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[85-2 USTC ¶9646] United States of America , Plaintiff-Appellee v. Horace E. Bressler, Defendant-Appellant

(CA-7), U. S. Court of Appeals, 7th Circuit, No. 84-2680, 772 F2d 287, 8/27/85 , Affirming an unreported District Court decision

[Code Secs. 7201 and 7203]

Crimes: Tax evasion: Willful failure to file return: Evidence: Jury instructions.--A jury instruction that an individual was a person required by law to file a return if his income exceeded a specified amount was proper because it did not direct the jury to find any facts, such as the amount of the individual's gross income. An objection, first raised on appeal, to another jury instruction involving a good faith defense to willfulness concerning whether a good faith misunderstanding of the law must be reasonable or whether an unreasonable misunderstanding sincerely held is sufficient was denied because the instruction did not constitute plain error. Various other objections raised by the individual were also denied. Thus, the individual's conviction for willfully failing to file income tax returns and willfully evading substantial tax liability was sustained.

Dan K. Webb, United States Attorney, Alexander S. Vesselinovitch, Assistant United States Attorney, Chicago, Ill. 60604, for plaintiff-appellee. Jeffrey Shrom, Shrom & Halprin, 422 W. Spruce, Missoula , Montana 59807 , for defendant-appellant.

Before CUMMINGS, Chief Judge, ESCHBACH, Circuit Judge, and CAMPBELL, Senior District Judge. ^*

CUMMINGS, Chief Judge:

Defendant Horace E. Bressler was convicted after a jury trial of two counts (Count One and Count Three) of willfully failing to file income tax returns for taxable years 1977 and 1978, in violation of 26 U. S. C. §7203, and one count (Count Two) of willfully evading substantial tax liability for 1978, in violation of 26 U. S. C. §7201. Defendant has timely appealed, and we affirm his conviction.

I

The defendant is a "tax protester," a member of a group of people who object to the payment of income tax. Evidence introduced at trial established that the defendant had substantial income from a variety of sources during the tax years at issue, 1977 and 1978. These sources included income from two insurance agencies with which the defendant was affiliated, and a number of rental properties. Russell Nimtz, an agent of the Internal Revenue Service ("IRS") and an expert in tax accounting, compiled a summary from the evidence presented at trial of the defendant's income and expenses in 1977 and 1978. According to this summary, the defendant received total gorss income in 1977 of $102,871.86 and in 1978 of $150,587.07. Agent Nimtz computed defendant's taxable income in 1978 at $42,071.56.

In January 1981, the defendant, transferred ten of his properties, including his own house, to his son Steven. He claimed he did so because they were "too much work" (Tr. 1121-1122). Each property was transferred for less than $100.

The government called witnesses to testify about various statements the defendant had made in public on the subject of income tax, for example at meetings he conducted at the Landmark Restaurant in Freeport , Illinois . Anne Fitzhenry, a reporter for the Freeport Journal-Standard newspaper, attended one of these meetings on February 1, 1983 . During that meeting, as Ms. Fitzhenry reported in an article appearing in the Journal-Standard and in her testimony at trial, the defendant admitted he had not filed a tax return for thirteen years, that paying income taxes was voluntary, and that the American people were `dumb, dumb, dumb'" (Tr. 325) for filing tax returns. He also said that a person's chance of getting caught for failure to file tax returns was slim. He advocated several methods for avoiding income tax, including making oneself judgment-proof by transferring real property into a trust and by removing assets from banks. Eunice Lee, a member of a church that employed the defendant as a pastor, testified that the defendant advised the congregation's members to withdraw their money from the banks, convert it into silver, and bury it in their yards. He also told them that a dollar bill was not worth as much as a blank piece of paper.

The defendant testified in his own defense, during which he insisted that the filing of income tax returns was voluntary. He called a number of witnesses to testify to his good character, and to testify about the February 1, 1983 , meeting at the Landmark Restaurant. Two of these witnesses conceded that the defendant had stated that he had not filed his income tax returns for thirteen years. Mr. Bressler was not represented by counsel at his trial, because he refused to be represented by court-appointed counsel and the trial court denied his request to be represented by someone who was not a licensed attorney. Nonetheless, the court did allow two lay persons to sit with Mr. Bressler at the counsel table to advise him during the course of the trial. The court also had a licensed attorney standing by throughout the trial to assist Bressler.

II

Defendant objects first to two jury instructions the court below read to the jury. The first instruction informed the jury that "[t]he defendant was a person required by law to file a return for the calendar year in question, as that phrase is used in these instructions, if his gross income equaled or exceeded $4,700 in 1977 or $4,700 in 1978" (Tr. 1352). Mr. Bressler contends that this instruction directed a verdict on one element of the crime charged under Counts One and Three, failing to file income tax returns.

The defendant's argument fails because the instruction did not direct the jury to find any facts. Defendant was married in tax years 1977 and 1978, and therefore was legally obliged to file income tax returns if his gross income exceeded $4,700. Thus the instruction at issue properly and adequately stated the law see United States v. Loman, 551 F. 2d 164, 168 (7th Cir. 1977), certiorari denied, 433 U. S. 912, but let the jury determine what the defendant's gross income was. The trial court also instructed the jury that the accuracy of "certain schedules or summaries" that had been admitted into evidence "has been challenged. Thus, the original materials upon which the exhibits are based have also been admitted into evidence so that you may determine whether the schedules or summaries are accurate" (Tr. 1350). The court clearly and explicitly left it for the jury to determine whether Mr. Bressler had earned sufficient income to be required to file and whether he incurred substantial tax liability for tax year 1978. Consequently the case at bar is quite unlike United States v. Goetz [84-2 USTC ¶9947], 746 F. 2d 705, 707-708 (11th Cir. 1984), because the judge there instructed the jury both what the law was, and that the document filed by the defendant as a tax return did not meet the requirements of the law. The judge in the instant situation did not apply the facts to the law, leaving it entirely to the jury to determine what Mr. Bresser's gross income was and whether he had complied with the law.

Defendant next argues that the jury instruction on the "good faith" defense to willfulness was inadequate. The trial court instructed the jury that "[a] good faith misunderstanding of the law may negate willfulness if the misunderstanding is reasonable" (Tr. 1355). Mr. Bressler contends that this instruction misrepresents the law, because a misunderstanding need not be objectively reasonable to serve as a defense to willfulness. In oral argument before us defense counsel relied for the first time on United States v. Aitken [85-1 USTC ¶9209], 755 F. 2d 188 (1st Cir. 1985), where the First Circuit declared "that the overwhelming weight of authority in the field of criminal prosecutions for failure to file tax returns and for tax evasion insists on a subjective standard for assessing willfulness." Id. at 192. Consequently, that court held that the district court's `objectively reasonable'" instructions, given on the basis of our decision in United States v. Moore [80-2 USTC ¶9627], 627 F. 2d 830 (1980), certiorari denied, 450 U. S. 916, were erroneous. Id. at 193. The issue of whether a good faith misunderstanding of the law must be reasonable, or whether an unreasonable misunderstanding sincerely held is sufficient, still appears to depend on objective reasonableness in this Circuit. United States v. Witvoet [85-2 USTC ¶9530], -- F. 2d --, No. 84-2695, slip op. at 4 (7th Cir. July 10, 1985 ) (misunderstanding must be objectively reasonable); United States v. Anton, 683 F. 2d 1011, 1018 (1982) (same). ¹

The defendant did not advance his argument concerning objective and subjective reasonableness until oral argument before this Court. Therefore, we "cannot review this instruction unless it constitutes plain error within the meaning of Federal Rule of Criminal Procedure 52(b)." United States v. Witvoet, supra, slip op. at 4. Witvoet involved almost an identical situation: on appeal before this Court the defendant argued for the first time that an instruction on the good faith defense requiring the misunderstanding to be "objectively reasonable" was erroneous. The Court held, on the strength of United States v. Moore , supra, that the instruction did not constitute plain error. Id. We agree that plain error has not been shown here.

We have previously observed that for a jury instruction to constitute plain error under Fed. R. Crim. P. 52(b), the reviewing court "must consider the entire trial record, * * * and discern whether the alleged error in the district court's charge had 'a probable impact on the jury's finding that the defendant was guilty.'" United States v. Verkuilen [82-2 USTC ¶9618], 690 F. 2d 648, 653 (1982) (quoting United States v. Jackson, 569 F. 2d 1003, 1010 (7th Cir. 1978), certiorari denied, 437 U. S. 907) (citations omitted). First of all, the district court properly instructed the jury that willfulness is a "voluntary and intentional violation of a known legal obligation" (Tr. 1355). No further instruction on good faith was even necessary. Verkuilen, 690 F. 2d at 655. Second, the evidence clearly established that the defendant did not "misunderstand" the law at all. He was a sophisticated businessman with substantial real estate holdings who held meetings during which he advised the audience how to avoid their tax obligations. In particular, his remarks reported by Ms. Fitzhenry positing that the chances of getting caught for failing to file income tax returns were very slight indeed, his informing those present at the February 1, 1983, meeting that they should evade liability by making themselves judgment-proof and telling them how to do so, as well as his transferring a number of his properties (including his own house) to his son for a nominal sum, indicate that he had no good faith, bona fide misunderstanding of the law, either subjective or objective. Mr. Bressler has refused to file income tax returns and pay the amounts due not because he misunderstands the law, but because he disagrees with it. As the jury in the instant situation was properly instructed, disagreement with the law does not constitute a good faith defense sufficient to negate a finding of willfulness (Tr. 1355). Just as an individual who is required to register for the draft, but refuses to do so on grounds of conscience, is subject to prosecution, so one who refuses to file income tax returns and pay the tax owing is subject to prosecution, even though the tax protester believes the laws requiring the filing of income tax returns and the payment of income tax are unconstitutional. ²

III

Mr. Bressler also raises several evidentiary objections. Great deference is owed to the trial judge's exclusion of evidence under Fed. R. Evid. 403 as being more prejudicial than probative. United States v. Serlin [83-1 USTC ¶9368], 707 F. 2d 953, 959 (7th Cir. 1983). The defendant argued that many of the remarks Ms. Fitzhenry attributed to him actually derived from a videotape shown at the meeting she attended. The district court excluded the videotape after review in camera as hearsay, irrelevant, and as being more prejudicial than probative.

We agree for several reasons. First, Ms. Fitzhenry did not remember any videotape being shown, so that whether the tape had in fact been played was greatly in doubt. Defendant did place on the witness stand at least one witness who testified to the videotape's having been shown at the February 1 meeting, so that the jury had adequate opportunity to assess the two witnesses' credibility regarding whether the tape had been shown on the evening in question. Second, the defendant's being able to show the videotape to the jury could not in any way establish whether the tape had been played at the meeting Ms. Fitzhenry attended. Finally, even if language on the tape duplicated Mr. Bressler's remarks as reported by Ms. Fitzhenry, duplication would not mean that Mr. Bressler had not made the statements attributed to him. He could himself have been using language he had previously heard, especially if the videotape in question had been played at other meetings that he conducted. The defendant's arguments lack merit. ³ In this situation the trial court's ruling was proper.

IV

Mr. Bressler also contends that the IRS failed to comply with the Privacy Act, 5 U. S. C. §552a(e)(3), ⁴ by failing to inform him that filing returns is mandatory and that criminal sanctions, including imprisonment, may result from failing to comply. These arguments are meritless. The Eighth Circuit considered what notices comply with Privacy Act requirements in United States v. Wilber [83-1 USTC ¶9119], 696 F. 2d 79 (1982). The court there examined the notices the IRS included in its 1040 instruction booklets for the tax years at issue here, 1977 and 1978, and concluded, "Nothing in the Privacy Act requires agencies to employ the exact language of the statute to give effective notice. The IRS booklet clearly notifies taxpayers that filing is mandatory." Id. at 80. We agree that the IRS notice, informing taxpayers that they "must file a return or statement with us for any tax you are liable for" adequately and clearly informs taxpayers that filing is mandatory.

The notice need not inform the taxpayer of the specific criminal penalty that may be imposed to comply with Privacy Act requirements. United States v. Dack, 747 F. 2d at 1176 n. 5; United States v. Bell [84-1 USTC ¶9508], 734 F. 2d 1315, 1318 (8th Cir. 1984) (per curiam); United States v. Wilber, 696 F. 2d at 80 (citing cases). Warning that the information may be turned over to the Department of Justice, or that the Department of Justice would be notified if information was not provided, is adequate. United States v. Bell, 734 F. 2d at 1318 (citing cases). Consequently, the defendant received all the notice to which he was entitled. Furthermore, we agree with the government that even if the defendant had made a sustainable argument, the proper remedy is a civil action under Section 552a(g)(1) of the Privacy Act, not dismissal of the indictment.

The defendant's other arguments lack merit. ⁵ The conviction is affirmed.

^* The Honorable William J. Campbell, Senior District Judge of the Northern District of Illinois, is sitting by designation.

¹ But compare United States v. Dack [84-2 USTC ¶9913], 747 F. 2d 1172, 1175 (7th Cir. 1984), with United States v. Walsh, 627 F. 2d 88, 93 (7th Cir. 1980). We need not choose between the objective and subjective tests in this case because, as noted in the text, defendant did not advance below an argument in favor of the subjective test.

² The government suggests that the good faith instruction given by the judge below was correct, because it did not require that the misunderstanding be objectively reasonable. The government argues that the jury could have interpreted the instruction to include subjective reasonableness, and so account for the defendant's subjective intent. At first glance, this argument appears specious, given as lawyers are to read "reasonable" as meaning "objective," or what the ordinary person in the defendant's situation would believe, as opposed to what the defendant did in actuality believe. But if so, then qualifying the word "reasonable" with the requirement that a belief be "objectively reasonable" seems unnecessarily redundant. Jurors are lay persons, after all, not lawyers, so that the word "reasonable" does not "carry the same baggage" for them that it would for lawyers.

The reasonableness requirement is intended to give the jury a method by which they can distinguish between a bona fide misunderstanding of the law and obdurate refusal to acknowledge (present in so many tax protestor cases) what the law indeed does require. "Those who believe, even in good faith, that the income tax law is unconstitutional are similarly willful violators of the tax law if they understand the obligations the statute purports to impose upon them." United States v. Burton [84-2 USTC ¶9689], 737 F. 2d 439, 442 (5th Cir. 1984).

³ Defendant's other evidentiary objections are worthy of only passing comment. A trial court's determinations of relevancy and materiality of evidence will be reversed only on a finding of a clear abuse of discretion. See United States v. Solomon [82-2 USTC ¶9591], 688 F. 2d 1171, 1178 (7th Cir. 1982). Mr. Bressler argues that he should have been allowed to introduce both voluminous materials he claims to have distributed at his church and certain biblical passages to rebut testimony given by church member Ms. Lee. But the defendant himself during cross-examination had elicited the remarks to which he now objects, remarks which had no relevance to the limited matters on which Ms. Lee had testified on direct examination. Defendant also wanted to call a defense witness to testify regarding a trip the witness took in 1982 with the defendant to the IRS. The district court did not abuse its discretion in ruling that this hearsay evidence was irrelevant to the defendant's failure to file income tax returns for tax years 1977 and 1978, and to why he may have failed to file.

⁴ Section 552a(e)(3) provides that each agency that maintains a system of records shall:

(3) inform each individual whom it asks to supply information, on the form which it uses to collect information or on a separate form that can be retained by the individual--

(A) the authority (whether granted by statute, or by executive order of the President) which authorizes the solicitation of the information and whether disclosure of such information is mandatory or voluntary;

(B) the principal purpose or purposes for which the information is intended to be used;

(C) the routine uses which may be made of the information, as published pursuant to paragraph (4)(D) of this subsection; and

(D) the effects on him, if any, of not providing all or any part of the requested information.

⁵ Mr. Bressler argues first that the district court lacked subject matter jurisdiction. We rejected the identical argument in United States v. Koliboski [85-1 USTC ¶9251], 732 F. 2d 1328 (1984), observing that "[c]ourts too numerous to enumerate have rejected this silly claim, and we now specifically reject it." Id. at 1329.

His argument that he was deprived of his Sixth Amendment right is even more ridiculous, given his refusal to court-appointed counsel. That refusal in these circumstances constitutes a valid waiver. We have specifically held in a similar situation that there is no constitutional right "to representation by non-lawyers or laymen." United States v. Thibodeaux [85-1 USTC ¶9308], 758 F. 2d 199, 201 (1985). Bressler has not shown that he was prejudiced in his defense in any way. Furthermore, as the trial court did in Thibodeaux, the district court here had a licensed attorney standing by during the trial to assist Bressler, in addition to allowing him to confer with two friends. Having received an adequate and fair trial, Bressler cannot now complain.

