U.S. v. Hirschfeld

• Decision Date: 29 October 1992
• Docket Number: No. 91-5046,91-5046
• Citation: 964 F.2d 318
• Parties: -5697, 93-1 USTC P 50,098 UNITED STATES of America, Plaintiff-Appellee, v. Richard M. HIRSCHFELD, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 318

964 F.2d 318

70 A.F.T.R.2d 92-5697, 93-1 USTC P 50,098

UNITED STATES of America, Plaintiff-Appellee, v. Richard M. HIRSCHFELD, Defendant-Appellant.

No. 91-5046.

United States Court of Appeals, Fourth Circuit.

Argued Feb. 3, 1992.

Decided May 7, 1992.

As Amended Oct. 29, 1992.

Andrew Lewis Frey, Mayer, Brown & Platt, Washington, D.C., argued (Kerry Edwards Cormier, Robert H. Bork, on brief), for defendant-appellant.

David Glenn Barger, Asst. U.S. Atty., Alexandria, Va., argued (Richard Cullen, U.S. Atty., Alexandria, Va., Dana J. Boente, Sr. Trial Atty., Charles P. Rosenberg, Trial Atty., Tax Div., U.S. Dept. of Justice, Washington, D.C., on brief), for plaintiff-appellee.

Before POWELL, Associate Justice (Retired), United States Supreme Court, sitting by designation, and HALL and NIEMEYER, Circuit Judges.

OPINION

NIEMEYER, Circuit Judge:

Richard M. Hirschfeld, a lawyer, was convicted of conspiracy to defraud the IRS in violation of 18 U.S.C. § 371 (Count I of the indictment against him), conspiracy to defraud the SEC in violation of 18 U.S.C. § 371 (Count II), and aiding in the preparation of his fraudulent income tax return for 1984 in violation of 26 U.S.C. § 7206(2) (Count III). The convictions are based on a complex series of financial transactions, controlled and manipulated by Hirschfeld to create for his benefit significant tax losses and to provide him with cash flow from the illegal underwriting of a small corporation. Hirschfeld was sentenced under the Sentencing Guidelines on Count I to 36 months imprisonment and under pre-guidelines' law on Counts II and III to 36 months on each. The sentences on Counts II and III were ordered to run concurrently with each other but consecutively to the sentence on Count I. He was also fined a total of $460,000.

On appeal Hirschfeld contends that (1) Count II was barred by the applicable statute of limitations, (2) venue for Count III did not lie in the Eastern District of Virginia, (3) the jury was improperly instructed on the "good faith" defense to the tax counts, (4) the tax fraud counts and the SEC count were improperly joined, (5) the Sentencing Guidelines were improperly applied to Count I, and (6) the district court erred in calculating the appropriate Sentencing Guideline range for Count I. After carefully considering the arguments and reviewing the record, we are satisfied that no reversible error contributed to Hirschfeld's conviction or to his sentence, and accordingly we affirm.

I

Hirschfeld first contends that prosecution of Count II, charging him with conspiracy to defraud the SEC, was barred by the applicable five-year statute of limitations. He argues that the last act in furtherance of the conspiracy occurred in 1984 when the public underwriting of Robotronix Corporation, which was the object of the conspiracy, was completed, and he was not indicted until November 28, 1990, over six years later.

The government contends that the object of the SEC conspiracy as alleged in Count II was to take Robotronix Corporation public, using the assistance of Stephen Goren who had been barred since 1973 from participating in such activity, and to conceal Goren's participation in the transaction and the payment to him for his participation. It maintains that, even though the underwriting was completed in 1984, acts in furtherance of disguising an improper payment to Goren, a necessary object of the conspiracy in light of Goren's suspension, took place within the five-year period before indictment. In 1986 Hirschfeld failed to report on his income tax return $2,000 received from Goren as interest on an advance of money made by Hirschfeld to Goren in connection with the underwriting. The government argues that the payment was not disclosed in order to conceal the illegal arrangement between Goren and Hirschfeld.

The government also contends that Hirschfeld decided, as a tactical matter, not to raise and did not raise the statute of limitations defense in the district court and that the defense was thus waived.

Before trial, Hirschfeld filed a "Notice of Probable Intent to Raise Statute of Limitations Defense to Counts in the Indictment" in which he stated:

2. Although Rule 12(b) does not include a motion addressed to the statute of limitations as being in the group of motions which "must be raised prior to trial," [ ] Mr. Hirschfeld, in an abundance of caution, hereby gives notice of his probable intent to file such motion and, further, gives notice that he does not waive any defense based on the statute of limitations.

