U.S. v. DeTar

• Decision Date: 17 November 1987
• Docket Number: No. 86-1199,86-1199
• Citation: 832 F.2d 1110
• Parties: , 60 A.F.T.R.2d 87-6055, 87-2 USTC P 9621 UNITED STATES of America, Plaintiff-Appellee, v. John H. DeTAR, M.D., Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1110

832 F.2d 1110

102 A.L.R.Fed. 117, 60 A.F.T.R.2d 87-6055,

87-2 USTC P 9621

UNITED STATES of America, Plaintiff-Appellee, v. John H. DeTAR, M.D., Defendant-Appellant.

No. 86-1199.

United States Court of Appeals Ninth Circuit.

Argued March 11, 1987.

Submitted May 26, 1987.

Decided Nov. 17, 1987.

Alan Hechtopf, Dept. of Justice, Washington, D.C., for plaintiff-appellee.

N. Patrick Flanagan, Reno, Nev., for defendant-appellant.

Appeal from the United States District Court for the District of Nevada.

Before CANBY and NORRIS, Circuit Judges, and HUPP, ^* District Judge.

CANBY, Circuit Judge:

Dr. John H. DeTar appeals from a judgment of conviction entered by the United States District Court for the District of Nevada. DeTar was convicted by a jury of all counts of an eight-count indictment charging him with willfully attempting to evade and defeat the payment of federal income taxes for the years 1977 through 1984. 26 U.S.C. Sec. 7201.

For each year, defendant filed a tax return on which he reported the amount of tax due, but paid none of the tax or only a nominal portion of it. According to his tax returns, DeTar's total tax liability for the prosecution years was $109,833. He had business net income of $566,581 and he paid only $350.59 of taxes due. DeTar placed funds and property in the names of nominees, placed funds and property beyond the reach of process. He dealt with his patients and others primarily in cash.

On appeal, DeTar contends that: (1) the indictment should have been dismissed for vindictive or selective prosecution, or because limitations had run; (2) he was improperly denied access to grand jury records; (3) the prosecution engaged in misconduct during the trial; (4) the district court erred in instructing the jury; and (5) the evidence was insufficient to sustain a conviction.

We deal with DeTar's contentions in the order he presents them. Nearly all are without merit. We agree with DeTar, however, that the district court committed reversible error in failing to instruct the jury on the lesser included offense of willful failure to pay tax when due, 26 U.S.C. Sec. 7203. Because a retrial will be necessary, we omit discussion of DeTar's contention that the prosecution engaged in misconduct during his trial.

DeTar first contends that the district court erred in not dismissing his indictment on the grounds of vindictive prosecution, selective prosecution, and prosecutorial misconduct. In order to sustain a claim for vindictive prosecution, DeTar must show a reasonable likelihood of vindictiveness on the part of those who made the charging decision. United States v. McWilliams, 730 F.2d 1218, 1221 (9th Cir.1984). He has made no such showing. In contrast to DeTar's characterizations, the long history of conflict between DeTar and the IRS suggests the appropriateness of initiating criminal action, not an appearance of vindictiveness.

To establish selective prosecution, DeTar must demonstrate (1) that similarly situated persons have not been prosecuted and (2) that he was selected for prosecution on the basis of an impermissible ground such as race, religion or the exercise of constitutional rights. McWilliams, 730 F.2d at 1221. DeTar offers no proof that similarly situated persons have not been prosecuted, nor does he show selection on an impermissible ground. The District Court properly denied DeTar's motions to dismiss for vindictive and selective prosecution.

DeTar contends that the indictment should have been dismissed for prosecutorial misconduct before the grand jury. He offers nothing to suggest that any such misconduct occurred. He claims that the District Court erred in failing to grant him access to the grand jury records. Discovery of such records may not be ordered unless the defendant demonstrates with particularity the existence of a compelling need that is sufficient to outweigh the policy of grand jury secrecy. United States v. Procter and Gamble Co., 356 U.S. 677, 682, 78 S.Ct. 983, 986, 2 L.Ed.2d 1077 (1958); United States v. Murray, 751 F.2d 1528, 1533 (9th Cir.), cert. denied, 474 U.S. 979, 106 S.Ct. 381, 88 L.Ed.2d 335 (1985). It is not sufficient for DeTar to assert that he has no way of knowing whether prosecutorial misconduct occurred. United States v. Bennett, 702 F.2d 833, 836 (9th Cir.1983). DeTar supported his request for production of grand jury records on nothing but baseless speculation. He stated that an unnamed grand juror told him that a previous grand jury had voted not to indict. The prosecutor informed the district court that no prior grand jury had refused to indict. DeTar presented no credible evidence to rebut the prosecutor's representation. "Speculation cannot justify this court's intervention into the grand jury's proceedings." United States v. Claiborne, 765 F.2d 784, 792 (9th Cir.1985), cert. denied, 475 U.S. 1120, 106 S.Ct. 1636, 90 L.Ed.2d 182 (1986). DeTar's claims will support neither authorization of access to the grand jury's records nor dismissal of the indictment.

