U.S. v. Nash

• Citation: 175 F.3d 429
• Decision Date: 28 April 1999
• Docket Number: No. 97-1601,97-1601
• Parties: -2129 UNITED STATES of America, Plaintiff-Appellee, v. Edward M. NASH, Defendant-Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (6th Circuit)

Page 429

175 F.3d 429

83 A.F.T.R.2d 99-2129

UNITED STATES of America, Plaintiff-Appellee, v. Edward M. NASH, Defendant-Appellant.

No. 97-1601.

United States Court of Appeals, Sixth Circuit.

Submitted Jan. 25, 1999.

Decided April 28, 1999.

George C. Bush (briefed), Thick & Bush, Saginaw, Michigan, for Defendant-Appellant. James A. Brunson, Assistant U.S. Attorney (briefed), Bay City, Michigan, for Plaintiff-Appellee.

Before: RYAN and GILMAN, Circuit Judges; SARGUS, District Judge. ^*

GILMAN, Circuit Judge.

Edward M. Nash was convicted for the willful failure to file income tax returns for 1991 and 1992, and for the presentation of false, fictitious, or fraudulent tax-refund claims for 1989-1991. He appeals, claiming that (1) the evidence was insufficient to support his conviction for the presentation of false, fictitious, or fraudulent claims for tax refunds, (2) the district court improperly denied the submission of certain exhibits to the jury, (3) the district court improperly instructed the jury, and (4) the district court erred in its application of sentence enhancements for obstruction of justice and for causing a tax loss of greater than $120,000. For the reasons set forth below, we AFFIRM Nash's conviction and sentence enhancements.

I. BACKGROUND

Prior to 1994, Nash was a chiropractor in Skidway Lake, Michigan. After attending various lectures and studying the tax laws, Nash claims to have concluded in good faith that he was not within the jurisdiction of the federal government and that the income tax laws did not apply to him. Specifically he testified that because he was a citizen of the "Republic of Michigan," but not a general citizen of the United States, he was properly classified as a nonresident alien. Given his purported nonresident alien status, Nash concluded that he was not obligated to pay federal income taxes, and that he was owed a refund of the monies that he had mistakenly paid in the past.

In 1996, a grand jury returned a five-count indictment against Nash. Counts 1 and 2 charged Nash with the willful failure to file income tax returns for 1991 and 1992, a violation of 26 U.S.C. § 7203. Nash conceded that he did not file these returns. Counts 3, 4, and 5 charged Nash with the presentation of false, fictitious, or fraudulent claims for tax refunds, a violation of 18 U.S.C. § 287 (Supp.1998). These claims were filed in 1993, seeking refunds for taxes paid during 1989-1991.

At trial, the government presented the testimony of Gregory Holdeman, an analyst in the criminal investigation division of the Internal Revenue Service ("IRS"). Holdeman stated that in 1993 his office received Nonresident Alien Income Tax Returns filed by Nash for the years 1989-1991. Nash signed each form "with all rights reserved, without prejudice," and relabeled each as a "Revocation of Election/Claim for Refund." Holdeman testified that these returns did not constitute processable claims for refunds for three reasons: (1) the only address provided by Nash was "Michigan Republic, America," (2) the absence of Nash's taxpayer identification number, and (3) the inclusion of Nash's reservation of rights statement. The returns were forwarded to revenue agent Annette Teneyuque for additional processing.

Teneyuque worked as an auditor in the civil division of the IRS. According to her testimony, any form requesting a tax refund, no matter how informal, "has to be considered as a claim." Teneyuque also testified that Nash did not file returns for 1991 and 1992. She thus wrote two letters to Nash, one relating to his non-filing of returns, and the other relating to his refund claims. The latter correspondence, which was sent on November 10, 1993, sought to arrange a meeting between Teneyuque and Nash on November 24, 1993 to further discuss these matters. Nash failed to appear at this meeting. Teneyuque then served a summons on Nash's CPA, Bernard Bak, for his records regarding Nash. After reviewing the information supplied by Bak, Teneyuque referred the case for criminal investigation.

Following the government's case in chief, Nash moved for a judgment of acquittal pursuant to Rule 29 of the Federal Rules of Criminal Procedure. He argued that Counts 3, 4, and 5 should not be submitted to the jury because the proof, when viewed in the light most favorable to the government, would not allow a rational trier of fact to find that the essential element of materiality had been established beyond a reasonable doubt. Specifically, he argued that the refund claims were immaterial because they would not have been taken seriously by the IRS, and were thus incapable of influencing its decisions. The district court denied the motion.

