenience to the court; (5) the defendant's assistance of counsel; (6) whether the plea is knowing and voluntary; and (7) waste of judicial resources. See United States v. Carr, 80 F.3d 413, 420 (10th Cir. 1996). "Although a defendant's motion to withdraw a plea before sentencing should be 'freely allowed' and 'given a great deal of latitude,' we will not reverse absent a showing that the trial court acted 'unjustly or unfairly.' " United States v. Kramer, 168 F.3d 1196, 1202 (10th Cir. 1999).

The district court decided that the first, third, and sixth factors weighed against allowing Defendant to withdraw his plea. The court first concluded that Defendant did not assert his innocence before the court, and in fact he "admitted that he had over $100,000 in income which was not reported to the United States and upon which he had not paid taxes." Appellant's Br. , Attach. at 3. The court noted that Defendant signed and submitted to the court a statement certifying that the facts indicating that he had underreported his income were true and correct. See id. at 2. Weighing the third factor, the court found that Defendant delayed filing his motion to withdraw his plea until three months after he had entered the plea, which was just five days before sentencing and twelve days after reviewing his draft presentence report. According to the court, this timing indicated that "[D]efendant's reason for filing the motion was motivated by the contents of the presentence report, which is not a fair and just reason for the withdrawal of plea." Id. at 6. Finally, in considering the sixth factor, the court noted that Defendant had knowingly and voluntarily admitted his guilt, both orally and in writing, and that he had been "represented by counsel throughout the proceedings." Id. For these reasons, the court denied Defendant's motion.

On appeal, Defendant contends that the court abused its discretion in denying his motion to withdraw his plea because the Carr factors weighed in favor of granting the motion. Specifically, Defendant claims that he asserted his innocence and presented the testimony of two expert witnesses and an affidavit by a former IRS employee to support his assertion; that he had legitimate reasons for failing to file his motion to withdraw his plea in a more timely manner; and that his plea was not "knowingly and intentionally given," Appellant's Br. at 32, because even if he signed the statement certifying the truth of the facts showing that he committed the charged offense, he did not "ever admit a critical element of the offense; that is[,] that he owed any federal income tax . . . for 1990." Id. at 33.

We begin our analysis with the three factors relied on by the district court. With respect to the first factor, Defendant's alleged assertion of innocence, there is some evidence that Defendant may not have believed he owed any income tax for 1990. For example, at the initial plea hearing, Defendant testified that the actions underlying the charge of attempted tax evasion against him "arose out of [his] belief that a repayment of a loan from a corporation was not a taxable event." Appellant's App. at 121. More specifically, Defendant believed that the money he received from selling the mining leases for Nordic to Crown Resources constituted a repayment of the "vast sums of money" he had loaned to Nordic over a period of approximately twelve years. Id. at 122. Although this evidence suggests that Defendant asserted his innocence, the record also contains evidence contradicting his assertion. For example, at sentencing, Defendant's counsel stated that Defendant "concede[d] then and he concedes now that he had not filed his returns," even though he generally "knew he had income during that period." Id. at 341. At the same hearing, Defendant admitted that he "knew what [he] was doing for all the years [he] failed to file and pay [his] taxes and [he] knew it was wrong." Id. at 356-57. These admissions and others like it seriously contradict Defendant's assertion of innocence. Nevertheless, even if the evidence showing that Defendant asserted his innocence weighs in favor of granting the motion to withdraw the plea, see Carr, 80 F.3d at 420 (indicating that all this factor requires is an assertion of innocence), the remaining factors weigh against granting the motion.

Defendant's delay in filing his motion to withdraw the plea--the third factor--weighs against allowing Defendant to withdraw. Defendant filed his motion approximately three months after entering his plea, which was only five days before sentencing. Delays of three months or more "weigh against granting a withdrawal motion because they often result in substantial prejudice to the government and may suggest manipulation by the defendant." Id. Further, " '[i]f the defendant has long delayed his withdrawal motion, and has had the full benefit of competent counsel at all times, the reasons given to support withdrawal must have considerab[le] . . . force.' " Id. (quoting United States v. Vidakovich, 911 F.2d 435, 439 (10th Cir. 1990)). Defendant's excuses do not have considerable force. He claims that his expert witnesses were unprepared to testify that he had no tax liability prior to the time he filed the motion and that he did not have enough money to pay the experts. Considering that Defendant was indicted in April 1997, that he did not enter his plea until September 1997, and that he did not file his motion to withdraw his plea until the end of December of that year, however, we think that he had ample time in which to obtain the advice of experts and arrange for their payment. In addition, as the district court noted, the attempt to change the plea came shortly after Defendant reviewed his proposed presentence report, which suggests that the timing may have been linked to the contents of the report rather than to any difficulties he experienced in obtaining the testimony of his experts. This timing, which implies that Defendant was dissatisfied with the sentence he received, reflects an improper motivation for attempting to withdraw the plea. See United States v. Gordon, 4 F.3d 1567, 1573 (10th Cir. 1993) (stating that a defendant's "dissatisfaction with the length of his sentence is an insufficient reason to withdraw a plea").

Because the record reveals no evidence indicating that Defendant entered the plea involuntarily or unknowingly, the sixth factor also does not support Defendant's argument. In describing why he was prepared to enter a plea at the initial plea hearing, Defendant testified that he was "well aware that the grief that this thing has caused [him] already for the last three years, coupled with the possibility of losing at trial is just overwhelming for [himself] and [his] family." Appellant's App. at 118. Defendant also repeatedly told the court that he understood the plea and that he realized he could proceed to trial if he did not wish to enter a guilty plea. See, e.g., id. at 118, 134. Additionally, Defendant indicated that he understood that the facts included in the statement he signed would be included in the presentence report and that they were true and correct. See id. at 11. In light of this evidence, we can only conclude that Defendant entered his plea knowingly and voluntarily.

Finally, although the district court limited its discussion to the first, third, and sixth factors from Carr, we conclude that the second, fourth, fifth, and seventh factors weigh against granting the motion. With respect to the second factor, prejudice to the government, we note that, if the district court had granted Defendant's motion, not only would the government be required to recommence trial preparation and reissue subpoenas but also it would need to locate evidence and witnesses which may have been lost with the passage of time. The fifth factor also does not support Defendant's position because he was represented by competent counsel throughout the proceedings. See infra note 4. In addition, the fourth and seventh factors, which involve inconvenience to the court and waste of judicial resources, weigh against allowing Defendant to withdraw his plea. Although "some waste of judicial resources from a plea withdrawal is inevitable," Carr, 80 F.3d at 421, the court likely would be inconvenienced by a trial at this stage.

Because six of the seven factors weigh against allowing Defendant to withdraw his plea, we conclude that the district court did not abuse its discretion in denying the motion to withdraw the plea.

II.

Defendant also takes issue with several aspects of his sentence, including the calculation of the base offense level; the two-point increase to the base offense level for the use of sophisticated means to evade discovery of the offense; the calculation of the criminal history category; and the failure of the district court to reduce his base offense level for acceptance of responsibility. We review the district court's interpretation of the sentencing guidelines de novo and its factual findings for clear error. See United States v. Pretty, 98 F.3d 1213, 1222 (10th Cir. 1996). ¹ "We give due deference to the district court's application of the Guidelines to the facts." United States v. Hankins, 127 F.3d 932, 934 (10th Cir. 1997); see 18 U.S.C. §3742(e).

Defendant first argues that the district court incorrectly found that he was liable for between $20,000 and $40,000 in 1990 income taxes, and that, as a result, the court erroneously calculated his base offense level at 10, rather than 6. The court's conclusion regarding the amount of the tax loss is a factual finding which we review only for clear error. See Pretty, 98 F.3d at 1222. In connection with the plea agreement, the Government and Defendant stipulated that Defendant's taxable income was $145,845.50. See Appellant's App. at 14-19. This amount was based on Defendant's report of $57,440.19 in income from Fuji Financial, one of the corporations over which Defendant exercised substantial control, and the $88,405.21 allegedly paid out of corporate accounts to cover Defendant's personal expenditures. See id. Moreover, by signing the statement in advance of the plea which he submitted to the district court, Defendant admitted to earning income in this amount. See id. at 15, 19. Based on the stipulated amount of income, the district court correctly concluded that Defendant was responsible for a tax loss of $38,601.74. See Addendum to Appellant's App. at 387. Because the district court simply applied the amount to which the parties stipulated, we do not think that the court committed clear error in determining that Defendant was responsible for a tax loss of between $20,000 and $40,000. ²

Although we review the factual findings underlying the court's calculation of the base offense level for clear error, see United States v. Taylor, 97 F.3d 1360, 1362 (10th Cir. 1996), as mentioned above, our review of the district court's interpretation of the Guidelines is de novo. See Pretty, 98 F.3d at 1222. Section 2T1.1 of the 1990 Guidelines sets the base offense level for a violation of 26 U.S.C. §7201 at the "[l]evel from §2T4.1 (Tax Table) corresponding to the tax loss." U.S.S.G. §2T1.1(a). Reference to §2T4.1 demonstrates that the base offense level for a tax loss of more than $20,000 but less than $40,000 is 10. See id. §2T4.1(E). We conclude that the district court correctly determined Defendant's base offense level as 10.

