U.S. v. Butler, 99-3867.
| Decision Date | 30 July 2002 |
| Docket Number | No. 99-3867.,99-3867. |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. Bradford Lee BUTLER, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Sixth Circuit |
Daniel Allen Brown (argued and briefed), Office of United States Attorney, Columbus, OH, for Plaintiff-Appellee.
William Yesowitch (briefed), Barber, Banaszynski & Associates, Louisville, KY, James R. Alsup (argued), Chula Vista, CA, for Defendant-Appellant.
Before MOORE and COLE, Circuit Judges; O'MEARA, District Judge.*
MOORE, J., delivered the opinion of the court, in which O'MEARA, D.J., joined. COLE, J., (p. 520), delivered a separate concurring opinion.
Defendant-Appellant Bradford Lee Butler pleaded guilty to one count of tax evasion in violation of 26 U.S.C. § 7201. On appeal, Butler claims that the district court erred by accepting his guilty plea to a count in the indictment that fell outside of the statute of limitations, denying his motion to dismiss the superseding indictment on the basis of the government's alleged breach of an agreement not to prosecute him, and denying his motion to withdraw his guilty plea on the basis of the government's alleged breach of the plea agreement. In addition, Butler challenges the district court's enhancement of his sentence for the use of sophisticated means, the court's failure to consider a split sentence, and the court's imposition of restitution in an amount to be determined by the Tax Court or the IRS. For the following reasons, we AFFIRM the district court's judgment in all respects, except that we VACATE the district court's order regarding the amount of restitution and we REMAND for further proceedings consistent with this opinion.
The undisputed facts of this case are set forth in an attachment to Butler's plea agreement. Butler established and operated two businesses, National Consumer Research ("NCR"), of which he was president, and Fulfillment Services Corp. ("FSC"). Butler represented to the Internal Revenue Service ("IRS") that NCR leased its employees from FSC. Butler used payroll services companies to pay the NCR/FSC employees, and the employees' checks showed the deduction of federal taxes. Instead of paying the deducted amounts to the federal government, however, Butler retained the money, and he also failed to file the employer tax return form as required by federal law. On January 29, 1998, a federal grand jury in the Southern District of Ohio returned an indictment against Butler for one count of conspiracy to impede or obstruct the IRS in ascertaining and collecting employment taxes in violation of 18 U.S.C. § 371 and five counts of employment tax evasion in violation of 26 U.S.C. § 7201.1 On February 26, 1998, the same grand jury returned a superseding indictment, adding information about FSC to some of the counts.
On March 6, 1998, Butler was arraigned, and, initially, he entered pleas of not guilty to the six counts charged against him in the superseding indictment. A number of pre-trial motions were filed, including a motion by Butler to dismiss the superseding indictment on the ground that the government had breached an agreement not to prosecute him. On September 15, 1998, the district court held a hearing on the motion to dismiss. At the hearing, Butler's former attorney and the attorney's paralegal testified that at a meeting in Washington, D.C. on October 18, 1995, the government agreed not to prosecute Butler in exchange for his cooperation in locating and convicting Manning and the payment of his personal income taxes. According to Butler's attorney and the paralegal, this agreement was confirmed in subsequent telephone conversations, although both conceded that there is no documentary evidence of such an agreement. Government witnesses testified that the meeting occurred, but they denied that the government attorney with whom Butler's attorney and the paralegal met ever agreed not to prosecute Butler; in fact, the government attorney testified that she did not have the authority to make such an agreement. The district court found that there was no agreement, specifically noting that "the oral testimony coming from defense witnesses as to an agreement are patently unbelievable," and it denied Butler's motion to dismiss. Joint Appendix ("J.A.") at 415-19 (Mot. to Dismiss Indictment Hearing Tr.).
Following the denial of his motion to dismiss the superseding indictment, Butler signed an agreement with the government to plead guilty to the second count of the superseding indictment charging him with tax evasion in violation of 26 U.S.C. § 7201.2 Pursuant to the 1991 Sentencing Guidelines,3 and based on a tax loss amount of $179,454.97 (the total tax loss to the IRS from both Butler and Manning), the presentence investigation report recommended that Butler be sentenced to twelve months of imprisonment, a fine of $3,000, restitution to be determined by the Tax Court, and a special assessment of $50. The report also recommended a two-level enhancement for the use of sophisticated means and a two-level reduction for acceptance of responsibility. In February 1999, the district court held a hearing on objections to the report. Based on the government's arguments at the hearing and in its post-hearing memorandum, Butler moved on May 5, 1999, to withdraw his guilty plea on the ground that the government had breached the plea agreement.
