Enhanced
Sentence
Page1
7203:
Willful Failure to File Return, Supply Information, or Pay Tax:
Sentence:
U.S.
Sentencing Commission Guidelines: Enhanced Sentence
[2005-2
USTC ¶50,507]
United States of America
, Plaintiff-Appellee v. Richard Michael Simkanin, Defendant-Appellant.
U.S.
Court of Appeals, 5th Circuit; 04-10531,
August 5, 2005
.
Affirming an unreported DC Texas decision.
[ Code
Secs. 7202 and 7203]
Criminal procedure: Jury instructions: Good faith defense:
Admissibility of evidence: Sentencing: Upward departure. --
A individual's
conviction for willfully failing to collect and pay over employment
taxes, knowingly making and presenting false claims for refund of
employment taxes, and failing to file income tax returns was upheld, as
was the enhanced sentence imposed by the district court. On appeal, the
individual challenged the jury instructions on the good faith defense
and the judge's response to a question from the jury, certain
evidentiary rulings and the enhancement to the guideline sentence. All
of these challenges were rejected.
Before: King, Chief Judge and Davis, Circuit Judge, and Rosenthal *
, District Judge.
KING, Chief Judge: Defendant-Appellant Richard Michael Simkanin appeals
his conviction for ten counts of willfully failing to collect and pay
over employment taxes in violation of 26 U.S.C. §7202,
fifteen counts of knowingly making and presenting false claims for
refund of employment taxes in violation of 28 U.S.C. §§287 and 2, and
four counts of failing to file federal income tax returns in violation
of 26 U.S.C. §7203.
He also appeals his sentence of eighty-four months imprisonment. For the
following reasons, we AFFIRM Simkanin's conviction and sentence.
I.
BACKGROUND
Defendant-Appellant Richard Simkanin owned Arrow Custom Plastics, Inc.
("Arrow") since its incorporation in 1982. In 1993, Simkanin
met with an accountant, Jim Kelly, who advised him that he would need to
change Arrow's accounting method and that this change would result in an
increase in Arrow's corporate income tax. Simkanin thereafter began to
question the federal tax system's applicability to him and its validity
in general. On his 1994 and 1995 individual income tax returns, he made
notations ( i.e., "UCC 1-207") apparently in an attempt
to indicate that the returns were filed under protest. He did not file
individual tax returns for the years 1996-2001.
With respect to the 1996 and 1997 returns, Simkanin told Kelly that he
was not required to file returns because he did not receive any income
but rather lived entirely off of his savings. However, this statement
was false --Simkanin did in fact receive a salary from Arrow during
these years, and his salary was sufficiently high such that Simkanin
owed federal income taxes. On Arrow's books, Simkanin's salary was
initially identified as "officer salary" and then later as
"remuneration," without any reference to Simkanin being the
recipient of the funds. During these years, Simkanin also received
payment from Arrow for his personal expenses, which were booked as
"repair and maintenance."
In 1996, Simkanin surrendered his
Texas
driver's license, and when stopped by the police while driving, he
showed a card styled "British West Indies International Motor
Vehicle Qualification Card," which he had acquired from a mail
order business in
Connecticut
. He also mailed to the U.S. Treasury Secretary a statement that he had
expatriated himself from the
United States
and repatriated to the
Republic
of
Texas
. He posted the same statement on Arrow's internet website, where he
also vowed to ignore the laws of the
United States
.
In 1997, Simkanin removed his name from Arrow's checking and credit card
accounts, replacing his name with the name of Arrow's bookkeeper Dianne
Clemonds. Simkanin told Clemonds that he did not want his name to appear
on documents requiring his social security number. Simkanin then listed
Clemonds as Arrow's president on various legal documents, although he
retained complete de facto responsibility for the company's affairs and
continued to make all of the decisions regarding finances and taxes.
By May 1999, Simkanin had become involved with an organization called We
The People Foundation for Constitutional Education ("WTP"),
which promotes the view that, despite common misconceptions, there is
actually no law that requires most Americans to pay income taxes or most
companies to withhold taxes from employees' paychecks. WTP also espouses
the view that the Sixteenth Amendment was fraudulently declared to have
been ratified. In accordance with these views, Simkanin told accountant
Kelly and others that he was not required to pay taxes and that filing
returns was purely voluntary. Kelly advised Simkanin that filing returns
was not voluntary and that Simkanin could get into trouble if he did not
file. Simkanin rejected this advice, and he began to pressure Arrow's
employees to attend seminars sponsored by WTP.
In November 1999, Simkanin told Kelly that Arrow would no longer
withhold employment taxes from employees' paychecks. Kelly counseled
against this course of action. In response to Simkanin's stated
intentions, Clemonds consulted with an attorney. She was advised that
she could be personally liable if she went along with Simkanin's plan to
stop collecting and paying over taxes. Clemonds therefore resigned from
her position at Arrow, and Simkanin returned his name to the Arrow bank
accounts as sole signatory. He then stopped Arrow's withholding of
federal taxes from the wages paid to its employees.
In January 2000, Simakanin filed with the IRS fifteen claims for tax
refunds. He claimed he was owed refunds for taxes paid by Arrow in
1997-99 and also for the taxes collected from, and paid by, Arrow's
employees. The IRS denied all of these claims, and Simkanin did not seek
further review.
In March 2000, Kelly and Fred Taylor, a named partner in Kelly's
accounting firm, went to Simkanin's office to discuss his refusal to
withhold and pay federal taxes or file returns. Simkanin reiterated that
he had no intention of paying taxes.
Taylor
advised Simkanin that he could be criminally prosecuted for his actions
and, by letter dated
March 28, 2000
, terminated Simkanin and Arrow as clients.
On
March 2, 2001
, a full page advertisement by WTP appeared in USA Today. The ad
prominently displayed the photographs of five men, including Simkanin.
The advertisement stated, inter alia, that Simkanin and the other men
pictured had stopped withholding taxes from their workers' paychecks and
that they were part of a "growing number of people" who
believe that:
1. There is no
law that requires workers, as
U.S.
citizens earning their money from domestic companies, to pay income or
employment taxes; nor to have those taxes withheld;
2. The 16th
Amendment (the "Income Tax Amendment") was fraudulently
declared to be ratified by the Secretary of State in 1913.
The ad concluded with a request for "donations" to WTP.
On
March 14, 2001
, Simkanin was advised that he was the target of a criminal
investigation regarding his failure to file individual income taxes
since 1995 and his failure to collect and pay over employment taxes
since January 2000. In July 2001, Simkanin was served with a grand jury
subpoena that sought the corporate records of "Arrow Custom
Plastics, Inc." In response to the subpoena, Simkanin dissolved the
corporation and operated Arrow as a sole proprietorship. Despite
Simkanin's refusal to produce Arrow's corporate records, the government
was able to obtain information about the amount of wages paid to Arrow's
employees from the
Texas
state agency that collected unemployment taxes from Arrow.
On June 19, 2003, an indictment was returned, charging Simkanin with
twelve counts of willfully failing to collect and pay over federal
income taxes and Federal Insurance Contribution ("FICA") taxes
from the total taxable wages of Arrow employees in violation of 26
U.S.C. §7202,
1 and fifteen counts of filing false claims for tax refunds
in violation of 18 U.S.C. §287. On
August 13, 2003
, a superceding indictment was returned, charging Simkanin with the same
substantive crimes but stating the applicable law more fully.
On
September 3, 2003
, the parties filed a plea agreement and a factual resume in which
Simkanin pled guilty to four counts of the superceding indictment.
However, the plea agreement misstated the maximum penalty to be lower
than the actual maximum of five years imprisonment and three years
supervised release. The government notified the court that Simkanin had
not actually agreed to plead to a count with the maximum penalty of five
years incarceration. The court ultimately ordered a deadline for
completing a plea agreement, and when the government and Simkanin had
not agreed to a new plea agreement by that date, the case went to trial.
Simkanin's first trial began on
November 25, 2003
. A number of Simkanin's supporters were present outside the courthouse
handing out pamphlets on jury nullification. The jury was unable to
reach a unanimous verdict, and the district court declared a mistrial.
One of the jurors subsequently contacted the court's staff and expressed
concern about the behavior of Simkanin's supporters and one of the
members of the jury. It was later revealed that some of the jurors had
been contacted by Simkanin's supporters.
On
December 17, 2003
, a second superceding indictment was returned, charging Simkanin with
the same offenses in the first superceding indictment plus four
additional counts of failure to file individual income tax returns.
Counts One through Twelve charged Simkanin with willfully failing to
collect and pay over federal income taxes and FICA taxes from the total
taxable wages of Arrow employees in violation of 26 U.S.C. §7202
(with each count pertaining to a different tax quarter). Counts Thirteen
through Twenty-Seven charged Simkanin with knowingly making and
presenting fifteen false claims for the payment of refunds of the
employer's share of FICA taxes paid by Arrow and of the employees' share
of FICA taxes and income taxes collected from Arrow's employees in
violation of 28 U.S.C. §§287 and 2. Finally, Counts Twenty-Eight
through Thirty-One charged Simkanin with failing to file federal income
tax returns in violation of 26 U.S.C. §7203.
The second trial began on
January 5, 2004
. 1
Simkanin primarily attempted to establish that he did not willfully
violate the tax laws because he held a good-faith belief that he was not
obligated to pay individual income taxes or to withhold employment taxes
from the wages paid to Arrow's employees. Simkanin took the stand and
testified that, inter alia, according to his own research: (1) the
Constitution provides for two types of taxes --a direct tax and an
indirect tax; (2) the income tax is an indirect tax; (3) a man's labor
is his own property and cannot be subject to an indirect tax; and (4)
the wages that a person receives for his labor are not subject to the
income tax. Simkanin further testified that he stopped paying his income
taxes and stopped withholding employment taxes from the wages of Arrow's
employees because he "could not find out what the tax was on."
To support his defense, a number of other witnesses testified that they
had informed Simkanin that the federal income tax laws, as written, did
not require Simkanin to pay taxes and that the income tax was
constitutionally invalid. Joseph Banister, a supporter of WTP, testified
that he met Simkanin at a conference entitled "Citizens'
Summit
to End the Unlawful Operations of the Internal Revenue Service," at
which Banister was a speaker.
Rob
ert Schultz, founder and CEO of WTP, testified that he advised Simkanin
that his research showed that the Sixteenth Amendment had been
fraudulently declared to have been ratified and that the constitutional
definition of the word "income" is different than the common
understanding of income. Larken Rose testified that, through phone
conversations with and emails to Simkanin, he explained that the income
of the average American is not subject to the federal income tax and
that the law merely applies to people engaged in certain types of
international trade. Banister, Schultz, and Rose all testified that they
did not advise Simkanin to stop withholding taxes or to stop filing tax
returns. Eduardo Rivera, an attorney from California, testified that he
had consulted with Simkanin in 1999, that Simkanin had paid him over
$10,000, and that he told Simkanin that his employees had no legal duty
to pay a tax and that Simkanin only had a duty to send money on their
behalf to the government if he contracted with them to do so. 2
A government witness, a district director for Congressman Joe Barton,
testified that Simkanin had corresponded with Barton's office regarding
taxes and the IRS. Barton's office had received, and forwarded to the
IRS, letters written by Simkanin expressing his view that he was not
required to withhold taxes from his workers' paychecks and that wages
are not a source of income subject to federal taxation. The district
director testified that Barton's office responded with a letter stating
that Simkanin's stated opinions were based on a flawed interpretation of
the Internal Revenue Code (the "IRC"), that wages are indeed
taxable under federal laws and regulations, and that Simkanin's
interpretation had been rejected by the courts.
The jury began its deliberations on
January 6, 2004
, and on January 7, it returned a verdict of guilty as to Counts Three
through Thirty-One. The jury was unable to reach a verdict as to Counts
One and Two, and the government moved to dismiss those counts, which the
district court did.
At sentencing, the district court applied the 2003 version of the United
States Sentencing Guidelines, and it determined Simkanin's criminal
history category to be I and his offense level to be Twenty-Two, with a
corresponding sentencing range of forty-one to fifty-five months
imprisonment. The court decided to depart upwardly from that range,
concluding that a range of eighty-four to 105 months more appropriately
reflected the likelihood that Simkanin would re-offend. The court then
imposed a sentence of eighty-four months. Simkanin appeals both his
conviction and his sentence.
II.
DISCUSSION
A. The District Court's Response to the Jury Note
Simkanin argues that the district court, when providing a supplemental
jury instruction in response to a note from the jury, directed a verdict
in favor of the prosecution with respect to one or more essential
elements of the offense. We review de novo whether a jury
instruction directed a verdict on an element of the offense. See United
States v. Bass [ 86-1
USTC ¶9313], 784 F.2d 1282, 1284 (5th Cir. 1986). In light of the
particular circumstances involved in this case, we conclude that the
district court did not direct a verdict for the government on an element
of the offense.
In Cheek v. United States [ 91-1
USTC ¶50,012], 498 U.S. 192, 201-03 (1991), the Supreme Court
defined "willfulness" for prosecutions under the IRC as
requiring a "voluntary, intentional violation of a known legal
duty." The Court reasoned that because of the complexity of the tax
laws, willful criminal tax offenses must be treated as an exception to
the general rule that ignorance of the law or a mistake of law is no
defense to criminal prosecution.
Id.
Moreover, the Court found that a defendant's good-faith belief that he
was not violating the law need not be objectively reasonable to negate
willfulness.
Id.
However, the Court distinguished a defense based on the defendant's
good-faith belief that he was acting within the law from a defense based
on the defendant's views that the tax laws are unconstitutional or
otherwise invalid.
Id.
at 204-06. The Court held that the latter belief, regardless of how
genuinely held by the defendant, does not negate the willfulness
element. Thus, the Court concluded that evidence pertaining to a
defendant's beliefs that the tax laws are invalid is irrelevant to
establishing a legitimate good-faith defense.
Id.
; see also FIFTH CIRCUIT PATTERN JURY INSTRUCTIONS: CRIMINAL §1.38
(West 2001).
The availability of the good-faith defense, while undeniably sound, 3
creates a number of complications and challenges for a district court
beyond those arising in the usual criminal trial, in which the
defendant's beliefs about what the law requires are not at issue. The
defendant in a criminal tax trial, unlike most other defendants, must be
permitted to present evidence to show what he purportedly believed the
law to be at the time of his allegedly criminal conduct. At the same
time, however, the district court must be permitted to prevent the
defendant's alleged view of the law from confusing the jury as to the
actual state of the law, especially when the defendant has constructed
an elaborate, but incorrect, view of the law based on a
misinterpretation of numerous IRC provisions taken out of proper
context. See, e.g., United States v. Barnett [ 91-2
USTC ¶50,519], 945 F.2d 1296, 1300 (5th Cir. 1991) (stating that
"[t]he jury must know the law as it actually is respecting a
taxpayer's duty to file before it can determine the guilt or innocence
of the accused for failing to file as required"). The district
court in this case, like other courts in similar cases, struggled to
balance these two competing concerns when it answered the jury's
confusion as to the correct interpretation of the law, which
unsurprisingly resulted from Simkanin's testimony about his own
erroneous beliefs about the law. Thus, it is with this set of
circumstances in mind that we consider Simkanin's arguments on appeal.
