U.S. v. Palmer

• Decision Date: 13 February 1987
• Docket Number: No. 85-8894,85-8894
• Citation: 809 F.2d 1504
• Parties: -619, 87-1 USTC P 9184, 22 Fed. R. Evid. Serv. 702 UNITED STATES of America, Plaintiff-Appellee, v. Otis PALMER, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1504

809 F.2d 1504

59 A.F.T.R.2d 87-619, 87-1 USTC P 9184,

22 Fed. R. Evid. Serv. 702

UNITED STATES of America, Plaintiff-Appellee, v. Otis PALMER, Defendant-Appellant.

No. 85-8894.

United States Court of Appeals, Eleventh Circuit.

Feb. 13, 1987.

Michael C. Garrett, Augusta, Ga., for defendant-appellant.

Frederick Kramer, Asst. U.S. Atty., Savannah, Ga., for plaintiff-appellee.

Appeal from the United States District Court for the Southern District of Georgia.

Before VANCE and EDMONDSON, Circuit Judges, and ALLGOOD ^*, Senior District Judge.

VANCE, Circuit Judge:

I

Appellant Palmer was indicted in the Southern District of Georgia on three counts of willfully and knowingly attempting to evade the payment of income taxes in violation of 26 U.S.C. Sec. 7201. After a five day trial, Palmer was found not guilty of violating 26 U.S.C. Sec. 7201. The jury, however, returned a verdict of guilty on each count for the lesser included offense of willful failure to file a federal income tax return in violation of 26 U.S.C. Sec. 7203. The district court sentenced Palmer to serve a term of three years in prison and pay a fine of $15,000. The district court further ordered Palmer to pay the total costs of the prosecution. The government submitted a bill for its costs totalling $57,970. Palmer appeals the judgment and the imposition of costs.

II

Appellant presents three issues for review:

(1) whether the district court committed prejudicial error in admitting evidence of Palmer's involvement in illegal drug sales;

(2) whether the costs of prosecution provision of 26 U.S.C. Sec. 7203 unconstitutionally burdens a defendant's exercise of his right to a jury trial; and

(3) whether the district court erred in assessing all the prosecution's costs against Palmer.

III

A. Evidence of Palmer's Involvement in Drug-Related Activity

Appellant complains that the trial judge improperly admitted evidence about Palmer's involvement in illegal drugs. He argues that this evidence of drug activity was so irrelevant and highly prejudicial that a new trial is required. There is no merit to this contention. The trial judge found substantial prosecutorial need for introducing the evidence of illicit drug sales. Palmer's involvement with drugs served to contradict his defense at trial that he was merely ignorant of his duty to file tax returns and lacked any intent to evade the payment of taxes. From the illegal source of the funds, a jury could reasonably infer an intent to conceal income. The evidence of his drug activity established a motive for Palmer's conduct: his extensive use of currency, failure to maintain records, acquisition of property in the names of family members, and failure to file tax returns can be understood to be affirmative acts of tax evasion.

The district court was careful to minimize any possible prejudice by giving clear limiting and final instructions to the jury. Throughout the trial, the district court maintained the jury's focus on the tax issues properly before it. See, e.g., United States v. Tafoya, 757 F.2d 1522, 1527-28 (5th Cir.), cert. denied, --- U.S. ----, 106 S.Ct. 252, 88 L.Ed.2d 259 (1985). The jury's verdict of acquittal on the tax evasion counts demonstrates not only the success of the limiting instructions but also the jury's ability to consider impartially the tax charges against Palmer. Palmer argues that evidence of his drug involvement should have been excluded as unduly prejudicial under Rule 403 of the Federal Rules of Evidence. ¹ This court has previously cautioned that a district court's "Rule 403 determination ... is accorded broad discretion, which we review only for clear abuse." United States v. King, 713 F.2d 627, 631 (11th Cir.1983), cert. denied, 466 U.S. 942, 104 S.Ct. 1924, 80 L.Ed.2d 470 (1984). In light of the obvious prosecutorial need and the careful limiting instructions, the district court in no way abused its broad discretion in admitting evidence of Palmer's drug activity. See United States v. Carrillo, 561 F.2d 1125, 1127 (5th Cir.1977) (evidence of illegal sources of income "inextricably tied to the basic elements of proof of filing false tax returns"); United States v. Tafoya, 757 F.2d at 1527 & n. 6 (defendant's unindicted criminal behavior necessary to prove tax violations) (and cases cited therein).

B. Constitutionality of the Costs of Prosecution Provision

of 26 U.S.C. Sec. 7203.

In this case, this circuit addresses the constitutionality of the costs of prosecution provision of 26 U.S.C. Sec. 7203 for the first time. The two circuit courts that have confronted this issue have upheld the constitutionality of the imposition of costs on a convicted defendant. United States v. Wyman, 724 F.2d 684 (8th Cir.1984); United States v. Chavez, 627 F.2d 953 (9th Cir.1980), cert. denied, 450 U.S. 924, 101 S.Ct. 1376, 67 L.Ed.2d 353 (1981). We agree.

