U.S. v. Clarke

• Decision Date: 20 March 2009
• Docket Number: No. 08-10038.,08-10038.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Gregory Louis CLARKE, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

562 F.3d 1158

UNITED STATES of America, Plaintiff-Appellee, v. Gregory Louis CLARKE, Defendant-Appellant.

No. 08-10038.

United States Court of Appeals, Eleventh Circuit.

March 20, 2009.

William C. White, II, The Cochran Firm Criminal Defense-Birmingham, LLC, James W. Parkman, III, Parkman, Adams & White, LLC, Birmingham, AL, for Defendant-Appellant.

Michael Boysie Billingsley, Joyce White Vance, Asst. U.S. Atty., Birmingham, AL, Paul Nicholas Monnin, DLA Piper LLP (US), Atlanta, GA, for Plaintiff-Appellee.

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

Before BIRCH and PRYOR, Circuit Judges, and STROM,^* District Judge.

BIRCH, Circuit Judge:

Defendant-appellant Gregory Louis Clarke ("Clarke") appeals his convictions and sentences on three counts of tax fraud in violation of 26 U.S.C. § 7206(1). On appeal, Clarke argues that: (1) the district court violated his Sixth Amendment right to a jury drawn from a fair cross-section of the community when it denied his motion to strike the jury venire based upon its racial make-up; (2) the evidence was insufficient to support the guilty verdict; and (3) the district court erred in calculating the tax loss amount and in applying the "sophisticated means" enhancement under the United States Sentencing Guidelines (the "guidelines"). After review of the record and consideration of the parties' briefs and oral arguments, we AFFIRM.

I. BACKGROUND

Clarke has been pastor of New Hope Baptist Church ("the church") and Superintendent of New Hope Christian School ("the school") in Birmingham, Alabama, since 1986. Clarke also served as interim manager of the New Hope Federal Credit Union ("the credit union") in 2001. Clarke received separate compensation, all paid by the church, for the services he rendered in each of these capacities. Clarke also received a $36,000 per year non-taxable minister's housing allowance, which was deposited into an account held by the church at Colonial Bank.

In January 2004, John Quartapella, an agent with the IRS's Criminal Investigation Division, began investigating Clarke after receiving an anonymous letter. As part of his investigation, Quartapella traced payments made by the church and the school to various sources on Clarke's behalf or for Clarke's benefit between 2000 and 2002 and determined that Clarke failed to report income of $11,205.94, $28,715.15, and $70,450.01 on his 2000, 2001, and 2002 tax returns, respectively.¹ A federal grand jury subsequently returned a three-count indictment charging Clarke with willfully filing false tax returns for tax years 2000 (Count One), 2001 (Count Two), and 2002 (Count Three), all in violation of 26 U.S.C. § 7206(1).

Before a jury was selected for Clarke's trial, Clarke moved to exclude the jury venire on the grounds that only three of its thirty-eight members were African-Americans. The courtroom deputy informed the district judge that the venire "wasn't specially drawn" and had been called in for both Clarke's trial and another criminal case. The district court denied the motion, noting that the venire was "just a regular jury pool" that was "from the southern division" of the district.

At trial, Lily Walton, Sandra Edwards, and Charles Trull, the individuals who prepared Clarke's 2000, 2001, and 2002 tax returns, respectively, testified that Clarke's returns were based solely on the W-2's and 1099's Clarke presented to them and that Clarke did not declare any additional income from other sources. At no time was Clarke advised that he was not required to report income not reflected on his W-2's or 1099's. Clarke reviewed the returns before they were filed with the Internal Revenue Service ("IRS") and never indicated that they were inaccurate or that they otherwise misstated his tax liability.

Quartapella testified that in 2000, the school paid Clarke's disability insurance premiums on his behalf directly to Franklin Life Insurance Company and also made monthly payments on a loan Clarke had taken out in 1999 to purchase a Hyundai Tiburon for his daughter. Several other witnesses testified that in 2000 they had paid Clarke fees for speaking engagements; "bird-dog" fees for referring customers to a local car dealership; referral fees for sending loans to a mortgage company; and a $6600 "finder's fee" from Cameron Homes for bringing in investors to fund a real estate development project. Clarke did not report any of this income on his 2000 tax return.

