U.S. v. Flake, 84-1001

• Decision Date: 30 October 1984
• Docket Number: No. 84-1001,84-1001
• Citation: 746 F.2d 535
• Parties: 84-2 USTC P 9985 UNITED STATES of America, Plaintiff-Appellee, v. Jay V. FLAKE, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 535

746 F.2d 535

84-2 USTC P 9985

UNITED STATES of America, Plaintiff-Appellee, v. Jay V. FLAKE, Defendant-Appellant.

No. 84-1001.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Sept. 10, 1984.

Decided Oct. 30, 1984.

Dougals J. McVay, Phoenix, Ariz., for plaintiff-appellee.

John D. Lyons, Jr., Asst. U.S. Atty., Phoenix, Ariz., for defendant-appellant.

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

Before WALLACE, ALARCON, and NELSON, Circuit Judges.

ALARCON, Circuit Judge:

Jay Flake appeals from his conviction for two counts of making and subscribing false income tax returns in violation of 26 U.S.C. Sec. 7206(1).

I

Flake seeks reversal on the following grounds:

One. The district court erred in treating materiality of the alleged false statement as a matter of law.

Two. The district court erred in failing to dismiss the indictment because it was based on perjured testimony.

Three. The prosecutor committed prejudicial misconduct by vouching for the credibility of a key government witness.

Four. The prosecutor committed other acts of misconduct in failing to advise the grand jury that a witness had committed perjury in denying that the government intervened on his behalf in a parole matter, by attempting to establish that Flake was an unethical lawyer, and by arguing outside the record.

Five. The district court erred by refusing to permit defense counsel to argue that the prosecution had changed its theory of the case.

Six. The district court erred in instructing that a jury may find an accused not guilty of underreporting his income where there is an honest disagreement among experts about the tax consequences of a particular transaction.

We conclude that each of these contentions lacks merit and affirm.

We discuss each issue and the facts pertinent thereto under separate headings.

II MATERIALITY AS A MATTER OF LAW

Flake contends that the materiality of alleged false statements, made in violation of 26 U.S.C. Sec. 7206(1), is a question of fact which should have been submitted to the jury for resolution. The only case cited by Flake in support of this proposition is United States v. Valdez, 594 F.2d 725 (9th Cir.1979). Valdez is neither dispositive nor applicable. In Valdez, we held that "[m]ateriality is an essential element of the offense prohibited by 18 U.S.C. Sec. 1001." Id. at 728. Under Sec. 1001, a statement is not material unless "the falsification is calculated to induce action or reliance by an agency of the United States ...." United States v. East, 416 F.2d 351, 353 (9th Cir.1969). In Valdez, we agreed with the appellant's contention that "the materiality issue should have been submitted to the jury." 594 F.2d at 729. We also concluded, however, that "the failure to do so was not reversible error." Id.

In the matter before us, we are concerned with a different statute. This court has not been called upon to decide whether the materiality of a false statement which violates 26 U.S.C. Sec. 7206(1) is a matter of law, or is an element of the offense. Other circuits have considered this precise issue. Each has held materiality under Sec. 7206(1) is a question of law.

The issue before us was squarely presented to the Fifth Circuit in Hoover v. United States, 358 F.2d 87 (5th Cir.), cert. denied, 385 U.S. 822, 87 S.Ct. 50, 17 L.Ed.2d 59 (1966), in a prosecution for a violation of Sec. 7206(1). Relying on its earlier opinion in Blackmon v. United States, 108 F.2d 572 (5th Cir.1940), the court stated "[o]n the basis of the reasoning employed in the perjury cases, the trial court could ... have decided that the subject matter was material as a matter of law ..." Id. at 89.

For example, in United States v. Taylor, 574 F.2d 232 (5th Cir.), cert. denied, 439 U.S. 893, 99 S.Ct. 251, 58 L.Ed.2d 239 (1978), the Fifth Circuit stated:

The trial judge did not err in deciding the question of materiality as a matter of law rather than submitting it to the jury. We have long held that in a prosecution for perjury the materiality of the alleged false statement is a question of law. Blackmon v. United States, 108 F.2d 572, 574 (5th Cir.1940). The rule applies to prosecutions under section 7206(1).

Id. at 235.

In United States v. Strand, 617 F.2d 571, 574 (10th Cir.), cert. denied, 449 U.S. 841, 101 S.Ct. 120, 66 L.Ed.2d 48 (1980), the Tenth Circuit adopted the rule of the Fifth Circuit in United States v. Taylor, 574 F.2d 232, in a Sec. 7206(1) prosecution.

In United States v. Romanow, 509 F.2d 26 (1st Cir.1975), the First Circuit found "no error" in the trial court's ruling that materiality is a question of law under Sec. 7206(1). Id. at 28.

