Erroneous calculation of
tax
7203:
Willful Failure to File Return, Supply Information, or Pay Tax:
Erroneous Calculation of Tax
[92-2
USTC ¶50,614]
United States of America
v. William Pollen, Appellant
(CA-3),
U.S. Court of Appeals, 3rd Circuit, 91-5703, 10/13/92, 978 F2d 78,
Affirming, vacating and remanding an unreported District Court decision
[Code Sec.
7201 ]
Crimes: Attempt to evade tax: Amount of liability: Double jeopardy:
Sentencing.--Multiple counts of income tax evasion did not subject a
doctor, who pled guilty to such charges, to multiple punishment for the
same violation for purposes of the double jeopardy clause of the Fifth
Amendment. It was permissible for each unit of prosecution to be based
on each significant act of evasion committed by the doctor, who admitted
to making several international transfers of hundreds of thousands of
dollars and to secreting valuable assets in the
United States
in attempts to evade tax. Further, the lower court's determination of
the amount of tax owed, which was less than the tax debt he attempted to
evade, was not clearly erroneous. The lower court improperly calculated
the doctor's offense level for the one count that fell under the federal
sentencing guidelines by failing to examine the doctor's leadership role
as it related to the specific offense charged. However, the one count
that fell under the sentencing guidelines had no limiting effect on the
lower court's discretion to impose sentences under the counts that fell
outside of the guidelines.
Michael
Chertoff, United States Attorney, Glenn J. Moramarco, Assistant United
States Attorney, Newark, N.J. 07102, for U.S. Stephen M. Orlofsky, Anne
C. Singer, Blank, Rome, Comisky & McCauley, 210 Lake Dr. E., Suite
200, Cherry Hill, N.J. 08002, for appellant.
OPINION
OF THE COURT
ROTH,
Circuit Judge:
This
appeal requires us to determine the allowable units of prosecution for
violations of 26 U.S.C. §7201 (1988), a federal
tax evasion statute, as well as several sentencing issues raised by
appellant, Dr. William Pollen. Pollen appeals from the sentences imposed
by the district court after his plea of guilty to four counts of tax
evasion. 1 He argues
that these four counts are impermissibly multiplicitous and that as a
consequence he has been subjected to multiple punishment for the same
violations of section 7201 , a result
prohibited by the Double Jeopardy Clause of the Fifth Amendment. In
addition, Pollen asserts that the district court erred in calculating
the amount of tax evaded and in increasing his offense level by four
points to reflect his role in the offense charged in Count Five, the
sole count governed by the Sentencing Guidelines. 2 Finally,
Pollen contends that, even assuming his other arguments fail, the
district court abused its discretion in imposing concurrent sentences
for his pre-Guidelines and Guidelines offenses.
We
find that the counts to which Pollen pleaded guilty charge allowable
units of prosecution under section
7201 and so are not impermissibly multiplicitous. Thus Pollen
has not been subjected to multiple punishment for the same offense in
violation of the Double Jeopardy Clause. Further, the district court did
not err in calculating the amount of tax evaded or in imposing
concurrent sentences for Pollen's pre-Guidelines and Guidelines
offenses. We agree, however, with Pollen's contention that the district
court committed plain error in increasing his offense level by four
levels to reflect Pollen's role in the offense charged in Count Five.
Consequently, we will vacate the sentence imposed on that count and
remand to the district court for further sentencing proceedings in light
of this opinion.
I.
The
guilty plea that comprises the basis of this appeal is not the first
chapter in the saga of Pollen's attempts to evade his obligation to pay
personal income taxes to the
United States
government. In April of 1972 Pollen was indicted by a federal grand jury
in the District of New Jersey on three counts of income tax evasion for
the years 1965, 1966, and 1967. The charges stemmed from an Internal
Revenue Service ("IRS") investigation which revealed that
between 1965 and 1967 Pollen deposited $650,000 in a South Amboy,
New Jersey
, bank without reporting any income relating to these deposits to the
IRS. 3
Prior
to his arraignment on these charges, Pollen fled. A bench warrant was
issued for his arrest, and on May 6, 1972, Pollen was apprehended in
Canada
. In March of 1973, Pollen pled guilty to evading $146,987 in taxes due
for the 1967 tax year. When he failed to appear for his scheduled
sentencing on May 8 of that year, a bench warrant was once again issued
for his arrest. Pollen managed to evade custody until May 7, 1974,
almost a year later. Once apprehended, he was given a five-year
sentence, the statutory maximum penalty for tax evasion.
Meanwhile,
on May 12, 1972, in response to a petition filed by the IRS, the
district court appointed a receiver for Pollen's estate, with
instructions to take custody of all property belonging to Pollen and his
wife and to satisfy Pollen's tax liens for calendar years 1965-67.
Throughout the majority of the receiver's tenure from 1972 through 1978,
Pollen refused to cooperate with the receiver's attempts to fulfill his
court-imposed duty to satisfy Pollen's existing tax liens. In fact,
during that period Pollen had substantial assets concealed outside of
the
United States
that he refused to disclose. 4 As a
consequence of this behavior the district court entered an order of
contempt against Pollen in January of 1974. This civil contempt was not
purged until June of 1975.
During
his tenure, the receiver collected outstanding accounts receivable from
Pollen's medical practice, located and sold a number of Pollen's real
estate holdings, and located bank accounts and safety deposit boxes
containing gold and silver bullion and currency in numerous locales,
including
New Jersey
,
Mexico
, and the
Bahamas
. These efforts resulted in the collection of approximately $1,300,000;
$662,744 of which was remitted to the IRS to fulfill Pollen's tax
obligations for 1965, 1966, and a portion of that due for 1967. 5 Pursuant to
standard IRS procedure, each payment the receiver made on behalf of
Pollen was applied to his total debt, including tax, interest, and
penalty, for the earliest tax years with outstanding debts.
After
his release from prison in April of 1976, Pollen continued to evade
payment of his taxes and conceal assets from the IRS. As a result, on
March 26, 1986, the grand jury for the District of New Jersey returned a
four-count indictment against Pollen, charging him with willfully
attempting to evade and defeat the payment of a large part of his United
States income taxes owed for the calendar years 1965 through 1967, 1972
through 1975, and 1980 through 1982, in an amount in excess of $640,000.
Again Pollen fled before he could be taken into custody, and he remained
a fugitive for over four years.
