U.S. v. Kallin

• Decision Date: 06 June 1995
• Docket Number: No. 93-10765,93-10765
• Parties: 95-1 USTC P 50,162, 42 Fed. R. Evid. Serv. 434 UNITED STATES of America, Plaintiff-Appellee, v. Jack P. KALLIN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 689

50 F.3d 689

95-1 USTC P 50,162, 42 Fed. R. Evid. Serv. 434

UNITED STATES of America, Plaintiff-Appellee, v. Jack P. KALLIN, Defendant-Appellant.

No. 93-10765.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Jan. 10, 1995.

Decided March 17, 1995.

As Amended on Denial of Motion to Recall Mandate June 6, 1995.

Michelle R. Hamilton, Phoenix, AZ, for defendant-appellant.

Stephen G. Winerip, Asst. U.S. Atty., Phoenix, AZ, for plaintiff-appellee.

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

Before: GOODWIN and SCHROEDER, Circuit Judges, and TASHIMA, District Judge. ^*

TASHIMA, District Judge:

Defendant-appellant Jack P. Kallin ("Kallin") appeals his conviction for attempted tax evasion and subscribing to a false tax return. His primary contention is that the government's extensive questioning and comments regarding his exercise of his rights to remain silent and to retain counsel constituted prejudicial error. He also contends that the district court improperly admitted copies of corporate tax returns from years in which he was not charged with tax evasion in violation of Fed.R.Evid. 404(b). Finally, Kallin contends that the district court erred in allowing a government witness to testify that he does not like Mexicans. We reverse the conviction.

FACTS

Kallin owned and operated three Desert Hobbies stores in Phoenix and Tempe, Arizona. Desert Hobbies was incorporated in 1982 as Kallin Enterprises, Inc., with Kallin as president, but continued to operate as Desert Hobbies. Kallin did not report personal income of more than $6,000 for any year from 1982 through 1986. He and his wife reported a joint income of $800 for 1985, and in 1986 they did not file a return. To qualify for a home mortgage, however, Kallin submitted to the lender copies of 1982 and 1983 tax returns reporting earnings of more than $50,000 per year. He purchased a $150,000 home in 1985, purchased a Cadillac in 1985, and owned an airplane as early as 1983. For the years 1985 through 1987, Kallin signed corporate tax returns indicating net operating losses for Kallin Enterprises.

Kallin separated from his wife in 1986 and his daughter Sharla initially remained with him. Sharla eventually left to live with her mother, taking Kallin's business records with her. The district court permitted Sharla to testify that Kallin dislikes Mexicans and told her to leave the house when he discovered that she had a Mexican boyfriend. In March, 1988, Sharla furnished the Desert Hobbies business records to the Internal Revenue Service ("IRS"). These records included a spiral notebook indicating receipts in excess of those reported on the corporate tax returns. Kallin claims that Sharla sought to extort $30,000 from him and delivered the records to the IRS after he refused to pay her extortionate demand.

The IRS initiated a criminal investigation and contacted Kallin concerning the business records. Before asking any questions, IRS agents advised Kallin of his non-custodial rights, including his right to remain silent and his right to retain counsel. Kallin exercised those rights by not answering any questions and seeking the advice of an attorney. The government obtained an indictment on November 27, 1991, charging Kallin and his accountant with eight counts of attempted tax evasion under 26 U.S.C. Sec. 7201. ¹ Kallin was arrested by IRS agents on December 5, 1991, and given a Miranda warning. He indicated at that time his desire to consult an attorney. On March 31, 1993, a superseding indictment was returned, adding a ninth count of subscribing to a false fiscal year 1987 corporate tax return, under 26 U.S.C. Sec. 7206(1). ²

At trial, the government presented evidence that the Desert Hobbies stores had two cash registers and the receipts of each were recorded separately. An expert witness testified that none of the receipts from the second registers were reported to the IRS, resulting in an under-reporting of approximately $1 million. Kallin testified that the records the government attributed to the second register were actually records of total receipts and the government was double-counting the receipts from the second register. The government rebutted this assertion with testimony that the records Kallin had identified as total receipts corresponded to the tapes from the first register.

During cross-examination of Kallin and during its closing argument, the government repeatedly commented on Kallin's retention of counsel and his failure to come forward with his explanation of the two sets of records until trial. ³ Defense counsel moved for a mistrial based on this line of questioning. The district court denied the motion the following day and instructed the jury to disregard the previous day's testimony concerning Kallin's silence and retention of counsel. ⁴

In closing argument, the government urged that the jury not believe Kallin:

Five years after the investigation began, Mr. Kallin came up with this story for the first time. And then he didn't wait--he waited until one week after the trial began, till the last moment of the trial. The idea, I submit to you, was to concoct a story and reveal, at the last moment, when the Government could do the least to respond to him. He's tried to fool you.

