U.S. v. Kim, 88-2834

• Decision Date: 11 September 1989
• Docket Number: No. 88-2834,88-2834
• Citation: 884 F.2d 189
• Parties: -495, 89-2 USTC P 9555 UNITED STATES of America, Plaintiff-Appellee, v. Richard Y. KIM and Young N. Kim, Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 189

884 F.2d 189

65 A.F.T.R.2d 90-495, 89-2 USTC P 9555

UNITED STATES of America, Plaintiff-Appellee, v. Richard Y. KIM and Young N. Kim, Defendants-Appellants.

No. 88-2834.

United States Court of Appeals, Fifth Circuit.

Sept. 11, 1989.

Dougal C. Pope, Houston, Tex., for Young N. Kim.

Rudy M. Groom, Houston, Tex., for Richard Y. Kim.

Frances H. Stacy, Paula C. Offenhauser, Tim Johnson, Asst. U.S. Attys., and Henry K. Oncken, Houston, Tex., for plaintiff-appellee.

Appeals from the United States District Court for the Southern District of Texas.

Before KING, JOLLY and DUHE, Circuit Judges.

DUHE, Circuit Judge:

Richard Y. Kim and his wife Young N. Kim appeal their convictions for income tax evasion. We affirm.

The Kims are Korean citizens who reside in the United States. From 1979 onwards Mr. Kim owned and managed several sexually oriented businesses in Texas and Louisiana. These businesses housed prostitutes in addition to conducting lawful activity. For the years 1981 to 1983 the Kims filed joint income tax returns prepared by Jin Sung Chung, an accountant retained by the Kims, reporting income of less then $11,500 each year.

An Internal Revenue Service investigation indicated that the Kims' financial condition did not square with their reported income. The investigation revealed that from 1981 to 1983 the Kims paid $135,000 toward $420,000 worth of real estate. They also made several large bank deposits during this period, depositing $186,530.66 in 1982 and $65,350 in 1983 into fourteen separate bank accounts. The IRS calculated the Kims' net worth and concluded that from 1981 to 1983 they had substantially underreported their taxable income and owed approximately $71,000 in additional tax.

The Kims were charged with tax evasion, 26 U.S.C. Sec. 7201, under a three-count indictment. The government and the Kims subsequently entered into a plea agreement, under which Mr. Kim agreed to plead guilty to Count II in exchange for dismissal of the remaining counts against him and of all counts against Mrs. Kim. Mr. Kim signed a plea of guilty during his arraignment, stating that he understood the elements of the charged offense and voluntarily entered the plea because he was guilty of that offense. At the sentencing hearing, however, Mr. Kim presented evidence to show that Mr. Chung was responsible for the underreporting. Mr. Kim's counsel explained that the evidence showed Mr. Kim lacked the willfulness required for the offense of tax evasion. The government then moved to withdraw the guilty plea and on the ground that Mr. Kim disputed willfulness the district judge declined to accept the guilty plea and set the matter for trial. The jury found Mr. and Mrs. Kim guilty on all counts.

Double Jeopardy

Mr. Kim first argues that his trial on Count II after withdrawal of his guilty plea to that count violated the Double Jeopardy Clause of the Fifth Amendment. Mr. Kim is correct in stating that jeopardy attaches with the acceptance of a guilty plea, but is incorrect in asserting that attachment alone settles the issue. "[W]hen defendant repudiates the plea bargain, either by withdrawing the plea or by successfully challenging his conviction on appeal, there is no double jeopardy (or other) obstacle to restoring the relationship between defendant and state as it existed prior to the defunct bargain." Fransaw v. Lynaugh, 810 F.2d 518, 524-25 (5th Cir.), cert. denied, 483 U.S. 1008, 107 S.Ct. 3237, 97 L.Ed.2d 742 (1987). Accordingly, if a defendant withdraws his guilty plea after conviction on that plea, the Double Jeopardy Clause does not prohibit trial on the same charge. Clark v. Blackburn, 605 F.2d 163, 164 (5th Cir.1979).

Mr. Kim nevertheless argues that his plea was withdrawn on the government's motion, and that he never requested withdrawal of the plea but only sought to mitigate the sentence by presenting evidence on the severity of the offense. The position taken by Mr. Kim at the sentencing hearing, however, amounted to a repudiation of the plea agreement. By denying willfulness, an element of the crime, Mr. Kim undermined the factual basis for the plea and thereby rejected the plea agreement. The district judge therefore properly tried Mr. Kim on Count II.

