U.S. v. Karterman

• Decision Date: 13 July 1995
• Docket Number: No. 93-30408,93-30408
• Citation: 60 F.3d 576
• Parties: 95 Cal. Daily Op. Serv. 5432, 95 Daily Journal D.A.R. 9256 UNITED STATES of America, Plaintiff-Appellee, v. Scott KARTERMAN, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 576

60 F.3d 576

95 Cal. Daily Op. Serv. 5432, 95 Daily Journal

D.A.R. 9256

UNITED STATES of America, Plaintiff-Appellee, v. Scott KARTERMAN, Defendant-Appellant.

No. 93-30408.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Feb. 7, 1995.

Decided July 13, 1995.

Peter Goldberger, Ardmore, PA; Karen Landau, Law Offices of Alan Ellis, Mill Valley, CA, for defendant-appellant.

Barry McHugh, Asst. U.S. Atty., Boise, ID, for plaintiff-appellee.

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

Before: SKOPIL, HALL, and WIGGINS, Circuit Judges.

WIGGINS, Circuit Judge:

OVERVIEW

Scott M. Karterman was convicted by a jury of two counts of making false statements on his income tax returns. He was acquitted on a count of attempted income tax evasion and two drug-related counts. The district court sentenced him to a 21-month prison term and one year of supervised release, imposed a $10,000 fine, and assessed $8,640.28 for costs. Karterman timely appeals both his conviction and his sentence. We have jurisdiction pursuant to 28 U.S.C. Sec. 1291, and we affirm.

FACTS

Karterman is a real estate broker in Sun Valley, Idaho. The Internal Revenue Service and Drug Enforcement Agency began investigating him in the late 1980s. Pursuant to warrant searches of Karterman's residence, government agents seized evidence of tax evasion and drug-related paraphernalia.

Karterman was charged with six counts: Two counts of making false statements on his income tax returns for 1985 and 1986 (counts 1 and 2); attempted income tax evasion for 1987 (count 3); conspiracy to distribute cocaine (count 4); distribution of cocaine (count 5); and using his residence to facilitate narcotics trafficking, thus justifying forfeiture of the property (count 6). The first five counts were tried in June and July 1993. Count 6 was tried separately and is not a part of this appeal.

On the false tax return counts, the government presented evidence that Karterman had significantly more income than he had reported on his tax returns, and that he had intentionally falsified financial loan documents. The government's theory was that the unreported income came from drug trafficking. Karterman argued that any underreporting to the IRS was not intentional, and he tried to show that the amount of unreported income was less than the government claimed. His own figures, however, indicated that he did have unreported income in both years.

On the drug counts, the government presented witnesses who claimed to have purchased drugs from Karterman at various times during the 1980s. Two of them testified that the drugs were purchased in quantities and in packages appropriate for resale. Karterman admitted prior drug use but denied any drug trafficking activity. He presented evidence of his good character and attempted to undermine the credibility of the government's witnesses.

The jury convicted Karterman on counts 1 and 2 (the false tax return counts) and acquitted him on counts 4 and 5 (the drug conspiracy and distribution counts). The district court granted Karterman's motion for acquittal on count 3.

Karterman was sentenced on October 1, 1993. Over Karterman's objection, the court adjusted his base offense level upward two levels for obstruction of justice and two more levels for failing to report income exceeding $10,000 that came from criminal activity. The obstruction of justice enhancement was based on Karterman's alleged attempt to influence the testimony of his bookkeeper and government witness, Jacqueline Vork. The criminal activity enhancement was based on the court's determination that Karterman's unreported income (which exceeded $10,000) came from narcotics trafficking. Karterman timely appeals his conviction and sentence.

DISCUSSION

I. ADMISSION OF DRUG-RELATED EVIDENCE

Over Karterman's objection, the district court admitted into evidence various items seized from Karterman's residence in December 1990. The challenged evidence consists of a nearly empty bottle of Mannitol (a laxative that is often used as a cutting agent for cocaine), a cocaine spoon, a box of baggies, a piece of paper with trace amounts of cocaine, and marijuana "roaches." Karterman asserts that the items are merely evidence of drug use and that as such, their admission to show drug distribution violated Federal Rules of Evidence 404(b) and 403.

We do not believe that the district court abused its discretion by admitting the challenged evidence. See United States v. Brooke, 4 F.3d 1480, 1487 (9th Cir.1993) (evidentiary rulings are reviewed for an abuse of discretion). Even if it did, however, we hold that reversal is not required because the error did not affect the jury's verdict. See United States v. Chu Kong Yin, 935 F.2d 990, 994 (9th Cir.1991) (reversal for nonconstitutional evidentiary error is not appropriate unless the error more likely than not affected the verdict).

