U.S. v. Adam, 01-10445.

• Decision Date: 25 June 2002
• Docket Number: No. 01-10445.,01-10445.
• Citation: 296 F.3d 327
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Arif S. ADAM, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

296 F.3d 327

UNITED STATES of America, Plaintiff-Appellee, v. Arif S. ADAM, Defendant-Appellant.

No. 01-10445.

United States Court of Appeals, Fifth Circuit.

June 25, 2002.

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Michael Reuss Snipes, Asst. U.S. Atty., Dallas, TX, for Plaintiff-Appellee.

Douglas C. McNabb, Houston, TX, for Defendant-Appellant.

Appeal from the United States District Court for the Northern District of Texas.

Before DAVIS, DeMOSS and STEWART, Circuit Judges.

CARL E. STEWART, Circuit Judge:

Arif S. Adam ("Adam") appeals from his conviction for failure to pay over taxes and from the district court's failure to allow him to withdraw his guilty plea. He also appeals from the district court's decision to impose a sentence enhancement for obstruction of justice. For the following reasons, we hereby AFFIRM.

FACTUAL AND PROCEDURAL HISTORY

Adam was charged in June of 2000 by a superseding indictment with three counts of wilfully failing to pay over taxes to the Internal Revenue Service ("IRS"), in violation of 26 U.S.C. § 7202 (1989). The counts of the superseding indictment charged violations occurring in the first, third, and fourth quarters, respectively, of 1994. Adam moved to dismiss the indictment as barred by the applicable statute of limitations. The motion was denied.

On September 19, 2000, pursuant to a plea agreement, Adam pleaded guilty to Count Three of the indictment and signed a factual resume. According to the factual resume, Adam was in charge of several temporary employment agencies between the summer of 1993 and late 1995. Adam admitted that he filed a false tax return, failed to truthfully account for the total amount of employee payroll taxes due in the fourth quarter of 1994, and failed to pay over to the United States the full amount of payroll taxes required by law. The trial judge reserved acceptance of the plea agreement and of the plea of guilty until sentencing.

Adam filed a notice of intent to withdraw his guilty plea on October 3, 2000, and on November 13, 2000, he filed a motion to withdraw the guilty plea. Adam argued in the motion that he had learned of exculpatory information shortly before his scheduled trial. The information was that Automatic Data Processing ("ADP"), a private company that performed various tax services for the businesses run by Adam, had records of tax deposits and filings made on behalf of the businesses in 1993. Adam averred that the IRS, the Government, and his former counsel had previously relied on ADP assertions that such payments had not been made. Adam also averred that his former counsel had discouraged him from presenting such information as a defense and had pressured him into pleading guilty. According to Adam, he succumbed to this pressure because he was in a weakened mental state due to his father's serious illness, and his counsel advised against seeking a continuance as Adam had requested. The district court ruled that Adam did not have an absolute right to withdraw his plea and must show a fair and just reason. After a hearing, the district court denied Adam's motion to withdraw his guilty plea.

The probation officer initially determined that Adam's total offense level was 15. The Government objected to the Presentence Report, requesting an enhancement for obstruction of justice based on Adam's alleged perjury at the hearing on his motion to withdraw his guilty plea. The probation officer agreed that an enhancement for obstruction of justice should be applied and two points for obstruction of justice were added, bringing Adam's total offense level to 17. The district judge overruled Adam's objection as to the obstruction of justice enhancement, ruling that Adam had repeatedly lied when he appeared before the court on his motion to withdraw his guilty plea.

Adam was sentenced to twenty-seven months of imprisonment, three years of supervised release, and was ordered to provide restitution in excess of $170,000. Adam appealed.

DISCUSSION

On appeal, Adam raises several points of error. First, he contends that the statute of limitations barred his indictment. Second, he asserts that the district court erred by requiring him to give a fair and just reason for withdrawing his plea. In the alternative, he asserts that the district court abused its discretion by not allowing him to withdraw his plea. Next, he argues that the district judge should have further inquired into Adam's use of medication to ensure that his plea was knowing and voluntary. Finally, he asserts that the court erred in enhancing his sentence for obstruction of justice based on the testimony he gave at his guilty-plea hearing and by failing to inform him of the consequences of giving untruthful statements to the court. We address these arguments in turn.

I.

