U.S. v. Miller

• Decision Date: 18 March 2008
• Docket Number: No. 06-11078.,06-11078.
• Citation: 520 F.3d 504
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Stephen P. MILLER, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

520 F.3d 504

UNITED STATES of America, Plaintiff-Appellee, v. Stephen P. MILLER, Defendant-Appellant.

No. 06-11078.

United States Court of Appeals, Fifth Circuit.

March 18, 2008.

Marc Woodson Barta (argued), Dallas, TX, Vicki H. Lamberson, Asst. U.S. Atty., Amarillo, TX, Nancy E. Larson, Asst. U.S. Atty., Fort Worth, TX, for U.S.

Charles Howard Portz (argued), Portz & Portz, Houston, TX, for Miller.

Appeal from the United States District Court for the Northern District of Texas.

Before HIGGINBOTHAM, DAVIS and SMITH, Circuit Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

A jury found Stephen Miller guilty of tax evasion in violation of 26 U.S.C. § 7201. Miller challenges the sufficiency of the evidence, as well as a number of the district court's evidentiary rulings. He also contends that the indictment was duplicitous. Finally, Miller raises a claim of Brady error. We affirm.

I

The jury could have concluded from the evidence the following. During the 1990s, Stephen Miller accumulated large tax deficiencies. According to the Government, Miller had tax liabilities — including deficiencies, penalties, and interests — of more than $2 million. Miller was associated with Charles Matich, a "financial planner." Matich helped wealthy individuals like Miller decrease their tax exposure by moving their funds overseas. Matich's business came to an end when the Government seized his records in 2000 and then charged him with conspiracy to impede income tax collection and personal tax evasion. Matich pled guilty.

Miller had over $1 million in an Individual Retirement Account (IRA). Rather than satisfy his tax obligations, and fearful that the IRS might seize the funds, Miller and Matich concocted a scheme to protect the funds. In January 1999, Miller began transferring money from his IRA overseas to a shell company called Euromex Leasing Limited, which Miller had previously formed and Matich then controlled. Miller transferred approximately $600,000 under the guise of repaying a loan to Euromex. Matich arranged to have Euromex send Miller a "demand payment letter." After Miller had "repaid" the loan, Euromex sent Miller a letter saying his debt was satisfied. After Miller had "repaid" the loan, he continued transferring money from his IRA overseas to accounts controlled by Matich. He transferred more than $1 million from his IRA in 1999, and he did report the IRA withdrawals on his tax return. Unbeknownst to Miller until later, however, the money he transferred disappeared.

On March 25, 2000, the IRS received a Form 656 Offer in Compromise from Miller, in which he proposed settling his tax liabilities for $7,500. On the Offer form, Miller checked the box for "Doubt as to Collectibility — `I have insufficient assets and income to pay the full amount.'" Miller offered the following explanation: "At my age and unavailability of assets, I do not feel that I, nor my spouse, will live long enough to ever be able to pay the liabilities and additional taxes assessed on our account." The IRS requested more information. Miller submitted a Form 433-A, which stated that he had a checking account worth $15,000 and an IRA with a balance of $25,000; Miller did not list any foreign accounts. The IRS again requested more information, and specifically asked about the money withdrawn from his IRA. Miller responded that he used the funds to repay the Euromex loan, and further explained, "I have no idea what happened to the proceeds. I assume the funds were repaid to the lenders of the funds." Miller repeated the story again in a subsequent correspondence with the IRS:

I repaid those loans back to a Euromex Leasing corporation formed in the Isle of Mann which had invested in some disastrous investments in Mexico in which I lost $1,000,000 and was personally responsible for.... These funds represented return of principal and interest on funds borrowed. I have absolutely no idea what the present officers of that corporation have done with those proceeds. I do not have these funds nor do I have access to them.

Subsequent to the submission of the Offer, Matich, who was working with the Government, called Miller. Investigators recorded the conversation. A fair interpretation of the call is that Miller transferred the money to shield it from the IRS, believed the money was still his, and wanted it back. The call indicated that Miller was only then learning that his money was gone. Miller and Matich also discussed how they could characterize their various transactions if questioned.

