U.S. v. Scruggs
| Citation | 848 F.2d 186 |
| Decision Date | 05 February 1988 |
| Docket Number | Nos. 87-5603,s. 87-5603 |
| Parties | Unpublished Disposition NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit. UNITED STATES of America, Plaintiff-Appellee, v. Bob D. SCRUGGS, Defendant-Appellant. UNITED STATES of America, Plaintiff-Appellee, v. Terrence Lee LEWIS, Defendant-Appellant. (L), 87-5608. . Argued: |
| Court | United States Courts of Appeals. United States Court of Appeals (4th Circuit) |
John DeWitt Cline (Williams & Connolly, on brief), Thomas R. Dyson, Jr., for appellants.
Kent S. Robinson, II, Assistant United States Attorney (Henry E. Hudson, United States Attorney, on brief), for appellee.
Before WILKINSON and HAYNSWORTH, Circuit Judges, and THOMAS SELBY ELLIS, III, United States District Judge for the Eastern District of Virginia, sitting by designation.
On April 14, 1987, appellants Terrence Lewis and Bob Scruggs were indicted with Dennis Flanders and Kyle Myers for (i) conspiring to defraud the Internal Revenue Service, in violation of 18 U.S.C. Sec. 371, (ii) filing false tax returns, in violation of 26 U.S.C. Sec. 7206(1), and (iii) making false statements, in violation of 18 U.S.C. Sec. 1001. Flanders and Myers pleaded guilty. Appellants Lewis and Scruggs were tried and convicted on all three counts.
Scruggs and Lewis appeal their convictions, asserting that the district court's characterization of Lewis' testimony as "evasive" and the court's leading questions to a government witness deprived them of a fair trial. In addition, Scruggs asserts (i) that there was insufficient evidence to establish that he acted with specific intent, (ii) that the count charging him with filing a false tax return was impermissibly vague, and (iii) that his conviction for making false statements must be reversed under the "exculpatory no" doctrine. Because we find no abuse of discretion or error of law by the district court, we affirm.
The convictions of Lewis, Scruggs, Flanders, and Myers stem from their involvement in an organization known as American Family Experience (AFE). This organization sold church charters for the purpose of obtaining tax deductions. Flanders was the founder of the organization, Scruggs was a salesman, Myers was the membership director, and Lewis, an attorney, gave tax advice and prepared members' tax returns.
The Assembly of Believers Convention of Churches, which later became AFE, was established by Flanders in 1978. It purported to be the east coast representative of the Universal Life Church (ULC) of Modesto, California, a tax-exempt organizaton. AFE solicited individuals by telling them that upon becoming members of AFE, they could establish a tax-exempt "congregation" of the ULC in their home. The individual would become the "minister" of that congregation and his family its "members." Each congregation would establish its own bank account, from which the minister could receive a "charitable contribution" deduction for any funds he donated to the church. The church would then be entitled to use these donated funds to pay the expenses of the minister and his congregation, i.e., his family. By passing money through this church account, members were advised that they could reduce their tax liability.
Upon joining the AFE, an individual received a package of materials that included documents for establishing a church, electing a board of directors, and opening bank accounts. The organization also assisted members in keeping records of their church activities and filing tax returns. Appellant Lewis reviewed these records, rendered advice, and prepared tax returns for some members. Members were told they could spend congregation funds for anything except food and servants, provided the expenditures were approved by the church's board of directors, i.e., the individual's family.
The AFE purchased newspaper advertisements promoting itself as a tax shelter and inviting interested persons to attend informational meetings where they could learn about AFE. During 1979, Flanders and Scruggs spoke at several of these meetings. On one of these occasions, Scruggs, in tape recorded remarks played for the jury, stated that he joined AFE "strictly as a tax dodge."
In addition to promoting AFE, Lewis and Scruggs established their own church congregations. Both established church bank accounts, took deductions for the amounts transferred into them, and spent money from these accounts for purely personal expenses. On their 1980 returns, Lewis and Scruggs claimed deductions of $8,651 and $15,175, respectively, for amounts transferred into their church accounts. Also, Scruggs earned a commission for every new member he solicited, and Lewis received legal fees from AFE. Both failed to report any of this income.
