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Our opinion in Gottesman does not require a different result. Gottesman rejected a court's order of restitution, payable upon the defendant's completion of supervised release, but did so primarily because the trial court ignored a provision in Gottesman's plea agreement, which provided that the defendant would pay his past taxes "on such terms and conditions as will be agreed upon between . . . Gottesman and the IRS." 122 F.3d at 150. The opinion focuses entirely on the requirements of section 3663(a)(3)--the provision concerning the treatment of restitution in the plea bargaining context--and the proper deference towards and interpretation of plea agreements. See id. at 151-53. ⁶

Outside the context of plea bargaining, which raises unique concerns about a defendant's expectations regarding sentencing, we see no reason to depart from the clear meaning of section 3583(d) and section 3563(b) and therefore hold that the trial judge permissibly ordered Bok to pay restitution as a condition of supervised release.

CONCLUSION

For the foregoing reasons, we affirm the judgment of conviction entered in the District Court, and we affirm the District Court's order that as a condition of his supervised release, Bok must pay ten percent of his gross monthly salary, up to $45,000, towards his personal tax liability.

¹ Our opinion in D'Agostino made clear that "the 'no earnings and profits, no income' rule would not necessarily apply in a case of UNLAWFUL diversion, such as embezzlement, theft, a violation of corporate law, or an attempt to defraud third-party creditors." [98-1 USTC ¶50,380], 145 F.3d at 73.

² In not finding intent to be determinative, this Circuit has also followed a different path from at least one of our sister Circuits. See United States v. Miller [76-2 USTC ¶9809], 545 F.2d 1204, 1215 (9th Cir. 1976) (permitting taxpayers to apply the return of capital theory only when there has been "some demonstration on the part of the taxpayer and/or the corporation that such distributions were intended to be such a return"), cert. denied, 430 U.S. 930 (1977).

³ Transferring the burden of production to the taxpayer is consistent with the burden allocation in DiZenzo, a civil case, under which the taxpayer faces burdens of both production and proof. See [65-2 USTC ¶9518], 348 F.2d at 126-27.

⁴ The accountant's letter accompanying the financial statements makes their limitations clear, explaining that the statements are "compilation[s] . . . limited to presenting in the form of financial statements information that is the representation of management. [The accounting firm] ha[s] not audit[ed] or reviewed the accompanying financial statements and, accordingly, do[es] not express an opinion or any other form of assurance on them."

⁵ Although Bok challenged the trial judge's authority to make ANY restitution order, he did not challenge the reasonableness of the actual order itself.

⁶ Gottesman also referred to a Fifth Circuit case, United States v. Stout, 32 F.3d 901 (5th Cir. 1994), which treated a trial court's order of restitution as a condition of supervised release in a tax evasion case. See Gottesman [97-2 USTC ¶50,636], 122 F.3d at 152. Like Gottesman, Stout involved a plea agreement, and the Fifth Circuit's reasoning depended on the trial court's interpretation of that agreement. See Stout, 32 F.3d at 904-05. That reasoning is therefore not applicable here.

 

 

[2001-1 USTC ¶50,283] United States of America , Plaintiff-Appellee v. Dr. Glenn Ahee, Defendant-Appellant

(CA-6), U.S. Court of Appeals, 6th Circuit, 99-1991, 2/15/2001, 2001 U.S. App. LEXIS 2706. Affirming an unreported District Court decision

[Code Sec. 7206 ]

Crimes: Filing of false returns: Conviction, upheld: Jury instructions.--Sufficient evidence existed to support a chiropractor's conviction on two counts of filing false returns in connection with "zero" returns that he filed for two tax years. The taxpayer's arguments regarding jury selection and his contention that one of the jurors was motivated to find him guilty due to fear of the IRS were meritless. Fear of the IRS is not a type of specific knowledge or undue influence sufficient to taint jury deliberations or warrant a hearing concerning improper extraneous prejudice. Moreover, the trial court did not commit plain error in failing to provide an explicit definition of "gross income" in its jury instructions. Finally, suggestions made by the prosecutor to the jury in closing arguments were well within the bounds of acceptable arguments and in no way improperly appealed to the jurors' pecuniary interests.
[Code Sec. 7206 ]

Crimes: Filing of false returns: Knowing and willful acts: Conviction, upheld: Individuals subject to tax: Miscellaneous constitutional arguments: Indictment.--A chiropractor was properly convicted of two counts of filing false returns in connection with "zero" returns that he filed for two tax years. The trial court's refusal to suppress his two "zero" tax returns did not violate his Fifth Amendment privilege against self-incrimination. Moreover, the taxpayer's argument that the trial court lacked jurisdiction over his case because the indictment was defective and was constitutionally insufficient to inform him of what constituted criminally prohibited conduct lacked merit. Although the taxpayer contended that the Internal Revenue Code does not define income and, thus, he did not know that monies received for his chiropractic services represented taxable compensation, the evidence established that he paid taxes for several years and considered those sums to be "income" when seeking loans or engaging in other financial activities.
[Code Sec. 7206 ]

Crimes: Filing of false returns: Conviction, upheld: Individuals subject to tax: Miscellaneous constitutional arguments: Administrative summonses.--Sufficient evidence existed to support a chiropractor's conviction on two counts of filing false returns in connection with "zero" returns that he filed for two tax years. Nothing in the record of the underlying litigation warranted a finding that the trial court erred in refusing to conduct a hearing regarding the suppression of information gathered through administrative summonses. Moreover, the taxpayer presented no credible evidence to demonstrate that administrative summonses were issued under the auspices of a criminal investigation or that the IRS violated his First Amendment Rights by engaging in impermissible selective prosecution. He failed to prove that he was selected for prosecution based upon his membership in a tax-protest organization.

Margaret E. Davis, Office of the U.S. Attorney, Detroit , Mich. , for plaintiff-appellee. Robert R. Elsey, Grosse Pointe Park , Mich. for defendant-appellant.

Before: DAUGHTREY and CLAY, Circuit Judges, RUSSELL, District Judge. ^*

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

RUSSELL, District Judge:

Defendant, Dr. Glenn Ahee, appeals his conviction by the district court of two counts of filing a false tax return, in violation of 26 U.S.C. §7206. On appeal, Dr. Ahee alleges that the trial court committed numerous evidentiary errors, that it empaneled an improper jury, that it permitted the use of a constitutionally insufficient indictment, that it allowed the Internal Revenue Service to improperly utilize administrative summonses, that the trial judge gave improper jury instructions, and that the prosecution engaged in improper conduct during its closing argument. For the reasons set forth below, we AFFIRM the district court on all grounds.

Dr. Glenn Ahee is a chiropractor who has been in private practice since June of 1986. He shared an office with another chiropractor, and operated the business under the name Shorepointe Chiropractic. Dr. Ahee charged a fee for his services, and reported these fees as income on his federal individual income tax returns until 1990. Dr. Ahee employed Robert Jeanguenat, a CPA and childhood friend, to complete his tax forms.

In 1990, Dr. Ahee stopped filing individual tax returns after watching a video tape given to him by his mother. The individual on the video instructed viewers that the Internal Revenue Code ("IRC") did not specifically require people to file returns or pay income tax based on the returns. Ahee contacted the man on the video, and began purchasing books, acquiring information, and reading court cases suggested by the individual. He also purchased a copy of the IRC. After doing case research, including United States v. Mitchell [71-1 USTC ¶9451], 403 U.S. 190, 91 S.Ct. 1763, 29 L.Ed.2d 406 (1971) and United States v. Ballard [76-1 USTC ¶9378], 535 F.2d 400 (8th Cir. 1976), Dr. Ahee sent letters to the IRS stating he was not subject to its jurisdiction and demanding a refund of $6,440. He also demanded that the IRS explain why he was required to pay taxes or file a return. Ahee claimed that the IRC did not specifically impose a tax upon his "activity." As a result, he was allegedly not required to pay taxes on monies generated by his "activity" of chiropractic services. Finally, he claimed he did not report any "income" because income is not defined by the IRC.

In June of 1990, Dr. Ahee applied for a mortgage to purchase a residential house. On his mortgage application, he listed "gross monthly income" of $2,300 and $4,000 per month in "other income." One year later, he created a trust called the Shorepointe Chiropractic Trust, and transferred all of his assets, including his interest in Shorepointe Chiropractic and the home he bought in June 1990, into the trust. His CPA informed him that whatever money came into the trust had to be reported to the IRS on the trust return. Dr. Ahee admitted that $43,324 reported in the 1991 trust return as "outside services" went into his personal accounts. He also admits that he did not report these monies on his 1991 personal federal tax return.

Dr. Ahee's CPA became concerned about these questionable financial activities. The CPA prepared a letter dated March 5, 1992 , in which he detailed his relationship with Dr. Ahee in 1991. The letter verifies that the CPA only prepared a trust return, and did not prepare an individual return for 1991. The CPA also told Dr. Ahee that the trust relationship would not save Dr. Ahee on his taxes. The CPA hand delivered the letter to Dr. Ahee, and had Dr. Ahee sign indicating its receipt.

In March of 1993, Special Agent Sanderson of the IRS Criminal Investigation Division conducted an interview of Dr. Ahee. Dr. Ahee admitted that he had not filed returns for 1990 or 1991. Special Agent Sanderson also met with CPA Jeanguenat, who informed Sanderson that he had prepared a 1990 personal return for Dr. Ahee and forwarded it to Dr. Ahee for his signature. The CPA indicated that Dr. Ahee had an income of $83,478 for 1990, and that he assumed Dr. Ahee had signed and filed the tax return. CPA Jeanguenat also provided Special Agent Sanderson with a copy of the "tax organizer" prepared by Dr. Ahee to assist Jeanguenat in preparing the 1990 return.

From this tax organizer, Special Agent Sanderson was able to identify bank accounts and other assets. He obtained records for these accounts, which revealed that Dr. Ahee had deposited numerous checks, cash and insurance proceeds given to Dr. Ahee as payment for chiropractic services. The IRS prepared summaries of the activities in these accounts, with which Dr. Ahee agreed. Utilizing these summaries, along with canceled checks and other records provided by Dr. Charles Schiemke, Dr. Ahee's partner in Shorepointe Chiropractic, the IRS prepared estimated taxes for Dr. Ahee. After subtracting expenses, exemptions and other permitted deductions, the Service calculated that Dr. Ahee's "total income" was $38,944.96 for 1990 and $50,555.83 for 1991.

In April of 1995, Dr. Ahee filed two form 1040 federal individual income tax returns for the years 1990 and 1991. Each of these returns were filed with all entries completed "0," except the 1990 return demanded the $6,440 refund (presumably for taxes paid in 1989). Attached to these returns was a two paged typed addendum in which Dr. Ahee stated that he was not required to pay taxes. Dr. Ahee claimed that he decided to file these "zero" returns after attending a tax seminar in early April 1995.

In 1996, a federal grand jury returned a two count indictment for making a false return under 26 U.S.C. §7206(1), based on the two "zero" returns. On January 22, 1999 , Dr. Ahee was convicted in a jury trial for violating the statute, and now appeals his conviction. Dr. Ahee mounts seven challenges to his conviction, with differing standards of review. We address each challenge separately below.

DISCUSSION

I. JUROR EXCLUSION AND INFLUENCE

Dr. Ahee claims that the court below improperly excluded all jurors who had previous negative experiences with the IRS and who believed or had knowledge that the IRS had engaged in improper activities. He also alleges that the judge erred in not conducting a post-trial hearing concerning alleged influence on one of the jurors. These arguments are in error.

A proper challenge to juror exclusion requires a showing that (1) the excluded group is a distinctive group in the community; (2) the identified group is under-represented in the jury venire from which jurors are selected, and that (3) this under-representation is due to systematic exclusion of the group in the jury selection process. See Duren v. Missouri , 439 U.S. 357, 364, 99 S.Ct. 664, 668, 58 L.Ed.2d 579 (1979). Review of whether or not jurors were properly excluded, or whether or not the trial judge conducted "proceedings necessary to discover misconduct is reviewed only for an abuse of discretion." United States v. Shackelford, 777 F.2d 1141, 1145 (6th Cir. 1985). See also Marks v. Shell Oil Co., 895 F.2d 1128, 1129 (6th Cir. 1990). Appellant points to no evidence in the record to support his claim. Nor can he demonstrate any record of objecting to the exclusion during the course of voir dire. Rather, it is just a bald, sweeping generalization indicating dissatisfaction with the jury panel. Such "issues averted to in a perfunctory manner, unaccompanied by some effort at developed argumentation, are deemed waived." McPherson v. Kelsey, 125 F.3d 989, 995 (6th Cir. 1997).

Appellant secured an affidavit from one of the jurors, and two "witnesses," that he and other jurors were motivated to find Ahee guilty out of fear of the IRS. Dr. Ahee also alleges the affidavit shows the jury preferred a finding of guilt on the lesser-included misdemeanor charge, but "through fear entered verdicts of guilty as to felonies."

Since Fed. R. Evid. 606(b) "only permits jurors to testify 'whether extraneous prejudicial information was improperly brought to the jury's attention or whether any outside influence was improperly brought to bear upon any juror,' " a party seeking to have the trial court conduct a so-called Reemer hearing must demonstrate that external influences impacted the jury process. United States v. Shackelford, 777 F.2d 1141, 1145 (6th Cir. 1985). See also United States v. Herndon, 156 F.3d 629, 635 (6th Cir. 1998) (only "where a colorable claim of extraneous influence has been raised" should a court conduct a Reemer hearing). "Extraneous influence on a juror is one derived from specific knowledge about or a relationship with either the parties or their witnesses. This knowledge or relationship is such that it taints the deliberations with information not subject to a trial's procedural safeguards." Herndon, 156 F.3d at 636.

Fear of the IRS is not the type of external influence contemplated by Fed. R. Evid. 606. A juror's possible subjective belief concerning the IRS is not "specific knowledge" sufficient to "taint the deliberations." This Court's cases that have found extraneous influence, and thus the necessity of a hearing, involved prior business relationships among private parties that ended with animosity (Herndon), or improper direct communication with the jury. See United States v. Walker, 1 F.3d 423 (6th Cir. 1993) (highlighted transcripts inadvertently sent to the jury room); United States v. Cooper, 868 F.2d 1505 (6th Cir. 1989) (prosecutor's notes ended up in the jury room). These cases highlight the policy behind Fed. R. Evid. 606 that only objective external forces, not the juror's own "mental processes" may be evaluated by the trial judge in a Reemer hearing.

Moreover, Appellant states everyone that had a negative experience with the IRS was already excluded. Thus, all potential jurors who have objective reasons for "fearing" the IRS were not on the actual jury. Dr. Ahee cannot both argue undue influence on the jury, and at the same time argue that all potential jurors who had a prior "knowledge or relationship" with IRS were systematically excluded from the jury panel. Herndon, 156 F.3d at 636.

II. SUPPRESSION OF TAX RETURN

Appellant contends that his two "zero" tax returns should have been suppressed as violative of his 5th Amendment privilege against self incrimination. "When reviewing the denial of a motion to suppress, we review the district court's findings of fact for clear error and its conclusions of law de novo." United States v. Hurst, 228 F.3d 751, 756 (6th Cir. 2000) (citing United States v. Navarro-Camacho, 186 F.3d 701, 705 (6th Cir. 1999); United States v. Walker, 181 F.3d 774, 776 (6th Cir. 1999), cert. denied, 528 U.S. 980, 120 S.Ct. 435, 145 L.Ed.2d 340 (1999). ² Nonetheless, the evidence must be evaluated " 'in the light most likely to support the district court's decision.' " Id. (quoting Navarro-Camacho, 186 F.3d at 705). There is nothing to suggest that the district court committed reversible error in its evaluation of Dr. Ahee's motion to suppress.