Ultimately
Pollen was apprehended on August 15, 1990, as the result of a successful
surveillance operation of his home in
Colonia
,
New Jersey
. At the time of arrest, Pollen possessed an extensive collection of
false identification, including social security cards, a number of
United States
and foreign passports, drivers licenses, and credit cards. He also
possessed a hand-held computer that contained information, recorded in
at least four distinct coding systems, detailing his elaborate
international system for concealing assets from the IRS.
The
United States
subsequently presented additional evidence to the grand jury, and an
eight-count Superseding Indictment was filed on October 1, 1990. On May
3, 1991, Pollen entered a plea of guilty in the United States District
Court for the District of New Jersey to Counts One, Two, Three, and Five
of this Superseding Indictment. Each of these four counts charged Pollen
with attempting to evade and defeat payment of his personal income taxes
for the same group of seven years: 1967, 1970, 1972 through 1975, and
1982. In return for Pollen's guilty plea on these counts, the government
moved to dismiss Counts Four, Six, Seven, and Eight of the Superseding
Indictment and Count One of a related indictment, the only count of that
indictment in which Pollen was named.
Count
One of the Superseding Indictment charged that on or about April 8,
1984, Pollen knowingly and willfully attempted to evade the payment of
more than $400,000 in federal income taxes for the years 1967, 1970,
1972 through 1975, and 1982 by "placing part of his assets out of
reach of the United States Government by causing approximately $690,000
in gold to be brought to the Swiss Bank Corporation, Toronto, Canada,
with instructions to further transfer the gold to a nominee
account" in Switzerland. When pleading guilty to this count Pollen
admitted that he owned this gold, that at the time of the transfer he
knew that he owed substantial taxes to the IRS, and that he made this
transfer in an attempt to evade payment of these taxes. Supplemental
Appendix ("
S.A.
") at 017-018.
Count
Two charged that on or about June 12, 1984, Pollen attempted to evade
taxes owed for the same seven tax years through transporting an
additional $285,000 to the Swiss Bank Corporation in
Toronto
,
Canada
, with instructions that it be transferred to the nominee account in
Switzerland
. In pleading guilty to this count Pollen admitted that he owned this
gold and that he made the transfer for the purpose of evading taxes that
he knew he owed to the IRS.
S.A.
at 018-019.
Count
Three charged that between October 5, 1981, and December 18, 1984,
Pollen attempted to evade and defeat the payment of taxes due for the
same seven years by engaging in a continuous scheme and course of
conduct to conceal assets from the IRS. In pleading guilty to this count
Pollen admitted that as part of this course of conduct he used currency,
money orders, and cashiers checks to buy assets and pay expenditures and
that he used nominees to conceal his expenditures. 6 Pollen also
admitted that when he engaged in this course of conduct he knew that he
owed the federal government substantial taxes and he conducted these
transactions in this manner for the purpose of evading their payment.
S.A.
at 019-021.
Finally,
Count Five charged that on or about August 22, 1990, Pollen attempted to
evade and defeat the payment of his taxes owed for the identical seven
years through placing assets out of the reach of the United States
"by maintaining more than $350,000 in gold bars and coins, jewelry,
and gems in safety deposit boxes at the First Union National Bank of
North Carolina" under a fictitious name. When pleading guilty to
this count Pollen admitted that he owned these assets and that he placed
them in the safety deposit boxes specifically for the purpose of evading
the payment of taxes that he knew he owed. 7
S.A.
at 021-022.
Prior
to sentencing, Pollen objected to his presentence report's calculation
of the amount of tax that he owed and its recommended four-level
Sentencing Guideline offense level increase for Count Five, intended to
reflect his leadership role in that offense. Both parties presented
evidence concerning the disputed sentencing issues at a three-day
sentencing hearing held July 29-31, 1991. Evidence also was presented
indicating that the IRS has not yet recovered all of Pollen's secreted
assets, particularly those hidden in other countries. 8 At the close
of this hearing, the district court imposed a sentence of five years
imprisonment for Count Five, the sole Guidelines count. This sentence
was based on a Sentencing Guideline calculation of an adjusted offense
level of 23 and a criminal history level of 3, which produced a
guideline sentence range of 57-71 months. 9 On this
count Pollen was also sentenced to a three-year term of supervised
release, with special conditions including restrictions on international
travel, the repayment of all taxes and the payment of interest,
penalties, a fine of $75,000, and a special assessment of $50. The court
imposed sentences of five years for each of Counts One, Two, and Three
to run concurrently with each other and consecutively with the sentence
imposed for Count Five. A special assessment of $50 was also imposed on
Count Three.
On
August 12, 1991, Pollen filed a notice of appeal from this sentencing
determination. We have jurisdiction over this appeal from a sentence
imposed in a criminal case by virtue of 28 U.S.C. §1291
and 18 U.S.C. §3742(a) & (e). Our review of the district
court's application and interpretation of the Sentencing Guidelines is
plenary.
United States
v. Murillo, 933 F.2d 195, 197 (3d Cir. 1991). Factual findings
concerning sentencing issues are subject to clearly erroneous review,
and if "a judicial finding involves mixed questions of law and
fact, the standard and scope of review takes on greater scrutiny,
approaching de novo review as the issue moves from one of
strictly fact to one of strictly law."
Id.
at 198.
II.
Pollen
first contends that the four counts to which he pleaded guilty were
impermissibly multiplicitous. 10 A
multiplicitous indictment charges the same offense in two or more counts
and may lead to multiple sentences for a single violation, a result
prohibited by the Double Jeopardy Clause. See
United States
v. Stanfa, 685 F.2d 85, 86-87 (3d Cir. 1982). The interest
protected by the Double Jeopardy Clause in this multiple punishment
context is confined to "ensuring that the total punishment did not
exceed that authorized by the legislature." Jones v. Thomas,
491
U.S.
376, 381, 109 S.Ct. 2522, 2525 (1989). According to Pollen, Counts One,
Two, Three, and Five each charge the same offense: evasion of the
payment of taxes for the identical group of seven years. 11 As a
result, Pollen maintains, he has received multiple punishment for the
same offense, in violation of the Double Jeopardy Clause. 12
In
response, the government first argues that because Pollen did not enter
either a conditional guilty plea or a plea of nolo contendere under Rule
(a) of the Federal Rules of Criminal Procedure, he is barred from
pressing a Double Jeopardy challenge to his sentences on appeal. By
pleading guilty, in the government's view, Pollen waived his right to
appeal any alleged multiplicity of the sentences imposed. We disagree.