The challenged statute provides, in pertinent part:

Any person ... [who willfully fails to file a return, supply information, or pay tax required by law] shall, in addition to other penalties provided by law, be guilty of a misdemeanor and, upon conviction thereof, shall be fined not more than $25,000 ($100,000 in the case of a corporation), or imprisoned not more than 1 year, or both, together with the costs of prosecution. [Emphasis supplied.]

The statute's grammatical structure and use of the word "shall" compel the conclusion that the costs of prosecution penalty is mandatory. See United States v. Wyman, 724 F.2d 684, 688 (8th Cir.1984); United States v. Chavez, 627 F.2d 953, 954-55 (9th Cir.1980), cert. denied, 450 U.S. 924, 101 S.Ct. 1376, 67 L.Ed.2d 353 (1981); United States v. Troiani, 595 F.Supp. 186, 187 (N.D.Ill.1984). ²

Appellant relies principally on United States v. Jackson, 390 U.S. 570, 88 S.Ct. 1209, 20 L.Ed.2d 138 (1968). In Jackson the Supreme Court declared unconstitutional a provision of the Federal Kidnapping Act that authorized the death penalty if a jury so recommended it, but contained no procedure for imposing the death penalty upon a defendant who waived his right to a jury trial or pleaded guilty. The Supreme Court held that the death penalty provision had the "inevitable effect" of "discourag[ing] assertion of the Fifth Amendment right not to plead guilty and to deter exercise of the Sixth Amendment right to demand a jury trial." Id. at 581, 88 S.Ct. at 1216 (footnote omitted). Although the death penalty provision served proper governmental purposes, these objectives "cannot be pursued by means that needlessly chill the exercise of basic constitutional rights.... [T]he question is whether the effect is unnecessary and therefore excessive." Id. at 582, 88 S.Ct. at 1216. Palmer argues that the mandatory costs of prosecution provision of Sec. 7203, like the death penalty provision in Jackson, "unnecessarily" and "needlessly" chilled his right to demand a jury trial.

Palmer claims further support from United States v. Glover, 588 F.2d 876 (2d Cir.1978). While upholding a discretionary costs of prosecution provision in 28 U.S.C. Sec. 1918(b), the Glover court intimated that a mandatory provision might be unconstitutional. It opined that "[i]f the statute directed that costs of prosecution be assessed against all convicted defendants, there would be some basis for concern that it served to 'chill the assertion of constitutional rights by penalizing those who choose to exercise them.' " Id. at 878 (quoting Fuller v. Oregon, 417 U.S. 40, 54, 94 S.Ct. 2116, 2125, 40 L.Ed.2d 642 (1974)).

The Supreme Court has consistently refused to adopt the broad reading of Jackson that the appellant urges here, and we thus decline to follow any dicta in Glover to the contrary. As the Court stated in Chaffin v. Stynchcombe, 412 U.S. 17, 30, 93 S.Ct. 1977, 1984, 36 L.Ed.2d 714 (1973), "Jackson did not hold, as subsequent decisions have made clear, that the Constitution forbids every government-imposed choice in the criminal process that has the effect of discouraging the exercise of constitutional rights." Chaffin involved a constitutional challenge by a defendant who received a harsher sentence on retrial than he had at the original trial. The Court found no constitutional infirmity, despite Chaffin's claim that Jackson compelled that the harsher sentence be struck down. The Chaffin court ruled that Chaffin's rights were not impermissibly chilled since the threat of a harsher sentence was speculative and simply another of the difficult choices which were an "inevitable attribute" of our judicial system. Id. at 31, 33-35, 93 S.Ct. at 1986-87.

Similarly, in Fuller v. Oregon, 417 U.S. 40, 94 S.Ct. 2116, 40 L.Ed.2d 642 (1974), the defendant argued that Jackson mandated the invalidation of an Oregon recoupment scheme. Oregon required indigent defendants who subsequently acquired financial resources to repay the state the costs of their legal defense. Fuller contended that the knowledge that he may later be obligated to repay the costs of his legal defense could have impelled him to decline the services of an appointed attorney, and thus his constitutional right to counsel was chilled. The Supreme Court rejected this argument. Since the recoupment statute was tailored to impose an obligation on only those who were able to repay costs, assessing costs on these defendants was not unnecessary to achieve its governmental purposes nor was it likely to substantially chill a defendant's rights.

The Supreme Court in Corbitt v. New Jersey, 439 U.S. 212, 99 S.Ct. 492, 58 L.Ed.2d 466 (1978), again cautioned that "[t]he cases in this Court since Jackson have clearly established that not every burden on the exercise of a constitutional right, and not every pressure or encouragement to waive such a right, is invalid." Id. at 218, 99 S.Ct. at 497 (footnote omitted). The defendant in Corbitt attacked a New Jersey homicide statute which made life imprisonment the mandatory punishment for defendants convicted of first-degree...