Miller was charged with one count of tax evasion in violation of 26 U.S.C. § 7201. The Government's theory was that Miller's Offer in Compromise constituted an attempt to evade his income taxes in that he lied by stating that because of unavailability of assets he could only pay $7,500 to satisfy his tax liabilities. This was a lie because Miller believed that he had over $1 million overseas, which he did not reveal to the IRS. The case went to trial, and Matich testified as a Government witness. The jury found Miller guilty, and the district court sentenced him to 46 months' imprisonment and three years supervised release, and ordered him to pay $968,836.27 in restitution. Miller appealed.

After Miller filed his opening brief, the Assistant U.S. Attorney notified him that she had become aware of a criminal referral involving Matich by the U.S. Trustee in Montana. The referral referenced the Government's possession of Matich's business records. We abated Miller's appeal so he could file a motion for a new trial in the district court. Miller did so, arguing that the Government violated Brady by failing to disclose the criminal referral and turn over all of Matich's business records. The district court denied Miller's motion, and he filed a supplemental brief in this court raising the Brady issue.

II

Miller challenges the sufficiency of the evidence. We review the evidence in the light most favorable to the Government, drawing all reasonable inferences and credibility determinations in favor of the jury's verdict.¹ "If any rational trier of fact could have found proof of the essential elements of the crime beyond a reasonable doubt, the verdict will stand."²

26 U.S.C. § 7201 provides that "[a]ny person who willfully attempts in any manner to evade or defeat any tax imposed by this title or the payment thereof shall ... be guilty of a felony." "The crime of tax evasion as defined in 26 U.S.C. § 7201 has three essential elements: (1) the existence of a tax deficiency; (2) willfulness; and (3) an affirmative act constituting evasion or attempted evasion of the tax."³ "[W]illfulness is `a voluntary, intentional violation of a known legal duty.' Evidence is usually circumstantial as direct proof is rarely available."⁴ Many kinds of conduct can constitute a willful attempt to evade taxation:

keeping a double set of books, making false entries or alterations, creating false invoices or documents, destroying books or records, concealing assets or covering up sources of income, handling one's affairs to avoid making the records normally accompanying transactions of a particular kind, any conduct likely to mislead or conceal, holding assets in others' names, providing false explanations, giving inconsistent statements to government agents, failing to report a substantial amount of income, a consistent pattern of underreporting large amounts of income, or spending large amounts of cash that cannot be reconciled with the amount of reported income.⁵

There is no question that Miller had a tax deficiency. Miller's argument is a hybrid of the second and third elements: he claims that the Government failed to prove that he had access to, or control of, the money he transferred out of his IRA and, therefore, his Offer in Compromise, which was based on his claim of unavailability of assets, was not fraudulent. Put differently, the Government failed to prove that the funds he transferred were "available" to him. This proof, his argument goes, is necessary for conviction. We are not persuaded.

Where Miller's money was located, and who had access to and control of it, matters, on the facts here, only to the extent that it bears on Miller's knowledge and belief as to the state of his financial affairs when he submitted his Offer; that is, what Miller's intent was in submitting his Offer.

The evidence was sufficient for the jury to conclude that when Miller submitted his Offer, he believed that he had $1 million squirreled away overseas. The recorded phone call with Matich, which occurred after submission of the Offer, makes clear that Miller continued to believe that the money he transferred was his. The call further reveals that, while Miller had an inkling that there was a problem with his money, he did not know his money was in fact gone. Moreover, Miller's responses to the IRS's requests for further information after he submitted his Offer are compelling evidence that he was trying to hide his assets from the IRS. Miller did not say that the money transferred from his IRA had disappeared or that he could not retrieve it; rather he twice told the IRS that he used the money to satisfy the fictitious Euromex loan obligation, which Miller knew did not exist and, in fact, had helped to concoct.

The irony in Miller's argument is that he transferred his money to Matich precisely because he believed this would shield it from the IRS. Despite his understanding that he had $1 million overseas, Miller stated in his Offer that he could only afford to pay $7,500 in satisfaction of his tax liabilities. One can understand his submission of the Offer as, inter alia, "concealing assets," "conduct likely to mislead or conceal," "providing false explanations," or some combination thereof. The Government proved the required affirmative act.

The Government also introduced sufficient evidence to support a finding of willfulness, including admissions made by Miller during the recorded...