Defendant also argues that the district court improperly increased his base offense level by two points for the use of sophisticated means in concealing the offense. See id. §2T1.1(b)(2). First, he claims that, in connection with the plea agreement, the Government agreed not to recommend an increase for sophisticated concealment. Second, Defendant urges that any sophisticated means he employed were not for the purpose of "imped[ing] discovery of the nature or extent of the offense." Id. §2T1.1(b)(2). In response to Defendant's first argument, we note that, although the Government agreed not to advocate an increase for use of sophisticated means, it reserved the right to defend such an increase "should the probation office determine it to be applicable." See Appellant's App. at 10. In fact, the probation office did recommend an increase on this basis. See Addendum to Appellant's App. at 389. Thus, the Government's reference to sophisticated means at sentencing, see Appellant's App. at 352, did not violate the plea agreement.

Defendant's second argument is also unpersuasive. The 1990 Guidelines describe "sophisticated means" as "conduct that is more complex or demonstrates greater intricacy or planning than a routine tax-evasion case." U.S.S.G. §2T1.1, comment. (n.6). We think Defendant's conduct meets this description. As Defendant admitted at sentencing, some of his efforts involving his alleged income may have been intended to avoid creditors. See Appellant's App. at 344. The record further indicates that Defendant was less than fully candid with his probation officer in reporting his income. See Addendum to Appellant's App. at 389. Although Defendant seems to contend that this failure was due more to his lack of organization and inconsistent record-keeping than to an effort to impede investigatory efforts, we do not think the district court erred in finding otherwise. Moreover, the record indicates that Defendant routinely placed his income in a variety of corporate accounts and that he used corporate accounts to pay his personal expenses. See id.; see also Appellant's App. at 23. We do not think that the district court erred in concluding that Defendant's conduct amounted to the use of sophisticated means under §2T1.1(2)(b).

Defendant also argues that his criminal history category should have been IV rather than V as determined by the district court. Section 4A1.1(e) provides: "Add 2 points if the defendant committed the instant offense less than two years after release from imprisonment on a sentence counted under (a) or (b) . . . . If 2 points are added for item (d), add only 1 point for this item." U.S.S.G. §4A1.1(e). Because Defendant received two points for committing the instant offense while on parole pursuant to §4A1.1(d), the district court added only one point pursuant to §4A1.1(e). Defendant argues that this point should not have been added because he did not commit any part of the instant offense within two years of imprisonment. Specifically, he claims that the conduct related to the instant offense did not begin until August 15, 1991 , the date on which he was required to file his 1990 tax return, which was more than two years after his release from imprisonment on June 30, 1989 .

We agree with the district court that Defendant began committing conduct relating to the instant offense at least as early as September 1990. The record supports this conclusion. First, Defendant began making personal expenditures out of corporate accounts as early as September 1990. See Addendum to Appellant's App. at 384. Second, Defendant sold the Nordic mining leases in September of 1990, at which time he placed the money into various corporate entities. Third, Defendant failed to report the income he earned from the sale of the mining leases to his probation officer. Because this conduct began within two years of June 30, 1989, the last date on which Defendant was imprisoned, the court correctly added one criminal history point to Defendant's score, and it correctly calculated the criminal history category at V. See U.S.S.G. Ch. 5, Pt. A.

Finally, Defendant argues that the district court erred by failing to apply a two-point deduction to his base offense level for acceptance of responsibility. Determination of acceptance of responsibility is a question of fact which we review for clear error. See United States v. Mitchell, 113 F.3d 1528, 1533 (10th Cir. 1997). Because "[t]he sentencing judge is in a unique position to evaluate a defendant's acceptance of responsibility . . ., the determination of the sentencing judge is entitled to great deference on review." U.S.S.G. §3E1.1, comment. (n.5). According to §3E1.1 of the Guidelines, a two-point reduction in the base offense level is warranted when "the defendant clearly demonstrates a recognition and affirmative acceptance of personal responsibility for his criminal conduct." Id. §3E1.1(a). In spite of Defendant's admission that he failed to report most of the income he earned during 1990 and his admission that he knew his actions were wrong, see Appellant's App. at 356-57, he has denied owing any taxes on this income. This denial is inconsistent with accepting responsibility for the offense to which he pled guilty, i.e., attempted tax evasion. Moreover, we do not think that Defendant's admissions of wrongdoing necessarily constitute an acceptance of responsibility. See United States v. McMahon, 91 F.3d 1394, 1397 (10th Cir. 1996) ("A defendant is not entitled to an adjustment for acceptance of responsibility merely because he admits to wrongdoing."). When we consider Defendant's continued insistence that he does not owe taxes for 1990, his incomplete record-keeping with respect to his businesses, see Appellant's App. at 343, the complicated relationships between his corporations, his use of corporate funds for personal expenditures, and his failure to file income tax returns for many years prior to 1990, see id. at 343, 350, it seems apparent that Defendant has not "clearly demonstrate[d] a recognition and affirmative acceptance of personal responsibility for his criminal conduct." U.S.S.G. §3E1.1(a). We conclude that the district court did not commit clear error in finding that a downward adjustment on the basis of acceptance of responsibility was unwarranted.

We AFFIRM the dismissal of Defendant's motion to withdraw his guilty plea and his sentence. ³

^* This order and judgment is not binding precedent, except under the doctrines of law of the case, res judicata, and collateral estoppel. The court generally disfavors the citation of orders and judgments; nevertheless, an order and judgment may be cited under the terms and conditions of 10th Cir. R. 36.3.

¹ Although the district court did not indicate which version of the United States Sentencing Guidelines it applied, because the presentence report applied the 1990 version of the Guidelines, see Addendum to Appellant's App. at 388, we assume that the court also applied that version. The district court was correct in doing so. Although the general rule is that a sentencing court applies the version of the Guidelines in effect at the time of sentencing, if the later version imposes harsher punishment and thereby implicates the Ex Post Facto Clause, the court applies the Guidelines in effect at the time of the defendant's offense. See United States v. Nichols, 169 F.3d 1255, 1270 n.3 (10th Cir. 1999); United States v. Svacina, 137 F.3d 1179, 1186 (10th Cir. 1998). Under the Guidelines in effect at the time of sentencing, March 17, 1998 , Defendant's base offense level would have been 12, rather than 10, for a tax loss of $38,601.74. Compare U.S.S.G. §2T1.1 & 2T4.1 (1997) with U.S.S.G. §2T1.1 & 2T4.1 (1990). Accordingly, for purposes of this appeal, we refer only to the 1990 Guidelines.

² We note that the Government could have sought to hold Defendant responsible for a much larger amount. Presumably as part of the plea agreement, the Government did not seek to include as taxable income the $494,520 Defendant received for the sale of the mining leases to Crown Resources. See Appellant's App. at 348-49. Although Defendant disputed whether there was an overlap between this sum and the $88,405.21 in personal expenditures, and although he claims on appeal that he did not owe taxes on this amount at all, we believe that Defendant received a lower sentence than he might have otherwise.

