U.S. v. Cutler

• Decision Date: 06 November 1991
• Docket Number: No. 90-4070,90-4070
• Citation: 948 F.2d 691
• Parties: -5834, 92-1 USTC P 50,062 UNITED STATES of America, Plaintiff-Appellee, v. Richard S. CUTLER, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 691

948 F.2d 691

68 A.F.T.R.2d 91-5834, 92-1 USTC P 50,062

UNITED STATES of America, Plaintiff-Appellee, v. Richard S. CUTLER, Defendant-Appellant.

No. 90-4070.

United States Court of Appeals, Tenth Circuit.

Nov. 6, 1991.

Craig S. Cook, Salt Lake City, Utah, for defendant-appellant.

Tena Campbell, Asst. U.S. Atty. (Dee Benson, U.S. Atty., and Stewart C. Walz, Asst. U.S. Atty., with her on the brief), Salt Lake City, Utah, for plaintiff-appellee.

Before McKAY, Chief Judge, SETH, Circuit Judge, and BROWN, District Judge. ^*

WESLEY E. BROWN, District Judge.

Defendant-appellant Richard Cutler was convicted by a jury on six counts of aiding and assisting in the preparation or presentation of false documents arising under the Internal Revenue laws (26 U.S.C. § 7206(2)). The counts against the defendant arose out of certain stock transactions with the Johnson-Bowles stock brokerage firm in Salt Lake City, Utah. The government alleged that the defendant willfully caused false statements to be included in "1099-B" forms that the brokerage firm prepared and was required to file with the Internal Revenue Service. The defendant contends that several errors on the part of the district court merit reversal of the convictions. We find no such error, however, and we therefore affirm the judgment of the district court.

The defendant opened an account at Johnson-Bowles in June of 1984. An account card containing the defendant's name, social security number, and other information was filled out either by the defendant or by his broker with information received from the defendant. It was Johnson-Bowles' routine practice to use the information obtained from a customer to compile an IRS form 1099-B, which reflected sale proceeds on stock transactions occurring in the customer's account. The firm was required by law to file such a form if it paid out proceeds on stock transactions over a certain amount. Johnson-Bowles' practice was to mail the form to the IRS at the end of the year and to mail a copy to the account holder indicating that the information had been provided to the IRS. The government introduced a customer copy of a 1099-B form in the defendant's name for the year 1984.

The government also produced new account cards from Johnson-Bowles in eight different names. The surnames on these accounts were: Shaw, Morrow, Murdock, Morris, Williams, Brown, Phelps, and Rice. These accounts were opened between April of 1984 and May of 1985. The address listed for each of these account holders except two was the same--2586 West South, Number 292. The government established that this address was a mailbox rented by the defendant in a fictitious name. The phone numbers listed on the form were not registered to the individuals named on the account cards. A check of the social security numbers listed on the account cards showed that, with the exception of one individual, the numbers were either issued to individuals other than those listed or had not been issued at all. The one exception was a Mr. Shaw. The social security number listed on the account card in his name was correct. The government called Mr. Shaw to testify, however, and he stated that he had not opened the account at Johnson-Bowles and had no knowledge of the matter. The fictitious information reflected on the account cards was incorporated by Johnson-Bowles into Form 1099-B's for each of these accounts when stocks were traded in the accounts. The government produced copies of these 1099-B forms that had been retained by Johnson-Bowles.

The government called various bank employees from a local bank who testified that the defendant often cashed checks made payable to the eight account holders listed above. Over a thirteen-month period, the defendant negotiated over $465,000.00 worth of checks arising from sales of stock in these accounts. The government established that the defendant endorsed the checks in the names of the various payees. The defendant declined to co-endorse the checks in his own name when asked to do so by bank employees. He told the bank tellers that he had a power of attorney to cash the checks on behalf of the payees. The tellers were directed to cash the checks by their supervisor, who was a friend of Mr. Cutler. An employee of the bank later told the defendant that the bank was unable to find a copy of the power of attorney to which he had referred. The defendant said he would provide the bank with another copy but he never did.

