U.S. v. Bourgeois

• Decision Date: 03 January 1992
• Docket Number: No. 90-1954,90-1954
• Parties: 34 Fed. R. Evid. Serv. 1198 UNITED STATES of America, Plaintiff-Appellee, v. Robert H. BOURGEOIS and Richard H. Crowe, Jr., Defendants-Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 980

950 F.2d 980

34 Fed. R. Evid. Serv. 1198

UNITED STATES of America, Plaintiff-Appellee, v. Robert H. BOURGEOIS and Richard H. Crowe, Jr., Defendants-Appellants.

No. 90-1954.

United States Court of Appeals Fifth Circuit.

Jan. 3, 1992.

Rehearing Denied Feb. 12, 1992.

Howard A. Weinberger, Dallas, Tex., for defendant-appellant Bourgeois.

Michael P. Gibson, Dallas, Tex., for defendant-appellant Crowe.

Marvin Collins, U.S. Atty., Dallas, Tex., Brett Mary Digman, Alan Hechtkopf, Robert E. Lindsay, Chief, Tax Enforcement Div., Dept. of Justice, Washington, D.C., for plaintiff-appellee.

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

Before THORNBERRY, DAVIS, and WIENER, Circuit Judges.

THORNBERRY, Circuit Judge:

Defendants Richard Crowe and Robert Bourgeois were convicted by a jury of committing tax fraud. They appeal their convictions, asserting numerous grounds of error as bases for reversing their convictions. After reviewing the extensive record in this case, we find no error. We therefore AFFIRM both Defendants' convictions.

I. Background

On May 24, 1989, Richard Crowe, Robert Bourgeois, and Eric Laub were indicted for conspiring to commit tax fraud and for filing false partnership and individual tax returns. In September 1989, the three Defendants were tried by a jury in a trial that lasted more than three weeks. The jury acquitted Defendant Laub but convicted Defendants Crowe and Bourgeois on all charges.

Richard Crowe was president and chairman of the board of Independent American Real Estate, Inc. (IARE), a real estate investment company, and Robert Bourgeois was president of IARE's investment division. Eric Laub was a real estate syndicator who was involved in real estate ventures with IARE. In the fall of 1985, Crowe began negotiating a real estate deal with Laub. At a meeting in November, Laub told Crowe that he was concerned about tax liability on the income he would generate from the transaction. Crowe told Laub that he would look into a tax shelter to offset the income.

In December of 1985, Crowe and Laub closed the real estate transaction, and Crowe and Bourgeois arranged a tax shelter for the income Laub received. They admitted Laub as a limited partner in a partnership named Wedgewood Associates, Ltd. (Wedgewood), giving Laub a 98% partnership interest. They amended the Wedgewood partnership agreement in December 1985, but backdated the amendment to January 2, 1985 so that Laub could claim 98% of the partnership's losses for all of 1985. In 1986, a 1985 partnership tax return was filed for Wedgewood, and a Form K-1 was sent to Laub for use in preparing his individual tax return. Using the Form K-1, Laub claimed 98% of Wedgewood's 1985 losses on his individual tax return for 1985. Crowe, Bourgeois, and Laub were indicted for tax fraud in connection with the tax returns filed for both Wedgewood and Laub.

At trial, the prosecution called a number of IARE employees to testify in its case-in-chief. Two of those employees, Cherlyn Whaley and Randy Edwards, were granted immunity from prosecution in exchange for their testimony. They testified that under the direction of Robert Bourgeois, they prepared the amendment to the Wedgewood partnership agreement, and another employee delivered it to Richard Crowe's office for Crowe's and Laub's signatures. Bourgeois was out of town at the time, but Cherlyn Whaley testified that he directed her to sign his name to the partnership agreement so that it could be filed with the Secretary of State's office by the 1985 year end. In late December 1985, Cherlyn Whaley signed Bourgeois's signature and notarized the document, falsely representing that Bourgeois, Crowe, and Laub signed the document in her presence on January 2, 1985.

The jury acquitted Defendant Laub, but convicted Defendants Crowe and Bourgeois. Defendant Crowe was convicted of conspiracy to defraud the United States in violation of 18 U.S.C. § 371, and aiding and assisting the preparation of false tax returns for Eric Laub, individually, and for Wedgewood Associates, Ltd. in violation of 26 U.S.C. § 7206(2). Defendant Bourgeois was also convicted of conspiracy under 18 U.S.C. § 371, as well as filing a false tax return for Wedgewood Associates, Ltd. in violation of 26 U.S.C. § 7206(1), and aiding and assisting the preparation of a false tax return for Eric Laub in violation of 26 U.S.C. § 7206(2).