"The central standard for the application of the Fifth Amendment privilege against self incrimination is whether the claimant is confronted by substantial and 'real,' and not merely trifling or imaginary, hazards of incrimination." United States v. Argomaniz [91-1 USTC ¶50,135], 925 F.2d 1349, 1353 (11th Cir. 1991) (quoting Marchetti v. United States [68-1 USTC ¶15,800], 390 U.S. 39, 53, 88 S.Ct. 697, 705, 19 L.Ed.2d 889 (1968)). A taxpayer may not, in the words of Justice Holmes, "draw a conjurer's circle around the whole matter by his own declaration that to write any word upon the government's blank would bring him into danger of the law." United States v. Saussy [86-2 USTC ¶9718], 802 F.2d 849, 855 (6th Cir. 1986) (quoting United States v. Sullivan [1 USTC ¶236], 274 U.S. 259, 264, 47 S.Ct. 607, 71 L.Ed. 1037 (1927)).

"The privilege must be claimed specifically in response to particular questions, not merely in a blanket refusal to furnish any information; (2) the claim is to be reviewed by a judicial officer who determines whether the information sought would tend to incriminate; (3) the witness or defendant himself is not the final arbitor of whether or not the information sought would tent to incriminate." Saussy [86-2 USTC ¶9718], 802 F.2d at 855 (quoting United States v. Johnson [78-2 USTC ¶9642], 577 F.2d 1304, 1311 (5th Cir. 1978)).

The cases that have upheld the exercise of the Fifth Amendment privilege typically involve criminal activity, or suspected criminal activity. They do not involve blanket refusals to provide any information whatsoever on an IRS 1040. Indeed, as noted above, this Court requires the privilege to be claimed "specifically in response to particular questions." There is nothing to indicate that occurred in this case.

III. INDICTMENT DEFECTS

The indictment in this case read as follows:

That on or about April 17, 1995 , in the Eastern District of Michigan, Southern Division, defendant Glenn M. Ahee did willfully make and subscribe a false return, statement and document, purporting to be an individual income tax return for 1990 [and 1991], which contained a written declaration that it was made under the penalty of perjury and was filed with the Internal Revenue Service, which return, statement and document he did not believe to be true and correct as to every material matter, in that he prepared and filed a form 1040 return which reported zero total income, whereas, as he knew, he earned substantial total income in 1990 [and 1991], all in violation of 26 U.S.C. §7206(1).

Appellant claims this indictment was constitutionally insufficient to inform him of what constituted the criminally prohibited conduct. He also claims that the district court was without jurisdiction to hear the case due to defects in the indictment These contentions are without merit.

An "indictment is sufficient if it, first, contains the elements of the offense charged and fairly informs a defendant of the charge against him which he must defend, and second, enables him to plead an acquittal or conviction in bar of future prosecutions of the same offense." Hamling v. United States , 418 U.S. 87, 117, 94 S.Ct. 2887, 2907, 41 L.Ed.2d 590 (1974). "It is generally sufficient that an indictment set forth the offense in the words of the statute itself, as long as 'those words of themselves fully, directly, and expressly, without any uncertainty or ambiguity, set forth all the elements necessary to constitute the offense intended to be punished.' " Id. (citation omitted). As to the question of jurisdiction, this Court applies de novo review. See Hedgepeth v. Tennessee , 215 F.3d 608, 611 (6th Cir. 2000).

Section 7206(1) provides that "any person who willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter shall be guilty of a felony. . ." 26 U.S.C. §7206 (1). "Section 7206 prohibits making or assisting the making of any materially false return, statement, claim or other document under the internal revenue laws. . . . Under a reasonable construction of the statute, a person of ordinary intelligence could understand that it criminalizes lying on any form or document filed with the IRS." United States v. Cochrane, 985 F.2d 1027, 1031 (9th Cir. 1993). Under the statue the government need not prove either intent to evade payment of taxes nor even the existence of any taxable income. merely that the person who signed the form lied about the matters it contained. See United States v. Taylor [78-1 USTC ¶9474], 574 F.2d 232 (5th Cir. 1978).

Any return that "omits material items necessary to the computation of income is not 'true and correct' within the meaning of section 7206. If an affirmative false statement be required, it is supplied by the taxpayer's declaration that the return is true and correct, when he knows it is not." Siravo v. United States [67-1 USTC ¶9446], 377 F.2d 469, 472 (1st Cir. 1967). Finally, "under §7206(1), the Government [does] not need to establish an actual tax deficiency in a §7206(1) prosecution. The burden rests on the taxpayer to disclose his receipts and claim his proper deductions." United States v. Ballard [76-1 USTC ¶9378], 535 F.2d 400, 404 (8th Cir. 1976).

Appellant avers that since the Code does not define income, he did not know that monies he received were income, so he violated the Code, if at all, in good faith. While it is true that the "general term income is not defined in the Internal Revenue Code," all of the monies received by Dr. Ahee clearly meet the definitions found in IRC §61. Ballard [76-1 USTC ¶9378], 535 F.2d at 404. The money he received as compensation for patient services falls squarely within IRC §61(a)(1): "Compensation for services, including fees, commissions, fringe benefits, and similar items." The monies could similarly be seen as "gross income derived from business" or "dividends" or "distributive share of partnership gross income" or finally "income form an interest in an estate or trust" under the trust scheme he established in 1991. See 26 U.S.C. §61(a)(2), (a)(7), (a)(13) and (a)(15).

Moreover, there is no indication that Dr. Ahee did not know that the monies he received as a result of providing patient services constituted "income." He had paid income taxes for several years, and his accountant had always established Dr. Ahee's level of taxable income from sums Dr.Ahee received as compensation for chiropractic services. His argument that he did not know that the sums he received constituted "income" is belied by his prior payment of income taxes based on those sums, and his aforementioned continued reliance on those sums as "income" when seeking loans or engaging in other financial activities.

IV. ADMINISTRATIVE SUMMONS

Dr. Ahee challenges the use of administrative summonses by the IRS to gather information which led to his indictment. He argues that the trial court should have conducted a so-called Genser hearing regarding the suppression of information obtained pursuant to the administrative summonses. See United States v. Genser [78-2 USTC ¶9682], 582 F.2d 292 (3d Cir. 1978), cert. denied, 444 U.S. 928, 100 S.Ct. 269, 62 L.Ed.2d 185 (1979). He also argues that the use of administrative summonses was improper since the summonses were issued under the auspices of a criminal investigation in violation of United States v. Lasalle National Bank [78-2 USTC ¶9501], 437 U.S. 298, 98 S.Ct. 2357, 57 L.Ed.2d 221 (1978). Finally, Dr. Ahee alleges that the summons were issued due to impermissible selective prosecution in response to legitimate First Amendment-protected activity.

The decision of whether to hold a Genser hearing lies within the sound discretion of the trial court. This court will "defer to the district court's discretion to decide if an evidentiary hearing on the question of enforcement of a summons is warranted." United States v. Gertner [95-2 USTC ¶50,499], 65 F.3d 963, 969 (1st Cir. 1995) (quoting Fortney v. United States [95-2 USTC ¶50,371], 59 F.3d 117, 121 (9th Cir. 1995)). See also Hintze v. IRS [89-2 USTC ¶9451], 879 F.2d 121, 126 (4th Cir. 1989). Dr. Ahee has presented nothing during the course of this appeal to suggest the trial court abused its discretion in not holding a Genser hearing regarding the IRS summonses used during the investigation.

At the trial court, Dr. Ahee argued that the Service failed to demonstrate the proper grounds for the use of the administrative summonses. The IRS may justify the use of the administrative summons upon a demonstration of good faith; that is:

that the investigation will be conducted pursuant to a legitimate purpose, that the inquiry may be relevant to the purpose, that the information sought is not already within the Commissioner's possession, and that the administrative steps required by the [Internal Revenue] Code have been followed--in particular, that the "Secretary or his delegate," after investigation, has determined the further examination to be necessary and has notified the taxpayer in writing to that effect.

United States v. Stuart [89-1 USTC ¶9185], 489 U.S. 353, 109 S.Ct. 1183, 1188, 103 L.Ed.2d 388 (1989) (quoting United States v. Powell [64-2 USTC ¶9858], 379 U.S. 48, 57-58, 85 S.Ct. 248, 254-55, 13 L.Ed.2d 112 (1964)). Also, under LaSalle, the Service cannot obtain information pursuant to the administrative summons process "after the IRS recommends prosecution to the Department of Justice, or after the IRS has abandoned, in an institutional sense, the pursuit of civil tax determination or collection." Genser [78-2 USTC ¶9682], 582 F.2d at 309. Dr. Ahee argues that the IRS has not met the standard of good faith set out above since it violated the admonition of LaSalle concerning criminal prosecutions.

Dr. Ahee notes that the IRS first became aware of him through a 1992 criminal investigation of the Pilot Connection Society, a tax protest organization operating in the western United States . While this is true, at the time there was no ongoing criminal investigation of Dr. Ahee himself. In fact, no criminal charges were brought against Dr. Ahee until after he made the false statements on his 1990 and 1991 1040s that he filed in April of 1995. Special Agent Sanderson stated in a sworn affidavit that all administrative summonses were issued in 1993 and 1994, well before Special Agent Sanderson completed his report recommending criminal sanctions, and at least 2 years before the matter was tendered to the Department of Justice for prosecution. Moreover, the crime at issue in the current case did not occur until April of 1995, at least a year after the summonses were issued. Given this fact, and the fact the summonses were utilized to gather evidence, not justify a previous determination to prosecute, the trial court did not err in concluding the IRS had a legitimate purpose for the use of administrative summonses under 26 U.S.C. §7206.

Dr. Ahee also alleges that the IRS did not properly follow the procedure for giving a taxpayer the opportunity to quash a subpoena under 26 U.S.C. 7609(a)(1). This statute gives a taxpayer up to 20 days to move to quash a subpoena investigating his or her affairs. Dr. Ahee only identifies one summons potentially violative of this provision. On April 8, 1993 , the Northeast Catholic Credit Union was served with a summons demanding it produce records relating to Dr. Ahee on April 26, 1993 , only 18 days later.

Nonetheless, the record reveals that Dr. Ahee received notice of the summons on April 9, 1993 , but did not make any motion to quash until July 8, 1998 , more than five years later. Despite the violation of the statutory provision, the district court properly denied any hearing on the motion to suppress/quash the information obtained with the summons. Not only did Dr. Ahee not present any justification for waiting over five (5) years to attempt to quash the summons, he presented no basis in fact that would justify an order to quash, nor did he demonstrate any information which the Service obtained with the summons that would be offered at trial.

Likewise, Dr. Ahee is entitled to no relief on the basis of selective prosecution. He argues that while he was subjected to criminal prosecution for filing "zero returns," other tax payers only received civil penalty assessments, or, in some cases, actual tax refunds. He argues the difference in treatment arose from his association with a tax protester group, and his exercise of First Amendment rights to criticize the government.

"The government has broad discretion in determining who will be charged and with what crime." Wayte v. United States , 470 U.S. 598, 607, 105 S.Ct. 1524, 1530, 84 L.Ed.2d 547 (1985). Thus, in order to succeed upon a selective prosecution claim, a criminal defendant must establish both that the government harbored a discriminatory intent and that the challenged prosecutorial policy had a discriminatory effect. See United States v. Jones, 159 F.3d 969, 976 (6th Cir. 1998). A demonstration of discriminatory intent requires the defendant to "show that 'the government's discriminatory selection of him has been invidious or in bad faith, i.e., based on such impermissible considerations such as race, religion, or the desire to prevent the exercise of his constitutional rights.' " United States v. Mullins, 22 F.3d 1365, 1373 (6th Cir. 1994) (quoting United States v. Hazel [83-1 USTC ¶9132], 696 F.2d 473, 474 (6th Cir. 1983)). As to discriminatory effect, "a defendant must show that similarly situated individuals . . . were not similarly prosecuted." Jones, 159 F.3d at 977.

Dr. Ahee has failed to adduce any evidence that either his membership in the Pilot Connection Society was a factor in the government's decision to prosecute, or that he was treated differently from "similarly situated" individuals. While he presents hearsay testimony that other people who filed "zero returns" were not prosecuted, he never outlines any evidence suggesting these individuals had similar incomes, expenses, deductions or exemptions that would have produced knowing, material misstatements of income on a level with those made by Dr. Ahee. He has simply produced no evidence to sustain a finding of "selective" prosecution.

V. POST-TRIAL MOTIONS FOR DISMISSAL

In his motions for post-trial relief, Dr. Ahee alleged a litany of evidentiary and other discretionary ruling abuses by the trial court. The district court denied Dr. Ahee's motions in all regards. "Although we review the district court's denial of the motion[s] de novo, we must affirm its decision if the evidence, viewed in the light most favorable to the government, would allow a rational trier of fact to find the defendant guilty beyond a reasonable doubt." United States v. Canan, 48 F.3d 954, 962 (6th Cir. 1995) (citing United States v. Montgomery, 980 F.2d 388, 393 (6th Cir. 1992)).

First, he alleges that the district court improperly admitted evidence of other bad acts in violation of Fed. R. Evid. 404(b). Specifically, he challenges the prosecution's successful introduction of his 1988 and 1989 federal tax returns as improper under this rule as he was only charged with making false statements on his 1990 and 1991 returns. As an initial matter, the admission of the two returns was not Rule 404(b) evidence because they were not offered to show prior wrongful acts. Rather, the Service introduced the two returns to show prior "good" acts; that is, that Dr. Ahee knew how to file proper tax returns yet consciously chose not to do so in the subsequent years of 1990 and 1991. Moreover, the prosecution informed Dr. Ahee prior to trial of its intent to introduce the returns, and Dr. Ahee made no timely, pretrial motion to exclude the evidence. At trial, defense counsel objected to the returns, but only on relevancy grounds, not under Rule 404(b). Thus, not only do Dr. Ahee's contentions lack merit, they were not properly preserved for presentation to this Court.

Dr. Ahee also asserts that the district court erred in allowing prosecution witnesses to offer hearsay testimony. However, he makes only a passing reference to this contention in his appellate brief, with no citation to the record nor any further argument or even citation to relevant authority. Such a skeletal treatment of an appellate issue is insufficient to preserve the allegation of error for review. See United States v. Layne, 192 F.3d 556, 566-67 (6th Cir. 1999), cert. denied, 529 U.S. 1029, 120 S.Ct. 1443, 146 L.Ed.2d 330 (2000).

Dr. Ahee next asserts the trial court erroneously allowed two prosecution witnesses to testify as "experts" under Fed. R. Evid. 703 when the two individuals did not meet the requirements Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993) and Kumho Tire Company, LTD v. Carmichael, 526 U.S. 137, 119 S.Ct. 1167, 143 L.Ed.2d 238 (1999). However, he cannot point to anything in the record that indicates the trial judge ever granted the two witnesses in question, CPA Jeanguenat and Ann McEnanly, expert status. The trial judge actually brushed aside an attempt by the prosecutor to qualify CPA Jeanguenat as an expert during the course of the trial. As to Ms. McEnanly, an employee of the IRS who compiled exhibits used during the trial, the district court found that she did not offer expert testimony. The district court also found that she had laid a proper foundation for any opinion testimony which she may have given. Since there are no rulings by the trial court that the two witnesses were experts. Dr. Ahee's challenge to non-existent rulings is without merit.

Dr. Ahee further asserts that the Service constructively and improperly amended the indictment returned by the grand jury when the prosecution questioned government witnesses about Dr. Ahee's "gross income" when the charging instrument specifically claimed that he had misstated his "total income" on his 1990 and 1991 tax returns. However, as noted by the prosecution, the testimony at trial was not offered in an attempt to charge Dr. Ahee with a different offense. Rather, in order to arrive at a "total income" figure on a tax return, the tax payer (and the IRS) must first calculate "gross income." Introduction of evidence regarding Dr. Ahee's gross income and the components of such a figure thus do not amount to a constructive amendment of the indictment.

