U.S. v. Griffin

• Citation: 524 F.3d 71
• Decision Date: 18 April 2008
• Docket Number: No. 07-1477.,No. 07-1475.,07-1475.,07-1477.
• Parties: UNITED STATES of America, Appellee/Cross-Appellant, v. Nadine J. GRIFFIN, Defendant, Appellant/Cross-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

524 F.3d 71

UNITED STATES of America, Appellee/Cross-Appellant, v. Nadine J. GRIFFIN, Defendant, Appellant/Cross-Appellee.

No. 07-1475.

No. 07-1477.

United States Court of Appeals, First Circuit.

Heard March 3, 2008.

Decided April 18, 2008.

Robert E. Barnes, with whom The Bernhoft Law Firm, S.C. was on brief, for appellant/cross-appellee.

Elissa Hart-Mahan, Attorney, Tax Division, Department of Justice, with whom Richard T. Morrison, Acting Assistant Attorney General, Alan Hechtkopf and Karen M. Quesnel, Attorneys, Tax Division, Department of Justice, were on brief for appellee/cross-appellant.

Before LIPEZ and HOWARD, Circuit Judges, and BESOSA,^* District Judge.

HOWARD, Circuit Judge.

A jury convicted Nadine Griffin of filing a false income tax return for 1999 in violation of 26 U.S.C. § 7206(1). The district court initially sentenced Griffin to 27 months imprisonment and a year of supervised release. Over a month later, the court resentenced Griffin, reducing her term of incarceration to 21 months.

Before us are an appeal and a cross-appeal. In the appeal, Griffin challenges her conviction. She argues that the court erred in instructing the jury on the elements of 26 U.S.C. § 7206(1) and in admitting certain evidence. In the cross-appeal, the government contends that the district court did not have the authority to resentence Griffin because, under the terms of Federal Rule of Criminal Procedure 35(a), the court either lacked jurisdiction or the initial sentence was not "clear error." We affirm the conviction, vacate the sentence, and remand for the imposition of the initial sentence.

I. Facts

We rehearse the background facts here, reserving the discussion of other facts for our later examination of the appellate claims. We view these facts in the light most favorable to the jury's verdict. United States v. Turner, 501 F.3d 59, 63 (1st Cir.2007).

In each of Griffin's 1998 and 1999 tax returns she reported an annual income that did not exceed $20,000. Neither of these returns reflected income Griffin earned working as an upper-level salesperson for a company called Global Prosperity Inc. (Global). In that capacity, Griffin made sales of over $700,000 and netted a profit of about $600,000 in 1998. She made sales of nearly $200,000 and netted a profit of about $137,000 in 1999.

Global was a multi-level marketing company that sold a series of audio-cassette tapes as well as tickets to offshore seminars where lectures were given and additional products sold. The Global products and lectures promoted various investment and tax avoidance strategies. As a sales-person for Global, Griffin sold these materials to customers. She eventually became one of Global's most successful salespeople and belonged to its top sales group.

Griffin set up bank accounts in order to store her Global proceeds and to manage her business with Global and Global customers. In addition to an offshore account, Griffin opened two domestic accounts. These accounts were opened in the names of Capital Finance Strategies (CFS) and Angelica Holdings (AH). Griffin, however, controlled the accounts and often drew money from them to finance personal expenditures. Griffin filed W-8 forms with the IRS when opening these accounts, indicating that both CFS and AH were foreign entities.

At some point, Griffin told another salesperson at Global that she did not plan to pay taxes on her income from Global. Consistent with this statement, Griffin did not report her Global income when meeting with the individuals who prepared her 1998 and 1999 tax returns. She did, however, report income she received for her work as a salesperson for two other marketing companies. These companies, unlike Global, had sent Form 1099's to both the IRS and Griffin that reflected Griffin's gross sales.¹

Despite filing returns in 1998 and 1999 that reflected a relatively modest income, when Griffin applied for a mortgage and car loan she reported a significantly higher income. Her mortgage application reflected an annual income of $540,000 and her car loan application an annual income of $100,000.

Ultimately, Griffin's financial situation drew the government's attention. In July 2005, she was indicted and charged with two counts of filing a false tax return in violation of 26 U.S.C. § 7206(1). The jury convicted her of one count, but did not reach a unanimous verdict on the other. The court initially sentenced Griffin to 27 months' imprisonment and a year of supervised release. Over a month later, however, it resentenced Griffin to 21 months' imprisonment with the same period of supervised release.