³ Defendant submitted two additional motions in conjunction with this appeal. In the first motion, he moved pro se to file a supplemental brief in which he asserted that the district court violated Rules 11(c) and 11(f) of the Federal Rules of Criminal Procedure by failing to ensure that he understood the nature of the charge against him and by failing to establish an adequate factual basis for the plea, respectively. Defendant also claimed that he received ineffective assistance of counsel on appeal because his counsel failed to raise the Rule 11 arguments in the opening brief. We have reviewed the record, and we conclude that Defendant's Rule 11 arguments are without merit. Additionally, while we note that claims of ineffective assistance of counsel should normally be raised in collateral proceedings, see United States v. Galloway, 56 F.3d 1239, 1240 (10th Cir. 1995) (en banc), in this case we may review the claim because Defendant complains only about the assistance he received on appeal. See United States v. Boigegrain, 155 F.3d 1181, 1186 (10th Cir. 1998) (noting that this court may hear ineffective assistance claims in rare instances when they are fully developed on the record). In light of our conclusion that Defendant has failed to state a claim based on Rule 11, we hold that Defendant has failed to demonstrate that he received ineffective assistance of counsel on appeal. See Strickland v. Washington, 466 U.S. 668, 687 (1984) (articulating showing required for establishing claim of ineffective assistance of counsel). The motion to file a supplemental brief is denied.

In his second additional motion, Defendant moved to supplement the record with an IRS document that was not before the district court. Because the document does not definitively establish Defendant's tax liability for 1990 or the IRS's position with respect to his liability, and because it does not affect our holdings that Defendant's sentence and the district court's denial of Defendant's motion to withdraw his plea rested on sufficient factual bases, we deny the motion to supplement the record.

 

 

[96-2 USTC ¶50,536] United States of America , Plaintiff-Appellee v. Herbert Daniel Fleschner, Defendant-Appellant United States of America , Plaintiff-Appellee v. Rob ert Barnwell Clarkson, Defendant-Appellant United States of America , Plaintiff-Appellee v. Vernon Rubel, Defendant-Appellant

(CA-4), U.S. Court of Appeals, 4th Circuit, 94-5929, 94-5933, 95-5063, 10/11/96, 98 F3d 155, Affirming an unreported District Court decision

[Code Sec. 7201 ]

Defraud U.S. of income tax: Convictions: Jury instructions: First Amendment: Verdict: Constitutionality.--Three individuals who were convicted of conspiracy to defraud the U.S. of income tax revenue were not entitled to a jury instruction on a First Amendment defense because their words and acts were not remote from the commission of the criminal acts. They held meetings and collected money from attendees whom they instructed and advised to claim unlawful exemptions and not to file returns or pay tax on wages. Further, the attendees followed the taxpayers' instruction and advice, their unlawful actions were solicited by the taxpayers, and the taxpayers were aware that the attendees were following their instructions and advice. Moreover, the purpose of the meetings was to convince attendees that it was legal to claim false exemptions, to hide income and to refuse to file returns or pay income tax. The trial court did not err when it failed to grant a verdict in favor of the taxpayers on the basis that the Constitutional foundation for federal income tax is uncertain and that their prosecution violated due process.

[Code Sec. 7201 ]

Defraud U.S. of income tax: Convictions: Conspiracy: Jury instructions.--Jury instructions on conspiracy given at a trial of three individuals who were convicted of conspiracy to defraud the U.S. of income tax were not misleading and contained an adequate statement of the elements necessary to convict the individuals of conspiracy.

[Code Sec. 7201 ]

Defraud U.S. of income tax: Conspiracy: Convictions: Sentencing.--The trial court properly sentenced an individual who was convicted of conspiracy to defraud the U.S. of income tax in accordance with the United States Sentencing Guidelines. His base level for sentencing was based on the tax loss, which included the loss from all acts and omissions occurring as part of the same course or common scheme or plan. Since conduct in furtherance of a conspiracy is not defined by, or confined to, just those occasions in which the individual and his co-conspirators were physically together or acted in unison, the calculated tax loss was based on the individual's conduct during the relevant time period in which he operated his business. In his business, he compensated his workers in such a way as to avoid withholding taxes and issuance of Forms W-2, which evaded and camouflaged income.

[Code Sec. 7201 ]

Defraud U.S. of income tax: Conspiracy: Convictions: Cross-examination.--Three individuals who were convicted of conspiracy to defraud the U.S. of income tax were not entitled to cross-examine government witnesses after the government's redirect examination because there was no new matters introduced on re-direct examination. Also, in one instance, the matter covered on re-direct examination had been raised on cross-examination.

Lowell Harrison Becraft, Jr., 209 Lincoln St. , Huntsville , Ala. , for Herbert Daniel Fleschner, Vernon Rubel. Harold Johnson Bender, 200 No. McDowell St. , Charlotte , N.C. 28204 , for Rob ert Barnwell Clarkson. Mark T. Calloway, United States Attorney, Charolette, N.C. 28802, Loretta C. Argrett, Assistant Attorney General, Michael Emile Karam, Rob ert E. Lindsay, Alan Hechtkopf, Department of Justice, Washington, D.C. 20530, for U.S.

Before: WIDENER, ERVIN, and LUTTIG, Circuit Judges.

OPINION

WIDENER, Circuit Judge:

Defendants Herbert D. Fleschner, Rob ert B. Clarkson, and Vernon Rubel appeal their convictions for conspiracy to defraud the United States of income tax revenue in violation of 18 U.S.C. §371 . We affirm.

I

Fleschner opened a chiropractic office in Hickory , N.C. in 1978 and Rubel became one of his patients. Rubel was an enrolled agent authorized to represent people before the IRS in tax matters. In March 1986, Rubel and Fleschner began a study of income tax law. Based on their interpretation of case law and various literature, they concluded that they were not liable for federal income tax. The third defendant, Clarkson, was a South Carolina attorney. He was one of the organizers in 1979 of a club that met once a month in Hickory , N.C. known as the Carolina Patriots. In the fall of 1989, Rubel and Clarkson renewed a prior friendship and thereafter the three defendants conducted the Hickory Carolina Patriot meetings together. The evidence shows that attendees at these meetings made what are called donations to join, in the range of $100 to $200. One witness described Clarkson's role as an instructor and founder of the group. Fleschner was described as a speaker, leader and an instructor although a little less knowledgeable than Clarkson. Rubel was described as a consultant who was not a speaker, but who would do research or legwork to provide additional information. There was testimony that they were instructed by the defendants to claim nine allowances on W-4 forms to prevent withholding from their paychecks, that they were led to believe that the allowances were legitimate, and that they followed the instructions. One witness, a certain Sluss, testified that when he received a letter from the Internal Revenue Service because of the claimed allowances, Fleschner and Rubel told him "not to worry about it, that it would be taken care of," and Rubel provided Sluss with a letter to send to the Internal Revenue Service. When the Internal Revenue Service penalized Sluss $500 and garnished his wages, Sluss again discussed the situation with Fleschner who told him that "they were working on it". Some attendees also testified that they were informed and advised by Clarkson and Fleschner to not file income tax returns and that based on this information and advice received, they did not file income tax returns. Another witness, one Mrs. Penley, testified that attendees were told they did not have to pay taxes they did not owe, that their wages were not income and therefore not taxable. Mrs. Penley was summoned for failure to file an income tax return for the years 1991 and 1992 and her husband was arrested. Some attendees were advised to hide income by removing themselves from the banking system and dealing in cash.

In April 1994, Fleschner, Clarkson, and Rubel were indicted for unlawfully conspiring to impede, impair, obstruct and defeat the functions of the Internal Revenue Service of ascertaining, computing, assessing and collecting income taxes in violation of 18 U.S.C. §371 . ¹ Following a jury trial, all three were convicted and sentenced to prison terms. This appeal followed.

II

The first claim of the defendants on appeal is that the trial court did not permit the cross-examination of government witnesses after the government's re-direct examination.

In the first place, the objection on its face is not well taken. Absent the introduction of any new matter on re-direct examination, the rule is that recross-examination is not required. Without something new, a party has the last word with his own witness. Wharton's Criminal Evidence, 14th Ed., 1986, Vol. 2, p. 698.

The defendants have correctly quoted the applicable rules from United States v. Riggi, 951 F.2d 1368, 1375 (3rd Cir. 1991), and United States v. Caudle, 606 F.2d 451, 458 (4th Cir. 1979). "It is well settled that if a new subject is raised in redirect examination, the district court must allow the new matter to be subject to recross-examination." 951 F.2d at 1375. "To deny recross examination on matter first drawn out on redirect is to deny the defendant the right of any cross-examination as to that new matter." 606 F.2d at 458.