In its initial instructions, the district instructed the jury that, in
order to convict Simkanin on Counts One through Twelve (willfully
failing to collect and pay over federal taxes from the total taxable
wages of Arrow employees in violation of 26 U.S.C. §7202),
the jury must find beyond a reasonable doubt that: (1) Arrow was an
employer that paid wages to its employees; (2) Simkanin was an official
of Arrow who had responsibility for its decisions regarding the
withholding from its employees' wages of Medicare, social security, and
federal income taxes, the accounting for such taxes, and the payment of
such taxes over to the IRS; (3) Simkanin caused Arrow not to withhold
and not to account truthfully for and pay over such taxes; and (4)
Simkanin's conduct in causing Arrow not to withhold, account for, and
pay over such taxes was willful. The court further instructed the jury
that:
Within the
meaning of [26 U.S.C. §7202],
during the years 2000, 2001, and 2002, [Arrow], through its responsible
officials, had a legal duty to collect, by withholding from the wages of
its employees, the employees' share of social security taxes, Medicare
taxes, and federal income taxes, and to account for those taxes and to
pay withheld amounts to the United States of America.
Simkanin did not object to these instructions at the time they were
given.
At trial, Simkanin testified that one reason behind his decision not to
withhold taxes from Arrow's employees was his belief that the IRC, which
is over 7,000 pages long, contains an extensive (and exclusive) list of
industries and activities. Simkanin stated that because Arrow did not
operate in any of the listed industries or perform any of the listed
activities, he concluded that Arrow's workers were not employees under
the IRC and that he therefore was not required by law to withhold taxes.
He further stated that he believed that the definition of an
"employee" under the IRC was limited only to persons who
worked for a governmental entity including the state or a political
subdivision thereof. 4
During its deliberations, the jury sent a note to the district judge
asking the following question:
Since no proof
has been made that the defendant and his employees are in an occupation
listed in those 7,000 [pages], are we to conclude that they are, in
fact, not in that 7,000, or do we need to read all 7,000 to see what the
defendant was referring to, and in fact, wasn't listed in the 7,000[?]
The court responded to the jury's question by stating:
Now, in answer
to your note: You are instructed that you do not need to concern
yourself with whether defendant's employees are in an occupation
"listed in those 7,000." The Court has made a legal
determination that within the meaning of Title 26, United States Code, Section
7202, during the years 1997, 1998, 1999, 2000, 2001, and 2002,
[Arrow], through its responsible officials, had a legal duty to collect,
by withholding from the wages of its employees, the employees' share of
the social security taxes, Medicare taxes, and federal income taxes, and
to account for those taxes and pay the withheld amounts to the United
States of America. You are to follow that legal instruction without
being concerned whether there are certain employers who are not required
to collect and withhold taxes from the wages of their employees.
Of course, you
will bear in mind in your deliberations all other instructions the Court
has given you concerning the law applicable to this case.
Defense
counsel objected to the court's response on the ground that, inter alia,
the response "amount[ed] to an instructed verdict of guilty by
instructing [the jury] on that point since that is the disputed issue
and the basis for his defense." 5
The trial transcript, as well as Simkanin's initial brief, make
perfectly clear that the disputed issue at trial was whether Simkanin willfully
violated the federal tax laws. The basis for his defense was that he did
not willfully fail to collect and pay over taxes in violation of §7202
(and that he did not knowingly present false claims for refund)
because he believed in good faith that he was not required by law to
withhold such taxes.
Simkanin argues on appeal that the district court's response to the jury
note constituted a directed verdict on an essential element of the
offense, and therefore reversible error, for two reasons. First,
Simkanin argues that the court's response erroneously instructed the
jury to disregard Simkanin's good-faith defense. Second, he asserts that
the court directed a verdict for the prosecution on the first element of
the §7202
offense --that Arrow was an employer that paid wages to its employees.
He contends that the district court's error in this regard warrants the
vacatur of his conviction as to Counts 3-12 (willful failure to
withhold) and Counts 13-27 (false claims of refund for taxes withheld).
As we stated in United States v. Cantu, 185 F.3d 298, 305-06 (5th
Cir. 1999):
The district
court enjoys wide latitude in deciding how to respond to questions from
a jury .... Overall, we seek to determine whether the court's answer was
reasonably responsive to the jury's questions and whether the original
and supplemental instructions as a whole allowed the jury to understand
the issue presented to it.
(internal citation and quotation marks omitted). "It is well
established that the instruction may not be judged in artificial
isolation, but must be considered in the context of the instructions as
a whole and the trial record." Estelle v. McGuire, 502
U.S.
62, 72 (1991) (internal quotation marks omitted).
In arguing that the district court's response directed the jury to
disregard his good-faith defense, Simkanin relies on United States v.
Burton [ 84-2
USTC ¶9689], 737 F.2d 439 (5th Cir. 1984), a case involving a
defendant's failure to file income tax returns. In Burton, the
district court instructed the jury that "[t]he court has ruled as a
matter of law that a good faith belief that wages are not income is not
a defense to the charges in this case." [ 84-2
USTC ¶9689], 737 F.2d at 440. We reversed, holding that a
defendant's good-faith belief that the tax laws did not require him to
file returns (as opposed to a belief that the tax laws are invalid or
unconstitutional) would have negated the willful element of the charged
offense and therefore constituted a valid defense. 6
Id.
at 441-42.
Burton
is easily distinguishable, however, because unlike the district court in
Burton
, the district court in the present case did not explicitly instruct the
jury to disregard the defendant's beliefs about the applicability of the
tax laws. Rather, the court instructed the jury that the defendant's
purported view of the law --that the fact that the IRC did not list his
business activities alleviated him from a legal duty to withhold taxes
--was incorrect. Thus, the district court acted properly under the
circumstances. See Barnett [ 91-2
USTC ¶50,519], 945 F.2d at 1300. We see nothing in the district
court's instruction that would have led the jury to believe that it must
disregard Simkanin's good-faith defense on the willfulness element,
especially because the court specifically instructed the jury to keep in
mind the other instructions, which included its instruction on
willfulness. 7
Thus, the jury remained free to decide the contested issue in the trial,
i.e., whether Simkanin's violations of the tax laws were willful as that
term was properly defined in the jury instructions.
Second, in a clever reconstruction of the district court's response to
the jury note, Simkanin argues that the court's response constituted a
directed verdict on another element of the offense, which was
uncontested at trial --namely, the requirement that Arrow was an
employer that paid wages to its employees. Counsel contends that, after
the court informed the jury of its legal determination that Arrow had a
legal duty to withhold, the jury logically could no longer find that
Arrow was not an employer that paid wages to its employees --for if the
jury found that Arrow was not an employer that paid wages to its
employees, then it would mean that Arrow, in effect, did not have a
legal duty to withhold taxes. This reading of the court's response,
while plausible in a literal sense, is entirely divorced from a reading
of the instructions as a whole, as well as from the context in which the
jury asked its question and the court responded.
Simkanin relies heavily on this court's decision in Bass [ 86-1
USTC ¶9313], 784 F.2d at 1282. In Bass, the defendant was
charged with willfully submitting false or fraudulent income tax
withholding exemption statements to employers in violation of 26 U.S.C. §7205.
[ 86-1
USTC ¶9313], 784 F.2d at 1283. The defendant asserted as one of his
defenses that he could not be held criminally liable under §7205
because he was not an "employee" for the purpose of supplying
withholding information on a W-4 to his employer. Despite this defense,
the district in Bass instructed the jury that "as a matter
of law the defendant ... was an employee of" the company in
question.
Id.
at 1284. We found this instruction to be constitutionally erroneous
because, "by instructing the jury that Bass was an employee, the
district court relieved the prosecution of its duty of proving, beyond a
reasonable doubt, Bass's guilt of every element of the offense
charged."
Id.
at 1284-85.
Unlike in Bass, however, the district court in the present case
did not explicitly direct a verdict on an essential element of the
offense. At most, the court's response, when viewed in isolation, could
be interpreted as implicitly requiring the jury to find that
Arrow was an employer that paid wages to its employees, lest the jury's
finding on that element logically conflict with the district court's
instruction. However, the district court also expressly instructed the
jury at least twice that, in order to convict Simkanin under §7202,
it must determine beyond a reasonable doubt that Arrow was an employer
that paid wages to its employees. Furthermore, when the court answered
the jury's question, it reminded the jury to consider all the other
instructions that had been given. Thus, when viewed in the context of
the entire jury charge, the district court's response merely instructed
the jury that Simkanin's belief that he was not required to withhold
taxes because Arrow's activities were not listed in the 7,000 pages of
the IRC was an incorrect view of the law, and that, if the jury found
that Arrow was an employer that paid wages to its employees, Simkanin
had a legal duty to withhold despite his professed belief to the
contrary. 8
Hence, the district court's answer was reasonably responsive to the
jury's question and was a correct statement of the law --it instructed
the jury that whether or not Arrow's business activity appears on a list
in the IRC is irrelevant to whether Simkanin had a legal duty to
withhold. See Cantu, 185 F.3d at 305-06. The original and supplemental
instructions as a whole allowed the jury to understand the issue
presented to it and required the jury to decide whether the government
had proven each essential element beyond a reasonable doubt. See id.
Accordingly, we conclude that, when the district court's response is
viewed in the context of the instructions in their entirety, there was
not a reasonable likelihood that the jury applied the instruction as if
it were a directed verdict on that element of the offense. See
United States
v. Phipps, 319 F.3d 177, 189-90 (5th Cir. 2003) ("The question is
... whether this single misstatement makes the instruction defective as
a whole. ... [T]he proper inquiry is not whether the instruction could
have been applied in an unconstitutional manner, but whether there is a
reasonable likelihood that the jury did so apply it." (internal
citation and quotation marks omitted));
United States
v. Musgrave, 483 F.2d 327, 335 (5th Cir. 1973). Accordingly, we find no
error in the district court's response to the jury note.
Moreover, even if we were to conclude that the district court's response
to the jury note was erroneous, which we do not, we still would not
reverse on this ground. In this case, both parties agree that we should
affirm if the government proves that the alleged error was harmless
beyond a reasonable doubt. 9
See Neder v.
United States
, 527
U.S.
1 (1999); Chapman v.
California
, 386
U.S.
18, 23 (1967). Therefore, we would proceed under that assumption, and we
would conclude that the government has met its burden to establish that
any error here was harmless. In Bass [ 86-1
USTC ¶9313], 784 F.2d at 1285, we stated that we could not deem the
court's explicit directed verdict on the "employee" element
harmless "[b]ecause one of Bass's defenses was that he was not an
'employee[]' ...." Here, however, one of Simkanin's defenses was
not that Arrow was not an employer that paid wages to its employees
under the IRC (although one of his defenses was that he did not
willfully violate the law because he erroneously believed that Arrow was
not an employer that paid wages to its employees under the IRC). During
the course of the trial, defense counsel introduced no evidence that
Arrow was not an employer that paid wages to its employees, and defense
counsel did not argue or otherwise suggest during the trial that the
prosecution had not established this element beyond a reasonable doubt.
On appeal, Simkanin does not point to any evidence introduced supporting
the notion (or any conceivable basis upon which a rational juror could
conclude) that Arrow was not an employer that paid wages to its
employees under a legally accurate interpretation of the relevant
sections of the IRC. Rather, Simkanin falls back on the argument that it
is possible that the jury could have decided that the government's
evidence, although uncontradicted, did not establish that element beyond
a reasonable doubt. However, we believe that it would have been
irrational for the jury to do so, and Simkanin's argument does not
suffice to raise a reasonable doubt in our minds that the jury might
have concluded that Arrow was not an employer that paid wages to its
employees. This is an instance in which the relevant element was
"supported by uncontroverted evidence" and in which the
"defendant did not, and apparently could not, bring forth facts
contesting the omitted element." Neder, 527
U.S.
at 18-19. Accordingly, applying the harmless-error standard agreed upon
by the parties, we would find any error here to be harmless beyond a
reasonable doubt.
B. Instruction on Good-Faith
Simkanin next argues that the district court erred by refusing to
include a specific jury instruction on his good-faith defense. As noted
above, the district court's instructions with respect to Counts 1-12
(failure to withhold) stated that the jury must find beyond a reasonable
doubt that Simkanin's conduct in causing Arrow not to withhold and not
to account truthfully for and pay over such taxes was willful. In
elaborating on the meaning of the term "willful," the court
instructed the jury that:
To act
willfully means to act voluntarily and deliberately and intending to
violate a known legal duty. For the government to establish willfulness
as to Counts 1-12 of the indictment, it must prove beyond a reasonable
doubt as to the count in consideration that defendant knew of the
requirements of federal law that [Arrow] collect, by withholding from
its employees' wages, Medicare taxes, social security taxes, and federal
income taxes, and to account for such taxes and pay them over to the
[IRS], and that he voluntarily and intentionally caused [Arrow] to fail
to comply with these requirements.
With respect to Counts 13-27 (false or fraudulent refund claims), the
court instructed that the government must prove beyond a reasonable
doubt that: (1) Simkanin "knowingly presented to an agency of the
United States a false or fraudulent claim against the United
States;" (2) Simkanin "knew that the claim was false or
fraudulent;" and (3) the false or fraudulent claim was material.
The court instructed that "knowingly, as that term has been used in
these instructions, means that the act was done voluntarily and
intentionally, not because of a mistake or accident."
Finally, with respect to Counts 28-31 (failure to file returns), the
court instructed the jury that it must find beyond a reasonable doubt
that: (1) Simkanin received gross income in the amounts stated in the
indictment for the year in question (this element was satisfied by a
stipulation); (2) Simkanin failed to file an income tax return, as
required, by the date stated in the indictment; (3) Simkanin knew he was
required to file a return; and (4) Simkanin's failure to file was
willful. The court then reminded the jury "that to act willfully
means to act voluntarily and deliberately and intending to violate a
known legal duty." The court further stated that "[f]or the
government to establish willfulness as to Counts 28-31 of the
indictment, it must prove beyond a reasonable doubt as to the count
under consideration that the defendant knew of the requirement of
federal law that he file an income tax return, and that he voluntarily
and intentionally failed to do so."
Defense counsel objected to these instructions on the ground that they
did not include a specific instruction on good faith under Cheek
[ 91-1
USTC ¶50,012], 498
U.S.
at 192. Counsel argued that, for this reason, the district court failed
to instruct the jury on the defense's theory of the case. Defense
counsel also objected to the use of the phrase "known legal
duty," rather than "known to the defendant." The district
court overruled these objections.
This court reviews a district court's refusal to include a defendant's
proposed jury instruction in the charge under an abuse of discretion
standard.
United States
v.
Rochester
, 898 F.2d 971, 978 (5th Cir. 1990). The district court abuses its
discretion by refusing to include a requested instruction only if that
instruction: (1) is substantively correct; (2) is not substantially
covered in the charge given to the jury; and (3) concerns an important
point in the trial so that the failure to give it seriously impairs the
defendant's ability to present effectively a particular defense.
United States
v. St. Gelais, 952 F.2d 90, 93 (5th Cir. 1992). Under this test,
this court will not find an abuse of discretion where the instructions
actually given fairly and adequately cover the issues presented by the
case. 10
Rochester
, 898 F.2d at 978.
As we discussed above, in Cheek [ 91-1
USTC ¶50,012], 498 U.S. at 201-04, the Supreme Court defined
"willfulness" for prosecutions under the IRC as requiring a
"voluntary, intentional violation of a known legal duty." The
Court further found that, because of the complexity of the federal tax
laws, criminal tax offenses with willfulness as an element must be
treated as an exception to the general rule that a mistake of law is not
a valid defense.
Id.
Thus, a defendant's good-faith belief that he is acting within the law
negates the willfulness element. On the other hand, a defendant's
good-faith belief that the tax laws are unconstitutional or otherwise
invalid does not negate the willfulness requirement, and such evidence
is therefore irrelevant to a good-faith defense.
Id.
; see also FIFTH CIRCUIT PATTERN JURY INSTRUCTIONS: CRIMINAL §1.38.
