U.S. v. Bok
| Citation | 156 F.3d 157 |
| Parties | 98-2 USTC P 50,765 UNITED STATES of America, Appellee, v. David S. BOK, Defendant-Appellant. Docket 97-1595. |
| Decision Date | 08 September 1998 |
| Court | U.S. Court of Appeals — Second Circuit |
Jeremy H. Temkin, Assistant United States Attorney for the Southern District of New York (Mary Jo White, United States Attorney, Craig A. Stewart, Assistant United States Attorney), for Appellee.
John L. Pollok, Hoffman Pollok & Pickholz LLP, New York City, for Defendant-Appellant.
Before: CALABRESI, CABRANES, and STRAUB, Circuit Judges.
David S. Bok appeals from a conviction by a jury before Judge Koeltl for attempted income tax evasion in violation of 26 U.S.C. § 7201 and for making false statements on corporate income tax returns in violation of 26 U.S.C. § 7206(1). Bok's appeal raises several issues. First, he argues that the trial court erred in not instructing the jury that a distribution of money he received from a corporation in which he was the sole shareholder may have constituted a nontaxable return of capital. Bok also challenges the trial court's instruction to the jury on the materiality of the false statements he made on the corporate returns he signed. Third, Bok alleges that the trial court improperly admitted evidence of his not filing various state and federal tax returns--which were not at issue in the indictment--to prove intent under Rule 404(b) of the Federal Rules of Evidence. And finally, Bok contends the trial court's requirement that he contribute ten percent of his gross monthly income towards his outstanding personal tax liability as a condition of supervised release violates 28 U.S.C. § 3663.
Having considered these arguments, we affirm in all respects.
Bok was in the construction contracting business in 1988 and 1989, during which time he was the president and sole shareholder of Abacus Construction Corp. Abacus had numerous clients both for commercial and residential projects, mostly in Manhattan. In the years before 1988, Bok had occupied a similar position with Abacus's predecessor corporation and, immediately before that, had attended and graduated from law school, having passed courses in both personal and corporate taxation.
Bok ran into trouble with the Internal Revenue Service in the early 1990s because he had not filed a personal income tax return for the 1988 tax year, and because Abacus had not filed corporate returns for 1988 and 1989. Responding to the IRS's requests, Bok eventually filed all three returns, in each case using the services of an accountant to prepare them. The accountant testified that he in turn had based his work on information provided by Bok. When Bok did file Abacus's corporate returns, there were significant discrepancies between Abacus's reported gross receipts and its actual gross receipts as suggested by a review of the company's bank statements. Similar discrepancies existed with respect to Bok's personal return for 1988, on which he had failed to include over $200,000 he had received from Abacus that year.
Specifically, for the 1988 tax year, a review of Abacus's bank statements indicated that the company had gross receipts of between $3.9 million and $4.8 million. Abacus's tax return for that year reflected gross receipts of just below $410,000. Similarly in 1989, Abacus's bank statements indicated gross receipts of just over $2 million, while its tax return reported slightly less than $405,000.
Bok's 1988 individual tax return listed his gross income as $58,154, only $16,700 of which derived from Abacus. During 1988, however, Bok used $202,765 of Abacus's assets to purchase a condominium in Manhattan, which Bok used as a personal residence. Also in 1988, Bok used $20,122.22 of Abacus's funds to purchase municipal bonds in his own name. In neither case did Bok disclose to his accountant his appropriation of Abacus's funds, and his personal income tax return in no way reflected his appropriation of those funds.
Bok was indicted and tried on one count of attempted personal tax evasion and two counts of making false statements on an income tax return. A jury convicted him on all three counts, and the trial court sentenced him to thirty months' incarceration and three years' supervised release. In addition, as a condition of Bok's supervised release, the trial court required Bok's cooperation in calculating the amount of back taxes that he owed to the government and ordered that Bok pay ten percent of his gross monthly income towards his individual tax liability for 1988 (up to a total of $45,000). As outlined above and discussed in greater detail below, Bok challenges his conviction on several grounds. After considering Bok's arguments, we conclude that the trial court committed no error and therefore affirm.
Two discrete portions of Bok's jury instructions are before us on appeal. First, we must determine whether the trial court erred in not instructing the jury that the money Bok took from Abacus to pay for the condominium and municipal bonds may have been an untaxable return of capital. Second, we analyze whether the trial court improperly prevented the jury from deciding the materiality of Bok's misstatements on Abacus's corporate tax returns.