The defendants then claim that in four instances the government's witnesses testified to new matter on re-direct examination, but recross-examination was not permitted. That testimony is a part of the witnesses Cofer, Holstein , Penley and Whiteside. As to the witnesses Cofer, Holstein and Penley, the testimony on re-direct examination was not on new matter, but on subjects which had been the subject of the direct examination of the witnesses. In the case of Whiteside, the matter covered on re-direct examination had been raised in the cross-examination of Whiteside to the effect that Clarkson had at one point been subjected to a mental examination. On re-direct examination, the government merely showed that Clarkson had passed that mental examination, and nothing more. Even if a further examination by the defendants' attorney not in the form of cross-examination would have been permissible, cross-examination was not, and in all events the denial of any further questioning was not an abuse of discretion. ²

III

The defendants assert that the district court erred in refusing to give requested jury instructions. We review the trial court's denial of the requested jury instructions in view of the record and instructions as a whole and in the context of the trial, reversing only for prejudicial error. United States v. Park, 421 U.S. 658, 674-675 (1975); Wellington v. Daniels, 717 F.2d 932, 938 (4th Cir. 1983).

Defendants claim that the most they did was openly advocate violation of the tax laws and that they were entitled to requested instructions on a First Amendment defense. ³ Having made a timely request, the defendants would have been entitled to an instruction on a First Amendment defense if there were evidence sufficient for a reasonable jury to find in their favor on that account. Mathews v. United States , 485 U.S. 58, 63 (1988). A First Amendment defense is warranted if there is evidence that the speaker's purpose or words are mere abstract teaching of the moral propriety of opposition to the income tax law. See Brandenburg v. Ohio , 395 U.S. 444, 447-48 (1969). "The cloak of the First Amendment envelops critical, but abstract, discussions of existing laws, but lends no protection to speech which urges the listener to commit violations of current law." United States v. Kelley [85-2 USTC ¶9592 ], 769 F.2d 215, 217 (4th Cir. 1985) (construing Brandenburg ).

The evidence in this case, however, does not support a First Amendment defense. The defendants' words and acts were not remote from the commission of the criminal acts. The evidence shows that the defendants held meetings and collected money from attendees whom they instructed and advised to claim unlawful exemptions and not to file income tax returns or pay tax on wages in violation of the United States Tax Code. The evidence shows that the attendees followed the instruction and advice of the defendants, that the attendees' unlawful actions were solicited by the defendants, and that the defendants were aware that the attendees were following their instructions and advice. The evidence discloses that a purpose of the meetings was to encourage people to unlawful actions by convincing them that it was legal to claim false exemptions, to hide income, and to refuse to file income tax returns or pay income tax. The facts in this case are similar to those in United States v. Kelly [85-2 USTC ¶9592 ], 769 F.2d 215 (4th Cir. 1985), in which this court held that Kelly's First Amendment claim was frivolous, and to those in United States v. Buttorff [78-1 USTC ¶9265 ], 572 F.2d 619 (8th Cir. 1978), cert. denied, 437 U.S. 906, in which the court held there was no First Amendment protection. We conclude that no reasonable juror could conclude that the defendants' words and actions were merely advocating opposition to the income tax laws.

We think the defendants' reliance on United States v. Freeman [85-1 USTC ¶9421 ], 761 F.2d 549 (9th Cir. 1985), is misplaced. That case held that a First Amendment defense was applicable to twelve counts of a fourteen count indictment but was not applicable to two counts. In Freeman, with respect to the counts to which the First Amendment was held to apply, the court held that the defendant ". . . directed his comments at the unfairness of the tax laws generally, without soliciting or counselling a violation of the law in an immediate sense." Freeman [85-1 USTC ¶9421 ], at 551-552. In our case, however, the Freeman reasoning does not apply, and the words of this court in Kelley do. As in Kelley, "[i]t was no theoretical discussion of noncompliance with law; action was urged; the advice was heeded and false forms were filed." Kelley [85-2 USTC ¶9592 ], at p. 217.

The defendants' assignment of error regarding requested jury instructions #34 and #35 regarding evidence required to prove a conspiracy likewise has no merit. ⁴ The district court instructed the jury as follows:

What the evidence in the case must show beyond a reasonable doubt the following four elements: First, that two or more persons in some way or manner, positively or tacitly, came to a mutual understanding to try to accomplish a common and unlawful plan, as charged in the indictment.

Second, that the defendant you're considering willfully became a member of such conspiracy. Third, that one of the conspirators during the existence of the conspiracy knowingly committed at least one of the means or methods or overt acts described in the indictment. Fourth, that such overt act was knowingly committed at or about the time alleged in an effort to effect or accomplish some object or purpose of the conspiracy.

An overt act is any transaction or event, even one which may be entirely innocent when considered alone, but which is knowingly committed by a conspirator in an effort to accomplish some object of the conspiracy.

One may become a member of a conspiracy without full knowledge of all of the details of the unlawful scheme or the names and identities of all of the other alleged conspirators. So, if a defendant, with an understanding of the unlawful character of a plan, knowingly and willfully joins in an unlawful scheme on one occasion, that is sufficient to convict him for a conspiracy even though he had not participated at earlier stages in the scheme and even though he played only a minor part in the conspiracy.

Of course, mere presence at the scene of an alleged transaction or event, or mere similarity of conduct among various persons and the fact that they may have associated with each other, and may have assembled together and discussed common aims and interests, does not necessarily establish proof of the existence of a conspiracy. Also, a person who has no knowledge of a conspiracy, but who happens to act in a way which advances some object or purpose of a conspiracy, does not thereby become a conspirator.

The court's instructions to the jury on conspiracy, read as a whole, were not misleading and contained an adequate statement of the elements necessary to convict the defendants of conspiracy. Additionally, both refused instructions amount to little, if anything more than comments on the weight of the evidence, which, although permissible, are not required. The district court did not err in refusing instructions 34 and 35.

The defendants' assignment of error with respect to refusing requested instructions 48 and 49 is without merit. Even if applicable, and called for in any case, the record does not support giving them here. ⁵

IV

The defendants' next assignment of error is as follows: The trial court erred in not granting a verdict in favor of the defendants on the basis that the Constitutional foundation for the federal income tax is uncertain and that prosecution of defendants violated due process.

We are of opinion this assignment of error is without merit.

V

Clarkson challenges his sentence, claiming that the district court incorrectly calculated the amount of tax loss attributable to him and erred in refusing to give him a downward departure of two levels for acceptance of responsibility. Clarkson's base level for sentencing is based on the tax loss which includes the loss from all acts and omissions occurring as part of the same course of conduct or common scheme or plan. U.S.S.G. §2T1.9(a)(1), §1B1.3(a)(2). The government asked the district court to find a tax loss of $330,093.26, but the district court adopted the recommendation of the probation officer in the presentence report, that the amount of tax loss attributable to Clarkson was $295,817.62. Clarkson objects to this amount claiming that it includes calculations for loss involving conduct that was not part of the same course of conduct or common scheme of the conspiracy for which he was convicted.

Clarkson's argument is unpersuasive. Clarkson's conduct in furtherance of the conspiracy is not defined by or confined to just those occasions in which the three defendants were physically together or acted in unison at the Patriot meetings. $219,051.62 of the calculated tax loss was based on conduct by Clarkson occurring during the relevant time period in which Clarkson operated a business known as D-G Labor Services, Inc., which provided individuals for employment to other businesses. Clarkson compensated his D-G Labor Services workers in such a way as to avoid withholding taxes and issuance of IRS W-2 forms. This was a method consistent with and related to that proved at trial of evading or camouflaging income. See Guideline 2T1.1, Application Note 2. The district court was not clearly erroneous in finding that these actions by Clarkson although not necessarily associated with people connected with the Patriot meetings were consistent with the course of conduct and common scheme of the conspiracy.

We have also considered Clarkson's claim that the district court erred in denying a downward departure for acceptance of responsibility and conclude that it has no merit.

The judgment of the district court is accordingly

AFFIRMED.

¹ 18 U.S.C. §371 states:

If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not more than five years or both.

² The government persuasively argues that the defendants' brief does not identify except by page number the testimony complained of. We do not rely on this for our decision, however.

³ Defendants requested the following instructions on a First Amendment defense:

#46. The first amendment to the Constitution protects a speaker's words and expressions unless both the intent of the speaker and the tendency of the speaker's words was likely to produce or incite an imminent lawless act, one likely to occur.