The Supreme Court in Cheek derived its definition of willfulness
from United States v. Pomponio [ 76-2
USTC ¶9695], 429 U.S. 10 (1976) ( per curiam). In Pomponio,
a case involving criminal charges of falsifying tax returns, the
district court instructed the jury that a willful act meant "one
done voluntarily and intentionally and with the specific intent to do
something which the law forbids, that is to say with [the] bad purpose
either to disobey or to disregard the law." [ 76-2
USTC ¶9695], 429
U.S.
at 11 (internal quotation marks omitted) (alterations in original). The
district court also instructed the jury that "'[g]ood motive alone
is never a defense where the act done or omitted is a crime,' and that
consequently motive was irrelevant except as it bore on intent."
Id.
(alteration in original). The court of appeals held that the final
instruction was improper because the relevant statute required a finding
of bad purpose or evil motive.
Id.
The Supreme Court reversed, noting that the court of appeals incorrectly
assumed that the reference to "evil motive" in an earlier
Supreme Court case meant something more than specific intent to violate
the law.
Id.
The Court stated that "willful," as the term is used in the
tax statutes, means "a voluntary, intentional violation of a known
legal duty."
Id.
The Court determined that because the district court had instructed the
jury as to that definition, the jury had been adequately instructed on
willfulness, and an additional instruction on good faith was thus
unnecessary.
Id.
Accordingly, the district court in the present case was not required to
include a specific instruction on good-faith because it adequately
instructed the jury on the meaning of willfulness under Cheek and
Pomponio. In other words, Simkanin's requested instruction was
"substantially covered in the charge given to the jury"
regarding willfulness. See St. Gelais, 952 F.2d at 93. In
addition, taken together, the trial, charge, and closing argument laid
the theory of the defense squarely before the jury, and the lack of the
requested instruction did not seriously impair Simkanin's ability to
present effectively his good-faith defense. 11
Id.
;
United States
v. Proctor, No. 03-20309, 118 Fed. Appx. 862, 863 (5th Cir.
Dec. 30, 2004
) ( per curiam) (unpublished) (quoting
United States
v. Gray, 751 F.2d 733, 735-36 (5th Cir. 1985)).
Finally, Simkanin complains that the phrase "known legal duty"
in the instructions did not make it clear that the legal duty must have
been known to the defendant. This claim ignores the next sentence of the
instructions, which stated: "For the government to establish
willfulness as to Counts 1-12 of the indictment, it must prove beyond a
reasonable doubt as to the count in consideration that defendant knew
of the requirements of federal law ... and that he voluntarily and
intentionally caused [Arrow] to fail to comply with these
requirements." Similarly, Simkanin ignores the actual language of
the district court's instructions when, citing FIFTH CIRCUIT PATTERN
JURY INSTRUCTIONS: CRIMINAL §1.37, he asserts that the district court
did not instruct the jury that a defendant did not "knowingly"
commit a tax offense if he acted by mistake. In fact, as noted above,
the district court explicitly instructed the jury that "knowingly,
as that term has been used in these instructions, means that the act was
done voluntarily and intentionally, not because of a mistake or
accident." Thus, Simkanin's argument fails.
C. Evidentiary Rulings
Simkanin's last argument with respect to his conviction is that the
district court unfairly and arbitrarily excluded defense evidence and
restricted the scope of cross-examination, thus hampering the
presentation of his good-faith defense. We review a district court's
rulings on the admission or exclusion of evidence for an abuse of
discretion. United States v. Flitcraft [ 86-2
USTC ¶9778], 803 F.2d 184, 186 (5th Cir. 1986).
Simkanin argues that the district court erred because it allowed him
only briefly to say what he knew, believed, and understood, but that it
did not allow him to corroborate his sincerity in these assertions
because it excluded from evidence certain documents on which Simkanin
allegedly relied for his beliefs about the tax laws. 12
The district court, however, explained that it did so because the
documents would tend only to confuse the jury about the relevant issues
in the case and were cumulative of Simkanin's testimony about what the
documents said and how he relied upon them in forming his beliefs about
what the tax laws required of him. Rule 403 of the Federal Rules of
Evidence states that "[a]lthough relevant, evidence may be excluded
if its probative value is substantially outweighed by the danger of
unfair prejudice, confusion of the issues, or misleading the jury, or by
considerations of undue delay, waste of time, or needless presentation
of cumulative evidence." In this instance, the district court did
not abuse its discretion in concluding that the probative value of this
evidence was far outweighed by its tendency to confuse the jury as to
the correct state of the law and by its cumulative nature.
In Flitcraft [ 86-2
USTC ¶9778], 803 F.2d at 185-86, we addressed the defendants' claim
that the district court had erred in excluding the documents upon which
they allegedly relied in forming their beliefs about the tax laws; the
defendants argued that such documents would increase the likelihood that
the jury would credit the sincerity of the defendants' purported
beliefs. This court held that the district court did not abuse its
discretion in excluding the evidence under FED. R. EVID. 403 because the
documents had little probative value, as they were largely cumulative of
the defendants' testimony as to their contents and the defendants'
reliance on them. Flitcraft [ 86-2
USTC ¶9778], 803 F.2d at 186. Furthermore, we stated that "the
documents presented a danger of confusing the jury by suggesting that
the law is unsettled and that it should resolve such doubtful questions
of law."
Id.
In Barnett [ 91-2
USTC ¶50,519], 945 F.2d at 1301, we once again addressed the
problem confronting a district court called upon to engage in "the
delicate balancing required by Rule 403" when determining the
admissibility of evidence to support a defendant's good-faith beliefs in
a tax evasion case. We noted "the need to allow the defendant to
establish his beliefs through reference to tax law sources and the need
to avoid unnecessarily confusing the jury as to the actual state of the
law." Barnett [ 91-2
USTC ¶50,519], 945 F.2d at 1301. Relying on Flitcraft, we
determined that the district court did not abuse its discretion in
excluding documentary evidence because the district court had allowed
the defendant to explain his understanding of the documents while
excluding the documents themselves to avoid unnecessarily confusing the
jury.
Id.
Thus, as in Flitcraft and Barnett, we conclude that the
district court in the present case did not abuse its discretion in
making the evidentiary rulings of which Simkanin complains. 13
With respect to the more specific evidentiary errors alleged by
Simkanin, we similarly conclude that the district court did not abuse
its discretion. Simkanin claims that the district court erred by
admitting a document entitled "Proclamation of Warning," which
Simkanin had posted on his website. In summary, the document declared
that Simkanin is a servant of God and that public officials should be
warned not to harm him or his household, lest they wish to enter
"into a state of war against Almighty God" and to suffer
"the fury of a fire which will consume [them]." The government
responds that Simkanin opened the door to this evidence when defense
counsel questioned Simkanin about how his religious beliefs told him not
to withhold taxes from the paychecks of his employees. When defense
counsel requested that he be able to question Simkanin on his religious
beliefs, the government replied that it would open the door to the
admission of the Proclamation. The district court acknowledged that it
probably would, but it allowed defense counsel the option to proceed
with the testimony on Simkanin's religious views. Simkanin testified
that the Bible told him that God is entitled to the first fruits of a
person's labor and that if he withheld taxes from his employees, then he
was stealing the first fruits of their labor. It is not clear why
defense counsel introduced Simkanin's own testimony on this issue
because his statements that the tax laws contradicted his religious
views were irrelevant to his good-faith defense under Cheek. It
is perhaps less clear what probative value the Proclamation had on the
relevant issues, but defense counsel was warned that testimony
concerning Simkanin's religious views about the tax laws might open the
door to other evidence concerning his religious views. In any event,
even if the district court did abuse its discretion in admitting the
Proclamation, we are convinced that it was harmless in the overall
scheme of the trial. At most, the Proclamation showed that Simkanin held
certain beliefs, which would tend to support his good-faith defense
rather than refute it.
Next, Simkanin complains that the district court erred by admitting IRS
press releases warning taxpayers about various "scams" and
"schemes" (including employers who claim that they need not
withhold taxes). However, we do not agree that the potentially
prejudicial nature of the documents outweighed the probative value of
these documents, which showed that Simkanin had been explicitly warned
about the illegality of his activities. Thus, the district court did not
abuse its discretion.
Simkanin also argues that, in an in limine ruling, the district court
unfairly restrained defense counsel from introducing any documentary
evidence without first approaching the bench. The government responds
that the district court's ruling was justified by the nature of the
documents on the defense exhibit list, which included the Communist
Manifesto, multiple versions of the Bible, and various publications
translating Greek and Hebrew. We agree with the government that the
district court did not abuse its discretion given this exhibit list.
Moreover, the documents actually excluded on the basis of the in limine
ruling would have been properly excluded under Rule 403 for the reasons
stated above ( i.e., they were cumulative and potentially
confusing).
Next, Simkanin claims that the district court unfairly restricted the
cross-examination of government witnesses, such as IRS agents Cooper and
Eastman. The district court prohibited certain questions by defense
counsel because the questions were beyond the scope of direct and
because, in the court's opinion, the questions attempted to show that
the IRS agent's views of the law were incorrect and that Simkanin's
views were actually correct. Simkanin argues that defense counsel's
questions merely attempted to demonstrate the reasonableness of
Simkanin's beliefs. Citing Olden v. Kentucky, 488 U.S. 227 (1988)
( per curiam), Simkanin claims that these rulings violated the
Confrontation Clause of the Sixth Amendment. However, the district court
did not abuse its discretion in determining that the questions were
beyond the scope of direct, see FED. R. CIV. P. 611(b), and
Simkanin was free to recall the witnesses during his presentation of
evidence, although he did not attempt to do so. Thus, his Confrontation
Clause rights were not implicated. Moreover, the district court did not
abuse its discretion because Simkanin was permitted to testify (and
present the testimony of other witnesses) about his beliefs and because
this line of questioning may have served to confuse the jury
unnecessarily.
D. Upward Departure
With respect to his sentence, Simkanin argues that the district court
erred by upwardly departing from the sentencing range established by the
Guidelines. Prior to the upward departure, the sentencing range
established by the Guidelines was forty-one to fifty-one months
imprisonment (for a criminal history category of I and an offense level
of Twenty-Two). Simkanin does not contend that the district court erred
in calculating this range. However, the district court decided to depart
upwardly, and it imposed a sentence of eighty-four months imprisonment.
At the sentencing hearing, the district court stated that U.S.S.G. §5K2.0(a)(2)(B)
14
justified an upward departure because: (1) Simkanin "has displayed
contempt and disrespect for the laws of the United States of America,
the State of Texas, and the city of Bedford," and he has further
confirmed that contempt in his conduct since his bail was revoked; (2)
he and those who share his views have a cult-like belief that the laws
of the United States do not apply to them; (3) Simkanin has entrenched
himself in anti-government groups and is part of a movement whose
members question the power of the federal government and its
instrumentalities, including the federal courts, to exercise
jurisdiction and authority over them; (4) his beliefs have led him to
act in a manner inconsistent with the laws of the United States (ranging
from giving up his driver's license, threatening to kill federal judges,
15
and failure to comply with the federal tax laws); and (5) the court was
satisfied that Simkanin would continue to act on those beliefs in the
future. In addition, the district court stated that U.S.S.G. §4A1.3(a)(1)
16
further justified the departure because, despite Simkanin's lack of a
prior criminal record, "based on defendant's radical beliefs
relative to the laws of the United States, it is likely that he will
commit future tax-related crimes."
The district court explained that in determining the extent of the
departure in accordance with U.S.S.G. §4A1.3(a)(4), 17
the court used "as a reference, the criminal history category
applicable to defendants whose likelihood to recidivate most closely
resembles that of the defendant's." The court concluded that, for
the reasons already discussed, Simkanin's likelihood to recidivate most
closely resembles that of defendants whose criminal history category is
VI. This produced a total offense level of Twenty-Two and a criminal
history category of VI, resulting in a sentencing range of 84-105
months. The district court then sentenced at the bottom of that range
and imposed an eighty-four month sentence.
Simkanin argues that the district court erred in imposing an upward
departure on the grounds articulated at the sentencing hearing because:
(1) it did not include a written statement of reasons in the judgment as
required by 18 U.S.C. §3553(c)(2); 18
(2) the district court impermissibly based its departure on grounds
involving Simkanin's associations and beliefs, in violation of the First
Amendment; and (3) the district court's belief that Simkanin posed a
danger of recidivism was not supported by evidence.
We recently discussed the appropriate standard of review to employ when
reviewing a district court's decision to depart upwardly from the
sentencing range established by the Guidelines. See
United States
v. Smith, --F.3d --, 2005 WL 1663784, *4-6 (5th Cir.
July 18, 2005
). There, we explained that the Supreme Court's decision in United
States v. Booker, 125 S.Ct. 738 (2005), directed us to return
essentially to the abuse-of-discretion standard employed prior to 2003:
Prior to 2003,
our review of departure decisions was for abuse of discretion, pursuant
to §3742(e).
In April 2003, Congress amended §3742(e),
altering our standard of review with respect to the departure decision
to de novo. Under this scheme, while the decision to
depart was reviewed de novo, the degree of departure was
still reviewed for abuse of discretion. Then, in January 2005, the
Supreme Court in Booker excised §3742(e),
leaving the appellate courts to review sentences for reasonableness. The
Court explained that it was essentially returning to the standard of
review provided by the pre-2003 text, which directs us to determine
whether the sentence is unreasonable with regard to §3553(a). Section
3553(a) remains in effect, and its factors guide us in determining
whether a sentence is unreasonable.
Smith, 2005 WL 1663784 at *4 (footnotes and internal quotation
marks omitted); 19
see also id. at *4 n.24;
United States
v. Harris, 293 F.3d 863, 871 (5th Cir. 2002). 20
Applying this standard, we conclude that Simkanin is not entitled to
resentencing.
First, Simkanin argues that the district court did not include its
written statement of reasons in its judgment of conviction and sentence
as required by 18 U.S.C. §3553(c)(2). We disagree. The judgment clearly
states that the Statement of Reasons and personal information about the
defendant are set forth in an attachment to the judgment. Although
Simkanin argued in his principal brief that the district court never
drafted a written statement of reasons, he concedes in his reply brief
that the court did so and that the written statement is virtually
identical to the oral reasons given by the district court at sentencing.
He also concedes that, after he filed his initial brief, he received a
copy of the written statement, which was in the sealed part of the
appellate record, as is the common practice in this circuit, and was
available to defense counsel. Thus, Simkanin's argument that the
district court did not author and include in the record a written
statement of reasons is wrong. Furthermore, we find no merit in
Simkanin's unsupported argument in his supplemental brief that he is
entitled to resentencing simply because the written reasons were
attached to the judgment and referenced after the judge's signature, as
opposed to appearing before the judge's signature.
Second, Simkanin argues that the district court erred because it
upwardly departed on an impermissible basis --namely, because of his
associations and beliefs. Given the particular facts of this case,
however, his argument fails. In Dawson v. Delaware, 503 U.S. 159
(1992), the Supreme Court held that it was constitutional error to admit
a stipulation of the defendant's membership in a racist prison gang, The
Aryan Brotherhood, as an aggravating factor for consideration in
sentencing. Dawson, 503
U.S.
at 164-67. The Court reasoned that the defendant's membership had no
relevance whatsoever to the crime in question, which was not racially
motivated or otherwise connected to the beliefs of the gang, and it
noted that the prosecution had introduced (via a stipulation) evidence
establishing only that defendant was a member and that the gang held
white supremacist views, not any evidence showing the gang's violent and
unlawful tendencies.
Id.
The Court explicitly recognized, however, that consideration of a
defendant's beliefs and associations might be appropriate in some
instances in making sentencing decisions about the likelihood that the
defendant will engage in future criminal activity.
Id.
at 165-66. The Court stated that "the Constitution does not erect a
per se barrier to the admission of evidence concerning one's beliefs and
associations at sentencing simply because those beliefs and associations
are protected by the First Amendment."
