U.S. v. Shorter

• Decision Date: 16 January 1987
• Docket Number: No. 85-6211,85-6211
• Citation: 809 F.2d 54,257 U.S. App. D.C. 358
• Parties: , 59 A.F.T.R.2d 87-449, 87-1 USTC P 9127, 22 Fed. R. Evid. Serv. 537 UNITED STATES of America v. John A. SHORTER, Jr., Appellant.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 54

809 F.2d 54

257 U.S.App.D.C. 358, 59 A.F.T.R.2d

87-449, 87-1 USTC P 9127,

22 Fed. R. Evid. Serv. 537

UNITED STATES of America v. John A. SHORTER, Jr., Appellant.

No. 85-6211.

United States Court of Appeals,

District of Columbia Circuit.

Argued Oct. 10, 1986.

Decided Jan. 16, 1987.

Appeal from the United States District Court for the District of Columbia (Criminal No. 84-00421-01).

Plato Cacheris, Appointed by this Court, with whom Larry S. Gondelman, Appointed by this Court, was on the brief for appellant.

Laura Ross Blumenfeld, Asst. U.S. Atty., with whom Joseph E. diGenova, U.S. Atty., Michael W. Farrell, Thomas J. Tourish, Jr., and Darryl W. Jackson, Asst. U.S. Attys., were on the brief for appellees.

Before EDWARDS and SILBERMAN, Circuit Judges, and McGOWAN, Senior Circuit Judge.

Opinion for the Court filed by Senior Circuit Judge McGOWAN.

McGOWAN, Senior Circuit Judge:

Appellant stands indicted for one felony count of tax evasion and six misdemeanor counts of willful failure to pay federal income taxes. Appellant moved to dismiss count one of the indictment, claiming that the government had impermissibly attempted to avoid the statute of limitations by incorporating twelve separate offenses in one count, resulting in a duplicitous count. The District Court denied appellant's motion. Appellant also filed a notice of intention to place in issue his mental condition by presenting expert testimony that he suffers from a pathological or compulsive gambling disorder. The District Court ordered that the expert testimony proffered by the defense for this purpose not be admitted at trial. The trial court sentenced appellant to forty months incarceration on count one, pursuant to 18 U.S.C. Sec. 4205(b)(2); six months each on counts two through seven to run concurrently with each other and with count one; and a $10,000 fine. From this judgment, appellant contests the orders of the District Court. For the reasons set forth hereinafter, we affirm.

I.

By indictment filed on November 1, 1984, appellant was charged with one felony count of willful attempt to evade the payment of income taxes due for the years 1972 through 1983, in violation of 26 U.S.C. Sec. 7201, and with six misdemeanor counts of willful failure to pay income tax for each of the years 1978 through 1983, in violation of 26 U.S.C. Sec. 7203. Appellant moved to dismiss count one of the indictment, claiming that he was being charged with acts barred by the statute of limitations, and that this count was impermissibly duplicitous because it incorporated twelve separate offenses. The District Court denied appellant's motion. United States v. Shorter, 608 F.Supp. 871 (D.D.C.1985). To ensure also that any guilty verdict would be unanimous, with respect to at least one affirmative act of evasion and one tax year delinquency, the District Court gave the jury a special unanimity instruction and required the jury to answer special interrogatories. Shorter, 608 F.Supp. at 881.

Appellant again contends that count one of the indictment--which charges the defendant with twelve separate offenses of tax evasion--was impermissibly duplicitous. Br. of Appellant at 20. " 'Duplicity' is the joining in a single count of two or more distinct and separate offenses." 1 C. Wright, Federal Practice and Procedure: Criminal Sec. 142 (2d ed. 1982) (footnote omitted). The District Court set out in careful detail its analysis of this contention, noting consideration of two questions: (1) whether appellant's alleged actions may legitimately be regarded as a single course of conduct and hence as a single offense, and (2) whether appellant would be prejudiced by his prosecution on a single-count basis. Shorter, 608 F.Supp. at 875.

Appellant contends that because the offense of tax evasion is time-specific, that is, each offense is tied to a particular year, the charging of tax evasion in a single count with respect to more than one year is impermissibly duplicitous. Br. of Appellant at 20-22. However, as the District Court correctly concluded, "... it is well established that two or more acts, each of which would constitute an offense standing alone and which therefore could be charged as separate counts of an indictment, may instead be charged in a single count if those acts could be characterized as part of a single, continuing scheme." Shorter, 608 F.Supp. at 876 (citations omitted); see also United States v. Mangieri, 694 F.2d 1270, 1281-82 (D.C.Cir.1982).