 

 

 

[85-2 USTC ¶9617] United States of America , Plaintiff-Appellee v. Lavern Charles Dunham, Defendant/Appellant

(CA-9), U. S. Court of Appeals, 9th Circuit, CA No. 85-3580, 8/8/85 , Affirming an unreported District Court decision

[Code Sec. 7203]

Criminal penalties: Income not reported: Instructions to jury.--The taxpayer, who represented himself at trial and was convicted of willfull failure to file income tax returns, was not prejudiced by the district court judge's jury instructions. The judge responded to the jury's question about jurisdiction that it was a matter of law to be determined by the court and that the jury's responsibility was to determine factual issues from the evidence. The taxpayer had told the jury that he believed that the IRS lacked jurisdiction to make him pay taxes involuntarily because he was a sovereign human being. Moreover, an alleged discrepancy in the recorder's transcript regarding the trial judge's answer to the no-jurisdiction question also did not prejudice the taxpayer. Therefore, his conviction was affirmed.

Jeffrey L. Shrom, Missoula , Mont. , for plaintiff-appellee. Malcom Logan, Anchorage , Alaska., for defendant-appellant.

Before WRIGHT, POOLE , and HALL, Circuit Judges.

Opinion

HALL, Circuit Judge:

By this appeal defendant-appellant Lavern Charles Dunham challenges the district court's denial of his motion to vacate sentence pursuant to 28 U. S. C. §2255. We affirm the decision of the district court.

Background

Dunham was convicted of three counts of willfully failing to file individual income tax returns in violation of 26 U. S. C. §7203. Dunham represented himself at trial. When he was given the opportunity to present evidence or cross-examine witnesses Dunham responded "no jurisdiction." Dunham made a closing argument on his own behalf, during which he told the jury of his belief that the IRS lacked jurisdiction to make him pay taxes involuntarily because he was a sovereign human being.

Once deliberations had begun the jury asked the district judge to "clarify what Mr. Dunham's 'no jurisdiction' refers to when mentioned by Mr. Dunham?" The recorder's transcript indicates that the district judge responded:

Jurisdiction is primarily a matter of law, and matters of law are determined by this court. In the first instance, what the questions that the jury has posed, I am not--are addressed to legal issues. The responsibility of the jury, of course, is to determine the factual issues from the evidence, and you really ought not to be concerned with the legal issues.

Dunham claims that the district judge said ". . . I am not required to answer but I will. I have jurisdiction." but that the recorder's transcript indicates dashes at the point where the underlined portion of the response was omitted.

Dunham asserts that he is entitled to §2255 relief because: (1) the trial judge's answer to the jury's question improperly directed a verdict against him on the mens rea element of the offense by telling the jury to disregard Dunham's repeated "no jurisdiction" statements; and (2) the discrepancy in the recorder's transcript regarding the trial judge's answer to the no jurisdiction question prejudiced his case. Dunham did not raise these errors in his appeal. ¹

Dunham's §2255 claim was referred to a United States Magistrate. The district court adopted the magistrate's findings, concluding that Dunham's claims, even if believed, did not rise to the level of constitutional error necessary to sustain §2255 relief.

Discussion

Section 2255 is not designed to provide criminal defendants repeated opportunities to overturn their convictions on grounds which could have been raised on direct appeal. The Supreme Court has held that where a criminal defendant fails to make allegations of error at trial or on direct appeal he must demonstrate "(1) 'cause' excusing his double procedural default, and (2) 'actual prejudice' resulting from the errors of which he complains." United States v. Frady, 456 U. S. 152, 168 (1982) (relying on Davis v. United States, 411 U. S. 233, 236-45 (1973)). ² We find no actual prejudice in this case.

A defendant seeking §2255 relief on the basis of a faulty jury instruction can establish actual prejudice only by demonstrating that the erroneous instruction "so infected the entire trial that the resulting conviction violates due process." Frady, 456 U. S. at 169. See also Egger v. United States, 509 F. 2d 745, 749 (9th Cir.) cert. denied, 423 U. S. 842 (1975). We hold that this is also the appropriate standard for determining actual prejudice where a defendant seeks §2255 relief on the basis of a court's response to questions by the jury. See Fennell v. United States, 313 F. 2d 941, 942 (10th Cir. 1963) (per curiam) (§2255 collateral relief denied where communications between judge and jury during deliberations did not infringe on the constitutional rights of the accused).

Dunham's allegations, even if believed, do not rise to this level of prejudice. The district judge correctly instructed the jury on the elements of the offense, including willfulness, before the jury began deliberations. Even if the district judge misinterpreted the jury's question the district judge's response did not violate Dunham's right to due process. The response was an accurate statement of the law directing the jury away from the legal issue of jurisdiction. The response did not mention willfulness or any other elements of the offense charged. The jury was given no indication that it was to disregard the previous instructions.

Dunham's attempt to establish actual prejudice through the alleged omission from the transcript is equally unavailing. The omission, assuming that it occurred, did not interfere with the fairness of Dunham's trial or his ability to raise issues on appeal.

We conclude that Dunham has failed to establish the actual prejudice necessary to obtain §2255 collateral relief.

AFFIRMED.

¹ Dunham also argues that he is entitled to §2255 relief because the district court erred by taking judicial notice of the existence of jurisdiction without instructing the jury on judicial notice as required by Fed. R. Evid. 201(g), and that this court should consider arguments raised in a previous writ of habeas corpus in determining Dunham's current §2255 claim. We find no merit in these contentions.

² We recognize that Dunham is guilty of only one procedural default on the second issue. The alleged transcript error could not have been discovered until after trial. We think that Frady provides the appropriate standard in any event. If we were to reach the cause portion of the Frady test in this case, we would only require Dunham to establish cause for his failure to raise the transcript issue in his direct appeal.

 

 

[85-2 USTC ¶9530] United States of America , Plaintiff-Appellee v. Eugene Witvoet, Defendant-Appellant

(CA-7), U. S. Court of Appeals, 7th Circuit, No. 84-2695, 767 F2d 338, 7/10/85 , Aff'g unreported DC

[Code Sec. 7203]

Crimes: Failure to file return: Instructions to jury: Verdict.--An individual, who disliked paying taxes and believed that his membership in a so-called religious order gave him tax-exempt status, was properly convicted for failure to file his 1981 tax return. The court of appeals rejected the individual's contention that the jury's verdict was internally inconsistent because he was convicted for the failure to file his 1981 tax return, but acquitted on the charge of failing to file the 1980 return. A criminal defendant convicted by a jury on one count cannot attack that conviction because it was inconsistent with the jury's verdict of acquittal on another count. The court further rejected the individual's argument that there was no substantial evidence to support the jury verdict because it amounted to a recapitulation of his position concerning internally inconsistent verdicts. Further, the court of appeals found that a jury instruction did not constitute plain error because the instruction was based upon a recent unquestioned ruling of the court. Such instruction stated that the defense based upon a good faith misunderstanding of the law must be objectively reasonable.

James D. O'Connell, Assistant United States Attorney, 219 South Dearborn Street , Chicago , Ill. 60604 , for plaintiff-appellee. Andrew B. Spiegel, 77 W. Washington Street , Chicago , Ill. 60602 , for defendant-appellant.

Before CUDAHY and COFFEY, Circuit Judges, and PECK, Senior Circuit Judge. ¹

PECK, Senior Circuit Judge:

Appellant Eugene Witvoet was convicted, after a jury trial, for willful failure to file a 1981 federal income tax return, in violation of 26 U. S. C. §7203. He now appeals his conviction to this court. We affirm.

I.

Witvoet became acquainted, in 1978, with members of the tax protest movement. The tax protesters Witvoet met represented themselves as experts, and claimed that payment of income taxes is a purely voluntary act. One of these "experts" even stated that is is illegal to pay income tax. The tax protesters supported their assertions by highly selective and misleading quotations from Supreme Court opinions and Internal Revenue Service regulations.

Witvoet and his wife were impressed by what they heard, and were inclined to credit the experts' views. They undertook no independent investigation and solicited no opinion from persons outside the tax protest movement, in spite of the fact that they had reason to doubt the authenticity of their mentors' credentials as experts. (Paul Bell, for example, the tax protester who had the greatest impact on Witvoet, called himself a "C.P.A." in his promotional literature. Witvoet knew that the initials stood, not for "certified public accountant," but for "citizens' protection agent," a title Bell apparently gave himself.)

Witvoet then decided not to pay taxes. The motives for his decision were mixed. Several of the reasons he gave for this decision amounted to the fact that he did not particularly like paying taxes, which is a not uncommon aversion. He also inclined to the belief that it was illegal to pay taxes, though he was not certain on this point, and he thought that his membership in a so-called "religious order" formed by Paul Bell gave him tax-exempt status.

Late in 1979, Witvoet submitted to his employer a W-4 form claiming fifty-three allowances. He did so to avoid having income tax withheld from his paycheck, even though his employer warned Witvoet that his submission of the form might constitute perjury. He filed no tax returns for the years 1979-82. In late 1983, Witvoet was indicted for failure to file 1980 and 1981 income tax returns. He attempted to call Bell , who had assured him that his actions would not result in legal liability and that he would arrange for legal assistance if Witvoet needed it. Witvoet's call was answered by a secretary, who told him that Bell was in prison. This fact, together with the indictment against him, apparently gave Witvoet pause, and he decided to file the tax returns for 1979-82. He testified at trial that he did so in part because he believed it would make a good impression on the jury when he was tried. Ironically, it turned out that a refund was due Witvoet for 1979; he owed taxes for 1980, 1981, and 1982, and paid them. Witvoet was tried before a jury in the United States District Court for the Northern District of Illinois. The jury convicted him for failure to file the 1981 return, but acquitted him on the charge of failing to file the 1980 return. Witvoet then filed a motion for a judgment of acquittal on the 1981 count. The court denied the motion and sentenced Witvoet to a year in prison, whereupon Witvoet filed a timely appeal to this court.

II.

Witvoet raises three issues on appeal. The first is whether a court can "sustain a jury's verdict which is internally inconsistent," which alleges this verdict to have been, since there was, in his opinion, no more evidence of his guilt on the 1981 count for which he was convicted than on the 1980 count for which he was acquitted. The Supreme Court has answered this question during the pendency of Witvoet's appeal. In United States v. Powell, -- U. S. --, 105 S. Ct. 471 (1984), the Court held that "a criminal defendant convicted by a jury on one count could not attack that conviction because it was inconsistent with the jury's verdict of acquittal on another count." Id. at 473, 479. Powell is dispositive of this issue.

Witvoet's second assignment of error is that the court gave an improper jury instruction on the nature of a defense based on a good faith misunderstanding of the law. The court instructed the jury:

A good faith misunderstanding of the law which the defendant is charged with violating is a defense if based on objectively reasonable grounds. However, mere disagreement with that law does not constitute good faith misunderstanding of the law, because it is the duty of all persons to obey the law whether or not they agree with it.

Witvoet argues that it was error for the court to instruct the jury that a good faith misunderstanding of the law must be objectively reasonable. However, he did not present this argument to the trial court, though he did object to two other aspects of the instruction. Federal Rule of Criminal Procedure 30 states, in relevant part:

No party may assign as error any portion of the charge or omission therefrom unless he objects thereto before the jury retires to consider its verdict, stating distinctly the matter to which he objects and the grounds of his objection.

Thus we cannot review this instruction unless it constitutes plain error within the meaning of Federal Rule of Criminal Procedure 52(b).

In United States v. Moore [80-2 USTC ¶9627], 627 F. 2d 830 (7th Cir. 1980), cert. denied, 450 U. S. 916 (1981), we held that "[t]he mistake of law defense is extremely limited and the mistake must be objectively reasonable." Id. at 833. Neither this court nor the Supreme Court has overruled Moore , and no other circuit has criticized it. ² For a trial court within this circuit to give an instruction based on a recent and unquestioned ruling of this court is not plain error. The instruction to which Witvoet objects, then, was not plain error, and since he did not make an objection complying with the requirements of Federal Rule of Criminal Procedure 30, we shall not review it.

Witvoet argues, finally, that there was no substantial evidence to support the jury verdict. ³ Most of his argument on this point amounts to a recapitulation of his position that his conviction for failure to file the 1981 return was inconsistent with his acquittal on the charge of failing to file his 1980 return. We have already addressed this contention, and we believe that the evidence, as summarized supra, was more than adequate to support his conviction.

The judgment of the district court is affirmed.

¹ Honorable John W. Peck of the Sixth Circuit, sitting by designation.

² Moore indicated that the requirement that a mistake of law defense be based on an objectively reasonable mistake was followed at that time in other circuits. See Moore , supra, at 833, and cases cited therein. We reaffirmed our adherance to this requirement in United States v. Anton, 683 F. 2d 1011, 1018 (7th Cir. 1982).

³ We view the evidence, of course, in the light most favorable to the prosecution, as Witvoet acknowledges we must. Our standard of review was stated by the Supreme Court in Hamling v. United States, 418 U. S. 87, 124 (1974):

The general rule of application is that "[t]he verdict of a jury must be sustained if there is substantial evidence, taking the view most favorable to the Government, to support it." Glasser v. United States , 315 U. S. 60, 80 (1942).

 

 

 

[85-1 USTC ¶9178] United States of America , Plaintiff-Appellee v. Wiley F. Green, Defendant-Appellant

(CA-7), U. S. Court of Appeals, 7th Circuit, No. 84-1075, 757 F2d 116, 2/4/85, Affirming unreported District Court decision

[Code Sec. 7203]

Crimes: Failure to file returns: Willful failure to file returns: Miscellaneous defenses: Good faith: Instruction to jury.--A dentist, who filed various protest documents in place of or in connection with his tax returns and filed amended returns for such years with each line item filled in with the words object self-incrimination, was convicted for failure to file a proper return and was sentenced to one year of incarceration with six months of the sentence suspended. The court of appeals, in affirming the taxpayer's conviction, rejected the plethora of objections that the taxpayer raised in citing error at the trial court level. Although the government failed to identify the taxpayer during its case-in-chief, the district court did not act improperly in denying the taxpayer's motion to dismiss for failure to properly identify him as the defendant because his identification could be inferred from all the facts and circumstances that were in evidence. Further, the district court did not abuse its discretion in allowing the government to reopen its case so that the government could present an IRS agent to specifically identify the taxpayer because the jury could logically infer the taxpayer's identity as that of the defendant from all the testimony and exhibits presented during the government's case. Secondly, the district court did not commit prejudicial error when it allowed the government to introduce the amount of the taxpayer's income, its source, reason for receipt, and time of receipt because such evidence related to the issue of the taxpayer's intent or willfulness in failing to file a return as well as to the taxpayer's Fifth Amendment good faith defense. Further, although the taxpayer was compelled to testify on cross-examination against his will concerning the computation of his tax liability for the years in question, the trial court did not commit reversible error because once the taxpayer took the stand to testify, his privilege against self-incrimination was lost for purposes of cross-examination as to matters reasonably related to his direct examination. Thirdly, the jury instruction, concerning the adequacy of information necessary in order for a return to constitute a proper return, failed to strip the taxpayer of his right to assert a good faith Fifth Amendment self-incrimination defense since the jury instruction related only to the failure to file a proper return and not to the element of intent. Further, the taxpayer's argument that a second jury instruction, concerning the Fifth Amendment good faith defense, was erroneous because it improperly commented on the evidence was rejected by the court as being a proper statement of the law. Also, the good faith Fifth Amendment privilege instruction was not too limited because the district court, in addition to instructing the jury on the interplay between the good faith defense and the Fifth Amendment privilege, also instructed the jury that the taxpayer's conduct was not willful if his actions were due to a good faith misunderstanding of the law. Finally, the district court did not improperly comment on the evidence when it instructed the jury that the Fifth Amendment does not apply to income derived from legitimate activities. By way of illustration the district court used the taxpayer's profession of dentistry as an example of a legitimate activity.

David J. Ryan, Assistant United States Attorney, Indianapolis , Ind. 46204 , for plaintiff-appellee. John F. Ittenbach, Cottrell, Ittenbach, Helbert & Sheeks, 7212 North Shadeland, Indianapolis, Ind. 46250, for defendant-appellant.

Before ESCHBACH and COFFEY, Circuit Judges, and GRANT, Senior District Judge. ^*

COFFEY, Circuit Judge:

The defendant, Wiley F. Green, appeals his conviction in the United States District Court for the Southern District of Indiana for three counts of failure to file an income tax return in violation of Title 26 U. S. C. §7203. ¹ For the calendar years 1976, 1977, and 1978, the defendant was sentenced to one year of incarceration with six months of the sentence suspended. We affirm.

I.