Next, Dr. Ahee contends that the prosecution failed to adduce sufficient evidence to support his convictions because no witness was able to testify as to his intent at the time he filed the 1990 and 1991 "zero returns" or to testify that the applicable laws imposed any duty upon Dr. Ahee to pay federal income taxes. When reviewing a sufficiency challenge, this Court must determine whether, viewing the trial testimony, exhibits and other evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. See Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560 (1979). Additionally, when performing this review, the Court may not reweigh the evidence, reevaluate the credibility of the witnesses, or substitute its judgment for that of the jury. See United States v. Hilliard, 11 F.3d 618, 620 (6th Cir. 1993).

There was no direct evidence presented at trial of Dr. Ahee's intent at the time of filing the "zero returns" for 1990 and 1991 in April of 1995. It would be a rare case that such testimony or other evidence would be available to the prosecution. Nevertheless, the Service presented sufficient circumstantial evidence to justify a finding that Dr. Ahee misstated his total income on the returns, that he knew that the stated income amounts were incorrect, and that the misstatements were intentional. This included testimony and documentation showing that Dr. Ahee had filed proper returns in prior years and was thus aware of his obligations as a taxpayer, the testimony of Dr. Ahee's personal accountant that Dr. Ahee had been informed that either the Shorepointe Chiropractic Trust or Dr. Ahee was responsible for paying taxes, and the testimony that Dr. Ahee had admitted to significant income in order to secure a mortgage loan at the same time he denied having any income for federal tax purposes.

The crux of Dr. Ahee's argument on this issue is that the Service has not established his responsibility to pay taxes and that testimony regarding gross receipts does not necessarily prove that he understated his income. This once again demonstrates Dr. Ahee's misunderstanding of 26 U.S.C. §7602. The crimes for which he was convicted do not involve allegations of nonpayment of taxes or underpayment of taxes, but rather the making of false statements on a federal tax form. Although gross receipts do not equal total income under the Internal Revenue Code, circumstantial evidence concerning prior years' returns and diversion of substantial amounts of income into a trust justify a rational trier of fact in finding beyond a reasonable doubt that Dr. Ahee's income for the relevant tax years was greater than zero. The same pattern of conduct also justifies the conclusion that Dr. Ahee knowingly misstated that income in violation of §7602.

VI. JURY INSTRUCTIONS

Dr. Ahee also briefly argues that the district court erred in failing to instruct the jury on the definition of gross income. As noted by the Service, however, defense counsel chose not to object to the instructions as given. Since no objection was made, this Court may only reverse if the trial judge committed plain error. United States v. Alt [93-2 USTC ¶50,385], 996 F.2d 827, 829 (6th Cir. 1993). See also Reynolds v. Green [93-2 USTC ¶50,385], 184 F.3d 589, 594 (6th Cir. 1999). Here, the jury had before it, through Dr. Ahee's testimony on cross-examination, the statutory definition of gross income, and was specifically instructed to use its common sense in considering and weighing the evidence in the case. Under such circumstances, and because the defendant was charged and convicted with making false statements regarding his "total income," not his "gross income," the district court did not commit plain error in failing to give an explicit definition of a term not included in the indictment.

VII. CLOSING ARGUMENT

In his final challenge, Dr. Ahee contends that the prosecution engaged in improper conduct during its closing argument by appealing to the pecuniary interests of the jury. Prosecutorial misconduct typically will not result in reversible error where the misconduct was not flagrant or where the proof of guilt is overwhelming. United States v. Bess, 593 F.2d 749, 757 (6th Cir. 1979). "First, we determine whether the conduct was improper under United States v. Bess, 593 F.2d 749 (6th Cir. 1979). Improper conduct is then examined for flagrancy under United States v. Leon, 534 F.2d 667 (6th Cir. 1976). If the conduct is found not to be flagrant, we will reverse only when (1) the proof against the defendant was not overwhelming, (2) opposing counsel objected to the conduct. and (3) the district court failed to give a curative instruction. United States v. Carroll, 26 F.3d 1380, 1384-90 (6th Cir. 1994) (reconciling Bess and Leon). In the absence of an objection, only flagrant conduct will warrant a "plain error" reversal. Id. , at 1385 n. 6." United States v. Brown, 66 F.3d 124, 127 (6th Cir. 1995). Here, Dr. Ahee cannot point to either flagrant misconduct or timely objection by his counsel in the record. The argument of the prosecutor did ask the jurors to use their common sense in evaluating the case and did submit that Dr. Ahee did not want to pay income taxes for his own selfish purposes. Those suggestions, however, were well within the bounds of acceptable argument and in no way improperly appealed to the jurors' pecuniary interests. Dr. Ahee's arguments to the contrary are without merit.

CONCLUSION

Dr. Ahee raises numerous issues in his attempt to extricate himself from these charges. For the reasons stated above, none of the arguments have merit. The district judge committed no reversible errors. The verdict of the jury is AFFIRMED.

^* Honorable Thomas B. Russell, United States District Judge for the Western District of Kentucky, sitting by designation.

² This is a different standard than the typical "abuse of discretion standard" prescribed by the Supreme Court for evidentiary decisions. General Electric Co. v. Joiner, 522 U.S. 136, 141, 118 S.Ct. 512, 139 L.Ed.2d 508 (1997). This is due to the strong constitutional considerations involved in evaluating a suppression claim under the Fourth and Fifth Amendments. See Hurst , 228 F.3d at 756 n. 1.

 

 

[2002-1 USTC ¶50,220] United States of America v. John Sandalis & Michelle Sandalis

U.S. District Court, West. Dist. Va. , Charlottesville Div., 3:98CR0082, 1/11/2002 , 2002 U.S. Dist. LEXIS 713.

[Code Sec. 7203 ]

Extraneous information supplied by juror: Verdict influenced.--A couple convicted of criminal tax fraud and tax evasion was not granted a new trial on their theory that extraneous information a juror supplied to the rest of the jury, that she had seen their company's logo on trucks outside her place of employment, unfairly influenced the jury's verdict. The isolated comment by the juror was not informative in any way that could have influenced the verdict.
[Code Sec. 7203 ]

Jury trials: Jurors: Bias, actual or implied: Evidence: Voir dire: Waiver of right to new trial: Remmer hearing.--A married couple was not granted a new trial following their conviction on counts of criminal tax fraud and tax evasion because they did not prove actual bias of a juror. The couple failed to prove that the juror made any express admission of bias, and they failed to present specific evidence that showed "such a close connection to the circumstances at hand that bias must be presumed." The couple's affidavits, which were offered to prove the existence of the juror's bias, were unpersuasive. They likely waived their right to a new trial when they admitted, through their affidavits and the affidavit of one of their employees, that they recognized the juror but failed to strike her during voir dire. Finally, the couple was not allowed to summon three jurors who failed to appear for the Remmer hearing because nothing would be gained by issuing subpoenas to them in light of the fact that the eight other jurors agreed unanimously that the juror in question was not biased against the couple.

Jean Barrett Hudson, United States Attorney's Office, Charlottesville, Va., John Hinton III, Department of Justice, Washington, D.C. 20530, for U.S. Charles P. Rosenberg, Hunton & Williams, McLean, Va., for John & Michelle Sandalis.

ORDER

MOON, District Judge:

This matter comes before the Court on Defendants' motions for a new trial. For the reasons stated in the attached Memorandum Opinion, Defendants' motion is DENIED.

The Clerk of the Court is hereby directed to send a certified copy of this Order to all counsel of record and to strike this case from the docket of the Court.

MEMORANDUM OPINION

I.

This matter comes before the Court on Defendants' motion for a new trial. Defendants' John and Michelle Sandalis ("the Sandalises") own and operate Dalis Painting ("Dalis"), a Virginia corporation. In December of 1998, the Sandalises were indicted on six counts of criminal tax fraud and tax evasion, relating both to their personal tax returns and the corporate tax returns of Dalis Painting. In March of 2000, after a two-day jury trial in this Court, the Sandalises were found guilty on all counts.

Defendants appealed their convictions, arguing that the Court erred by failing to conduct an evidentiary hearing into allegations of juror bias, pursuant to Remmer v. United States [56-1 USTC ¶9320], 347 U.S. 227, 98 L.Ed. 654, 74 S.Ct. 450 (1954). Specifically, the Sandalises alleged that Elizabeth Braswell, the foreperson of the jury, was unduly prejudiced against Defendants. Ms. Braswell works for the University of Virginia at the Miller Center of Public Affairs, located in the Faulkner House. Dalis Painting worked on a lead abatement project in the Faulkner House, in and around Ms. Braswell's office, from January to August 1999. According to the affidavits of several Dalis employees, Ms. Braswell was a chronic complainer who disapproved of the amount of noise and dust that created by the project.

The Fourth Circuit held that a defendant is entitled to an evidentiary hearing if he can make "a threshold showing that improper external influences came to bear on the decision-making process of a juror." United States v. Sandalis, 2001 U.S. App. LEXIS 17273, No. 00-4748, 2001 WL 867389, at *5 (4th Cir. Aug. 1, 2001 ). Once a defendant meets this initial burden, the district court "should not decide and take final action ex parte . . ., but should determine the circumstances, the impact thereof upon the juror, and whether or not it was prejudicial, in a hearing with all interested parties permitted to participate." Id. (quoting Remmer [56-1 USTC ¶9320], 347 U.S. at 229-30). Based on the affidavits presented by the Sandalises, the Fourth Circuit concluded that Defendants had met their initial burden and therefore were entitled to a Remmer hearing.

The Fourth Circuit instructed this Court to conduct the hearing as follows. Ms. Braswell was to be questioned and the Sandalises would "bear the burden of proving that Braswell's prior business dealings with the Sandalises compromised her ability to render a fair and impartial verdict." 2001 U.S. App. LEXIS 17273, 2001 WL 867389, at *13. It was left for this Court to determine whether any other jurors should be interrogated. The Court directed the Clerk to summon all jurors who would be available on the date of the Remmer hearing. In summoning additional jurors, the Court sought to determine whether these jurors had any sense that Ms. Braswell might be particularly committed to a finding of guilt, or whether Ms. Braswell injected any external evidence that might have improperly affected the decision-making process of the jury. Nine jurors, including Ms. Braswell, attended the hearing and were questioned by Defendants' counsel and by the government. The remaining three jurors could not be contacted, or were not available on the date of the hearing.

Following the Remmer hearing, attorneys on both sides filed supplemental briefs. Defendants requested an additional hearing on the issues raised in these supplemental briefs, which the Court held on December 12, 2001 . In addition, Defendants filed a motion with the Court asking for criminal background checks to be performed on each of the jurors. The Court granted the motion in part, permitting the disclosure of criminal background checks of those jurors who testified at the initial Remmer hearing. Those background inquiries revealed that one of the jurors pled guilty in 1979 to the charge of petit larceny of merchandise valued at less than $100, which resulted in a sentence of twelve months confinement, all but thirty days suspended, and that to be served on weekends only. In addition, that same juror was arrested in July of 2001 and charged with possession of a controlled substance and solicitation of prostitution. Those charges arose after the Sandalises' trial, and have not been resolved.

Based on the above evidence, Defendants contend that they are entitled to a new trial because: (1) Ms. Braswell was actually biased against them; (2) she would have been excluded from the jury at voir dire had her prior experiences with Dalis Painting come to light; and (3) she introduced improper, extraneous evidence into the jury's deliberation process. For the reasons stated below, this Court disagrees, and Defendants' motion for a new trial is DENIED.

II.

The first question before the Court is whether Defendants have proven that Ms. Braswell was biased against them. The Sandalises contend that she was actually biased. In addition, they suggest that even if the Court finds that she was not actually biased, that the Court should impute bias to her. The Court will consider both arguments.

A.

A defendant is entitled to a new trial if, after a post-trial hearing, he can prove actual bias on the part of any one of the jurors. A mere showing of possible bias, on its own, is insufficient to require a new trial. "The participation of a juror whose impartiality is suspect for reasons not known to defense counsel at the time of voir dire does not per se require a new trial. Instead, the verdict may be set aside if a post-trial hearing demonstrates that the juror was actually biased." United States v. Malloy, 758 F.2d 979, 982 (4th Cir. 1985). As the Supreme Court has stated, "Due process does not require a new trial every time a juror has been placed in a potentially compromising situation. . . . Due process means a jury capable and willing to decide the case solely on the evidence before it, and a trial judge ever watchful to prevent prejudicial occurrences and to determine the effect of such occurrences when they happen." Smith v. Phillips, 455 U.S. 209, 217, 71 L.Ed.2d 78, 102 S.Ct. 940 (1982).

At the post-trial hearing, the defendant has "the burden of proof to show actual prejudice." Malloy, 758 F.2d at 982. To show actual bias, a defendant must: (1) present evidence of an express admission by the allegedly biased juror; or (2) present specific evidence that shows "such a close connection to the circumstances at hand that bias must be presumed." United States v. Perkins, 748 F.2d 1519, 1532 (11th Cir. 1984) (internal quotations omitted). Ms. Braswell did not admit any bias. She testified at the Remmer hearing that she felt "totally neutral" towards Dalis Painting and the Defendants. Therefore, this Court will focus its attention the whether the specific facts Defendants have presented are sufficient to allow a reasonable fact-finder to conclude that Ms. Braswell was actually biased.

Before reviewing the evidence at hand, it is useful to survey two examples wherein a defendant attempted to show actual bias. In Fitzgerald v. Greene, the defendant was charged with raping two teenagers and murdering two other individuals. 150 F.3d 357 (4th Cir. 1998). The trial was bifurcated into guilt and penalty phases. The jury first voted to convict on all counts and then proceeded to the penalty phase. During deliberations on sentencing, one of the jurors commented that he had "no sympathy for rapists because his granddaughter had been molested as a child." Id. at 363. Based on this statement, the defendant sought habeas corpus relief. The Fourth Circuit denied the defendant's petition, upholding the state court's determination that the juror was being honest when he stated that "his granddaughter's molestation had no effect on his voting to convict or sentence Fitzgerald for any of his crimes." Id. at 364.

In contrast, in United States v. Perkins, the Eleventh Circuit found that a defendant was entitled to a new trial because of juror bias. Perkins was convicted on obstruction of justice charges relating to certain banking practices of a Savings and Loan Association that he had organized. 748 F.2d 1519, 1529-30 (11th Cir. 1984). After almost twenty hours of deliberation, the jury returned a verdict of guilty.

Immediately after the trial, two jurors contacted the defendant to inform him that the verdict was not their verdict. Additionally, one of the jurors reported that a third juror, Juror Goad, was especially committed to a finding of guilty. Id. at 1529-30. During voir dire, Goad admitted that he recognized the defendant "facially" but that he did not know him personally. Id. at 1530. At a post-trial hearing, it was uncovered, after much questioning, that Goad had in fact served on a committee with Perkins. The rest of the jury also testified at the Remmer hearing, and eight of them stated that Goad had told them during deliberations that he knew the defendant and/or had served on a committee with him. Id.

After that revelation, the court asked the jurors if any of them had been a plaintiff or defendant in a civil suit. Although he was initially reluctant to respond, Juror Goad did admit that he as a party to a divorce case "about forty-two or three years ago." Id. at 1530. The court asked Goad if he had been a party to any other suit, and Goad denied that he had been involved in any other matters. After the court recited the name of a case in which he had been a named defendant, Goad replied, "Since you brought that up, I do remember that." Id. That case, Snider v. Allstate Administrator, Inc. (M.D. Fla. No. 69-237), involved charges of misappropriation of funds, similar to the charges against Mr. Perkins. The Court followed up with Mr. Goad again, asking him if there were any other cases in which he had been involved, either as a party or as a witness. Again, he claimed not to remember any other lawsuits in which he had taken part. Finally, after considerable prodding, Juror Goad admitted that he had testified as a witness on behalf of the government in third case. 748 F.2d at 1530-31.

The court concluded "that actual bias must be presumed" because of: (1) his concealment of his prior relationship with the defendant; and (2) his "tenacious effort to deny involvement" in any other court proceedings. Id. at 1532. Additionally, the court was swayed by the fact that Goad had injected extraneous information about the defendant into jury deliberations that "had remained hopelessly deadlocked" for two days. Id. at 1534.