The
Supreme Court, addressing this question of whether a Double Jeopardy
claim of multiple punishment is barred by a defendant's guilty plea, has
explained that
[j]ust
as the defendant who pleads guilty to a single count admits guilt to the
specified offense, so too does a defendant who pleads guilty to two
counts with facial allegations of distinct offenses concede that he
has committed two separate crimes.
United
States v. Broce, 488
U.S.
563, 570, 109 S.Ct. 757, 763 (1989) (emphasis added). Consequently an
accused advised by competent counsel who enters a voluntary and
intelligent guilty plea may not bring a collateral Double Jeopardy
challenge to the sentences subsequently imposed.
Id.
at 574, 109 S.Ct at 765. The Court noted, however, that there is an
exception to this rule if the defendant's claim of multiplicity can be
proven by reference solely to the indictment and existing record.
Id.
at 574-76, 109 S.Ct. at 765-66.
Broce
thus establishes the principle that a defendant who pleads guilty to a
criminal charge may subsequently assert a claim of multiple punishment
in violation of the Double Jeopardy Clause "only if the violation
is apparent on the face of the indictment or record." Taylor v.
Whitley, 933 F.2d 325, 328 (5th Cir. 1991) (collateral attack on a
guilty plea). See also United States v. Makres, 937 F.2d 1282,
1286 (7th Cir. 1991) (same); United States v. Quinones, 906 F.2d
1924, 1927 (2d Cir. 1990) (explaining, in the context of a direct appeal
from a guilty plea, that "the test that apparently emerges from Broce
seems to turn on whether the claim of Double Jeopardy may be adjudicated
on the face of the record or requires supplemental evidence"), cert.
denied, 111 S. Ct. 789 (1991); United States v. Montilla, 870
F.2d 549, 552-53 (9th Cir. 1989) (applying principle of Broce in
a direct constitutional challenge to a guilty plea). If an indictment
does not raise Double Jeopardy concerns on its face, and the defendant
who has pleaded guilty would only be able to demonstrate a Double
Jeopardy violation through an evidentiary hearing, then such claim,
whether brought by collateral attack or direct appeal, must be rejected.
See Dermota v.
United States
, 895 F.2d 1324, 1326 (11th Cir.) (collateral attack on guilty
plea), cert. denied, 111 S.Ct. 107 (1990); Montilla, 870
F.2d at 552-53 (direct appeal from guilty plea).
In
this case, Pollen asserts that the defect in his indictment is apparent
on its face and that the legality of his sentences can be determined
from the existing record. We will, therefore, examine the record to
determine if Counts One, Two, Three, and Five are impermissibly
multiplicitous, i.e., does Pollen's indictment in fact charges
the identical offense in several counts.
Neither
party disputes that it would have been proper to charge Pollen, in
separate counts, with attempting to evade taxes for each of the seven
years specified in his indictment. See, e.g.,
United States
v. Minker [63-1
USTC ¶15,458 ], 312 F.2d 632, 636 (3d Cir. 1962), cert.
denied, 372
U.S.
953, 83 S.Ct. 952 (1963). It is also permissible under section 7201 to charge tax
evasion covering several years in a single count as a "course of
conduct" in circumstances "where the underlying basis of the
indictment is an allegedly consistent, long-term pattern of conduct
directed at the evasion of taxes for these years." United States
v. Shorter [87-1 USTC ¶9127 ],
809 F.2d 54, 58 (D.C. Cir.), cert. denied, 484
U.S.
817, 108 S.Ct. 71 (1987). Pollen's indictment, however, raises a unique
question: whether a defendant can be charged and punished separately for
several distinct affirmative acts of evasion committed with regard to
taxes owed for the identical set of years.
To
adjudge whether the counts of Pollen's indictment properly charge
separate offenses we must ascertain the allowable unit of prosecution
under the relevant statutory provision, section
7201 . See, e.g.,
United States
v. Langford, 946 F.2d 798, 802 (11th Cir. 1991), cert. denied,
112 S.Ct. 1562 (1992). We have explained that the basic inquiry in this
process
is
whether proof of one offense charged requires an additional fact that
proof of the other offense does not necessitate. . . . Also of central
importance is whether the legislature intended to make separately
punishable the different types of conduct referred to in the various
counts.
Stanfa,
685 F.2d at 87 (quoting United States v. Carter, 576 F.2d 1061,
1064 (3d Cir. 1978)). In practice, the second inquiry is usually
determinative of the multiplicity question. Id. Accord United States
v. Cooper, 966 F.2d 936, 942 (5th Cir. 1992) (in determining the
allowable unit of prosecution for a statutory provision, the "task
is to discern Congress' intent by looking first to the plain language of
the statute and then to legislative history and the overall statutory
scheme of which it is a part"). Indeed, the Supreme Court has
emphasized that "[i]t is Congress, and not the prosecutor, which
establishes and defines offenses." Sanabria v.
United States
, 437
U.S.
54, 69, 98 S.Ct. 2170, 2181 (1978). Whether "a particular course of
conduct involves one or more distinct 'offenses' under the statute
depends on this congressional choice." 13 Id.
at 70, 98 S. Ct. at 2182.
In
this case the offense charged is tax evasion, in violation of 26 U.S.C. §7201 . To identify the
congressionally intended units of prosecution for this offense, we first
look to the language of this statute. See Cooper, 966 F.2d at
942;
United States
v. Song, 934 F.2d 105, 108 (7th Cir. 1991). If this language is
ambiguous, we will look next to the provision's legislative history. See
Song, 934 F.2d at 108. Finally, if the legislative history sheds
no light on Congress' intended units of prosecution, we will apply the
rule of lenity. See
United States
v. Marino, 682 F.2d 449, 455 (3d Cir. 1982). Under this rule,
when ambiguity in a criminal statute cannot be clarified by either its
legislative history or inferences drawn from the overall statutory
scheme, the ambiguity is resolved in favor of the defendant.
Id.
(citing Rewis v. United States, 401
U.S.
808, 812, 91 S.Ct. 1056, 1059 (1971)).
Section 7201 provides, in
relevant part:
Any
person who willfully attempts in any manner to evade or defeat any tax
imposed by this title or the payment thereof shall . . . be guilty of a
felony and, upon conviction thereof, shall be fined not more than
$100,000 . . . or imprisoned not more than five years, or both, together
with the costs of prosecution.