The defendant often negotiated the checks for a combination of large amounts of cash and cashiers' checks. On one occasion the defendant attempted to obtain more than $10,000 in cash. The bank teller informed him that such a transaction would require that the bank complete a "CTR," or currency transaction report. The defendant declined to go forward with that transaction and thereafter always asked for less than $10,000 in cash when he negotiated checks. The cashiers' checks he obtained were usually made payable to himself. The cashiers' checks were sometimes cashed by the defendant at other banks on the same day he obtained them, but were always cashed for under $10,000. The series of transactions at various banks support an inference that the defendant went to great lengths to avoid cashing a check for over $10,000. The defendant's income tax returns for the years 1984 and 1985 were filed in 1987. The returns showed that the defendant claimed the gain on some of these transactions as his own, while on others he reported only ten per cent of the gain and listed it as a commission. The gain on other transactions did not appear on the defendant's returns.

I. Filing of the 1099-B's.

Appellant's first contention is that the conviction must be reversed because an essential element of the offense--filing of the false 1099-B forms with the IRS--was not shown by the evidence. Underlying this argument is the defendant's assertion that a tax document containing a false statement must be filed before it can be the basis for an offense under 18 U.S.C. § 7206(2). The government contends that there is no filing requirement under § 7206(2), or, alternatively, that sufficient circumstantial evidence was presented to show that the filing requirement was met.

Section 7206(2) of Title 26 provides:

7206. Fraud and false statements

"Any person who--

(2) Aid or assistance.--Willfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a return, affidavit, claim, or other document, which is fraudulent or is false as to any material matter, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim, or document;

shall be guilty of a felony...."

Section 7206(2) does not expressly mention filing as an element of the offense. The statute makes it unlawful for a person to willfully aid or assist in the "preparation or presentation" of a document under the tax laws that contains a materially false statement. In United States v. Monteiro, 871 F.2d 204 (1st Cir.1989), the First Circuit was presented with an issue similar to the one raised by appellant. In that case, Monteiro was charged under § 7206(2). The tax documents at issue in that case were IRS forms 1099 for the reporting of gambling income. Under the tax laws, dog and horse racing tracks were required to file 1099 forms disclosing payment to winners of wagers over a certain amount. The winner normally provided the necessary information when he or she cashed the winning tickets. The race track was responsible for filing the forms with the IRS. The indictment against Monteiro alleged that he was a "ten-percenter," meaning that for a ten per cent fee he arranged for individuals other than the actual winners to provide their name to the track and to sign the 1099 forms, thereby allowing the true winners to go undetected if they did not report the income on their tax returns. On appeal, Monteiro argued that the evidence was insufficient to support a conviction because the government did not show that the forms in question were filed with the IRS. The court of appeals conceded there was no such evidence but found this to be irrelevant. Id. at 210. The court assumed that "filing" was required under the statute but stated that such a requirement did not mean "receipt by the IRS" when an intermediary was involved. Id. The court concluded that "the offense of aiding or assisting the preparation or presentation of a false or fraudulent tax document is certainly complete when the document has been presented to a person or entity which is required by law to transmit the information thereon to the IRS." Id. at 210-11.

Appellant cites United States v. Dahlstrom, 713 F.2d 1423 (9th Cir.1983) to support his argument. In Dahlstrom, the Ninth circuit found that an offense was not committed under § 7206(2) unless and until the document containing the false statement was filed with the IRS. The court did not address the language of the statute, which appears to be aimed at the "preparation or presentation" of false documents. In reaching its conclusion, the Dahlstrom court relied on cases applying the statute of limitations, including United States v. Habig, 390 U.S. 222, 88 S.Ct. 926, 19 L.Ed.2d 1055 (1968), in which the Supreme Court indicated that an offense under § 7206(2) was committed at the time the return was filed. These cases were not concerned with the preparation of an informational return by an intermediary, however, and are therefore not controlling under the facts of this case. See Monteiro, 871 F.2d at 211. This case is similar to Monteiro in all material respects. The defendant in this case willfully provided false information to an intermediary required by law to file an informational return pertaining to the defendant. Even assuming that "filing" of the tax form is...