U.S. v. Soulard

• Decision Date: 12 April 1984
• Docket Number: No. 82-1780,82-1780
• Citation: 730 F.2d 1292
• Parties: 84-1 USTC P 9386, 15 Fed. R. Evid. Serv. 1090 UNITED STATES of America, Plaintiff-Appellee, v. Roland A. SOULARD, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1292

730 F.2d 1292

84-1 USTC P 9386, 15 Fed. R. Evid. Serv. 1090

UNITED STATES of America, Plaintiff-Appellee, v. Roland A. SOULARD, Defendant-Appellant.

No. 82-1780.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted Nov. 29, 1983.

Decided April 12, 1984.

James P. Springer, Dept. of Justice, Washington, D.C., for plaintiff-appellee.

Felix A. Maciszewski, Honolulu, Hawaii, for defendant-appellant.

Appeal from the United States District Court for the District of Hawaii.

Before ELY, WALLACE, and REINHARDT, Circuit Judges.

ELY, Circuit Judge:

Soulard appeals from his judgments of conviction under 26 U.S.C. Sec. 7206(1) (1976) for willfully subscribing false corporate tax returns (Counts I, III, and V) and, also, individual tax returns (Counts II, IV, and VI) for the years 1975, 1976, and 1977.

This appeal is timely, and we have jurisdiction under 28 U.S.C. Sec. 1291 (1976). We affirm.

FACTUAL BACKGROUND

During the years in question, Soulard was the sole stockholder of RST, Inc., Mr. Softee Hawaii ("corporation"), which was the Hawaiian distributor of franchises for the principal corporation, Mr. Softee, Inc. ("parent corporation"), located in New Jersey. Soulard assigned sales territories to subfranchisees, sold Mr. Softee trucks to them, sold ice cream mix to them on occasion, and trained them. Under Soulard's contractual relationships with the parent corporation and with the subfranchisees, he shared in the royalties the parent corporation collected from the individual subfranchisees based on ice cream mix sales.

Soulard personally kept and maintained the corporation's and his individual financial records in his home. The income tax returns for the years 1975, 1976, and 1977 were prepared by trained tax preparers, based on the records kept and supplied by Soulard.

On March 19, 1982, a federal grand jury indicted Soulard for willfully and knowingly subscribing, signing, and filing false and fraudulent corporate and individual income tax returns for the three years hitherto specified. After a jury trial, Soulard was found guilty on all six counts as charged in the indictment. He was sentenced to 18 month's imprisonment, ordered to pay a $2,500 fine, and placed on five year's probation. Soulard has, until now, remained free on bond.

ANALYSIS

In this appeal, Soulard urges numerous errors. We shall discuss the contentions in the order presented.

I. EVIDENTIARY RULINGS

A. STANDARD OF REVIEW

As to all of the District Court's evidentiary rulings at issue, the standard of review is abuse of discretion. United States v. Rohrer, 708 F.2d 429, 432 (9th Cir.1983) (evidentiary rulings in general); United States v. Long, 706 F.2d 1044, 1054 (9th Cir.1983) (proper foundation, relevancy, balance of probative value and prejudicial impact); United States v. Bradshaw, 690 F.2d 704, 708 (9th Cir.1982) (evidence of other acts), cert. denied, --- U.S. ----, 103 S.Ct. 3543, 77 L.Ed.2d 1392 (1983); United States v. Fleishman, 684 F.2d 1329, 1336 (9th Cir.) (expert testimony), cert. denied, --- U.S. ----, 103 S.Ct. 464, 74 L.Ed.2d 614 (1982). To determine whether the District Court abused its discretion, this Court must consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment. See Citizens to Preserve Overton Park v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 823, 28 L.Ed.2d 136 (1971).

Even if error is found, the nonconstitutional errors alleged here would not require reversal unless it was more "probable than not" that they affected the verdict. Fed.R.Crim.P. 52(a); United States v. Rohrer, 708 F.2d at 432. In other words, the usual "harmless error" rule applies.