In 1982, W. Thomas Miller, a revenue agent with the IRS, was involved in a program auditing tax protestors in the Northern Virginia area. 1 In May 1982, Miller met with Scruggs to audit Scruggs' 1979 and 1980 income tax returns. During the course of the audit Miller asked Scruggs a series of questions, including whether Scruggs had received any nontaxable income during those years, and whether he had received taxable income which was not reported on the returns. Scruggs responded "no" to these questions. Miller met with Scruggs on two other occasions, and in their last meeting, he told Scruggs and his wife that there were approximately $18,000 in questionable bank deposits. The Scruggs' could not explain the majority of the deposits. In November 1982, Agent Miller referred the Scruggs case to the IRS criminal division. Scruggs, Lewis, Flanders and Myers were subsequently indicted.
A. Lewis and Scruggs
Lewis and Scruggs jointly assert that the district court's characterization of Lewis as "evasive," made in the presence of the jury during the government's examination, deprived them of a fair trial. This assertion is without merit. The trial judge has broad discretion in conducting and controlling the trial. 2 There is no evidence that the trial court abused its discretion. On the contrary, the record reflects that the trial court exhibited patience throughout Lewis' testimony. During the course of his testimony, Lewis often gave irrelevant, evasive answers to direct questions. Lewis' ramblings included a discussion of the central highlands of Vietnam, which he described as "a central canopy jungle," and an explanation to the jury of the meaning and purpose of a "string citation." The court simply asked Lewis to answer directly the questions posed to him.
The context of the judge's remark confirms the absence of any abuse of discretion. Lewis was asked whether his review of the records of AFE members showed that those persons were taking deductions for monies deposited into so-called church bank accounts they controlled. Lewis first asked the government to direct him to a specific exhibit, and then answered nonresponsively that church records would not have shown the identity of the persons receiving payment from those accounts. When asked again whether he knew that people were claiming deductions for money deposited into church bank accounts they controlled, Lewis responded:
When you say did I know it, do you mean do I know it in a manner that I could testify from my own personal knowledge that they had either told me they were putting money in it or I had seen it, or did you mean did I presume it, because that is the way the operation was supposed to work? What is the meaning of your term "to know," sir?
The court then directed Lewis to answer the questions directly and not evasively.
You are trying to be evasive and you are being evasive. Now you will listen to the question and answer it directly.
We find that the district court's comments, in context, were proper, and not an abuse of discretion. 3
Appellants' authorities are inapposite. They concern judicial comments on the witness' veracity, not a comment on a witness' refusal to answer questions directly. See, e.g., Quercia v. United States, 289 U.S. 466, 472 (1933) (); United States v. Bates, 468 F.2d 1252, 1255 (5th Cir.1972) (). Here, the trial court did not indicate to the jury that Lewis was lying or that he was not credible. Rather, the trial judge merely sought to avoid needless consumption of time by admonishing Lewis to answer questions directly. Even assuming the comment bore on Lewis' credibility, the court gave two curative instructions, one immediately after the court's comment and another at the end of the case. These cured any prejudice to appellants. United States v. Tello, 707 F.2d 85, 88-89 (4th Cir.1983); United States v. Billups, 692 F.2d 320, 327 (4th Cir.1982), cert. denied, 464 U.S. 820 (1983).
Appellants also claim that the district court's leading question to a single prosecution witness was plain error and deprived them of a fair trial. This claim, too, is meritless. The witness, Arthur Stickley, testified that Scruggs induced him to join the ULC. On cross-examination, Stickley stated that neither he nor Scruggs intended to break the law:
After cross-examination, but prior to the government's redirect, the court asked the leading question at issue:
The court: Mr. Stickley, you say you didn't intend to violate the law. Didn't this seem to be a little to good for you?
To continue reading
Request your trial