The first amendment protects speech that merely advocates non-compliance with the law. If you determine that a speaker's purpose, or the tendency of the speaker's words, was directed to ideas or results remote from the purposes or objective of the alleged conspiracy, then that speech is protected. However, if the intent of the speaker and the tendency of the speaker's words was to produce or incite an imminent lawless act, then the speech is not protected by the first amendment.

#38. A "conspiracy to defraud the United States " is not proven by the mere open defiance of a governmental purpose to enforce a law by urging persons subject to it to disobey it.

⁴ Defendants requested the following:

34. To prove a conspiracy to defraud the United States , there must be proof or evidence submitted which shows something more than completely external interference with the workings of a governmental program, functions or disregard for federal laws.

35. A conspiracy to defraud the United States is not proven by simply showing that parties, including the Defendants, failed to file tax returns and disclose income.

⁵ 48. Reliance upon a decision of the United States Supreme Court is a defense to the element of wilfulness. If you find that the Defendant relied, in good faith, upon a Supreme Court decision, then you must find him not guilty.

49. An American citizen such as the Defendant has a right the [sic] rely upon representations and statements made by the government and appearing in official publications.

 

 

[2002-1 USTC ¶50,207] United States of America , Appellee v. Charles A. Willis, Appellant

(CA-8), U.S. Court of Appeals, 8th Circuit, 01-2912, 1/24/2002 , 277 F3d 1026

277 F3d 1026

2002 U.S. App. LEXIS 931. Affirming an unreported District Court decision.

[Code Sec. 7203 ]

Criminal penalties: Tax evasion: Affirmative act of evasion: Jury instructions: Good faith.--The government presented sufficient evidence for a jury to conclude that a pro se individual who attempted to conceal his whereabouts from the IRS affirmatively attempted to evade his tax obligations for two tax years. The district court did not err in failing to instruct the jury that a conviction for tax evasion required the finding of an affirmative act of evasion, nor did it abuse its discretion in issuing a "willful blindness" instruction regarding the taxpayer's purported belief that he was not required to pay taxes. In addition, its instruction properly defined good faith as a belief honestly held and an absence of malice or ill.

[Code Sec. 7203 ]

Criminal penalties: Tax evasion: Evidentiary hearing: Jury misconduct, not proven.--The district court did not abuse its discretion by not holding an evidentiary hearing regarding alleged jury misconduct during a pro se individual's trial for tax evasion. Although the foreman worked for a competitor of a firm previously owned by the taxpayer, the taxpayer did not challenge the foreman's jury service. In addition, the district court was not required to provide the taxpayer with non-exculpatory documents concerning a tax protest organization that allegedly influenced his belief that he was not obligated to pay taxes.

[Code Sec. 7203 ]

Criminal penalties: Tax evasion: Sentencing guidelines: Tax loss.--The district court's finding on the amount of tax loss determining a pro se taxpayer's sentencing guidelines for tax evasion relating to two tax years was not clearly erroneous. The court based its determination on evidence presented to a jury by IRS agents.

Lizabeth A. McKibben, United States Attorney's Office, Minneapolis , Minn. , for appellee. Charles A. Willis, Plymouth, Minn., pro se. John William Lundquist, Steven Zane Kaplan, Dulce J. Foster, Fredrikson & Byron, Minneapolis, Minn., for appellant.

Before: MCMILLIAN and MURPHY, Circuit Judges, and BATTEY, District Judge. ¹

MURPHY, Circuit Judge:

After Charles A. Willis was convicted by a jury on two counts of tax evasion, he moved for a new trial based on alleged insufficiency of evidence, errors in the instructions and evidentiary rulings, and juror misconduct. A second retrial motion alleged violations of his rights under Brady v. Maryland, 373 U.S. 83, 10 L.Ed.2d 215, 83 S.Ct. 1194 (1963). The district court ² denied both motions and sentenced him to 27 months. Willis appeals the denial of the motions and his sentence. We affirm.

I.

In the tax years 1995 through 1997, Charles Willis worked as a shareholder and officer of Connectivity Systems, Inc., a business founded by his father, where he earned taxable income of nearly $1.5 million. ³ Willis testified at trial that in 1996, as a result of a conversation with a Connectivity employee, he began to believe that payment of federal income taxes was not compulsory. ⁴ He purchased books on the subject and spoke with lawyers and accountants. Most of those with whom he spoke told him that payment was compulsory, and even those materials which encouraged his belief told him that it was contrary to the view of the Internal Revenue Service (IRS) and the courts. Willis also researched the issue in statutes and casebooks, despite having no legal training.

Willis rejected a return prepared by an accountant for his 1995 tax year because of his view that payment was voluntary. He instead prepared his own return which showed deductions equal to his 1995 income and requested a refund of the amount previously withheld by Connectivity, approximately $170,000. The IRS rejected this return as frivolous and began an investigation. In the course of the investigation, Willis told IRS agents that he was unable to find any legal authority requiring him to file tax returns. An IRS agent testified that she offered to send Willis a brochure explaining his obligation to pay, with citations to cases and statutes. She reported that Willis declined her offer, instead demanding that she "cite the law off the top of [her] head." She eventually mailed the brochure to Willis, who claims that he did not receive it.

Willis failed to file a return for the 1996 and 1997 tax years. In 1996 he drafted and filed a "substitute W-4" form stating that he was "excluded" from withholding. After receiving the form Willis had drafted, Connectivity continued to report his income to the IRS but no longer withheld taxes from his earnings.

In March 2000 Willis was charged with three counts of tax evasion in violation of 26 U.S.C. §7201: ⁵ for the years 1995, 1996, and 1997. The case was tried before a jury which convicted him on the counts relating to 1996 and 1997 but deadlocked on the one for 1995. His motions for a new trial were denied by the district court which then sentenced him to 27 months in prison.

Willis appeals from the denial of his motions for a new trial on the grounds that the evidence presented at trial was insufficient to convict him and that the court improperly excluded evidence and erred in its instructions to the jury. He also alleges that he is entitled to a new trial because of alleged juror misconduct and because of the government's failure to disclose evidence under Brady v. Maryland, 373 U.S. 83, 87, 10 L.Ed.2d 215, 83 S.Ct. 1194 (1963). Finally, ⁶ he argues that the district court did not use the correct base offense level in its sentencing calculation under the guidelines.

II.

The government must prove three elements in order to obtain a conviction under §7201: a tax deficiency, willfulness, and an affirmative act of evasion or attempted evasion of the tax. United States v. Brooks, 174 F.3d 950, 954 (8th Cir. 1999). Willis does not now dispute that he owed taxes for income earned in 1996 and 1997, and we consider in turn each of his points on appeal.

A.

Willis argues that the evidence presented by the government was insufficient to convict him. A motion for a new trial should be granted if there is insufficient evidence to support the verdict. Larson v. Farmers Coop. Elevator of Buffalo Ctr., 211 F.3d 1089, 1095 (8th Cir. 2000). A question regarding the sufficiency of the evidence is reviewed de novo, considering the evidence in the light most favorable to the government. Brooks, 174 F.3d at 954.

Willis contends that the government presented insufficient evidence of one element for conviction under §7201: an affirmative act of evasion or attempted evasion of the tax. This element is satisfied by proof of any affirmative conduct which has the likely effect to mislead or conceal. Id. at 956. Willis contends that the failure to file is not itself an affirmative act and that his conduct was neither evasive nor misleading. He openly communicated to IRS agents and others that he did not believe he was required to pay taxes.

The government presented evidence sufficient for the jury to conclude that Willis affirmatively attempted to evade his obligation to pay taxes. There was also evidence that Willis attempted to conceal his whereabouts by selling his home and permitting himself to be contacted by cell phone only. The evidence was sufficient to prove attempted evasion of the tax.

B.

Willis raises several issues with respect to the court's instructions to the jury. A court's instructions are generally reviewed for abuse of discretion. United States v. Beckman, 222 F.3d 512, 520 (8th Cir. 2000). A judgment will be reversed on the basis of instructional error only if the error affected the substantive rights of the parties. White v. Honeywell, Inc., 141 F.3d 1270, 1278 (8th Cir. 1998). The question is whether the instructions "taken as a whole and viewed in the light of the evidence and applicable law, fairly and adequately submitted the issues in the case to the jury." Id. (quoting Kim v. Nash Finch Co., 123 F.3d 1046, 1057 (8th Cir. 1997)).

