U.S. v. McGill

• Decision Date: 19 May 1992
• Docket Number: Nos. 91-1122,91-1201,s. 91-1122
• Citation: 964 F.2d 222
• Parties: -5043, 92-1 USTC P 50,268 UNITED STATES of America, Appellant in 91-1201, v. Thomas L. McGILL, Jr., Appellant in 91-1122.
• Court: U.S. Court of Appeals — Third Circuit

Page 222

964 F.2d 222

70 A.F.T.R.2d 92-5043, 92-1 USTC P 50,268

UNITED STATES of America, Appellant in 91-1201, v. Thomas L. McGILL, Jr., Appellant in 91-1122.

Nos. 91-1122, 91-1201.

United States Court of Appeals Third Circuit.

Argued October 15, 1991.

Decided May 13, 1992.

As Amended May 19, 1992.

Laura A. Ingersoll (argued), Jackie M. Bennett, Jr., Phillip A. Talbert, Public Integrity Section, Crim. Div., U.S. Dept. of Justice, Washington, D.C., for appellant in No. 91-1201.

Thomas C. Carroll (argued), Philadelphia, Pa., for appellant in No. 91-1122.

Before: STAPLETON, SCIRICA and ROTH, Circuit Judges.

OPINION OF THE COURT

ROTH, Circuit Judge.

Defendant Thomas L. McGill, Jr. was convicted in the Eastern District of Pennsylvania of five violations of the Internal Revenue Code. Of these convictions, one fell within the Federal Sentencing Guidelines, and on this count the trial judge granted McGill a two-level reduction for acceptance of responsibility. The Government appeals that reduction. McGill cross-appeals his convictions on all five counts.

The Government charged McGill under 26 U.S.C. § 7201 (1988 and Supp.1990) with five counts of evasion of payment of income taxes, comprising tax years 1980 through 1987. ¹ Section 7201 is a felony offense. A jury found McGill guilty of three counts of evasion of payment, covering the years 1985 through 1987 (Counts 6, 7 and 8). The jury acquitted McGill of felony charges on the remaining two counts, which included tax years 1980 through 1984 (Counts 4 and 5). On those two counts, however, the jury found that McGill willfully failed to pay federal income taxes, a misdemeanor under 26 U.S.C. § 7203 (1988 and Supp.1990). ²

McGill contests several aspects of his trial, including the sufficiency of the evidence as to the felony convictions, misleading jury instructions, misjoinder of offenses, and the erroneous exclusion of evidence relating to the willfulness of his violations. This court has jurisdiction over appeals from final judgments of conviction under 28 U.S.C. § 1291 (1988). We have jurisdiction under 18 U.S.C. § 3742(b) (1988) to review the Government's appeal of the sentence imposed on McGill under Count 8.

We will affirm in part and reverse in part. We will affirm the misdemeanor convictions on Counts 4 and 5, and McGill's felony conviction on Count 6. We believe, however, that there was insufficient evidence of affirmative acts of evasion for the tax years 1986 and 1987. Therefore, we will reverse the convictions on Counts 7 and 8. Because of our decision on Count 8, we need not reach the sentencing issue raised by the Government. ³

I.

A. Procedural History

On March 27, 1990, Thomas McGill and co-defendants Kenneth Harris and Leon Brown were charged by a federal grand jury with violation of the Travel Act, 18 U.S.C. § 1952 (1988), and conspiracy to violate the Travel Act, 18 U.S.C. § 371 (1988). Additionally, McGill was charged with five counts of evading payment of his federal income taxes, in violation of 26 U.S.C. § 7201. After a seven-day jury trial, McGill was convicted of three of the felony counts of evasion of tax payment (26 U.S.C. § 7201), ⁴ and of two counts of the lesser-included offense of willful failure to pay federal income taxes (26 U.S.C. § 7203). ⁵ McGill was acquitted, and the other defendants were convicted, of the Travel Act violations and the related conspiracy charge, which arose out of an alleged judicial bribery scheme.

McGill was sentenced to two five year terms of probation on Counts 6 and 7, these terms to be served concurrently with each other and to a concurrent term of five years probation imposed under the one felony (Count 8) which fell within the Federal Sentencing Guidelines. The five years probation under Count 8 included a condition that McGill spend the first month in a community treatment center or half-way house, followed by three months of home confinement. The court computed this sentence under the Guidelines after awarding McGill a two-level reduction for acceptance of responsibility. Additionally, McGill was sentenced to two consecutive one year terms of probation on the misdemeanors, these terms to run concurrently with the five year terms.

