U.S. v. Hayes

• Decision Date: 14 March 2003
• Docket Number: No. 02-4478.,No. 02-4421.,02-4421.,02-4478.
• Citation: 322 F.3d 792
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Warren Monroe Hayes, Defendant-Appellant. United States of America, Plaintiff-Appellant, v. Warren Monroe Hayes, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fourth Circuit

322 F.3d 792

UNITED STATES of America, Plaintiff-Appellee, v. Warren Monroe Hayes, Defendant-Appellant.

United States of America, Plaintiff-Appellant, v. Warren Monroe Hayes, Defendant-Appellee.

No. 02-4421.

No. 02-4478.

United States Court of Appeals, Fourth Circuit.

Argued: January 24, 2003.

Decided: March 14, 2003.

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ARGUED: Mary Elizabeth Maguire, Assistant Federal Public Defender, Richmond, Virginia, for Appellant. Laura C. Marshall, Assistant United States Attorney, Richmond, Virginia, for Appellee. ON BRIEF: Frank W. Dunham, Jr., Federal Public Defender, Richmond, Virginia, for Appellant. Paul J. McNulty, United States Attorney, Richmond, Virginia, for Appellee.

Before WILKINS, Chief Judge, WIDENER, Circuit Judge, and GREENBERG, Senior Circuit Judge of the United States Court of Appeals for the Third Circuit, sitting by designation.

Affirmed in part and vacated in part by published opinion. Chief Judge WILKINS wrote the opinion, in which Judge WIDENER and Senior Judge GREENBERG joined.

OPINION

William W. WILKINS, Chief Judge:

Warren Monroe Hayes appeals his convictions for 24 counts of procuring the presentation of tax returns containing false statements, in violation of 26 U.S.C.A. § 7206(2) (West 2002). He asserts that 20 of the charges against him are barred by the statute of limitations, that six of his convictions are not supported by sufficient evidence, and that the district court erred in admitting certain evidence. On cross-appeal, the Government contends that the district court improperly refused to consider relevant conduct at sentencing. Finding merit only in the Government's claim, we affirm Hayes' convictions, vacate his sentence, and remand.

I.

On November 19, 2001, a grand jury in the Eastern District of Virginia issued an indictment charging Hayes with preparing 24 tax returns that fraudulently inflated the taxpayers' deductions. The returns in question were filed between February 17, 1996 and April 15, 1999.

Hayes moved to dismiss all but four of the charges. In support, he argued that a three-year statute of limitations applied under 26 U.S.C.A. § 6531 (West 2002) and that only four of the charges in the indictment involved conduct within the preceding three years. The district court denied Hayes' motion, concluding that the applicable limitations period is six years, not three.

At the ensuing trial, the Government presented testimony from several witnesses who had retained Hayes to prepare their taxes. Their testimony indicated that Hayes was not a full-time accountant or tax-preparer but that he supplemented his income every year by preparing returns for relatives and acquaintances. These returns were ostensibly based on documents provided to Hayes by his customers. The customers testified, however, that the returns prepared by Hayes substantially overstated some of their deductions, primarily for charitable contributions and medical expenses. The customers further testified that they did not review the returns before filing them; thus, even as they recognized that they were receiving larger refunds than they were accustomed to, they did not become aware of the overstatements until contacted by investigators from the Internal Revenue Service (IRS).

Hayes testified in his own behalf. He admitted that he made errors in the returns he prepared but denied fabricating any figures in order to increase his customers' deductions.

The jury found Hayes guilty of all 24 counts charged in the indictment. The court then sentenced Hayes to 24 concurrent terms of 30 months imprisonment.

II.

Hayes' first claim is that the district court erred in refusing to apply a three-year statute of limitations to the charges against him. This is a legal issue which we review de novo. See Franks v. Ross, 313 F.3d 184, 192 (4th Cir.2002).

Section 6531 provides that criminal violations of tax laws are ordinarily subject to a three-year statute of limitations. The statute further provides, however, that the limitations period is six years for eight types of offenses. As is relevant here, the longer limitations period applies to

the offense of willfully aiding or assisting in, or procuring, counseling, or advising, the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a false or fraudulent return, affidavit, claim, or document (whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim, or document).

26 U.S.C.A. § 6531(3). The district court concluded that the charges against Hayes were governed by § 6531(3) and thus subject to a six-year statute of limitations. We agree.