It is also the law of this circuit that the materiality of an alleged false statement in a prosecution for perjury is a question of law. United States v. Dipp, 581 F.2d 1323, 1328 (9th Cir.1978), cert. denied, 439 U.S. 1071, 99 S.Ct. 841, 59 L.Ed.2d 37 (1979); United States v. Sisack, 527 F.2d 917, 920 (9th Cir.1975); Vitello v. United States, 425 F.2d 416, 423 (9th Cir.), cert. denied, 400 U.S. 822, 91 S.Ct. 43, 27 L.Ed.2d 50 (1970). We see no compelling reason to carve out a different rule for false statements in violation of Sec. 7206(1).

The trial court did not err in instructing the jury on materiality as a matter of law.

III DENIAL OF FLAKE'S MOTION TO DISMISS THE INDICTMENT

Flake contends that we must reverse because the district court denied his motion to dismiss the indictment in spite of evidence in the record that the government's witness, Church, lied to the grand jury. He argues that he is entitled to a new trial notwithstanding "the unwillingness of the prosecutor to acknowledge the obvious, i.e. that Church unquestionably lied to the grand jury on material matters and also probably lied during the trial." Flake claims that a review of United States v. Basurto, 497 F.2d 781 (9th Cir.1974) and Mesarosh v. United States, 352 U.S. 1, 77 S.Ct. 1, 1 L.Ed.2d 1 (1956) "demonstrates that the motion should be granted."

Neither of these cases is applicable to the facts in this record. In Basurto, the prosecutor was advised by a government witness that "he had committed perjury before the grand jury in important respects. In particular, he told the prosecutor that all his grand jury testimony relating to his knowledge of appellants' activities in the conspiracy prior to May 1, 1971, was untrue." United States v. Basurto, 497 F.2d at 784. In the instant matter, the record shows that Church denied committing perjury before the grand jury. Our review of the record convinces us that any misstatements or inconsistencies in Church's testimony did not relate to any fact that was material to the offenses under investigation. Our holding in Basurto was carefully and narrowly drawn. We stated:

We hold that the Due Process Clause of the Fifth Amendment is violated when a defendant has to stand trial on an indictment which the government knows is based partially on perjured testimony, when the perjured testimony is material, and when jeopardy has not attached. Whenever the prosecutor learns of any perjury committed before the grand jury, he is under a duty to immediately inform the court and opposing counsel--and, if the perjury may be material, also the grand jury--in order that appropriate action may be taken.

Id. at 785-86. Flake has failed to demonstrate that the prosecutor in this matter violated the requirements of Basurto in any respect.

In Mesarosh, 352 U.S. 1, 77 S.Ct. 1, 1 L.Ed.2d 1 "[t]he Solicitor General of the United States moved to remand the case to the trial court for further proceedings because of untruthful testimony given ... by Joseph D. Mazzei, a Government witness ...." Id. at 3, 77 S.Ct. at 2. Stating that "[t]he dignity of the United States Government will not permit the conviction of any person on tainted testimony," id. at 9, 77 S.Ct. at 5, the court ordered a new trial.

In this matter, the government has advised this court that "[t]here is absolutely no evidence that Church made a false statement or intended to deceive the grand jury in any way." Mesarosh offers no support for Flake's argument on this issue. The district court did not abuse its discretion in denying Flake's motion to suppress the indictment.

The essence of Flake's argument is that perjury occurred before the grand jury and tainted his indictment. In order for a defendant to obtain a dismissal of his indictment based on inconsistent testimony by a witness, he must show that the witness committed "knowing perjury relating to a material matter ...." United States v. Kennedy, 564 F.2d 1329, 1338 (9th Cir.1977), cert. denied, 435 U.S. 944, 98 S.Ct. 1526, 55 L.Ed.2d 541 (1978). Flake made no such showing. Although Flake demonstrated inconsistencies in Church's testimony, inconsistency is not tantamount to perjury absent a showing of knowing falsehood. If knowing falsehood is not shown, dismissal of an indictment is improper. See United States v. Noti, 731 F.2d 610, 613-14 (9th Cir.1984).

Moreover, the alleged inconsistencies are not material to Flake's indictment. Church's inconsistent testimony did not bear on the tax charge against Flake, but only reflected potential misconduct by Church. Therefore, the alleged perjury, even if it was intentional, was material to Flake's indictment only to the extent that it artificially inflated the grand jurors' opinion of Church's credibility and not the guilt of the accused, and when the petit jurors have an independent opportunity to assess the witness' credibility, an indictment should not be dismissed. See United States v. Bracy, 566 F.2d 649, 654-56 (9th Cir.1977), cert. denied, 439 U.S. 818, 99 S.Ct. 79, 58 L.Ed.2d 109 (1979).

IV PROSECUTION MISCONDUCT--VOUCHING

Flake claims that the prosecutor committed prejudicial misconduct in his rebuttal argument "in response to a predictable attack on his star witness." Flake argues that the prosecutor vouched for the credibility...