After considering all of the evidence, this Court concludes that Ms. Braswell was not biased against Defendants. First, there is the testimony of several Dalis employees, each of whom testified that Ms. Braswell was a "chronic complainer." Whether or not this testimony is believed, it does not contradict Ms. Braswell's testimony, which this Court finds to be credible. Ms. Braswell stated that she had talked with L.T. "Spike" Weeks, the University officer who hired and managed Dalis Painting, but that she did not remember making any complaints to him or to anyone else. She added that she might have mentioned a complaint about noise or dust to her co-workers, but she did not recall voicing those complaints formally. Comparing the evidence from Ms. Braswell to the evidence from the Dalis employees, it is likely that Ms. Braswell, simply does not see herself as a chronic complainer. As a result, while Dalis employees may not have been fond of Ms. Braswell, she bore no ill will towards them, or towards Dalis Painting.

This view of Ms. Braswell is supported by the testimony of the other jurors. Eight jurors other than Ms. Braswell testified at the hearing. None of them perceived Ms. Braswell as being committed to a finding of guilt. She was described by her fellow jurors as quiet and reserved. Two of the eight jurors stated that Ms. Braswell "had an interest" in being foreperson of the juror, but most of the jurors felt that she was randomly chosen for what was described as a "secretarial" position. The eight jurors were unanimous in their belief that Ms. Braswell was not biased against the Defendants.

Defendants have tried to impeach the credibility of one of these jurors, who was convicted in 1979 of petit larceny of merchandise valued at less than $100, and who has since the Sandalis trial been charged with illegal possession of a controlled substance and solicitation of prostitution. While the past conviction and pending charges might make this juror a less reliable witness than the other jurors, the fact remains that his testimony is completely consistent with their testimony. Like the rest of the jury, he did not perceive Ms. Braswell to be biased.

Defendants also contend that the prior larceny conviction should have come out during voir dire. However, potential jurors were only asked if they had been convicted of a crime punishable by more than one year of prison time. This juror's thirty days of confinement more than twenty years ago did not disqualify him from jury service in this case.

In addition, Defendants point to the testimony of one juror, Juror Fix, who remembered Ms. Braswell mentioning something about Dalis Painting. According to Juror Fix, Ms. Braswell recognized the name "Dalis Painting" as being on work trucks outside of her office building. Juror Fix asserted that Ms. Braswell did not give any impression one way or the other on her feelings about the Sandalises' company. She merely mentioned that she had seen the name on the trucks.

This testimony does not support the assertion that Ms. Braswell was actually biased against Defendants. To compare it to previous cases, it is far less significant than the testimony of the eight jurors in Perkins who remembered the biased juror discussing his relationship with the defendant. Similarly, it is not damning in the way that the statement by the juror in the Fitzgerald case was. In Fitzgerald, the juror told the entire jury during deliberations that he "had no sympathy for rapists" because his granddaughter had been sexually assaulted. At the time of his comment, the jury was deciding on a recommended sentence for the rape charges in that case. In contrast, Ms. Braswell's comment to Juror Fix was apparently made to him alone, and was unrelated to the question of guilt or innocence. She did not say, for example, that she had "no sympathy" for Dalis Painting. She did not offer her impressions about the company at all--whether positive or negative.

Finally, there are the affidavits of John and Michelle Sandalis, as well as the affidavit of Spike Weeks. Spike Weeks, in his affidavit, asserts that Mr. Sandalis "is a very hands on person who comes to job sites frequently." Mr. Weeks believes that he and Mr. Sandalis came to the work site in Ms. Braswell's office building "at least a dozen" times. In short, Defendants contend that Ms. Braswell should have recognized the Defendant's face when he stood up during voir dire. Additionally, Defendants contend that Ms. Braswell called them directly to complain about the lead abatement project. Michelle Sandalis has stated in her affidavit that she specifically remembers the name "Ms. Braswell" as someone who called asking for her husband. She then remembers passing the phone to her husband, who answered by saying, "This is John Sandalis can I help you?" John Sandalis, in his affidavit, claims to remember the details of this conversation, as well as a second telephone conversation with Ms. Braswell.

Ms. Braswell stated that she does not remember ever calling the Sandalis, and she further insists that she does not recognize him from the job site at her office. On these points, the Court finds Ms. Braswell's testimony credible. Therefore, evidence of phone calls that Ms. Braswell cannot recall does not support Defendants' assertion that Braswell was actually biased against them.

The evidence does suggest, however, that Defendants might have waived their right to a new trial. Based on the evidence of the Sandalises' affidavits, it appears that Defendants should have recognized Ms. Braswell, both by face as she sat in the jury box, and by name as they read the jury list before the trial began. Both Defendants specifically remember the name "Ms. Braswell" from these phone conversations. Yet when asked by their attorney to look at the jury list to see if there was anyone they knew, neither of them mentioned anything about Elizabeth Braswell. The fact that Ms. Braswell listed the University of Virginia as her employer--and the fact that Dalis Painting does considerable work for the University--apparently did not ring any bells for Defendants. Instead, they claim that they did not notice Ms. Braswell's name on the jury list because she listed the "Miller Center at the University of Virginia" as her place of work, and the lead abatement project had been performed at the Faulkner House at the University of Virginia. They contend that they did not know that the Miller Center is housed in the Faulkner House.

In addition to the affidavits of Defendants, there is the testimony of Michael Ripley, an employee of Dalis Painting. Mr. Ripley mentioned that he came to the courtroom to watch the trial, and that he recognized Ms. Braswell on the jury. He said he was surprised to see her there because he believed that as a defendant, "you weren't supposed" to have someone you knew on the jury. Mr. Ripley further testified as follows.

Q [Government's Counsel]: How soon did you tell [Mr. Sandalis] that you were surprised [Ms. Braswell] was on the jury?

A: Probably, I guess, as soon as we left, I assume.

Q: Of the first day?

A: Yeah. Yes sir.

Defendants did not take the stand or present any evidence--either at the initial Remmer hearing or at the later December 12th hearing--to contradict Mr. Ripley's testimony or to suggest that his memory of this conversation is unreliable. Therefore, from Mr. Ripley's testimony and from the evidence in Defendants' own affidavit, it is probable that Defendants recognized Ms. Braswell on the jury while the trial was still in progress. Perhaps because they thought that a former client of Dalis Painting would be sympathetic to their case, Defendants chose not to strike her from the jury. In making this choice, Defendants have likely waived their right to a new trial. See United States v. Breit, 712 F.2d 81, 83 (4th Cir. 1983).

Regardless of the issue of waiver, however, the defense has not met its burden to prove actual bias. Defendants have failed to point to specific facts that show "such a close connection to the circumstances at hand that bias must be presumed." Perkins, 748 F.2d at 1532. This Court finds Ms. Braswell's testimony to be credible and consistent with the testimony of the other jurors. It is the ruling of the Court, therefore, that Ms. Braswell was not biased against Defendants.

B.

Having failed to show actual bias on the part of Braswell, Defendants suggest that they are entitled to a new trial based on a claim of implied bias. In Smith v. Phillips, the Supreme Court held that the law will not impute bias to a juror who is in a compromising position. See 455 U.S. at 215. Justice O'Connor filed a concurring opinion, expressing her view "that the [majority] opinion does not foreclose the use of 'implied bias' in appropriate circumstances." Id. at 221. Those circumstances are "extreme situations," such as "a revelation that the juror is an actual employee of the prosecuting agency, that the juror is a close relative of one of the participants in the trial or the criminal transaction, or that the juror was a witness or somehow involved in the criminal transaction." Id. at 222. See also United States v. Tucker, 243 F.3d 499, 509 (8th Cir. 2001).

The Fourth Circuit has followed Justice O'Connor's guidance, and applies the doctrine of implied bias only in " 'exceptional' and 'extraordinary' situations." Fitzgerald v. Greene, 150 F.3d 357, 365 (4th Cir. 1998). The Sandalises' case is not the kind of "egregious situation" envisioned by Justice O'Connor or the Fitzgerald court. Id. Ms. Braswell was not closely related to anyone in the case, and she was not a witness to any of the events of the crime. Her scenario does not rise to the extreme level necessary to support a allegation of implicit bias. Defendants' motion, therefore, must fail on this point as well.

III.

Defendants also claim that they are entitled to a new trial because the Court would have excused her for cause on voir dire had her experiences with Dalis Painting been known. They assert that she was "dishonest by omission" for refusing to inform the Court of her past interactions with Defendants' business. The Supreme Court has held:

To obtain a new trial in such a situation, a party must first demonstrate that a juror failed to answer honestly a material question on voir dire, and then further show that a correct response would have provided a valid basis for a challenge for cause. The motives for concealing information may vary, but only those reasons that affect a juror's impartiality can truly be said to affect the fairness of a trial.

McDonough Power Equipment, Inc. v. Greenwood , 464 U.S. 548, 556, 78 L.Ed.2d 663, 104 S.Ct. 845 (1984). This test has been adopted by the Fourth Circuit for use in criminal cases. See Fitzgerald, 150 F.3d at 362.

In this case, Braswell was asked at voir dire whether she knew the Defendants, John and Michelle Sandalis. She was not asked whether she recognized the name Dalis Painting, and she stated that she did not make the connection between "Dalis" and "Sandalis" until late in the trial. It is not clear exactly when she made the connection, but in any event, it had become clear to her by the last day of the trial, when Dalis Painting employees entered the courtroom in their "Dalis Painting" t-shirts.

As to the first prong of the McDonough test, there is no evidence that Juror Braswell answered any of the questions posed to her dishonestly. She was asked if she recognized the Defendants, and by her silence at voir dire she indicated that she did not. The Court finds that her answer at that time was an honest, good faith response to the question. Defendants contend, however, that Ms. Braswell's dishonest omission occurred after voir dire. Once she made the connection to Dalis Painting, they contend, she was obligated to come forward with that information. Yet Ms. Braswell held no bias towards Defendants; therefore, it is difficult to fault her for not saying she recognized the "Dalis Painting" name.

However, as the Supreme Court commented, "The motives for concealing information may vary, but only those reasons that affect a juror's impartiality can truly be said to affect the fairness of a trial." McDonough Power Equipment, 464 U.S. at 556. On this question of fact, the Court does not believe that Ms. Braswell was motivated to conceal her connection to Defendants by a desire to see them found guilty. Rather, the Court finds her statements at the Remmer hearing telling. She stated, "I wish [that someone during voir dire ] had asked, "Have you ever heard of Dalis Painting." She wished she had been asked about Dalis Painting because she would have answered yes, and then possibly would have avoided jury service altogether. She then added that she "would love not to have been on the jury and been able to stay all day at work."

Therefore, it is the opinion of the Court that she would not have been dismissed for cause at voir dire had her connection to Dalis Painting been revealed. If, during voir dire, the Court had asked Ms. Braswell about Dalis Painting, she would have answered, as she did at the Remmer hearing, that she had "tuned out" the Dalis Painting employees, went about her own business, and was "totally neutral" towards Dalis Painting. Based on these statements, the Court is confident that Ms. Braswell would have been able to put her past dealings with Dalis Painting aside and decide the case impartially, solely on the facts admitted into evidence. As a result, while Defendants or the government might have chosen to use one of their peremptory strikes on Ms. Braswell, the Court would not have stricken her for cause. The Sandalises have failed to meet the requirements of the McDonough test.

IV.

As a final matter, Defendants argue that they are entitled to a new trial because of extraneous evidence injected into the jury proceedings by Ms. Braswell. "In order that it may determine the extent, if any, of any prejudice of evidence improperly brought before the jury, a district court must evaluate whether there is a 'reasonable possibility that the jury's verdict was influenced by the material that improperly came before it.' " United States v. Seeright, 978 F.2d 842, 849 (4th Cir. 1992) (citing United States v. Barnes, 747 F.2d 246, 250 (4th Cir. 1984)).

In this case, the only extraneous evidence is Ms. Braswell's lone statement to Juror Fix that she had seen the Dalis Painting logo on work trucks. As discussed above, Juror Fix testified that Braswell did not share any impression she may have had about Dalis Painting with him. As a result, this Court is confident that her isolated comment did not influence the jury's verdict. Defendants motion for a new trial based on this extrinsic evidence must fail.

Additionally, Defendants have made a motion asking this Court to subpoena the three remaining jurors who were unavailable on the day of the Remmer hearing. That motion was denied by this Court in an Order and Memorandum Opinion dated December 7, 2001 . On remand, the Fourth Circuit asked this Court to conduct a hearing at which Ms. Braswell would be questioned. It was left for this Court to determine whether any other jurors should be summoned to testify. As explained in the December 7th Memorandum Opinion, this Court, in its discretion, does not believe that anything would be gained by subpoenaing these three additional jurors. Defendants' motion on this point is therefore denied.

V.

In conclusion, after conducting a full and fair post-trial hearing to investigate claims of potential juror bias, this Court concludes that no such bias existed. As a result, Defendants' motion for a new trial is DENIED.

The Clerk of the Court is hereby directed to send a certified copy of this Memorandum Opinion to all counsel of record, and is further instructed to strike this matter from the docket of this Court.

 

 

[2002-2 USTC ¶50,516] United States of America , Plaintiff-Appellee v. John Sandalis, Michelle Sandalis, Defendants-Appellants United States of America , Plaintiff-Appellee v. John Sandalis, Michelle Sandalis, Defendants-Appellants

(CA-4), U.S. Court of Appeals, 4th Circuit, 00-4748, 02-4073, 7/3/2002, 2002 U.S. App. LEXIS 13258. Affirming, per curiam, a District Court decision, 2002-1 USTC ¶50,220

[Code Secs. 7203 , 7206 and 7402 ]

Constitutional provisions: Sixth Amendment: Impartial jury: Jury bias: Review by court of appeals: New trial.--The district court properly denied married taxpayers a new trial on their criminal tax fraud and tax evasion convictions. The taxpayers failed to show actual or implied bias on the part of the jury foreperson, who had been an employee of a university at which the taxpayers' company performed painting and lead abatement work. The taxpayers' contention that the juror's testimony was not credible and that the district court improperly weighed the evidence was rejected.

[Code Secs. 7206 and 7402 ]

Fraud and false statements: Jury verdict: Willfulness.--The government introduced substantial evidence to support a jury verdict that an individual willfully attempted to evade taxes and assisted in the preparation and presentation of false tax returns. She was significantly involved in managing her company's finances. She also borrowed money from the company and deposited it into unreported personal accounts, but did not keep records of the loans or inform her accountant about them.

Paula M. Junghans, Acting Assistant Attorney General, Robert P. Crouch, Jr., United States Attorney, Gregory Victor Davis, Robert E. Lindsay, Alan Hechtkopf, Meghan S. Skelton, Department of Justice, Washington, D.C. 20530, for plaintiff-appellee. Peter Hugh White, Charles P. Rosenberg, Robert C. Stacy II, Hunton & Williams, McLean , Va. , for defendants-appellants.

Before: WILKINS and WILLIAMS, Circuit Judges, and DAVIS, District Judge.

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

OPINION

Per Curiam"

EC: John and Michelle Sandalis (collectively, the Sandalises) appeal their convictions and sentences for tax fraud and tax evasion following our remand for the district court to conduct an evidentiary hearing regarding the potential bias of the jury foreperson. See United States v. Sandalis, 14 Fed. Appx. 287, No. 00-4748, 2001 WL 867389 (4th Cir. Aug. 1, 2001 ). Finding no reversible error, we affirm.

I.

The Sandalises operated Dalis Painting, Inc., one of the principal painting contractors for the University of Virginia . John owned the company and managed the operations and painting contracts, and Michelle was the bookkeeper. The Sandalises were prosecuted for their failure to report revenues from Dalis Painting as income on their corporate and individual income tax returns in 1994 and 1995.