Sufficiency of the Evidence

Mr. and Mrs. Kim argue that the evidence is insufficient to show willfulness on their part. ¹ Mr. Kim states that as an uneducated immigrant without knowledge of English he depended on Mr. Chung to prepare correct tax returns. Mr. Kim therefore argues that he could not have possessed the degree of intent required for tax evasion, because he disclosed all relevant information to Mr. Chung and was unable to understand the returns Mr. Chung prepared. Mrs. Kim argues that she did not possess the requisite intent because she neither assembled financial information nor dealt with Mr. Chung at any time.

In reviewing the sufficiency of the evidence, we view the evidence in a light most favorable to the government and with all reasonable inferences and credibility choices made in support of the jury's verdict. The standard of review inquires whether any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt. United States v. Nixon, 816 F.2d 1022, 1029 (5th Cir.1987), cert. denied, --- U.S. ----, 108 S.Ct. 749, 98 L.Ed.2d 762 (1988). For purposes of Sec. 7201 evidence of willfulness must generally show a voluntary, intentional violation of a known legal duty. Such evidence is ordinarily circumstantial, since direct proof is often unavailable. United States v. Schafer, 580 F.2d 774, 781 (5th Cir.), cert. denied, 439 U.S. 970, 99 S.Ct. 463, 58 L.Ed.2d 430 (1978). Circumstantial evidence in this context may consist of, among other things, a failure to report a substantial amount of income, United States v. Schechter, 475 F.2d 1099, 1101 (5th Cir.), cert. denied, 414 U.S. 825, 94 S.Ct. 127, 38 L.Ed.2d 58 (1973), a consistent pattern of underreporting large amounts of income, Holland v. United States, 348 U.S. 121, 139, 75 S.Ct. 127, 137, 99 L.Ed. 150 (1954), the spending of large amounts of cash that cannot be reconciled with the amount of reported income, United States v. Daniels, 617 F.2d 146, 150 (5th Cir.1980), or "any conduct, the likely effect of which would be to mislead or to conceal." Spies v. United States, 317 U.S. 492, 499, 63 S.Ct. 364, 368, 87 L.Ed. 418 (1943).

The record amply supports the element of willfulness on the part of both Mr. and Mrs. Kim. The Kims failed to report $182,601 over the three years covered by the indictment. The underreporting was consistent over this period of time. The Kims also maintained many accounts at several different banks, and Mr. Kim made large cash deposits into these accounts during the reporting period. A rational jury might easily have concluded that the consistent underreporting of income demonstrated an intentional violation of the Kims' duty to pay taxes, and that maintaining numerous bank accounts constituted conduct designed to mislead the IRS. In addition, the Kims appear to have known that they had earned far more than they reported. Their extensive real estate purchases were well out of line with their reported income. With respect to Mrs. Kim specifically the record shows that she received cash from female employees which supports the conclusion that she was aware of the amount of income the businesses were earning. It is therefore reasonable to infer that the Kims were aware of the extent of their earnings and willfully underreported their income.

The thrust of the Kims' argument is that Mr. Chung was responsible for determining the income shown on the tax returns. They argue that he prepared for Mr. Kim several financial statements that reflected far greater earnings than were reported to the IRS and yet ignored those earnings in preparing the returns. Mr. Chung testified, however, that Mr. Kim was a "walk-in customer" rather than a customer whose business activity Mr. Chung would oversee and with whom Mr. Chung would have a continuous relationship. This adequately explains Mr. Chung's role in the preparation of the conflicting documents. In addition, the jury seems reasonably to have concluded that the discrepancy between the tax returns and the financial statements provided further proof of Mr. Kim's willfulness in committing the offense. Mr. Chung testified that in preparing both the returns and the statements he depended on information provided by Mr. Kim, who apparently simply recited many of the figures orally to Mr. Chung. Giving false information to an accountant bears on intent to evade and defeat the payment of taxes, Daniels, 617 F.2d at 149, and the jury was certainly entitled to conclude that Mr. Kim deliberately fabricated the information for the returns.

The Charge

The Kims submitted four proposed instructions ² that set forth the "theory of the defense." The instructions stated in essence that the Kims' reliance on the advice of their accountant demonstrated lack of willfulness. The district judge did not give the proposed instructions but did charge the jury as follows:

Now, if Mr. and Mrs. Kim provided Mr. Chung, the CPA, with full information with relation to their taxable income and expenses during the year, and the defendants then adopted, signed and filed the tax return on form 1040 as prepared by Mr. Chung, without having reason to believe it was not correct, then you will find the defendants not guilty.

The Kims argue that the judge's failure to give their proposed charges rendered the trial fundamentally unfair.

A criminal defendant is entitled to have the jury instructed on a theory of the defense for which there is any foundation in the evidence. Perez v. United States, 297 F.2d 12, 15-16 (5th Cir.1961). The judge need not instruct the jury with the very words proposed by the defendant, but is only required to instruct in such a way that adequately and fairly presents the theory of...