U.S. v. Holecek

• Decision Date: 07 August 1984
• Docket Number: No. 83-2455,83-2455
• Citation: 739 F.2d 331
• Parties: 84-2 USTC P 9638 UNITED STATES of America, Appellee, v. Carl HOLECEK, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 331

739 F.2d 331

84-2 USTC P 9638

UNITED STATES of America, Appellee, v. Carl HOLECEK, Appellant.

No. 83-2455.

United States Court of Appeals Eighth Circuit.

Submitted April 9, 1984.

Decided July 13, 1984.

Rehearing and Rehearing En Banc

Denied Aug. 7, 1984.

Ronald D. Lahners, U.S. Atty., Robert F. Kokrda, Asst. U.S. Atty., D.Neb., for appellee.

Steven E. Achelpohl, Schumacher & Gilroy, Omaha, Neb., for appellant.

Before BRIGHT, Circuit Judge, SWYGERT, Senior Circuit Judge, ^* and BOWMAN, Circuit Judge.

BOWMAN, Circuit Judge.

Carl Holecek was found guilty of violating 26 U.S.C. Sec. 7206(2) which provides for criminal sanctions against one who:

Willfully 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.

Id. We affirm.

Facts

Carl Holecek is the founder and chairman of a political organization known as the Constitutional Party. It is a position of the Constitutional Party that, under the United States Constitution and the Internal Revenue Code, wages and salaries should be exempt from taxation.

Holecek often made speeches and disseminated literature concerning the taxation of wages and salaries. In addition, Holecek prepared and assisted in the preparation of other individuals' regular (Form 1040 or 1040A) and amended (Form 1040X) tax returns. Holecek generally received a nominal fee for preparing these returns.

The indictment in this case referred to thirty-two regular and amended tax returns which Holecek had prepared in whole or in part for other individual taxpayers. These tax returns requested refunds of amounts withheld from or of amounts previously paid on earned wages or salaries. Every return correctly listed the amount of wage or salary income. Typically, however, in the case of a regular return, the word "exempt" was written beside the statement of wages or salaries earned. The appropriate wage or salary figure was carried to the "adjusted gross income line," next to which the words "no gain" were written. The words "no gain--no tax" then appeared in the tax computation block of the regular return. Any amount withheld from wage or salary income then was claimed as a refund on the "refund or balance due line." In the case of an amended return, the amount of previously reported taxable income was "corrected" to zero and the word "exempt" was written next to the "corrected" zero amount. The full amount of tax paid in the relevant previous year then was claimed as a refund in the "refund or balance due section" of the return.

A grand jury returned a thirty-two count indictment against Holecek on April 13, 1983. His case was tried to a jury in the District Court. ¹ Of the thirty-two counts charged in the indictment, Holecek was convicted of twenty-nine counts.

On appeal Holecek argues that he was selectively prosecuted and that the District Court improperly instructed the jury with respect to the applicability of the First Amendment to this case and the elements of falsity and materiality.

Selective Prosecution

Holecek claims that he was the victim of illegal selective prosecution because of speeches he made and literature he disseminated regarding the taxation of wages and salaries.

This Court recently has reiterated the elements of a prima facie case of selective prosecution. See United States v. Eklund, 733 F.2d 1287 (8th Cir.1984) (en banc ). [A] defendant must first demonstrate that he has been singled out for prosecution while others similarly situated have not been prosecuted for conduct similar to that for which he was prosecuted. Second, the defendant must demonstrate that the government's discriminatory selection of him for prosecution was based on an impermissible ground, such as race, religion or his exercise of his first amendment right to free speech.

Id. at 1290. (quoting United States v. Catlett, 584 F.2d 864, 866 (8th Cir.1978)). One attempting to meet these requirements bears a heavy burden. Id. We have reviewed the record in this case and find nothing to support Holecek's claim of selective prosecution.