First, Willis contends that the court erred in failing to instruct that a conviction under §7201 requires the finding of an affirmative act of evasion. The court instructed the jury that it could convict only upon a finding that Willis had attempted to evade and defeat the tax which he owed, an element involving both "an intent to evade or defeat the tax [and] some act willfully done in furtherance of such intent." According to the instruction, this element is satisfied if the defendant "willfully failed to report" income which he knew he must report or attempted to evade or defeat the tax in some other manner. The jury was instructed further that to evade or defeat a tax means "to escape paying [it] by means other than lawful avoidance." Willis charges that this instruction permitted the jury to convict him even if it did not find an affirmative act of evasion. Because he failed to object on this basis at trial, our review is for plain error which is error that affected his "substantial rights." United States v. Pinque, 234 F.3d 374, 378 (8th Cir. 2000), cert. denied, 149 L.Ed.2d 1013, 121 S.Ct. 2012 (2001) (quoting United States v. Jorgensen, 144 F.3d 550, 560 (8th Cir. 1998)); Fed. R. Crim. P. 30. No such error is present here. The instruction clearly prohibited the jury from convicting Willis unless it found some act "willfully done" in furtherance of an intent to evade or defeat the tax he owed.

Next, Willis contends that the court erred in issuing a willful blindness instruction. The court instructed the jury that the necessary element of knowledge could be inferred

if the defendant deliberately closed his eyes to what otherwise would have been obvious to him. You may not find the defendant acted knowingly, however, if you find that the defendant actually believed he had no duty to pay taxes. A showing of negligence, mistake or carelessness is not sufficient to support a finding of knowledge.

A willful blindness or deliberate indifference instruction is appropriate when there is evidence to "support the inference that the defendant was aware of a high probability of the existence of the fact in question and purposely contrived to avoid learning all of the facts in order to have a defense" against subsequent prosecution. United States v. Barnhart, 979 F.2d 647, 652 (8th Cir. 1992).

Willis argues that the evidence shows that he actively sought to learn his obligations under the law by consulting accountants and lawyers and by reading materials on the subject; the willful blindness instruction should therefore not have been given. Willis objected to this instruction at trial and so we review the court's decision to give it for abuse of discretion. Beckman, 222 F.3d at 520 (8th Cir. 2000). The government presented evidence sufficient to support the deliberate indifference instruction here. Testimony from the lawyers and accountants Willis approached, as well as IRS agents, indicate that he was eager to convince them that payment of taxes was voluntary and was unwilling to hear any contrary view. The very documents upon which Willis says he relied in forming his belief expressly warned that the IRS and the courts did not agree. A jury could reasonably conclude from this evidence that Willis was aware of a high likelihood that he was required to pay taxes and attempted to avoid learning the truth. The willful blindness instruction was therefore appropriate.

Finally, Willis argues that the court erred in its instruction on good faith. The jury was instructed that

[a] defendant's good faith is recognized as a defense to the charge of tax evasion, because good faith on the part of a defendant is simply inconsistent with the willful intent to violate the law with which he's charged. [Good faith] encompasses, among other things, a belief or opinion honestly held, and an absence . . . of malice or ill will. A person who acts on an honestly held belief or opinion is not punishable under the law merely because the opinion or belief turns out to be inaccurate, incorrect, or wrong. An honest mistake in judgment or an honest error does not rise to the level of criminal conduct.

Willis objected at trial and argues now that this instruction erroneously led the jury to believe that he could be acquitted only if his beliefs were reasonable. He suggests that the court should have expressly instructed the jury to acquit him if he sincerely believed his actions were lawful, even if that belief was unreasonable. The instruction clearly told the jury to determine whether his belief was sincere and honest rather than whether it was reasonable, and the court did not abuse its discretion in declining to add the language suggested by Willis.

Willis also contends that this instruction was erroneous because under it the jury could not find both good faith and malice or ill will toward the IRS. As he points out, the absence of malice or ill will is not required for a good faith defense under §7201. See Brooks , 174 F.3d at 955. See also Cheek v. United States [91-1 USTC ¶50,012], 498 U.S. 192, 202-03, 112 L.Ed.2d 617, 111 S.Ct. 604 (1991); Eighth Circuit Criminal Jury Instructions §9.08 (2000). Willis presented considerable evidence of his anger toward the IRS over the Connectivity payroll tax embezzlement, and he now argues that this evidence of ill will could have led the jury to discredit his good faith defense. Willis did not object on this basis at trial and so our review is limited to a determination of whether the trial court committed plain error in violation of his substantial rights. Pinque, 234 F.3d at 378. Plain error will be found "only where necessary to prevent a miscarriage of justice." United States v. Neumann, 887 F.2d 880, 882 (8th Cir. 1989) (en banc). No such error is present here. Although a lack of malice is not itself a requirement for the good faith defense, a finding of malice could lead the jury to find that Willis' beliefs were not honestly held. The government presented considerable evidence to support the jury's finding that a defense of good faith did not apply. The court's instruction did not violate Willis' substantial rights.

C.

At trial Willis sought to introduce materials upon which he allegedly relied in forming a belief that he was not required to pay taxes. These materials included statutes and judicial opinions, as well as three boxes of documents from groups supporting his view. Willis argued that these materials were probative evidence of his honest understanding that he was not required to pay taxes. The court permitted Willis to introduce several of these documents, and it allowed Willis to testify about the remaining material which was excluded as cumulative and prejudicial.

Willis contends that the excluded evidence was relevant and that the court erred by not admitting it. Cf. United States v. Gaumer [92-2 USTC ¶50,444], 972 F.2d 723, 725 (6th Cir. 1992) (error to exclude all documents contributing to belief that defendant was not required to pay taxes). Willis has not shown how the excluded documents would have added new insight into the formation of his beliefs beyond the materials that were permitted into evidence. These documents were cumulative, Fed.R.Evid. 403, and so the court did not abuse its discretion in excluding them. Cf. United States v. Nash, 175 F.3d 429, 434-36 (6th Cir. 1999) (permissible to exclude some materials contributing to belief that payment of taxes is not required). Moreover, introduction of the statutes and judicial opinions would have had a high potential to confuse the jury and conflict with the court's responsibility to instruct on the law. Willis had been permitted to explain the source of his beliefs and to introduce other exhibits on which he relied, and the district court did not err in excluding the additional documents. Fed.R.Evid. 403.

D.

In connection with his motions for a new trial, Willis presented evidence from a friend of his father about alleged juror misconduct. That individual stated he had had a conversation with the employer of the jury foreperson. The friend of Willis's father said that the employer had told him that the foreperson had spoken with him the night before the verdict and said that "it didn't look good for Willis." The father's friend also stated that the foreperson and his employer had discussed the fact that their company was a competitor of a firm previously owned by Willis. After Willis made this allegation, an IRS agent was sent to interview the foreperson who said that he had told his employer only the name of Willis' case, the name of the firm previously owned by Willis, and the length of his expected absence from work.

Willis contends that the court should have held an evidentiary hearing before concluding that there had been no juror misconduct. See United States v. Behler, 14 F.3d 1264, 1268 (8th Cir. 1994) (citing Remmer v. United States [54-1 USTC ¶9274], 347 U.S. 227, 230, 98 L.Ed. 654, 74 S.Ct. 450 (1954)). The trial court has broad discretion in handling allegations of juror misconduct. United States v. Williams, 77 F.3d 1098, 1100 (8th Cir. 1996). Any contact with a juror during trial about the case before the juror is presumptively prejudicial, Behler, 14 F.3d at 1268, but this presumption can be rebutted if "the proper reaction of the court establishes that the defendant has not been prejudiced." Id. (quoting United States v. Rowley, 975 F.2d 1357, 1363 (8th Cir. 1992)). The foreperson had revealed at voir dire that he worked for a competitor of Willis' previous company, but Willis made no challenge to his jury service then or during trial. We conclude that the court did not abuse its discretion by not holding an evidentiary hearing or in finding that these allegations based on multiple hearsay were "nearly spurious."

E.

Willis made a Brady motion before trial requesting any exculpatory evidence, specifically including any documents in the possession of the government concerning a program known as "De-Taxing America." Willis testified at trial that he had relied on materials from De-Taxing America in forming his belief that he was not obligated to pay taxes. The government responded that it possessed no such evidence.