26
U.S.C. §7201
.
In
support of the contention that his indictment is multiplicitous, Pollen
emphasizes the phrase "evade or defeat any tax
imposed." In his view, this language evidences the section's focus
on the evasion of a specific tax, rather than on the willful
attempt or attempts to evade that tax. Simply put, according to Pollen,
the allowable unit of prosecution is the tax year. It is irrelevant
whether the government proves one or multiple attempts to evade: section 7201 is intended to
punish the evasion of any tax, and the precise attempts made to evade
the tax are irrelevant for the purposes of punishment. Through charging
in distinct counts several specific acts of evasion of the taxes owed
for an identical group of years, Pollen contends, the government has
arbitrarily and impermissibly splintered the crime of tax evasion into
potentially innumerable offenses.
We
cannot agree that Congress intended section
7201 's phrase "any tax" to be elevated in
importance above the rest of that provision. There is nothing in the
language of this section to indicate as much. In fact, when considered
in its entirety, the language of section 7201 is
straightforward: it prohibits "willful attempts in any manner to
evade or defeat any tax." It proscribes "attempts" to
evade or defeat any tax and thus speaks in terms of the act of evasion,
as well as the taxes evaded. Cf.
United States
v. Coiro, 922 F.2d 1008, 1014-15 (2d Cir.) (ascertaining the
allowable unit of prosecution under 18 U.S.C. §1510(a)), cert.
denied, 111 S.Ct. 2826 (1991). Indeed, an affirmative act of evasion
is an element of a section 7201 violation. See
Sansone v. United States [65-1 USTC ¶9307 ],
380 U.S. 343, 351, 85 S.Ct. 1004, 1010 (1965) (the elements of a section 7201 violation
include willfulness, the existence of a tax deficiency, and an
affirmative act constituting an evasion or attempted evasion of the
tax). Thus the offense of tax evasion can be completed when a person
willfully "attempts in any manner" to evade or defeat income
tax. See United States v. McGill [92-1
USTC ¶50,268 ], 964 F.2d 222, 230 (3d Cir. 1992) (the
offense of tax evasion "is complete when a single willful act of
evasion has occurred"); United States v. Kirkman, 755
F.Supp. 304, 306 (D. Idaho 1991) (concluding, for statute of limitations
purposes, that tax evasion is not a continuing offense). See also Norwitt
v. United States [52-1 USTC ¶9252 ],
195 F.2d 127, 133-34 (9th Cir.) (tax evasion is not a continuing
offense), cert. denied, 344
U.S.
817, 73 S.Ct. 11 (1952). The plain language of this section, therefore,
evinces the congressional intent to allow distinct, significant,
affirmative acts of tax evasion to constitute separate section 7201 offenses. 14
In
this case, Pollen made several international transfers of hundreds of
thousands of dollars and secreted equally valuable assets in the
United States
, in attempts to evade payment of his taxes owed for a total of seven
tax years. During his guilty plea colloquy Pollen admitted that at the
time of these actions he knew that he owed substantial taxes and
willfully undertook these actions in order to avoid their payment.
However, Pollen repeatedly emphasized that although he was aware that he
owed substantial taxes at the time of this conduct, he did not know for
which years he owed which portion of the taxes he was attempting to
evade. Logically, then, on the facts of this case it is clear that
Pollen attempted to evade all of the taxes he owed for the group of
years in question through the several significant affirmative acts of
evasion charged in the counts to which he pleaded guilty. Under these
circumstances, where the acts of evasion charged in each count involve
funds far greater than the taxes owed for any particular year, and, as
Pollen himself indicated, each act was intended to evade payment of all
taxes owed, not merely those owed for a particular year, we conclude
that section
7201 permits a unit of prosecution based on separate
significant acts of evasion. Each willful attempt to evade taxes that
involves funds of an amount that cannot logically be broken down and
classified as relating to a particular tax year is an allowable unit of
prosecution under the plain language of this section and so can be
separately charged as evasion of the taxes owed for a group of tax
years. Pollen's indictment, therefore, is not impermissibly
multiplicitous, and his claim pressed under the Double Jeopardy Clause
fails. 15
We
agree with the government that the unit of prosecution we recognize in
this opinion is particularly appropriate in a case charging tax evasion
committed through the evasion of payment. 16 In cases
charging evasion of the assessment of tax, the alleged fraudulent action
of a defendant often directly affects assessment for a particular tax
year. 17
Consequently, it is logical in that type of case to charge attempts to
evade the assessment of taxes for distinct years in separate counts.
Evasion of payment cases, however, stand in sharp contrast to evasion of
assessment cases. A defendant attempting to evade payment of taxes may,
as in this case, engage in transactions designed to conceal assets from
the IRS in an attempt to evade the payment of taxes due for a number of
years. As a result in evasion of payment cases it is logical to charge
distinct, significant attempts to evade the payment of tax for the same
group of tax years in separate counts.
Finally,
we emphasize that our holding is circumscribed by the facts of this
case: that for taxes owed for the years 1967, 1970, 1972 through 1975,
and 1982, Pollen attempted to evade payment in April 1984 by
transferring gold through Canada to Switzerland (Count One); he
attempted to evade payment in June 1984 by transporting an additional
$285,000 through Canada to Switzerland (Count Two); he attempted to
evade payment between October 5, 1981, and December 18, 1984, by using
currency, money orders, and cashiers checks to buy assets and pay
expenditures and by using nominees to conceal his expenditures (Count
III); and he attempted to evade payment in August 1990 by placing gold
bars, coins, jewelry, and gems in safety deposit boxes in North Carolina
under a fictitious name. 18 The unit of
prosecution which we have recognized does not encompass the charging of
a number of separate acts of evasion of a single year's taxes in
distinct counts. We do not, therefore, need to reach the much more
difficult question of whether the language of section
7201 would support the splintering of the offense of tax
evasion into a number of attempts greater than the number of calendar
years for which taxes were evaded. 19
III.