In his defense, Nash introduced various letters that he wrote to the IRS during 1992 and 1993, stating that he had studied the law and believed that he was not within the jurisdiction of the federal government. One such letter was received by Teneyuque on November 23, 1993. Nash concluded the letter by stating: "With all of the information and court cases that have already decided this issue in my favor, I am curious to find out why you still insist that I am a 'person made liable' in ... the IRS Code. May I please receive a logical explanation?" Teneyuque declined to respond to this letter.

Nash also sought to introduce eight exhibits that he argued supported his good faith defense. These exhibits were marked Exhibits 501 through 508. The district court admitted four of the exhibits into evidence (Exhibits 501, 504, 505, and 506), but did not allow the submission of the remaining four (Exhibits 502, 503, 507, and 508) on the ground that their probative value was substantially outweighed by the danger of confusion under Rule 403 of the Federal Rules of Evidence. Nash, however, was permitted to briefly mention and quote from the four excluded documents during his testimony in order to show the basis for his good faith belief that the income tax laws did not apply to him.

At the end of Nash's defense, the district court charged the jury that good faith, although a defense to Counts 1 and 2, is not a defense to the presentation of false, fictitious, or fraudulent claims for tax refunds as charged in Counts 3, 4, and 5. The jurors were instructed to ignore any evidence regarding good faith in deciding Nash's guilt or innocence on these counts. Nash objected to this jury instruction, but was overruled. Ultimately, the jury returned guilty verdicts on all counts.

At sentencing, the government argued that Nash committed perjury when he testified that his failure to file income tax returns for 1991 and 1992 resulted from a good faith belief that he was not subject to the income tax laws. It sought a two-level increase in Nash's base offense level for obstruction of justice pursuant to § 3C1.1 of the United States Sentencing Guidelines ("USSG"). The district court found that Nash had committed perjury, citing specific portions of the evidence to support this enhancement. Nash's sentence was therefore increased two levels for obstruction of justice.

The government also sought an additional two-level enhancement pursuant to USSG § 2T4.1(J) for a tax loss greater than $120,000. A tax loss of this amount requires an offense level of 15. Three experts testified at trial as to Nash's tax liability for 1991 and 1992. Teneyuque also computed Nash's liability for 1993. Given these figures, the government determined that Nash's total tax liability was $127,643. In response, Nash argued that the calculations of his tax liability for 1991 and 1992 as provided by the two government witnesses varied by 25-40%, and that Nash's 1993 tax liability therefore should have been discounted by comparable percentages. This would have placed Nash's liability in the $70,000-$120,000 range (Offense Level 14). The district court rejected this argument, adopted the government's calculation of Nash's tax liability at $127,643, and enhanced Nash's sentence accordingly. This appeal followed.

II. ANALYSIS

A. Motion for judgment of acquittal

We review a district court's denial of a motion for judgment of acquittal under a de novo standard of review. See United States v. Canan, 48 F.3d 954, 962 (6th Cir.1995) ("Although we review the district court's denial of the motion de novo, we must affirm its decision if the evidence, viewed in the light most favorable to the government, would allow a rational trier of fact to find the defendant guilty beyond a reasonable doubt.").

Counts 3, 4, and 5 charged Nash with the presentation of false, fictitious, or fraudulent claims for tax refunds under 18 U.S.C. § 287. According to the government, Nash's claims violated § 287 because Nash knew that he owed taxes, knew that he was within the jurisdiction of the federal government, and knew that he was not owed these refunds. The government contends that Nash's refund claims in light of this knowledge were false, fictitious, or fraudulent.

On appeal, Nash argues that materiality is an element of this offense, and that the government failed to prove that his statements contained in the refund claims were material. He relies on the definition of materiality as set forth in United States v. Gaudin, 515 U.S. 506, 509, 115 S.Ct. 2310, 132 L.Ed.2d 444 (1995), where the Supreme Court described a material statement as one that "must have a natural tendency to influence, or [be] capable of influencing, the decision of the decisionmaking body to which it was addressed." (internal quotation marks and citation omitted) (brackets in original). According to Nash, his claims for refunds, which bore the obvious earmarks of a tax protestor and were not processable, were immaterial because they would not have misled the IRS, and were thus incapable of influencing its decisions. Because the government failed to prove this element, he argues that a rational trier of fact could not find him guilty beyond a reasonable doubt of these charges.

Whether materiality...