U.S. v. Chisum

• Decision Date: 25 September 2007
• Docket Number: No. 06-7082.,06-7082.
• Citation: 502 F.3d 1237
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Jimmy C. CHISUM, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

502 F.3d 1237

UNITED STATES of America, Plaintiff-Appellee, v. Jimmy C. CHISUM, Defendant-Appellant.

No. 06-7082.

United States Court of Appeals, Tenth Circuit.

September 25, 2007.

Submitted on the briefs:^*

Stephen J. Knorr, Tulsa, OK, for Defendant-Appellant.

Sheldon J. Sperling, United States Attorney, Robert G. Guthrie, Assistant United States Attorney, Muskogee, OK, for Plaintiff-Appellee.

Before HARTZ, EBEL, and TYMKOVICH, Circuit Judges.

HARTZ, Circuit Judge.

Jimmy C. Chisum appeals his conviction and sentence on four counts of tax evasion. He contends that the district court erred in admitting evidence of his lawsuits against tax-court judges and in applying a sentencing enhancement based on his role in the tax-evasion offenses. He also contends that he was not timely tried under the federal Speedy Trial Act, that the district court lacked subject-matter jurisdiction, that the federal Paperwork Reduction Act barred his prosecution, and that the indictment and evidence were insufficient. As explained below, we affirm Mr. Chisum's conviction, but we reverse and remand for resentencing.

BACKGROUND

In April 2005 Mr. Chisum, a self-styled business and estate planner, was indicted for aiding and abetting the willful attempt to evade income taxes owed by Brian and Mitzi Chadsey for the calendar years 1997 through 2000. See 18 U.S.C. § 2; 26 U.S.C. § 7201. The government's theory of the case was "essentially that [Mr. Chisum] created a sham trust to attempt to conceal income [Brian] Chadsey earned from his business, Regional Chiropractic Health Care," a limited liability company. R., Vol. 1, Doc. 35 at 2-3 (Bill of Particulars). Upon being informed that Mr. Chisum wished to represent himself, the district court appointed attorney Stephen Knorr to assist him as standby counsel.

At trial the government introduced testimony to establish the following: Brian Chadsey met Mr. Chisum at one of Mr. Chisum's seminars on "business structure, limited liability companies and trusts." Id., Vol. 4 at 123 (Chadsey testimony). They later entered into an arrangement in which Mr. Chadsey allocated 95% of the income from Regional Chiropractic to CSEA Cottage Limited, a trust established by Mr. Chisum "to take care of tax matters and anything else that was needed." Id. at 126. Mr. Chisum told Mr. Chadsey that taxes would have to be paid only on the money that Mr. Chadsey took from Regional Chiropractic as a salary and that the rest of the income "would end up in a non-controlled foreign corporation that was not taxable under U.S. tax law." Id. at 129. Mr. Chadsey did "[n]ot intimately" understand the details of how the income became nontaxable. Id. Mr. Chadsey followed Mr. Chisum's directions in filing tax returns for 1997 through 2000, underreporting Regional Chiropractic's income by about $207,000. In July 2000 the IRS began auditing Regional Chiropractic. In accordance with Mr. Chisum's advice, Mr. Chadsey filed amended income-tax returns for the years 1997 through 2000, reporting that Regional Chiropractic had no income.

In July 2001 Mr. Chisum appeared at an IRS office in response to a summons seeking Regional Chiropractic's records, but he refused to produce the requested books and records. Even after a judge ordered production of the records, Mr. Chisum advised Mr. Chadsey that he could refuse to produce them. Eventually, Mr. Chadsey obtained counsel and began to cooperate with the IRS.

In its case-in-chief, the government also introduced into evidence several tax-court decisions from 1999 and 2000 holding that trusts created by Mr. Chisum were shams.

Mr. Chisum testified at trial that he did not intend to commit the crimes charged:

Whether or not I've willfully evaded a known duty is the question before you. And it's my opinion, it was my belief through my own study, my own research, my own history that I never knew there was a duty. I thought, and still believe in my heart, that the income tax system in America is written to be a hundred percent compatible with the scripture, and that it has a very strong voluntary component to it.

R., Vol. 6 at 490. In rebuttal the government offered evidence of lawsuits filed by Mr. Chisum in 2002 against tax-court judges who had issued opinions declaring various Chisum trusts to be shams. The jury returned guilty verdicts against Mr. Chisum on all four counts in the indictment.