Pollen
next contends that the district court erred in calculating the sentence
imposed for Count Five, 20 the only
count governed by the United States Sentencing Guidelines. Chapter 3,
Part B of the Sentencing Guidelines permits a sentencing court to adjust
a defendant's offense level in relation to the role that defendant
played in committing the offense in order to reflect the defendant's
culpability. 21 See
U.S.S.G. §3B (Introductory Commentary);
United States
v. Murillo, 933 F.2d 195, 198 (3d Cir. 1991). Section 3B1.1
instructs the court to increase the offense level if a defendant was an
"organizer," "leader," "manager," or
"supervisor" in an offense. 22 In
calculating Pollen's Count Five sentence, the district court increased
the offense level by four levels pursuant to section 3B1.1(a) to reflect
what it deemed to be Pollen's aggravating role in that offense. In doing
so, the court explained that it found by a preponderance of the evidence
that at least five individuals knew of Pollen's attempted tax evasion,
and that "the evidence clearly shows that these people would not
have been where they were for the purpose of attempting to retrieve
secreted items unless in fact they were, as the government contends,
orchestrated by the defendant."
Relying
on our decision in United States v. Murillo, 933 F.2d 195 (3d
Cir. 1991), Pollen now argues that this four-level increase was in
error: in making this offense-level adjustment the district court
improperly considered all of his "relevant conduct," as that
phrase is defined by the Guidelines, rather than only conduct directly
relating to the specific offense of conviction charged in Count Five. 23 Had the
district court properly limited its section 3B1.1 inquiry to conduct
relating to the offense charged in that count, Pollen maintains, the
court could not have concluded that he orchestrated at least five
participants in criminal activity in connection with that offense.
Pollen,
however, did not raise this objection to the calculation of his offense
level at sentencing and therefore failed to preserve this issue properly
for appeal. As a consequence, we review the matter only to assure that
"plain error" was not committed. See, e.g., Fed. R.
Crim. P. 52(b); United States v. Gonzalez, 918 F.2d 1129, 1138
(3d Cir. 1990) (reviewing sentencing calculations for plain error), cert.
denied, 111 S.Ct. 1015 (1991); United States v. Castro, 776
F.2d 1118, 1128 (3d Cir. 1985) (objection to jury instruction that is
not preserved will be reviewed for plain error), cert. denied,
475 U.S. 1029, 106 S.Ct. 1233 (1986). Under this standard, we are
"concerned only with errors that seriously affect substantial
rights or compromise the fairness of the proceedings."
United States
v. Martinez-Zayas, 857 F.2d 122, 134 (3d Cir. 1988). See also United
States v. Schreiber, 599 F.2d 534, 539 (3d Cir.) (Seitz, J.
concurring) (explaining that "[t]he price an appellant pays for his
failure to object is a heavier burden of persuasion. He must show that
the error was plain"), cert. denied, 444
U.S.
843, 100 S.Ct. 86 (1979).
In
Murillo we resolved this question of the proper scope of a
defendant's conduct to be considered in adjusting an offense level
pursuant to Guideline section 3B.1. 24 Though
recognizing that generally under the Guidelines all "relevant
conduct" should be considered in determining offense levels, we
noted that the Background to section 1B1.3 explained that it established
a rule for determining the range of conduct relevant to calculating
offense levels only "in the absence of more explicit instructions
in the context of a specific guideline." Murillo, 933 F.2d
at 198. We concluded that Guideline section 3B1.1 contained a more
explicit instruction and found that "the common sense reading of
'the offense' as used in §3B1.1 is 'the offense of conviction.'" Murillo,
933 F.2d at 198-99. Consequently,
when
determining role in the offense for all offenses committed before
November 1, 1990, a court should look both to the acts or omissions of
the defendant that satisfied the specific elements of the offense of
conviction and to those that brought about the offense of conviction, i.e.,
all acts or omissions that were in furtherance of the offense of
conviction.
Id.
at 199-200. Murillo thus explicitly adjudged it inappropriate for
a sentencing court to consider all of a defendant's "relevant
conduct" when following Guideline 3B1.1 to adjust an offense level
to reflect a defendant's role in the offense.
Our
review of Pollen's presentence report and the transcript of his
sentencing hearing reveals that Pollen is correct: neither the district
court at sentencing nor that portion of the presentence report adopted
by the court as portraying the evidence relating to this decision
analyzed Pollen's alleged leadership role in relation to the specific
offence charged in Count Five. Instead, the district court increased
Pollen's offense level by four points pursuant to section 3B1.1(a) as a
consequence of what it deemed to be his leadership role without
determining whether the individuals allegedly orchestrated by Pollen
were in any way involved in that specific offense.
In
fact, the government now concedes both that Murillo governs this
issue and that the district court did not conduct a specific analysis of
Pollen's alleged leadership role with regard to Count Five.
Nevertheless, the government asserts that there are several factors to
support a finding that this failure to comply with section 3B1.1(a) does
not rise to the level of plain error. First, in the government's view,
the miscalculation of Pollen's offense level should be adjudged
harmless, for although no specific analysis of the evidence was
conducted, it was clear that the actions of at least two individuals,
Valerie and Carlos Garrett, were orchestrated by Pollen in direct
connection to the Count Five offense. Pursuant to 3B1.1(c), therefore, a
two level increase in Pollen's offense level would have been
appropriate. Further, according to the government, the district court at
sentencing intimated that it would have departed upward from a lower
Guideline range to impose the same statutory maximum five-year sentence.
Second,
the government contends that the adjustment of Pollen's offense level
did not amount to a manifest miscarriage of justice, and so is not plain
error, because just months after Pollen's Count Five offense the
Guidelines were amended to specify that all relevant conduct, and not
merely conduct relating to the offense of conviction, should be
considered in making this type of adjustment in offense level.
We
cannot agree. The district court clearly failed to examine the evidence
concerning Pollen's leadership role specifically in connection with the
offense charged in Count Five. Absent this appropriate analysis, we are
unwilling to assume that the sentencing court would have found
appropriate a two-level adjustment for Pollen's role in the offense
pursuant to section 3B1.1(c). Furthermore, we decline to engage in the
type of speculation urged by the government concerning whether the
district court would have made an upward departure from a properly
calculated Guideline sentence range. See 18 U.S.C. §3742(f)(1). 25 We are
dealing here with an egregious case of tax evasion. However, speculation
on our part as to whether the district court would determine that
Pollen's outrageous conduct warranted an upward departure is
inappropriate in light of the fact that a sentencing court's decision to
depart or not from the Guidelines is inherently discretionary and is not
subject to appellate review. See United States v. Colon, 884 F.2d
1550, 1554-56 (2d Cir.), cert. denied, 493
U.S.