II. Discussion

A. Appeal

Griffin presents two arguments on appeal. Her first, and primary argument, is that the court erroneously instructed the jury regarding the elements of 26 U.S.C. § 7206(1). Her second is that the court erred in admitting certain evidence. We consider both arguments in turn.²

1. Jury Instructions

26 U.S.C. § 7206(1) provides, in part, that any person who

[w]illfully makes and subscribes any return, statement or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter . . . shall be guilty of a felony.

We have established that this offense has four elements:

(1) that the defendant made or caused to be made, a federal income tax return for the year in question which he verified to be true; (2) that the tax return was false as to a material matter; (3) that the defendant signed the return willfully and knowing it was false; and (4) that the return contained a written declaration that it was made under the penalty of perjury.

United States v. Boulerice, 325 F.3d 75, 79-80 (1st Cir.2003).

At the close of the defendant's case, the district court instructed the jury on these four elements. Of relevance are the court's instructions regarding the second and third elements, materiality and willfulness. The court instructed:

Material means that it makes a difference. It makes a difference as to the actual tax liability, the amount owed . . . Willful means an intentional violation of a known duty . . . [T]he language I want you to use here is, willful means an intentional violation of a known duty. No one can be convicted of filing a false tax return because they made a mistake or because they were careless or because they had a genuine, but mistaken, belief in the requirements of the tax code.

At the government's request, the court supplemented its instruction on the willfulness element with a "willful blindness" instruction. This instruction stated:

She cannot, however, be what we call willfully blind to the duty to know. What do we mean by that? We mean she cannot willfully, that is intentionally, blind herself to what a reasonable person would understand was the very strong probability that taxes were owed on the proceeds.

Griffin argues that the court's instructions were erroneous for three reasons: the court failed to instruct the jury accurately on both (1) "materiality" and (2) "willfulness"; and (3) the court's instruction did not specify that the government had to prove Griffin made false statements with the "intent of inducing reliance."

Because Griffin failed to object to the court's jury instructions at trial, our standard of review is plain error. Accordingly, Griffin must show an error that was plain, (i.e., obvious and clear under current law), prejudicial (i.e., affected the outcome of the district court proceedings), and that seriously impaired the fairness, integrity, or public reputation of the judicial proceedings. Colon-Millin v. Sears Roebuck De P.R., Inc., 455 F.3d 30, 41 (1st Cir. 2006). This standard is "exceedingly difficult to satisfy in jury instruction cases." United States v. Gonzalez-Velez, 466 F.3d 27, 35 (1st Cir.2006). We review jury instructions as a whole determining if they "adequately explained the law or whether they tended to confuse or mislead the jury on controlling issues." Id.

a. Materiality

Griffin argues that the district court should have instructed the jury that a statement is material if it could have influenced the IRS, not as it did, that "[m]aterial means that it makes a difference . . . to the actual tax liability, the amount owed."

The court's instruction on materiality was not plainly erroneous. We have said that a "material" matter is one that affects or influences the IRS in carrying out the functions committed to it by law or "one that is likely to affect the calculation of tax due and payable." Boulerice, 325 F.3d at 82 n. 3 (citing United States v. DiRico, 78 F.3d 732, 735-36 (1st Cir.1996)). If anything, the court's instruction that a false statement is material if it "makes a difference . . . as to the amount owed" was more narrow than necessary and increased the government's burden of proof. A false statement may be material even if it was only likely to influence the calculation of tax due and payable. Id.³

b. Willfulness

Griffin lodges four complaints against the district court's instruction on this element. First, she contends that the trial court made various statements throughout the trial that tainted the instruction on willfulness. She cites two statements in particular. One was the court's statement that,

What the government must prove here is that . . . the things she did either knowing that they violated, actually knowing in her own mind, or willfully, which means with reckless disregard, willful blindness, uncaring whether she was following the law or not.

The other was the court's statement that, "The government does not have to prove that a person knew they were violating a specific law." Second, Griffin argues that the court failed to inform the jury that, in order to convict her, the jury must conclude that she knew the statements on her tax returns were false when she filed them. Third, she asserts that the court should...