The facts of this case are undisputed. The appellant, Wiley F. Green, is a dentist who resides in Zionsville , Indiana . He and his wife filed joint tax returns for the years 1972 through 1974. He testified that based upon his experiences while serving in the Army, together with the information he received while attending various seminars regarding a citizen's constitutional rights, he began to question the government's constitutional authority to tax. Thus, beginning in the year 1975 Green requested that his employer, the University of Indiana , withhold no taxes from his paycheck since he contended he had incurred no federal income tax liability for the taxable year of 1974. ²

Between 1976 and 1978, the appellant filed various protest documents in place of or in connection with his tax return. ³ Warning letters were sent to the defendant by the Internal Revenue Service (IRS) for each year that the defendant filed an improper return. Following his third year of filing deficient returns, IRS Special Agents contacted the appellant regarding his tax return deficiencies. He then filed amended returns for each of the three years inscribing on each line the statement "object self-incrimination." Based on his continued failure to file proper tax returns, the defendant was indicted, tried and convicted for failure to file a proper return in violation of Title 26 U. S. C. §7203 for the years 1976 through 1978.

Green appeals this conviction alleging that the government failed to sufficiently identify him as the defendant at trial. He also asserts that the district court abused its discretion in allowing evidence to be received at trial detailing his income and in allowing him to be cross-examined on certain tax computations. Next, he contends that the district court submitted several erroneous jury instructions concerning the sufficiency of the information to be disclosed on his tax returns and the nature of his Fifth Amendment good faith defense.

II.

A. Identification of the defendant. The appellant initially contends that the district court improperly denied the defendant's motion to dismiss based upon the government's failure to properly identify the individual in the courtroom as the defendant, Wiley F. Green. We hold that the appellant's argument is without merit.

This court, in United States v. Weed, 689 F. 2d 752 (7th Cir. 1982), held that while "an in-court identification of the accused is an essential element in the establishment of guilt beyond a reasonable doubt . . . identification can be inferred from all the facts and circumstances that are in evidence." Id. at 754. In this case, at the close of the government's case-in-chief, the district court had before it various stipulations entered into between the parties at the beginning of trial that had been signed by the defendant, Wiley F. Green. When the government offered these stipulations into evidence, the only objections raised by Green were to their materiality and relevance. In fact, Green's counsel at trial stated that he objected "since we have offered to stipulate that the defendant in this case has earned sufficient income . . .." Similarly, the defense counsel failed to object properly to the prosecution's reference to the "defendant" throughout its case-in-chief and since there was only one defendant in this case there was no opportunity for confusion or mistake. Id. at 756. Thus, the district court did not act improperly in denying the defendant's motion to dismiss for failure to properly identify the defendant during the government's case-in-chief. It should be noted that the district court allowed the government to reopen its case-in-chief and present an IRS agent who specifically identified the defendant as Wiley F. Green. Green contends that the district court abused its discretion in allowing the government to reopen its case in order that they might identify him as the defendant. However, the district court is invested with broad, discretionary powers in allowing a party to reopen its case. See, e.g., United States v. Papia, 560 F. 2d 827, 849 (7th Cir. 1977). "The trial judge must meet situations as they arise and to do this must have broad power to cope with the complexities inherent in the adversary process. . . . The judge's control over the proceedings must necessarily be substantial. . . . In the final analysis, the admissibility and the scope of examination of witnesses must be determined by the trial court in the exercise of its discretion. . . ." Caruth v. Pinkney, 683 F. 2d 1044, 1051 (7th Cir. 1982). We disagree with Green that the district court judge abused his discretion in allowing the government to reopen its case in order to present the IRS agents who could specifically identify Green as the defendant. Certainly, this evidence was relevant and did not prejudice Green in any manner. Further, the jury could very logically infer his identity as that of the defendant from all of the testimony and exhibits presented during the government's case. Thus, the added specific identification of Green as the defendant after the reopening of the government's case was, at best, cumulative evidence of his identity.

B. Evidentiary matters. The defendant next argues that the district court committed prejudicial error when it allowed the government to introduce the amount of the defendant's income during the years in question into evidence since the defendant was willing to stipulate that he had made enough income during these years to be required to file a return. The district court allowed not only the introduction of the amount of the defendant's income into evidence, but also allowed evidence concerning its source, reason for receipt, and time of receipt. Clearly, all of this information was introduced and properly received into evidence as it related to the issue of the defendant's intent or "willfulness" in failing to file a return, a fact that the defendant was obviously not willing to stipulate. The evidence as to the income's source, reasons for receipt, etc., was particularly relevant since the defendant based his defense upon his good faith belief in claiming the Fifth Amendment right against self-incrimination on his tax return. The evidence as to the amount of income derived from the various sources and the time that those amounts were received was also relevant as it related to the defendant's Fifth Amendment good faith defense since it detailed the percentage of the defendant's income from its various sources from wages, dividends, and interest for the tax years in question. ⁴ Further, on many of the documents introduced into evidence, such as Green's canceled checks, he often stamped the back with a notation protesting the constitutionality of Federal Reserve Notes. Certainly, this evidence was relevant in assessing his intent in failing to file his tax returns. See United States v. Moore [80-2 USTC ¶9627], 627 F. 2d 830, 832, 833 n. 1 (7th Cir. 1980) (This notation on the back of the checks was relevant since Green deposited the amount of money reflected on the check into his account at the bank and, thus, the evidence tended to undercut his own assertion that he believed those dollars to be worthless).

The defendant also contends that he was compelled to testify on cross-examination against his will concerning the computation of his tax liability for the years in question. The appellant is correct in his assertion that every citizen of the United States must be guaranteed a free choice to admit, deny, or refuse to answer any questions, except that once he takes the stand to testify this privilege against self-incrimination is lost for purposes of cross-examination as to matters reasonably related to his direct examination. Brown v. United States , 356 U. S. 148, 155-56 (1958); Neely v. Israel , 715 F. 2d 1261, 1264 (7th Cir. 1981). ("The rationale is that a witness who foregoes his right not to testify cannot then claim that he is immune from cross-examination on matters that he has chosen to put in dispute through his direct testimony." Id. ) When determining the "relation to the subject matter of one's direct examination" both the United States Supreme Court and our court have liberally interpreted the extent of the defendant's direct examination for purposes of establishing the proper scope of the cross-examination. See Neely, 715 F. 2d at 1264, interpreting United States v. Havens, 446 U. S. 620, 628 (1980); see also United States ex rel. Doss v. Bremer, 685 F. 2d 1003, 1013 (7th Cir. 1982).

The defendant in this case testified on direct examination that he compared the possible penalties for failure to file against his possible tax liability. He explained that since the possible penalties were much greater than the tax liability incurred if he did file a legitimate return, he must have sincerely believed in his cause since he was willing to accept those penalties by not filing a return. He was then asked to disclose how he computed his liability and the basis for those computations for the years in question. ⁵ Green objected to the inquiry concerning the basis for his computation and claimed his Fifth Amendment privilege; but, the district court ordered him to answer. It is clear, based upon the rule regarding the scope of the cross-examination as set forth in Brown, Havens, and Neely, supra, that it was not an abuse of discretion for the court to require Green to disclose the basis for his tax computation during the years in question since he was responsible for raising the issue of his tax computation during his direct examination.

C. Improper Jury Instructions. The district court instructed the jury that if a tax return does not contain any information relating to a taxpayer's income from which a tax may be computed, it cannot be classified as a return within the meaning of the Internal Revenue Code. This instruction was derived from the decision in United States v. Porth [70-1 USTC ¶9329], 426 F. 2d 519, 523 (10th Cir.), cert. denied, 400 U. S. 824 (1970) ("A taxpayer's return which does not contain any information relating to the taxpayer's income from which the tax can be computed is not a return within the meaning of the Internal Revenue Code . . ."). The defendant now raises on appeal an issue he failed to raise before the trial court, namely, that this instruction "destroyed the credibility of [his] testimony at trial in regard to [his] defense of a good faith misunderstanding of the law." Appellant's brief at 14. He also renews his argument that Porth itself was incorrectly decided, an argument previously presented to the district court.

Although we are unable to comprehend what Green intends to assert when he argues that this instruction "destroyed [his] credibility . . . in regard to [his] defense of a good faith misunderstanding of the law," we hasten to note that because of his failure to object to this instruction on this basis at the district court level, our review is limited to one of plain error under Fed. R. Crim. P. 56(b). ⁶ However, it obviously was neither plain error nor error in the first instance for the district court to give this instruction since it was consistent with our decision in United States v. Verkuilen [82-2 USTC ¶9618], 690 F. 2d 648 (7th Cir. 1982).

The petitioner apparently assumes that this instruction negates his assertion of his Fifth Amendment good faith defense to a charge of willful failure to file a proper income tax return. However, this jury instruction cannot be read in isolation. See, e.g., Wilk v. American Med. Ass'n., 719 F. 2d 207, 218-19 (7th Cir. 1983). In this case, the jury was initially instructed that there are three elements to the offense of failure to file a proper tax return: (1) the defendant earned more than $750.00 and was required to file a return; (2) the defendant failed to file a return; and (3) the defendant did so willfully. The jury was also instructed that the government must prove all three elements of the crime beyond a reasonable doubt and that the defendant could claim as a defense his Fifth Amendment right against self-incrimination if in fact he had a good faith belief that disclosure of certain information on his tax return may subject him to criminal prosecution. The jury instruction to which the defendant refers does not strip him of his right to assert his good faith Fifth Amendment self-incrimination defense since the jury instruction relates only to the failure to file, and not the element of intent. As stated by this court in Verkuilen, 690 F. 2d at 654, a case very similar to the one before us in that the defendant also typed on most of the lines of his tax return the phrase "object: self-incrimination," "A tax form which does not disclose sufficient information from which tax liability can be calculated is not a tax return under the Internal Revenue Code." Further, we stated in United States v. Moore [80-2 USTC ¶9627], 627 F. 2d 830 (7th Cir. 1980), that "[t]he determination of what is an adequate return is a legal question and it was proper for the district court to decide that question." Id. at 834. Thus, the jury instruction regarding the adequacy of the information contained in the return was entirely proper.

Green also urges us to overrule the line of cases in this circuit following the Porth decision since, Green contends, Porth was incorrectly decided. He argues that the decisions cited in Porth do not support Porth's "conclusive" presumption that the failure to include sufficient information within a return does not constitute a proper tax return for purposes of §7203. This circuit, however, has recognized the underpinnings of the Porth decision and has followed its rationale:

"Porth relied in part on earlier Supreme Court cases which considered the definition of a return in another context. These cases indicate that it is not enough for a form to contain some income information; there must also be an honest and reasonable intent to supply the information required by the tax code. . . . In the tax protester cases, it is obvious that there is no 'honest and genuine' attempt to meet the requirements of the code. In our self-reporting tax system the government should not be forced to accept as a return a document which plainly is not intended to give the required information."

Id. at 835 (citations omitted). In this case, Green fails to make the distinction between the §7203 crime of failure to file a return, which includes as one of its elements the willful or intentional failure to file, and one of the §7203 elements that the government must prove, namely the failure to file the return itself. The jury instruction in this case obviously pertained only to the element of "failure to file." Porth accurately states the law and the district court was correct in giving this instruction, as far as delineating the failure to file element of a §7203 violation.

Finally, the defendant argues that the Fifth Amendment "good faith" defense jury instruction was erroneous since it improperly commented on the evidence; it implied that only persons engaged in criminal activity can take the Fifth Amendment; and was too narrow in scope since it did not include language instructing that the jury could consider the defendant's "honest" belief in the appropriateness of his actions in asserting his Fifth Amendment privilege on his tax return. ⁷ We reject the defendant's argument and hold that the jury instruction was a proper statement of the law.

The instruction given in this case was clear, concise, and consistent with the instruction recently approved by our court in United States v. Verkuilen [82-2 USTC ¶9618], 690 F. 2d 648 (7th Cir. 1982) where we stated:

"An individual who refuses to disclose the amount of his income derived from a legitimate source on the grounds that such disclosure would violate his Fifth Amendment privilege against self-incrimination has improperly invoked and asserted the Fifth Amendment privilege, unless he can show some possibility that such a disclosure may lead to a criminal prosecution.

* * *

"An improper invocation of the Fifth Amendment is not an adequate justification for failure to file a tax return."

Id. at 654. Green, however, characterizes the instruction given in this case as limiting the Fifth Amendment privilege against self-incrimination to criminals only. We agree with the defendant's assertion only insofar as that the Fifth Amendment privilege "serves as a protection to the innocent as well as to the guilty . . ." and, thus, protects all citizens. Ullmann v. United States , 350 U. S. 422, 427 (1956). Certainly a person does not need to assert the Fifth Amendment privilege if he or she does not fear criminal prosecution for his acts; but if there is a justifiable fear of prosecution, that person may invoke the privilege. Garner v. United States [76-1 USTC ¶9301], 424 U. S. 648, 650 (1976). The instruction in this case stated that the person claiming the Fifth Amendment privilege must have a good faith belief in his/her claim, which rests upon a legitimate fear that disclosure could subject that person to possible criminal prosecution. As made clear in Verkuilen, it is the defendant's burden to make some "colorable" showing. Verkuilen, 690 F. 2d at 654. If, as in this case, the return fails to reveal any apparent threat of self-in-crimination, it then becomes the defendant's responsibility to `show that answers to [the questions] might incriminate him'. . . . This does not mean that the defendant must confess the crime he has sought to conceal by asserting the privilege. The law does not require him 'to prove guilt to avoid admitting it'. . . . But neither does the law permit the defendant to be the final arbiter of his own assertion's validity." United States v. Neff [80-1 USTC ¶9397], 615 F. 2d 1235, 1240 (9th Cir. 1980) (citations omitted). ⁸

The defendant, in the alternative, asserts that the good faith Fifth Amendment privilege instruction in this case was too limited and that the district court erred when it rejected his proposed jury instruction that the jury may consider the defendant's "honest" belief in taking his Fifth Amendment privilege. As it concerns the intent or wilfullness element of a §7203 violation, Green appears to be arguing that the district court should have defined "willful" using "bad faith" or "bad purpose" terminology. However, we do not agree that the defendant's position is a correct statement of the law. "Willful in the tax crime statutes means a voluntary, intentional violation of a known legal duty. . . . The Supreme Court has specifically ruled that no additional good faith defense instruction need be given. United States v. Pomponio, 429 U. S. at 13, 97 S. Ct. at 24." Moore , 627 F. 2d at 833 (citations omitted). Thus, since the Supreme Court's decision in Pomponio and our decision in Moore , the "bad faith" instruction, which the defendant in this case apparently proposes, need not be given by the district court. See also United States v. Koliboski, 732 F. 2d 1328, 1331 n. 2 (7th Cir. 1984). In this case, the district court instructed that before the defendant could be found guilty the government had to prove beyond a reasonable doubt that he had voluntarily and intentionally violated a known legal duty. The district court, in addition to instructing the jury on the interplay of the good faith defense and the Fifth Amendment privilege defense, also instructed that the defendant's conduct was not "willful" if his actions were due to a good faith misunderstanding of the law. These instructions correctly embodied the applicable law when a person is prosecuted for violating §7203; thus we approve of the jury instruction given by the district court.

Here, the government introduced the defendant's tax returns into evidence for the years 1972 through 1974, and also introduced copies of letters from the IRS for the years 1975 through 1978 explaining that his returns failed to meet the legal requirements. Considering that Green never did file proper returns for the years 1975 through 1978, the government more than carried its burden of proof in demonstrating that the defendant voluntarily and intentionally violated a known legal duty even after he had been repeatedly advised. It was then up to the defendant to rebut the government's evidence by demonstrating that he had a legitimate good faith belief that he may have been subject to prosecution if he disclosed the requested tax information. Green, however, failed to present this defense.

Finally, the defendant argues that the district court improperly commented on the evidence in its instruction to the jury when the court explained, using the practice of dentistry as an example, that the Fifth Amendment does not apply to income derived from legitimate activities. As made clear by our decision in Verkuilen, the income derived from legitimate activities does not constitute a valid ground for asserting the Fifth Amendment right against self- incrimination. By way of illustration, and to ensure that the jury properly considered the evidence in this case, the district court properly instructed the jury that if it found that the defendant earned legitimate income from his practice of dentistry, he would not have properly asserted his Fifth Amendment privilege. The district court was correct in instructing the jury in this manner given that invocation of the Fifth Amendment privilege against self-incrimination does not apply to income earned from legitimate activities. Thus, the district court's instruction was proper and did not deprive the defendant of a fair trial.

The decision of the district court is AFFIRMED.

^* The Honorable Rob ert A. Grant, Senior District Judge of the United States District Court for the Northern District of Indiana, is sitting by designation.