998, 110 S.Ct. 553 (1989); United States v. Denardi, 892 F.2d
269, 272 (3d Cir. 1989) (approving the
Colon
analysis). The improper four-level increase in Pollen's offense level
resulted in a Guideline sentence range of 57-71 months, rather than the
46-57 month range if a two level increase had been imposed under §3B1.1(c)
or the 37-46 month range if there had been no upward adjustment for a
leadership role. Where, as here, there is such a discrepancy between the
sentence imposed and the correct sentencing range that the district
court may ultimately find, we will not assume that such an error was
harmless.
Finally,
we also reject the government's contention that the miscalculation did
not amount to a manifest injustice. The fact that the Guidelines were
later amended has no bearing on the calculation of Pollen's Count Five
sentence. If the Sentencing Guideline in effect at the time an offense
is committed is more favorable to a defendant, it must be applied. See United
States v. Chasmer, 952 F.2d 50, 52 (3d Cir. 1991), cert. denied,
112 S.Ct. 1703 (1992). The district court's improper calculation of
Pollen's offense level, resulting in a significantly higher Guideline
sentencing range, certainly is an error that seriously affected Pollen's
substantial rights, and so amounts to plain error. Accord United
States v. Plaza-Garcia, 914 F.2d 345, 348 (1st Cir 1990) (finding
plain error where government conceded on appeal that Sentencing
Guideline calculations were erroneous). Consequently, we will vacate
Pollen's sentence on Count Five, and remand to the district court for
further sentencing proceedings in light of this decision and our opinion
in Murillo.
IV.
Pollen's
contention that the district court clearly erred in concluding that he
owed approximately $488,000 in taxes merits little discussion. According
to Pollen, credible evidence presented at his sentencing hearing
demonstrated that the IRS applied the receiver's payments to reduce the
total amount, including tax, penalty, and interest, owed for each year,
rather than only each year's actual tax liability. 26 Had these
payments been allocated only to delinquent taxes, exclusive of penalties
and interest, Pollen asserts that he would now owe slightly less than
$100,000 in taxes. In Pollen's view, because the Sentencing Guidelines
only take into account the actual amount of tax owed, regardless of the
interest and penalties also due to the IRS, see U.S.S.G. §2T1.1
(Commentary, Application Note 2), 27 the
district court's failure to recalculate his taxes owed in this manner is
clear error: in effect he has received a longer sentence as a
consequence of the receiver's failure to request that the IRS depart
from its standard procedure for allocating tax payments. 28
We
cannot adjudge the district court's calculation of the tax owed is
clearly erroneous. The Sentencing Guidelines provide that sentences
imposed for violations of section 7201 are to be
based on "the total amount of tax that the taxpayer evaded or attempted
to evade." U.S.S.G. §2T1.1.(a) (emphasis added). A
preponderance of the evidence presented at the sentencing hearing
demonstrated that Pollen attempted to evade every penny of the taxes he
owed. Consequently, the district court would not have committed clear
error even if it had sentenced Pollen based on the full tax debt he
attempted to evade, without any credit for the receiver's payments to
the IRS. It is thus not clearly erroneous for the district court to
refuse to accept Pollen's calculation of the amount of taxes owed, a
calculation that assumes that the IRS should have allocated the payments
made by the receiver in a manner more favorable to Pollen. 29
V.
Finally,
Pollen argues that by imposing consecutive sentences for his
pre-Guidelines and Guidelines counts, the district court abused its
discretion by double-counting all of the taxes he owed for the tax years
in question. Emphasizing the fact that the statutory maximum penalty for
a violation of 26 U.S.C. §7201 is five years (60
months), Pollen asserts that, even assuming that the calculation of a
sentence range of 57-71 months is correct, if all of the counts charged
had been governed by the Guidelines, a consecutive sentence of at most
eleven months would have been permissible. 30 In Pollen's
view, the district court abused its discretion through not imposing a
consecutive sentence of a comparable length for his pre-Guidelines
counts.
It
is well settled that, with regard to pre-Guideline counts, "the
district court has virtually unfettered discretion in imposing a
sentence if it falls within the statutory limits."
United States
v. Matthews, 773 F.2d 48, 52 (3d Cir. 1985). In keeping with
this discretion, our review of such a sentence is extremely
circumscribed: if the sentence falls within the statutory maximum it is
not reviewable on appeal unless there is a showing of illegality or
abuse of discretion. United States v. Fischbach & Moore, Inc.,
750 F.2d 1183, 1188 (3d Cir. 1984), cert. denied, 470
U.S.
1029, 105 S.Ct. 1397 (1985).
With
regard to offenses committed before the effective date of the Sentencing
Guidelines but sentenced after that date, we have stated that "the
preexisting law will apply to all substantive matters including the
imposable sentence." United States v. Sussman, 900 F.2d 22,
24 (3d Cir. 1990) (quoting S. Rep. No. 225, 98th Cong., 2d Sess. (1983),
reprinted in 1984 U.S.C.C.A.N. 3182, 3372). Further, the fact
that a defendant is also convicted of Guidelines offenses does not
affect a sentencing court's discretion in sentencing on the
pre-Guidelines counts. Accord
United States
v.
Lincoln
, 1925 F.2d 255, 257 (8th Cir.) ("it is not an abuse of
discretion to impose consecutive sentences when a defendant stands
convicted of related pre-Guidelines and Guidelines offenses--even if the
Guidelines would mandate concurrent sentences if both offenses were
subject to them"), cert. denied, 111 S.Ct. 2838 (1991); United
States v. Watford, 894 F.2d 665 (4th Cir. 1990) (same); United
States v. Garcia [91-1
USTC ¶50,030 ], 903 F.2d 1022 (5th Cir.) (same), cert.
denied, 111 S.Ct. 364 (1990). Thus Pollen's assertion that his one
Guideline count of tax evasion has some limiting effect on the district
court's discretion to impose consecutive sentences for his pre-Guideline
counts fails.
VI.
For
the foregoing reasons, we will vacate the judgment with respect to Count
Five and remand to the district court for further sentencing proceedings
in light of this opinion. The district court's sentencing determinations
will be affirmed in all other respects.
1
Specifically, Pollen pleaded guilty to Counts One, Two, Three, and Five
of his Superseding Indictment.