The trial judge, Judge Porter, became disabled after the trial, and the case was transferred to Judge Fitzwater for sentencing. Defendant Crowe moved for disqualification of Judge Fitzwater or for a new trial under Rules 25(b) and 33 of the Federal Rules of Criminal Procedure. Judge Fitzwater denied Crowe's motions and sentenced both Defendants on November 2, 1990.

On appeal, Crowe asserts a number of grounds of error as the bases for reversing his conviction. Bourgeois joins in and asserts only a few of the claims presented by Crowe. Crowe's first ground of error is that the evidence is insufficient to support the jury's verdict on the conspiracy count. The rest of the claims can be grouped into three categories: pretrial rulings, rulings during trial, and post-trial rulings. We address each of the claims in turn.

II. Issues

A. Sufficiency of the Evidence

Defendant Crowe asserts that the evidence presented at trial is insufficient to support his conspiracy conviction. In reviewing sufficiency of the evidence claims, we must view the evidence in the light most favorable to the verdict. We must determine whether a reasonable trier of fact could find that the essential elements of conspiracy were proved beyond a reasonable doubt. United States v. Martin, 790 F.2d 1215, 1219 (5th Cir.1986).

In order to prove a conspiracy, the prosecution must show that the defendant either positively or tacitly agreed with another person to accomplish a common and unlawful plan, and that during the existence of the conspiracy, one of the conspirators knowingly committed an overt act in furtherance of the conspiracy. Id. Defendant Crowe primarily complains that the government failed to prove that Crowe knew of or agreed to participate in any illegality.

At trial, the government presented evidence of a meeting between Crowe and Laub in which Crowe told Laub that he would "look into" tax shelters to offset income of approximately $325,000. Randy Edwards testified that Bourgeois indicated to him that Crowe had directed Bourgeois to admit Laub to the Wedgewood partnership. Laub's interest in Wedgewood allowed him to claim tax losses of approximately $325,000. Although Crowe claimed that he never signed the agreement, several witnesses testified that the signature on the backdated Wedgewood partnership agreement appeared to be Richard Crowe's signature. The government also established Crowe's familiarity with the tax laws prohibiting retroactive losses for partners joining partnerships late in a tax year.

We believe that a rational trier of fact could find that this evidence established beyond a reasonable doubt a tacit agreement by Crowe to accomplish an illegal purpose. Although there was no direct evidence of Crowe's agreement to the illegal transaction, we noted in United States v. Martin that "[n]o express agreement to violate the law need be shown and the conspiracy may be proven by showing that the defendant conspired with one or more others ... to achieve an illegal purpose." United States v. Martin, 790 F.2d 1215, 1219 (5th Cir.1986). We find that the evidence is sufficient to support Defendant Crowe's conviction of conspiracy to defraud the United States. ¹

B. Pretrial Rulings

Judge Porter held a pretrial hearing to settle two matters related to witness Cherlyn Whaley. First, both Defendants had moved to dismiss their indictments due to prosecutorial misconduct in the presentation of Ms. Whaley to the grand jury. The Defendants claimed that the prosecution misled the members of the grand jury through its questioning of Cherlyn Whaley, and that the indictments issued by that grand jury were therefore defective. The second issue to be settled was whether Cherlyn Whaley's testimony would be excluded or limited in the upcoming trial, and whether any cautionary jury instructions would be necessary.

Ms. Whaley testified before the grand jury in March of 1989 and again in May of 1989. In March, Ms. Whaley told the grand jury that Bourgeois signed the Wedgewood partnership agreement. At a meeting with the prosecutors on the day before her second grand jury appearance in May, Ms. Whaley began to question whether her recollection of the events surrounding the signing of the partnership agreement was correct. She became unsure whether Bourgeois had signed the document, and she expressed her doubts to the prosecutors. They questioned her extensively for several hours, but she could not recall anything definite. She maintained that, although she had some doubts, to the best of her knowledge at that time, the signature was Bourgeois's. Before the grand jury the next day, the prosecutor asked Ms. Whaley, "[T]o the best of your knowledge, does it appear to be Bob Bourgeois' signature on the Wedgwood [sic] Partnership?" Ms. Whaley answered, "Yes."

Ms. Whaley later consulted a hypnotist to help her remember who signed the Wedgewood partnership agreement. She underwent one hypnotic session, but her memory was not jogged during that session or immediately afterward. Ms. Whaley testified at the pretrial hearing that she did not believe she had been hypnotized during the session; the hypnotist testified that the session was unsuccessful. Sometime after the session, but prior to trial, Ms. Whaley's memory returned. She remembered that Bourgeois did not sign the agreement; rather, she forged Bourgeois's signature on the agreement at his request.

At the end of the pretrial hearing, Judge Porter made two rulings. He overruled the motion to dismiss the indictment for prosecutorial...