¹ 26 U. S. C. §7203 states:

"Any person required under this title to pay any estimated tax or tax, or required by this title or by regulations made under authority thereof to make a return (other than a return required under authority of §6015 or §6016), keep any records, or supply any information, who willfully fails to pay such estimated tax or tax, make such return, keep such records, or supply such information, at the time or times required by law or regulations, shall, in addition to other penalties provided by law, be guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than $10,000, or imprisoned not more than one year, or both, together with the costs of prosecution."

This section was amended in 1982 by Pub. L. 97-248 to increase the maximum penalty to $25,000 ($100,000 for a corporation) and to disallow an action under this section if one who fails to pay an estimated tax is not liable for any further tax under §6654 or §6655. Neither of these amendments affect the outcome of this appeal.

² If a person did not incur any income tax liability for the previous year, he may claim this as an exemption from withholding in the following year. The evidence, however, revealed that Green did in fact incur a federal income tax liability of $2,114.67 for 1974.

³ In the 1975 protest document he stated that he had received only 740 constitutional dollars of silver and/or gold (the requirement for filing at the time was $750.00). In his 1976 protest document he stated "I am not able to get an accurate account of a number of leeches living off of me and I wish to make no false statements so 5th Amend." For his 1978 return, the defendant wrote "object self-incrimination" on each line of his return.

⁴ But whether or not the amount of income was relevant, its admission did not unduly prejudice the defendant's case. The evidence concerning the amount of the defendant's income ranged from approximately $15,000 in 1976 to $21,000 in 1978. The defendant apparently argues that the amounts were introduced in an attempt to unduly sway the jury with the argument that the defendant had gotten away with not paying his fair share of the tax burden that all of us bear. We fail to understand how these amounts would inflame the jury that the defendant had somehow circumvented the system as to not pay his fair share.

⁵ In this case the district court judge asked Green to disclose the information. The defendant does not argue on appeal that it was improper for the district court judge to ask him to disclose this information. However, if he did raise this argument we would hold that this questioning was not improper. It is acceptable for a district court judge to question a witness as long as he does not "communicate a belief in the defendant's guilt to the jury." United States v. Moore [80-2 USTC ¶9627], 627 F. 2d 830, 832 (7th Cir. 1980). In this case the judge's questions were directed to give the jury more information by which to assess the defendant's good faith claim.

⁶ Fed. R. Crim. P. 52(b) provides:

"Plain errors or defects affecting substantial rights may be noticed although they were not brought to the attention of the court."

The Advisory Committee Note interpreting Rule 52(b) provides:

"Rule 27 of the Rules of the Supreme Court, 28 U. S. C. foll. §354, provides that errors not specified will be disregarded, 'save as the court, at its option, may notice a plain error not assigned or specified.'"

⁷ The jury instruction to which the defendant objects is as follows:

"You are instructed that a taxpayer may not avoid filing a required income tax return by claiming his privilege against self-incrimination unless the taxpayer in good faith believes that if he furnishes this information on his tax return that the revelation of such information would subject him to possible prosecution for violation of criminal laws. However, the Fifth Amendment privilege does not give a person the right to withhold the required information on the return concerning items the disclosure of which would not incriminate him.

"Revelation of income from legitimate activities in which no criminal activity was involved would not constitute self-incrimination. For instance, legitimate income from business or the profession of dentistry would not come within the Fifth Amendment privilege as asserted by this defendant.

"In other words, a defendant is required to have a good faith belief that revealing his income would, in fact, violate other criminal laws before he could lawfully rely on a Fifth Amendment privilege not to incriminate himself."

⁸ Similar claims made by other defendants have been rejected time and gain by the circuit courts. See, e.g., Steinbrecher v. C. I. R. [83-2 USTC ¶9531], 712 F. 2d 195 (5th Cir. 1983); Lukovsky v. C. I. R. [82-2 USTC ¶9704], 692 F. 2d 527 (8th Cir. 1982).

 

 

[84-2 USTC ¶9948] United States of America , Appellee v. George Keith Garman, Appellant

(CA-4), U. S. Court of Appeals, 4th Circuit, No. 83-5014, 748 F2d 218, 11/19/84 , Affirming unreported District Court case

[Code Secs. 6091 and 7203]

Crimes: Returns: Failure to file return: Place for filing returns: Venue.--The Court of Appeals held that the taxpayer, who was convicted for the willful failure to file federal income tax returns, was properly tried in the district of his residence. By looking to the legislative history and by reading the regulations of Code Sec. 6091, the court concluded that venue was proper in either the district of residence or the district where the service center was located. The taxpayer's motion to dismiss for improper venue was properly denied by the District Court because 18 U. S. C. §3237(a) provides that a crime committed in more than one district could be prosecuted in any district in which it was begun, continued, or completed, and the filing of such return was required in either district.

[Code Sec. 7203]

Crimes: Failure to file return: Evidence: Constitutional grounds: Instructions to jury.--The taxpayer, who was convicted of the willful failure to file federal income tax returns, was not denied his Fifth and Sixth Amendment rights when the District Court refused his request for a continuance. Because the taxpayer's proffered evidence was not of sufficient significance, the Court of Appeals concluded that the District Court did not abuse its discretion in denying the continuance and the taxpayer's right to present his entire defense was not violated. Therefore, no reversible error occurred when the District Court refused to grant a continuance to allow the taxpayer's witnesses to testify. Furthermore, the additional instruction given to the jury concerning the question of willfulness was a proper instruction and a correct statement of law. The court found that there was evidence of procrastination, and, whether the taxpayer intended to rely upon it or not, the IRS was entitled to have the jury told that procrastination was no defense.

J. Frederick Motz, United States Attorney, Glenda G. Gordon, Max H. Lauten, Assistant United States Attorneys, Baltimore, Md. 21201, for appellee. Paula M. Junghans, Ronald B. Rubin, Garbis & Schwait, 1001 Keyser Building, Baltimore, Md. 21202, for appellant.

Before WINTER, Chief Judge, SPROUSE, Circuit Judge, and HAYNSWORTH, Senior Circuit Judge.

WINTER, Chief Judge:

Defendant was convicted of the willful failure to file federal income tax returns for the years 1977-79 in violation of 26 U. S. C. §7203, and he appeals. He contends that he was improperly tried in the District of Maryland, that he was deprived of his rights under the Fifth and Sixth Amendments when he was denied a continuance in order to present additional witnesses, and that there was error in the district court's jury instructions.

We see no merit in any of these contentions, and we therefore affirm.

I.

Defendant resides in Baldwin , Maryland , and Maryland is within the internal revenue district which has a service center in Philadelphia , Pennsylvania . Defendant argues that the district court erred in denying his pretrial motion to dismiss for improper venue because the criminal act charged, the willful failure to file income tax returns, occurred in the Eastern District of Pennsylvania and not in the District of Maryland, where defendant was tried and convicted. Defendant relies on the well-established rule that when a crime consists of a failure to act, the place fixed for performance of the act is the proper venue. See, e.g., United States v. Rice, [81-2 USTC ¶9718], 659 F. 2d 524, 526 (5 Cir. 1981); Bowles v. United States, 73 F. 2d 772, 774 (4 Cir. 1934).

The places for filing non-corporate income tax returns are fixed by 26 U. S. C. §6091(b)(1)(A), which provides that returns shall be made "(i) in the internal revenue district in which is located the legal residence . . . of the person making the return, or (ii) at a service center serving the internal revenue district referred to in clause (i)." The statute also authorizes the Secretary by regulations to designate the place of filing.

The Secretary has adopted regulations governing the place for filing income tax returns. 26 C. F. R. §§ 1.6091-1 et seq. The pertinent portion (§1.6091-2) is set forth in the margin. ¹ While the regulations seem unnecessarily obscure, we do read them to establish alternative places for filing individual tax returns: the internal revenue district where the taxpayer resides if the return is hand-carried, or the service center serving the internal revenue district where the taxpayer resides if the return is mailed. ² Thus we read the regulations adopted pursuant to §6091 to prescribe two places of filing.

This reading of the regulations is consistent with the legislative history of the 1966 amendment to §6091, which first authorized filing at a service center as an alternative and addition to the pre-existing requirement of filing within the district of residence. The purpose of the amendment, which authorized filing at places where the Internal Revenue Service had recently installed automatic data processing equipment, was to maximize use of such equipment and to speed the processing of returns and payment of tax refunds.

The Senate Report on this amendment specifically discusses venue in cases of willful failure to file under §6091 as amended. The Report concluded that venue is proper in either the district of residence or the district where the service center is located. ³ Indeed, in connection with the amendment of §6091, Congress thought it appropriate to amend 18 U. S. C. §3237 to provide that an individual prosecuted for willful failure to file in a district other than that of his residence has the right to have the case transferred to the district of his residence. ⁴

We conclude that filing was required in either the District of Maryland or the Eastern District of Pennsylvania, and therefore defendant's willful failure to file was a crime committed in more than one district. Since 18 U. S. C. §3237(a) provides that a crime committed in more than one district may be prosecuted in any district in which it was "begun, continued, or completed," the District of Maryland had venue here. ⁵

II.

We turn next to the contention that the district court's denial of a continuance denied defendant his constitutional rights and constituted reversible error.

Defendant's trial began on November 22, 1982 , the Monday before Thanksgiving. The trial was not protracted because the sole contested issue was whether the failure to file was willful. At the end of the first day of trial the government reported that it had one more witness for its case in chief. The district court then told defense counsel to have her witnesses ready for the next day; defense counsel agreed with the district court that it was highly probable the case might conclude on Wednesday; and the district court advised counsel that it would sit later than usual on Tuesday.

On Tuesday, the second day of trial, the government completed its case before the midmorning recess. Defense counsel, in response to an inquiry from the district court, said that she planned to present two witnesses before lunch and two, including the defendant, after lunch. After the lunch recess, however, defense counsel reported that she intended to call three more witnesses on Wednesday. The district court reminded her that the court planned to sit late, and told her she should get her witnesses there that day because the taking of evidence would end once there was nothing more to present. ⁶

Late in the afternoon, after presenting all available witnesses, defense counsel stated her desire to call Constantino Bakas and Charles Brooks as witnesses on Wednesday. The district court reminded her of its concern about the approaching Thanksgiving holiday and its desire to complete the case on Wednesday, pointing out that counsel had not earlier reported that Mr. Brooks could not be available on Tuesday. At the district court's suggestion, some of the evidence sought to be proven was stipulated, and certain legal documents were admitted into evidence. The government then presented its one available rebuttal witness, though it represented that it might have as many as five if the taking of evidence was extended into Wednesday. The taking of evidence concluded and the district court adjourned at about 5:30 p. m.

The government argues that the proposed additional evidence was only cumulative of what was already before the jury, and that the district court could therefore exclude the testimony under Federal Evidence Rule 403 because its probative value was substantially outweighed by "considerations of undue delay, waste of time, or needless presentation of cumulative evidence." As a technical matter we doubt that Rule 403 is applicable when the district court did not purport to exclude evidence under Rule 403, but instead denied a continuance so that the witnesses were not even called. Rather, it seems to us that the issue is whether the district court abused its discretion in denying a continuance. See Ungar v. Sarafite, 376 U. S. 575, 589 (1964). As a practical matter, what we must decide is the same under either test--was defendant foreclosed from presenting his complete defense by the district court's limitation on the taking of evidence? The question is largely a factual one, and it is to the facts that we turn.

The government amply proved for the years in question that defendant earned taxable income and that he failed to file income tax returns. The government showed that defendant's unpaid tax liability for the years in question was $28,700. Defendant himself conceded that for each of the years he knew that he was supposed to file tax returns, so the only contested issue for the jury was whether defendant's failure to file was willful.

The government proved that in 1978 defendant hired an accountant, Leonard Miller, to prepare defendant's 1977 tax return. Miller obtained three extensions for filing the return, and finally quit in January 1979 because defendant failed to provide him with sufficient information to prepare the return. There was evidence that during this same period defendant hired another accountant, Sylvan Offit, to prepare a personal net worth statement for use in refinancing some properties owned by defendant, and that defendant furnished the necessary data fast enough for the statement to be prepared within three weeks.

In 1978 defendant worked for JCB, Inc. and then for American Liner Corporation. While at American Liner he had Jerome Lichter, an accountant who worked there, obtain two extensions of time to file his 1978 return, but Lichter could not prepare the return because defendant enver furnished the necessary information. Defendant then asked Charles Decker, a bookkeeper for American Liner, to prepare his 1977 and 1978 returns, but Decker could not do so with the information defendant supplied.

Defendant next sought help from Rob ert Thompson, an accountant, but Thompson could not get the files necessary to prepare a return. Finally, in April 1980, defendant went to Joseph Tarr and Mark Finley, who procured two extensions of time for filing the 1979 return. By December 1980, however, defendant had not paid their fee so they did not complete the return.

The IRS special agent who investigated defendant's case testified that when he interviewed defendant, the latter agreed to discuss his tax affairs. Defendant admitted that he had not filed returns and he took the agent to the office of Constantino Bakas (his attorney) and then to the office of his accountant, telling both to give the special agent whatever information he requested.

Garman's defense was that he did not act willfully because he thought that as a result of casualty and other losses he owed little if any tax, and he had made good faith attempts to have returns prepared and filed. He showed that he was evicted from his home in January 1976 while he was away, and that when he returned, his tools, machinery, furniture and personal records were gone. Litigation ensued and defendant eventually won the right to buy the property, but it was in very damaged condition when he regained possession. He estimated his losses from the eviction were $100,000 and damage to the property approximately $20,000.

It was part of the government's proof that when defendant worked for American Liner, his annual salary was $104,000 but that no taxes were withheld because first he was treated as an independent contractor and then he claimed 102 exemptions. Defendant testified that he wanted to avoid withholding because of his substantial losses and that the number of exemptions claimed was fixed by employees of American Liner and not by him.

Against this factual background, defendant's counsel made the proffer set forth below. ⁷ Following the proffer, the district court received into evidence documentary evidence and stipulations to establish that defendant had filed suits (a) in 1976 regarding the eviction from his home, (b) in 1976 regarding damage to his property after his eviction, (c) in 1976 regarding an insurance claim for a stolen pump, and (d) in 1975 and 1976 regarding some cattle.

We do not think that the proffered evidence was of sufficient significance that we could conclude that the district court abused its discretion in denying the continuance or that defendant's right to present his entire defense was violated. There is nothing new in what defendant sought to present through the two witnesses. The fact that defendant, during his absence, was evicted from his home, lost property before he returned, sued to regain the right to occupy the property and regained it only in damaged condition, was amply proven. The fact that there was no withholding on defendant's salary from American Liner was not questioned and the reason for nonwithholding, that defendant claimed he had offsetting losses, was proven. Mr. Brooks' proffered testimony that he took part in the decision to withhold taxes would have added nothing because this advice was based, as defendant himself admitted, on his claim of offsetting losses. The validity of this claim could not be established through Mr. Brooks; it could only be proven from other sources.

Similarly, we think that the testimony of Mr. Bakas was of little significance. Documentary evidence already proved that there was litigation over cattle. Three witnesses--the defendant, the IRS agent, and an accountant--already proved that the defendant told Bakas to cooperate with the agent's investigation. Clearly, testimony from Bakas on these matters would be cumulative.

We therefore conclude that there was no reversible error in the district court's refusal to continue the taking of evidence to permit these witnesses to testify.

III

In instructing the jury on the question of willfulness, the district court gave the standard instruction, but, at the government's request, added:

A failure to file a tax return may be willful even if it is the result of procrastination, unless you find that such failure was accidental, inadvertent or negligent.

Defendant contends that the addition constituted reversible error because (a) it was an "unnecessary embellishment" that made the jury believe defendant was arguing procrastination as a defense, and (b) it may have led the jury to believe that the burden was on defendant, upon proof by the government of procrastination, to show that his conduct was not willful. We are not persuaded by either argument.

Giving the additional instruction was proper. It was a correct statement of the law. See United States v. Browney [70-1 USTC ¶9154], 421 F. 2d 48, 50 (4 Cir. 1970). In this case there was evidence of procrastination and, whether defendant intended to rely upon it or not, the government was entitled to have the jury told that procrastination was no defense. We do not read the additional instruction as purporting to shift the burden of proof. ⁸ Nor do we find any such implied meaning. The phrase "unless you find", read in context, was plainly meant only to distinguish procrastination from accidental, inadvertent or negligent conduct.

AFFIRMED.

¹ §1.6091-2 Place for filing income tax returns.

Except as provided in §1.6091-3 (relating to income tax returns required to be filed with the Director of International Operations) and §1.6091-4 (relating to exceptional cases):

(a) Individual estates, and trusts.

(1) Except as provided in paragraph (c) of this section, income tax returns of individuals, estates and trusts shall be filed with the district director for the internal revenue district in which is located the legal residence or principal place of business of the person required to make the return, or, if such person has no legal residence or principal place of business in any internal revenue district, with the District Director at Baltimore, Md. 21202.