Adam, originally indicted in April of 2000, pled guilty to Count Three of his superseding indictment, which alleged conduct that occurred in the fourth quarter of 1994. On appeal, Adam renews his argument that his indictment under § 7202 was barred by the statute of limitations. Issues of statutory interpretation are reviewed de novo. United States v. Santos-Riviera, 183 F.3d 367, 369 (5th Cir.1999).

A general three-year limitations period applies to violations of the internal revenue laws. 26 U.S.C. § 6531 (1989). However, the statute provides eight specific exceptions for which a six-year statute of limitations applies. Id. As briefed by the parties, the dispute centers on the scope of the exception contained in § 6531(4), which establishes a six-year limitations period "for the offense of willfully failing to pay any tax, or make any return... at the time or times required by law or regulations." § 6531(4). At issue is whether § 6531(4) applies to violations of § 7202, which covers "[a]ny person required ... to collect, account for, and pay over any tax... who wilfully fails to collect or truthfully account for and pay over such tax." § 7202.

As the Government points out, every circuit court to have considered the issue has held that § 6531(4) covers § 7202. United States v. Gilbert, 266 F.3d 1180, 1186 (9th Cir.2001); United States v. Gollapudi, 130 F.3d 66, 68-71 (3d Cir.1997); United States v. Musacchia, 900 F.2d 493, 498-500 (2d Cir.1990), vacated on other grounds, United States v. Musacchia, 955 F.2d 3, 4 (2d Cir.1991); United States v. Porth, 426 F.2d 519, 521-22 (10th Cir. 1970).

Adam argues that the circuit courts have relied on flawed logic to support their holdings as to the statute of limitations issue. He contends that the holding in Musacchia is questionable given that Congress prescribed three-year statutes of limitations for various felony tax offenses. Relying on district court decisions in United States v. Block, 497 F.Supp. 629, 631-32 (N.D.Ga.1980), and United States v. Brennick, 908 F.Supp. 1004, 1018-19 (D.Mass. 1995), Adam also suggests that the approach taken in Gollapudi is incorrect because it is inconsistent with the structure of the statute.

In holding that six-year limitations period established by § 6531(4) did not apply to offenses under § 7202, the Block court found it "obvious ... that Congress had the statutory scheme of 26 U.S.C. [§] 7201 et seq. in mind when considering what offenses should be exempted from the three-year period of limitations generally applicable." 497 F.Supp. at 632. The court noted that several of the eight exceptions of § 6531 mention certain code sections by number, noting by way of example that § 6531(5) references §§ 7206 and 7207. Id. The court also found it significant that in § 6531 "there is substantial borrowing of statutory language from certain of the code sections in the [§] 7201 et seq. series." Id. Noting that "the key words of [§] 7202, `collect, account for, and pay over' are entirely absent from the subsections of [§] 6531 which establish the longer six-year period of limitations," the Block court concluded that it was unlikely that Congress "would omit use of the key words of [§] 7202 if it had intended to make failure to `pay over' third party taxes subject to the six-year statute of limitations." Id.

Adam also argues that there is a significant distinction between taxes owed by the income earner and taxes owed by a responsible person who is obligated under law to collect taxes on behalf of the government for liabilities arising from a different taxpayer's activities. This view also finds support in Block, which, drawing attention to the subtle difference in language used in §§ 6531(4) and 7202, noted that "failure to `pay over' third party taxes [as proscribed by § 7202] is substantively different from failure to pay taxes." 497 F.Supp. at 632.

We are not persuaded. The plain language of § 6531(4) encompasses the conduct engaged in by Adam. As the Third Circuit noted in Gollapudi:

Under a plain reading of this statute, we find it clear that violations of § 7202 are subject to a six-year statute of limitations under § 6531(4). Specifically, 26 U.S.C. § 7202 makes it an offense for an employer to willfully fail to "account for and pay over" to the IRS taxes withheld from employees. Given that § 6531 pertains to "failing to pay any tax," the District Court correctly found that the failure to pay third-party taxes as covered by § 7202 constitutes failure to pay "any tax," and thus, is subject to the six-year statute of limitations under § 6531(4).

130 F.3d at 70.

Further, we are also persuaded by Musacchia's reasoning that it would be inconsistent for Congress to establish a six-year statute of limitations for the misdemeanor offense prescribed in 26 U.S.C. § 7203, while setting a three-year limitations period for the felony offense of § 7202. 900 F.2d at 500.

Because Adam has not shown a persuasive reason for creating a split among the circuits on this issue, and because we believe the plain language of § 6531(4) encompasses § 7202, we conclude that the district court correctly determined that the six-year statute of...