U.S.A v. Snipes

• Decision Date: 16 July 2010
• Docket Number: No. 08-12402.,08-12402.
• Citation: 611 F.3d 855
• Parties: UNITED STATES of America, Plaintiff-Appellee Cross-Appellant,v.Wesley Trent SNIPES, Defendant-Appellant Cross-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

611 F.3d 855

UNITED STATES of America, Plaintiff-Appellee Cross-Appellant,v.Wesley Trent SNIPES, Defendant-Appellant Cross-Appellee.

No. 08-12402.

United States Court of Appeals, Eleventh Circuit.

July 16, 2010.

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Peter Goldberger, Ardmore, PA, David Anthony Wilson (Court-Appointed), Ocala, FL, Carmen D. Hernandez, Law Offices of Carmen Hernandez, Washington, DC, for Snipes.

Patricia D. Barksdale, Jacksonville, FL, S. Robert Lyons, Alan Hechtkopf, Tax Div., Dept. of Justice, Washington, DC, for U.S.

Appeals from the United States District Court for the Middle District of Florida.

Before MARCUS, FAY and ANDERSON, Circuit Judges.

MARCUS, Circuit Judge:

Defendant Wesley Trent Snipes appeals from his criminal convictions, after a jury trial, on three counts of willful failure to file individual federal income tax returns for calendar years 1999, 2000, and 2001, in violation of 26 U.S.C. § 7203. Snipes alleges that the trial court committed reversible error in sentencing, jury instructions, and on issues of venue. After thorough review, we affirm the rulings and judgment of the district court in all respects.¹

I.

The essential facts adduced at trial and the procedural history are these: Wesley Trent Snipes is a movie actor and owner of film production companies, including Amen RA Films and Kymberlyte Productions. Sometime around the year 2000, Snipes became involved in co-defendant Eddie Ray Kahn's organization, American Rights Litigators (“ARL”), that purported to assist customers in resisting the Internal Revenue Service (“IRS”). ARL employees, including co-defendant Douglas Rosile, and ARL members sent voluminous letters to the IRS, challenging the agency's authority to collect taxes. The centerpiece of this resistance was the “861 argument” that the domestic earnings of individual Americans do not qualify as “income” under 26 U.S.C. § 861, because the earnings do not come from a listed “source.”²

The ARL message appeared to have found a welcome audience in Snipes. Although Snipes earned more than thirty-seven million dollars in gross income from 1999 to 2004, he did not file individual federal income tax returns for any of those years. These were not, however, silent years. After meeting with ARL, Snipes began a long conversation with the IRS. He sent treatises describing theories about why the IRS was powerless to collect income taxes from him and several altered tax forms demanding money for taxes he had rendered in earlier years. Thus, for example, in April 2001, Snipes sent an altered form 1040X, styled as an Amended United States Individual Income Tax Return, in which he demanded a refund of over seven million dollars for taxes paid for the calendar year 1997, allegedly paid in error.

Snipes's correspondence with the IRS advanced several arguments justifying his failure to file his personal tax returns, including that he was a “non-resident alien to the United States,” that earned income must come from “sources wholly outside the United States,” that “a taxpayer is defined by law as one who operates a distilled spirit Plant,” and that the Internal Revenue Code's taxing authority “is limited to the District of Columbia and insular possessions of the United States, exclusive of the 50 States of the Union.” Snipes also claimed that as a “fiduciary of God, who is a ‘nontaxpayer,’ ” he was a “ ‘foreign diplomat’ ” who was not obliged to pay taxes. When Snipes consulted his long-time tax attorneys about his resistance to paying federal income taxes, they advised him that his position was contrary to the law and that he was required to file tax returns. The firm terminated Snipes as a client when Snipes refused to file his tax returns.³

Snipes's resistance to the IRS did not stop at his personal filings. Snipes integrated the ALR tax “teachings” into the accounting methodology of his film production companies. After June 2000, his companies stopped deducting payroll and income taxes from employees' salary checks. Snipes began to proselytize this theory of tax resistance. He invited several employees to an “861” educational seminar at his home. When accounts-payable employee Carmen Baker attended the seminar and questioned the “861” theory, Snipes ordered her to leave his house, later telling her that he was “disappointed” in her and that if she was “not going to play along with the game plan,” she should find another job.