On May 7, 1999, the district court held a sentencing hearing, at which it also heard Butler's motion to withdraw his guilty plea. Finding that the government had not breached the plea agreement, the district court denied Butler's motion to withdraw his guilty plea. The court also approved the presentence report's enhancement and reduction recommendations. However, the court agreed — with both Butler and the government — that the appropriate amount of tax loss was $69,558 as opposed to $179,454.97. Based the lower tax loss amount, the court then sentenced Butler to twelve months of imprisonment, three years of supervised release following the imprisonment, a fine of $3,000, restitution to be determined by the Tax Court or the IRS, and a special assessment of $50.4 Butler timely appeals.5
Butler pleaded guilty to tax evasion in violation of 26 U.S.C. § 7201. The statute of limitations period for prosecuting violations of 26 U.S.C. § 7201 is six years. 26 U.S.C. § 6531. Butler claims that the "operative date of violation" of Count 2 was December 31, 1991; therefore, as the superseding indictment was returned on February 26, 1998, he argues that the district court should not have been able to accept his guilty plea to Count 2 because the statute of limitations for prosecuting the offense in Count 2 had run.
We conclude that the district court properly accepted Butler's guilty plea to Count 2 of the superseding indictment because the statute of limitations had not yet run on the offense described in that Count. Count 2 of the superseding indictment states that:
On or about the 31st day of January 1992, in the Southern District of Ohio, KRISTON KENT MANNING and BRADFORD LEE BUTLER, JR., defendants, who conducted businesses known as National Consumer Research (hereinafter, "NCR") and Fulfillment Services Corp. that were established in Columbus, Ohio, and with business operations then in Columbus, Ohio, did willfully attempt to evade and defeat federal income taxes withheld from wages and Federal Insurance Contributions Act taxes due and owing to the United States of America for the quarter ending December 31, 1991, by failing to file with the Internal Revenue Service an Employer's Quarterly Federal Tax Return, Form 941, and by failing to pay the amount of federal income tax withheld and social security taxes due and owing...
J.A. at 32 (Superseding Indictment). We have held that the statute of limitations begins to run for tax evasion under 26 U.S.C. § 7201 on the date of "the last affirmative act of evasion." United States v. Dandy, 998 F.2d 1344, 1356 (6th Cir. 1993), cert. denied, 510 U.S. 1163, 114 S.Ct. 1188, 127 L.Ed.2d 538 (1994). The date Butler cites as the operative date of violation — December 31, 1991 — is not the date of the last affirmative act of evasion. December 31, 1991, was the day the winter quarter of 1991 ended; the taxes for that quarter were not even due until January 31, 1992. Therefore, at the very earliest, January 31, 1992, is the date of the last affirmative act of evasion.6
Moreover, Butler calculates the date of prosecution as the date the superseding indictment was entered—February 26, 1998. However, this court has held that a superseding indictment relates back to the date of the original indictment if it "does not broaden the charges set forth" in the original indictment. United States v. Garcia, 268 F.3d 407, 411 (6th Cir.2001), cert. denied, ___ U.S. ___, 122 S.Ct. 1985, 152 L.Ed.2d 1041 (2002). In Garcia, this court concluded that the addition of drug quantities in a superseding indictment did not "materially broaden the charges already pending against the defendants," because the defendants had sufficient notice of the drug quantities. Id. at 416. Similarly, in a fraud conspiracy case, United States v. Lash, we held that a superseding indictment was not materially broadening because:
The dates of the conspiracy remain the same, as do the names of the conspirators and the nature and offices of the operations alleged. The allegation of additional underlying details in a superseding indictment does not compel a conclusion that the charge had been broadened. The original indictment clearly put the defendants on notice of the charges against which they were to defend themselves at trial.
United States v. Lash, 937 F.2d 1077, 1081-82 (6th Cir.1991) (quotation...
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