U.S. v. Lavoie

• Decision Date: 22 December 2005
• Docket Number: No. 04-1982.,04-1982.
• Citation: 433 F.3d 95
• Parties: UNITED STATES of America, Appellee, v. John J. LAVOIE, Defendant, Appellant.
• Court: U.S. Court of Appeals — First Circuit

433 F.3d 95

UNITED STATES of America, Appellee, v. John J. LAVOIE, Defendant, Appellant.

No. 04-1982.

United States Court of Appeals, First Circuit.

Heard October 7, 2005.

Decided December 22, 2005.

Elizabeth L. Prevett, Federal Defender Office, for appellant.

John M. Hodgens, Jr., Assistant United States Attorney, with whom Michael J. Sullivan, United States Attorney, were on brief, for appellee.

Before TORRUELLA and LIPEZ, Circuit Judges, and DiCLERICO, Jr.,^* District Judge.

TORRUELLA, Circuit Judge.

A jury convicted defendant John J. Lavoie of willfully evading federal income taxes. Lavoie appeals, contending that the evidence was insufficient for a jury to find that he acted willfully. For the reasons presented herein, we affirm.

I.

John J. Lavoie ("Lavoie") was the sole proprietor of a business engaged in the installation and repair of heating and air conditioning systems. As a business owner, he was required to file with his income tax return a Schedule C form containing the details of his business profits and losses. As of 1993, Lavoie had yet to file his 1990, 1991, and 1992 tax forms. After being contacted by the Internal Revenue Service ("IRS"), Lavoie hired Robert Reed ("Reed"), an accountant, to complete his tax forms.

Reed asked Lavoie either to supply him with his business records or to create a summary of his business profits and losses. Because his business records were not organized, Lavoie chose the latter and created a one-page summary sheet. On the first six lines, Lavoie listed gross receipts and costs of goods sold for the years 1990, 1991, and 1992. For the three tax years, Lavoie reported gross receipts of $33,105, $39,342, and $43,531; and he reported costs of goods of $32,598, $38,863, and $36,452. The rest of the sheet listed deductible business expenses such as rent, truck repairs, and advertising. Lavoie discussed this sheet with Reed, and Reed made notes on the sheet.

From this one-page summary sheet, Reed prepared Lavoie's tax forms. Reed sent only the signature pages of the tax forms to Lavoie, who signed and returned them to Reed. Reed filed the forms with the IRS. The IRS then contacted Reed, requesting an audit of Lavoie's 1992 return. Lavoie provided Reed his business records, and Reed discovered that Lavoie had substantially underreported his gross receipts.

While the audit was pending, Lavoie retained a second accountant, Michael O'Malley ("O'Malley"), to prepare tax forms for 1991 and 1992. Lavoie told O'Malley that he was being audited but did not tell him that Reed had previously filed tax forms for those years. Lavoie provided O'Malley with a more complete accounting of his gross receipts and business expenses than he had provided to Reed. O'Malley prepared tax forms for Lavoie, but Lavoie did not file them.

The IRS found that Lavoie had substantially underreported his gross receipts on his 1990, 1991, and 1992 tax returns. The government and Lavoie stipulated at trial that Lavoie's gross receipts for the three years were $79,034, $97,561, and $85,301. For each of the three years, the IRS's computation of the gross receipts was about double what Lavoie had reported. The government and Lavoie also stipulated at trial that Lavoie's costs of goods sold for the three years were $32,598, $72,324, and $71,388. Because Lavoie did not have accurate records for 1990, the stipulated value for the cost of goods sold for that year was the same that Lavoie had reported to Reed. For the other two years, the stipulated costs of goods sold were computed from Lavoie's records and were about double what Lavoie had reported. At trial, a government witness testified that for the three tax years Lavoie had underpaid his taxes by $11,326, $5,584, and $1,817.

A jury convicted Lavoie of three counts of tax evasion. The court sentenced him to twenty-eight months probation including four months of home detention. At the close of the government's case and then again after the verdict, Lavoie moved for a judgment of acquittal for insufficient evidence of willfulness. The court denied both of his motions. Lavoie now appeals, again arguing insufficient evidence of willfulness on his part.

II.

In order to convict Lavoie for tax evasion, the government must show (1) the existence of a tax deficiency, (2) an affirmative act constituting an evasion or attempted evasion of the tax, and (3) willfulness. Sansone v. United States, 380 U.S. 343, 351, 85 S.Ct. 1004, 13 L.Ed.2d 882 (1965); 26 U.S.C. § 7201. On appeal, Lavoie argues only that there was insufficient evidence for a jury to find willfulness.

We review the trial judge's finding of sufficient evidence de novo. United States v. Carucci, 364 F.3d 339, 343 (1st Cir.2004). We will affirm if "after assaying all the evidence in the light most amiable to the government, and taking all reasonable inferences in its favor, a rational factfinder could find, beyond a reasonable doubt, that the prosecution successfully proved the essential elements of the crime." United States v. O'Brien, 14 F.3d 703, 706 (1st Cir.1994).

In order to prove that Lavoie acted willfully, the government must show more than just that he acted in "careless disregard for the truth." United States v. Pomponio, 429 U.S. 10, 12, 97 S.Ct. 22, 50 L.Ed.2d 12 (1976). A mere underreporting of income does not require a finding of willfulness as the underreporting could be caused by inadvertence or negligence. See Holland v. United States, 348 U.S. 121, 139, 75 S.Ct. 127, 99 L.Ed. 150 (1954); United States v. Olbres, 61 F.3d 967, 972 (1st Cir.1995). Willfulness requires the "intentional violation of a known legal duty." Pomponio, 429 U.S. at 12, 97 S.Ct. 22. Willfulness can be established by showing that Lavoie "fil[ed] returns with knowledge that he should have reported more income than he did." United States v. Zanghi, 189 F.3d 71, 81 (1st Cir.1999). "[C]ircumstantial evidence of willfulness can be sufficient to sustain a conviction." United States v. Boulerice, 325 F.3d 75, 80 (1st Cir.2003).

The government asserts that Lavoie willfully evaded taxes when he underreported both his gross receipts and his costs of goods by about a factor of two. In defense, Lavoie primarily claims that he confused the terminology of gross receipts and net receipts and notes that his reported gross receipts were close in value to his actual net receipts. Lavoie does not explain why he underreported his costs of goods by a factor of two, even though this would have erroneously increased his tax burden. The government put forth five factors in arguing that the evidence was sufficient for a reasonable jury to find that Lavoie acted willfully, and we consider them in turn.

The government first argues that the substantial understatement of gross receipts shows that Lavoie acted willfully. In response, Lavoie argues that a mere...