Id.
at 165. Moreover, the Court explained that "[i]n many cases, for
example, associational evidence might serve a legitimate purpose in
showing that a defendant represents a future danger to society[;] [a]
defendant's membership in an organization that endorses the killing of
any identifiable group, for example, might be relevant to a jury's
inquiry into whether the defendant will be dangerous in the
future."
Id.
at 166.
Simkanin's beliefs and associations may be considered if they were
"sufficiently related to the issues at sentencing." Boyle
v. Johnson, 93 F.3d 180, 183-85 (5th Cir. 1996). Here, Simkanin's
sentence was not increased merely because of his abstract beliefs or
associations. Rather, Simkanin's specific beliefs that the tax laws are
invalid and do not require him to withhold taxes or file returns (and
his association with an organization that endorses the view that free
persons are not required to pay income taxes on their wages) are
directly related to the crimes in question and demonstrate a likelihood
of recidivism. 21
Thus, the district court did not constitutionally err in considering
these factors. See id. at 183-85; see also Fuller v. Johnson, 114 F.3d
491, 497-98 (5th Cir. 1997) (finding that the defendant's membership in
a racist gang was properly considered in sentencing because it went to
future dangerousness in light of the evidence showing the gang's violent
tendencies). 22
Simkanin also briefly argues that the district court's finding that he
held "contempt and disrespect for the law" was not a proper
basis for upward departure. Relying solely on United States v.
Andrews, 390 F.3d 840, 847-48 (5th Cir. 2004), he claims that the
appropriate action for the district court to take in response to such
contempt is the denial of a downward adjustment for acceptance of
responsibility. However, Andrews involved a district court's
upward departure expressly based in part on the defendant's failure to
take responsibility ( i.e., his lack of paid restitution,
attempts to blame others for his behavior, and insincerity in his
proffered words of remorse). The district court in the present case did
not base its upward departure on the defendant's lack of acceptance of
responsibility, but rather on the likelihood that he would recidivate. Andrews,
therefore, is inapposite. 23
At oral argument, defense counsel contended that the district court
erred because it departed upwardly on the basis of Simkanin's firmly
held beliefs and that this reasoning contradicted the government's
position, and the jury's finding, that Simkanin did not hold good-faith
belief that he was not obligated to file income returns or withhold
taxes from the paychecks of Arrow's employees. However, as the
government correctly responded, the district court's decision to depart
upwardly did not contradict the jury's finding that Simkanin did not
have a valid good-faith defense under Cheek. As discussed above,
Simkanin's avowed position was that he would not comply with the tax
laws, and the reason for his position was that the tax laws were both
inapplicable to him and invalid for a number of reasons beyond the
boundaries of a legitimate good-faith defense under Cheek. At
sentencing, Simkanin made clear to the district court that he continued
to hold these beliefs when he stated that he still "firmly
believed" that the Bible, the Constitution, and the Declaration of
Independence all agree that "the wages of a laborer are withheld
through fraud." Thus, the district court was convinced that
Simkanin's likelihood to recidivate was not adequately reflected by the
Guidelines range, and it did not abuse its discretion in upwardly
departing from that range.
Finally, Simkanin contends that the extent of the upward departure was
unreasonable. The district court upwardly departed from a range of
forty-one to fifty-one months imprisonment to impose a sentence of
eighty-four months. Simkanin argues that the district court failed to
articulate the reasons "why a sentence commensurate with a bypassed
criminal history category was not selected." United States v.
Lambert, 984 F.2d 658, 663 (5th Cir. 1993) ( en banc).
Simkanin is correct that the district court did not specifically state
why it rejected each of the preceding criminal history categories.
However, as the government correctly notes, this court does "not
require the district court to go through a 'ritualistic exercise' where
... it is evident from the stated grounds for departure why the bypassed
criminal history categories were inadequate." United States v.
Asburn, 38 F.3d 803, 809 (5th Cir. 1994) ( en banc) (quoting Lambert,
984 F.2d at 663). Simkanin correctly notes that it was clearer in Asburn
why the district court had decided that defendant's criminal history
category did not adequately reflect his prior history --the district
court in Asburn noted that the defendant had committed a series
of robberies for which he was never convicted.
Id.
However, the district court in the present case explained that it was
convinced that Simkanin's membership in a group with radical views
rejecting the laws of the United States and his professed beliefs that
he is not required to abide by the tax laws would lead him to commit
other tax-related crimes. Moreover, the mere fact that the upward
departure nearly doubled the Guidelines range does not render it
unreasonable. See United States v. Daughenbaugh, 49 F.3d
171, 174-75 (5th Cir. 1995) (upholding departure from Guidelines range
of fifty-seven to seventy-one months to a sentence of 240 months); Ashburn,
38 F.3d at 809 (upholding departure from range of sixty-three to
seventy-eight months to sentence of 180 months). Therefore, we are
persuaded, guided by the factors in §3553(a), that the sentence imposed
was reasonable for the reasons given by the district court.
E. Booker Error
Simkanin argues that he is entitled to resentencing under Booker.
He concedes that he did not object on relevant grounds in the district
court and that our review is therefore for plain error. See
United States
v. Mares, 402 F.3d 511, 520 (5th Cir. 2005). The basis of
Simkanin's Booker argument is that the district court erred by
enhancing his sentence based on facts not admitted by the defendant nor
found by the jury. He claims that this court should focus solely on this
alleged enhancement error without considering the effect of the
Guidelines' mandatory nature at the time that he was sentenced. This
argument fails under Mares because the proper inquiry for Booker
error under the plain-error test is whether "the result would have
likely been different had the judge been sentencing under the Booker
advisory regime rather than the pre- Booker mandatory
regime." 24
Mares, 402 F.3d at 522. Simkanin clearly has not met his burden because
he has pointed to nothing in the record suggesting that he would have
received a lower sentence had he been sentenced under the post- Booker
advisory Guidelines. His assertion that other defendants with similar
records who have committed similar offenses have received shorter
sentences does nothing to show that he was prejudiced by the district
court's assumption that the Guidelines were mandatory. Furthermore,
Simkanin's suggestion that we should simply disregard the Supreme
Court's remedial majority in Booker, including its explicit instruction
to apply its remedial interpretation of the Guidelines to all cases
pending on direct appeal, is obviously unconvincing. See, e.g., Booker,
125 S.
Ct.
at 769; cf.
United States
v. Scroggins, 411 F.3d 572, 576-77 (5th Cir. 2005). Finally, because we
conclude that Simkanin is not entitled to resentencing, we need not
address his argument that the district court's sentencing options would
be limited on remand.
III.
CONCLUSION
For the foregoing reasons, we AFFIRM Simkanin's conviction and sentence.
*
District Judge of the Southern District of Texas, sitting by
designation.
1 Section
7202 provides:
Any person required under this title to collect, account for, and pay
over any tax imposed by this title who willfully fails to collect or
truthfully account for and pay over such tax shall, in addition to other
penalties provided by law, be guilty of a felony and, upon conviction
thereof, shall be fined not more than $10,000, or imprisoned not more
than 5 years, or both, together with the costs of prosecution.
1
Simkanin's supporters were again outside the courthouse and inside the
courtroom. However, security measures were taken to prevent the
supporters from contacting members of the jury pool or the selected
jurors.
2
Rivera admitted on cross-examination that in 2003 a permanent injunction
had been entered against him, barring him from making such statements.
3
See, e.g., United States v. Burton [ 84-2
USTC ¶9689], 737 F.2d 439, 441 (5th Cir. 1984) (noting "the
pervasive intent of Congress to construct penalties that separate the
purposeful tax violator from the well-meaning, but easily confused, mass
of taxpayers." (internal quotation marks omitted)).
4
Simkanin's position, as defense counsel concedes, was based on an
incorrect view of the law. See, e.g., 26 U.S.C. §§3121(a)-(d),
3306(a)-(c), 3401(a)-(d); 26 C.F.R. §§31.3121(a)-(d), 31.3306(a)-(c),
31.3401(a)-(d); Breaux & Daigle, Inc. v. United States [ 90-2
USTC ¶50,491], 900 F.2d 49, 51-53 (5th Cir. 1990); see also Otte
v. United States [ 74-2
USTC ¶9822], 419 U.S. 43, 50-51 (1974). This fact is undisputed on
appeal, and it is abundantly clear that Simkanin's testimony on his
views regarding the definition of an "employer" and
"employees" was elicited to support his defense of a
good-faith belief, not to show that Arrow was not an employer under the
IRC.
5
We assume, without deciding, that Simkanin's objection to the district
court's response to the jury note preserved the alleged error, even
though he did not object to the district court's original instruction
containing the same language. Thus, we do not review the alleged error
under the considerably less defendant-friendly plain-error standard
under FED. R. CRIM. P. 52(b).
6
Similarly, Simkanin cites Cheek [ 91-1
USTC ¶50,012], 498 U.S. at 192, for the proposition that a district
court errs when it instructs a jury to disregard the defendant's
evidence of a good-faith misunderstanding of the tax laws.
7
As we discuss below, the district court adequately instructed the jury
on the willfulness element to allow Simkanin to advance his good-faith
defense.
8
Moreover, it is of no event that the district court used the term
"employees" in its response because the jury's own question
referred to Arrow's "employees."
9
Although at oral argument Simkanin's defense counsel argued that the
type of error alleged here is not subject to harmless-error review,
defense counsel, in supplemental briefing submitted after oral argument,
reverted to the position taken in its initial briefs --i.e., that
if the district court's response directed a verdict on an essential
element of the offense, the error is subject to harmless-error analysis
and that we may affirm only if the government establishes that the error
was harmless beyond a reasonable doubt.
10
Relying on language from United States v. Mathews, 485
U.S.
58, 63 (1988), Simkanin argues that he was entitled to an instruction on
any defense supported by the evidence. However, Mathews addresses
whether a defendant can simultaneously raise contradictory defenses, and
the broader language from Mathews has no bearing on the issue
presented here because the district court did not deny Simkanin's
requested instruction on the basis that it was not supported by
sufficient evidence. See Mathews, 485 U.S. at 63.
11
As discussed more fully below, Simkanin argues that the district court
restricted his ability to present his good-faith defense at trial.
However, we address here Simkanin's argument concerning closing
argument. Simkanin notes that the district court limited defense counsel
to only fifteen minutes for closing argument. However, he concedes that
he did not object below on this basis, and he explicitly states that he
does not challenge on appeal the district court's limitation of closing
argument. At the same time, however, Simkanin argues that the limitation
on closing argument should shade our analysis of the issues that he
actually raises on appeal. In light of the particular circumstances of
this case, we do not agree that the limitation on closing argument
somehow rendered the instruction on willfulness erroneous. Defense
counsel was entirely free to argue, and did in fact argue, the
good-faith defense to the jury during the allotted time period, and, as
discussed below, the district court did not unfairly restrict Simkanin's
presentation of evidence to establish that defense. The restriction on
closing was applied evenhandedly to both the defense and the
prosecution. The trial lasted only two days and involved relatively few
witnesses. It involved a single theory of the defense, which was based
on Simkanin's beliefs about the requirements of the federal tax laws
(not the validity of those laws, which are irrelevant to willfulness
under Cheek). Thus, we are not persuaded that the limitation on
closing unfairly curtailed defense counsel's ability to present
Simkanin's good-faith defense.
12
Simkanin does not specifically identify all of the evidentiary rulings
that he claims were erroneous; rather, he advances a broader contention
that the district court's evidentiary rulings as a whole prejudiced his
ability to assert his defense.
13
Simkanin avers that the district court's evidentiary rulings were not
evenhanded because it permitted the government to introduce §3402
as proof that Simkanin had been shown, and therefore actually was aware
of, the correct law concerning withholding. However, we do not find this
disparity dispositive because the admission of §3402
did not raise the possibility of confusing the jury in the same manner
as the defense exhibits.
14
U.S.S.G. §5K2.0(a)(2)(B) (2003) provides:
(a) Upward Departures in General and Downward Departures in Criminal
Cases Other Than Child Crimes and Sexual Offenses. ...
(2) Departures Based on Circumstances of a Kind not Adequately Taken
into Consideration. ...
(B) Unidentified Circumstances. --A departure may be warranted in the
exceptional case in which there is present a circumstance that the
Commission has not identified in the guidelines but that nevertheless is
relevant to determining the appropriate sentence.
15
A person present at a meeting at Simkanin's place of business reported
that Simkanin stated "I think we need to knock off a couple of
federal judges. That will get their attention."
16
U.S.S.G. §4A1.3(a)(1) provides:
(a) Upward Departures. --
(1) Standard for Upward Departure. --If reliable information indicates
that the defendant's criminal history category substantially
under-represents the seriousness of the defendant's criminal history or
the likelihood that the defendant will commit other crimes, an upward
departure may be warranted.
17
U.S.S.G. §4A1.3(a)(4) provides:
(4) Determination of Extent of Upward Departure. --
(A) In General. --Except as provided in subdivision (B), the court shall
determine the extent of a departure under this subsection by using, as a
reference, the criminal history category applicable to defendants whose
criminal history or likelihood to recidivate most closely resembles that
of the defendant's.
18
Section 3553(c) provides:
(c) Statement of reasons for imposing a sentence. --The court, at the
time of sentencing, shall state in open court the reasons for its
imposition of the particular sentence, and, if the sentence --
(2) is not of the kind, or is outside the range, described in subsection
(a)(4), the specific reason for the imposition of a sentence different
from that described, which reasons must also be stated with specificity
in the written order of judgment and commitment ....
19
As the Smith court noted, 18 U.S.C. 3553(a) states:
(a) Factors to be considered in imposing a sentence. --The court shall
impose a sentence sufficient, but not greater than necessary, to comply
with the purposes set forth in paragraph (2) of this subsection. The
court, in determining the particular sentence to be imposed, shall
consider --
(1) the nature and circumstances of the offense and the history and
characteristics of the defendant;
(2) the need for the sentence imposed --
(A) to reflect the seriousness of the offense, to promote respect for
the law, and to provide just punishment for the offense;
(B) to afford adequate deterrence to criminal conduct;
(C) to protect the public from further crimes of the defendant; and
(D) to provide the defendant with needed educational or vocational
training, medical care, or other correctional treatment in the most
effective manner;
(3) the kinds of sentences available;
(4) the kinds of sentence and the sentencing range established for ...
the applicable category of offense committed by the applicable category
of defendant as set forth in the guidelines ...;
(5) any pertinent [sentencing guidelines] policy statement ... [;]
(6) the need to avoid unwarranted sentence disparities among defendants
with similar records who have been found guilty of similar conduct; and
(7) the need to provide restitution to any victims of the offense.
20
In Harris, 293 F.3d at 871, the court stated:
We review a district court's departure from the range established by the
Guidelines for abuse of discretion. The district court's decision is
accorded substantial deference because it is a fact intensive assessment
and the district court's findings of fact are reviewed for clear error.
However, the district court's interpretation of the Guidelines is a
question of law, reviewed de novo; a district court abuses its
discretion by definition when it makes an error of law. Determining
whether a factor is permissible to take into account when considering a
departure is one of these questions of law. A district court abuses its
discretion if it departs on the basis of legally unacceptable reasons or
if the degree of the departure is unreasonable.
(internal citations omitted).
21
This court reached a similar conclusion in an unpublished opinion, United
States v. Tampico, 297 F.3d 396 (2002) ( per curiam)
(unpublished), a child pornography case in which the court upheld an
upward departure that was based in part on the defendant's membership in
the North American Man Boy Love Association, which advocates sexual
relationships between men and underage boys. The court concluded that
the defendant's membership in the organization was relevant to
sentencing because it may indicate the increased likelihood of
recidivism.
Tampico
, 297 F.3d at 402-03. As Simkanin correctly points out,
Tampico
is not binding precedent. Nonetheless, its reasoning is persuasive in
light of Dawson and Boyle.
