U.S. v. Latham, 83-2686

• Decision Date: 04 February 1985
• Docket Number: No. 83-2686,83-2686
• Citation: 754 F.2d 747
• Parties: -846, 85-1 USTC P 9180, 17 Fed. R. Evid. Serv. 784 UNITED STATES of America, Plaintiff-Appellee, v. Ronald E. LATHAM, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 747

754 F.2d 747

55 A.F.T.R.2d 85-846, 85-1 USTC P 9180,

17 Fed. R. Evid. Serv. 784

UNITED STATES of America, Plaintiff-Appellee, v. Ronald E. LATHAM, Defendant-Appellant.

No. 83-2686.

United States Court of Appeals, Seventh Circuit.

Argued June 1, 1984.

Decided Feb. 4, 1985.

Thomas J. Scorza, Asst. U.S. Atty., Chicago, Ill., for plaintiff-appellee.

Andrew B. Spiegel, Chicago, Ill., for defendant-appellant.

Before CUMMINGS, Chief Judge, COFFEY, Circuit Judge and CAMPBELL, Senior District Judge. ^*

COFFEY, Circuit Judge.

The defendant, Ronald E. Latham, appeals his conviction for willful failure to file income tax returns and for filing false W-4 statements in violation of 26 U.S.C. Secs. 7203 and 7205, respectively. We affirm.

I.

On December 13, 1982, the defendant was charged in a six-count indictment with failure to file income tax returns for the calendar years 1980 and 1981, in violation of 26 U.S.C. Sec. 7203, and with filing false W-4 statements on four separate occasions during the years 1980, 1981, and 1982, in violation of 26 U.S.C. Sec. 7205. The defendant was convicted by a jury on all counts and sentenced by the district court to two concurrent one-year terms to be followed by a five-year probationary period; however, the sentence was stayed pending this appeal.

On appeal, Latham challenges his conviction on five grounds. He claims that (1) the district court lacked jurisdiction over his prosecution under 18 U.S.C. Sec. 3231 since jurisdiction under that statute is limited to offenses defined in Title 18 only; (2) the special grand jury that indicted him exceeded its authority since it was empowered to investigate organized crime activities only; (3) the district court erred when it improperly instructed the jury and abused its discretion when it refused the theory of law he proffered as a defense instruction; (4) the district court abused its discretion in excluding certain evidence offered by the defendant; and (5) his rights under the Speedy Trial Act were violated, 18 U.S.C. Sec. 3161 et seq.

II.

A. Issues controlled by Koliboski.

The first three issues raised by the defendant relating to jurisdiction, grand jury powers, and the jury instructions, are controlled by our recent decision in United States v. Koliboski, 732 F.2d 1328 (7th Cir.1984). The defendant in Koliboski was indicted on similar charges by the same grand jury that indicted this defendant. As in this case, Koliboski argued that the district court was without subject matter jurisdiction under 18 U.S.C. Sec. 3231. We rejected Koliboski's claim as "silly," holding that Title 26 violations are offenses against the laws of the United States and thus are clearly within federal district court jurisdiction under Sec. 3231. ¹ Id. at 1329. Thus, the defendant's claim of lack of jurisdiction is similarly dismissed as meritless.

Koliboski further resolves Latham's claim that a special grand jury can investigate only organized crime activities. In Koliboski we held that special grand juries are not restricted in their scope to investigating organized crime only. Id. at 1330 ("Special grand juries have broad investigative powers. Section 3332(a) directs these grand juries to 'inquire into offenses against the criminal laws of the United States alleged to have been committed within that district.' ... The legislative history confirms the breadth of the general mandate bestowed by this section. These grand juries are not restricted to investigating only organized crime activities."). Thus, based upon our holding in Koliboski the special grand jury which indicted Latham did not exceed its authority.

The Koliboski decision also disposes of two of Latham's other claims with regard to improper jury instructions. Latham contends that the district court improperly refused his instruction defining "income" as distinct from "gross income." This instruction was intended to enforce his claim that he in good faith believed that wages are not income for taxation purposes. As we stated in Koliboski, a claim of this nature is without merit. Id. at 1329 n. 1. Latham's wages were and are income; thus, his proposed jury instruction was a misstatement of the law and the district court properly refused to adopt the same in the instructions.