2
Count Five charged an offense which occurred after November 1, 1987, the
effective date of the Sentencing Reform Act of 1984, and so required
that a sentence be imposed under the United States Sentencing
Guidelines. ("U.S.S.G."). Counts One, Two, and Three charged
offenses occurring prior to that date.
3
The IRS learned from an informant that the unreported income was
eventually placed in accounts in
Switzerland
. According to the informant, on one occasion Pollen's first wife
wrapped $180,000 in currency to her midsection, pretended she was
pregnant, and slipped past Customs Officials to enter
Switzerland
.
4
For example, at some point during 1973, the receiver learned that Pollen
had stored gold bullion in safety deposit boxes in
Mexico
. Before the receiver could retrieve these assets, Pollen sent an
accomplice to move the gold, and it was never recovered by the receiver.
5
The balance was disbursed to other creditors and applied to the
receiver's fees.
6
For example, evidence was presented at the sentencing hearing that
during the latter part of 1981, Pollen used cash to pay for over $30,000
worth of swimming pool repairs and landscaping work performed at his
residence in
Colonia
,
New Jersey
. In December of 1982, Pollen bought a 1983 Lincoln Town Car for $20,346
using a combination of $3,000 in cash, six cashier's checks of $2,000
each, and another check issued by a nominee. In January of 1984, Pollen
purchased a 1971 Rolls Royce for $11,800, using both cash and payments
from a nominee. Pollen also gave one of his accomplices $7,500 in cash
to pay for Pollen's daughter's private school expenses. Between May of
1984 and May of 1985, Pollen made cash payments of $17,200 for rent on a
home in
Palm City
,
Florida
. Also during this period, Pollen paid a travel agent in cash for trips
to places such as
Iceland
,
Luxembourg
,
London
,
Switzerland
,
Rome
,
Venice
, Nice, Montserrat, and
Saint Thomas
.
7
After Pollen's arrest, two of his accomplices, Carlos and Valerie
Garrett, attempted to gain access to these safe deposit boxes ahead of
the government. The government, however, had already searched the boxes
and confiscated their contents: gold bars and coins, including Mexican
pesos, Canadian maple leaves, Krugerrands, platinum, silver, diamonds,
sapphires, rubies, pearls, watches and other jewelry valued at
approximately $350,000. The Garretts, charged in a related indictment,
pled guilty to conspiring with Pollen.
8
For example, at the time of his arrest, Pollen possessed four keys for
safe deposit boxes in
Switzerland
. According to the entries in Pollen's hand-held computer, these boxes
contain over 3,000 ounces of gold, none of which has been recovered by
the IRS.
9
The court imposed the statutorily set maximum penalty of 60 months.
10
The government asserts that because the district court imposed
concurrent sentences on Counts One, Two and Three, we need not decide
whether Count Three is multiplicitous of Counts One and Two. Under the
concurrent sentence doctrine, we have discretion to decline to resolve
legal issues affecting less than all counts in an indictment if at least
one count can be upheld and the sentences imposed run concurrently. See United
States v. American Investors of Pittsburgh, Inc., 879 F.2d 1087,
1100 (3d Cir.), cert. denied, 493
U.S.
955, 110 S.Ct. 368 (1989). This doctrine is generally not invoked if it
is possible that the defendant may suffer collateral consequences, such
as impaired parole eligibility.
Id.
However,
at oral argument Pollen's counsel conceded that because the sentences
imposed for Counts One, Two, and Three run concurrently, Pollen's Double
Jeopardy argument does not apply to these counts. We will, therefore,
consider only the question of whether the acts of evasion charged in
these counts are multiplicitous of the offense charged in Count Five,
and not whether Counts One, Two and Three are themselves impermissibly
multiplicitous.
11
Counts One, Two, Three and Five each charged Pollen with evading taxes
for the years 1967, 1970, 1972-75, and 1982.
12
Pollen correctly acknowledges that as a consequence of his guilty plea,
he cannot attack the validity of the indictment per se, but instead is
limited to challenging the constitutionality of his sentences under the
Double Jeopardy Clause. Cf. United States v. Bonavia, 927
F.2d 565, 571 (11th Cir. 1991) (defendant who fails to object to
multiplicitous counts in indictment before trial is barred from
challenging indictment on appeal); United States v. Mastrangelo,
733 F.2d 793, 800 (5th Cir. 1984) (same).
13
In fact, "[f]ew, if any, limitations are imposed by the Double
Jeopardy Clause on the legislative power to define offenses."
Id.
14
Further, nothing in section
7201 's legislative history requires us to conclude that
Congress intended to limit this provision's unit of prosecution to an
individual tax year. See H.R. Rep. Nos. 1337 & 2543, 83rd Cong., 2nd
Sess. (1954), reprinted in 1954 U.S.C.C.A.N. 4137, 4572; 5280,
5343. Indeed, the scant legislative history of this provision simply
does not address the question of its allowable unit of prosecution. Thus
it provides no support for Pollen's attempt to circumvent the language
of section
7201 .
15
Because we conclude that section
7201 is not ambiguous, we have no need to resort to the rule
of lenity. That rule is applicable "only after it is determined
that a criminal statute is ambiguous, not at the beginning of the
process of construction 'as an overriding consideration of being lenient
to wrongdoers.' " United States v. Rodriguez, 961 F.2d 1089,
1093-94 (3d Cir. 1992) (quoting Chapman v. United States, 111
S.Ct. 1919, 1926 (1991)).
16
The Supreme Court has described section 7201 as including
"the offense of willfully attempting to evade or defeat the assessment
of tax as well as the offense of willfully attempting to evade or defeat
the payment of a tax." Sansone v. United States [65-1 USTC ¶9307 ],
380 U.S. 343, 354, 85 S.Ct. 1004, 1011 (1965) (emphasis in original).
This language has been interpreted as indicating that section 7201 proscribes the
offense of tax evasion, which can be committed either by evading the
assessment or evading the payment of taxes. See, e.g., McGill
[92-1
USTC ¶50,268 ], 964 F.2d at 230; United States v. Mal
[91-2
USTC ¶50,518 ], 942 F.2d 682, 686-87 (9th Cir. 1991); United
States v. Dunkel [90-1
USTC ¶50,243 ], 900 F.2d 105, 107-08 (7th Cir. 1990).
17
For example, attempts to evade assessment of tax often involve the
filing of a false tax return or other false documents.
18
As we have explained in footnote 10, under the concurrent sentence
doctrine we in fact considered only whether the acts of evasion charged
in Counts One, Two, and Three are multiplicitous of the offense charged
in Count Five.