22
The other Supreme Court cases cited by Simkanin on the constitutional
question are inapposite. See Wisconsin v. Mitchell, 508
U.S. 476, 485 (1993) (upholding a statute that increases punishment for
crimes committed with a racially motivated intent); McDonald v. Smith,
472 U.S. 479 (1985) (holding that the First Amendment right to petition
is no shield against liability for libel); Watts v. United States,
394 U.S.705 (1969) ( per curiam) (holding that a statute
prohibiting threats against the President did not constitutionally apply
to criminalize the defendant's conditional and hyperbolic political
comment); Noto v. United States, 367 U.S. 290, 297-98, 299-300
(1961) (addressing a conviction under the membership clause of the Smith
Act and finding evidence insufficient to show a present advocacy of
overthrow); R.A.V. v. Minnesota, 505 U.S. 377 (1992) (holding
unconstitutional on First Amendment grounds a law criminalizing conduct
such as placing a burning cross or Nazi swastika, which one knows to
arouse anger, alarm, or resentment on the basis of race, religion, etc.).
23
Simkanin also challenges the district court's ability to predict the
likelihood of recidivism, stating that even trained scientists cannot
accurately make such predictions. The Guidelines, however, clearly
permit a district court to depart upwardly if it believes that reliable
information suggests that the defendant's likelihood to recidivate is
not adequately represented by the range established. See U.S.S.G.
§4A1.3(a)(1). Obviously, nothing in the Guidelines or our case law
suggests that the district court must be able to predict recidivism with
scientific certainty.
24
Indeed, Simkanin explicitly recognizes that his position is foreclosed
by Mares, and it is therefore unavailing. See Hogue v.
Johnson, 131 F.3d 466, 491 (5th Cir. 1997) (noting that one panel of
this circuit may not overturn another panel absent an intervening
decision to the contrary by the Supreme Court or this court en banc).
[2000-1 USTC ¶50,438] United States
of America, Plaintiff-Appellee v. Franklin Y. Wright, Jr., Annette Ryan
Wright, also known as Annette S. Wright, also known as Annette Kaufman
Wright,
Rob
ert E. Barger, Defendants-Appellants
(CA-5),
U.S.
Court of Appeals, 5th Circuit, 98-50554,
4/27/2000
211 F3d 233
2000
U.S.
App. LEXIS 8192. Affirming an unreported District Court decision.
[Code
Secs. 6211 and 7203 ]
Penalties, criminal: Attempt to evade or defeat tax: Tax liability,
definition of.--A married couple and their tax attorney were
properly convicted of tax evasion despite their claim that the husband's
underlying tax deficiency had been eliminated. His voluntary payments
and the proceeds from the sale of his seized property did not eliminate
his original tax liability and the IRS was not required to apply the
seized amounts in the same manner as he requested for his voluntary
payments. The IRS applied the seizure proceeds to his total tax,
interest and penalties for the earliest year owed; thus, there continued
to be a deficiency even thought the husband's total payments exceeded
the amount of tax that he originally owed. Moreover, the evidence
against the parties was sufficient to support their convictions.
[Code Sec.
7203 ]
Penalties, criminal: Tax evasion: Conspiracy to defraud government.--A
married couple and their tax attorney were properly convicted of tax
evasion and conspiracy to defraud the government; the attorney was also
properly convicted of making false statements to the IRS. By indirectly
purchasing a new home in the name of a co-conspirator, the couple tried
to hide assets from the IRS in order to avoid paying the husband's tax
liability. Although the attorney was not intimately involved in the
scheme, he submitted an offer in compromise on behalf of the husband
that omitted any mention of the new home and claimed that the old home
was sold because the taxpayer could not afford it.
[Code Sec.
7203 ]
Penalties, criminal: Conspiracy: Attempt to evade or defeat tax:
False statements: Motion for new trial, denied: Testimony:
Co-conspirator.--A married couple and their tax attorney who were
convicted of tax evasion, conspiracy to defraud the government, and
making false statements to the IRS were denied a new trial based on a
co-conspirator's post-trial claim that she was pressured into pleading
guilty. The co-conspirator did not deny the truthfulness of her
testimony against the couple or attorney. Thus, her assertion of
innocence was irrelevant to the their convictions.
[Code Sec.
7203 ]
Penalties, criminal: False statements: Sentencing guidelines,
application of: Enhancement: Sophisticated means: Tax attorney: Downward
departure: Sentencing discrepancies: Remand.--Although a tax
attorney's sentence for making false statements to the IRS was properly
enhanced for special skills, his case was remanded because the trial
court erroneously concluded that discrepancies between his sentence and
the sentences of other persons involved a same tax evasion scheme were
an inadequate basis for downward departure under the U.S. Sentencing
Guidelines.
[Code Sec.
7203 ]
Penalties, criminal: Indictment: Conspiracy: Attempt to evade or
defeat tax.--The IRS was not required to charge a couple and their
tax attorney with the more specific offense of concealing income or
assets instead of indicting them for defrauding the government. Their
conduct was not a single incident or mere technical violation of the tax
code and the allegations against them were sufficiently set forth in the
indictment to apprise them of the crimes charged. Distinguishing B.
Minarik (CA-6), 90-1
USTC ¶50,085 .
Before: GARZA,
HIGGINBOTHAM and BENAVIDES, Circuit Judges.
OPINION
HIGGINBOTHAM,
Circuit Judge:
This appeal
presents various challenges to the tax evasion-related convictions of
Franklin Wright, his wife Annette Wright, and
Franklin
's attorney and tax preparer,
Rob
ert Barger. Barger also appeals his sentence. We reject the defendants'
legal challenges to the convictions and find that the evidence was
sufficient to support each of the verdicts. Because it appears that the
district court believed it could not downward depart under the
Sentencing Guidelines based on a discrepancy in sentences among the
co-defendants, we remand for the re-sentencing of Barger.
I
The charges
against all of the defendants stem from tax deficiencies owed by
Franklin Wright for 1986, 1987 and 1988. Collection proceedings began in
1988, and the Internal Revenue Service ("IRS") and
Franklin
began a long period of negotiation.
In August
1992, Barger submitted an Offer in Compromise to the IRS and set up a
$5,000-a-month payment plan for
Franklin
, which
Franklin
followed until December 1994. Although the offer was substantial, the
IRS eventually rejected it because
Franklin
failed to provide required additional information. Through seizures and
voluntary payments, however,
Franklin
eventually paid about $490,000 toward his tax liability of $419,000, not
including penalties and interest.
Franklin and
Annette married in 1989, after
Franklin
accumulated his deficiency. The government charged Annette with
assisting
Franklin
in hiding assets from the IRS. In August 1992, while the Offer in
Compromise was pending, Annette decided to sell the home she had owned
before her marriage to
Franklin
and buy a new house. Annette claims that she was unable to secure
financing for the home because of
Franklin
's tax problems. She asked a friend, Caroline Haggard, to buy the home
in Haggard's name and stated that she would assume the mortgage once the
tax issues had been resolved. Haggard agreed to this arrangement.
Franklin and
Annette brought her almost $150,000 for the house in a bag containing
$100 bills.
Franklin
told Haggard that the cash was money from his law practice. Haggard
testified at trial that the Wrights assured her that the taxes had been
paid on the money but warned that she should avoid depositing the funds
in the bank to avoid problems with the IRS.
Haggard
decided to deposit the money anyway, resulting in a report to the IRS.
She called Barger for advice, and Barger asked her why she had deposited
the money when she had been told not to. Barger also participated in the
home purchase in other ways: he assisted Haggard in gathering financial
records in order to qualify for the mortgage; drew up papers
transferring the mortgage to Annette; and loaned
Franklin
$64,000 for the remainder of the down payment. In April 1993, Barger
submitted an amendment to the Offer in Compromise stating that the
Wrights had sold their house because they could no longer make mortgage
payments and were now renting. The form did not list the new home as
potential community property.
The government
indicted the Wrights, Barger and Haggard for conspiracy to defraud,
Franklin for tax evasion, and Barger for making false statements.
Haggard, also facing prosecution on unrelated Medicaid fraud charges,
plead guilty to all charges and testified on behalf of the government. A
jury found all three of the others guilty. 1
The district court sentenced
Franklin
to concurrent 12-month terms. Annette received five years' probation so
that she could care for the couple's small children. Barger received
concurrent 18-month terms; his sentence included a two-point enhancement
for use of a special skill. Haggard attempted to withdraw her plea after
the trial, claiming that she was innocent of the tax charges; her appeal
proceeded separately and was rejected by a panel of this court. At issue
today are the appeals of the other three defendants.
II
All three
defendants raise several legal challenges to the convictions. First,
they claim that the convictions are improper because
Franklin
had no underlying tax deficiency.
Franklin
contends that he owed only interest and penalties and could not be
prosecuted for evasion if no tax was owed.
The Supreme
Court has held that the elements of Internal Revenue Code
("I.R.C.") §7201, the provision criminalizing the evasion of
taxes, include the existence of a "tax deficiency." 2
While §7201 does not describe "tax deficiency," it is defined
elsewhere in the IRC as the amount by which the tax exceeds the tax
reported on the return plus the amounts previously assessed as a tax
deficiency. 3
The IRC specifically excludes interest from being treated as tax for
purposes of deficiency procedures. 4
The Sentencing Guidelines also exclude interest and penalties in
assessing the penalty for tax evasion. 5
Although the
deficiency procedures are separate from the criminal liability
provisions, we are persuaded that the definition of "tax
liability" excluding penalties and interest extends to §7201. We
decline to assume a broader meaning for a "tax deficiency"
under §7201 than under the deficiency proceedings provision, especially
when §7201 attaches criminal liability to the debt owed. The Guidelines
merely confirm our conclusion.
Franklin
fails to demonstrate, however, that he owed no tax during the alleged
period of evasion. Although his total payments eventually exceeded his
tax owed, the IRS collected a significant portion of the paid amounts
through seizure. The IRS applied the seized amounts according to its
normal procedure, which is first to extinguish the taxpayer's total tax,
interest and penalties for the earliest year owed. 6
Franklin
cites no authority for the proposition that his requests as to how the
IRS should apply his voluntary payments must also have been honored as
to the seized amounts. 7
Without having all of the seized amounts first applied to his tax
liability,
Franklin
continued to have a tax deficiency. 8
The defendants
also argue that the indictments under 18 U.S.C. §371 impermissibly
varied from the proof presented at trial. Section 371 has two prongs: it
prohibits a conspiracy to commit an offense against the
United States
, or one to defraud the
United States
. The first prong refers to specific offenses criminalized elsewhere in
the federal code; the second stands independently. The government
charged the defendants with conspiracy to defraud.
Franklin
argues that the defrauding indictment was impermissible because the
alleged conduct could have been charged as a specific offense:
concealing income or assets from the IRS.
Franklin
relies on United States v. Minarik, which held that the
government must proceed under the more specific clause of §371 if it
applies. 9
Minarik, however, has since been limited: it now applies only
when the taxpayer's duties are technical, the violation was too isolated
to comprise a "conspiracy to defraud," and the defendant
receives no specific notice of the crimes charged. 10
Here, the conduct was not a mere technical violation of the tax code,
the allegations went beyond a single incident of violation, and the
indictment, which exhaustively set forth the government's allegations,
gave specific notice of the crimes charged.
Finally, the
three defendants seek a motion for new trial based on Haggard's
post-trial attempts to withdraw her plea. 11
Haggard told several individuals that she believed she was not guilty of
conspiracy to defraud the IRS but had been pressured into pleading to
avoid a more severe penalty regarding the Medicaid fraud. Because
Haggard has never denied the truthfulness of her testimony regarding the
three other defendants, however, her assertion of her own innocence is
immaterial to the other three convictions. The denial of a new trial was
not an abuse of discretion.
III
Franklin and
Annette each challenge the sufficiency of the evidence to support the
jury verdicts. To establish a conspiracy under 18 U.S.C. §371, the
government must prove (1) an agreement (2) to commit a crime and (3) an
overt act committed by one of the conspirators in furtherance of the
agreement. 12
A conviction under IRC §7201 requires a showing of willfulness, a tax
deficiency, and an affirmative act constituting evasion. 13
There was
sufficient evidence to support Franklin's and Annette's convictions. Key
evidence included Haggard's testimony regarding the delivery of the
cash. While Annette's purchase of the home could have been bona fide,
even if she accepted money from Franklin for the house, the manner of
payment, including the bag of cash and Franklin's comments, gave rise to
an inference of illegal activity. In addition, Annette's claims that she
wanted the house to be hers alone are contradicted by
Franklin
's funding of the down payment. The jury could reasonably have inferred
from this account that Franklin and Annette conspired to hide assets
from the IRS, and that
Franklin
thus attempted to evade the payment of his tax deficiency.
IV
Barger
challenges the sufficiency of the evidence against him, as well as his
sentence. He argues that there is insufficient evidence of his
involvement in the conspiracy because his assistance with the purchase
of the home was innocent. Barger further argues that there was
insufficient evidence regarding his false statement conviction. To
establish a violation of 18 U.S.C. §1001(a)(3), the government must
show a statement that is false and material and made knowingly and
willfully. 14
We find
support for both counts of Barger's conviction. On the amended Offer in
Compromise form, he omitted any reference to
Franklin
's possible ownership interest in the home and stated that the Wrights
were renting their residence because they could not make house payments.
Barger's involvement with the home purchase was sufficient to infer that
he knew that some of the down payment might be
Franklin
's funds, thus requiring him to list the home as potential community
property, and that he knew that the Wrights were able to make payments
on a house. His involvement also provides sufficient evidence to support
the conspiracy conviction. His reproach to Haggard after she had
deposited the money indicated his intimate knowledge with the details of
the transaction.
Barger raises
two challenges to his sentence. He argues that the district court
clearly erred in applying a two-level enhancement for the use of a
special skill and that it erred in failing to recognize that it could
shorten Barger's sentence based on sentencing disparities.
The district
court found that Barger's special skills as a Certified Public
Accountant and tax attorney were essential to the evasion scheme. While
Barger's contribution to the scheme was not particularly sophisticated,
part of it did involve his preparation of the Offer in Compromise and
other legal documents. Because this use of special skills did further
the conspiracy, it was not clearly erroneous for the district court to
apply the enhancement.
Barger argues
for a downward departure based on the sentencing disparity between
Franklin, the taxpayer, and Barger, who played a much more peripheral
role and did not profit from the crime. 15
In Koon v. United States, the Supreme Court held that departure
factors should normally not be ruled out on a categorical basis and that
courts may depart if the case is outside the Guidelines' heartland. 16
After the Seventh Circuit categorically denied departures based on
discrepancies among co-defendants' sentences, the Supreme Court remanded
the case for reconsideration in light of Koon. 17
This court may
review a district court's refusal to grant a downward departure only if
the district court mistakenly concluded that the Guidelines did not
permit the departure. 18
From our review of the sentencing transcript, it is evident that the
district court was troubled by the discrepancy in sentences between
Franklin and Barger. The district court concluded, "I still don't
like how [Barger] can be assessed more time. And I'm already giving him
time for the attorney role, but I find no - I don't have a basis here to
depart, though." Although this candid comment was doubtless not
intended to be a full explication of the court's rationale, the court
appears to have believed that the discrepancy could not be a basis for a
downward departure. We remand to the district court for re-sentencing.
We find no
legal grounds warranting reversal of any of the convictions:
Franklin
had a tax deficiency for purposes of IRC §7201; the indictment was
proper; and Haggard's recantation is not material to any of the
defendants' convictions. There was sufficient evidence to convict the
Wrights and Barger of conspiracy to defraud,
Franklin
of evasion, and Barger of making false statements. The district court
did not clearly err in applying the special skill enhancement to
Barger's sentence. As it appears that the district court believed that
the Sentencing Guidelines did not permit a downward departure based on
discrepancies in sentences among co-defendants, we REMAND for the
re-sentencing of Barger.