Defense counsel's timely objection to this statement was overruled.

Kallin was convicted on counts four and five (covering personal returns for 1985 and 1986) and counts seven, eight and nine (covering corporate returns for fiscal years 1986 and 1987). He was acquitted of the remaining counts. Kallin then moved for a new trial. The court denied the motion, stating, "I believe that the evidence against Mr. Kallin is overwhelming. To be honest, I really don't understand how the jury could have acquitted him of any of the counts. And I think that my instruction to the jury was pretty emphatic...."

STANDARDS OF REVIEW

Whether improper references to a defendant's silence and retention of counsel are harmless is reviewed under a "harmless-beyond-a-reasonable-doubt" standard. Brecht v. Abrahamson, --- U.S. ----, ----, 113 S.Ct. 1710, 1717, 123 L.Ed.2d 353 (1993).

"[T]he issue of whether the evidence falls within the scope of Rule 404(b) is reviewed de novo." United States v. Arambula-Ruiz, 987 F.2d 599, 602 (9th Cir.1993); United States v. Mundi, 892 F.2d 817, 820 (9th Cir.1989), cert. denied, 498 U.S. 1119, 111 S.Ct. 1072, 112 L.Ed.2d 1178 (1991). A trial court's decision to admit evidence of other crimes pursuant to Fed.R.Evid. 404(b) is reviewed for abuse of discretion. Id.; United States v. Hill, 953 F.2d 452, 455 (9th Cir.1991). "We review the district court's decisions balancing the probative value of evidence against its prejudicial effect for abuse of discretion." United States v. Kessi, 868 F.2d 1097, 1107 (9th Cir.1989). "The district judge is given wide latitude in determining the admissibility of evidence under this standard." United States v. Kinslow, 860 F.2d 963, 968 (9th Cir.1988), cert. denied, 493 U.S. 829, 110 S.Ct. 96, 107 L.Ed.2d 60 (1989). The district court's determination of whether or not evidence is relevant under Rule 402 is also reviewed for abuse of discretion. United States v. Schaff, 948 F.2d 501, 505 (9th Cir.1991).

Under the abuse of discretion standard, a reviewing court cannot reverse unless it has a definite and firm conviction that the district court committed a clear error of judgment in reaching its conclusion or based its decision on an erroneous conclusion of law. United States v. Plainbull, 957 F.2d 724, 725 (9th Cir.1992); Nilsson, Robbins, Dalgarn, Berliner, Carson & Wurst v. Louisiana Hydrolec, 854 F.2d 1538, 1546 (9th Cir.1988).

DISCUSSION

I. Prosecutorial Comment on Kallin's Silence and Retention of Counsel

The government admits that it violated Kallin's due process rights by repeated references to his retention of counsel and failure to come forward earlier with his explanation of innocence, but argues that the error was harmless. "[I]t does not comport with due process to permit the prosecution during trial to call attention to [the defendant's] silence...." Doyle v. Ohio, 426 U.S. 610, 619, 96 S.Ct. 2240, 2245, 49 L.Ed.2d 91 (1976); United States v. Foster, 985 F.2d 466 (9th Cir.1993). The reasoning of Doyle extends to comments on a defendant's decision to retain counsel. United States v. Daoud, 741 F.2d 478, 480-81 (1st Cir.1984); United States v. McDonald, 620 F.2d 559, 562-63 (5th Cir.1980). "The right to counsel is included in the Miranda warnings, and as such is covered by the implicit assurance that invocation of the right will carry no penalty." ⁵ Daoud, 741 F.2d at 480.

The government bears the burden of proving that the admitted errors pass muster under the harmless-beyond-a-reasonable-doubt standard. Brecht, --- U.S. at ----, 113 S.Ct. at 1717. The court must determine "whether the prosecutor's conduct was harmless by 'considering the extent of comments made by the witness, whether an inference of guilt from silence was stressed to the jury, and the extent of other evidence suggesting defendant's guilt.' " Foster, 985 F.2d at 468 (quoting United States v. Newman, 943 F.2d 1155, 1158 (9th Cir.1991)).

The mandate of Doyle is that the prosecution not call attention to a defendant's silence. Where one impermissible question about a defendant's silence was asked and an immediate objection was sustained before the question was answered, the court did not find a violation of Doyle because, through this minor slip, the prosecutor had not been allowed to impeach the defendant or call attention to his silence. Greer v. Miller, 483 U.S. 756, 764, 107 S.Ct. 3102, 3108, 97 L.Ed.2d 618 (1987). This Circuit has found that three improper questions and answers required reversal, despite a strong jury instruction to disregard the questions. Newman, 943 F.2d at 1158. Seven questions about a defendant's silence, answered after an objection was overruled,...