(2) An individual employed on a salary or commission basis who is not also engaged in conducting a commercial or professional enterprise for profit on his own account does not have a "principal place of business" within the meaning of this section.

(b) Corporations. Except as provided in paragraph (c) of this section, income tax returns of corporations shall be filed with the district director for the internal revenue district in which is located the principal place of business or principal office or agency of the corporation.

(c) Returns filed with service centers. Notwithstanding paragraphs (a) and (b) of this section, whenever instructions applicable to income tax returns provide that the returns be filed with a service center, the returns must be so filed in accordance with the instructions.

(d) Hand-carried returns. Notwithstanding paragraphs (1) and (2) of section 6091(b) and paragraph (c) of this section:

(1) Persons other than corporations. Returns of persons other than corporations which are filed by hand carrying shall be filed with the district director (or with any person assigned the admin istrative supervision of an area, zone or local office constituting a permanent post of duty within the internal revenue district of such director) as provided in paragraph (a) of this section.

² We distill this from the following reading of the regulation:

Paragraph (a) says that, except as provided in paragraph (c), returns shall be filed in the district of residence. Paragraph (c) says that returns shall be filed with the service center serving the district of residence, but paragraph (d) says that notwithstanding the provisions of paragraph (c), hand-carried returns of persons other than corporations shall be filed in the district of residence.

³ Senate Report No. 1625, 89th Cong., 2nd Sess. (1966), reprinted in U. S. Code Cong. & Ad. News 3676, 3680-81. The pertinent language of the report follows:

Present law provides that the willful failure to file a tax return is a misdemeanor. For purposes of determining where a prosecution of this offense is to occur, present case law holds that the venue is to be in the judicial district in which the return was required to be filed.

Under the bill, taxpayers are required to file returns in either of two judicial districts in the majority of cases. If they choose to mail their return, regulations may require that they be filed in the judicial district in which their service center is located. If they choose to file their return in person, by hand-carrying, they are required to file it at their district director's office. In most cases, the service center and the district office will be located in different judicial districts. Since venue for a willful failure to file prosecution lies in either district, the Government under the bill could bring the prosecution in either district. (footnote omitted).

⁴ The discussion of the Report on the amendment to §3237 follows:

Your committee agrees with the Committee on Ways and Means that a prosecution for willful failure to file a return should be brought as close to the defendant's residence as possible in order to avoid hardship to him, his attorneys, and witnesses. In this regard, it is this committee's understanding that the Government in practice will bring prosecutions for willful failure to file returns in the judicial district where the taxpayer resides (or the closest district possible). However, to be sure that the taxpayer has the right to be tried in the district in which he resides, the bill amends present law to provide that he may elect to remove his trial to the judicial district of his residence.

⁵ We cannot refrain from calling attention to the anomalous result which would flow from adopting defendant's contention that venue was solely in the Eastern District of Pennsylvania, because defendant, under the provisions of §3237(b), would have the absolute right to have his case transferred to the District of Maryland. If Maryland would not have venue in the first instance, it is difficult to understand why a transfer to Maryland would be authorized as a matter of right.

⁶ Counsel was assisted at the trial by another lawyer who was free to leave the courtroom and communicate with the proposed witnesses.

⁷ MS. JUNGHANS: We proffer that Mr. Brooks is an attorney who was Mr. Garman's attorney prior to the formation of American Liner, who handled some of the litigation connected with the events of the eviction and regaining the property in Baldwin , Maryland .

He would testify also to the fact that Mr. Garman was considered an independent contractor with American Liner and that there was--that Mr. Brooks participated in the decision that it was appropriate not to have withholding from Mr. Garman's salary.

Mr. Bakas would testify as to some of the litigation he handled for Mr. Garman with respect to cattle, also being involved in some of the litigation with respect to the property and the regaining of the property in Baldwin , Maryland .

Mr. Bakas would also testify as to being visited by Special Agent Schmoll in the company of Mr. Garman and instructions he was given by Mr. Garman with respect to the cooperation with the Internal Revenue Service.

⁸ Defendant lodged no objection to the instruction on this ground before the district court, so that our review is limited to a determination of whether there was plain error.

 

 

[84-2 USTC ¶10,007] United States of America , Plaintiff v. Rob ert Anthony Bowden, Defendant

U. S. District Court, Mid. Dist. Tenn., Columbia Div., Criminal Action No. 82-10012, 1/19/83 , 597 F. Supp. 337

[Code Sec. 7201]

Crimes: Tax evasion: Constitutional violations.--The taxpayer's motion to suppress evidence was summarily denied and his attorney reprimanded because there was not any evidence to indicate that the taxpayer's right to silence had been infringed.

[Code Sec. 7201]

Crimes: Tax evasion: Jury trial: Jury instructions: Cross-examination: Closing argument.--In denying the taxpayer's motion for a new trial, the court ruled that there was sufficient evidence of the taxpayer's failure to report income to warrant taking the case to the jury. The court also ruled that the taxpayer's counsel was not unduly restricted in cross-examination. Further, the court did not err when it restricted the taxpayer's counsel from arguing the law during his closing argument. Finally, the judge's failure to give defense counsel's tendered instruction was not error because the instruction dealt with failure to file returns and was irrelevant to the facts of the case. The instructions that were tendered were held to be clear and comprehensive.

Jim Thomason, Assistant United States Attorney, Nashville , Tenn. 37203 , for plaintiff. Bob Lynch, Third National Bank Bldg., Nashville , Tenn. 37219 , for defendant.

Memorandum Opinion

NEESE, Senior Judge:

Among the 14 or so pretrial motions interposed by the defendant Mr. Rob ert Anthony Bowden herein was a motion "* * * to suppress certain statements made by him during the [g]overnment's investigation of this case for the reason that these statements were taken in violation of [d]efendant's Fifth Amendment [constitutional] right to remain silent. In addition, [d]efendant move[d] to suppress all evidence obtained by the [g]overnment as a result of statements given the [g]overnment [sic] by [d]efendant. * * *" Rules 12(b)(3), 41(f), F. R. Crim. P. An evidentiary hearing was conducted December 6, 1982 in the hope it would enable the Court to rule thereon. Rule 12(e), F. R. Crim. P.

The Court inquired of defense counsel at the outset thereof regarding the specifics of the claimed constitutional violation and received no satisfactory explanation; while asserting that his purpose was not that of mere discovery, counsel for the defendant inisted that he was entitled to a hearing on the issue of the voluntariness of Mr. Bowden's "confession" under 18 U. S. C. §3501(a). The prosecuting attorney represented he would offer the statements thus obtained from the defendant, not as his confession, but as incriminating out-of-court admissions. ¹

The Court heard all the evidence offered, which consisted of the testimony of Mr. Fred Moore, Jr., a special agent of the Internal Revenue Service (IRS), criminal division, and that of Mr. W. C. Barron, a certified public accountant who, at all or some of the pertinent times, served Mr. Bowden relative to accounting matters. There being not the slightest indicia whatever of any infringement of the defendant's right of silence by the IRS agents or others, the motion was summarily

Overruled, denied and stricken.

The Court was disturbed by the ostensible fact that defense counsel may have advanced that motion as a defense which was unwarranted under existing law (noting judicially that such attorney is a former assistant United States attorney of this District); he asserted no claim such a defense could be supported by any good-faith argument for some extension, modification, or reversal of existing law. Cf. Code of Professional Responsibility, DR 7-102(2). Mr. Bob Lynch, Jr. (such defense attorney) was unable to point to any matter in evidence on the hearing which suggested an inference of coercion to any degree of Mr. Bowden by IRS agents or others with reference to his client's right of silence.

The purported admissions were obtained from Mr. Bowden in a series of four interviews, the latter three of which had been arranged through his former attorney who was in attendance at all times. Two of the interviews actually took place in the office of such former attorney. The singular complaint by Mr. Lynch, Esq. was that the first interview of his client occurred so "early in the morning * * *"; the evidence was uncontradicted that such interview began about 10:30 o'clock, a. m., and continued until 2:00 or 2:30 o'clock, p. m., on September 24, 1980 . Although urged insistently by the Court to advance an argu#a ment warrantable under existing law, Mr. Lynch, Esq. could not--or, certainly, did not--do so.

The existing law of self-incrimination appears to be well-settled and well-known; as the Chief Justice exemplified it fairly recently, as follows:

* * * [T]he Fifth Amendment * * * does not automatically preclude self-incrimination, whether spontaneous or in response to questions put by government officials. "It does not preclude a witness from testifying voluntarily in matters which may incriminate him," * * * for "those competent and freewilled to do so may give evidence against the whole world, themselves included."

* * * Indeed, far from being prohibited by the Constitution, admissions of guilt by wrongdoers, if not coerced, are inherently desirable. In addition to guaranteeing the right to remain silent unless immunity is granted, the Fifth Amendment proscribes only self-incrimination obtained by a "genuine compulsion of testimony." * * * Absent some officially coerced self-acusation, the Fifth Amendment privilege is not violated by even the most damning admissions. Accordingly, unless the record reveals some compulsion, respondent's [the defendant's] incriminating testimony cannot conflict with any constitutional guarantees of the privilege.

* * *

* * * The constitutional guarantee is only that the witness be not compelled [as in original] to give self-incriminating testimony. The test is, considering the totality of the circumstances, whether the free will of the witness was overborne. * * * [Citations and footnote reference omitted.] * * *

United States v. Washington , 431 U. S. 181, 186-188, 97 S. Ct. 1814, 1818-1819 [3], [4], 52 L. Ed. 2d 238 (1977).

There was not one word, syllable, letter, or sign in the evidence adduced at the hearing of any circumstance whatever by means of which Mr. Bowden's free will was overborne!

It is likewise well known that, ordinarily, the mere holding of an interview does not require the giving of the warnings required by Miranda v. Arizona, 384 U. S. 436, 86 S. Ct. 1602, 16 L. Ed. 2d 694 (1966) (cited by the defendant herein); such warnings are necessary only where the taxpayer is in "custody" of the IRS agents, i.e., where there is a significant restraint on his or her bodily freedom. Beckwith v. United States [76-1 USTC ¶9352], 425 U. S. 341, 96 S. Ct. 229, 234[1], 48 L. Ed. 2d 1 (1976); United States v. Nuth [79-2 USTC ¶13,314], 605 F. 2d 229, 234[1] (6th Cir. 1979). "* * * It may happen that a person makes statements to law enforcement officials that he later regrets, but the issue in such cases is not whether the statement was self-protective, but rather whether it was made voluntarily * * *," United States v. Mendenhall, 446 U. S. 544, 555-556, 100 S. Ct. 1870, 64 L. Ed. 2d 497, 510 (1980), reh. den. 448 U. S. 908, 100 S. Ct. 3051, 65 L. Ed. 2d 1138 (1980); "* * * 'Any statement given freely and voluntarily without any compelling influences is, ² of course, admissible in evidence.' * * * "Rhode Island v. Innis, 446 U. S. 291, 299-300, 100 S. Ct. 1682, 64 L. Ed. 2d 297, 307[3], (1980), quoting from Miranda v. Arizona, supra, 384 U. S. at 478, 86 S. Ct. at 1602.

Our local Rule 8(a)(1) required that the motion of the defendant for a suppression of evidence "* * * be signed as required by Rule 11 of the Federal Rules of Civil Procedure * * *." Mr. Lynch, Esq. signed that motion as the trial attorney for the defendant: "* * * The signature of an attorney constitutes a certificate by him that he has read the pleading; [and] that to the best of his knowledge, information, and belief there is good ground to support it * * *." Rule 11, F. R. Civ. P. "* * * The effect of Rule 11 is to place a moral obligation upon the attorney to satisfy himself that there are good grounds for the action or defense. However, the cases do not make it clear to what extent an attorney must investigate his client's case prior to signing. Questions concerning an attorney's good faith arise infrequently. * * *

"* * * Rule 11 does provide a positive standard of conduct against which to measure an attorney's behavior. For those lawyers who need reminding, this rule is intended to minimize tendencies toward untruthfulness in pressing a client's suit [or, here, defense] [footnote references omitted]. * * *" 5 Wright & Miller 499-500: Civil §1333.

Until Mr. Lynch, Esq., an officer of this Court, gave in open court his assurance of his belief that the suppression defense of Mr. Bowden was warranted by his (the attorney's) initial consideration of the circumstances surrounding the obtaining of his admissions, the Court would have proceeded without hesitation to have invoked appropriate sanctions. It is trusted that neither Mr. Lynch, Esq. nor another nor others will need further reminder of what to expect if there is repetition of ostensibly frivolous motions which waste judicial time and energy with no gain to anyone implicated.

¹ Of course, the term "confession" "* * * means any confession of guilt of any criminal offense or any self-incriminating statement made or given orally or in writing." 18 U. S. C. §3501(e).

² "In the absence of a clear showing that the taxpayer has been tricked or deceived by the government agents into providing incriminating information, the documents and statements obtained by the Internal Revenue agents are admissible * * *." United States v. Allen, 522 F. 2d 1229, 1233[6] (6th Cir. 1975).

Memorandum Opinion and Order

The defendant Mr. Rob ert Anthony Bowden made timely a motion for a new trial, Rule 33, F. R. Crim. P., or, in the alternative, for entry of a judgment of acquittal as to count three of the indictment herein, Rule 29(c), F. R. Crim, P. The motion has no merit in either alternative.

Four of the grounds of the former motion relate to the sufficiency of the evidence to support the submission of the case to the jury and the conviction of Mr. Bowden on such count. As did the defendant by brief, the Court considers such grounds together.

I

The jury found obviously beyond a reasonable doubt under the Court's instructions that the defendant and his (then) wife, residents of Lewisburg, Tennessee, caused to be prepared, signed and mailed or caused to be mailed on April 16, 1979 in this District, a report to the Internal Revenue Service that their joint taxable income for the calendar-tax year, 1978, was $35,908.23 and that due and owing thereon was tax of $7,317.44; that the defendant Mr. Bowden, in so doing, wilfully and knowingly attempted to evade and defeat $3,073.60 of the income tax due and owing by them for that period by filing an income tax return which was false and fraudulent, because he well knew his and his wife's joint taxable income in that period was $42,138.03 on which they owed an income tax which was $3,073.60 more than they reported and paid; and, thus, that the defendant Mr. Bowden was guilty as charged in count 3 of the indictment of September 8, 1982 herein of violating the provisions of 26 U. S. C. §7201.

The prosecution claimed that Mr. and Mrs. Bowden had additional and other specific items of reportable income derived from the source of checks which they did not report and which resulted in their understating their true taxable income for 1978. The jury was instructed inter alia:

In arriving at the taxable income of an individual, upon which a tax is to be imposed, the first step is to make a determination of "gross income." Gross income means all income from whatever source derived, including (but not limited to). * * * gross income derived from business * * *.

From that gross income is subtracted: such deductions as the law may allow, such as all ordinary and necessary expenses paid during the year in carrying on a trade or business * * *.

The amount remaining is called "adjusted gross income," from which the taxpayer is permitted to deduct the standard deduction fixed by law, or such itemized deductions [allowed by law]. * * * Finally, then, the taxpayer is allowed to deduct a specified amount for each qualified exemption.

The resulting figure is termed "taxable income," which is the sum to which the progressive tax rate is applied in order to determine the amount of the income tax.

(See 26 U. S. C. §§ 61, et seq.)

The evidence reflected that Mr. Bowden took care to advise his accountant of all his ordinary and necessary business expenses he paid during that year, but he withheld from this professional person certain specific items of gross income derived from his business; thus his expenses reduced further the taxable income he did report.

There was evidence admitted from which the jury might have found by reasonable inference additional income derived in 1978 by the defendant from the following respective sources in the following respective amounts:

date                                                                        source                 amount

August 18, 1978
            Bill Jordan Scrap Dealer, Inc. ........................       [TEH] 2 $ 240.63

August 24, 1978
            Bill Jordan Scrap Dealer, Inc. ........................               3 418.22

September 28, 1978
         Heil-Quaker Corporation ...............................             4 3,375.00

September 28, 1978
         United States Treasury (Agric Armis 54-6395, etc.) ....               5 384.40

December 10, 1978
          Walker Die-Casting, Inc. ..............................             6 1,811.55

                           totaling in the aggregate the sum of ..................            7 $6,229.80

There was also evidence admitted from which the jury might have found beyond a reasonable doubt under such instructions by reasonable inference that the defendant Mr. Bowden, by receiving and not reporting the receipt of the foregoing specific items of reportable income derived from those sources, attempted wilfully to evade or defeat a substantial amount of the tax imposed by title 26, U. S. C., and payment thereof. There was undisputed evidence in addition that Mr. and Mrs. Bowden's tax, and the additional income thus derived been reported timely, would have been $3,073.60 more than they reported and paid.