With respect to 2001, Quartapella testified that the church paid Clarke's life insurance premiums, totaling over $6000, and that the school continued to pay Clarke's disability insurance premiums and the monthly payments on Clarke's daughter's car loan. In addition to these benefits, the church paid Clarke a salary of $750 every two weeks ($15,000 per year) for serving as interim manager of the credit union.² Mark Nixon, the church's Chief Financial Officer since 2001, testified that these $750 biweekly checks, which were drawn from the church's operating account, were deposited directly into Clarke's housing-allowance account and thus were not routed through the payroll system. According to Nixon, only he and the chairperson of the church's board of trustees had the authority to write checks out of the housing-allowance account.

With respect to 2002, Quartapella's investigation revealed that the school, in addition to paying Clarke's disability insurance premiums and car loan payments, made various other miscellaneous payments on Clarke's behalf, including $177.89 on a time-share property Clarke owned; $45 for Clarke's water bill; and $708 on Clarke's homeowner's insurance policy.³ In total, Clarke received $10,308.21 in unreported income from the school in 2002.

Most significantly, however, Clarke received $60,000 from the church for his work at its South Avondale location. According to the 2002 budget for South Avondale, the $60,000 was designated for "pastor's housing expenses" and listed under the heading "salaries." R5 at 637. Nixon testified that the church did not give this money directly to Clarke, but deposited it into the church's savings account at the credit union. Clarke brought Nixon his bills as they became due and Nixon paid them at Clarke's direction until the amounts disbursed totaled $60,000. Out of this $60,000, Nixon paid off Clarke's personal credit card debt and the loan on the Tiburon and also wrote checks to cover Clarke's cosmetic dentistry and repairs to Clarke's home, including repainting and gutter work. Quartapella testified that although the total amount paid out on Clarke's behalf was less than $60,000, the remaining money was transferred into Clarke's housing allowance account. None of the checks written out of the church's accounts for Clarke's benefit in 2001 or 2002 were paid directly to Clarke.

Quartapella further testified that despite what Clarke had reported on his tax returns, Clarke had full knowledge of the extent of his income. Records Quartapella had subpoenaed during his investigation showed that Clarke had disclosed an annual income of $113,000 on the credit application he completed in order to obtain financing for his Lexus RX300, and had disclosed an annual income of $115,000 both on an application for a platinum MasterCard and on an application to amend his life insurance policy. Moreover, from 2000 to 2002, Clarke owned an interest in two time-shares, paid for expensive cosmetic dental work, and purchased numerous luxury items, including a 2.73-carat diamond ring, a projection television, a camcorder, a DVD player, and custom-made clothes. According to Quartapella, the excessiveness of Clarke's lifestyle relative to his reported income was indicative of fraud.

At the conclusion of the government's case-in-chief, Clarke moved for a judgment of acquittal pursuant to Federal Rule of Criminal Procedure 29(a), arguing that the government failed to prove all the elements of the crimes charged. The district court denied the motion. Clarke then presented several witnesses who testified that the $60,000 payment from the church was a "gift" and not compensation for services rendered. These witnesses conceded, however, that there was no written evidence, either in the minutes from the meeting in which the 2002 budget was discussed or in the budget itself, that the $60,000 payment was intended as a gift. They further conceded that this amount was identified in the 2002 budget for "Pastor housing expenses," and was listed under the heading "salary." Id. at 714. Clarke renewed his motion for a judgment of acquittal at the close of all the evidence, and it was again denied. The jury subsequently convicted Clarke on all three counts of the indictment.

The court set a sentencing hearing and ordered a presentence investigation report ("PSI"). The PSI recommended a base offense level of 14, based on a tax loss of $35,684, and applied a two-level enhancement under U.S.S.G. § 2T1.1(b)(2) after finding that Clarke used sophisticated means to conceal his fraud from the IRS. At sentencing, Clarke objected to the tax loss amount, arguing that it should be calculated as if he had legally amended his tax return to reflect a filing status of married, filing jointly. He also argued that his was a "routine tax case" and that the "sophisticated means" enhancement was therefore inappropriate. R7 at 13. The district court overruled Clarke's objections, adopted the PSI, and sentenced Clarke to twenty-one months' imprisonment. Clarke now appeals both his convictions and sentences.

II. DISCUSSION

On appeal, Clarke argues that: (1) the district court's denial of his motion to strike the jury venire, on the grounds that only three of its thirty-eight members were African-American, violated his Sixth Amendment right to a jury selected from a fair cross-section of the community; (2) the evidence was insufficient to establish guilt beyond a reasonable doubt; and (3) the district court erred...