U.S. v. Jerde

• Decision Date: 14 April 1988
• Docket Number: No. 87-5193,87-5193
• Parties: -777, 88-1 USTC P 9238, 24 Fed. R. Evid. Serv. 1193 UNITED STATES of America, Appellee, v. Larry A. JERDE, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 818

841 F.2d 818

61 A.F.T.R.2d 88-777, 88-1 USTC P 9238,

24 Fed. R. Evid. Serv. 1193

UNITED STATES of America, Appellee, v. Larry A. JERDE, Appellant.

No. 87-5193.

United States Court of Appeals,

Eighth Circuit.

Submitted Dec. 17, 1987.

Decided March 3, 1988.

Rehearing and Rehearing En Banc Denied April 14, 1988.

Kevin J. Short, Minneapolis, Minn., for appellant.

John Ulrich, Sioux Falls, S.D., for appellee.

Before John R. GIBSON, BOWMAN and WOLLMAN, Circuit Judges.

WOLLMAN, Circuit Judge.

Larry A. Jerde (Jerde) appeals from his five-count conviction by a jury of willfully failing to file employer's quarterly tax returns for the third and fourth quarters of 1984, and willfully failing to file personal income tax returns for the 1982, 1983, and 1984 calendar years, in violation of 26 U.S.C. Sec. 7203. ¹ Jerde argues that the district court ² erroneously instructed the jury concerning willfulness and good faith, and that the district court improperly interjected itself into the trial by interrogating Jerde on two occasions. We affirm.

I.

At the time of trial, Jerde had practiced as a certified public accountant for approximately eleven years. In December 1980, Jerde started his own accounting practice in Watertown, South Dakota. In December 1982, Jerde sold fifty percent of this practice to Dennis Jeske (Jeske), a former Internal Revenue Service agent. The practice was incorporated as Jerde & Jeske, Ltd., with each owning fifty percent of the stock. The firm suffered a loss during the 1983 tax season. The business relationship between Jerde and Jeske deteriorated, and Jeske left the firm in June 1983.

After settlement negotiations failed, Jeske filed a lawsuit in February 1984 to recover the $11,000 he had invested in the business. One of the issues in the lawsuit was whether Jerde & Jeske, Ltd. was a corporation or a joint venture. Jerde argued that the corporation was never operational because Jeske had only paid $11,000 of the $15,000 purchase price. This litigation continued through November 24, 1986.

During the pendency of the state court litigation, Jerde did not file employer's quarterly tax returns for the third and fourth quarters of 1984. Jerde applied for six-month extensions of time in which to file his 1982, 1983, and 1984 personal income tax returns but did not file the returns before the expiration of the respective extension periods. Jerde claims to have filed the returns in question in December 1986. ³

In March 1987, Jerde was convicted of five counts of willfully failing to file these returns. At trial, Jerde contended that his failure to file the tax returns was not willful. Under penalty of perjury, each tax return requires the signer to declare, to the best of his knowledge and belief, that the return is true, correct, and complete. Jerde's theory of defense was that his failure to file the returns was not willful because he acted under the good-faith belief that he could not accurately complete the returns until the ongoing state court litigation determined whether Jerde & Jeske, Ltd. was a corporation or a joint venture.

II.

Jerde argues that the district court erroneously instructed the jury concerning willfulness and good faith. Four general principles govern our evaluation of the adequacy of jury instructions. First, the instructions must inform the jurors of the essential issues before them and of the permissible ways of resolving those issues. United States v. Montgomery, 819 F.2d 847, 851 (8th Cir.1987). Second, a party is entitled to an instruction on his theory of the case, provided the instruction is timely requested, supported by the evidence, and correctly states the law. Id. at 851-52. Third, the district court is afforded considerable discretion in choosing the form and language of jury instructions. Id. at 852. Fourth, the adequacy of jury instructions is determined by reviewing them as a whole, United States v. Kouba, 822 F.2d 768, 770 (8th Cir.1987), and in the context of the trial. United States v. Park, 421 U.S. 658, 674, 95 S.Ct. 1903, 44 L.Ed.2d 489 (1975); United States v. McMillan, 820 F.2d 251, 256 (8th Cir.), cert. denied, --- U.S. ----, 108 S.Ct. 234, 98 L.Ed.2d 193 (1987).