As an initial matter, "[a] jury instruction is erroneous if it misleads the jury as to the correct legal standard or does not adequately inform the jury on the law." United States v. Dinome, 86 F.3d 277, 282 (2d Cir.1996) (internal quotation marks omitted). We review challenged jury instructions de novo but will reverse only if all of the instructions, taken as a whole, caused a defendant prejudice. See United States v. Locascio, 6 F.3d 924, 939 (2d Cir.1993) (citing
United States v. Pujana-Mena, 949 F.2d 24, 27 (2d Cir.1991)), cert. denied, 511 U.S. 1070, 114 S.Ct. 1645 (1994). With respect to both instructions, the government argues that Bok did not object to the court's actual charge and that therefore he may only challenge portions of it if the trial court's decisions amount to plain error under Rules 30 and 52(b) of the Federal Rules of Criminal Procedure. See Johnson v. United States, 520 U.S. 461, 117 S.Ct. 1544, 1548, 137 L.Ed.2d 718 (1997). Bok admits that he did not object at the proper time to the materiality issue and that the plain error standard applies. He does not explicitly accept or deny the government's contention with respect to the instruction on calculation of his income. It is, however, not necessary in this case for us to determine whether to use plain error analysis or whether the usual harmless error standard applies because neither of the trial court's instructions was erroneous.
On the morning of the last day of the government's case, one day before the trial court submitted the case to the jury, Bok presented the court with several additional requests to charge. One of them concerned the treatment for tax purposes of money withdrawn by a shareholder from a corporation. Through that proposed charge, Bok sought to characterize the money he received from Abacus for his condominium and his municipal bonds as a nontaxable return of capital that he had invested in the corporation rather than as a taxable dividend. The proposed charge read as follows:
Return of Capital Non-Income Transaction
If a shareholder in a corporation withdraws his capital from that corporation, either all or part of that withdrawal is not income to the shareholder, and need not be reflected on that shareholder's personal income tax return. The same treatment occurs if the shareholder directs the corporation to pay to a third party for his benefit all or part of his capital contribution.
Defendant's Additional Requests to Charge at 2. The government opposed the use of the proposed charge, arguing both that it was not legally correct as written and that there was no basis in fact for its inclusion in the charge as a whole.
After entertaining arguments from both sides, the trial court decided against including Bok's proposed charge as written. The trial judge did invite Bok to work with the government to craft a more correct statement of the law, but the two sides evidently never reached agreement on an instruction. The trial judge went on to say that, in keeping with his obligation to instruct the jury correctly on the law, he had included a charge "about a corporate distribution and how that can be income." Trial Transcript at 963. Ultimately the relevant portion of the charge read as follows:
Gains or profits and income derived from any source whatever are included in gross income for the purpose of taxation of income. This includes both lawful and unlawful gains.
In order to prove that the defendant received substantial additional income omitted from his tax return, the government has introduced evidence that the defendant was the sole shareholder, or owner, of Abacus Construction Corp., a corporation, and received certain funds or assets from the corporation for the purchase of an apartment and a bond.
If you find that the defendant obtained such funds, or assets, or other property from Abacus Construction Corp., then you should proceed to determine whether this was income to the defendant.
In this connection, the question for you to determine is whether the defendant had control over the funds, or assets, or other property from that corporation, took it as his own and treated it as his own, so that as a practical matter he derived economic value from the funds, or assets, or other property received. If you find this to be the case, then the funds, or assets, or property received by the defendant would be income; if you do not find this to be the case, then the funds or assets or other Trial Transcript at 1126-27.
property obtained by the defendant would not be income to the defendant.
We have long recognized that under certain circumstances monies lawfully...
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...that separate the purposeful tax violator from the well-meaning, but easily confused, mass of taxpayers."); United States v. Bok, 156 F.3d 157, 166 (2d Cir. 1998) (failure to file personal or corporate returns shows intent to evade taxes); United States v. Marabelles, 724 F.2d 1374, 1380 (9......
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Tax violations.
...that separate the purposeful tax violator from the well-meaning, but easily confused, mass of taxpayers."); United States v. Bok, 156 F.3d 157, 166 (2d Cir. 1998) (finding failure to file personal or corporate returns shows intent to evade taxes); United States v. Marabelles, 724 F.2d 1374,......
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Tax violations.
...that separate the purposeful tax violator from the well-meaning, but easily confused, mass of taxpayers."); United States v. Bok, 156 F.3d 157, 166 (2d Cir. 1998) (finding failure to file personal or corporate returns shows intent to evade taxes); United States v. Marabelles, 724 F.2d 1374,......
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Tax violations.
...that separate the purposeful tax violator from the well-meaning, but easily confused, mass of taxpayers."); United States v. Bok, 156 F.3d 157, 166 (2d Cir. 1998) (failure to file personal or corporate returns shows intent to evade taxes); United States v. Marabelles, 724 F.2d 1374, 1380 (9......