Mr. Bowden continues to argue that the variance between the amount of additional tax charged in count three of the indictment to have been due ($6,128.07) and the amount shown by the proof at trial ($3,073.60) precludes his conviction under that count. It was not necessary for the proof to have shown an attempted evasion by Mr. Bowden of the exact amount of tax alleged in the indictment so long as it demonstrated an attempt to evade a substantial amount of tax. United States v. Warden [76-2 USTC ¶9790], 545 F. 2d 32, 36[4] (7th Cir. 1976); United States v. Parr [75-1 USTC ¶9349], 509 F. 2d 1381, 1385-1386[9] (5th Cir. 1975); United States v. Rischard [73-1 USTC ¶9151], 471 F. 2d 105, 108[5] (8th Cir. 1973); United States v. Cole [73-1 USTC ¶9206], 463 F. 2d 163, 167[2] (2d Cir. 1972), cert. den., 409 U. S. 942, 93 S. Ct. 238, 34 L. Ed. 2d 193 (1972).

By its verdict, the jury found the sum of $3,073.60 to have been substantial. The Court is convinced there was no fatal variance between the charge in count three and the proof, and that there was no likelihood that Mr. Bowden was convicted of an offense other than that charged by the grand jury. Cf. United States v. Beeler, 587 F. 2d 340, 342 (6th Cir. 1978), cert. den., -- U. S. --, 102 S. Ct. 315, -- L. Ed. 2d -- (1981).

II

The defendant moved for a mistrial and claims error now on the ground inter alia that the Court has interrupted the cross-examination of the summary witness, Revenue Agent Ackersly, after such examination had resulted in the disclosure of numerous instances of conceded errors therein until a summary chart exhibited could be readjusted by the witness to reflect more accurately the claims of the prosecution of the defendant's culpability; that, after such corrections, the Court permitted the attorney for the prosecution to "re-direct" the witness thereon; and that he was prejudiced by this procedure.

The Court allowed the prosecution to present the tax agent as its last witness, to assist the jury in understanding the tax implications of the testimony its members had heard from the various witnesses and of the documentary evidence such members had reviewed: all to the end of making the case as clear as possible to the jury. See United States v. Enoch, 650 F. 2d 115, 117[3] (6th Cir. 1981) ("It is the district court's duty to see that the evidence is clear and understood.") Cf. also United States v. Stirone, 311 F. 2d 277, 279-280[3] (3d Cir. 1962) and authorities there collected (The judge should see to it that evidence helpful to an intelligent understanding of the issues is before the jury "to aid it in its deliberations.") As stated, the cross-examiner was able to elicit from this witness admissions of errors in the summary chart he had prepared and concessions that certain items included thereon "should not have been included."

The Court refrained from any intercession in the proceedings until it was felt that the cross-examiner had had ample opportunity to gain for his client whatever favorable effect such admissions and concessions of incorrectness produced, recognizing the right of the defendant to cross-examine any witness offered against him. Davis v. Alaska , 415 U. S. 308, 316, 94 S. Ct. 1105, 1110[2], 39 L. Ed. 2d 347 (1974). At long last, however, it was the feeling of the Court that the witness, testifying from an error-wracked summary was confusing, rather than clarifying, for the jury and interceded, in the exercise of judicial discretion, in the effort to inspire corrected testimony and chart. Alford v. United States, 282 U. S. 687, 694, 51 S. Ct. 218, 220[5], 75 L. Ed. 624 (1931) (The trial court may exercise reasonable discretionary judgment with respect to cross-examination); see also United States v. Daniels, 528 F. 2d 705, 709[9] (6th Cir. 1976).

When the second re-direct examination of the tax expert had been concluded, the Court allowed defense counsel full and untrammeled cross-examination of such witness, irrespective of whether such queries encompassed matters developed on the first-or the second-direct examination. There was no prejudice to the defendant in this procedural handling, and his motion for a mistrial lacked merit and was overruled properly; the defendant is not entitled to a new trial on this ground.

III

The defendant objected to, and now assigns as error, the Court's restriction of counsel's final arguments to a review and discussion of the evidence. Patently, it would have been reversible error per se to have denied him an opportunity to make any closing argument at all, Herring v. New York , 422 U. S. 853, 858, 95 S. Ct. 2550, 2553, 45 L. Ed. 2d 593 (1975).

"* * * This is not to say that closing arguments in a criminal case must be uncontrolled or even unrestrained. The presiding judge must be and is given great latitude in controlling the duration and limiting the scope of closing summations. [Emphasis added by this writer.] * * * [H]e must have broad discretion. * * *" Ib., 422 U. S. at 862, 95 S. Ct. at 2555[2]. "* * * [T]he adversary fact finding process * * *" is the crux "* * * in a criminal trial. * * *" Ib., 422 U. S. at 858, 95 S. Ct. at 2553. Since the reforms in procedure from the 16th and 17th centuries, the effect has been "* * * of shifting the primary function of argument to summation of the evidence at the close of trial * * *." Ib., 422 U. S. at 861, 95 S. Ct. at 2255; accord: United States v. Morris, 568 F. 2d 396, 401[6] (5th Cir. 1978) ("The purpose of summations is for the attorneys to assist the jury in analyzing, evaluating, and applying the evidence [as in original]. It is not for the purpose of permitting counsel to 'testify' as an 'expert witness'.")

"It can hardly be questioned that closing argument serves to sharpen and clarify the issues for resolution by the trier[s] of fact in a criminal case. * * * [C]ounsel fro the parties * * * then can argue the inferences to be drawn from all the testimony * * *." Herring v. New York, supra, 422 U. S. at 862, 95 S. Ct. at 2555. "* * * [A] criminal trial * * * is in the end basically a factfinding process * * *." Id.

But, if the presiding judge permits counsel to "argue the law" in closing summations, the danger is ever present that the jurors will hear from counsel one version or two or more versions of "what the law is" and yet another version from the trial judge. "* * * In a trial by jury in a federal count, the judge is not a mere moderator, but is the governor of the trial for the purpose of assuring its proper conduct and of determining questions of law [emphases added by this writer] * * *," Quercia v. United States, 289 U. S. 466, 469, 53 S. Ct. 698, 698-699[1], 77 L. Ed. 1321 (1933); and "* * * it is the duty of juries in criminal cases to take the law from the court * * *." Sparf and Hanson v. United States, 156 U. S. 51, 102, 15 S. Ct. 273, 293, 39 L. Ed. 343 (1895) ("[I]t cannot be regarded as the right of counsel to dispute before the jury the law as declared by the court"); accord: United States v. Parr-Pla, 549 F. 2d 660, 662[2] (9th Cir. 1977), cert. den., 431 U. S. 972, 97 S. Ct. 2935, 53 L. Ed. 2d 1069 (1977) (It is the duty of the court, not counsel, to advise the jury as to the law.")

As the sole expounder to the jury of the applicable law, the undersigned judge and his supporting personnel have long undertaken to determine such applicability; to prepare accurately and completely as the progress of the proceedings permits what appears to be an understandable version of it; to recheck the end product against any special requests for instructions to the jury from all parties litigant. Rule 30, Federal Rules of Criminal Procedure; and, after all the evidence has been heard and seen and reviewed and discussed by adversary counsel, to give the jury fairly in one voice at one sitting all the law they will utilize in making all their decisions. This serves to minimize the prospect that a juror may be confused as to "what the law is" or how that juror is to go about performing properly the fact finding function.

"* * * Because it is the Court's function and duty to instruct the jury on the controlling law [it is] the better practice * * *, of course, * * * that any arguments of this type be limited solely toward demonstrating how the evidence, or reasonable inferences therefrom, conform to the law. * * *" United States v. Hayes, 479 F. Supp. 901, 919[29] (D. Puerto Rico 1979), aff'd in part, rev'd in part, 653 F. 2d 8 (1st Cir. 1981). If the Court were to permit counsel to argue the law to the jury, the chance is not insubstantial that counsel may misstate the law and cause prejudicial error. See e.g., United States v. Segna, 555 F. 2d 226, 230-232 (9th Cir. 1977), and Graham v. United States, 257 F. 2d 724, 729-730[14] (6th Cir. 1958) (it is error for the court to allow the prosecuting attorney to misstate the law in argument to the jury).

This ground of the motion is wholly meritless and approximates impropriety in being thus advanced.

IV

Mr. Bowden asserts error on the part of the Court in its instructions to the jury. He complains initially that the Court failed to include in its charge to the jury the following language, which was contained in his special request no. 4:

On the other hand, the defendant's conduct is not willful if you find that he failed to file a return [emphasis provided here] because of negligence, inadvertence, accident or reckless disregard for the requirements of the law, or due to his good faith misunderstanding of the requirements of the law.

While this was probably an accurate statement of abstract law, the failure of the Court to have so charged the jury was not error.

"* * * Instructions should be confined to the issues in the case and the facts developed by the evidence, and the fact that an instruction may be a correct statement of abstract law, does not mean it must be given where it relates to matters without the scope of the evidence. * * *" United States v. Linn, 438 F. 2d 456, 460[10] (10th Cir. 1971). Mr. Bowden was not charged herein with failing to file a tax return; instead, the indictment charged that he had filed returns for the years in question but that those returns were false and fraudulent.

The evidence was undisputed that Mr. Bowden filed tax returns for each of the years involved, and the failure to file a tax-return simply was not an issue. Under the issues in this case and the facts developed by the evidence, the jury could not have found that Mr. Bowden failed to file a tax return regardless of whatever any reason therefor might have been.

The instructions given by the Court emphasized to the jury the elements of mens rea which the prosecution was required to have proved before Mr. Bowden could be found guilty. Inter alia, the jurors were told that the evidence must have shown beyond a reasonable doubt that Mr. Bowden knew an additional amount of income tax was due and owing for the particular year in question and that he wilfully attempted to evade or defeat such additional tax with the specific intent to defraud the federal government of such additional tax.

These various terms were defined and explained to the jury. ⁸ The Court is convinced that its instructions eliminated any possibility that the jury might have found Mr. Bowden guilty "* * * because of negligence, inadvertence, accident or reckless disregard for the requirements of the law, or due to his good faith misunderstanding of the requirements of the law."

The instruction of the Court, that, if Mr. Bowden were found beyond a reasonable doubt to have admitted perjury in giving inconsistent testimony in an earlier trial, his testimony should be received with caution and considered with great care, was appropriate herein. "* * * His admission of his earlier inconsistent testimony and his explanation of it created issues of credibility which are properly submitted to the jury. * * *" United States v. Ross, 322 F. 2d 306, 307[1] (4th Cir. 1963), cert. den., 375 U. S. 970, 84 S. Ct. 490, 11 L. Ed. 2d 418 (1964). Any witness testifying in any trial "* * * must testify truthfully or suffer the consequences * * *"; and this is equally true when a defendant testifies in his or her own criminal trial. United States v. Havens, 466 U. S. 620, 626, 100 S. Ct. 1912, 1916-1917[1, 2], 64 L. Ed. 2d 559 (1980). The testimony of the defendant as an admitted perjurer became suspect because, as it was phrased by Justice Blackmun:

We are, after all, always engaged in a search for truth in a criminal case so long as the search is surrounded with the safeguards provided by our Constitution.

Oregon v. Haas, 420 U. S. 714, 722, 95 S. Ct. 1215, 1221, 43 L. Ed. 2d 570 (1975).

Thus, there were no harmful errors in the instructions to the jury herein, either as to those given or those requested but denied or modified and given.

Mr. Bowden, having been found guilty of the crime charged in the third count of the indictment herein by the factfinders, upon judicial review of all the evidence in the light most favorable to the prosecution, this Court concluded as a matter of law that he is not entitled to the entry of a judgment of acquittal thereon, Jackson v. Virginia, 443 U. S. 307, 319, 99 S. Ct. 2781, 2789[7], 61 L. Ed. 2d 560 (1979), as "* * * any [as in original] rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." Id. As that verdict is correct presumptively, neither has the defendant carried his burden and demonstrated any prejudicial error on the trial herein justifying the granting to him of a new trial in the interest of justice. See United States v. Turner, 490 F. Supp. 583, 599[38] (D. C. Mich. 1979), cert. den. 450 U. S. 912, 101 S. Ct. 1351, 67 L. Ed. 2d 336 (1981).

For such reasons, the motion of the defendant Mr. Rob ert Anthony Bowden hereby is

Denied.

¹ "Any person who willfully attempts in any manner to evade or defeat any tax imposed by this title [title 26, U. S. C.] or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and, upon conviction thereof, shall be fined not more than $10,000, or imprisoned not more than 5 years, or both, together with the costs of prosecution. * * *" This "* * * serious and inclusive felony [is, thus,] defined to consist of [a] willful attempt in any manner to evade or defeat the tax. * * *" Spies v. United States [43-1 USTC ¶9243], 317 U. S. 492, 497, 63 S. Ct. 364, 367, 87 L. Ed. 418 (1943). Yet, those who attempt to limit their voluntary admissions of tax-liability to the amount owed need not be apprehensive of conviction as a criminal:

"* * * Sanctions to insure payment of the tax are * * * varied to meet the variety of causes of default. It is the right as well as the interest of the taxpayer to limit his admission of liability to the amount he actually owes. But the law is complicated, accounting treatment of various items raises problems of great complexity, and innocent errors are numerous, as appear from the number who make overpayments. [Footnote reference omitted.] It is not the purpose of the law to penalize frank difference of opinion or innocent errors made despite the exercise of reasonable care. * * *" Ib., 317 U. S. at 467, 63 S. Ct. 367[2].

² See collective exhibit no. 42.

³ See collective exhibit no. 42.

⁴ See collective exhibit no. 73.

⁵ See collective exhibit no. 74.

⁶ See collective exhibit no. 62.

⁷ The Court instructed the jury along these lines, and it must be presumed the jury conscientiously observed these instructions. Shotwell Mfg. Co. v. United States, 371 U. S. 341, 367, 83 S. Ct. 448, 9 L. Ed. 2d 357, 375 (headnote 22), reh. den., 372 U. S. 950, 83 S. Ct. 931, 9 L. Ed. 2d 975 (1963). "* * * Our theory of trial relies upon the ability of a jury to follow instructions. * * *" Opper v. United States , 348 U. S. 84, 95, 75 S. Ct. 158, 165, 99 L. Ed. 101 (1954).

⁸ The jury was instructed, inter alia:

* * *

An act is done "knowingly" if it is done voluntarily and intentionally, and not because of mistake, inadvertence, accident or some other innocent reason. This law, requiring someone to have acted knowingly, insures that no one will be convicted for an act done because of mistake, inadvertence, accident or some other innocent reason.

An act is done "wilfully" if it is done intentionally, and with the specific intent to do something the law forbids; that is to say, with bad purpose either to disobey or to disregard the law.

* * *

Before Mr. Bowden can be found guilty under any count of this indictment, any attempt by him to evade or defeat the federal income tax must have been a wilful attempt. An attempt is wilful if it is made voluntarily and intentionally, and with the specific intent to keep from the federal government a tax imposed by the income tax laws, which it was the legal duty of the defendant to pay to his government, and which he knew it was his duty to pay.

In other words, any attempt by Mr. Bowden to evade or defeat the income tax must have been made with the bad purpose of wilfully seeking to defraud the federal government of some substantial amount of income tax liability lawfully due from Mr. Bowden and his wife.

* * *

If Mr. Bowden believed, in good faith, that he had paid all the taxes he owed for a particular year, he could not be guilty of attempting to evade or defeat taxes for that year.

* * *

Before Mr. Bowden may be convicted under any count of this indictment, the evidence must have shown beyond a reasonable doubt that he knowingly and wilfully attempted to evade or defeat some substantial portion of the additional tax as charged in that count to have been owing to the federal government.

* * *

 

[85-1 USTC ¶9180] United States of America , Plaintiff-Appellee v. Ronald E. Latham, Defendant-Appellant

(CA-7), U. S. Court of Appeals, 7th Circuit, No. 83-2686, 754 F2d 747, 2/4/85 , Affirming an unreported District Court case

[Code Secs. 7203 and 7205]

Tax evader: District Court: Subject matter jurisdiction: Jury instructions: Speedy Trial Act.--A convicted tax evader unsuccessfully argued that the district court was without subject matter jurisdiction, that a special grand jury can investigate only organized crime activities and that the district court improperty refused his jury instructions, improperly excluded evidence and violated his rights under the Speedy Trial Act. Denying the tax evader's motion for dismissal, the court found that: (1) the tax evader's argument that the district court was without subject matter jurisdiction was meritless because Title 26 violations are offenses against the laws of the U. S. and are clearly within federal district court jurisdiction; (2) special grand juries have broad investigative powers and are not restricted to investigating only organized crime activities; (3) all of the district court's jury instructions were proper; (4) the same standard of relevance was uniformly and equally applied to both parties; and (5) the Speedy Trial Act was not violated because the tax evader's trial began within 70 non-excludable days.