Dalis Painting maintained a corporate account at Central Fidelity Bank, and corporate earnings also were deposited into several accounts held in John's name, which were maintained at Jefferson National Bank (JNB accounts) ¹ and NationsBank. Dalis Painting's general ledger accounted for the transactions in the NationsBank accounts, but it made no mention of any transactions involving the JNB accounts. Similarly, the 1994 and 1995 corporate tax returns for Dalis Painting reported the income deposited into the NationsBank account, but they did not report the income deposited into the JNB accounts. The omission of the income deposited into the JNB accounts resulted in Dalis Painting underreporting its income by $267,584 for 1994 and $125,056 for 1995.

On the Sandalises' individual income tax returns for 1994 and 1995, they did not report any dividend income from Dalis Painting, but in both years, the Sandalises used corporate income from the NationsBank and JNB accounts for personal expenditures. By failing to report these expenditures as income, the Sandalises underreported their joint individual income by $209,962 in 1994 and by $56,079 in 1995.

The Sandalises were charged with two counts of attempted tax evasion, in violation of 26 U.S.C.A. §7201 (West 1989) (Counts One and Two). Additionally, John was charged with two counts of preparing false tax returns, in violation of 26 U.S.C.A. §7206(1) (Counts Five and Six), and Michelle was charged with two counts of aiding in the preparation and presentation of false tax returns, in violation of 26 U.S.C.A. §7206(2) (West 1989) (Counts Three and Four). At trial, the Sandalises conceded that the 1994 and 1995 corporate and individual income tax returns were materially false and resulted in a substantial tax debt. They contended, however, that they did not intend to violate the tax laws and that their accountant, Arthur Gisser, solely was to blame for the inaccuracies in their tax returns.

The jury found the Sandalises guilty of all counts. John was sentenced to 26 months imprisonment, and Michelle was sentenced to 12 months imprisonment. The Sandalises filed a notice of appeal to this court, arguing, inter alia, that the district court erred in failing to hold a post-trial evidentiary hearing to determine whether the jury foreperson, Elizabeth Braswell, was biased against them. We remanded for the district court to conduct the requisite hearing in accordance with Remmer v. United States [54-1 USTC ¶9274 ], 347 U.S. 227, 229-30, 98 L.Ed. 654, 74 S.Ct. 450 (1954). At the evidentiary hearing, several witnesses testified, including Braswell and eight of the other eleven jurors who had served during the Sandalises' trial. Based upon this testimony, supplemental briefing, and oral argument, the district court found that Braswell was an impartial juror and denied the Sandalises' motion for a new trial.

On appeal, the Sandalises challenge the district court's findings and denial of their motion for a new trial, contending that the evidence demonstrated that Braswell was biased against them, depriving them of their Sixth Amendment right to trial by an impartial jury. Additionally, the Sandalises renew arguments from their previous appeal, claiming that the district court erred by failing to strike prejudicial evidence regarding John's character and by denying Michelle's motion for judgment of acquittal. ² We have consolidated the Sandalises' current appeal with their previous appeal and now undertake to resolve each claim of error in turn.

II.

In United States v. Cheek, 94 F.3d 136 (4th Cir. 1996), we developed a specialized standard of review for the denial of a motion for a new trial based upon juror bias, providing as follows:

The standard of review of the district court's opinion involves three inquiries. We review historical facts for clear error. Questions of law are reviewed de novo. . . . Ordinarily, the grant of a new trial is committed to the sound discretion of the district court. However, because the ultimate factual determination regarding the impartiality of the jury necessarily depends on legal conclusions, it is reviewed in light of all the evidence under a somewhat narrowed, modified abuse of discretion standard giving the appellate court more latitude to review the trial court's conclusion in this context than in other situations.

Id. at 140 (internal citations and quotation marks omitted).

As we stated more fully in our prior opinion, Braswell had contact with employees of Dalis Painting in 1998 and 1999, during which time the company performed painting and lead abatement work in and around Braswell's office, which was located in the Faulkner House at the University of Virginia . ³ Sandalis [2002-1 USTC ¶50,220 ], 2001 WL 867389, 17 Fed. Appx. 287. At the evidentiary hearing on the Sandalises' claim of juror bias, present and former Dalis Painting employees and a contract manager for the University of Virginia testified that there were quite a few complaints about the painting project and that Braswell complained more than other people about the painters. The Sandalises also submitted the affidavits of three individuals who did not testify at the hearing but who averred that Braswell made numerous complaints about Dalis Painting during its work at the Faulkner House. Finally, the Sandalises presented evidence that Braswell spoke directly to John on the telephone on at least two occasions to discuss her various complaints and that Braswell spoke with Michelle on the telephone on at least one occasion.

Braswell testified, on the other hand, that while her office building had been undergoing a substantial amount of construction and renovation over the past two years, she could not recall complaining about Dalis Painting or its painters. According to Braswell, she did not know and had not heard of the Sandalises prior to her jury service. She testified that between the first and second day of the trial, she recognized the connection between Dalis Painting and the renovation of her office building, but that she did not bring it to the district court's attention because she thought the trial and the renovation work were "disconnected" matters. (J.A. at 970.) Braswell specifically denied telephoning Dalis Painting at any point. Ultimately, Braswell stated that she had been "faithful to [her] oath as a juror," (J.A. at 983), that she "was totally neutral," and that she had no opinions or feelings about Dalis Painting or the Sandalises that affected her ability to render an impartial verdict, (J.A. at 978). Several of the other jurors testified that Braswell had seemed objective, had not been particularly vocal, never mentioned that Dalis Painting had performed services at Braswell's office, ⁴ and was randomly selected to serve as the jury foreperson.

In analyzing the Sandalises' claims of actual and implied bias, the district court carefully reviewed all of the competing evidence, explicitly found Braswell's testimony to have been credible, and concluded that the Sandalises had not met their burden of proving that Braswell's prior business dealings with the Sandalises compromised her ability to render a fair and impartial verdict. See United States v. Malloy, 758 F.2d 979, 982 (4th Cir. 1985) (holding that the defendant bears the burden of proving bias). The Sandalises contend that Braswell's testimony was incredible and that the district court improperly weighed the evidence, but the district court is uniquely situated to weigh the evidence and make credibility determinations. See, e.g., United States v. Lancaster, 96 F.3d 734, 739 (4th Cir. 1996) (en banc) (stating, in the context of a challenge to voir dire, that "an appellate court [cannot] easily second-guess the conclusions of the decisionmaker who heard and observed the witnesses" (internal quotation marks omitted)). On this record, we cannot say that the district court abused its discretion in concluding that Braswell was neither actually nor impliedly biased. ⁵ See Smith v. Phillips, 455 U.S. 209, 218-19, 71 L.Ed.2d 78, 102 S.Ct. 940 (1982) (setting forth standard for finding actual bias); id. at 222 (O'Connor, J., concurring) (providing examples "that would justify a finding of implied bias"). Accordingly, the district court properly denied the Sandalises' motion for a new trial on the basis of juror bias.

III.

John next argues that he is entitled to a new trial because the district court, on two separate occasions, erroneously admitted prejudicial evidence regarding his character. During the Government's case in-chief, the prosecutor asked Lee Koliopolous, an acquaintance of the Sandalises, whether Koliopolous had formed an opinion regarding John's character for truthfulness. Koliopolous responded, "I don't think he's a very truthful person." (J.A. at 584.) John argues that this opinion testimony was forbidden by Federal Rule of Evidence 404(a), which provides:

Evidence of a person's character or a trait of character is not admissible for the purpose of proving action in conformity therewith on a particular occasion, except:

(1) Character of accused. Evidence of a pertinent trait of character offered by an accused, or by the prosecution to rebut the same. . . .

Fed. R. Evid. 404(a) (emphasis added).

Because John failed to object to the admission of this evidence at trial, we review for plain error. See United States v. Ellis, 121 F.3d 908, 918-19 (4th Cir. 1997) (applying plain error review to evidentiary challenge). To establish our authority to notice an error not preserved by timely objection, John must demonstrate that an error occurred, that the error was plain, and that the error affected his substantial rights. See United States v. Olano, 507 U.S. 725, 732, 123 L.Ed.2d 508, 113 S.Ct. 1770 (1993). Even if John can satisfy these requirements, correction of the error remains within our discretion, which we "should not exercise . . . unless the error 'seriously affects the fairness, integrity or public reputation of judicial proceedings.' " Id. (second alteration in original and internal quotation marks omitted).

Assuming the admission of Koliopolous's opinion testimony violated Rule 404, John has not met his burden of establishing that his substantial rights were affected. Subsequent to Koliopolous's testimony, John presented evidence of his character for truthfulness through six separate witnesses. Rule 404(a) would have permitted the Government to introduce Koliopolous's opinion testimony to rebut these character witnesses. Significantly, John does not contend that he would not have introduced this positive character evidence had the Government not first introduced Koliopolous's opinion testimony. Thus, the error was one only of timing, because, irrespective of this error, the jury would have had the benefit of Koliopolous's opinion testimony. In fact, the failure to object to the admission of Koliopolous's testimony, coupled with the subsequent admission of positive character evidence, may have been a strategic decision designed to secure the final word on John's character prior to the commencement of jury deliberations. Thus, John has not met his burden of demonstrating that the jury's verdict was "substantially swayed by the error." United States v. Brooks, 111 F.3d 365, 371 (4th Cir. 1997); United States v. Vonn, -- U.S. --, 152 L.Ed.2d 90, 122 S.Ct. 1043, 1048 (2002) (explaining that under plain error review, the defendant "has the burden to show that his substantial rights were affected" (internal quotation marks omitted)).

John also claims that the district court erred by failing to strike a question that the Government posed to Michael Mulkey, John's former attorney. On direct examination, Mulkey testified that he had known John for several years and that he had a high opinion of John's character. On cross examination, the prosecutor asked Mulkey: "Did you know that Mr. Sandalis within the last few years attempted to persuade Mr. Koliopolous to testify falsely in a judicial proceeding?" (J.A. at 770.) The district court overruled defense counsel's objection and permitted Mulkey to answer the question. Mulkey responded that he did not have any knowledge of the suggested incident.

John concedes that the question complied with Federal Rule of Evidence 405(a), which allows the Government to inquire into specific instances of conduct on cross examination of a character witness for the defendant. See Fed. R. Evid. 405(a). Nevertheless, he contends that the question violated Federal Rule of Evidence 404(b) because it amounted to evidence of a prior criminal act, and the Government failed to provide defense counsel with the requisite advance notice of its intent to offer such evidence. Fed. R. Evid. 404(b). This argument is misplaced because Rule 404(b) limits the admission of "evidence of other crimes, wrongs, or acts," Fed. R. Evid. 404(b) (emphasis added), and no such evidence was admitted. Mulkey responded to the question by saying that he had no knowledge of the alleged criminal activity, and the Government did not attempt to establish the occurrence of the criminal activity in any other manner. Indeed, the jury explicitly was instructed: "If a lawyer asks a witness a question which contains an assertion of fact, you may not consider the assertion as evidence of that fact." (J.A. at 298.) Therefore, Rule 404(b)'s advance notice requirement was not violated. ⁶

IV.

Finally, Michelle contends that the Government failed to introduce sufficient evidence to support her convictions. A jury verdict "must be sustained if there is substantial evidence, taking the view most favorable to the Government, to support it." United States v. Burgos, 94 F.3d 849, 862 (4th Cir. 1996) (en banc) (internal quotation marks and emphasis omitted). In determining whether the evidence is substantial, we examine whether there is evidence that a reasonable finder of fact could accept as adequate and sufficient to support a conclusion of a defendant's guilt beyond a reasonable doubt. Id. We must consider circumstantial as well as direct evidence and allow the government the benefit of all reasonable inferences from the facts proven to those sought to be established. Id. at 857-58.

Michelle was charged with attempted tax evasion and aiding and assisting in the preparation of false tax returns. She concedes that she filed and assisted in preparing materially false tax returns but claims that the Government failed to introduce substantial evidence that her violations of the tax laws were willful. ⁷ See 26 U.S.C.A. §§7201 , 7206(2) . Willfulness means the voluntary and intentional violation of a known legal duty. Cheek v. United States [91-1 USTC ¶50,012 ], 498 U.S. 192, 201, 112 L.Ed.2d 617, 111 S.Ct. 604 (1991).

The evidence demonstrated that Michelle was involved significantly in managing the finances for Dalis Painting. She served as the company's bookkeeper and was the primary contact for Gisser. Although she now contends that she knew almost nothing about the activity or amount of corporate income in the JNB accounts, John Peirce, an Internal Revenue Service case agent, testified that Michelle told him that she borrowed money from Dalis Painting and deposited those loans into the JNB accounts. She further informed Peirce that she did not keep records of the loans and did not tell Gisser about the loans. Peirce also testified that there were "several large cash withdrawals" from the JNB accounts, some of which were in the form of checks made payable to Michelle. (J.A. at 529.) Moreover, Peirce testified that when he first asked about the company's records for 1994 and 1995, Michelle stated that the Sandalises had not maintained records related to the company's income in 1994 or 1995, but she later told Peirce that such records had been maintained in the form of a "pink book," which included information regarding invoices and checks that had been deposited into the JNB accounts, and that the records had been provided to Gisser for preparation of the tax returns. (J.A. at 527, 552, 821.) Gisser testified that he provided "guidance to the Sandalises about the use of the corporate credit card" and "told them their personal expenses shouldn't be there." (J.A. at 445.) He further testified that he advised the Sandalises not to take loans from the corporation. ⁸ (J.A. at 445.) Based upon the evidence of Michelle's individual connection to, and knowledge of, the company's finances, including her status as the bookkeeper, evidence of her knowledge of proper accounting practices, such as Gisser's advice to her, and her lack of candor regarding the maintenance of records relating to the company's income for 1994 and 1995, a reasonable juror could infer that Michelle willfully assisted in the preparation of false tax returns and attempted to evade taxes. See United States v. Diamond [86-1 USTC ¶9356 ], 788 F.2d 1025, 1030 (4th Cir. 1987) (affirming conviction for filing false returns and concluding that defendant's knowledge and experience with tax matters was circumstantial evidence of willfulness); United States v. Wilkins [67-2 USTC ¶9739 ], 385 F.2d 465, 472 (4th Cir. 1967) ("Subsequent acts of a defendant, such as the fabrication of evidence or false explanations which will aid his defense, are clearly admissible to prove his guilty state of mind."). Because there was substantial evidence to support the jury's verdict, we affirm Michelle's convictions.

V.

For the foregoing reasons, we affirm the Sandalises' convictions and sentences.

AFFIRMED

¹ Two separate accounts were maintained at JNB. One was interest bearing, and the other was non-interest bearing. (J.A. at 535.)

² We reserved judgment on these issues pending completion of the district court's proceedings following the remand.

³ Dalis Painting employees all wear uniforms with "large Dalis Painting logos" printed on them and Dalis Painting's vehicles and equipment are similarly marked. (J.A. at 103-04.)

⁴ One juror, Charles Fix, testified that Braswell had told him that "she had seen the [Dalis Painting] sign on the doors of vehicles or something or another, and she had recognized the name." (J.A. at 986-87.)

⁵ We note that there is some question as to whether implied bias remains a viable doctrine following the Supreme Court's majority opinion in Smith v. Phillips, 455 U.S. 209, 218-19, 71 L.Ed.2d 78, 102 S.Ct. 940 (1982). Id. at 221 (O'Connor, J., concurring) (writing separately to express her "view that the [majority] opinion does not foreclose the use of 'implied bias' in appropriate circumstances"); cf. Fitzgerald v. Greene, 150 F.3d 357, 365 (4th Cir. 1998) (noting that the majority opinion in Smith appeared to undermine the legitimacy of the implied bias doctrine). Assuming the doctrine's continued viability, however, we agree with the district court that the facts alleged by the Sandalises do not support a finding of implied bias.