The charges against Hayes alleged violations of § 7206(2), which establishes criminal penalties for any person who

[w]illfully aids or assists in, or procures, counsels, or advises the preparation or presentation under, or in connection with any matter arising under, the internal revenue laws, of a return, affidavit, claim, or other document, which is fraudulent or is false as to any material matter, whether or not such falsity or fraud is with the knowledge or consent of the person authorized or required to present such return, affidavit, claim, or document.

Even a cursory comparison of these provisions demonstrates that § 6531(3) refers to offenses under § 7206(2). The language of the two statutes is virtually identical, with the only substantive difference being that § 6531(3) omits the requirement that the defendant's false statements relate to a "material matter."

Hayes contends that this difference demonstrates that § 6531(3) does not apply to violations of § 7206(2). This argument might be persuasive if the additional requirement appeared in the procedural provision establishing the statute of limitations rather than the substantive provision defining the crime. Here, however, the reverse is true. Thus, while there may be offenses that satisfy § 6531(3) without including all the elements of a § 7206(2) violation, it is not possible to violate § 7206(2) without meeting all the requirements of § 6531(3). See United States v. Zavin, 190 F.Supp. 393, 394 (D.N.J.1961) ("A return which is false as to any material matter is a false return.").

Hayes further argues that the absence of any reference to § 7206(2) in § 6531 demonstrates that Congress did not intend for the extended statute of limitations to apply to § 7206(2) offenses. He bolsters this argument by noting that § 6531(5) specifically alludes to § 7206(1). We acknowledge that the legislative intent would be clearer if § 6531 identified both of the relevant portions of § 7206 in the same manner, rather than referring to one by citation and to the other by incorporating its language. Nevertheless, the absence of an explicit reference to § 7206(2) within § 6531 does not preclude the application of a six-year limitations period here. Of the eight categories of offenses subject to the six-year period under § 6531, four are defined through descriptions of offense conduct, see 26 U.S.C.A. §§ 6531(1)-(4), while the other four are defined through statutory references, see 26 U.S.C.A. §§ 6531(5)(8). A holding that the six-year statute of limitations applies only to the statutory provisions explicitly mentioned in § 6531 would effectively nullify the four paragraphs of that statute that use descriptions rather than citations. This result would contravene well-settled principles of statutory construction. See Lane v. United States, 286 F.3d 723, 731 (4th Cir.2002).

For the foregoing reasons, we conclude that application of § 6531(3) to offenses under § 7206(2) is appropriate, notwithstanding that § 6531 neither expressly refers to § 7206(2) nor incorporates all the elements of a § 7206(2) offense. We therefore hold that the district court properly denied Hayes' motion to dismiss the 20 charges involving conduct occurring more than three years before he was indicted.

III.

We next consider Hayes' claim that there was insufficient evidence to support six of his convictions. We review this claim de novo. See United States v. Romer, 148 F.3d 359, 364 (4th Cir.1998).

Section 7206(2) requires the Government to prove that "`(1) the defendant aided, assisted, or otherwise caused the preparation and presentation of a return;... the return was fraudulent or false as to a material matter; and (3) the act of the defendant was willful.'" United States v. Aramony, 88 F.3d 1369, 1382 (4th Cir. 1996) (quoting United States v. Salerno, 902 F.2d 1429, 1432 (9th Cir.1990)). The verdict of the jury that Hayes committed this offense will be upheld if "`there is substantial evidence, taking the view most favorable to the Government, to support it.'" United States v. Bennafield, 287 F.3d 320, 324 (4th Cir.) (quoting Glasser v. United States, 315 U.S. 60, 80, 62 S.Ct. 457, 86 L.Ed. 680 (1942)), cert. denied, ___ U.S. ___, 123 S.Ct. 388, 154 L.Ed.2d 315 (2002). With these standards in mind, we now examine the evidence supporting the convictions challenged by Hayes.

A. Count 7: Eunicea and Larry Ellerbe

Eunicea Ellerbe testified that she retained Hayes through her sister, Cynthia Peeples. Ellerbe gave relevant documents to Peeples for delivery to Hayes, and Hayes then prepared a tax return for Ellerbe and her husband. This return included, among other inaccurate figures, a claimed deduction of $16,381 for medical expenses. Ellerbe testified that she did not give Hayes any information supporting such a deduction.

Hayes contends that his conviction relating to the Ellerbe tax return is not supported by sufficient evidence because there was no evidence negating the possibility that Peeples, rather than Hayes, invented the deductions listed on the Ellerbe return. We disagree. Peeples testified at trial that, in addition to recruiting Hayes to prepare returns for Ellerbe, she twice hired him to...