Thomas J. Scorza, Assistant United States Attorney, Chicago , Ill. 60604 , for plaintiff-appellee. Andrew B. Spiegel, 77 W. Washington, Chicago , Ill. 60602 , for defendant-appellant.

Before CUMMINGS, Chief Judge, COFFEY, Circuit Judge, and CAMPBELL, Senior District Judge. ^*

COFFEY, Circuit Judge:

The defendant, Ronald E. Latham, appeals his conviction for willful failure to file income tax returns and for filing false W-4 statements in violation of 26 U. S. C. §§ 7203 and 7205, respectively. We affirm.

I.

On December 13, 1982 , the defendant was charged in a six-count indictment with failure to file income tax returns for the calendar years 1980 and 1981, in violation of 26 U. S. C. §7203, and with filing false W-4 statements on four separate occasions during the years 1980, 1981, and 1982, in violation of 26 U. S. C. §7205. The defendant was convicted by a jury on all counts and sentenced by the district court to two concurrent one-year terms to be followed by a five-year probationary period; however, the sentence was stayed pending this appeal.

On appeal, Latham challenges his conviction on five grounds. He claims that (1) the district court lacked jurisdiction over his prosecution under 18 U. S. C. §3231 since jurisdiction under that statute is limited to offenses defined in Title 18 only; (2) the special grand jury that indicted him exceeded its authority since it was empowered to investigate organized crime activities only; (3) the district court erred when it improperly instructed the jury and abused its discretion when it refused the theory of law he proffered as a defense instruction; (4) the district court abused its discretion in excluding certain evidence offered by the defendant; and (5) his rights under the Speedy Trial Act were violated, 18 U. S. C. §3161 et seq.

II.

A. Issues controlled by Koliboski. The first three issues raised by the defendant relating to jurisdiction, grand jury powers, and the jury instructions, are controlled by our recent decision in United States v. Koliboski, 732 F. 2d 1328 (7th Cir. 1984). The defendant in Koliboski was indicted on similar charges by the same grand jury that indicted this defendant. As in this case, Koliboski argued that the district court was without subject matter jurisdiction under 18 U. S. C. §3231. We rejected Koliboski's claim as "silly," holding that Title 26 violations are offenses against the laws of the United States and thus are clearly within federal district court jurisdiction under §3231. ¹ Id. at 1329. Thus, the defendant's claim of lack of jurisdiction is similarly dismissed as meritless.

Koliboski further resolves Latham's claim that a special grand jury can investigate only organized crime activities. In Koliboski we held that special grand juries are not restricted in their scope to investigating organized crime only. Id. at 1330 ("Special grand juries have broad investigative powers. Section 3332(a) directs these grand juries to "inquire into offenses against the criminal laws of the United States alleged to have been committed within that district.' . . . The legislative history confirms the breadth of the general mandate bestowed by this section. These grand juries are not restricted to investigating only organized crime activities."). Thus, based upon our holding in Koliboski the special grand jury which indicted Latham did not exceed its authority.

The Koliboski decision also disposes of two of Latham's other claims with regard to improper jury instructions. Latham contends that the district court improperly refused his instruction defining "income" as distinct from "gross income." This instruction was intended to enforce his claim that he in good faith believed that wages are not income for taxation purposes. As we stated in Koliboski, a claim of this nature is without merit. Id. at 1329 n. 1. Latham's wages were and are income; thus, his proposed jury instruction was a misstatement of the law and the district court properly refused to adopt the same in the instructions.

Latham argues also that the district court erred in refusing to instruct the jury that in order for a violation of the tax laws to be "willful" the violation must be the product of a "bad purpose." The district court's instruction correctly paraphrased the "voluntary, intentional violation of a known legal obligation" jury instruction that we approved in Koliboski and United States v. Moore [80-2 USTC ¶9627], 627 F. 2d 830 (7th Cir. 1980). The Supreme Court in United States v. Pomponio [76-2 USTC ¶9695], 429 U. S. 10 (1976), held this instruction to be the proper definition of willfulness in a prosecution for violations of the Tax Code. No further "bad purpose" instruction is required. See Koliboski, 732 F. 2d at 1331 n. 2.

The other jury instructions proffered by the defendant are equally inane. Thus we hold that the district court did not err in refusing the other instruction offered by Latham implying that 26 U. S. C. §7343 defining "person" does not include natural persons. ² Similarly, Latham's instruction which indicated that under 26 U. S. C. §3401(c) the category of "employee" does not include privately employed wage earners is a preposterous reading of the statute. It is obvious that within the context of both statutes the word "includes" is a term of enlargement not of limitation, and the reference to certain entities or categories is not intended to exclude all others.

Latham also contends that the court erred in refusing to instruct the jury that an assessment under 26 U. S. C. §6201 is a legal necessity before an individual can have an income tax liability. Latham's theory is that if there was no assessment, there can be no income tax liability and thus he cannot be found to have filed false W-4 forms since there was no tax liability in the preceding year. But an assessment under §6201 is an admin istrative determination that a certain amount is currently due and owing as a tax with consequences somewhat similar to the reduction of a claim to judgment. Cohen v. Gross [63-1 USTC ¶9395], 316 F. 2d 521, 522-23 (3d Cir. 1963). The exempt status requirement of a tax liability in the preceding year does not support Latham's novel and ridiculous theory that there must have been an IRS determination in that year of tax due on income earned when (as here) the taxpayer failed to file a return. Latham cannot place himself in the exempt category in 1981 simply by failing to file a return in 1980.

Finally, Latham alleges that by failing to present his "theory of defense" instructions to the jury the district court committed reversible error. ³ This claim is likewise without merit. The judge's instructions to the jury are to embody a proper statement of the relevant law, not a continuation of counsel's closing argument. Our reading of the record convinces us that the district court's jury instructions were proper as to the relevant defenses. Latham's theory of defense instructions were nothing more than a summary of the evidence he presented at trial relating to his defenses and were properly refused.

B. Exclusion of evidence. Latham also claims that the district court's evidentiary rulings, denying the admission of certain defense evidence, deprived him of a fair trial because the court failed to apply "the same standard of relevance to Latham as it did to the government." Defendant's brief at 21. Because the district court allowed the prosecution to offer into evidence income tax returns which Latham had filed in 1976, 1977, and 1978, in order that they might establish that he acted willfully in 1980, 1981, and 1982, Latham argues that fairness required the district court also to admit all the exhibits he offered in evidence. These exhibits consisted of the complete text of various writings, as well as letters Latham received from the attorney for the Belanco religious order, a legal defense fund for tax protesters that Latham had joined. Latham claimed he had relied upon the exhibits in arriving at his misunderstanding of his duties under the Tax Code.

A district court has broad discretion when assessing the admissibility of proffered evidence and we may reverse its rulings only atter we are convinced that the court abused its discretion. United States v. Brown, 688 F. 2d 1112, 1115 (7th Cir. 1982). While Latham properly states that the same standard of relevance must be applied to both parties (United States v. Parker, 447 F. 2d 826 (7th Cir. 1971)), our examination of the excluded exhibits and the trial record in the instant case convinces us that the same standard of relevance was uniformly and equally applied to both Latham's and the government's proffered evidence.

As to the letters Latham received from the Belanco religious group attorney, the district court properly noted that the letters were received subsequent to Latham's indictment by the grand jury, and thus were irrelevant as to the questions of notice and willfulness. On the other hand, Latham's earlier tax forms preceded the dates of his violations and thus were relevant in determining Latham's intent in failing to file tax returns for the years 1980 and 1981.

As to the excluded writings, the trial judge admitted into evidence only those portions of the writings that Latham quoted during his testimony since those were the portions that specifically addressed claiming exempt status on W-4 forms and the taxpayer's duty to file tax returns--the relevant issues at trial. Latham's contention that the complete text of each book had to be admitted because he relied on everything in the books in formulating his state of mind is without merit since the excluded portions of the text concern general criticisms of the tax system, including questions as to its constitutionality. As this court has continually noted, a good faith disagreement with the tax laws or a good faith belief that they are unconstitutional are not defenses. See e.g., United States v. Moore [80-2 USTC ¶9627], 627 F. 2d 830, 833, n. 1 (7th Cir. 1980). Because portions of these texts contained only general criticisms of the Tax Code and did not relate to the charges facing the defendant, they were by definition irrelevant to the case at bar. Moreover, the trial judge has broad discretionary powers and, thus, may exclude exhibits of slight probative value where, as here, they might very well have confused or misled the jury. See Fed. R. Civ. P. Rule 403. Thus, allowing the trial court the wide latitude of discretion proper to a determination of relevancy, we hold that the court did not abuse its discretion in excluding the entire texts from consideration by the jury.

C. Speedy Trial. The only meritorius argument presented by the petitioner concerns his assertion that the Speedy Trial Act was violated. The Speedy Trial Act allows 70 days to elapse between the date of arraignment and the date of trial, in addition to the time that is excluded from the computation of delay under 18 U. S. C. §3161(h). Needless to say, the Speedy Trial Act was inartfully drafted and, thus, has confronted our circuit and others with perplexing problems in its interpretations and application. The issue presented in this case is whether §3161(h)(1)(J) and (F) should be read together to provide a 30-day maximum exclusion from the 30-day limit where more than one pre-trial motion is filed by the defendant.

The defendant contends that since his trial did not commence within the time required in the Speedy Trial Act this case must be dismissed. He first appeared in court on December 21, 1982 and his trial began on July 12, 1983 , 203 days later. Under the defendant's calculation, subtracting out the excludable time, the total non-excludable days to trial were 92. The government makes the same calculation; however, it arrives at a total of 48 non-excludable days to trial, well within the 70-day limit.

Although there is a disagreement between the parties as to the number of days to be excluded between the time of arraignment on December 21, 1982 and the date of filing the first set of pre-trial motions on January 10, 1983 , ⁴ the determinative period is the 68 days from March 11, 1983 , the date on which the final briefs were filed on Latham's 8 pre-trial motions, to May 18, 1983 , the date when the final disposition of the motions by the trial court was made. Latham argues that under 18 U. S. C. §3161(h)(1)(J) only 30 of those 68 days are excludable:

"(h) The following periods of delay shall be excluded in computing the time within which an information or an indictment may be filed, or in computing the time within which the trial of any offense must commence:

(1) any period of delay resulting from other proceedings concerning the defendant, including but not limited to--. . .

(J) delay reasonably attributable to any period, not to exceed 30 days, during which any proceeding concerning the defendant is actually under advisement by the court."

The government, however, contends that subsection (J) does not limit the period of advisement to 30 days where there are multiple motions. It argues that the controlling section of §3161 is subsection (1)(F):

"(F) Delay resulting from any pre-trial motion, from the filing of the motion through the conclusion of the hearing on, or other prompt disposition of such motion."

Thus, the government argues that the 30-day limit of subsection (J) does not apply to subsection (F) and the entire 68 days used by the trial court in considering and deciding defendant's motions is excludable time. We hold that the government's calculation under the Speedy Trial Act is the proper one and, thus, we affirm the decision of the district court denying the defendant's motion to dismiss.

Recently this court addressed the issue of the calculation of time under the Speedy Trial Act where a defendant had filed multiple motions prior to trial. See United States v. Tibboel, No. 84-1072 (7th Cir. Jan. 29, 1985 ). We concluded that the 30-day limit in subsection (J) did not control subsection (F); rather, the governing standard was one of "reasonable promptness." Id. at 5-7 citing United States v. Regilio, 669 F. 2d 1169, 1172-73 (7th Cir. 1981) (multiple premotions filed at same time) and United States v. Brim, 630 F. 2d 1307, 1313 (8th Cir. 1980) (multiple motions filed at different times prior to trial). In fact, we noted that there is less justification for applying the 30-day limit where multiple motions are filed at different times prior to trial. Id. at 6. ⁵

In this case, the defendant filed two separate sets of motions with the court; one set (consisting of six motions) was filed on January 10th with briefing completed by January 31st, while two other motions were filed on February 18th with briefing completed on March 11th. The parties in this case argue that the determinative period is the 68 days from the completion of all briefing on March 11th to the date the district court decided all the motions on May 18th. Accepting these 68 days as the determinative period, if 30 days is considered to be a reasonable amount of time to decide one motion (see United States v. Janik, 723 F. 2d 535, 543-44 (7th Cir. 1983) where this court held that subsection (J)'s 30-day limit controls subsection (F) when one pre-trial motion is filed), then an additional 38 days to decide the eight motions in this case is both reasonable and proper. ⁶

Since we hold that the defendant's trial began within the 70 non-excludable days, the Speedy Trial Act was not violated. The decision of the district court is affirmed.

^* The Honorable William J. Campbell, United States Senior District Judge for the Northern District of Illinois, is sitting by designation.

¹ 18 U. S. C. §3231 provides:

"The district court of the United States shall have original jurisdiction, exclusive of the courts of the States, of all offenses against the laws of the United States .

"Nothing in this title shall be held to take away or impair the jurisdiction of the courts of the several States under the laws thereof."

² "The statute's provision was not intended to exclude individual[s] or to limit the ordinary meaning of the term 'person' so as to exclude individuals or 'natural persons' . . . from their responsibility to comply with the tax laws." United States v. Rice [81-2 USTC ¶9718], 659 F. 2d 524, 528 (5th Cir. 1981).

³ His "theory of defense" instructions were based upon (1) Latham's testimony that he personally believed he had incurred no income tax liability for the years 1979 through 1982, and (2) his reliance upon so-called constitutional "tax experts" as a defense to the charge of willful failure to file a tax return.

⁴ Recently, this court decided that the time allowed by the district court for preparation of motions and briefs is excludable under the Act when the district court judge has set a specific date for the preparation and submission of pre-trial motions. See United States v. Tibboel, No. 84-1072, slip op. at 3-4 (7th Cir. Jan. 29, 1985 ). In this case, the district court ordered all motions to be filed by January 4, 1983 . Latham filed his motions on January 10, 1983 . Consequently, the district court extended the government's response time to January 20th and Latham's reply time to January 31st. Thus, the time period between December 22, 1982 and January 10, 1983 is excludable along with the briefing period from January 10th to January 31st. Latham also filed two motions on February 18th, the day of his status hearing. The district court allowed Latham two weeks to file his briefs; at Latham's request this period was extended to March 11, 1983 . Therefore, the period from February 18th to March 11th is also excludable. The days that are definitely not excludable are the 23 days from May 19, 1983 to June 10, 1983 , and 11 days from June 13, 1983 to June 24, 1983 . The parties agree the three days between June 10th and June 13th are excludable due to the defendant filing a severance motion. The remaining 15 days from June 24, 1983 to July 12, 1983 are excludable due to the defendant's request for a continuance to accomodate his counsel's trial schedule.

⁵ Judge Posner stated: "Brim is an easier case than this for recognizing an exception to the 30-day requirement because the pre-trial motions had not been filed all at once, but instead seriatim, and for all that appears the last motion was decided within 30 days of its being filed . . .. It would be unreasonable to require judges to rule on a pre-trial motion within one day just because a previous motion had been filed with him 29 days earlier and not yet decided." Tibboel, No. 84-1072, slip op. at 6.

⁶ Even if we would consider February 1st as the day in which to begin counting for purposes of determining a reasonable exclusionary period under subsection (F), the additional 18 days, from February 1st to the 18th, would not change the result. The period from February 18th to March 11th would not be considered since this was additional motion and briefing time allowed by the district court. See supra, n. 4 and Tibboel, No. 84-1072, slip op. at 3-4.

[84-1 USTC ¶9104] United States of America , Plaintiff-Appellee v. Charles J. Rothbart, Defendant-Appellant

(CA-10), U. S. Court of Appeals, 10th Circuit, No. 82-2146, 723 F2d 752, 12/15/83 , Affirming an unreported District Court conviction

[Code Sec. 7203]

Criminal penalties: Failure to file: Evidence: Admissibility: Instructions to jury.--An attorney's conviction for failure to file timely employer's quarterly tax returns was affirmed. The trial court did not err in rejecting the taxpayer's jury instructions as to the definition of willfulness. Evidence that he had filed other late returns was properly admitted to show intent and absence of mistake and other evidence was properly excluded.

Rob ert N. Miller, United States Attorney, Glenn R. Archer, Jr., Assistant Attorney General, James P. Springer, Michael L. Paup. Rob ert E. Lindsay, Deborah Wright Dawson, Department of Justice, Washington, D. C. 20530, for plaintiff-appellee. Alan J. Dunn, for defendant-appellant.