The IRS launched a criminal investigation of Wesley Snipes after the agency received the April 2001 altered form 1040X for the year 1997, demanding refund of over seven million dollars based upon the “861” argument. On October 12, 2006, a grand jury sitting in the United States District Court for the Middle District of Florida returned a superseding indictment, charging Snipes and his two co-defendants, Eddie Ray Kahn and Douglas Rosile, with various crimes relating to a fraudulent tax scheme. Count One charged Snipes, Kahn, and Rosile with conspiracy to defraud the United States by impeding the IRS in its collection of income taxes, in violation of 18 U.S.C. § 371. Count Two charged all three defendants with filing a false claim for a refund of Snipes's taxes, in violation of 18 U.S.C. §§ 2 and 287. Counts Three through Eight charged Snipes alone with six counts of willfully failing to file his individual federal income tax returns for calendar years 1999 through 2004, in violation of 26 U.S.C. § 7203. Each defendant pled not guilty. Snipes surrendered voluntarily and was arraigned on December 8, 2006.

At the time of arraignment, a magistrate judge set a deadline for pretrial motions for January 12, 2007. On January 12, Snipes moved for an extension of time to file motions, due to the complexity of the case and the need to analyze discovery. The magistrate judge granted the extension, resetting the motions deadline to June 4, 2007, and the trial date to October 2007. On June 4, 2007, Snipes filed several motions, including a motion to transfer venue to the Southern District of New York, under both 18 U.S.C. § 3237(b) and Federal Rule of Criminal Procedure 21(b).

The district court denied Snipes's motion for elective transfer under 18 U.S.C. § 3237(b) as untimely, because it had been filed more than five months past the twenty-day elective transfer period defined by § 3237(b). The district court also denied Snipes's motion to transfer venue under Federal Rule of Criminal Procedure 21(b), determining that Snipes's claim that his wife and children lived in his home in California was insufficient to overcome the hardship a transfer of venue would place on his significantly poorer co-defendants and on many Florida-based witnesses. On Snipes's motion for reconsideration of the venue issue, the court again denied the motion to transfer venue.

In early October 2007, Snipes moved for a continuance after he had fired his counsel for claimed incompetence and hired new lawyers. After the district court granted the continuance, Snipes's new lawyers challenged venue still again, alleging that the government had chosen Ocala County, Florida, for trial for racially discriminatory reasons. Snipes again attempted to make a 18 U.S.C. § 3237(b) statutory transfer election, claiming that the district court could disregard the statutory twenty-day deadline because the ineffective assistance of his prior counsel constituted “good cause.” The trial court denied both venue motions.

After the district court refused to conduct a pretrial evidentiary hearing on the issue of venue, Snipes lodged a notice of appeal with this Court on the venue-related orders. We denied this interlocutory appeal, concluding that an order pertaining to venue was effectively reviewable after the entry of judgment. United States v. Snipes, 512 F.3d 1301, 1302 (11th Cir.2008).

The case proceeded to a fourteen-day trial in January 2008. At trial, an IRS witness testified that although Snipes had regularly filed individual federal income tax returns for the years 1993 through 1998, he had not filed any returns for calendar years 1999 through 2004.

IRS Special Agent Cameron Lalli testified extensively about the investigation of the alleged tax conspiracy. Agent Lalli described a telephone conversation with Snipes and his lawyer in May 2002, during which Agent Lalli had informed Snipes that Snipes was under investigation for tax crimes. When he read Snipes his non-custodial rights, which included the right to remain silent, Snipes replied, “very interesting.” In the course of the investigation, the grand jury served subpoenas on the office staff of Amen RA films. Former accounts-payable employee Carmen Baker testified at trial that when she received the grand jury subpoena, Snipes ordered her “not to respond, not to talk to anybody or to disclose any information on the company.” When Baker asked Snipes why she should not respond, Snipes replied, “It doesn't matter. I have [a confidentiality agreement] with your signature on it.... [I]f you do contact them, you will have to pay the consequences.” According to Baker, Snipes's warning made her feel “very upset,” “uneasy,” and “scared.”

After the government rested its case, Snipes moved for a judgment of acquittal on only the false claim charge (Count Two) and the 1999 failure-to-file charge (Count Three).⁴ The motion neither mentioned the first Count nor the other failure-to-file charges contained in Counts Four through Eight of the superseding indictment. The court denied the motions and the defense rested its case without presenting any evidence. The district court denied again any motion for judgment of acquittal at the end of the case.

Snipes requested a specific jury instruction on venue for Counts Three through Eight. The district court granted Snipes's request in full, instructing the jury that the Sixth Amendment protects a defendant's right to a “trial in the state and district wherein the crime shall have...