19
We note also that our holding is not the equivalent of concluding that,
as a consequence of section
7201 's phrase "in any manner," each manner of tax
evasion amounts to a separate unit of prosecution. This court has
previously acknowledged the fact that the term "any," when
used in a statutory definition of a unit of prosecution, fails to define
unambiguously the unit of prosecution in singular terms. See United
States v. Marino, 682 F.2d 449, 454 & n.5 (3d Cir. 1982). See
also United States v. Coiro, 922 F.2d 1008, 1014 (2d Cir.)
("the word 'any' has typically been found ambiguous in connection
with the allowable unit of prosecution") (quotation omitted), cert.
denied, 111 S.Ct. 2826 (1991).
20
Count Five charged Pollen with knowing and willful attempted tax evasion
"by placing part of his assets out of the reach of the United
States Government by maintaining more than $350,000.00 in gold bars and
coins, platinum, jewelry, and gems in safety deposit boxes at the First
Union Bank in North Carolina in a fictitious name."
21
Unless otherwise indicated, all references to the Sentencing Guidelines
in this opinion will be those in effect on August 22, 1990, the date of
the offense charged in Count Five, as these are the Guidelines that must
be applied. See United States v. Chasmer, 952 F.2d 50, 52 (3d
Cir. 1991) (if Guidelines in effect on date of offense are more
favorable to the defendant, they must be applied), cert. denied,
112 S.Ct. 1703 (1992).
22
Specifically, Guideline 3B1.1 states:
Based
on the defendant's role in the offense, increase the offense level as
follows:
(a)
If the defendant was an organizer or leader of a criminal activity that
involved five or more participants or was otherwise extensive, increase
by 4 levels.
(b)
If the defendant was a manager or supervisor (but not an organizer or
leader) and the criminal activity involved five or more participants or
was otherwise extensive, increase by 3 levels.
(c)
If the defendant was an organizer, leader, manager, or supervisor in any
criminal activity other than described in (a) or (b) above, increase by
2 levels.
U.S.S.G.
§3B1.1.
23
Guideline section 1B1.3 defines relevant conduct as:
(1)
all acts and omissions committed or aided and abetted by the defendant,
or for which the defendant would be otherwise accountable, that occurred
during the commission of the offense of conviction, in preparation for
that offense, or . . . that otherwise were in furtherance of that
offense;
(2)
solely with respect to offenses of a character for which §3D1.2(d)
would require grouping of multiple counts, all such acts and omissions
that were part of the same course of conduct or common scheme or plan as
the offense of conviction;
U.S.S.G.
§1B1.3. Violations of 26 U.S.C. §7201
are covered by Guideline §2T1.1, and §3D1.2(d) requires
grouping of these offenses.
24
Murillo resolved this issue with regard to offenses committed
prior to November 1, 1990. Effective as of that date the Sentencing
Commission amended the Guidelines to specify that the determination of
the defendant's role in the offense is to be made on the basis of all
relevant conduct "and not solely on the basis of elements and acts
cited in the count of conviction." U.S.S.G. §3B (Introductory
Commentary). See also Murillo, 933 F.2d at 198 n.1. The parties
agree that these amendments do not apply to Pollen's Guidelines offense.
Although
Murillo was decided on May 8, 1991, approximately three months
prior to Pollen's sentencing hearing, neither the parties nor the
district court appeared at that time to have been aware of its holding.
25
This section provides:
If
the court of appeals determines that the sentence--
(1)
was imposed in violation of law or imposed as a result of an incorrect
application of the sentencing guidelines, the court shall remand the
case for further sentencing proceedings with such instructions as the
court considers appropriate.
18
U.S.C. §3742(f)(1).
26
The IRS followed its standard procedure of applying payments against the
total amount due from the taxpayer, including tax, interest, and
penalty, year by year, beginning with the earliest year for which an
amount is owed.
27
Guideline 2T4.1, the Tax Table, provides that a defendant owing more
than $70,000 but less than $120,000 in tax is to receive an offense
level of 12. A defendant owing more than $350,000 but less than $500,000
is to receive an offense level of 15.
28
We do not reach Pollen's additional arguments that the district court's
decision to adopt the government's calculation of the amount of taxes
owed was clearly erroneous because the IRS failed to assign a basis
figure to certain properties sold by the receiver, and because taxes due
for 1983, charged in Count Four of the indictment and later dismissed,
were improperly included in the total figure. Even assuming that these
decisions were in error, they would be harmless. The total amount
disputed by Pollen in this regard is $89,725.50, while an offense level
of 15 is appropriate if the amount of tax evaded is more than $350,000
but less than $500,000. The amount of tax evaded by Pollen would
nevertheless fall within this range even if the $89,725.50 at issue in
these arguments is subtracted from the total amount found by the
district court.
29
We pause to accept the Sentencing Commission's longstanding invitation
to express our view on the efficacy and propriety of particular
Guidelines. See, e.g., United States v. Parson, 955 F.2d
858, 874 (3d Cir. 1992). Guideline section 2T1.1, Application Note 2,
provides that for the purposes of imposing sentence for violations of section 7201 , the tax loss
considered cannot include interest or penalties. See U.S.S.G. §2T1.1.
While such a limitation may be appropriate in an evasion of assessment
case, it is not always so when imposing sentence for tax evasion
committed through the evasion of payment.
Pollen's
actions aptly illustrate this point: his repeated attempts to conceal
assets were intended to evade the payment of his total debt of over
$3,000,000. The Guidelines' requirement that his sentence be calculated
based on only his evasion of the $488,000 in raw taxes owed, and not
also on his evasion of the payment of interest and penalties, fails to
reflect accurately the criminal behavior involved in this type of
evasion of payment of taxes offense.
30
In relevant part, Guideline section 5G1.2 states:
(c)
If the sentence imposed on the count carrying the highest statutory
maximum is adequate to achieve the total punishment, then the sentences
on all counts shall run concurrently, except to the extent otherwise
required by law.
(d)
If the sentence imposed on the count carrying the highest statutory
maximum is less than the total punishment, then the sentence imposed on
one or more of the other counts shall run consecutively, but only to the
extent necessary to produce a combined sentence equal to the total
punishment. In all other respects sentences on all counts shall run
concurrently, except to the extent otherwise required by law.
.
. .
U.S.S.G.
§5G1.2