The few courts that have discussed the issue of duplicity in the context of income tax decisions have supported the conclusion that is permissible to charge conspiracy to evade several years' taxes as one count. See, e.g., United States v. Baker, 262 F.Supp. 657, 684 (D.D.C.1966); Lott v. United States, 309 F.2d 115, 120-21 (5th Cir.1962), cert. denied 371 U.S. 950, 183 S.Ct. 504, 9 L.Ed.2d 498 (1963); United States v. Haskell, 327 F.2d 281, 284 (2d Cir.1964), cert. denied, 377 U.S. 945, 84 S.Ct. 1351, 12 L.Ed.2d 307 (1964). We agree with the District Court's conclusion that tax evasion covering several years may be charged in a single count as a course of conduct in circumstances such as those here where the underlying basis of the indictment is an allegedly consistent, long-term pattern of conduct directed at the evasion of taxes for these years. Shorter, 608 F.Supp. at 879; see also United States v. Boyle, 338 F.Supp. 1028, 1035-36 (D.D.C.1972); United States v. Mangieri, 694 F.2d at 1281-82.

The District Court considered two factors as crucial to the determination of whether a particular conduct may be charged as a continuous offense in a single count: (1) the language and legislative history of the statute, and (2) the nature of the proscribed conduct. Shorter, 608 F.Supp. 877; see also United States v. Morse, 785 F.2d 771 (9th Cir.1986), cert denied, --- U.S. ----, 106 S.Ct. 2925, 91 L.Ed.2d 553 (1986); United States v. UCO Oil Co., 546 F.2d 833, 835-37 (9th Cir.1976), cert. denied, 430 U.S. 966, 97 S.Ct. 1646, 52 L.Ed.2d 357 (1977).

In analyzing the first factor, the District Court concluded that the language and legislative history of the statute does not address directly the question of whether it is proper to charge a continuing scheme to evade taxes for several years. Shorter, 608 F.Supp. at 877. The statute makes it a felony for any person to "willfully attempt[ ] in any manner to evade or defeat any tax imposed by this title or the payment thereof...." 26 U.S.C. Sec. 7201. The Supreme Court, however, has construed this language broadly, contemplating acts that would be committed on a multi-year, continuing course of conduct:

Congress did not define or limit the methods by which a willful attempt to defeat and evade might be accomplished and perhaps did not define lest its effort to do so result in some unexpected limitation. Nor would we by definition constrict the scope of the Congressional provision that it may be accomplished "in any manner." By way of illustration, and not by way of limitation, we would think affirmative willful attempt may be inferred from conduct such as keeping a double set of books, making false entries or alterations, or false invoices or documents, destruction of books or records, concealment of assets or covering up sources of income, handling of one's affairs to avoid making the records usual in transactions of the kind, and any conduct, the likely effect of which would be to mislead or conceal. Spies v. United States, 317 U.S. 492, 499, 63 S.Ct. 364, 368, 87 L.Ed. 418 (1943).

Although the language in Spies is not conclusive upon the question under consideration here, the District Court's findings are consistent with this language. Under this broad standard, we conclude that count one of the indictment may fairly be read to charge but a single scheme and is therefore not duplicitous.

The second factor, the nature of the proscribed conduct, also supports our ultimate conclusion. We find no basis for appellant's argument that the District Court confused the nature of the proscribed conduct with the nature of the appellant's conduct. Reply Br. of Appellant at 8. The District Court stated in detail the government's charges. See Shorter, 608 F.Supp. 877-879. Briefly restated, since at least 1973, appellant has conducted all of his professional and personal business in cash, maintaining no bank accounts, office ledgers, or receipts or disbursement journals. Appellant received compensation in cash, paid his employees in cash, possessed no credit cards, and never acquired attachable assets. In short, appellant maintained what has come to be characterized as a "cash lifestyle." Br. of Government at 36.

Although appellant reported a total income for the twelve years from 1972 through 1983 of $387,438.96 on which there was a tax due, excluding interest and penalties of $134,866.40, appellant made only two $2,500 tax payments during that period. During the same period, the Internal Revenue Service ("IRS") obtained at least nine civil tax judgments against appellant, but because of the cash method of operation, the IRS was never able to collect on any of these judgments.

The District Court concluded, and we agree, that these activities could be regarded as evidencing a continuous course of conduct. In short, as the government argues, each affirmative act of tax evasion was intended to evade payment of all taxes owed, or which appellant expected to owe, at the time of the affirmative act. Br. of Government at 36. Indeed, the same evidence that the government would produce with respect to the single-count indictment covering twelve years "would be admissible to support the first count (in a twelve-count indictment) charging the evasion of taxes due in 1972, and this same evidentiary pattern could and would be repeated eleven more times, that is, with respect to each subsequent count." Shorter, 608 F.Supp. at 879.

Finally, appellant argues that language in a number of ...