Additionally, to the extent that McDonough Power Equip., Inc. v. Greenwood, 464 U.S. 548, 78 L.Ed.2d 663, 104 S.Ct. 845 (1984), is applicable in this criminal proceeding, see id. at 556 (holding in a civil case that a new trial is warranted when a "juror failed to answer honestly a material question on voir dire" and "the correct response would have provided a valid basis for a challenge for cause"); Fitzgerald v. Greene, 150 F.3d 357, 362 (4th Cir. 1998) (applying the McDonough test in the context of a criminal habeas corpus proceeding), the Sandalises have not demonstrated that the district court erred by denying a new trial on the basis of McDonough. The Sandalises claim that Braswell was dishonest for failing to inform the district court of her past interactions with Dalis Painting. Noting that Braswell was never asked whether she recognized the name "Dalis Painting," and that she had not recognized the Sandalises, by name or appearance, the district court found that Braswell honestly responded to all of the voir dire questions, and, in any event, that Braswell was not motivated to conceal her connection to Dalis Painting for reasons affecting her partiality. See McDonough, 464 U.S. at 556 ("Only those reasons that affect a juror's impartiality can truly be said to affect the fairness of a trial."). These factual findings were not clearly erroneous.

⁶ We also reject John's suggestion that the question constituted prosecutorial misconduct.

⁷ To obtain a conviction under §7206(2), the government must prove the following elements beyond a reasonable doubt: "(1) the defendant aided, assisted, or otherwise caused the preparation and presentation of a return; (2) that the return was fraudulent or false as to a material matter; and (3) the act of the defendant was willful." United States v. Aramony, 88 F.3d 1369, 1382 (4th Cir. 1996) (internal citation omitted). The elements of the section 7201 offense are: (1) willfulness; (2) a substantial tax deficiency; and (3) some affirmative act constituting an attempted evasion of the tax. United States v. Wilkins [67-2 USTC ¶9739 ], 385 F.2d 465, 472 (4th Cir. 1967).

⁸ Michelle challenges testimony, such as Gisser's, which was worded in the form of the Sandalises' joint wrongdoing, complaining that she was prejudiced because she was "not tried as an individual, but rather as a part of 'the Sandalises,' as a unit." (Appellant's Br. at 37.) The fact that Gisser's testimony implicates both of the Sandalises, absent some other objection, is not a ground for reversal of Michelle's convictions. Moreover, the district court advised the Sandalises that "it's generally not a very good idea to have the same lawyer representing both defendants," but the Sandalises rejected this advice and agreed to joint representation, and their attorney did not object to the joint nature of the evidence. (J.A. at 491.) Accordingly, to the extent that some of the evidence of their joint wrongdoing may have been problematic, the admission of the evidence does not require reversal of Michelle's convictions. Cf. United States v. Olano, 507 U.S. 725, 732, 123 L.Ed.2d 508, 113 S.Ct. 1770 (1993) (providing that errors for which no objection was raised are reviewed for plain error); United States v. Herrera, 23 F.3d 74, 75 (4th Cir. 1994) (holding that invited errors do not provide a basis for reversal).

 

 

[2003-1 USTC ¶50,222] United States of America , Plaintiff-Appellee v. Dr. Paul, Defendant-Appellant.

U.S. Court of Appeals, 6th Circuit; 01-1284, 57 FedAppx 597, January 23, 2003 .

Unpublished opinion affirming, per curiam, an unreported DC Mich. decision.

[ Code Sec. 7206]

Crimes: Fraud: Plain error: Dismissal of jurors: Jury instructions: Abuse of discretion. --

A federal district court's dismissal of potential jurors and interactions with the jury in the course of an individual's criminal fraud and tax evasion trial did not constitute plain error. The taxpayer failed to establish that the judge's introductory comments and subsequent ex parte communications with the jury substantially affected his rights. Also, the judge's dismissal of potential jurors for having strong opinions regarding the IRS did not constitute an abuse of discretion absent proof of bias. Further, while the judge erred in assembling both parties to render additional jury instructions, no prejudice resulted. The supplemental instructions simply referred to the original instructions; thus, the error was harmless and did not warrant a new trial.

[ Code Sec. 7206]

Crimes: Fraud: Abuse of discretion: Evidence. --

A federal district court did not abuse its discretion in admitting evidence in a tax fraud proceeding that showed how a taxpayer handled the proceeds from the sale of his home in a manner designed to deceive the IRS. The evidence, which demonstrated an intent to defraud the government, was relevant, was not unfairly prejudicial, and did not affect the taxpayer's substantial rights.

[ Code Sec. 7206]

Crimes: Fraud: Sentencing: Conditions of supervised release. --

Sentencing guidelines applicable to an individual convicted of tax fraud permitted the inclusion of conditions that he refrain from consuming alcohol and participate in community service activities. Those conditions were reasonably related to the goals of probation and rehabilitation. Also, records from the taxpayer's business were properly used to reconstruct his income and taxes due. Amounts that he had previously remitted were not deducted from the current taxes owing because those funds were paid in connection with a fraudulent offer-in-compromise that was entered into after the crimes were committed.

[ Code Sec. 7206]

Crimes: Fraud: Sentence enhancements: Sophisticated concealment: Obstruction of justice. --

Sentence enhancements and conditions for a supervised release were appropriate in the case of an individual who was convicted of tax fraud. No error was committed in the application of sentence enhancements that increased his sentence by six levels based upon his part in the sophisticated concealment of his crimes, the aggravating role he played as the organizer of the fraudulent scheme, and his obstruction of justice.


Before: Boggs and Cole, Circuit Judges, and Battani, ^* District Judge.

¬ Caution: The court has designated this opinion as NOT FOR PUBLICATION. Consult the Rules of the Court before citing this case.®

PER CURIAM: Dr. Dr. Paul was named in a 47-count indictment issued in March 2000: Count 1 charged Dr. Paul with attempting to evade and defeat the payment of assessed personal income taxes for calendar years 1987 through 1991; Count 2 charged Dr. Paul with violating 26 U.S.C. §7206(l) by subscribing his signature and knowingly submitting a false Offer-in-Compromise (and its accompanying schedules and attachments) to the Internal Revenue Service (IRS): Count 3 charged Dr. Paul with signing and submitting a false 1993 individual income tax return, in violation of 26 U.S.C. §7206(l): Count 4 charged Dr. Paul with bank fraud, in violation of 18 U.S.C. §1344; and Counts 5-47 charged Dr. Paul with committing mail fraud in furtherance of his alleged scheme to defraud a federal bank, set forth in Count 4. Dr. Paul went to trial in October 2000, and was convicted by the jury on all counts, except for Count 11, which was dismissed by the court during the trial on a motion from the government. Dr. Paul now appeals his conviction on Counts 4-10 and 12-47, on a number of different grounds.

Dr. Paul claims the trial judge committed plain error at three points during the trial and thus his conviction should be vacated and a new trial held. First, Dr. Paul claims the judge erred by making improper and misleading introductory comments during the jury selection process. Second, Dr. Paul claims the judge erred by dismissing certain potential jurors during the voir dire process without sufficiently probing their potential for impartiality. Third, Dr. Paul claims the judge erred by engaging in ex parte communications with the jurors.

Next, Dr. Paul appeals the district court's denial of his motion for acquittal, in which he claimed that there was insufficient evidence for his conviction on the bank fraud charge, and additionally claims that the trial judge abused his discretion by admitting evidence that was unrelated to the crimes for which Dr. Paul was charged. Finally, Dr. Paul claims that the district court abused its discretion by denying Dr. Paul's motion for a new trial on the basis of allegedly improper and misleading jury instructions and committed clear error in its calculation of the tax loss sustained by the government as a result of Dr. Paul's actions.

On February 16, 2000, the district court sentenced Dr. Paul to fifty-four months on Counts 1, 4-10 and 12-47, to run concurrent with a term of imprisonment of thirty-six months on Counts 2 and 3, with post-confinement conditions imposed on Dr. Paul's supervised release, requiring that Dr. Paul retain from using alcohol and perform 300 hours of community service in a non-medical field. Apart from the appeals that Dr. Paul has brought with regard to his conviction, he challenges his sentencing, contending that the district court committed clear error in applying separate two-level enhancements for sophisticated concealment of his offenses, his leadership role in the crimes, and for obstructing justice. In addition, Dr. Paul contends that the district court committed plain error in setting the terms of his post-confinement supervised release. We affirm on all points.

I

Dr. Paul was a self-employed neurosurgeon in the Muskegon , Michigan area. During the late 1980's and into the early 1990's. Dr. Paul's practice steadily declined and he began to accumulate large debts. Beginning in 1988, Dr. Paul failed to file his federal income tax returns on time. When he was directly contacted by the Internal Revenue Service (IRS) several years later, Dr. Paul filed the delinquent returns, but did not pay the taxes that were due with the returns filed. In addition, Dr. Paul collected, but did not pay over to the IRS, his employees' income withholdings.

Dr. Paul owned a house in North Muskegon . As a result of his falling behind on the monthly mortgage payments, the bank started foreclosure on the property. During a six-month mortgage redemption period, Dr. Paul suggested to a friend, Edward Snider, that he buy the home and rent it back to Dr. Paul. Snider's testimony revealed that he understood Dr. Paul needed to put the property into someone else's name in order to protect it from creditors. Snider testified that he decided to go forward with the purchase of the house in order to help Dr. Paul.

In September 1991, Dr. Paul's attorney prepared a Purchase and Sale Agreement, in which Snider was to purchase the property from Dr. Paul for $300,000, with $60,000 to be paid by Snider to Dr. Paul as a down payment. Subsequently, on October 5, 1991, Dr. Paul and Snider executed an agreement (the Rental Agreement) in which Dr. Paul agreed to rent the house from Snider after closing on the sale of the property for the amount of Snider's mortgage payment. The Rental Agreement was for a term of seven years, included an option for Dr. Paul to buy the property at any time during the term of the agreement for a sum equal to the outstanding mortgage balance or a sum greater than that at Paul's discretion, required Dr. Paul to pay the real estate taxes and unspecified insurance premiums on the property, and provided for the establishment of an interest-bearing account in Snider's name, which would hold a sum equal to three monthly mortgage payments to be deposited by Dr. Paul, with the interest on the money to be divided equally between Dr. Paul and Snider.

After being denied a mortgage at Old Kent Bank, Snider approached a non-federally-insured Michigan mortgage broker, the Mortgage House, and submitted a loan application in October 1991. The mortgage broker obtained a mortgage from St. Paul Federal Bank, a federally insured bank, on the basis of a loan application submitted to the Mortgage House by Snider in which he misrepresented his income, assets, and profession, and also incorrectly stated that he had given Dr. Paul $60,000 as a down payment on the property. Additionally, Snider submitted a phony bill of sale for a diamond to be used as collateral, a phony gift letter to explain where the $60,000 down payment had come from, and false tax returns. Snider alleges that he did all of this with Dr. Paul's knowledge and help.

St. Paul Federal Bank (the Federal Bank) sent a loan commitment letter to the Mortgage House and subsequently the closing on the property took place. Nevertheless, neither Dr. Paul nor Snider disclosed the existence of the Rental Agreement to either the Mortgage House or the Federal Bank. Over the course of the next few years, Dr. Paul sent Snider checks to cover the mortgage payments and Snider used those funds to pay the mortgage. These checks are the basis of the mailings charged in Counts 5-47, mail fraud. Because of late payments, Snider twice filed suit against Dr. Paul for back rent in Michigan state court.

In February 1992, Dr. Paul's practice in Muskegon had declined to such an extent that he was forced to shut it down and Dr. Paul began a new practice in Idaho Falls , Idaho , affiliated with the Eastern Idaho Regional Medical Center (EIRMC). EIRMC provided Dr. Paul with several loans in order to help start his practice and defray moving costs, so that by the end of 1993, Dr. Paul owed the company $235,000 plus interest, which increased to more than $363,000 by early 1994. Dr. Paul paid his employees in this new office in cash and did not apply for a new Employer Identification Number for the practice. In addition, Dr. Paul did not open up a checking account in the practice's name and utilized five different bank accounts to deposit checks from patients for services.

By 1994, Dr. Paul was assessed approximately $311,000 in unpaid taxes, penalties, and interest, approximately $138,000 of which was actual tax. In May 1994, the IRS decided to accept an Offer-in-Compromise filed by Dr. Paul, which would forgive his tax debt of $311,431.55 for the reduced amount of $50,000. This compromise was reached on the basis of financial statements provided to the IRS by Dr. Paul with regard to his current assets and income, which caused the IRS to make a determination that the residual money owed would very likely remain uncollectible. However, Dr. Paul did not disclose to the IRS that he had a new practice in Idaho, an ongoing interest in a the North Muskegan residence, five bank accounts in Idaho, Nevada, and Wyoming, ownership of an antique Packard automobile, and a new home in Idaho Falls, purchased for $250,000 on an unrecorded land contract. In fact, when dealing with the IRS, Dr. Paul used a false Nevada address, a Nevada driver's license, and Nevada automobile license plates.

In July 1993, Dr. Paul and William Sewell, the husband of Dr. Paul's Idaho Falls office manager, formed an entity known as the Idaho Brain Tumor Center (IBTC), which was to develop and utilize a new medical technology called "boron neutron capture therapy." In July 1994, EIRMC made another loan to Dr. Paul, this time in the amount of $297,000. Dr. Paul gave the proceeds of that loan to the IBTC. In total, Dr. Paul invested approximately $500,000 into IBTC, which sustained huge losses over the course of its existence. EIRMC filed a claim against Dr. Paul in federal court for a sum in excess of $868,152, which included the various loans made to him. In 1999, Dr. Paul managed to refinance the Michigan home through another bank mortgage, paid off the St. Paul Federal Bank mortgage and thereby removed Snider as the owner of record. Shortly thereafter, Dr. Paul sold the house at a substantial profit. In 1997, the IRS began a criminal investigation of Dr. Paul, which eventually led to his arrest and indictment for the charges in this case.

II

1. Claims of Plain Error During the Trial

Dr. Paul now appeals three events during the course of his trial to which his lawyer did not make a timely objection. We restrict our review of these claims, therefore, to correcting "plain errors or defects affecting substantial rights" under Fed. R. Crim. P. 52(b). See United States v. Dedhia, 134 F.3d 802, 808-09 (6th Cir. 1998). Before this court can correct an error not raised at trial, there must be 1) error, 2) that is plain, and 3) that affects substantial rights. United States v. Olano, 507 U.S. 725, 732 (1993); Fed. R. Crim. P. 52(b). If those three factors are met, then this court may exercise its discretion to notice a forfeited error if the error "seriously affect[s] the fairness, integrity, or public reputation of judicial proceedings." Olano, 507 U.S. at 732.

Introductory Comments Made by the Trial Judge

Dr. Paul contends that the trial judge committed plain error by suggesting to the jurors that they were to apply their own local values and local sense of justice when evaluating issues at trial, that the comments tainted the jurors' perception of their role in the proceeding, and that this court should, therefore, reverse Dr. Paul's conviction and order a new trial. In part, the judge stated:

This is your community. And I can't speak more strongly for the fact that the values that are cherished and are a part, indigenous to West Michigan , you bring to this courtroom, and that's okay. And you will use those as you evaluate a matter such as this.

...

You represent [a] statistical cross section [of your district]. That's very important because a jury that sits and deliberates on justice and a just result has historically come from the district where the event is alleged to have occurred and is one in which it is said in the earliest English roots that it's a peer group of the community sitting in judgment on itself. That is, you bring to this courthouse, whether consciously or unconsciously, a sense of justice which you as a member of your community have. Now, this may come from coffee klatches, from newspapers, through television, through schools, through any number of things. You bring that to your sense of justice.

JA at 1046, 1065.

The trial judge's introductory remarks, if objectionable at all, do not amount to plain error requiring reversal. They were made in explanation of the common-law principle that one has a right to be tried by a jury of one's peers. This basic tenet of our judicial system is reflected in the Jury Selection and Service Act of 1968, as amended, which states that "[i]t is the policy of the United States that all litigants in Federal courts entitled to trial by jury shall have the right to grand and petit juries selected at random from a fair cross section of the community in the district or division wherein the court convenes." 28 U.S.C. §1861.

