U.S. v. Barrow

• Decision Date: 21 November 1996
• Docket Number: 96-1577,Nos. 95-1686,s. 95-1686
• Citation: 118 F.3d 482
• Parties: -5203, 97-2 USTC P 50,558 UNITED STATES of America, Plaintiff-Appellee, v. Tommy Joe BARROW, Defendant-Appellant. . Argued (95-1686)
• Court: U.S. Court of Appeals — Sixth Circuit

Page 482

118 F.3d 482

80 A.F.T.R.2d 97-5203, 97-2 USTC P 50,558

UNITED STATES of America, Plaintiff-Appellee, v. Tommy Joe BARROW, Defendant-Appellant.

Nos. 95-1686, 96-1577.

United States Court of Appeals Sixth Circuit.

Argued (95-1686) Nov. 21, 1996.

Submitted (96-1577) Nov. 21, 1996.

Decided July 2, 1997.

Sheldon Light (argued and briefed), Patricia G. Blake, Office of the U.S. Attorney, Detroit, MI, for Plaintiff-Appellee in No. 95-1686.

Sheldon Light (briefed), Office of the U.S. Attorney, Detroit, MI, for Plaintiff-Appellee in No. 96-1577.

Tommy Joe Barrow (briefed), Detroit, MI, pro se in No. 96-1577.

Allan S. Rubin (argued), Carl L. Rubin (briefed), Rubin & Rubin, Southfield, MI, Tommy Joe Barrow (briefed), Detroit, MI, for Defendant-Appellant in No. 95-1686.

Before: KENNEDY, BOGGS, and WOOD, ^* Circuit Judges.

OPINION

KENNEDY, Circuit Judge.

Defendant, Tommy Joe Barrow, appeals his convictions for making a false statement in connection with a loan application in violation of 18 U.S.C. § 1014, bank fraud in violation of 18 U.S.C. § 1344, income tax evasion in violation of 26 U.S.C. § 7201, and willfully filing false tax returns in violation of 26 U.S.C. § 7206. For the following reasons, we reject defendant's assignments of error.

I. Facts

A. Background

Defendant was a certified public accountant who was the founder, as well as the controlling shareholder, of a Detroit accounting firm, Barrow, Aldridge & Co. In addition, defendant was the sole proprietor of a data processing company, Complete Information Services (CIS). In 1982, defendant was elected to the Board of Directors of Detroit Central Hospital, and in 1986 he became chairman.

During this time, the hospital was renamed New Center Hospital (New Center) and ownership was transferred to a holding company, Central City Health Services (Central City). By 1986, defendant's accounting firm had become the accounting department for the hospital and the holding company. By 1987, CIS was performing computerized billing services for the hospital and related entities. Around this time, defendant became chief executive officer of both New Center and Central City.

On October 12, 1993, a Grand Jury returned a 15 count indictment against defendant, charging him with making false statements in connection with a bank loan application, 18 U.S.C. § 1014 (Count One); bank fraud, 18 U.S.C. § 1344 (Count Two); income tax evasion in 1984 through 1988, 26 U.S.C. § 7201 (Counts Three, Five, Seven, Nine, and Eleven); and willfully filing false tax returns, ¹ 26 U.S.C. § 7206 (Counts Four, Six, Eight, Ten, and Twelve through Fifteen). Following a ten-day trial, the jury acquitted defendant on Counts Three, Four, Seven, and Eight (1984 and 1986 tax evasion and false tax return counts). The jury convicted on all other counts. The following summarizes the general facts pertaining to each count for which defendant was convicted.

B. Convictions

1. False Loan Application and Bank Fraud

(Counts One and Two)

In March 1986, defendant applied for a $100,000 loan from Great Lakes Federal Savings (Great Lakes) in order to purchase a boat. In support of his loan application, defendant provided the bank with a personal financial statement, a document purporting to be his 1984 U.S. Individual Income Tax Return (Form 1040), and a document purporting to be his 1985 W-2 Wage and Tax Statement from Barrow, Aldridge & Co. The government presented testimony that the bank relied on these documents in assessing and approving defendant's loan. In May 1986, Great Lakes loaned defendant $105,000 to buy the boat.

The information and documents that defendant submitted to the bank were fraudulent. When he applied for the loan, defendant had not filed a 1984 income tax return; in fact, he did not file his 1984 return until July 13, 1987, over a year after he obtained the loan. Furthermore, the false 1984 return stated that his total income in 1984 was $92,037.69, including $86,920.04 in wages, and that he had paid $15,921.00 in taxes. But the 1984 tax return that he actually filed with the Internal Revenue Service (IRS) in 1987 declared a total income of only $24,059.38, wages of only $39,879.01, and zero tax liability.

