U.S. v. Avery
| Decision Date | 04 December 1992 |
| Docket Number | 91-5080,Nos. 91-5081,s. 91-5081 |
| Citation | 989 F.2d 495 |
| Parties | NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit. UNITED STATES of America, Plaintiff-Appellee, v. Jeffery L. Avery, Defendant-Appellant. United States of America, Plaintiff-Appellee, v. Darrell L. Avery, II, Defendant-Appellant. . Argued: |
| Court | U.S. Court of Appeals — Fourth Circuit |
Appeals from the United States District Court for the Western District of North Carolina, at Charlotte. Robert D. Potter, District Judge. (CR-90-113-02, CR-90-113-01)
George Vernon Laughrun, II, GOODMAN, CARR, NIXON & LAUGHRUN, Charlotte, North Carolina, for Appellant Jeffery Avery.
Harold Johnson Bender, BENDER & MATUS, Charlotte, North Carolina, for Appellant Darrell Avery.
Yoel Tobin, Tax Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee.
Shirley D. Peterson, Assistant Attorney General, Robert E. Lindsay, Alan Hechtkopf, Tax Division, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee.
Before PHILLIPS and MURNAGHAN, Circuit Judges, and SPROUSE, Senior Circuit Judge.
Darrell L. Avery, II, and Jeffrey L. Avery appeal their convictions for violating and for conspiring to violate federal criminal tax laws. In 1986, the Avery brothers, operators of an accounting and tax preparation business, persuaded clients to buy stock of another client, Robinson Yacht Company, and thereby acquire percentages of Robinson Yacht's net operating losses to offset their tax liabilities. 1 Without Robinson Yacht's knowledge, Darrell Avery prepared tax returns for these clients listing the yacht company's losses and subsequently amended Robinson Yacht's tax return to list these clients as shareholders. The Averys kept the proceeds from the sales of the stock and did not inform their clients of their false tax statements.
A jury convicted Darrell Avery on nine counts of willfully aiding and assisting in the preparation and presentation of false tax returns in violation of 26 U.S.C. § 7206(2), one count of willfully making and subscribing a false return in violation of 26 U.S.C.s 7206(1), and one count of conspiracy in violation of 18 U.S.C. § 371. On appeal, he contends that the district court erroneously instructed the jury and erroneously admitted an IRS agent's testimony on the procedure used for issuing a search warrant. Jeffrey Avery was also convicted of conspiracy in violation of 18 U.S.C. § 371, but was acquitted on the only other charge against him-willfully aiding and assisting in the preparation of a false return in violation of 26 U.S.C.s 7206(2). Jeffrey Avery raises the same issues that his brother raises. Additionally, he argues that his acquittal on the substantive count and his conviction on the conspiracy count are fatally inconsistent and that the trial court failed to find that he was a minimal participant in the conspiracy and reduce his sentence accordingly. We affirm.
For many years, the Avery brothers-Darrell and Jeffrey-and their parents operated an accounting and tax return preparation business, Avery Financial Services ("Avery Financial"). One of their clients, Robinson Yacht, suffered losses in 1986. Darrell approached Waverly Robinson, the owner of Robinson Yacht, about selling stock to Avery clients who could use the losses to offset their tax liabilities, but Robinson refused. Unbeknown to Robinson, the Avery brothers had already sold Robinson Yacht stock to clients, advising them to claim Robinson Yacht's losses against their tax liabilities. 2 The clients paid for the stock with checks made out to "Avery Financial" or "Avery Financial Escrow Account," which the Averys deposited into their accounts and withdrew for personal use. Darrell, in preparing these clients' tax returns, offset their income with the fraudulently obtained losses. 3
Jeffrey played a minor role in most of the sales of Robinson Yacht's stock, but he was a key player in a transaction with Printing Equipment Corporation ("Printing Equipment"), owned by Harold McKee and Ralph Brown. Darrell initially contacted McKee and suggested that Printing Equipment offset its $58,000 tax liability by buying Robinson Yacht stock. After both brothers met with McKee and Brown and assured them of the legality of the proposed offset, McKee and Brown agreed to buy the stock for $33,000. It was Jeffrey who discussed the details of the stock purchase contract with McKee, and when McKee asked for the stock certificates, Jeffrey assured him that Avery Financial had taken care of them. Darrell then prepared Printing Equipment's November 1987 tax return and included the losses "purchased" from Robinson Yacht. Jeffrey delivered the return to Printing Equipment's office and procured McKee's signature.
