U.S. v. Morris, 93-2859

• Decision Date: 16 May 1994
• Docket Number: No. 93-2859,93-2859
• Citation: 20 F.3d 1111
• Parties: -2111, 94-1 USTC P 50,234 UNITED STATES of America, Plaintiff-Appellee, v. Jimmy D. MORRIS, Franklin W. Briggs, Defendants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1111

20 F.3d 1111

73 A.F.T.R.2d 94-2111, 94-1 USTC P 50,234

UNITED STATES of America, Plaintiff-Appellee, v. Jimmy D. MORRIS, Franklin W. Briggs, Defendants-Appellants.

No. 93-2859.

United States Court of Appeals, Eleventh Circuit.

May 16, 1994.

Frank Petrella, Atlanta, GA, for Morris.

Howard J. Weintraub, Atlanta, GA, for Briggs.

B. Edward Lowe, Asst. U.S. Atty., Tallahassee, FL, for appellee.

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

Before ANDERSON and BIRCH, Circuit Judges, and ATKINS ^*, Senior District Judge.

BIRCH, Circuit Judge:

The appellants, Jimmy D. Morris and Franklin W. Briggs, present three challenges to their conviction for criminal filing and subscribing of false income tax returns. The appellants assert that the evidence against them was insufficient to support a conviction, that the trial court improperly refused to instruct the jury on a permissible theory of defense, and that their sentence was improperly computed. We find that the evidence presented against the appellants at trial was sufficient to sustain a conviction. We hold, however, that the failure of the trial court to instruct on appellants' good-faith defense was reversible error. Because of our decision on the second issue, the sentencing issue is moot. We therefore REVERSE the appellants' convictions and REMAND to the trial court for further proceedings.

I. BACKGROUND

On February 10, 1993, Jimmy Morris and Franklin Briggs were indicted by a federal grand jury for one count of conspiracy to defraud the United States by filing false income tax returns, in violation of 18 U.S.C. Sec. 371, and four counts each (one per tax year) of filing and subscribing false personal income tax returns for 1985, 1986, 1987, and 1988, in violation of 26 U.S.C. Sec. 7206(1). Each was acquitted of the conspiracy count and the false filing count for the year 1985 and convicted on all remaining counts. Both appellants were sentenced to nine months of incarceration.

The appellants are engaged in the residential construction business in Florida. Together they own approximately fourteen different construction businesses. Each of these businesses maintains one or more checking accounts, totalling more than forty accounts for all businesses together. The appellants also maintained their own personal bank accounts. The businesses' bookkeeping staffs made deposits and withdrawals and wrote checks from all accounts, including appellants' personal accounts.

Appellants were prosecuted when they failed to report certain income they received from West Florida Natural Gas in each of the relevant years. This income was in the form of a rebate check issued directly to the appellants, personally, whenever an entity that they controlled installed gas appliances in a construction project. The tax offense of which the appellants were convicted is a specific intent crime that requires willfulness on the part of the individual who files a false tax return. See United States v. Lankford, 955 F.2d 1545, 1550 (11th Cir.1992). The standard for the statutory willfulness ¹ requirement is the "voluntary, intentional violation of a known legal duty." Cheek v. United States, 498 U.S. 192, 202, 111 S.Ct. 604, 610, 112 L.Ed.2d 617 (1991). The key to this criminal case is whether the appellants omitted these funds from their personal income tax returns with knowledge that doing so was a violation of the tax laws (i.e., that each return was not materially "correct").

During the course of the trial, the appellants presented witnesses and other evidence to show that the omissions of income in their tax returns were due to mistakes and were not intentional. For example, the appellants presented evidence that their books were kept internally and reviewed by outside certified public accountants. Their tax returns were prepared by an outside accounting firm each year. Further, witnesses testified that the appellants evidenced a desire to include all income on the various tax returns filed each year including their personal and business returns. The appellants presented substantial evidence that they held a good-faith belief that all income required to be reported was reported on some return, whether business or personal. ²

At the close of evidence, the appellants proffered to the trial court a jury instruction on their theory of defense--that the false returns were not filed willfully, but were erroneous due to a good faith mistake or belief that the filings were correct; that is, that the returns complied with the law. The trial court refused to give the appellants' requested instruction on the rationale that the general instruction on the elements of the underlying crime was sufficient to convey the substance of such a defense to the jury.