Jerde contends that the district court erroneously instructed the jury that the government was not required to prove bad purpose or evil motive to establish willfulness. The instruction in question stated in relevant part:

Willfulness is an essential element of the crime of failure to file an income tax return. The word "willfully["] used in connection with this offense means a voluntary, intentional violation of a known legal duty, or otherwise stated, with the wrongful purpose of deliberately intending not to file a return which defendant knew he should have filed in order to prevent the government from knowing the extent of and knowing the facts material to the determination of his tax liability. You are instructed that the government is not required to prove bad purpose or evil motive. (Emphasis added.)

We have stated that the words "bad purpose or evil motive" are " 'merely another way to convey the concept of willfulness.' " United States v. Ojala, 544 F.2d 940, 947 (8th Cir.1976) (quoting United States v. Pohlman, 522 F.2d 974, 977 (8th Cir.1975) (en banc), cert. denied, 423 U.S. 1049, 96 S.Ct. 776, 46 L.Ed.2d 638 (1976)). Based on this statement, Jerde argues that it was misleading to instruct the jury that the government was not required to prove bad purpose or evil motive, because the terms "bad purpose or evil motive" and "willfulness" are essentially synonymous for this purpose. In addition, Jerde argues that Pohlman held that a trial court is not required to instruct the jury that bad purpose or evil motive is required to establish willfulness, not that the government is not required to prove bad purpose or evil motive.

"Willfulness in this context simply means a voluntary, intentional violation of a known legal duty." United States v. Pomponio, 429 U.S. 10, 12, 97 S.Ct. 22, 24, 50 L.Ed.2d 12 (1976). It does not require proof of any other motive. Id. Our references in Ojala and Pohlman to "bad purpose or evil motive" meant no more than the intent to violate a legal duty. See Pomponio, 429 U.S. at 11, 97 S.Ct. at 23. We conclude that the challenged jury instruction was not misleading, particularly when the charge as a whole made repeated reference to the appropriate legal standard. See Ojala, 544 F.2d at 947 (jury instruction that minimized good motive was proper because government was not required to prove anything but a voluntary, intentional violation of a known legal duty).

As indicated above, Jerde's theory of defense was that his failure to file the returns in question was not willful because he acted under the good-faith belief that he could not accurately complete the returns until the ongoing state court litigation determined whether Jerde & Jeske, Ltd. was a corporation or a joint venture. He argues that his theory of defense was effectively removed from the jury's consideration by the jury instruction that stated in relevant part:

You are instructed that the existence of wilfulness required to be proven by the government is not negated by the excuse of pressing business problems including any existing State court litigation. These matters however may be considered by you in determining whether or not the defendant voluntarily and intentionally violated a known duty. If you should find that the government has failed to prove beyond a reasonable doubt that the defendant's failure to file was willful, then your verdict should be for the defendant.

The propriety of this instruction is apparent in the context of the whole trial. Jerde's counsel sought to introduce a copy of the state court's memorandum decision into evidence. At that point, the district court gave the following limiting instruction:

You have heard evidence of the existing State Court litigation. The court does advise you that the existence of State Court litigation is not an excuse for failure to timely file United States Internal Revenue Service income tax returns.

The court will be submitting to you an issue of willfullness [sic].

I am going to permit Exhibit 30, which is the memorandum decision of the State Court decision, to be introduced for the limited purpose of you to determine what effect that may have had upon the issue of willfullness [sic], which is an element of the offense of failing to timely file an income tax return.

So for that limited purpose, Exhibit 30 will be received, in other words, not as an excuse for failure to file, but simply for you to determine and assess that evidence in light of your requirement to find that the defendant willfully failed to file timely his 1982, '83 and '84 income tax returns and the 941 Form[s], which are the subject of Counts I and II.

We conclude that the challenged jury instruction did not remove Jerde's theory of defense from the jury. This instruction, particularly when read in conjunction with the limiting instruction, properly instructed the jury that the mere existence of state court litigation does not negate willfulness. See United States v. Sempos, 772 F.2d 1, 2 (1st Cir.1985) (financial or domestic problems do not negate willfulness as used in 26 U.S.C. Sec. 7203). The instruction also focused the jury's attention on the appropriate standard, "whether * * * the defendant voluntarily and intentionally violated a known duty," and informed the jury that it could consider Jerde's pressing business problems, including the existence of state court litigation, in making that determination. ⁴

Jerde's next two arguments concern the jury instructions given by the district court on the issue of good faith. First, Jerde argues that because the concept of good faith simply requires a person to act with an honest belief or with honest intentions, the following jury instruction improperly raised the level of that standard: ...