724 F.2d 1374 (9th Cir. 1984), 83-1101, United States v. Marabelles

Docket Nº:83-1101.
Citation:724 F.2d 1374
Party Name:UNITED STATES of America, Plaintiff-Appellee, v. Alexander E. MARABELLES, Defendant-Appellant.
Case Date:January 31, 1984
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 1374

724 F.2d 1374 (9th Cir. 1984)

UNITED STATES of America, Plaintiff-Appellee,


Alexander E. MARABELLES, Defendant-Appellant.

No. 83-1101.

United States Court of Appeals, Ninth Circuit

January 31, 1984

Argued and Submitted Nov. 29, 1983.

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[Copyrighted Material Omitted]

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Carol K. Muranaka, Asst. U.S. Atty., Honolulu, Hawaii, for plaintiff-appellee.

Clayton C. Ikei, Honolulu, Hawaii, for defendant-appellant.

Appeal from the United States District Court for the District of Hawaii.

Before ELY, WALLACE and REINHARDT, Circuit Judges.

ELY, Circuit Judge:

Marabelles appeals from his judgments of conviction under 26 U.S.C. Sec. 7201 (1976) (two counts of attempted tax evasion for the years 1977 and 1978) and 26 U.S.C. Sec. 7206(1) (1976) (one count of willfully filing a false tax return for the year 1977).

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The appeal was timely, and we have jurisdiction under 28 U.S.C. Sec. 1291 (1976). We affirm.


During the years in question, Marabelles was a self-employed painter. On his federal income tax return for 1977, Marabelles reported gross receipts from his painting business in the amount of $10,083.00 and expenses in the amount of $4,394.00. On his tax return for 1978, he reported $11,653.00 as gross receipts from his business and $6,396.00 as expenses. The tax returns were prepared by trained tax preparers, based on information provided by Marabelles.

On October 29, 1982, a four-count indictment was returned against Marabelles, charging him with two counts of attempted tax evasion (1977 and 1978) and two counts of willfully filing false tax returns (1977 and 1978). Marabelles was tried before a jury, beginning February 23, 1983.

At trial, the Government employed the specific items method of proof, 1 to show that the gross receipts from Marabelles' painting business totalled at least $20,000.00 for 1977 and at least $30,000.00 for 1978. Marabelles' defense was based on his assertion that the Government failed to allow him reasonable credit for deductible business expenses.

On March 3, 1983, the jury found Marabelles guilty of two counts of attempted tax evasion and one count of willfully filing a false tax return. The remaining count of the indictment had been dismissed with prejudice by the district judge before the jury began deliberation because a typographical error pertaining to the count had been discovered in the indictment.

On April 18, 1983, Marabelles was sentenced to a term of imprisonment of eighteen months on each count; the sentences as to Counts II and III were ordered to run concurrently with the sentence imposed on Count I. Marabelles has, until now, remained free on bond.


In this appeal, Marabelles urges the following errors. We treat these contentions in the order presented.



    Marabelles strongly urges that the evidence was insufficient to support the jury's verdict. In evaluating such a contention, the trial court must determine whether there was relevant evidence from which the jury could reasonably find the defendant guilty beyond a reasonable doubt, viewing the evidence in the light most favorable to the prosecution. United States v. Hazeem, 679 F.2d 770, 772 (9th Cir.), cert. denied, --- U.S. ----, 103 S.Ct. 106, 74 L.Ed.2d 95 (1982). On appeal, our Court applies the same test to review the trial court's decision. Id. See also Jackson v. Virginia, 443 U.S. 307, 319, 99 S.Ct. 2781, 2789, 61 L.Ed.2d 560 (1979) ("the 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" (emphasis in original)).


    The elements of attempted income tax evasion (26 U.S.C. Sec. 7201 (1976)) are: (1) the existence of a tax deficiency, (2) willfulness in attempted evasion of taxes, and (3) an affirmative act constituting an evasion or attempted evasion. Sansone v. United States, 380 U.S. 343, 351, 85 S.Ct.

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    1004, 1010, 13 L.Ed.2d 882 (1965); United States v. Conforte, 624 F.2d 869, 873 (9th Cir.), cert. denied, 449 U.S. 1012, 101 S.Ct. 568, 66 L.Ed.2d 470 (1980). Viewing the evidence in the light most favorable to the Government, we conclude that a rational trier of fact could have reasonably found that Marabelles was guilty, beyond a reasonable doubt, of attempted income tax evasion.

    1. Tax Deficiencies

    As we above stated, the Government used the specific items method of proof to show the existence of tax deficiencies for 1977 and 1978. It introduced into evidence cancelled checks received for services rendered and cashed by Marabelles during these years to establish total gross receipts figures. The Government argues that these figures, when compared with Marabelles' tax returns, reveal substantial unreported income 2 and additional tax liabilities in the amounts of $2,169.26 for 1977 and $4,936.65 for 1978.

    In challenging the Government's proof of tax deficiencies, Marabelles does not argue that he reported all his income; instead, he argues that the majority of the unreported income went to unclaimed business expenses. He further asserts that the failure of the Government fully to investigate and incorporate into its case these alleged expenses renders the Government's case fatally defective.

    To support his arguments, Marabelles cites evidence purporting to show the existence of labor expenses:

    (1) the testimony of one Frank Watanabe that he had observed some 10 to 12 persons, total, work for Marabelles during 1977 and 1978, that it was his opinion that Marabelles had a steady employee, that a painting contractor's gross receipts generally consist of expenses of 1/3 for paint and materials and 2/3 for labor, and that it was his opinion that it was not possible for a single painter to gross $31,000.00 per year working by himself;

    (2) the testimony of the Internal Revenue Service ("IRS") special agent responsible for the Government's investigation of Marabelles that he had not inquired as to Marabelles' business procedures (personal hourly rate, number of hours and days per week worked), and that he had not investigated a deduction on Marabelles' 1978 tax return for workmen's compensation insurance (a deduction usually indicating the existence of employees);

    (3) the testimony of another investigating IRS agent that he had noted the deduction taken by Marabelles on his 1978 tax return for liability and unemployment insurance and that he could not recall any instance in which a self-employed person took out unemployment insurance for himself;

    (4) the testimony of the Government's summarizing witness, who reconstructed Marabelles' tax returns to substantiate the Government's tax deficiency claim, that he gave Marabelles no credit for labor expenses, even...

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