In the meantime, Waverly Robinson had prepared and filed Robinson Yacht's 1986 tax return, listing himself as sole shareholder. Robinson gave Darrell a copy of the Robinson Yacht return and requested tax advice. Without Robinson's knowledge, Darrell prepared an amended return, forged Robinson's signature to it, and filed it. The forged return incorrectly listed Robinson Yacht's address as the street address of Avery Financial and claimed a $95,000 loss for Robinson Yacht. 4 It also listed three other Avery clients (Billy Watts, Gerald Ferguson, and Erroll Sult) as ten-percent owners of Robinson Yacht.
The IRS audited all of the clients who purchased Robinson Stock and disallowed the losses. After an IRS investigation, a grand jury indicted Darrell on eleven counts: nine counts of violating 26 U.S.C. § 7206(2), one count of violating 26 U.S.C.s 7206(1), and one count of violating 18 U.S.C. § 371 (conspiracy). Jeffrey was indicted on only two counts: one count of violating 26 U.S.C.s 7206(2) and one count with Darrell of conspiracy under 18 U.S.C.s 371. Evidence presented by the government in the ensuing eight-day trial included testimonies of IRS agents and Avery clients, some of whom had taped their conversations with the Averys during the IRS investigation. The jury convicted Darrell on all counts but convicted Jeffrey on the conspiracy count only. Before sentencing, Jeffrey moved to set aside his verdict as inconsistent. The district court denied the motion. After a hearing, the court sentenced Darrell to fifty-six months of imprisonment and three years of supervised release, and ordered him to pay $79,372 in restitution. The court sentenced Jeffrey to sixteen months of imprisonment and three years of supervised release, and ordered him to pay $16,500 in restitution.
On appeal, the Avery brothers raise three issues jointly. Jeffrey, individually, raises two additional issues.
We initially address the brothers' joint contentions of error. Both Darrell and Jeffrey criticize the district court's jury instructions on reasonable doubt and good faith. They also argue that the court should have excluded the testimony of IRS Agent Michael J. Toomey, Jr., concerning the issuance of the search warrant of Avery Financial. We consider these arguments sequentially and find each without merit.
The Avery brothers first argue that they deserve a new trial because the court improperly instructed the jury on reasonable doubt. They claim that the court "stated what reasonable doubt is not, but failed and refused to instruct the jury what reasonable doubt is." 5 This argument misconceives the law. It is true, of course, that "at some point a reasonable doubt definition may be so incomprehensible or potentially prejudicial to require reversal." United States v. Moss, 756 F.2d 329, 333 (4th Cir. 1985). As long as the instruction" correctly conveys the concept of reasonable doubt," however, the charge is not sufficiently prejudicial to require reversal. Id.; see Holland v. United States, 348 U.S. 121, 140 (1954). As the defendants concede, we have long admonished trial courts not to define reasonable doubt. See, e.g., Adams v. Aiken, 965 F.2d 1306, 1312 (4th Cir. 1992); United States v. Headspeth, 852 F.2d 753, 755 (4th Cir. 1988). In fact, we recently approved of a jury instruction almost identical to the one given here. See United States v. Adkins, 937 F.2d 947, 950 (4th Cir. 1991).
The defendants' second argument concerns the district court's jury instruction on good faith. The Averys contend that the instruction misled the jury by failing to state that the burden of proof on the good-faith defense remained with the government. The court instructed:
If a person in good faith believes that an income tax return prepared and presented to the Internal Revenue Service as a result of his aid and assistance, or as a result of his counseling, procuring and advising, truthfully reports the allowable deductions of the taxpayer under the Internal Revenue laws, he cannot be found guilty of willfully aiding and assisting in, and counseling, procuring and advising, the preparation and presentation of a false or fraudulent income tax return.
This instruction informed the jury that it could not convict on the section 7206(2) counts if the defendants in good faith believed in the truthfulness of their clients' returns. See Cheek v. United States, 111 S. Ct. 604, 610 (1991); United States v. Hirschfeld, 964 F.2d 318, 322 (4th Cir. 1992), cert. denied, 61 U.S.L.W. 3499 (Jan. 19, 1993). Nothing in this instruction suggested that the defendants had to prove their good faith. Furthermore, the court told the jury to consider the instructions as a whole. And, throughout the jury instructions, the court emphasized the defendants' presumption of innocence and the government's burden of proving guilt beyond a reasonable doubt. Contrary to the defendants' assertions, these instructions, in our view, did not mislead the jury or...
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