Moreover, the approved circuit instructions on the proper role and duties of a juror were given at the beginning of the trial and after closing arguments the judge reiterated that the jury was bound by oath to follow the court's instructions with regard to the law, applying it to the facts as found by the jury. These additional instructions minimize the likelihood that anything said by the trial judge in his introductory comments could have been misinterpreted by the jury and would have clarified any doubt in a juror's mind that he or she was to apply the law as identified by the court. The district court, therefore, did not commit plain error.

Dismissal of Jurors by the District Court

Dr. Paul contends that the trial judge committed plain error by dismissing venire members during voir dire for expressing opinions about the IRS, without probing further to ascertain if the jurors in question would be capable of putting such opinions aside. Dr. Paul argues that as a result of the judge's actions, the jury impaneled was "pro" IRS and thus Dr. Paul was denied an opportunity to be heard by an impartial jury, in violation of the Sixth Amendment.

The district court has the duty and authority to dismiss jurors for cause. See 28 U.S.C. §1870. In addition, "[t]he scope of questions permitted to be asked on voir dire examination is generally a matter addressed to the sound discretion of the court." Eisenhauer v. Burger, 431 F.2d 833, 836 (6th Cir. 1970). See also United States v. Anderson , 562 F.2d 394, 397 (6th Cir. 1977). The district judge asked a number of routine questions of jurors in order to ascertain if anyone's past experiences with the IRS would affect their ability to evaluate the evidence presented at trial in a fair or impartial manner. Considering that much of this case deals with tax fraud, the trial judge did not abuse his discretion when he dismissed jurors for having strong opinions about the IRS when the jurors admitted to the court that they either did not think they would be fair or impartial in their evaluation of the evidence presented in relation to the IRS or were not sure. Furthermore, it is not enough for Dr. Paul to show that the trial court's decision to exclude the jurors in question was improper. He must also show that the jury selected was biased. See Hill v. Brigano, 199 F.3d 833, 844 (6th Cir. 1999) (citing Ross v. Oklahoma, 487 U.S. 81, 83-85 (1988)). Dr. Paul, however, does not provide any evidence that the jury selected was biased. The trial court did not commit plain error in dismissing the jurors in question and there was no evidence of bias in the jury that was impaneled in this case.

Ex parte Communications

Dr. Paul contends that the trial judge erred by engaging in ex parte communications with jurors during the trial and that according to our decision in Standard Alliance Industries, Inc. v. Black Clawson Co., 587 F.2d 813, 828 (6th Cir. 1978), such conduct raises a presumption of reversible error that cannot be rebutted. However, the situation in this case differs markedly from the situation in Standard Alliance, in which there was absolutely no record of the court's ex parte contact, which was conducted through the court's law clerk, and to which the defendant had no opportunity to object during his trial. Moreover. since Standard Alliance, the Supreme Court has refined the law in this area, providing us with guidance for considering claims of judicial ex parte communications.

The right of the accused to be present during all critical stages of a trial against him is fundamental. See Rushen v. Spain , 464 U.S. 114, 117 (1983); Fed. R. Crim. P. 43. Ex parte communications are absolutely discouraged and a question from the jury should be answered in open court, after providing the defendant with an opportunity to be heard. See Rogers v. United States , 422 U.S. 35, 39 (1975): United States v. Reynolds, 489 F.2d 4, 7-8 (6th Cir. 1973). Nevertheless, even if a judge improperly participates in ex parte communications, such communications will not necessarily constitute reversible error. See Rushen, 464 U.S. at 118-19; Miller v. Am. President Lines, Ltd., 989 F.2d 1450, 1468 (6th Cir. 1993). There must be a reasonable possibility that the ex parte communications affected the verdict.

In this case the judge properly disclosed in open court and on the record that he had communicated ex parte with the jury. See Rushen v. Spain, 464 U.S. 114, 119-20 (1983) (stating that "[w]hen an ex parte communication relates to some aspect of the trial, the trial judge generally should disclose the communication to counsel for all parties."). If Dr. Paul's counsel had been concerned about the communications relayed by the judge, he could have voiced his concern to the district court and an appropriate record could have been made. Counsel having failed to object at trial, our review is limited to a plain error analysis in which we must determine if the judge's responses to the inquiries of the jurors affected the defendant's substantial rights. Olano, 507 U.S. at 736. However, Dr. Paul offers no evidence that the communications in question affected his substantial rights, making it unnecessary to determine whether or not the fairness, integrity or public reputation of the trial was affected.

The ex parte communications in question do not appear to raise a reasonable possibility of prejudice. The communications were related to the general well-being of the jurors, the way in which the lawyers were handling the exhibits, and the fact that the lawyer for the United States Attorney's office was speaking too softly, making it difficult for the jurors to hear him. As pointed out by the Supreme Court in Rushen, 464 U.S. at 118, there "is scarcely a lengthy trial in which one or more jurors do not have occasion to speak to the trial judge about something, whether it relates to a matter of personal comfort or to some aspect of the trial." There appears to be nothing in the content of what was communicated that would adversely affect Dr. Paul's substantial rights. Dr. Paul suggests that these communications should be viewed in the light of other comments made by the judge that suggested he viewed Dr. Paul with "disdain." However, each detrimental comment made by the judge and referred to by Dr. Paul occurred only after the jury had announced its verdict. Although the comments made by the judge are disparaging towards Dr. Paul, such comments are noticeably absent from the rest of the record, suggesting that the judge was careful not to make such comments before the jury rendered a verdict. In sum, there is no evidence to support Dr. Paul's contention that the ex parte communications between the judge and the jury during the course of this trial had any affect on Dr. Paul's substantial rights.

2. Motion for Acquittal

Following the close of the government's evidence, Dr. Paul moved unsuccessfully for a judgment of acquittal pursuant to Fed. R. Crim. P. 29 with regard to the bank fraud charge, arguing that the government had not presented sufficient evidence to support its claim. In determining whether the evidence presented at Dr. Paul's trial was sufficient to support a conviction, "[t]he relevant question is whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." United States v. Kelly, 204 F.3d 652, 656 (6th Cir. 2000) (quoting Jackson v. Virginia, 443 U.S. 307, 319 (1979) (emphasis in original) (internal quotation marks and citation omitted)). All reasonable inferences are to be drawn in the government's favor. Ibid. Moreover, since Dr. Paul failed to renew his motion at the end of his trial, we review the district court's denial "for plain error and can reverse only if there is a `manifest miscarriage of justice."' United States v. Beaver, No. 97-2224/48/70, 97-2343 4, 98-1012/5/76/1155, 2000 WL 491538, at **4 (6th Cir. Apr. 20, 2000) (quoting United States v. Price, 134 F.3d 340, 350 (6th Cir. 1998)).

In order to convict Dr. Paul for bank fraud under 18 U.S.C. §1344, the government must prove that Dr. Paul 1) knowingly executed or attempted to execute a scheme to defraud a financial institution: 2) did so with the intent to defraud; and 3) that the financial institution was insured by the FDIC. See United States v. Everett , 270 F.3d 986, 989 (6th Cir. 2001); United States v. Hoglund, 178 F.3d 410, 412-13 (6th Cir. 1999). Dr. Paul contends that the government failed to demonstrate that he had any knowledge of the fraudulent statements and misrepresentations made by Snider in order to obtain the mortgage for his Michigan home, and thus failed to prove the specific intent requirement contained in the second element of the crime. Alternatively, Dr. Paul argues that because the Mortgage House, the institution from which Snider, and allegedly Dr. Paul, fraudulently obtained a mortgage, was not federally insured, the government did not prove the third element of bank fraud, despite the fact that the Mortgage House sold the mortgage to a federally insured institution at closing on the property.

First, there is ample evidence to support the conclusion that Dr. Paul knowingly acted in collusion with Snider as part of a scheme to obtain a mortgage on the basis of fraudulent information and that this was done with the intent to defraud. Snider's testimony supports this conclusion, as he states that Dr. Paul originally formulated the plan, helped Snider to fraudulently fill out the loan application taken by the Mortgage House, assisted Snider in falsifying his tax returns for the loan application, offered proof to the bank that he had received a down payment of $60,000 from Snider, even though Dr. Paul had not, and finally helped Snider obtain a fraudulent gift letter to be used as evidence of the source of the down payment to the mortgage broker.

Second, it is not necessary for the Mortgage House to have been a federally insured entity in order to prove bank fraud. It is sufficient to demonstrate that the "defendant in the course of committing, fraud on someone causes a federally insured bank to transfer funds under its possession and control." United States v. Everett , 270 F.3d 986, 989 (6th Cir. 2001). In this case, at closing on Dr. Paul's Michigan home, Snider signed a mortgage with The Mortgage House and immediately thereafter at closing that mortgage was assigned to St. Paul Federal Bank on the basis of a commitment letter in which the Federal Bank agreed to purchase the mortgage on the Michigan property. The representative from the Mortgage House testified to the fact that the false information provided to her by Snider in his loan application was forwarded to St. Paul Federal Bank and the Federal Bank representative at trial testified that the bank approved the loan on the basis of that falsified mortgage application. Under the Everett standard, the entire question of whether or not Dr. Paul knew that St. Paul Federal Bank or any bank was to hold the mortgage is moot. If Dr. Paul was deemed to have participated in creating the fraudulent application that was subsequently relied upon by the Federal Bank to transfer funds in its possession and control to Dr. Paul, there is sufficient evidence of bank fraud.

Moreover, there is evidence to suggest that Dr. Paul knew that St. Paul Federal Bank was to hold the mortgage on the property. The representative from the Mortgage House testified that upon receipt of the commitment letter from the Federal Bank, she informed Snider of its acceptance of the mortgage. In addition, Snider testified to the fact that he told Dr. Paul of this fact. Furthermore, the representative from St. Paul Federal Bank testified that both parties knew at closing that the bank was lending the money for the sale of the property.

The evidence relied upon by the government in its case against Dr. Paul on the count of bank fraud is witness testimony, which in this case the jury found to be credible. It is not our position to second-guess the jury's assessment upon review. We generally avoid making such a determination, noting that the opportunity of the trial court to assess witness testimony is superior to that of the appellate court. See United States v. Garcia, 866 F.2d 147, 151-52 (6th Cir. 1989). See also United States v. Hernandez, 227 F.3d 686, 694 (6th Cir. 2000) (noting that "[s]ufficiency-of-evidence appeals are `no place ... for arguments regarding a government witness's lack of credibility."') (citations omitted). Accordingly, we hold there to be sufficient evidence for Dr. Paul's conviction of bank fraud and affirm the district court's denial of Dr. Paul's motion to acquit on that basis.

3. Mail Fraud Counts
Dr. Paul contends that since there is insufficient evidence to find him guilty of bank fraud, the mail fraud charges, which are predicated on the scheme to defraud St. Paul Federal Bank, must fail as well. In light of our holding that the government presented sufficient evidence at trial to find Dr. Paul guilty of bank fraud, his objection to the mail fraud counts must fail.

4. Evidence Admitted of Financial Transactions by Dr. Paul
Dr. Paul contends that the trial court abused its discretion in admitting evidence of Dr. Paul's handling of the proceeds he obtained from the sale of his Michigan home in 1999, after having paid off the St. Paul mortgage, removing Snider as the owner of record and selling the house to a bona fide purchaser at a substantial profit.

Dr. Paul contends that the evidence proffered was irrelevant and thus violated Rule 402 of the Federal Rules of Evidence, that its probative value was substantially outweighed by the danger of unfair prejudice, and that specific notice of the government's intention to introduce this evidence was not provided, in violation of Rule 404(b) of the Federal Rules of Evidence. Dr. Paul further argues that the admission of this evidence affected his substantial rights and that the judgment should, therefore, be vacated and a new trial ordered by this court.

Dr. Paul filed a pre-trial motion in limine, seeking to bar the government from introducing the evidence in question; however, the trial court denied that motion. At trial, Dr. Paul renewed his objection, but it was overruled. We review the trial court's decision to admit the evidence for abuse of discretion. See United States v. Bonds, 12 F.3d 540, 554 (6th Cir. 1993).

The evidence admitted described how Dr. Paul took the proceeds of his house sale ($120,767.47) and broke it down into a number of cashier's checks, periodically cashing each one, taking a small amount of cash and putting the remainder into a new cashier's check. The government argues that this evidence was relevant to the government's case. The government contends that Dr. Paul handled the proceeds of the sale of his house in this unique way in order to avoid creating a trail to a bank account, in an effort to continue to deceive the IRS.

"Broad discretion is given to district courts in determinations of admissibility based on considerations of relevance and prejudice, and those decisions will not be lightly overruled." United States v. Jackson-Randolph, 282 F.3d 369, 376 (6th Cir. 2002). The evidence proffered by the government is reasonably relevant to the crime as subsequent acts that demonstrate an intent to defraud and Dr. Paul does not offer an argument as to why the evidence is unfairly prejudicial to the defense. Furthermore, the record indicates that the government gave notice of its intention to include this information in a brief filed one week before trial, describing the inclusion of this evidence in some detail, in response to Dr. Paul's motion in limine. In so doing, the government provided sufficient notice. See United States v. French, 974 F.2d 687, 694-95 (6th Cir. 1992) (finding no violation of the Fed. R. Evid. 404(b) notice requirement where the government informed the defense of its intent to offer evidence of prior bad acts one week before trial and no motion for a continuance was made). Dr. Paul's three objections to the admission of this evidence fail.

5. Jury Instructions
During deliberations, the jury sent a written question to the judge, which asked "[i]f payments are being made on a fraudulent loan and these payments are mailed --are those payments mail fraud just because the initial loan agreement is fraudulent?" JA at 19. The court notified the parties that the question was asked, and answered the jurors with a note that read: "See instruction `Use of Mails --Defined' (page 33) and specifically the third and fourth paragraphs." The third and fourth paragraphs referred to by the court state the following:

The Government must prove beyond reasonable doubt, however, that the mails were, in fact, used in some manner to further, or to advance, or to carry out the scheme to defraud or scheme to obtain money or property by false or fraudulent pretenses, representations or promises. The Government must also prove that the use of the mails would follow in the ordinary course of business or events or that the use of the mails by someone was reasonably foreseeable.

It is not necessary for the Government to prove that the item itself mailed was false or fraudulent or contained any false or fraudulent statement, representation, or promise, or contained any request for money or thing of value.

Dr. Paul maintains that the district court erred in not providing him with an opportunity to respond to the jury's note and that therefore we should remand this case for a new trial. Under Rule 43 of the Federal Rules of Criminal Procedure, a defendant shall be present "at every stage of the trial." The rule requiring a defendant's presence at every stage of the trial must be reviewed by this court for harmless error under Fed. R. Crim. P. Rule 52(a). See United States v. Harris, 9 F.3d 493, 499 (6th Cir. 1993). This court has held that an ex parte communication of this type, between the judge and the jury during its deliberations, will not result in reversal if there is no reasonable possibility of prejudice. Ibid. See also United States v. Giacalone, 588 F.2d 1158, 1165 (6th Cir. 1978) (quoting United States v. Reynolds, 489 F.2d 4, 8 (6th Cir. 1973)). This court has alternatively said that such an error "is reversible only if the court's response to the question is confusing, misleading or potentially harmful to the defendant, or results in `a miscarriage of justice."' United States v. Combs, 33 F.3d 667, 670 (6th Cir. 1994). In this case, Dr. Paul has not successfully demonstrated how the court's instructions could have created a reasonable possibility of prejudice. The court did not make a substantive response to the jury's note, but instead mechanically referred back to the jury instructions that had been previously given. Cf. Combs, 33 F.3d at 670 (holding that although the district court erred in failing to assemble the parties and the jury in the courtroom in order to render supplemental instructions, the instructions were legally correct and therefore the error did not result in a "grave miscarriage of justice."); Giacalone, 588 F.2d at 1164 (harmless error to tell jury to continue deliberations after receiving a note informing court that jury was deadlocked); United States v. Florea, 541 F.2d 568, 570-71 (6th Cir. 1976) (harmless error to allow agent to replay tapes admitted into evidence at the request of the jury, without the presence of the parties).