1
Barger was acquitted on one of the counts of making false statements.
2
See Sansone v. United States [65-1 USTC ¶9307], 380 U.S. 343,
351, 13 L.Ed.2d 882, 85 S.Ct. 1004 (1965).
3
See IRC §6211.
4
See §6601(e).
5
See
U.S.
SENTENCING GUIDELINES MANUAL §2T1.1 & App. Notes; United States
v. Clements, 73 F.3d 1330, 1339 (5th Cir. 1996).
6
See Rev. Ruling 73-305, 1973-2 C.B. 43, amended by Rev. Ruling
79-284, 1979-2 C.B. 83.
7
We are unpersuaded that
Franklin
had such a right under the Due Process Clause of the Constitution.
8
Even if successful, this argument would affect only the IRC §7201
conviction and not the convictions based on conspiracy under 18 U.S.C.
§381. The latter provision prohibits the defrauding of the
United States
, not just the evasion of taxes.
9
[90-1 USTC ¶50,085], 875 F.2d 1186, 1193-94 (6th Cir. 1989).
10
See
United States
v. Khalife, 106 F.3d 1300, 1304-06 (6th Cir. 1997). Other courts
also follow this rule. See United States v. Goulding, 26 F.3d
656, 663 (7th Cir. 1994); United States v. Notch [91-2 USTC ¶50,470],
939 F.2d 895, 901 (10th Cir. 1991).
11
The defendants concede that their Singleton argument regarding Haggard's
testimony is foreclosed by United States v. Webster, 162 F.3d 308
(5th Cir. 1998).
12
See
United States
v. Gray, 96 F.3d 769, 772-73 (5th Cir. 1996).
13
See Sansone [65-1 USTC ¶9307], 380
U.S.
at 351.
14
See
United States
v. Puente, 982 F.2d 156, 158 (5th Cir. 1993).
15
Franklin
will serve his time in a halfway house. With an 18-month sentence,
Barger is ineligible for the halfway program.
16
See 116 S.Ct. 2035, 2051 (1996).
17
See
United States
v. Meza, 127 F.3d 545, 547-48 (7th Cir. 1997).
18
See
United States
v. Palmer, 122 F.3d 215, 222 (5th Cir. 1997).
[2002-2 USTC ¶50,502]
United States of America
, Plaintiff-Appellee v. Arif S. Adam, Defendant-Appellant
(CA-5),
U.S.
Court of Appeals, 5th Circuit, 01-10445,
6/25/2002
, 2002
U.S.
App. LEXIS 12478. Affirming an unreported District Court decision
[Code
Secs. 6531 and 7203 ]
Penalties, criminal: Willful failure to pay over taxes: Statute of
limitations: Six-year period.--An operator of several temporary
employment agencies was properly indicted on charges of willfully
failing to pay over withheld employment taxes. Since the individual's
failure to remit the withholdings to the IRS constituted a failure to
pay any tax under Code
Sec. 6531 , his prosecution was timely instituted within the
six-year limitations period.
[Code Sec.
7203 ]
Penalties, criminal: Sentencing guidelines: Evidence.--An
individual's assertion that the trial court erred in enhancing his
sentence for obstruction of justice based on the testimony he gave at
his guilty-plea hearing was rejected. Based on a review of the record,
the appellate court found no reversible error in either the trial
court's interpretation of the sentencing guidelines or in its
application of the obstruction of justice enhancement to the facts and
circumstances of the case.
Before:
DAVIS
, DEMOSS and STEWART, Circuit Judges.
OPINION
STEWART,
Circuit Judge:
Arif S. Adam
("Adam") appeals from his conviction for failure to pay over
taxes and from the district court's failure to allow him to withdraw his
guilty plea. He also appeals from the district court's decision to
impose a sentence enhancement for obstruction of justice. For the
following reasons, we hereby AFFIRM.
FACTUAL
AND PROCEDURAL HISTORY
Adam was
charged in June of 2000 by a superseding indictment with three counts of
wilfully failing to pay over taxes to the Internal Revenue Service
("IRS"), in violation of 26 U.S.C. §7202 (1989). The counts
of the superseding indictment charged violations occurring in the first,
third, and fourth quarters, respectively, of 1994. Adam moved to dismiss
the indictment as barred by the applicable statute of limitations. The
motion was denied.
On
September 19, 2000
, pursuant to a plea agreement, Adam pleaded guilty to Count Three of
the indictment and signed a factual resume. According to the factual
resume, Adam was in charge of several temporary employment agencies
between the summer of 1993 and late 1995. Adam admitted that he filed a
false tax return, failed to truthfully account for the total amount of
employee payroll taxes due in the fourth quarter of 1994, and failed to
pay over to the
United States
the full amount of payroll taxes required by law. The trial judge
reserved acceptance of the plea agreement and of the plea of guilty
until sentencing.
Adam filed a
notice of intent to withdraw his guilty plea on
October 3, 2000
, and on
November 13, 2000
, he filed a motion to withdraw the guilty plea. Adam argued in the
motion that he had learned of exculpatory information shortly before his
scheduled trial. The information was that Automatic Data Processing
("ADP"), a private company that performed various tax services
for the businesses run by Adam, had records of tax deposits and filings
made on behalf of the businesses in 1993. Adam averred that the IRS, the
Government, and his former counsel had previously relied on ADP
assertions that such payments had not been made. Adam also averred that
his former counsel had discouraged him from presenting such information
as a defense and had pressured him into pleading guilty. According to
Adam, he succumbed to this pressure because he was in a weakened mental
state due to his father's serious illness, and his counsel advised
against seeking a continuance as Adam had requested. The district court
ruled that Adam did not have an absolute right to withdraw his plea and
must show a fair and just reason. After a hearing, the district court
denied Adam's motion to withdraw his guilty plea.
The probation
officer initially determined that Adam's total offense level was 15. The
Government objected to the Presentence Report, requesting an enhancement
for obstruction of justice based on Adam's alleged perjury at the
hearing on his motion to withdraw his guilty plea. The probation officer
agreed that an enhancement for obstruction of justice should be applied
and two points for obstruction of justice were added, bringing Adam's
total offense level to 17. The district judge overruled Adam's objection
as to the obstruction of justice enhancement, ruling that Adam had
repeatedly lied when he appeared before the court on his motion to
withdraw his guilty plea.
Adam was
sentenced to twenty-seven months of imprisonment, three years of
supervised release, and was ordered to provide restitution in excess of
$170,000. Adam appealed.
DISCUSSION
On appeal,
Adam raises several points of error. First, he contends that the statute
of limitations barred his indictment. Second, he asserts that the
district court erred by requiring him to give a fair and just reason for
withdrawing his plea. In the alternative, he asserts that the district
court abused its discretion by not allowing him to withdraw his plea.
Next, he argues that the district judge should have further inquired
into Adam's use of medication to ensure that his plea was knowing and
voluntary. Finally, he asserts that the court erred in enhancing his
sentence for obstruction of justice based on the testimony he gave at
his guilty-plea hearing and by failing to inform him of the consequences
of giving untruthful statements to the court. We address these arguments
in turn.
I.
Adam,
originally indicted in April of 2000, pled guilty to Count Three of his
superseding indictment, which alleged conduct that occurred in the
fourth quarter of 1994. On appeal, Adam renews his argument that his
indictment under §7202 was barred by the statute of limitations. Issues
of statutory interpretation are reviewed de novo.
United States
v. Santos-Riviera, 183 F.3d 367, 369 (5th Cir. 1999).
A general
three-year limitations period applies to violations of the internal
revenue laws. 26 U.S.C. §6531 (1989). However, the statute provides
eight specific exceptions for which a six-year statute of limitations
applies.
Id.
As briefed by the parties, the dispute centers on the scope of the
exception contained in §6531(4), which establishes a six-year
limitations period "for the offense of willfully failing to pay any
tax, or make any return . . . at the time or times required by law or
regulations." §6531(4). At issue is whether §6531(4) applies to
violations of §7202, which covers "any person required . . . to
collect, account for, and pay over any tax . . . who wilfully fails to
collect or truthfully account for and pay over such tax." §7202.
As the
Government points out, every circuit court to have considered the issue
has held that §6531(4) covers §7202. United States v. Gilbert [2001-2
USTC ¶50,655 ], 266 F.3d 1180, 1186 (9th Cir. 2001); United
States v. Gollapudi [97-2
USTC ¶50,978 ], 130 F.3d 66, 68-71 (3d Cir. 1997); United States
v. Musacchia [90-1
USTC ¶70,001 ], 900 F.2d 493, 498-500 (2d Cir. 1990), vacated on
other grounds, United States v. Musacchia, 955 F.2d 3, 4 (2d Cir.
1991); United States v. Porth [70-1
USTC ¶9329 ], 426 F.2d 519, 521-22 (10th Cir. 1970).
Adam argues
that the circuit courts have relied on flawed logic to support their
holdings as to the statute of limitations issue. He contends that the
holding in Musacchia is questionable given that Congress
prescribed three-year statutes of limitations for various felony tax
offenses. Relying on district court decisions in United States v.
Block [82-1
USTC ¶9256 ], 497 F.Supp. 629, 631-32 (N.D. Ga. 1980), and United
States v. Brennick [97-1
USTC ¶50,390 ], 908 F.Supp. 1004, 1018-19 (D. Mass. 1995), Adam
also suggests that the approach taken in Gollapudi is incorrect
because it is inconsistent with the structure of the statute.
In holding
that six-year limitations period established by §6531(4) did not apply
to offenses under §7202, the Block court found it "obvious
. . . that Congress had the statutory scheme of 26 U.S.C. [§] 7201 et
seq. in mind when considering what offenses should be exempted from
the three-year period of limitations generally applicable." [82-1
USTC ¶9256 ], 497 F.Supp. at 632. The court noted that several of
the eight exceptions of §6531 mention certain code sections by number,
noting by way of example that §6531(5) references §§7206 and 7207.
Id.
The court also found it significant that in §6531 "there is
substantial borrowing of statutory language from certain of the code
sections in the [§] 7201 et seq. series." Id. Noting
that "the key words of [§] 7202, 'collect, account for, and pay
over' are entirely absent from the subsections of [§] 6531 which
establish the longer six-year period of limitations," the Block
court concluded that it was unlikely that Congress "would omit use
of the key words of [§] 7202 if it had intended to make failure to 'pay
over' third party taxes subject to the six-year statute of
limitations."
Id.
Adam also
argues that there is a significant distinction between taxes owed by the
income earner and taxes owed by a responsible person who is obligated
under law to collect taxes on behalf of the government for liabilities
arising from a different taxpayer's activities. This view also finds
support in Block, which, drawing attention to the subtle
difference in language used in §§6531(4) and 7202, noted that
"failure to 'pay over' third party taxes [as proscribed by §7202]
is substantively different from failure to pay taxes." [82-1
USTC ¶9256 ], 497 F.Supp.2d at 632.
We are not
persuaded. The plain language of §6531(4) encompasses the conduct
engaged in by Adam. As the Third Circuit noted in Gollapudi:
Under a plain
reading of this statute, we find it clear that violations of §7202 are
subject to a six-year statute of limitations under §6531(4).
Specifically, 26 U.S.C. §7202 makes it an offense for an employer to
willfully fail to 'account for and pay over' to the IRS taxes withheld
from employees. Given that §6531 pertains to 'failing to pay any tax,'
the District Court correctly found that the failure to pay third-party
taxes as covered by §7202 constitutes failure to pay 'any tax,' and
thus, is subject to the six-year statute of limitations under §6531(4).
[97-2
USTC ¶50,978 ], 130 F.3d at 70.
Further, we
are also persuaded by Musacchia's reasoning that it would be
inconsistent for Congress to establish a six-year statute of limitations
for the misdemeanor offense prescribed in 26 U.S.C. §7203, while
setting a three-year limitations period for the felony offense of §7202.
[90-1 USTC
¶70,001 ], 900 F.2d at 500.
Because Adam
has not shown a persuasive reason for creating a split among the
circuits on this issue, and because we believe the plain language of §6531(4)
encompasses §7202, we conclude that the district court correctly
determined that the six-year statute of limitations applies to §7202.
II.
Adam argues
that the district court erred by requiring him to provide a fair and
just reason for withdrawing his guilty plea because the plea had not yet
been accepted by the court. He argues that courts which require the
defendant to provide a fair and just reason in such circumstances have
erroneously interpreted United States v. Hyde, 520 U.S. 670, 137
L.Ed.2d 935, 117 S.Ct. 1630 (1997).
However, as
Adam acknowledges, this issue has been foreclosed by United States v.
Grant, 117 F.3d 788 (5th Cir. 1997). In Grant, we held that
the "fair and just reason" standard of Federal Rule of
Criminal Procedure 32(e) is triggered by the entry of the defendant's
plea.
Id.
at 790. The Grant court reasoned that "allowing [the
defendant] to withdraw his plea without a fair and just reason would
defeat the purpose of the plea hearing and diminish the significance of
entering pleas."
Id.
at 791. In view of our clear holding in Grant, the district court
did not err in requiring a "fair and just reason" to support
Adam's motion to change his plea.
III.
Adam argues
that the district court erred when it declined to allow him to withdraw
his guilty plea. The denial of a Rule 32(e) motion to withdraw a plea of
guilty is reviewed for abuse of discretion. Grant, 117 F.3d at
789. We consider seven factors in reviewing the denial of a Rule 32(e)
motion: "(1) whether the defendant asserted his innocence, (2)
whether withdrawal would prejudice the government, (3) whether the
defendant delayed in filing the withdrawal motion, (4) whether the
withdrawal would inconvenience the court, (5) whether adequate
assistance of counsel was available, (6) whether the plea was knowing
and voluntary, and (7) whether withdrawal would waste judicial
resources."
Id.
No single factor is dispositive, and the determination is based on the
totality of the circumstances.
United States
v. Lampazianie, 251 F.3d 519, 524 (5th Cir. 2001). The defendant
bears the burden of establishing a "fair and just reason" for
withdrawing his guilty plea.
United States
v.
Henderson
, 72 F.3d 463, 465 (5th Cir. 1995).
Adam argues
that proceeding with the case would not have been a waste of judicial
resources and would not inconvenience the district court. He notes that
he gave notice of his intent to withdraw his guilty plea two weeks after
he entered his plea, and that he asserted his innocence at his
change-of-plea hearing. He also contends that the Government would not
be inconvenienced because it had already prepared to try his case, as
his guilty plea came just one day prior to the scheduled start of trial.
According to
Adam, his motion to withdraw his guilty plea was partially based on
information allegedly discovered shortly before he was to go to trial
that arguably pointed to his innocence. However, the district judge
found that Adam's testimony at the change-of-plea hearing lacked
credibility, but that Adam had been credible when initially entering his
guilty plea. Adam declared under oath at his guilty-plea hearing that
his plea was freely and voluntarily made. As this Court has observed,
"solemn declarations in open court carry a strong presumption of
verity." Lampazianie, 251 F.3d at 524 (internal quotation
and citation omitted). As Adam failed to show a "fair and just
reason" to change his guilty plea under the totality of the
circumstances, the district court did not abuse its discretion in
denying the motion. See
Henderson
, 72 F.3d at 465.
IV.
Adam argues
that the trial court erred at his guilty-plea hearing by failing to
inquire into Adam's use of medication. There was no objection by Adam in
the district court on this issue. As such, we apply a plain-error
analysis.