Holecek was prosecuted for willfully and knowingly aiding and assisting in, and counseling, procuring, and advising the preparation and presentation to the Internal Revenue Service of tax returns which were false as to material matters, i.e., he was prosecuted for tax return preparation activities. Holecek argues that the taxpayers whom he assisted in the preparation of tax returns, as well as Guy Brock, the legal director of the Constitutional Party, were "similarly situated," yet were not prosecuted. Some of these taxpayers had discussed and urged making claims to the Internal Revenue Service that their wages and salaries were exempt from taxation. Brock was responsible for researching and speaking on the law applicable to making such claims. But there is no indication that any of these individuals assisted others in the actual preparation of tax returns. These individuals therefore were not "similarly situated" to one charged with illegally assisting others in tax return preparation. Finally, Holecek likens himself to Shirley Liles, an Oregon member of the Constitutional Party who had disseminated literature similar to that which Holecek had disseminated. There is some indication in the record that Liles was schooled by Holecek in tax return preparation and that she assisted other taxpayers in preparing returns. But there is no direct proof that Lile's activities were so pervasive as to make her "similarly situated" to Holecek. Thus, Holecek has not established the first element of a prima facie case of selective prosecution.

Even if Holecek had established the first element of a prima facie case of selective prosecution, there is no evidence in the record to establish the second element of such a case. Granted, Holecek made speeches and disseminated literature regarding the taxation of wages and salaries, but this is not why Holecek was prosecuted. With respect to each count of which he was convicted, Holecek did at least one of the following: requested documents from taxpayers in order to compute figures for or prepare their returns, computed figures for taxpayers to place on their returns, actually prepared returns, signed returns as the preparer, and, in one instance, mailed returns. Holecek also provided many of the taxpayers with a statement that "compensation for labor" is exempt from taxation under the Constitution and the Internal Revenue Code and told them to attach a personally handwritten, signed copy of the statement to their returns. ² Assistance by Holecek in the actual preparation of tax returns was not an impermissible ground upon which to base a prosecution.

Jury Instructions

I. First Amendment

It is Holecek's position that at least part of his activities--speeches to groups and the dissemination of literature on the subject of taxation of wages and salaries--constituted protected speech under the First Amendment. He therefore argues that the District Court should have instructed the jury that:

The first amendment does not provide a defense to a criminal charge simply because the actor uses words to carry out his illegal purpose. Speech which "incites imminent lawless activity" is not protected speech under the first amendment. Speech which "merely advocates law violation" is, however, protected by the first amendment.

Designated Record (D.R.), Defendant's Requested Instruction No. 5.

This requested instruction might be a proper statement of the law under Brandenburg v. Ohio, 395 U.S. 444, 89 S.Ct. 1827, 23 L.Ed.2d 430 (1969), but Brandenburg is inapplicable to this case. Holecek has done a great deal more than merely to advocate through speech violation of the tax laws. See, e.g., supra, p. 334. Regardless of the fact that Holecek, by speaking on the subject and by disseminating literature, arguably may have expressed his position regarding the taxation of wages and salaries in such a fashion as to be protected under the First Amendment, the actual preparation of the tax returns by Holecek removes this case from the ambit of both Brandenburg and the First Amendment. We therefore hold that the District Court properly refused to give Defendant's Requested Instruction No. 5.

II. Falsity

In United States v. Hinderman, 528 F.2d 100 (8th Cir.1976) (conviction under 26 U.S.C. Sec. 7205 for willfully supplying false or fraudulent information to employer with regard to withholding tax allowances), this Court sanctioned a trial court's charge to the jury which included a definition of the term false:

A statement is false if it was untrue when made, and was then known to be untrue by the person making it or causing it to be made. "False" means more than merely "incorrect."

Id. at 102 (emphasis added). In the instant case, the District Court also instructed the jury as to the element of falsity:

A "false" return is a return that was untrue when made. You are instructed that the tax returns filed by the individual taxpayers referred to in the indictment were false as to material matters within the meaning of Title 26, section 7206(2) of the United States Code.

D.R., Court's Charge to the Jury, Instruction No. 12A (emphasis added). Holecek contends that by so instructing the jury, the District Court denied him the "right and opportunity to argue that the returns [referred to in the indictment] were not false--that ... when he assisted in their preparation, [he] did not know the statements were untrue." Brief for Defendant/Appellant at 20.

The generally accepted definition of "false" to be applied in cases such as this is two-pronged: a statement is false if...