The evidence that Karterman alleges should have been excluded was most directly relevant to the drug counts. It seems to us quite implausible that the jury was unduly swayed on the false tax return counts by evidence that was more relevant to the drug counts on which it acquitted Karterman. Moreover, there was an abundance of other evidence from which the jury could find Karterman guilty on counts 1 and 2, including documentary evidence of underreported income; Karterman's own figures showing that his income for the relevant years was underreported; and his admission that he intentionally falsified financial loan documents.

II. JURY INSTRUCTION ON CHARACTER EVIDENCE

Karterman claims that the district court's failure to give his proposed instruction on character evidence allowed the jury to convict him on the false tax return counts without properly considering relevant, exculpatory evidence of his good character. Karterman did not timely object to the jury instructions, and he raises this argument for the first time on appeal. Therefore, we review the district court's ruling for plain error, United States v. Kessi, 868 F.2d 1097, 1102 (9th Cir.1989), which means we must find "clear" or "obvious" error that "affect[ed] [the defendant's] substantial rights," United States v. Olano, --- U.S. ----, ---- - ----, 113 S.Ct. 1770, 1777-78, 123 L.Ed.2d 508 (1993). The defendant generally must also show that the error "affected the outcome of the District Court proceedings." Id. at ----, 113 S.Ct. at 1778.

On the facts of this case, the lower court's refusal to give Karterman's requested instruction did not amount to clear or obvious error that affected Karterman's substantial rights. Several witnesses testified to Karterman's character for truth and honesty. Karterman testified that he did not intentionally underreport any income, and his counsel emphasized Karterman's honest intent during closing argument. The district court instructed the jury to "consider all of the evidence introduced by all parties," to "carefully scrutinize all the testimony given," and to consider "every matter in evidence which tends to show whether a witness is worthy of belief."

Moreover, in light of the previously described evidence supporting the jury's guilty verdicts, Karterman has not demonstrated that the alleged instructional error affected the outcome of his trial. See United States v. Armijo, 5 F.3d 1229, 1233-34 (9th Cir.1993) (no plain error where evidence other than the erroneously admitted evidence supported the determination of guilt). We therefore hold that the district court's refusal to give Karterman's requested instruction on character evidence does not amount to plain error.

III. INEFFECTIVE ASSISTANCE OF COUNSEL

Karterman alleges that he was denied effective assistance of counsel because his attorney failed to request a cautionary jury instruction concerning "addict witnesses." We find that this claim is premature and we decline to address it at this juncture. See United States v. Swanson, 943 F.2d 1070, 1072 (9th Cir.1991) (appellate court generally reviews ineffective assistance claims through habeas corpus proceedings, where the record has been more fully developed).

IV. "CUMULATIVE" TRIAL ERRORS

Karterman argues that even if none of the alleged trial errors, standing alone, requires reversal of his conviction, the cumulative effect of the alleged errors does. We disagree. If the district court erred by admitting the drug-related evidence, that error was harmless, and the court did not commit

plain error by refusing to give Karterman's requested credibility instruction. Because each error is, at best, marginal, we cannot conclude that their cumulative effect was "so prejudicial" to Karterman that reversal is warranted. See United States v. Necoechea, 986 F.2d 1273, 1282-83 (9th Cir.1993); United States v. Payne, 944 F.2d 1458, 1477 (9th Cir.1991), cert. denied, 503 U.S. 975, 112 S.Ct. 1598, 118 L.Ed.2d 313 (1992).

V. UPWARD ADJUSTMENT FOR DRUG-RELATED INCOME

The district court adjusted Karterman's base offense level upward two levels under U.S.S.G. Sec. 2T1.3(b)(1) (Nov.1992). ¹ The enhancement was based on the court's determination that Karterman made more than $10,000 in unreported income from narcotics trafficking. The district court's interpretation of a Sentencing Guidelines section is reviewed de novo. United States v. Ford, 989 F.2d 347, 349 (9th Cir.1993). The factual findings on which the lower court based the enhancement are reviewed for clear error. Id.

Karterman argues that the enhancement was inappropriate on the facts of his case. ² Section 2T1.3 permits a two-level enhancement if unreported income of over $10,000 comes from "criminal activity." Drug trafficking, upon which the district court based the section 2T1.3 enhancement, clearly constitutes "criminal activity." The difficulty in this case is that Karterman was not convicted of any drug trafficking offenses. He also was acquitted on counts that charged him with a conspiracy to distribute...