After trial Willis discovered that the founders of De-Taxing America had been investigated by the IRS and permanently enjoined from marketing the program. See United States v. Raymond, 78 F.Supp.2d 856 (E.D. Wis. 1999), aff'd [2000-2 USTC ¶50,750], 228 F.3d 804 (7th Cir. 2000), cert. denied, 150 L.Ed.2d 230, 121 S.Ct. 2242 (2001). Willis contends that evidence that others had been misled by the De-Taxing America materials would have supported his claim that he had honestly believed that he was not obligated to pay taxes. He argues that the government should have provided him with information regarding the case against De-Taxing America, including deposition transcripts, affidavits, notes, and correspondence.

To establish a Brady violation, the defendant must show that the prosecution suppressed material evidence favorable to him. United States v. Keltner, 147 F.3d 662, 673 (8th Cir. 1998). Evidence is material only if there is a reasonable probability that the result of the trial would have been different if it had been disclosed. Id. The De-Taxing America material does not meet this standard. The injunction against the De-Taxing America program was a matter of public record at the time of trial. As the district court observed, the information Willis sought was available by merely entering the phrase "De-Taxing America" into a search engine on a legal database such as Westlaw or Lexis. Willis claims that research conducted by his attorney before trial failed to uncover any government action against De-Taxing America, but the district and appellate court opinions in Raymond were filed in July 1999 and September 2000, and the existence of an injunction against the De-Taxing America program was publicly available knowledge at the time trial began in December 2000. Publicly available information which the defendant could have discovered through reasonable diligence cannot be the basis for a Brady violation. United States v. Jones, 160 F.3d 473, 479 (8th Cir. 1998). Moreover, the office prosecuting Willis was not in charge of the Raymond prosecution and was not in possession of non public materials from that case. Most significantly, this material was not materially exculpatory. Government witnesses testified before the jury that they had received materials drafted by De-Taxing America from many individuals, not just from Willis. Additional evidence that others had followed that program would not have created a reasonable probability of a different result at trial. We conclude there was no Brady violation.

F.

Finally, Willis challenges his sentence. He claims the court erred in its finding on the amount of tax loss which led to a base offense level of 16 instead of 15.

The court found that the government had suffered a tax loss in an amount between $200,000 and $325,000, which corresponds to a base offense level of 16 under the United States Sentencing Guidelines. See United States Sentencing Commission, Guidelines Manual §2T4.1 (Nov. 2000). This base offense level and a criminal history category of I resulted in a sentencing range of 21 to 27 months. The court sentenced Willis to 27 months, the upper point of that range. Willis contends that the loss should have been less than $200,000, based on amended returns he filed just before trial. That loss amount would have given him a base offense level of 15 and a guidelines range of 18 to 24 months.

The district court's factual findings regarding the amount of tax loss will be upheld unless clearly erroneous. United States v. Oseby, 148 F.3d 1016, 1025 (8th Cir. 1998). In this case, the court based its determination of the amount of tax loss on evidence presented at trial by IRS agents. Willis argues that the district court improperly relied on the Presentence Investigation Report rather than making its own independent findings of fact, see United States v. Olbres [96-2 USTC ¶50,670], 99 F.3d 28, 30-32 (1st Cir. 1996), but the court expressly relied on testimony "proven at trial [and] shown before a jury." It commented that Willis did not "seriously challenge" this testimony. Instead, Willis relied on tax forms filed in September 2000 after he was indicted. The court chose to disregard Willis' own calculation in favor of trial evidence. Its factual finding of the amount of loss was not clearly erroneous.

III.

After studying the record, we conclude that Willis is not entitled to either a new trial or to resentencing, and we affirm the judgment of the district court.

¹ The Honorable Richard H. Battey, United States District Judge for the District of South Dakota, sitting by designation.

² The Honorable James M. Rosenbaum, Chief Judge , United States District Court for the District of Minnesota.

³ The parties do not dispute that Willis paid income taxes on his earnings prior to 1995. For the 1994 tax year the taxes paid amounted to approximately $134,000.

⁴ Another explanation for Willis' attitude towards the tax system emerged at trial. In 1996 Connectivity discovered that a contract payroll company working for it had embezzled payroll tax funds rather than remitting them to the IRS. See United States v. Ervasti [2000-1 USTC ¶50,173], 201 F.3d 1029 (8th Cir. 2000). Connectivity was then required to remit to the IRS additional funds beyond those already provided to the payroll company for payment of its taxes. Willis testified that he felt that the IRS was at least partly responsible for Connectivity's lost funds.

⁵ Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $100,000 . . . or imprisoned not more than 5 years, or both, together with the costs of prosecution.

26 U.S.C. §7201.

⁶ Willis also charges that the court consistently made rulings prejudicial to him, but he cites only one example--the allegedly inconsistent treatment of two letters. One letter had been mailed by an IRS agent to Willis, and he had sent the other to the IRS. His letter was excluded for lack of foundation, but the IRS letter was admitted despite what he says was weaker foundation. Willis has not shown an abuse of the court's discretion in ruling on the admissibility of evidence, by this example or otherwise. See United States v. Jackson, 914 F.2d 1050, 1053 (8th Cir. 1990) (standard of review).

Willis further alleges that the court made "embarrassing and gratuitous criticisms" of his counsel throughout the trial, but a review of the record finds this charge baseless.

 

 

[2002-1 USTC ¶50,157] United States of America , Appellee v. John J. Feola, Defendant-Appellant

(CA-2), U.S. Court of Appeals, 2nd Circuit, 01-1321, 12/26/2001 , 275 F3d 216

275 F3d 216

2001 U.S. App. LEXIS 27192. Affirming an unreported District Court decision.

[Code Secs. 7203 and 7206 ]

U.S. Sentencing Guidelines: Bank fraud: Willful failure to file return: Penalties, criminal.--An individual who was convicted of bank fraud and willful failure to file a tax return was properly sentenced under the U.S. Sentencing Guidelines. The district court's consideration of the taxpayer's income generated by his wife's embezzlement activities in calculating the tax loss attributable to him was not clearly erroneous. Additionally, the imposition of a 24-month sentence for the taxpayer's bank fraud offense, which was imposed with a concurrent sentence of 12-months for the taxpayer's conviction for willful failure to file a tax return, was affirmed.

Joseph A. Pavone, United States Attorney, Michael C. Olmsted, Elizabeth S. Riker, Assistant United States Attorneys, Syracuse, N.Y., for appellee. Jack R. Maro, Ocala , Fla. , for defendant-appellant.

Before: WALKER, Chief Judge, NEWMAN and PARKER, Circuit Judges.

Per Curiam"

EC: This appeal of a sentence primarily concerns a claim that "relevant conduct," calculated pursuant to the Sentencing Guidelines, U.S.S.G. §1B1.3, has been used to increase a sentence above a statutory maximum in violation of the rule of Apprendi v. New Jersey , 530 U.S. 466, 147 L.Ed.2d 435, 120 S.Ct. 2348 (2000). The precise issue is whether conduct relevant to an offense charged in one count may enhance a concurrent sentence on a second count that is less than the maximum statutory sentence for the second count but more than the maximum statutory sentence for the first count. We conclude that such enhancement does not conflict with Apprendi, and we therefore affirm.

Appellant John J. Feola appeals from his sentence entered by the district court on July 3, 2001, after conviction upon a guilty plea, of concurrent terms of twenty four months' imprisonment for bank fraud, in violation of 18 U.S.C. §1344, and 12 months' imprisonment for willfully failing to file a federal income tax return for the 1998 tax year, in violation of 26 U.S.C. §7203.

Between 1995 and 2000, appellant's wife embezzled nearly four million dollars from her employer by submitting checks with a forgery of her employer's signature to a bank. The joint tax returns filed by the Feolas for the years 1996 and 1997 did not reflect the embezzled money as income and the couple failed to file tax returns for 1998 and 1999. In 1999, the Feolas submitted a copy of a 1998 tax return, which they falsely represented had been filed with the IRS, to a bank in support of a loan application. As a result of these activities, Mrs. Feola pled guilty to one count of bank fraud based on the embezzlement scheme and one count of filing a fraudulent tax return for 1997, and appellant Feola pled guilty to one count of failure to submit a 1998 tax return and one count of bank fraud for the fraudulent loan application.