Following his conviction, DeTar filed a motion for a judgment of acquittal on Counts I and II of indictment on the ground that those counts were barred by the six-year statute of limitations applicable to 26 U.S.C. Sec. 7201. Counts I and II charge that DeTar attempted to evade the payment of taxes incurred in years 1977 and 1978. Because he was indicted on October 22, 1985, more than six years from the date returns were due for those years, DeTar contends that the District Court erred in denying his motion.

To convict DeTar of attempting to evade the payment of taxes, the Government must prove that he committed affirmative acts constituting evasion or attempted evasion. See Sansone v. United States, 380 U.S. 343, 351, 85 S.Ct. 1004, 1010, 13 L.Ed.2d 882 (1965). Even if the taxes evaded were due and payable more than six years before the return of the indictment, the indictment is timely so long as it is returned within six years of an affirmative act of evasion. See United States v. Andros, 484 F.2d 531, 532-33 (9th Cir.1973); United States v. Trownsell, 367 F.2d 815, 816 (7th Cir.1966). Overt, affirmative acts committed by DeTar through 1985 are sufficient to keep the action alive.

DeTar's one meritorious contention ¹ is that the district court committed reversible error by failing to instruct the jury on the lesser included offense of willful failure to pay taxes in violation of 26 U.S.C. Sec. 7203. The elements of that misdemeanor as applied to this case are: (1) willfulness and (2) failure to pay the tax when due. Sansone v. United States, 380 U.S. at 351, 85 S.Ct. at 1010. The felony offense of which DeTar was convicted, violation of Sec. 7201, requires the same two elements of willfulness and an unpaid tax, plus a third: an affirmative act constituting an evasion or attempted evasion of the tax. Id. It is undisputed that Sec. 7203 defines a lesser included offense of Sec. 7201. DeTar was entitled to a lesser-included offense instruction if "there [were] disputed issues of fact which would enable the jury rationally to find that, although all of the elements of Sec. 7201 have not been proved," all of the elements of the lesser included misdemeanor of Sec. 7203 have been proved. Id.

The government argues that the evidence is clear that the affirmative acts occurred, and that on this record there can be no dispute over whether they were willful. We do not agree. The Supreme Court has made it clear that conviction for the felony of tax evasion under Sec. 7201, requires a showing of "some willful commission in addition to the willful omissions that make up the list of misdemeanors." Spies v. United States, 317 U.S. 492, 499, 63 S.Ct. 364, 368, 87 L.Ed. 418 (1943). Thus the willfulness involved in failing to pay the tax when due, resources being available, is not enough. For a felony conviction, there must be "proof of willfulness in the sense of a specific intent to evade or defeat the tax or its payment." Edwards v. United States, 375 F.2d 862, 867 (9th Cir.1967). The government quite correctly argues that the necessary intent may be inferred from conduct "the likely effect of which would be to mislead or to conceal." Spies, 371 U.S. at 499, 63 S.Ct. at 368. It further argues that there was ample evidence of such conduct in DeTar's use of the family trust, his insistence that his patients pay him in cash, and similar devices. We readily agree that there was sufficient evidence to support an inference of intent to evade the payment of taxes. ² But the fact that the intent may be inferred does not mean that it must be inferred. "Such inferences are for the jury." Id. at 500, 63 S.Ct. at 368. DeTar presented evidence of other motives for his behavior, some religious, some personal, and some having to do with needs or desires of his patients. While the jury was by no means required to accept those reasons, ³ we conclude that a rational jury could have found a lack of intent or motive necessary to convict of evasion, while still finding a willful failure to pay the taxes when due. ⁴ The district court accordingly erred in failing to give the requested instruction on the lesser included offense. See United States v. Crutchfield, 547 F.2d 496, 500-01 (9th Cir.1977).

The need for instructions on the lesser included offense raises in another posture the issue of the statute of limitations. The limitations period for Sec. 7203, like that for Sec. 7201, is six years. 26 U.S.C. Sec. 6531(2) and (4). The two kinds of offenses do not necessarily mature at the same time, however. In this case, the government concedes that the offenses of willful failure to pay the tax when due were complete at the time DeTar filed his returns. Consequently, the limitations period had run on the lesser included offenses of Counts I and II when the indictment was returned.

The statute of limitations is not jurisdictional. It provides an affirmative defense, which is waived in this...