Latham argues also that the district court erred in refusing to instruct the jury that in order for a violation of the tax laws to be "willful" the violation must be the product of a "bad purpose." The district court's instruction correctly paraphrased the "voluntary, intentional violation of a known legal obligation" jury instruction that we approved in Koliboski and United States v. Moore, 627 F.2d 830 (7th Cir.1980). The Supreme Court in United States v. Pomponio, 429 U.S. 10, 97 S.Ct. 22, 50 L.Ed.2d 12 (1976), held this instruction to be the proper definition of willfulness in a prosecution for violations of the Tax Code. No further "bad purpose" instruction is required. See Koliboski, 732 F.2d at 1331 n. 2.

The other jury instructions proffered by the defendant are equally inane. Thus we hold that the district court did not err in refusing the other instruction offered by Latham implying that 26 U.S.C. Sec. 7343 defining "person" does not include natural persons. ² Similarly, Latham's instruction which indicated that under 26 U.S.C. Sec. 3401(c) the category of "employee" does not include privately employed wage earners is a preposterous reading of the statute. It is obvious that within the context of both statutes the word "includes" is a term of enlargement not of limitation, and the reference to certain entities or categories is not intended to exclude all others.

Latham also contends that the court erred in refusing to instruct the jury that an assessment under 26 U.S.C. Sec. 6201 is a legal necessity before an individual can have an income tax liability. Latham's theory is that if there was no assessment, there can be no income tax liability and thus he cannot be found to have filed false W-4 forms since there was no tax liability in the preceding year. But an assessment under Sec. 6201 is an administrative determination that a certain amount is currently due and owing as a tax with consequences somewhat similar to the reduction of a claim to judgment. Cohen v. Gross, 316 F.2d 521, 522-23 (3d Cir.1963). The exempt status requirement of a tax liability in the preceding year does not support Latham's novel and ridiculous theory that there must have been an IRS determination in that year of tax due on income earned when (as here) the taxpayer failed to file a return. Latham cannot place himself in the exempt category in 1981 simply by failing to file a return in 1980.

Finally, Latham alleges that by failing to present his "theory of defense" instructions to the jury the district court committed reversible error. ³ This claim is likewise without merit. The judge's instructions to the jury are to embody a proper statement of the relevant law, not a continuation of counsel's closing argument. Our reading of the record convinces us that the district court's jury instructions were proper as to the relevant defenses. Latham's theory of defense instructions were nothing more than a summary of the evidence he presented at trial relating to his defenses and were properly refused.

B. Exclusion of evidence.

Latham also claims that the district court's evidentiary rulings, denying the admission of certain defense evidence, deprived him of a fair trial because the court failed to apply "the same standard of relevance to Latham as it did to the government." Defendant's brief at 21. Because the district court allowed the prosecution to offer into evidence income tax returns which Latham had filed in 1976, 1977, and 1978, in order that they might establish that he acted willfully in 1980, 1981, and 1982, Latham argues that fairness required the district court also to admit all the exhibits he offered in evidence. These exhibits consisted of the complete text of various writings, as well as letters Latham received from the attorney for the Belanco religious order, a legal defense fund for tax protesters that Latham had joined. Latham claimed he had relied upon the exhibits in arriving at his misunderstanding of his duties under the Tax Code.

A district court has broad discretion when assessing the admissibility of proffered evidence and we may reverse its rulings only after we are convinced that the court abused its discretion. United States v. Brown, 688 F.2d 1112, 1115 (7th Cir.1982). While Latham properly states that the same standard of relevance must be applied to both parties (United States v. Parker, 447 F.2d 826 (7th Cir.1971)), our examination of the excluded exhibits and the trial record in the instant case convinces us that the same standard of relevance was uniformly and equally applied to both Latham's and the government's proffered evidence.

As to the letters Latham received from the Belanco religious group attorney, the district court properly noted that the letters were received subsequent to Latham's indictment by the grand jury, and thus were irrelevant as to the questions of notice and willfulness. On the other hand, Latham's earlier tax forms preceded the dates of his violations and thus were relevant in determining Latham's intent in failing to file tax returns for the years 1980 and 1981.

As to the excluded writings, the trial judge admitted into evidence only those portions of the writings that Latham quoted during his testimony since those were the portions that specifically addressed claiming exempt status on W-4 forms and the taxpayer's duty to file tax returns--the relevant issues at trial. Latham's contention that the complete text of each book had to be admitted because he relied on everything in the books in formulating his state of mind is without merit since the excluded portions of the text concern general criticisms of the tax system, including questions as to its...