The district court erred in failing to assemble the parties and the jury in the courtroom in order to render the supplemental instructions; however, there was no reasonable possibility of prejudice towards Dr. Paul as a result, because the judge's note simply referred back to the original jury instructions. This error was, therefore, harmless and on this basis we affirm the district court's denial of Dr. Paul's motion for a new trial.

6. Calculation of Tax Loss

The district court determined the tax loss to the government under the Sentencing Guidelines to be $327,302.93. This figure was based on a total of three amounts. First, the court calculated the assessed tax without penalties and interest for the period covered by the Offer-in-Compromise, which came to $134,105.63. This figure is undisputed. Second, the court calculated the amount of tax Dr. Paul avoided on his 1993 income tax return when he failed to disclose the gross proceeds from his Idaho medical practice to be $180,952.30. This second figure is disputed by Dr. Paul. The government produced at trial two different methods by which Dr. Paul's income from the Idaho practice during 1993 and 1994 could be calculated. On the one hand, the government introduced the patient checks that Dr. Paul had deposited into his various bank accounts and had a revenue agent calculate for the court, based on those deposits, the amount of tax that Dr. Paul would have owed. The expert calculated that Dr. Paul would have owed $54,571.40. In the alternative, the government introduced Dr. Paul's own business records, as kept by his office manager, Kaye Sewell, which reflected a considerably larger revenue from the Idaho practice. The final amount of tax owed, based on Ms. Sewell's records, came to $180,952.30. The court chose to use the tax debt calculated on the basis of Ms. Sewell's records and at sentencing Dr. Paul objected, stating that Ms. Sewell's testimony and records were unreliable. Third and finally, the court calculated the tax Dr. Paul avoided on his 1994 income tax return to be $12,245. This figure is undisputed. Dr. Paul also objects to the fact that the district court did not reduce the calculated tax loss by the $50,000 he paid in connection with the Offer-in-Compromise.

In examining factual determinations made by the district court for the purpose of applying the Sentencing Guidelines, we review for clear error. 18 U.S.C. §3742(e); United States v. Pierce, 17 F.3d 146, 151 (6th Cir. 1994). We review de novo the application of the Sentencing Guidelines to a particular set of facts. See United States v. Morrison, 983 F.2d 730, 732 (6th Cir. 1993). Thus, the first issue, centering on whether or not Ms. Sewell's testimony and records are reliable, is reviewed for clear error. The district judge's response to Dr. Paul's objection on this point demonstrates that he carefully weighed the evidence before him and decided that Ms. Sewell's records were likely to be more accurate. The judge noted that the government might not have found all of the bank accounts that Dr. Paul had opened while practicing in Idaho and that there was evidence demonstrating that Dr. Paul had paid for things by signing over checks he received from patients. In either case, the government's first figure would not have taken these variables into account, while Ms. Sewell's calculations would not have had the same problem. Although Dr. Paul claims that Ms. Sewell's records were unreliable and that she was biased, the judge noted that the jury found Ms. Sewell's testimony to be credible. In sum, the district court did not clearly err in its decision to use Ms. Sewell's records in order to calculate the tax loss at stake.

We review de novo the issue of whether the amount paid by Dr. Paul in connection with the Offer-in-Compromise should have been subtracted from the overall tax loss, since it requires an application of the Sentencing Guidelines to a particular set of facts. The government argues that the district court did not err since the Sentencing Guidelines specifically state that "[t]he tax loss is not reduced by any payment of the tax subsequent to the commission of the offense." USSG §2T1.1(c)(5). Dr. Paul contends that the commission of the offense actually occurred when the IRS accepted Dr. Paul's final Offer-in-Compromise and that the money paid in association with that acceptance does not fall under the auspices of §2T1.1(c)(5), since it is not a payment made subsequent to the relevant offense.

The district court established two categories of offenses for the purposes of sentencing under the guidelines, pursuant to USSG §3D1.2. The first group, known as the "Count Group 1" contained Counts One, Two, and Three, all of which involved Dr. Paul in a common scheme of tax evasion. The base offense level assigned to Dr. Paul for Count Group 1 was 17, based on the calculation done by the court that his calculated tax loss came to $327,302.93. Therefore, the "offense" to which the tax payment must be subsequent includes any of the offenses contained in this common scheme of tax evasion. Count One of the indictment, on which the jury returned a guilty verdict, charges Dr. Paul with willfully attempting to evade and defeat the payment of a substantial portion of the assessed taxes owed by him "from on or about December 14, 1993 to on or about May 27, 1994." December 14, 1993 was chosen because it was when Dr. Paul submitted the first Offer-in-Compromise, which was later rejected by the IRS. Therefore, the money paid in association with the Offer-in-Compromise in April 1994 was made subsequent to the relevant offense and is subject to USSG §2T1.1(c)(5). We affirm the district court's ruling on this matter.

7. Sentence Enhancements
Dr. Paul now appeals the district court's decision to apply three sentence enhancements, ultimately increasing his sentence by six levels on the basis of sophisticated concealment, his aggravating role, and for obstruction of justice. We review the district court's findings of fact with respect to the application of the enhancement for clear error, but review legal conclusions as to whether the facts justify an enhancement de novo. See United States v. Morris, No. 99-3905, 2001 WL 92126, at **3 (6th Cir. Jan. 23, 2001) (reviewing the application of a sentence enhancement under USSG §2T1.1 for sophisticated concealment by the defendant, making the offense difficult to detect); United States v. Caseslorente, 220 F.3d 727, 734 (6th Cir. 2000) (reviewing the application of a sentence enhancement under USSG §3B1.1 for the defendant's role in the offenses he committed); United States v. Sabino, 307 F.3d 446, 448 (6th Cir. 2002) (reviewing the application of a sentence enhancement under USSG §3C1.1 for the defendant's obstruction of justice).

Sophisticated Concealment Enhancement

The Sentencing Guidelines provide for a sentence enhancement of two levels for tax evasion offenses involving "sophisticated concealment." USSG §2T1.1(b)(2). Sophisticated concealment is defined as "especially complex or especially intricate offense conduct in which deliberate steps are taken to make the offense, or its extent, difficult to detect." USSG §2T1.1, comment. (n.4). The Commentary points out that `[c]onduct such as hiding assets or transactions, or both, through the use of fictitious entities, corporate shells, or offshore bank accounts ordinarily indicates sophisticated concealment." Ibid.

In general, complex schemes of tax evasion warrant imposition of the sophisticated concealment enhancement. In United States v. Butler [ 2002-2 USTC ¶50,579], 297 F.3d 505 (6th Cir. 2002), this court affirmed the application of a sophisticated concealment enhancement where the defendant set up shell corporations, used post office drop boxes, aliases, and different bank accounts to conceal his tax evasion. In Sabino [ 2002-1 USTC ¶50,137], 274 F.3d 1053, this court affirmed the application of a sophisticated concealment enhancement where the defendant had used at least seven trusts to avoid payment of taxes, noting that the IRS investigation had been lengthy and complex. In United States v. Middleton, 246 F.3d 825 (6th Cir. 2001), this court affirmed the application of a sophisticated concealment enhancement where the defendant had deposited his receipts into non-interest-bearing business bank accounts, had opened accounts at several different banks, had used several different company names to open these accounts, including one in which he had no ownership interest, had traveled to different branches of the same bank to make structured withdrawals of amounts less than $10,000, and had paid all of his bills using cash, money orders, or endorsed business checks without ever retaining a receipt or other record of the transaction.

The district court, in justifying its enhancement of Dr. Paul's sentence for sophisticated concealment, noted that Dr. Paul opened five different bank accounts in three states, supplied a false social security number to the IRS, paid his employees with cash, personal checks, and checks from a business other than his medical practice, required the buyer of his home in Michigan to enter into a confidentiality agreement that prevented the new owner of the house from disclosing any facts or circumstances of the land purchase, and carefully broke down the check he had received from the sale of the Michigan property into amounts that were below $10,000 in order to avoid alerting the IRS to his activities when depositing this money into various accounts. Moreover, the court took notice of the scheme between Dr. Paul and Snider in conducting the straw sale purchase of his Michigan home. All of these factors point to an elaborate plan to conceal Dr. Paul's tax evasion, relatively similar to the one described in Middleton. The district judge did not commit clear error in assessing Dr. Paul a sentence enhancement for sophisticated means.

Aggravating Role Enhancement

The Sentencing Guidelines provide a sentence enhancement for an individual's aggravating role in the commission of an offense. USSG §3B1.1. In particular, the guidelines direct a sentencing court to increase a defendant's offense level by two levels "if the defendant was an organizer, leader, manager, or supervisor in any criminal activity...." The Commentary gives examples of factors to be considered in determining whether the defendant had a leadership role:

Factors the court should consider include the exercise of decision making authority, the nature of participation in the commission of the offense, the recruitment of accomplices, the claimed right to a larger share of the fruits of the crime, the degree of participation in planning or organizing the offense, the nature and scope of the illegal activity and the degree of control and authority exercised over others.

USSG §3B1.1, comment. (n.4).

In this case, the district judge enhanced Dr. Paul's sentence because of his leadership role in the straw sale purchase of his Michigan home. The judge points out that Dr. Paul came up with the idea, planned the offense, recruited Snider and others, such as Kaye Sewell and the man who fronted Dr. Paul the money for the down payment in the straw sale of his Michigan property, and directed them in the commission of the crime, exercising a considerable degree of control over Snider in particular. Furthermore, the judge points out that Dr. Paul was the only participant to gain financially from the transaction.

Dr. Paul cites to the case of United States v. Vandeberg, 201 F.3d 805, 812 (6th Cir. 2000), in which this court held that the record did not support the imposition of a two-level enhancement to a defendant's sentence for being an organizer, leader, manager, or supervisor of criminal activity pursuant to USSG §3B1.1, even though the defendant had provided his co-conspirator with information that was crucial to helping the co-conspirator burglarize a home. However, in Vandenberg, there was no evidence indicating that the defendant had either recruited his co-conspirator, exercised any authority over him, or had taken a leadership role in planning the crime. Id. at 811. Moreover, the defendant in Vandeberg did not take a larger share in the profits garnered from the burglary. Ibid. Dr. Paul's role is not comparable, since there was evidence to support the conclusions reached by the district court in this case that Dr. Paul had recruited Snyder and others into defrauding the IRS, had exercised control over Snyder, had masterminded the straw sale of his Michigan home, and had reaped a far greater financial gain as a result of his crime than anyone else involved. The district court did not commit clear error in applying the two-level enhancement for Dr. Paul's leadership role in the commission of the offense.

Obstruction of Justice Enhancement

The Sentencing Guidelines provide for a two-level enhancement for obstruction of justice pursuant to USSG §3C1.1. The guidelines provide that:

If (A) the defendant willfully obstructed or impeded, or attempted to obstruct or impede, the administration of justice during the investigation, prosecution, or sentencing of the instant offense of conviction, and (B) the obstructive conduct related to (i) the defendant's offense of conviction and any relevant conduct; or (ii) a closely related offense, increase the offense level by 2 levels.

USSG §3C1.1. The non-exhaustive list of examples of obstructive conduct found in the Commentary includes in relevant part:

...

(b) committing, suborning, or attempting to suborn perjury;

...

(f) providing materially false information to a judge or magistrate;

(g) providing a materially false statement to a law enforcement officer that significantly obstructed or impeded the official investigation or prosecution of the instant offense;

...

USSG §3C1.1, comment. (n.4).

The district court found that Dr. Paul was eligible for a sentence enhancement on the basis of obstruction of justice because Dr. Paul had perjured himself in the submission of his Offer-in-Compromise, which was signed "under penalty of perjury," on December 14, 1993 . Moreover, the court held that Dr. Paul had willfully perjured himself on the witness stand on several material points, when Dr. Paul declared that he had not filled out the documents relating to the Offer-in-Compromise, had never used a false Social Security number and that Snider alone committed the bank fraud.

As in this case, the application of an enhancement on the basis of obstruction of justice is generally dependant upon credibility determinations and thus a district court has considerable discretion in determining whether the obstruction enhancement applies. See United States v. Moss, 9 F.3d 543, 553 (6th Cir. 1993). Here, the district court did not err in its application of the obstruction of justice enhancement. Dr. Paul contends that the judge's determinations with regard to Dr. Paul's credibility were unreasonable, but the evidence and the jury's conviction prove otherwise. We affirm the district court's ruling.



8. Conditions on Supervised Release

The Sentencing Guidelines permit the trial court to add specific conditions to the supervised release of a defendant, stating that:

The court may impose other conditions of supervised release to the extent that such conditions (1) are reasonably related to (A) the nature and circumstances of the offense and the history and characteristics of the defendant; (B) the need for the sentence imposed to afford adequate deterrence to criminal conduct; (C) the need to protect the public from further crimes of the defendant; and (D) the need to provide the defendant with needed educational or vocational training, medical care, or other correctional treatment in the most effective manner; and (2) involve no greater deprivation of liberty than is reasonably necessary for the purposes set forth above and are consistent with any pertinent policy statements issued by the Sentencing Commission.

USSG §5D1.3(b). In addition, the Guidelines recommend that the court impose certain conditions, including that the "defendant shall refrain from excessive use of alcohol...." USSG §5D1.3(c)(7). Moreover, the Guidelines note that certain "special conditions" may be appropriate on a case-by-case basis, including community service. Since Dr. Paul did not object at sentencing to the conditions set by the district court, we review for plain error. See United States v. Vincent, 20 F.3d 229 (6th Cir. 1994).

The district court imposed two conditions on Dr. Paul's supervised release. First, the district court required that Dr. Paul refrain from consuming alcohol. Dr. Paul contends that there is no basis for this condition and that it should be eliminated. The record, however, reflects that Dr. Paul was arrested twice for incidents that related to an abuse of alcohol. Dr. Paul was once charged with operating a vehicle under the influence, and was allowed to plead guilty to the lesser included offense of operating while impaired. A few years later, Dr. Paul was arrested for resisting and obstructing an officer who had pulled him over for speeding, weaving, and other traffic offenses, and attempted to conduct a sobriety test. As a result of the second arrest, Dr. Paul was required to participate in alcohol counseling and his driver's license was suspended for a year.

This court has consistently held that the imposition of a special condition is within the district court's discretion if that condition is "reasonably related to the dual goals of probation, the rehabilitation of the defendant and the protection of the public." United States v. Bortels, 962 F.2d 558, 560 (6th Cir. 1992). In addition, the Sentencing Guidelines specifically provide that if the court has reason to believe that the defendant has an alcohol problem, conditions requiring that the defendant participate in abuse programs that include testing for the substance to ensure abstinence are appropriate. USSG §5D1.3(d)(4). Given Dr. Paul's criminal record, it is not unreasonable to assume that he may have a substance abuse problem and therefore the district court did not commit clear error in requiring that Dr. Paul refrain from consuming alcohol during his supervised release. Cf United States v. Modena, 302 F.3d 626, 636-37 (6th Cir. 2002) (holding that the district court's requirement that the defendant abstain from the use of alcohol during his term of supervised release was an abuse of discretion since there was nothing in the record to indicate that the defendant had a substance abuse problem).

The second condition required by the court is that Dr. Paul perform 300 hours of community service in a non-medical related field. The court explained that it was putting this restriction on Dr. Paul in order to help Dr. Paul to regain a more realistic picture of himself as a normal human being, and not as an important doctor. This special condition is intended to serve the permissible goal of rehabilitation. See Bortels, 962 F.2d at 560. We affirm the district court's imposition of these two conditions.

III

For the reasons given above, we AFFIRM Dr. Paul's conviction and sentence.

^* The Honorable Marianne O. Battani, United States District Judge for the Eastern District of Michigan, sitting by designation.