3. The determination of whether the above-referenced motion, addressed to the issue of the statute of limitations in this case, should be filed is, at this time, premature because the defendant has not yet received the discovery in this case. Indeed, the filing of such motion may not be appropriate until the government's presentation of its casein-chief at trial, since the motion, of necessity, may arise from the evidence.

The government filed a response, which noted that the statute of limitations defense would be waived if not preserved. Thereafter, Hirschfeld did not raise the statute of limitations defense, although he had several opportunities to do so. The defense was not included as part of his motion for judgment of acquittal or post-verdict motions, and it was never voiced during trial or argued to the district court at any time. The issue has been raised for the first time on appeal.

While counsel for Hirschfeld was obviously aware of the defense, the strategy apparently undertaken was to meet the charges of Count II head on and not suggest that "the crime may have been committed, but you got me too late." Faced at that time with the choice of strategies and the possible damage that the limitations defense might cause to a defense on the merits, it was not unreasonable for Hirschfeld to have relinquished the limitations defense because of the murky question of whether post-underwriting conduct within the limitations period was in furtherance of the conspiracy. Having lost on the merits, however, and not having raised the limitations defense below, Hirschfeld cannot now, in hindsight, raise the defense for the first time on appeal. See United States v. Walsh, 700 F.2d 846, 855-56 (2d Cir.), cert. denied, 464 U.S. 825, 104 S.Ct. 96, 78 L.Ed.2d 102 (1983). We therefore refuse to consider whether the conspiracy continued into the five-year period before indictment.

II

Hirschfeld also contends that the government did not prove that the Eastern District of Virginia was a proper venue in which to prosecute Count III, charging him with willfully aiding or assisting in, or procuring, counseling, or advising the preparation of his 1984 income tax return in violation of 26 U.S.C. § 7206(2). Hirschfeld relies on the facts that the tax return for 1984 was prepared in California, mailed from Charlottesville, Virginia (located in the Western District of Virginia), and filed at the IRS center in Memphis, Tennessee. None of these locations is within the Eastern District of Virginia.

The government points out, however, that other acts undertaken by Hirschfeld to aid and assist in the preparation of the return took place in the Eastern District of Virginia. From the Eastern District of Virginia, Hirschfeld applied for and obtained an extension to file his 1984 return which was incorporated in the return; he purportedly paid a $2.1 million judgment in the Eastern District of Virginia which turned out to be a fraudulent settlement of a sham lawsuit that formed the basis for a false tax deduction on his 1984 return; he allegedly provided assistance from the Eastern District of Virginia to a coconspirator in the preparation of a document entitled "Satisfaction of Judgment" which was attached to his return; the "Satisfaction of Judgment" referenced an agreement which was allegedly fraudulently entered into in the Eastern District of Virginia; he sent a letter from the Eastern District of Virginia to a co-conspirator's lawyer discussing a potential fraudulent lawsuit and subsequent tax deduction; he failed to disclose on Schedule B interest income from Stephen Goren which arose primarily out of actions in the Eastern District of Virginia; and he claimed allegedly false insurance and legal expenses on lines 16 and 19 of Schedule C of the return, based in part on documents that were created in the Eastern District of Virginia.

The general venue statute for crimes, as set forth in 18 U.S.C. § 3237(a), provides:

Except as otherwise expressly provided by enactment of Congress, any offense against the United States begun in one district and completed in another, or committed in more than one district, may be inquired of and prosecuted in any district in which such offense was begun, continued, or completed.

While 26 U.S.C. § 7206(2), which is involved here, does not expressly identify where the tax violation is deemed to have occurred, the prohibitive language focuses on the conduct of any person who "aids or assists in, or procures, counsels, or advises the preparation" of a false return. Thus, any such conduct constitutes a continuation of the offense and forms a basis for establishing venue. See United States v. Griffin, 814 F.2d 806, 810 (1st Cir.1987). Hirschfeld reads § 7206(2) too narrowly in focusing only on where the return was prepared, mailed, and filed. The prohibition by its own terms reaches conduct which consists of aiding and assisting in the preparation of a false return. See United States v. Nealy, 729 F.2d 961, 962-63 (4th Cir.1984) (upholding conviction under § 7206(2) of defendant who assisted in the preparation of a false engineering report which he knew would be used to compute unjustified deductions).

Because Hirschfeld, while in the Eastern District of Virginia, participated actively in assisting and preparing his 1984 return, which he knew included fraudulent deductions, the Eastern District of Virginia...