Moreover, the 1985 W-2 form that defendant submitted to the bank indicated that his wages from Barrows, Aldridge & Co. were $96,147.29, with federal income tax withholdings of $14,389.56, but the 1985 W-2 form that was filed with the IRS showed wages of only $35,905.94, with no federal income tax withheld. Finally, the figures in the false tax documents corresponded to the figures in the loan application and the personal financial statement.

2. Tax Evasion and False Individual Returns

(Counts Five, Six, and Nine Through Twelve)

Defendant prepared his own individual income tax returns for 1984 through 1988, the years charged in the indictment. In 1989, the IRS began a civil audit of both Barrow, Aldridge & Co. and defendant, focusing in part on information that defendant or his firm had received unreported income from New Center or Central City. The evidence at trial established that defendant had underreported income that he had received in the form of CIS's gross receipts. The unreported income totaled over $29,000 for the years defendant was convicted. In addition to underreporting his CIS income, defendant deducted as a business expense several thousand dollars in payments to a housekeeper who cleaned his personal residence and performed no services for CIS. Defendant also took over $8,000 in unreported income in 1988 by diverting and depositing into his personal account a check payable to Barrow, Aldridge & Co.

Defendant also received large amounts of unreported income from New Center, Central City, and related entities. Specifically, defendant received compensation for his services as CEO in the form of checks made out to him personally, which he deposited into his personal bank account. This unreported income totaled over $108,000 for 1985, 1987, and 1988.

In total, defendant did not report over $150,000 of income for the years of conviction. Defendant's tax deficiency was $52,000 for those years.

3. False Corporate Returns

(Counts Thirteen Through Fifteen)

Defendant also prepared corporate tax returns for Barrow, Aldridge & Co. During the civil audit of both the accounting firm and defendant, defendant filed three amended corporate income tax returns for the firm. These amended returns purported to increase the reported income of the corporation for the fiscal years ending March 31, 1988 and March 31, 1989, stating that the income of Barrow, Aldridge & Co. was to be increased "due to income inadvertently omitted from Corporate return, however, no tax is due because of available not [sic] operating loss from prior year." The government proved that the amended corporate returns were false because defendant should have claimed the income on his individual tax returns.

C. District Court Proceedings

On October 20, 1994, defendant filed a Motion for Judgment of Acquittal, challenging the evidentiary basis of his tax evasion convictions. On January 29, 1995, the District Court denied the motion. An evidentiary hearing was held concerning sentencing and, on June 5, 1995, defendant was sentenced to concurrent terms of 21 months imprisonment, a fine of $11,000, restitution to Great Lakes Federal Savings in the amount of $39,000, restitution to the Great Lake Bancorp and to the Internal Revenue Service in the amount of $42,195.71, and a special assessment of $550.

A notice of appeal of the judgment was timely filed on June 14, 1995. This Court entered an order dismissing the appeal on October 4, 1995, but we reinstated the appeal on November 16, 1995. On January 12, 1996, defendant filed his initial brief on appeal. At that point, the government discovered that four documents--the stipulated jury instructions, the government's request for jury instructions, the "defense theory" instructions, and the Government Submission Regarding Jury Instructions--had been omitted from the record. The government filed a motion with the District Court requesting that it correct the record on appeal and make a record of the court's procedure requiring the submission of stipulated and non-stipulated jury instructions. The District Court denied this motion, stating that "[p]laintiff has not explained in its motion exactly why it seeks to add the above items to the record."

The government filed a motion for reconsideration, this time explaining to the court that defendant was challenging the instructions on appeal and that it wished to rely on the "invited error" doctrine. The District Court subsequently granted the government's motion for reconsideration, finding that the government had more adequately explained its reasons and confirming that the documents had been submitted to and considered by the court during the trial. Moreover, the court certified that

[d]uring the course of the trial in this case, the Court directed the parties to attempt to stipulate to as many of their proposed jury instructions as possible, and to jointly submit the stipulated instructions. The Court further directed the parties to submit to the Court any other instructions to which the parties could not stipulate.... Based upon all of these submissions, the Court instructed the jury on September 26, 1994, giving the instructions to which the parties had stipulated, supplemented by such additional proposed instructions which this Court found to be appropriate.... The Court then allowed the parties to object to the Court's instructions....

Finally, the court ordered that the relevant documents be made a part of the record on appeal.

On April 22, 1996, defendant filed a motion for reconsideration of the District Court's order, arguing that the modification of the record was outside the scope of FED. R.APP. P. 10(e) and would affect the substantive nature of the matter on appeal. Defendant requested...