The probation department prepared a presentence report calculating a United States Sentencing Guidelines (U.S.S.G.) range of 78 to 97 months' imprisonment based on Mr. Chisum's category-one criminal history and offense level of 28. The government objected, seeking a two-level upward adjustment of the offense level under U.S.S.G. § 3B1.1(c), claiming that Mr. Chisum "was an organizer, leader, manager, or supervisor of Mr. Chadsey's (along with many others) criminal activity." R., Vol. 8 (Feb. 26, 2006 letter to Supervising U.S. Probation Officer at 1). The probation department opposed the adjustment, stating that § 3B1.1(c) did not apply because "it does not appear that the other participants initially intentionally entered into any criminal activity with [Mr. Chisum]." Id. (Addendum to the Presentence Report at 1). At the sentencing hearing the government asserted that under § 3B1.1(c), "it's not necessary that there be another criminal participant [besides Mr. Chisum]. There just has to be criminal activity." Id., Vol. 7 at 149.

The district court sustained the government's objection, ruling that § 3B1.1(c) was applicable:

Mr. Chisum provided seminar participants with specific information and examples of how to set up trusts to protect their property, assets, and income from taxation. Mr. Brian Chadsey testified during the trial in this case that his own involvement in filing false income tax returns was due to the advice and direction of Mr. Chisum. Likewise, Mr. Chisum has provided the same or similar directions to many other persons, which resulted in the filing of income tax returns which did not . . . contain complete and truthful information regarding the legitimate taxes owed to the Internal Revenue Service. Mr. Chisum assisted individuals in setting up sham trusts to disguise or hide taxable income and acted as the trustee for many people, in addition to Brian Chadsey. He also acted as tax matters partner and interceded with the Internal Revenue Service on behalf of many of these people when their tax returns were questioned by the IRS. . . . [T]he Court finds by a preponderance of the evidence that Mr. Chisum was a leader and organizer of others in the criminal activity of tax evasion and filing of false income tax returns.

Id. at 152-53. Accordingly, the district court increased Mr. Chisum's offense level by two, which made the applicable sentencing range 97 to 121 months. The district court imposed a 97-month sentence.

Mr. Chisum appealed. We directed Mr. Knorr to file an appellate brief. Because Mr. Knorr thought that several issues pressed by his client were meritless, he raised them under Anders v. State of Cal., 386 U.S. 738, 87 S.Ct. 1396, 18 L.Ed.2d 493 (1967) (describing proper procedure for defense attorney raising meritless arguments pressed by client). In addition, he raised two non-Anders issues.

DISCUSSION

I. Non-Anders Issues

A. Evidence of Mr. Chisum's Lawsuits

Mr. Chisum argues that he was extremely prejudiced by evidence of his lawsuits against tax judges. He asserts that the evidence portrayed him as a tax protester and that it added nothing relevant because the district court had already admitted the tax judges' opinions finding his trusts to be shams. "We review challenges to admissibility of evidence solely for abuse of discretion." United States v. Reddeck, 22 F.3d 1504, 1508 (10th Cir. 1994).

Under Federal Rule of Evidence 403, "[a]lthough relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence." Evidence is relevant if it has "any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." Fed. R.Evid. 401.

The intent requirement in criminal tax cases is particularly strict. As the Supreme Court stated in Cheek v. U.S., 498 U.S. 192, 201-02, 111 S.Ct. 604, 112 L.Ed.2d 617 (1991):

Willfulness, as construed by our prior decisions in criminal tax cases, requires the Government to prove that the law imposed a duty on the defendant, that the defendant knew of this duty, and that he voluntarily and intentionally violated that duty. . . . [I]f the Government proves actual knowledge of the pertinent legal duty, the prosecution, without more, has satisfied the knowledge component of the willfulness requirement. But carrying this burden requires negating a defendant's claim of ignorance of the law or a claim that because of a misunderstanding of the law, he had a good-faith belief that he was not violating any of the provisions of the tax laws. . . . In the end, the issue is whether, based on all the evidence, the Government has proved that the defendant was aware of the duty at issue, which cannot be true if the jury credits a good-faith misunderstanding and belief submission, whether or not the claimed belief or misunderstanding is objectively reasonable.

In light of this intent requirement, the district court did not abuse its discretion in admitting Mr. Chisum's prior complaints. He had sued the tax judges for attempting to "put[][him] out of business" by ruling that the income received by his trusts was taxable. R., Vol. 1, Doc. 69, Ex. 82 (Am Compl. at 4). The lawsuits tended to show that he was not acting in good faith in continuing his scams. In particular, Mr. Chadsey testified that he and Mr. Chisum had talked "about trusts...