McGill filed a post-verdict motion seeking judgment of acquittal, or alternatively, a new trial. In the motion for judgment of acquittal, McGill alleged insufficient evidence on two elements of the felony charge: affirmative acts of evasion and willfulness. He also alleged failure of proof as to willfulness on the two misdemeanor counts. The motion for new trial focused on improper jury instructions regarding: willfulness and affirmative acts of evasion; the relevance of the defendant's Offer In Compromise; the voluntariness of levy collections; the relevance of the defendant's inability to pay his taxes; and the charging of lesser-included misdemeanors. Finally, McGill alleged that misjoinder of his bribery and tax offenses necessitated a new trial. The trial judge denied these motions. United States v. McGill, No. 90-144-01, 1991 WL 12346 (E.D.Pa. Jan. 24, 1991).

The Government filed an appeal in this court challenging the two-level reduction for acceptance of responsibility; McGill cross-appealed both his convictions and the denial of his post-verdict motions.

B. Facts

McGill was charged in Counts 4 through 8 of the indictment with evading payment of $46,910 in personal income taxes. This figure encompasses assessed but unpaid taxes for the years 1980 through 1987, excluding penalties and interest. ⁶

McGill is a self-employed attorney in Philadelphia. During the decade 1980 through 1990, he received income from three sources: private criminal defense work, for which he was paid in cash and by personal check; court appointments to represent indigent criminal defendants, for which he was paid, upon submitting vouchers, by the City of Philadelphia (the City); and service as an appointed member of a Pennsylvania commission, ⁷ for which he received a stipend from the Commonwealth.

For each of the years 1980 through 1987, McGill filed federal income tax returns indicating taxes due. There is no dispute as to the accuracy of McGill's tax forms. However, he failed to include with his returns payment of any of the tax which he admittedly owed. ⁸

In 1983 the Internal Revenue Service (IRS) directed McGill to pay his 1978 taxes and file returns for the years 1979-1982. He submitted the overdue returns, and acknowledged amounts due, but remitted no payment. The IRS then in 1984 issued levies against McGill's two personal bank accounts. The banks informed the IRS that no funds were available in these accounts. In May 1985, the IRS again issued levies against McGill's two personal bank accounts, and also against McGill's fees from the Commonwealth and the City. McGill was aware of the levies from the time they were imposed, as he acknowledged in a meeting with the IRS in late May 1985.

After the 1985 levies were imposed, McGill ceased using his personal bank accounts. Those accounts were later closed by the banks. McGill deposited and wrote checks on an account in his wife's name ⁹ (the Lillie account) and on a joint account which he and several other lawyers had established for the purpose of handling common expenses for office space they shared (the McGill & Seay account). ¹⁰ The IRS had no record of the Lillie and the McGill & Seay accounts. ¹¹ McGill testified that he used the family and the business accounts because he thought his two personal accounts had been closed. At the same time, he admitted at trial that he used the business account "thinking that the IRS wouldn't bother the money." Joint App. at A-2102.

McGill made one attempt in 1986 to settle his debts with the IRS: he hired an attorney and prepared an Offer In Compromise (OIC) of his tax liability. He filed financial disclosure forms in connection with the OIC in late May 1986. The record contains conflicting information about the adequacy of the disclosure forms, none of which is before us. IRS Agent Kroll assured the trial court that McGill had provided him with information about all bank accounts, Joint App. at A-1198, but the Government alleged in oral argument that McGill failed to include the McGill & Seay account with the filing. The OIC was finally withdrawn after the IRS suggested that the proposed level of payment was too low. ¹² The IRS further noted that McGill had made no effort to pay his current year's (1986) estimated taxes, a prerequisite for a good faith OIC. McGill asserted that he could not pay his 1986 taxes because most of his earnings--his income from the Commonwealth and the City--were subject to IRS levies.

During the period from January 1986 until January 1987, when the OIC was being negotiated, McGill on the advice of counsel did not submit expense vouchers to the City. Thus, the IRS received no levy payments from the City in that year. McGill submitted the entire year's vouchers--worth approximately $5,000--after he withdrew his Offer In Compromise. Of this amount, approximately $3,700 went to the IRS. Joint App. at A-1987-88.

In 1987, McGill sent a $3,000 check to the IRS. He was seeking election to a local judgeship at the time. This was the only non-levy payment McGill made to the IRS between April 1985 and March 1990, the period relevant to the indictment. ¹³

In March 1988, the Government instituted a criminal tax investigation of McGill. McGill continued to accept court appointments from the City. The IRS kept the income levied from these City appointments in a "suspense account" while pursuing the criminal charges. At the time of trial, the suspense account contained nearly $30,000. ¹⁴ None of these funds was allocated toward McGill's liability for the tax years charged in the indictment (1980 through 1987). ¹⁵

In about August 1988, five months after the Government initiated its criminal investigation, McGill opened a checking account in his own name at...