Based on its calculation that appellant had an income of $47,000.00 during 1998, the Government stipulated to an offense level of 9 for appellant's tax count in the plea agreement. The Presentence Report ("PSR"), however, found that appellant received an additional $776,280.00 in 1998 from Mrs. Feola's embezzlement scheme, and also counted as relevant conduct their filing of the joint tax returns in 1996 and 1997, which did not reflect the embezzled income, as well as their failure to file a tax return in 1999. According to the PSR, the total tax loss for the years 1996 through 1999 amounted to $1,341,767, resulting in an offense level of 19.

The district court agreed with the PSR, finding "almost inconceivable" appellant's arguments that he believed his wife when she told him that the money was a loan from her employer or that he did not know about the existence of the money at all. After reducing the offense level by 3 for acceptance of responsibility, the district court determined the total offense level to be 16, and sentenced appellant to concurrent terms of 24 months on the bank fraud count and the statutory maximum of 12 months on the tax count.

Appellant argues that the district court erred in calculating his sentence under the guidelines because (1) the district court should not have considered the embezzlement income generated by his wife's activities in calculating the tax loss attributable to him; and (2) the district court violated the holding of Apprendi because conduct relevant to the tax offense resulted in a concurrent sentence on the fraud count that exceeded the statutory maximum of one year on the tax count.

1. Calculation of Tax Loss

Facts in support of sentencing need only be proven by a preponderance of the evidence. See United States v. Sutton, 13 F.3d 595, 599 (2d Cir. 1994) (per curiam) (citations and quotation marks omitted). We review a district court's factual findings for clear error and its application of the Sentencing Guidelines de novo. United States v. Fitzgerald [2001-1 USTC ¶50,245], 232 F.3d 315, 318 (2d Cir. 2000). In determining the total tax loss attributable to the offense, "all conduct violating the tax laws should be considered as part of the same course of conduct or common scheme or plan unless the evidence demonstrates that the conduct is clearly unrelated." U.S.S.G. §2T1.1, cmt. n.2.

Appellant argues that his failure to submit a tax return in 1999 and the understatement of income in the 1996 and 1997 returns cannot be considered relevant conduct because he was unaware that the funds were received as a result of embezzlement, and thus lacked criminal intent. We find that the district court's decision to discredit the assertion that appellant thought the money was a loan to his wife from her employer was not clearly erroneous, given that appellant knowingly submitted a fraudulent tax return to the bank in 1999, and that between 1995 and 1999, sums of money spent by appellant far exceeded the income earned by either spouse, that significant portions of the embezzled money went into the business appellant operated, and that appellant and his wife purchased a plot of land for $235,000 and a mobile home and put a down payment on a house.

Appellant's argument that the district court cannot consider as relevant conduct activity that was not included in the indictment has no merit. See Fitzgerald [2001-1 USTC ¶50,245], 232 F.3d at 318 (holding that state and city tax evasion considered relevant conduct under conviction for federal tax evasion); United States v. Bove, 155 F.3d 44, 47-48 (2d Cir. 1998) (holding that uncharged failure to declare W-2 income for 1992 tax year was relevant conduct for conviction of submitting false tax return in 1993 tax year); United States v. Silkowski, 32 F.3d 682, 687 (2d Cir. 1994) (stating that uncharged conduct may be considered relevant conduct for sentencing purposes).

2. Apprendi Claim

Nor are we persuaded by appellant's contention that the district court's sentence implicated the Supreme Court decision in Apprendi. In that decision the Court ruled that a fact must be alleged in an indictment and found by a jury beyond a reasonable doubt if it results in a sentence for a crime above the maximum specified by statute for that crime. Apprendi, 530 U.S. at 490 ("Other than the fact of a prior conviction, any fact that increases the penalty for a crime beyond the prescribed statutory maximum must be submitted to a jury, and proved beyond a reasonable doubt."). Since Apprendi, we have ruled that the decision applies to a fact that increases a statutory minimum sentence for an offense to a point above the otherwise applicable Guidelines range, United States v. Guevara, No. 00-1133, 2001 WL 1613512, at *4 (2d Cir. Dec. 18, 2001), but that it does not apply to a fact that determines a Guideline range within a statutory maximum sentence, United States v. Garcia, 240 F.3d 180, 183-84 (2d Cir. 2001). Appellant contends that his 24-month sentence for the bank fraud offense violates Apprendi because the Guideline range that resulted in that sentence was enhanced by conduct relevant to his tax offense for which the statutory maximum sentence is 12 months.

Understanding appellant's argument and ultimately its lack of merit requires some explanation of the Guidelines' provisions for sentencing a defendant convicted on multiple counts. First, counts "involving substantially the same harm" are "grouped" together. U.S.S.G. §3D1.2. Next, an offense level for each group is determined either by using the offense level, enhanced by relevant conduct, for the most serious offense within the group, or, if counts involving drugs or money are within the group, using the offense level for the aggregate quantity of drugs or money, enhanced by relevant conduct. Id. §3D1.3(a), (b). Next, a combined offense level is determined by using the offense level for the group with the highest level and then adjusting upward depending on the offense levels of the other groups. Id. §3D1.4. Next, a total punishment is selected, using the sentencing range prescribed for the combined offense level and the appropriate criminal history category. Id. §3D1.5. Finally, sentences are imposed by sentencing the defendant to the prescribed total punishment on each count, up to the statutory maximum for that count; if at least one count carries a statutory maximum greater than the prescribed total punishment, the sentences are concurrent, but if the total punishment exceeds the statutory maximums on all counts, the sentences are imposed consecutively to the extent necessary to achieve the prescribed total punishment. Id. §5G1.2; see United States v. McLeod, 251 F.3d 78, 83 (2d Cir. 2001); United States v. Rahman, 189 F.3d 88, 155 (2d Cir. 1999).

In appellant's case, the relevant conduct for his tax offense enhanced his offense level for that offense to 16. Had that been his only offense, the prescribed sentence, in Criminal History Category II, would have been within a range of 24-30 months, which could not have been imposed on the tax count because the statutory maximum was 12 months. However, under the multi-count sentencing rules, U.S.S.G. §5G1.2(b), (c), the prescribed sentence within the range of 24-30 months was required to be imposed on the bank fraud count, for which the statutory maximum was 360 months. 18 U.S.C. §1344. The minimum sentence in that range, 24 months, was imposed on the bank fraud count to run concurrently with the 12-month sentence on the tax count.

The propriety of permitting relevant conduct for one offense to enhance an aggregate sentence on multiple counts has already been upheld in this Circuit, albeit in slightly different circumstances, in United States v. White, 240 F.3d 127, 135-36 (2d Cir. 2001). In White, relevant conduct was used to determine an offense level that called for a total punishment in excess of the statutory maximums for any of the defendant's individual counts. In conformity with U.S.S.G. §5G1.2(d), the total punishment was achieved by sentencing the defendant to the statutory maximum on each count and then running those sentences consecutively.

In appellant's case, had his 24-month aggregate sentence been achieved by imposing a 12-month sentence on the bank fraud count and running it consecutively to the 12-month sentence on the tax count, the result would have been valid under White, even though the 24-month total punishment would have been determined based on conduct relevant to his tax offense. Since appellant did not receive a sentence greater than the maximum sentence on any count, and since consecutive sentences could have been imposed on appellant to achieve the 24-month sentence without violating the rule in Apprendi, it would make no sense to deem that decision an obstacle to his sentence simply because, under the Guidelines, the availability of a 30-year statutory maximum on the bank fraud count, 18 U.S.C. §1344, required the total punishment of 24 months (selected from the range of 24-30 months) to be imposed on that count, to run concurrently with the 12-month sentence on the tax count. Either way, conduct relevant to the tax offense will result in an aggregate sentence greater than the statutory maximum for that offense. However, the aggregate sentence is imposed because appellant has committed two offenses, not because a statutory maximum for any one offense has been exceeded. ¹

For the reasons set forth above, the judgment of the district court is affirmed.

¹ We recognize that in Apprendi the Supreme Court rejected the State's argument that the challenged sentence should have been upheld because the same aggregate sentence could have been imposed by using consecutive sentences. Apprendi, 530 U.S. at 474. However, the vice in Apprendi was the imposition of a sentence on a single count (Count 18) in excess of the statutory maximum for that count. In the pending case, the appellant's sentences on each count is within the statutory maximum for that count. The consecutive sentence analogy from White therefore encounters no obstacle under Apprendi.