United States
v. Vonn, 152 L.Ed.2d 90, 122 S.Ct. 1043, 1046 (2002). Under this
analysis, Adam has the burden of showing that his "substantial
rights" were affected. 122 S.Ct. at 1048. "Because relief on
plain-error review is in the discretion of the reviewing court, a
defendant has the further burden to persuade the court that the error
seriously affected the fairness, integrity or public reputation of
judicial proceedings."
Id.
(internal quotations and citation omitted).
A trial court
may not accept a guilty plea "without first . . . addressing the
defendant personally in open court, [to] determine that the plea is
voluntary and not the result of force or threats or of promises apart
from a plea agreement." FED. R. CRIM. P. 11(d). Rule 11 does not
specifically require that the trial judge inquire as to the defendant's
use of medication. See id.
The trial
judge complied with Rule 11(d) in this matter by personally addressing
Adam and making the required inquiries. The court ascertained that
Adam's plea was knowing and voluntary, that no threats or force had been
used on Adam, and that the Government had made no promises to Adam as to
whether the court would accept the plea agreement. The court also
inquired as to whether Adam was under the influence of drugs or alcohol,
which Adam denied. Adam's counsel then volunteered the following:
Your Honor,
one other thing on the medication. Mr. Adam is taking Prosac [sic] but I
can represent to the court that he's extensively looked at this case
which has some complex financial aspects to it. He's been able to fully
participate in understanding all that, but just to--for the record he is
taking medication as prescribed.
The
trial judge made no further inquiries on the medication issue.
As the
transcript showed, the trial court fully complied with Rule 11(d) by
determining that Adam's guilty plea was given voluntarily. Adam denied
taking medication, and his counsel's representation that he was taking
Prozac, but had fully participated in the case, only reinforced Adam's
testimony as to the voluntariness of his plea. On these facts, we find
no error, let alone plain error.
V.
Adam contends
that the district court erred by imposing a sentence enhancement for
obstruction of justice based on testimony changing his plea from guilty
to not guilty. A district court's interpretation or application of the
Sentencing Guidelines is reviewed de novo, and its factual
findings, such as a finding of obstruction of justice, are reviewed for
clear error.
United States
v. Huerta, 182 F.3d 361, 364 (5th Cir. 1999). Where a factual
finding is plausible in light of the record as a whole, it is not
clearly erroneous.
Id.
Unless left with the "definite and firm conviction" that a
mistake has been committed, this Court will not deem the district
court's finding to be clearly erroneous.
United States
v. Pofahl, 990 F.2d 1456, 1480 (5th Cir. 1993).
A defendant's
offense level is to be increased if he "willfully obstructed or
impeded, or attempted to obstruct or impede, the
admin
istration of justice during the course of the investigation,
prosecution, or sentencing of the instant offense of conviction."
U.S.
SENTENCING GUIDELINES MANUAL §3C1.1 (2001). The provision of
"materially false information to a judge or magistrate" is
among the list of non-exhaustive examples of conduct to which the
obstruction of justice enhancement applies.
Id.
cmt. n.4(f).
The trial
court found that Adam had lied under oath at his plea-withdrawal
hearing, but did not make detailed factual findings as to which of
Adam's statements were untruthful. However, at the sentencing hearing,
the Government referred to a transcript from the plea-withdrawal hearing
in which Adam admitted that he had been untruthful in response to
several questions. The Assistant United States Attorney summarized the
transcript as follows:
The court
asked Mr. Adam, "You told the truth on some things but you lied to
me on other things."
[Adam:]
"Yes, I did."
[Court:]
"And you lied to me because your attorney told you to lie."
[Adam:]
"Yes."
[Court:]
"And then you lied to me when you said you were actually freely and
voluntarily entering the plea of guilty."
[Adam:]
"Yes, I did."
[Court:]
"You lied to me when you said nothing had forced you to enter a
plea of guilty?"
[Adam:]
"Yes, I did."
[Court:]
"You lied to me when you told me that the sole reason you were
pleading guilty was the fact you were guilty."
[Adam:]
"Yes, I did."
[Court:]
"And you lied to me when you said there was no other reason that
you were pleading guilty."
[Adam:]
"Yes, I did." 1
The
district judge then stated that "in the colloquy that the
Government refers to[,] it was clear to me that the defendant was lying
and that he told repeated lies."
As the
Government notes, there is no case in the Fifth Circuit that squarely
holds that an obstruction enhancement is appropriate for perjury
committed during a hearing on a motion to withdraw from a plea of
guilty. This Court has held that the enhancement for obstruction of
justice "is proper any time the defendant is aware of the action or
investigation against him and he conceals or attempts to conceal
information material to the investigation, prosecution, or sentencing of
the instant offense." United States v. Upton, 91 F.3d 677,
688 (5th Cir. 1996); see also
United States
v. Reed, 26 F.3d 523, 531 (5th Cir. 1994) (upholding obstruction of
justice enhancement based on false testimony given at hearing on motion
to suppress evidence).
Adam relies
principally on United States v. Endo, 635 F.2d 321 (4th Cir.
1980). Endo held that a defendant's inconsistent answers to the
question "are you guilty?" could not sustain a perjury
conviction because statements which present legal conclusions are
considered opinion, and cannot form the basis of a perjury conviction.
Id.
at 323. The Endo court observed that permitting the conviction to
stand "would effectively place any defendant under the sword of
Damocles whenever he or she might seek to assert a recognized procedural
right to withdraw a plea."
Id.
at 324.
Endo
does not support Adam's position. The district court did not find Adam
to have committed perjury based merely on his change of plea. Rather, it
was Adam's statements under oath regarding the circumstances surrounding
his guilty plea, which the district court found to be untruthful, that
led the court to impose the obstruction of justice enhancement. The
court's factual finding of perjury is supported by the record as a
whole. Thus, it is not clearly erroneous. In this regard, this case is
like United States v. Martinez, a Seventh Circuit case wherein
the court upheld the application of an obstruction of justice
enhancement based upon a defendant's perjurious statements at his
plea-withdrawal hearing. 169 F.3d 1049, 1056 (7th Cir. 1999). Based on
Martinez
, and our review of the record, we find no reversible error in either
the district court's interpretation of the Sentencing Guidelines or in
its application of the obstruction of justice enhancement to the facts
and circumstance of this case.
VI.
Adam's
remaining argument is that the district court erred by failing to advise
him of the consequences of making untruthful statements, as required by
Federal Rule of Criminal Procedure 11(c)(5). Rule 11(c)(5) provides
that, before accepting a plea of guilty or nolo contendere, the
court must address the defendant personally in open court, and inform
him that the court may ask him questions about the offense to which he
has pled, and if he answers these questions under oath, on the record,
and in the presence of counsel, his answers may later be used against
him in a prosecution for perjury or false statement. Fed. R. Crim. P.
11(c)(5). Adam correctly notes that the district judge did not admonish
him as required under Rule 11(c)(5). An allegation that Rule 11 has been
violated is subject to plain-error review. Vonn, 122 S.Ct. at
1048.
Adam cites no
authority linking a failure to give a Rule 11(c)(5) admonishment with
relief from an obstruction of justice enhancement. Moreover, by its
terms Rule 11(c)(5) is not applicable to this matter for at least two
reasons. First, the trial court found that Adam made false statements at
his Rule 32(e) plea-withdrawal hearing, rather than at his guilty-plea
hearing, which is the focus of the Rule 11(c)(5) mandate. Second, Adam
is not currently subject to a criminal prosecution for perjury or false
statements, which are the consequences contemplated by Rule 11(c)(5),
but rather to an adjustment under the sentencing guidelines. As such,
this claim is also without merit.
CONCLUSION
For the
foregoing reasons, we AFFIRM.
AFFIRMED.
1
The Assistant United States Attorney's recitation is faithful to the
actual transcript of the plea-withdrawal hearing. However, the actual
transcript also shows that Adam explained his guilty plea with reference
to his father's illness.
[2002-1 USTC ¶50,394]
United States of America
v. Daniel Enright, Appellant
(CA-3),
U.S.
Court of Appeals, 3rd Circuit, 99-5144,
4/18/2002
, 2002
U.S.
App. LEXIS 7218. Affirming an unreported District Court decision
[Code Sec.
7201 ]
Penalties, criminal: Tax evasion: Excise taxes.--The president of
an oil corporation was properly convicted of tax evasion for his
participation in a daisy chain scheme to evade excise taxes on the sale
of fuel. The individual contended that, because his corporation was not
a federal or state (
New Jersey
) excise taxpayer, the evasion counts should have been dismissed.
However, the appellate court was satisfied that a rational finder of
fact could conclude beyond a reasonable doubt that the government met
its burden of proof. A jury could rationally conclude that the
corporation was responsible for the unpaid federal and state excise
taxes.
[Code Sec.
7201 ]
Penalties, criminal: Tax evasion: Jury instructions: Willfulness:
Sufficiency of evidence.--An oil company president's claim that the
trial court improperly charged the jury on the terms
"knowingly" and "willfully" in convicting him of tax
evasion was dismissed due to his failure to cite any legal authority in
support of his position. His claim that there was insufficient evidence
to prove that he acted willfully was also rejected. The record indicated
that the individual knew the taxes had not been paid and that he and
other co-conspirators falsified books and records and covered up sources
of income in order to conceal assets.
[Code Sec.
7201 ]
Penalties, criminal: Tax evasion: Sentencing guidelines.--An
individual's objections to his sentence for his conviction for tax
evasion were rejected. In particular, the trial court did not err in
using 1998 sentencing guidelines to calculate the sentence, grouping its
decision for sentencing purposes or refusing to grant the individual a
downward departure for acceptance of responsibility.
Christopher J.
Christie, United States Attorney, Newark, N.J. 07102,
Rob
ert E. Lindsay, Alan Hechtkopf, Karen Quesnel, John Hinton III,
Department of Justice, Washington, D.C. 20530, for U.S. John J.E.
Markham, Markham & Read, Boston, Mass., for appellant.
Before:
SCIRICA and COWEN, Circuit Judges, and RESTANI *,
United States Court of International Trade Judge.
è Caution:
This court has designated this opinion as NOT FOR PUBLICATION. Consult
the Rules of the Court before citing this case.ç
OPINION
COWEN, Circuit
Judge:
Daniel Enright
was found guilty of violating 18 U.S.C. §371 by conspiring to defraud
the
United States
, to commit tax evasion (in violation of 26 U.S.C. §7201), commit wire
fraud on the State of
New Jersey
(in violation of 18 U.S.C. §1343), and to commit money laundering (in
violation of 18 U.S.C. §1957). He was also convicted of fourteen counts
of attempting to evade excise taxes (in violation of 26 U.S.C. §7201),
eleven counts of wire fraud (in violation of 18 U.S.C. §1343), eleven
counts of money laundering (in violation of 18 U.S.C. §1957), and one
count of evading currency reporting requirements (in violation of 31
U.S.C. §5316, 5322). Enright was sentenced to 200 months, and ordered
to pay $1,000,000 in restitution. He challenges the sufficiency of the
evidence to support his conviction, some of the District Court's
evidentiary rulings and jury instructions, as well as his sentence. He
also asserts that the District Court improperly allowed an amendment to
or variance from the terms of the indictment. We will affirm.
I.
Enright and
his coconspirators participated in a "daisy chain" scheme to
evade excise taxes on the sale of certain kinds of fuel. The elements of
such schemes have been detailed sufficiently elsewhere. See, e.g.,
United States v. Morelli, 169 F.3d 798, 801 (3d Cir. 1999), cert.
denied, 528 U.S. 820, 120 S.Ct. 63, 145 L.Ed.2d 54 (1999) (citations
omitted). During the prosecution period, Enright operated as the
president of Petro Plus Oil ("PetroPlus"), a company that
bought and sold fuel at the bottom of the chain. We will add further
factual detail below as it becomes necessary to the legal discussion.
Enright was
convicted of a multiple-object conspiracy contained in Count One of the
Superseding Indictment, along with multiple counts of tax evasion, wire
fraud, money laundering, and evading currency reporting requirements.
II.
A.
Sufficiency of the Evidence PetroPlus Was The Taxpayer
Enright argues
that because PetroPlus was not the federal or
New Jersey
state excise taxpayer, the evasion counts should have been dismissed.
When reviewing the sufficiency of the evidence to sustain a conviction,
we must ask whether any rational jury could have found the essential
elements of the offense beyond a reasonable doubt, viewing the evidence
in the light most favorable to the government. See United States v.
Veksler, 62 F.3d 544, 551 (3d Cir. 1995) (citations omitted).
We are
satisfied that a rational finder of fact could conclude beyond a
reasonable doubt that the government met its burden of proof. A jury
could rationally conclude that PetroPlus was responsible for the unpaid
federal and
New Jersey
State
excise taxes. The record is replete with evidence of an agreement
between Enright and his coconspirators whereby Kings would purchase
number 2 oil from a major fuel supplier in a tax-free transaction to be
delivered to PetroPlus in subsequent transactions without the taxes ever
being paid. This involved an elaborate and complex daisy chain involving
fictitious paper sales of the fuel to make it appear that a sham company
above PetroPlus in the chain had actually incurred and paid the taxes on
the sale of the number 2 oil, when in fact the taxes had not been payed
[sic]. The record also reflects that PetroPlus then sold the oil
at prices that purported to include the federal and
New Jersey
state excise taxes, when in reality as well known to Enright the taxes
had never been payed [sic]. The record reflects numerous other
examples from the paper trail of the daisy chain.
The jury
considered and rejected Enright's claim that PetroPlus did not incur the
tax liability. The District Court specifically instructed the jury that,
in determining whether the government had proven the attempted evasion
of tax charged in the indictment beyond a reasonable doubt, the
"first question for you to determine is whether a tax was due and
owing from PetroPlus to the United States." App. at 614. It is
apparent from the voluminous record that the trial provided overwhelming
evidence from which a rational jury could find beyond a reasonable doubt
that PetroPlus incurred the taxes.
B.
Jury Instructions
Enright argues
that the District Court improperly charged the jury on knowingly and
willfully. He cites no legal authority in his two-paragraph analysis on
this issue. "We will reverse the District Court's denial to charge
a specific jury instruction only when the requested instruction was
correct, not substantially covered by the instructions given, and was so
consequential that the refusal to give the instruction was prejudicial
to the defendant."
United States
v. Phillips, 959 F.2d 1187, 1191 (3d Cir. 1992). Our review of
whether the District Court stated the appropriate legal standards in its
charge is plenary.
United States
v. Johnstone, 107 F.3d 200, 204 (3d Cir. 1997). The jury charge
must clearly articulate the legal standards at issue and be structured
to avoid confusion, and we examine the charge in its entirety.
Id.
The District
Court charged the jury as follows:
The word
"willfully," as used in section 7201, means a voluntary,
intentional violation of a known legal duty. Under section 7201, a
defendant has a legal duty not to act to evade a tax obligation. Thus,
to find a defendant guilty, you must find that the Government has proven
that he or she acted voluntarily and intentionally and with the specific
intent to keep from the Government a tax imposed by the tax laws that a
defendant knew there was a legal duty to pay. An act is done
"knowingly" only if it is done purposely and deliberately and
not because of mistake, accident, negligence, or other innocent reason.
Although, as I
previously instructed, you must find beyond a reasonable doubt that
PetroPlus owed unpaid taxes, it is not required that you find a
particular defendant knew who was the proper taxpayer.
However, you
must find beyond a reasonable doubt that a defendant acted voluntarily
and intentionally and with the specific intent to keep from the
Government a tax imposed by law that a defendant knew there was a legal
duty to pay.
App.
at 617. Enright is incorrect in his assertion that the government had to
prove that Enright knew that PetroPlus owed the taxes at issue. See
United States v. Voigt [96-2 USTC ¶50,633], 89 F.3d 1050, 1089-90
(3d Cir. 1996); United States v. Wisenbaker, 14 F.3d 1022,
1024-25 (5th Cir. 1994). Among other things, what the government had to
prove was that PetroPlus was the taxpayer, not that Enright knew that
PetroPlus was the taxpayer. Read in its entirety, the District Court
properly charged the jury.