II. DISCUSSION

A. Sufficiency of the Evidence

The appellants first assert that the evidence presented by the government at trial was insufficient to establish the appellants' guilt beyond a reasonable doubt. The sufficiency of the evidence to support a conviction is a question of law subject to de novo review. United States v. Thomas, 8 F.3d 1552, 1556 (11th Cir.1993). We examine the evidence in the light most favorable to the government and must affirm a conviction if any reasonable construction of the evidence would permit the jury to find a defendant guilty beyond a reasonable doubt. United States v. McKinley, 995 F.2d 1020, 1025 (11th Cir.1993).

We have reviewed the evidence in this case carefully and in accordance with the foregoing standard. Although we find that most of the government's evidence was circumstantial and subject to differing interpretations, after drawing all possible inferences in favor of the government we must conclude that a reasonable jury could have found the appellants guilty. Therefore, despite the close balance of the evidence in this case, we find that the evidence was sufficient to support the jury's verdict.

B. Adequacy of Jury Instructions

Appellants complain that the trial court erred in refusing to give their proposed theory-of-defense instruction to the jury. The refusal to give a requested jury instruction is reviewed for abuse of discretion. United States v. Morales, 978 F.2d 650, 652 (11th Cir.1992). ³ "A defendant is entitled to have the court instruct the jury on the theory of the defense, as long as it has some basis in the evidence and has legal support." United States v. Orr, 825 F.2d 1537, 1542 (11th Cir.1987) (citing United States v. Gold, 743 F.2d 800, 819 (11th Cir.1984), cert. denied, 469 U.S. 1217, 105 S.Ct. 1196, 84 L.Ed.2d 341 (1985)). In this case, the appellants presented significant evidence supporting a good-faith defense. They admitted, in hindsight, that the personal income tax returns they filed were erroneous. However, they asserted that they did not intend to violate the tax laws, but rather filed their returns with the good-faith, though erroneous, belief that the returns were correct; that is, in compliance with the tax laws. ⁴

The crime described in 26 U.S.C. Sec. 7206(1), filing a false tax return, is one requiring proof of specific intent. In order to be convicted of that offense, a defendant must be shown to have signed his tax return under penalty of perjury, and to have known that, at the time of signing, the return was materially incorrect or in violation of existing tax laws. 26 U.S.C. Sec. 7206(1). Such specific intent may be negated by a good-faith misunderstanding of the law or a good-faith belief that one is not violating the law, regardless of whether or not the belief is reasonable. See Cheek v. United States, 498 U.S. 192, 202, 111 S.Ct. 604, 610-11, 112 L.Ed.2d 617 (1991).

In order to convict the appellants in this case, the government was required to prove, as an element of its case, that the appellants' actions were willful. The government was required to show that the law imposed a duty on the appellants, that they knew of this duty, and that they voluntarily and intentionally violated that duty. Id. at 202, 111 S.Ct. at 610. There is no question that the law imposed a duty on the appellants. That duty consisted of compliance with the relevant tax laws. ⁵ The knowledge requirement, however, is more elusive. Cheek instructs that the government must carry the burden of proving that appellants knew of the duty imposed by the law, "[b]ut carrying this burden requires negating a defendant's claim of ignorance of the law or a claim that because of a misunderstanding of the law, he had a good-faith belief that he was not violating any of the provisions of the tax laws." Id. at 202, 111 S.Ct. at 611. Here the appellants conceded that the disputed income should have been accounted for, but claimed confusion and mistake as to whether and on what return it had been reported. ⁶

The Cheek case clearly articulates the requirements of a good-faith defense to the crime of filing false tax returns, and as such serves as the basis for determining the sufficiency of jury instructions. "A refusal to give a requested theory of defense instruction is reversible error only if the requested instruction '(1) was correct, (2) was not substantially covered by the court's charge to the jury, and (3) dealt with some point in the trial so important that failure to give the requested instruction seriously impaired the defendant's ability to conduct his defense.' " United States v. Camejo, 929 F.2d 610, 614 (11th Cir.1991) (quoting United States v. Benz, 740 F.2d 903, 910 (11th Cir.1984), cert. denied, 474 U.S. 817, 106 S.Ct. 62, 88 L.Ed.2d 51 (1985)). We next examine each of these requirements in the context of this case.

1. Accuracy of Requested Instructions

The appellants requested the following instruction on good faith:

The general rule in this country is that ignorance of the law or a mistake of law is not a defense to a criminal prosecution. However, because of the passage of numerous tax statutes and regulations, it has...