Before MCKAY, BREITENSTEIN and LOGAN, Circuit Judges.

BREITENSTEIN, Circuit Judge:

Appellant-defendant, Rothbart, the co-owner of Warehouse Foods Distributors, was charged with six counts of failure to file timely Employer's Quarterly Federal Tax Returns (Form 941) for the last two quarters of 1974 and for all four quarters of 1975 in violation of 26 U. S. C. ¶7203. The jury returned verdicts of not guilty as to the first two counts, charging violations for the last two quarters of 1974, and guilty as to the remaining four counts relating to violations occurring in the four quarters of 1975. The defendant appeals from his conviction and sentencing. We affirm.

This case has been to this court before. The court reversed his conviction on all six counts and remanded for a new trial, finding prejudicial error in the admission of the deposition of a government witness. United States v. Rothbart, 10 Cir., 653 F. 2d 462.

At trial on remand, Rothbart, an attorney, admitted that as president of Warehouse Foods Distributors, Inc. (WFD) during the time in question, he was solely responsible for filing the company's employment tax returns, Form 941, and that these forms were not filed for the last two quarters of 1974 or for all quarters of 1975. Section 7203, Title 26 U. S. C., makes it a misdemeanor to "willfully" fail to file a required return. The issue at trial was whether defendant's failure to file was willful.

Defendant presented evidence on two theories to show lack of willfulness. First, he claimed through his own testimony and that of two former employees of WFD that the business at the times in question was in a chaotic state and demanded so much of defendant's time that he negligently failed to file the forms. Secondly, he argued that he relied on statements of Internal Revenue Service, IRS, agents in not filing.

As to the first, he argues that the court erred in refusing his tendered instructions regarding specific facts that the jury should consider in determining his willfulness, including pressing business demands, personnel changes and inadvertent loss or misplacement of business records. As to the second, he claims that the definition of willfulness was insufficient to address his claim of good faith reliance on statements of IRS agents.

He testified that in April or May, 1975, he told Ochoa, an IRS agent who was auditing WFD 1972 and 1973 tax liabilities, that he had not yet filed the Forms 941 for the last two quarters of 1974 and the first quarter of 1975. He said that Ochoa told him not to do anything until the completion of the audit. Ochoa denied this statement. In 1976 defendant met with Lane, another IRS agent, and two former employees of WFD testified that defendant asked Lane whether he should file the delinquent returns and that Lane refused to advise him. He said that after speaking with Lane he decided to file the forms for all six quarters but was then unable to do so because of the inadvertent misplacement of payroll records. During the time that these records were supposedly missing, they were taken by defendant's employee to IRS in response to an IRS summons, catalogued, and returned to the employee.

A defendant is entitled to instructions which fairly present his theory of the case. United States v. Hudler [79-2 USTC ¶9688], 10 Cir., 605 F. 2d 488, 490, cert. denied 445 U. S. 961. The exact language requested by defendant need not be given, United States v. Westbo, 10 Cir., 576 F. 2d 285, 289, and the trial court need not give the examples requested by the defendant. United States v. Irwin [79-1 USTC ¶9222], 1 Cir., 593 F. 2d 138, xxx-142. It is enough that the instructions as a whole give an accurate statement of the law. United States v. Hudler, supra, 605 F. 2d at 490.

In the instant case the court instructed the jury that:

"The term 'wilfully' as used in these instructions means voluntary, purposeful, deliberate and intentional, as distinguished from accidental, inadvertant or negligent.

Mere negligence, even gross negligence, is not sufficient to constitute [sic] wilfulness.

The failure to make a timely return is wilful if the defendant's failure to act was voluntary and purposeful and with the specific intent to fail to do what the law required to be done. That is to say, with the purpose to disobey or disregard the law that requires [sic] him to disclose to the government facts material to the determination of the withholding tax liability of the corporate employer for which he was the responsible person.

. . .

On the other hand, the defendant's conduct is not wilful if you find that he failed to file a return because of negligence, mistake or inadvertance."

This definition of willfulness is an accurate statement of the law as set forth in United States v. Pomponio [76-2 USTC ¶9695], 429 U. S. 10 and United States v. Bishop [73-1 USTC ¶9459], 412 U. S. 346. Although the instruction in Pomponio included the phrase "bad purpose to disobey or disregard the law," there was no error in the deletion of the word "bad" in this case. As noted in Pomponio, 429 U. S. at 12, willfulness does not require any motive other than "a voluntary, intentional violation of a known legal duty."

The trial judge directed that a failure to file due to mistake would not be willful, rejecting defendant's proposal that he also of the law. . . ." We find of the law. . . ." We find no reversible error in an instruction which states that a failure to file based on mistake is not willful because it does not then repeat that a failure to file based on a misunderstanding is not willful. Although the instruments did not emphasize the defendant's evidence, they were adequate to inform the jury regarding his theory of the case. The judge stated that the failure to file was not willful if due to accident, inadvertence, negligence, or mistake. This language covers the claims of mistaken reliance or the agent's statement or the inadvertent misplacement of necessary business records.

The defendant had previously been convicted of failure to file timely personal income tax returns for the years 1969 and 1971. The court ruled that evidence of these convictions could not be shown. On cross-examination of the defendant, the court allowed the prosecution to ask if he had filed any late returns but the judge cautioned the prosecutor that he could not go into the matter further. He admitted testimony of the late filings.

The admission of evidence is a matter within the trial court's discretion and will not be disturbed unless clearly erroneous. United States v. Lawson [82-1 USTC ¶9197], 10 Cir., 670 F. 2d 923, 928. Under Fed. Rule Evid. ¶404(b), evidence of other crimes, wrongs, or acts is admissible to prove motive, intent, knowledge, or absence of mistake. As required by the Rule, the court properly balanced the prejudicial effect of the evidence against its probative value. In this case where the sole issue was defendant's willfulness, the evidence was properly admitted to show intent and absence of mistake. See Ayash v. United States [65-2 USTC ¶9739], 10 Cir., 352 F. 2d 1009, 1013, and Sanseverino v. United States [63-2 USTC ¶9684], 10 Cir., 321 F. 2d 714, 716.

Defendant made an offer of the testimony of witness Peterson, a WFD employee, concerning a conversation which she had with the defendant in 1976. The proferred testimony was that, sometime after the defendant's conversation with agent Lane in the summer of 1976, the defendant asked Peterson what she thought of Lane's refusal to advise him and Peterson told him that she got the impression that he should not file.

It is difficult to understand how the proferred testimony was relevant to the charges against the defendant or the defense theory. The defendant was charged with failure to file the returns for the last two quarters of 1974 and all four quarters of 1975 when due. Peterson's testimony would go to show that in the fall of 1976, the defendant was uncertain whether he should file the already delinquent returns. Even if relevant, its exclusion was harmless error because it was covered by other evidence. The defendant's justification for his failure to file was set forth at length in his own testimony. His statements concerning agent Ochoa's advice were corroborated by witness Thompson. His testimony concerning Lane's refusal to advise him was corroborated by both Thompson and Peterson. His testimony concerning the lost payroll records was corroborated by Peterson. The proferred testimony would have added little, if anything, to corroborate defendant's story. The court did not err in excluding it.

Affirmed.

 

 

[51-2 USTC ¶9478]Joseph L. Lurding, Appellant v. United States of America , Appellee

(CA-6), In the United States Court of Appeals for the Sixth Circuit, No. 11,330, 191 F2d 921, Filed October 16, 19 51

Penalties: Filing of false returns.--There was abundant substantial evidence upon which taxpayer could be properly convicted of the offense of wilfully and knowingly attempting to defeat and evade a large part of his income taxes for the calendar years 1943 through 1946.

Russell Smith and James U. Smith, Jr., Louisville , Ky. , for appellant. David C. Walls and Charles F. Wood, Louisville , Ky. , for appellee.

Before HICKS, ALLEN and MARTIN, Circuit Judges.

MARTIN, Circuit Judge:

This appeal of Joseph L. Lurding, for the second time convicted by jury verdict of wilfully and knowingly attempting to defeat and evade a large part of his income taxes for the calendar years 1943 through 1946 in violation of section 145(b), Title 26, U. S. C. A., has been heard on the record and on the oral arguments and briefs of the respective attorneys for appellant and the United States;

And it appearing from the record that there was abundant substantial evidence upon which appellant could be properly convicted of the offense charged against him; and that the trial court committed no reversible error upon retrial of the case, but followed faithfully the directions of this court in Lurding v. United States, 179 Fed. (2d) 419 (C. A. 6) [50-1 USTC ¶9159], and delivered a carefully prepared and correct written charge to the jury;

The judgment of conviction and sentence entered in the district court upon the verdict of the jury is ordered to be affirmed.

 

 

[81-2 USTC ¶9621] United States of America , Plaintiff-Appellee v. Raymond L. Ness, Defendant-Appellant

(CA-9), U. S. Court of Appeals, 9th Circuit, No. 80-1530, 652 F2d 890, 8/7/81 , Affirming unreported district court decision

[Code Sec. 7205]

Filing of false withholding certificate: Selective prosecution: Failure to prove: Sufficiency of jury instructions: Exclusion of evidence.--The taxpayer's conviction for willfully filing a false withholding exemption certificate was affirmed. His claim of selective prosecution was rejected because he failed to establish that others similarly situated were not prosecuted and that his prosecution was based on an impermissible motive. The taxpayer's other allegations of error regarding the sufficiency of the jury instructions and the exclusion of evidence were also rejected as being without merit.

Morgan C. Taylor, 567 San Nicolas Dr. , Newport Beach , Calif. , for plaintiff-appellee. Frederick M. Flam, Paul H. Rochmes, Assistant United States Attorneys, Los Angeles , Calif. 90012 , for defendant-appellee.

Before NELSON and CANBY, Circuit Judges, and WILKINS, ^* District Judge.

PER CURIAM:

Appellant Ness was charged with willfully filing a false W-4 form, in violation of 26 U. S. C. §7205. The evidence showed that Ness filed an exempt W-4 claiming, under penalty of perjury, that he had had no income tax liability in the prior year, and expected none for the year in which he filed the W-4. That claim was false. The evidence further showed that Ness renewed his claim for exemption from withholding even after the Internal Revenue Service notified him that he was ineligible, and that he could be criminally prosecuted for falsifying his W-4.

We find all of Ness 's arguments on this appeal to be without merit and, therefore, affirm.

I. Selective Prosecution

Ness contends that, at a pretrial hearing, he made a nonfrivolous prima facie showing that he was a victim of selective prosecution, but was improperly denied the discovery and hearing necessary to prove his claim. Hence, Ness argues that his case should be remanded for an evidentiary hearing on that issue. See United States v. Oaks [75-1 USTC ¶9157], 508 F. 2d 1403 (9th Cir. 1974). Ness is mistaken both as to the sufficiency of his showing and as to the adequacy of the pretrial procedures afforded him.

To succeed on a claim of selective prosecution a defendant has the burden of establishing that others similarly situated have not been prosecuted and that the allegedly discriminatory prosecution of the defendant was based on an impermissible motive. See United States v. Wilson [81-1 USTC ¶9194], 639 F. 2d 500, 503-04 (9th Cir. 1981). Ness failed to make an adequate prima facie showing on either prong of that test.

While he showed that similarly situated members of his tax protest group had also been prosecuted, Ness did not show a single instance of a similarly situated but nonprotesting violator who had not been prosecuted. See United States v. Steele, 461 F. 2d 1148, 1151-52 (9th Cir. 1972). The fact that access to the Government's files might be helpful to a defendant seeking to prove discriminatory prosecution does not relieve him of the burden of making an initial showing, nor does that fact, in itself, entitle every defendant raising such a claim to discovery. ¹ See United States v. Murdock [77-1 USTC ¶9289], 548 F. 2d 599, 600 (5th Cir. 1977); United States v. Berrios, 501 F. 2d 1207, 1211-12 (2d Cir. 1974); Steele, 461 F. 2d at 1151-52. See also Fed. R. Crim. P. 16(a)(1)(C).

Ness also failed to suggest any discrimination in the decision to prosecute him. To make out a prima facie case of selective prosecution a defendant must show evidence of impermissible motive at some crucial stage in the procedures leading to the initiation of prosecution. Compare Steele, 461 F. 2d at 1151-52 (discriminatory investigation taints prosecution where normal procedures for selecting cases for prosecution have apparently been bypassed), with United States v. Erne [78-1 USTC ¶9402], 576 F. 2d 212, 216-17 (9th Cir. 1978) (discriminatory investigation does not taint prosecution where prosecutor's decision is independent and based on nondiscriminatory policies). Ness made no showing that the Government focused its investigation on him because of first amendment protest activites. Nor did he show any discriminatory policies underlying the selection of cases for prosecution. Tax violations are not a protected form of political dissent. Insofar as a protest group engages in such violations, it is obvious that proper prosecutorial considerations, such as deterrence of widespread tax evasion, will inevitably lead to the prosecution of numerous protest violators. See United States v. Catlett [78-2 USTC ¶9775], 584 F. 2d 864 (8th Cir. 1978); United States v. Gardiner [76-1 USTC ¶9300], 531 F. 2d 953, 954 (9th Cir.), cert. denied, 429 U. S. 853, 97 S. Ct. 145, 50 L. Ed. 2d 128 (1976).

Moreover, the record before us reveals that at the hearing on his motion Ness was granted an opportunity to present evidence on his claim but declined to do so, contending that he needed more time to prepare. The requirement that a defendant must make a nonfrivolous showing before becoming entitled to an evidentiary hearing on a selective prosecution claim is not to be employed as a tactical device to delay orderly prosecution. See also, Murdock, 548 F. 2d at 600. Ness was granted a hearing. No reason appears to justify his failure even to attempt to subpoena witnesses or to request discovery of documents that he believed might aid his claim. Hence, we need not consider whether, in the event that he had done so and had also made out a prima facie case, it would be error not to grant a continuance if the Government resisted proper efforts to assemble the evidence necessary to carry his burden of proof.

II. Other Issues

Ness complains that evidence of a slide show, that allegedly misled him into believing he was eligible to claim exemption from withholding, was improperly excluded. Both Ness and the lecturer testified as to the content of the slide show. Hence, presentation of the slide show was properly excluded as cumulative. See Fed. R. Evid. 403. Moreover, Ness 's request to introduce that content by way of such a presentation was properly denied as potentially confusing to the jury. See Cooley v. United States [74-2 USTC ¶9718], 501 F. 2d 1249 (9th Cir. 1974), cert. denied, 419 U. S. 1123, 95 S. Ct. 809, 42 L. Ed. 2d 824 (1975).

The judge's comments on the theories Ness claimed to rely on for his belief that he was entitled to an exemption from withholding were not inaccurate. Insofar as the judge's colorful language may have been inappropriate, his curative instruction was sufficient to offset any prejudicial inferences his comments might have suggested. See generally Smith v. United States [62-2 USTC ¶9815], 305 F. 2d 197, 205 (9th Cir.), cert. denied, 371 U. S. 890, 83 S. Ct. 189, 9 L. Ed. 2d 124 (1962).

Ness was not entitled to have the jury instructed in precisely the form he requested. The instructions that were given were correct, adequate and fair. See United States v. Buras [81-1 USTC ¶9126], 633 F. 2d 1356 (9th Cir. 1980); United States v. Pallan [78-1 USTC ¶9361], 571 F. 2d 497, 501 (9th Cir.), cert. denied, 436 U. S. 911, 98 S. Ct. 2249, 56 L. Ed. 2d 411 (1978). The instruction, that a political belief that the law is wrong will not suffice to negate a finding of willfulness, was entirely appropriate in this case. The mistaken belief that a statute is unconstitutional and that one has the right to violate it is not a "mistake of law" such as will provide a defense to a charge of willful violation. See United States v. Kelley [76-2 USTC ¶9489], 539 F. 2d 1199, 1204 (9th Cir.), cert. denied, 429 U. S. 963, 97 S. Ct. 393, 50 L. Ed. 2d 332 (1976). Finally, it was not error to refuse to instruct the jury that recklessness is not the equivalent of willfulness. See United States v. Pomponio [76-2 USTC ¶9695], 429 U. S. 10, 12, 97 S. Ct. 22, 23, 50 L. Ed. 2d 12 (1976); Pallan, 571 F. 2d at 501; Cooley, 501 F. 2d at 1253 n.4; United States v. Bengimina [74-2 USTC ¶9513], 499 F. 2d 117 (8th Cir. 1974).

The judgment is AFFIRMED.

^* Hon. Philip C. Wilkins, District Judge for the Eastern District of California, sitting by designation.

¹ We note further that in this case the record does not contain any motion for discovery adequate under Fed. R. Crim. P. (16)(a)(1)(C). Discovery could properly be denied on that basis alone.