Enright also
argues that the following instruction was tantamount to a directed
verdict:
If, in good
faith, a defendant believed that he or she was not violating the
Internal Revenue laws, then such defendant cannot be guilty of tax
evasion.
. . .
The test is
whether a defendant personally believed in good faith that all properly
reportable excise taxes due under the Internal Revenue Code had been
reported and paid.
App.
at 620-21. Reviewing the charge in its entirety, we find no error with
the instruction. As discussed above, the government did not need to
prove that Enright (or any of his coconspirators) knew the identity of
the taxpayer in order to establish willfulness. The belief that someone
other than PetroPlus owed the taxes did not constitute a defense to the
crimes charged in the superseding indictment.
Enright also
challenges the District Court's instruction on sham transactions. The
District Court gave the following instruction on sham transactions:
It is not
lawful for parties to conduct transactions which, rather than having any
business purpose or economic substance, are conducted solely for the
purpose of evading taxes. Therefore, where a transaction is found to
have been conducted for the sole purpose of evading tax liability, the
Internal Revenue Service is permitted to ignore or reject the form of
that transaction, and look instead at its economic reality for purposes
of imposing the proper tax on the appropriate party or parties.
App.
at 623. Having read the charge to the jury in its entirety, we find no
error with the instruction. See United States v. Wexler [94-2
USTC ¶50,361], 31 F.3d 117, 122 (3d Cir. 1994).
C.
Sufficiency of the Evidence Enright Acted Willfully
Enright
challenges the sufficiency of the evidence adduced at trial that he
acted willfully. We must ask whether any rational jury could have found
the essential elements of the offense beyond a reasonable doubt, viewing
the evidence in the light most favorable to the government. See
Veksler, 62 F.3d at 551 (citations omitted).
Enright
asserts that to show willfulness, the government had to prove that he
knew PetroPlus owed the taxes due on the fuel sales at issue. We
disagree with such a theory of the case. Willfulness may be inferred. See
Voigt [96-2 USTC ¶50,633], 89 F.3d at 1090. There is ample evidence
in the record from which a reasonable jury could infer that Enright
acted willfully to evade the taxes. Whether he knew who the ultimate
taxpayer should have been is irrelevant. Enright testified that he knew
the taxes had not been payed [sic]. App. at 621. To further and
conceal the tax evasion, Enright and his coconspirators made false
entries and alterations in the books and records of the companies
involved in the daisy chain, created false invoices and documents,
destroyed relevant records, concealed assets, and covered up sources of
income. See, e.g., Spies v. United States [43-1 USTC ¶9243], 317
U.S. 492, 499, 63 S.Ct. 364, 368, 87 L.Ed. 418 (1943); United States
v. Ashfield [84-2 USTC ¶9530], 735 F.2d 101, 105 (3d Cir. 1984).
Numerous deceptions exist in the record, along with evidence of
Enright's vast experience and tenure in the oil business. We will not
disturb the jury's finding of willfulness.
D.
Constructive Amendment and Variance Issues
Enright argues
that the District Court should have acquitted him on the conspiracy and
evasion counts because the District Court permitted the government to
constructively amend the indictment during trial, a per se
reversible error. Stirone v.
United States
, 361
U.S.
212, 215-17, 80 S.Ct. 270, 272-73, 4 L.Ed.2d 252 (1960). In the
alternative he argues that the proof adduced at trial varied from the
allegations in the superseding indictment such that it would constitute
a reversible error. A variance constitutes reversible error only if
Enright were prejudiced by the variance. See
United States
v. Perez, 280 F.3d 318, 346 (3d Cir. 2002). We reject both of
Enright's theories because they are based on the same misreading of the
superseding indictment.
Enright takes
issue with wording found in the superseding indictment in the conspiracy
count and all of the evasion counts: "knowingly, willfully, and
unlawfully evaded and defeated the federal excise taxes due and owing
from PetroPlus to the
United States
." (Counts 1, 24-37) (emphasis added). Enright contends that the
superseding indictment charged him only with owing taxes due and owing
from PetroPlus, and that at trial there was no proof that the
transactions above PetroPlus in the daisy chain were sham transactions
or that PetroPlus was responsible for the taxes. In other words, the
government failed to meet its burden of proof that PetroPlus (as opposed
to other companies involved in earlier transactions in the daisy chain)
owed the taxes. According to Enright, this constituted a constructive
amendment or variance. We do not agree with Enright's restrictive
reading of the superseding indictment.
In United
States v. Wisenbaker, the Fifth Circuit was confronted with an
almost identical fact pattern. 14 F.3d 1022 (5th Cir. 1994). The
defendant alleged that the indictment charged only him with tax evasion,
but that the proof adduced at trial that he had assisted others, namely
his customers, in evading their taxes constituted an amendment or
variance.
Id.
at 1026. The indictment at issue in Wisenbaker read:
The defendant
Houston M. Wisenbaker, Jr., did knowingly, willfully, and unlawfully
attempt to evade and defeat federal excise taxes . . . by making and
causing to be made false invoices; by using numerous entities to conceal
the purchase of tax-free diesel fuel; by dealing in currency and
cashier's checks; by failing to make a Quarterly Excise Tax Return, Form
720, . . . as required by law, with any proper officer of the Internal
Revenue Service; and by other means.
Id.
The Court of Appeals for the Fifth Circuit
did "not find the language of the indictment susceptible to the
restrictive reading [the defendant] wished to impose on [the
Court]."
Id.
at 1027. As the Court explained, "the indictment contains no terms
restricting it to an allegation that Wisenbaker failed to pay his own
taxes. It fairly encompasses the government's theory that Wisenbaker
also violated I.R.C. §7201 by evading any taxes his customers owed but
did not pay because of Wisenbaker's false assurances that he had already
paid the taxes."
Id.
(emphasis added).
As in Wisenbaker,
each of the counts at issue (1 and 24-37) in the superseding indictment
contains the phrase, ". . . the defendants . . . and others . . .
did knowingly, willfully, and unlawfully attempt to evade and defeat and
aided, abetted, counseled, commanded, induced and procured and caused
the evasion and defeat of federal excise taxes . . . due and owing from
PetroPlus, Inc." App. at 248, 300, 302, 304, 306, 308, 310, 312-21,
323, 325, 327. What Enright fails to consider is that each count, read
as a whole, "fairly encompasses" the government's theory that
PetroPlus was the taxpayer, and the government did not have to prove
that Enright knew that PetroPlus owed the taxes. Wisenbaker, 14
F.3d at 1027.
The
superseding indictment is 98 pages long. App. at 236-334. It devotes 37
paragraphs to the general terms of the daisy chain scheme and all of the
individuals involved. App. at 236-45. The Introduction is incorporated
into the first paragraph of every count. The conspiracy count contained
in Count One of the superseding indictment consists of 32 pages (143
paragraphs), detailing the acts and individuals. App. at 246-78. The
tax-evasion counts span 28 pages, and are likewise filled with detailed
descriptions of the individuals and their acts. App. at 300-28. Reviewed
in its entirety, we can say with confidence that the superseding
indictment "fairly encompasses" the government's theory that
PetroPlus was the taxpayer, and Enright was properly and fairly put on
notice of this allegation. All of the same arguments can be made with
regard to PetroPlus as the "State of
New Jersey
" taxpayer, as well. As discussed above, the government did not
have to prove that Enright knew that PetroPlus owed the state taxes. The
indictment sufficiently informed Enright of the charges against him so
as to put him on notice to prepare his defense. The evidence adduced at
trial constituted neither a variance from nor an amendment of the terms
of the superseding indictment.
E.
Sentencing
Enright raises
several sentencing errors. We review a District Court's factual
determinations underlying the application of the sentencing guidelines
for clear error and exercise plenary review over legal questions
involving the proper interpretation and application of the sentencing
guidelines. United States v. Helbling, 209 F.3d 226, 242-43 (3d
Cir. 2000), cert. denied, 531
U.S.
1100, 121 S.Ct. 833, 148 L.Ed.2d 715 (2001); 18 U.S.C. §3742(e).
Enright adopts
the argument of his co-Appellant, Erlikh, that the state misdemeanor
conduct involved in this case did not fall near the heartland of the
conduct covered by the laundering statutes. He argues that the conduct
fell outside the "heartland" of money laundering, and,
therefore, the District Court erred by using the money laundering
guideline in calculating his sentence. Enright asserts that the District
Court should have used the tax evasion guideline instead of the money
laundering guideline. We do not agree. The record demonstrates that
Enright was involved in an elaborate, systematic scheme to defraud.
Money derived from the scheme was used to keep the daisy chain going and
the links in the chain were established to avoid detection by
authorities. See generally Morelli, 169 F.3d at 805-809. This
amounted to a crime of significant duration and marked severity. The
total loss to the State of
New Jersey
on account of the daisy chain scheme was over 11 million dollars. The
daisy chain constitutes serious criminal activity and is the conduct
Congress sought to prevent when it proscribed money laundering. There
was nothing "atypical" about Enright's conduct that would
justify the District Court not using the money laundering guidelines. See
United States
v. Chilingirian, 280 F.3d 704, 713-14 (6th Cir. 2002).
Enright
challenges the District Court's use of the 1998 Sentencing Guidelines to
calculate his sentence. His argument, which consists of one paragraph in
his brief and cites no authority, see Fed. R. App. P. 28(a)(9)(A)
(explaining that Appellant's brief must contain the legal authorities
and citations to the record upon which Appellant relies), is that the
1993 version of the Guidelines should have been used because the last
tax evasion charge took place in June of 1993. The Guidelines themselves
state that a court should use the "Guidelines Manual in effect on
the date that the defendant is sentenced" unless there is an ex
post facto concern. U.S.S.G. §1B1.11(a), 1B1.11(b)(1). The
Guidelines also state that "if the defendant is convicted of two
offenses, the first committed before, and the second after, a revised
edition of the Guidelines Manual became effective, the revised edition
of the Guidelines Manual is to be applied to both offenses."
U.S.S.G. §1B1.11(3). Enright alleges no ex post facto concern,
and despite his assertions to the contrary, the record reveals that
Enright's tax offenses were not completed until after the effective date
of the November 1993 revisions to the Guidelines. We find no error.
Enright
contends that his sentence "double counts" because the
District Court improperly treated the federal tax evasion scheme as a
separate group from the wire-fraud and money laundering activity. By
grouping the offenses into these two groups, the District Court was able
to add another two levels to the total offense level. Enright argues
that the District Court should have grouped the tax evasion with his
wire fraud and money laundering offenses, and then should have sentenced
him under the tax evasion guidelines.
The District
Court did not err in its grouping decision. Under U.S.S.G. §1B1.1(a),
the District Court had to first determine the base offense level for
each count. Because multiple counts were involved, the District Court
had to group "closely related" counts together to determine a
single offense level. U.S.S.G. §1B1.1(d). In the case of a
multiple-object conspiracy, each object offense is treated as a count of
conviction. U.S.S.G. §§§1B1.2(d), 3D1.2, comment. (n. 8). In grouping
"closely related" counts, the District Court must group those
counts together that involve "substantially the same harm,"
meaning "when the offense level is determined largely on the basis
of the total amount of harm or loss . . . or some other measure of
aggregate harm, or if the offense behavior is ongoing or continuous in
nature and the offense guideline is written to cover such
behavior." U.S.S.G. §3D1.2 (d). The tax evasion guideline bases
the offense level on the amount of money involved, while the guideline
for money laundering does not. See, e.g., United States v. Napoli,
179 F.3d 1, 10 (2d Cir. 1999), cert. denied, 528
U.S.
1162, 120 S.Ct. 1176, 145 L.Ed.2d 1084 (2000); United States v.
Johnson, 971 F.2d 562, 576 (10th Cir. 1992). As for wire fraud, it
has been found to be a crime that is "distinct from [its]
underlying predicate acts and purposes and involves additional
harms." See United States v. Helmsley [91-2 USTC ¶50,455],
941 F.2d 71, 101 (2d Cir. 1991). Another difference to note is the
ongoing and continuous nature of the money laundering and wire fraud
offenses. More distinctions exist that we need not enumerate. The
District Court did not err when it determined that the tax evasion
offenses did not involve substantially the same harm as the money
laundering and wire fraud convictions.
Enright argues
that the District Court erred by not awarding him a downward departure
for acceptance of responsibility. Section 3E1.1(a) permits a district
court to reduce a defendant's offense level by two points if the
district court finds that "the defendant clearly demonstrates
acceptance of responsibility for his offense." U.S.S.G. §3E1.1(a).
Application Note 2 provides that the adjustment is not intended to
"apply to a defendant who puts the government to its burden of
proof at trial by denying the essential factual elements of guilt, is
convicted, and only then admits guilt and expresses remorse."
U.S.S.G. §3E1.1, comment. (n. 2). The record is clear that Enright did
not demonstrate acceptance of responsibility. The trial lasted nine and
a half months, and put the government to its burden. Enright never
admitted his guilt, denied any knowledge of the inner workings of the
daisy scheme, and continues to deny his criminal intent to this day. The
District Court gave Enright an enhancement for obstruction of justice,
which according to the guidelines themselves is an indication that a
defendant has not accepted responsibility for his criminal conduct.
U.S.S.G. §3E1.1 comment. (n. 4). Such events led the District Court to
characterize Enright's behavior as "the dead opposite of acceptance
of responsibility. It is the nonacceptance of responsibility." App.
at 2647. We find no error in the District Court's refusal to grant
Enright a reduction for acceptance of responsibility.
Enright also
challenges the District Court's enhancement for obstruction of justice.
A District Court should enhance a defendant's offense level by two if
"the defendant willfully obstructed or impeded, or attempted to
obstruct or impede, the
admin
istration of justice during the course of the investigation,
prosecution, or sentencing of the instant offense." U.S.S.G. §3C1.1.
The record is clear Enright used offshore accounts to conceal funds and
information from the I.R.S., and that Enright knew of the federal
investigation into the daisy chain scheme while he used the offshore
accounts. Other examples of Enright's efforts to avoid detection exist
in the record as well. Enright has no authority for his proposition that
the District Court was wrong to base its obstruction of justice
enhancement on the overseas account because conduct cannot be both part
of the offense charged and the basis of an enhancement. Enright is also
without authority for his argument that because the District Court
imposed a two-point increase for a sophisticated act of concealment, it
was in error for the District Court to also give an enhancement for
obstruction of justice. We find no error with the District Court's
enhancement for obstruction of justice.
Enright
contends that the District Court impermissibly exceeded the 6-12 month
sentence that would result from U.S.S.G. §2S1.3 when it imposed a
sentence of 100 months for Count 39 of the superseding indictment.
Enright cites no authority in his one-paragraph argument on this issue,
and we fail to see the point of his argument. The District Court
calculated Enright's combined offense level at 36, and determined that
his criminal history category was I. The Guideline range was 188-235,
and the District Court determined that the appropriate total term of
imprisonment was 200 months. In accordance with §5G1.2(d), the District
Court distributed the 200-month sentence over the multiple convictions,
several of which (including Count 39) authorized confinement for up to
120 months. See 31 U.S.C. §5316(a), 5322(b). We find no error.
III.
We have
thoroughly reviewed all the arguments presented by Defendant in his
submissions to this Court, and those presented at oral argument, and
find no basis to disturb the multiple convictions or the sentence
imposed by the District Court. The judgment of conviction entered
February 16, 1999
will hereby be affirmed.
*
Honorable Jane A. Restani,
Judge
,
United States
Court of International Trade, sitting by designation.