B. BANK DEPOSITS METHOD

Soulard alleges that the District Court committed reversible error by admitting evidence supporting the bank deposits method of proof ¹ and by allowing the prosecution to use summary charts supporting the bank deposits analysis.

1. Bank Records Exhibits

First, Soulard claims that the District Court erroneously admitted the bank deposits analysis because the bank records exhibits ² upon which the analysis was based were improperly admitted. Soulard asserts that the exhibits should not have been admitted because the Government failed to establish that the exhibits were "complete sets" of the pertinent bank records. "If the records are incomplete," Soulard contends, "it is impossible to subtract out ... nontaxable items, and the bank deposit analysis based on such records is inaccurate."

Soulard correctly argues that neither the bank witnesses (who produced the bank records exhibits) nor the Government's summary witness (who explained the bank deposits analysis) stated that they knew that "all pertinent [bank] records were duplicated and marked as exhibits for use at trial." Indeed, both bank witnesses stated on cross-examination that they had not compared each one of the records to determine whether the records exhibits were complete. Moreover, the lack of completeness of the records exhibits appeared to be recognized at trial by the Government, and the District Court admitted the records "for whatever they're worth."

Mindful of the safeguards set forth in United States v. Hall, 650 F.2d 994 (9th Cir.1981), ³ regarding the bank deposits method of proof, we do not condone the admission of possibly incomplete bank records exhibits "for whatever they're worth." Indeed, allowing the admission of admittedly incomplete records may prove fatal in some cases. Nonetheless, in the circumstances of this case, we cannot conclude that the District Court, by admitting the bank records exhibits, so abused its discretion as to require reversal of the judgments.

The foundation for admitting the exhibits was adequate, notwithstanding our belief that it should have been somewhat stronger. There was testimony before the District Court from which it could conclude that the bank records exhibits were authentic and relevant. Both bank witnesses testified that they had compared most of the Government's exhibits with the original bank records to verify that the exhibits were authentic copies of "those [documents] maintained by the bank in [their] ordinary course of business." And, there were no monthly statements or ledgers missing from the exhibits.

Soulard urges that we and our Court should announce a rule whereby a showing of "completeness," in addition to showings of authenticity and relevancy, must be made before admitting bank records exhibits in cases using the bank deposits method of proof. We decline to reach such a result. As we see it, once adequate foundational showings of authenticity and relevancy have been made, the issue of completeness then bears upon the Government's burden of proof and is an issue for the jury to resolve, assuming, of course, that the jury has been properly instructed. In the case at hand, the issue of completeness was argued vigorously to the jury and the District Court properly instructed the jury as to the underlying inferences and assumptions of the bank deposits method of proof and the Government's burden of proof thereunder. In these circumstances, neither the spirit nor the letter of Hall was violated. ⁴ The District Court did not so abuse its discretion as to warrant reversal.

2. Beginning Cash on Hand

Second, Soulard argues that the District Court erroneously admitted the bank deposits analysis because the Government failed to establish an accurate cash on hand figure for the beginning of the three-year prosecution period. The beginning cash on hand figure is important because a large amount of undeposited cash could explain Soulard's "excessive" deposits. Soulard argues the beginning cash on hand figure was based on evidence that was inadmissible and inferior to the testimony of a certain witness. Based on our review of the record, we hold that the District Court did not abuse its discretion by admitting the bank deposits analysis based on the Government's beginning cash on hand figure.

The Government's first witness testified that in late 1974 Soulard had a metal box that contained "quite a bit" of money. On cross-examination, the witness testified that there may have been as much as $200,000.00 in the box. Soulard claims that, in light of this testimony, the Government erroneously relied on an "uncorroborated" credit application to establish a beginning cash on hand figure.

Yet, the witness clearly did not know how much cash the metal box contained: "[W]hen that box was opened, I saw a lot of money. I can't tell you if it was ten thousand or twenty thousand or five thousand. I didn't count it ...."

Also, Soulard, before he filed any of the returns in question (and before he was investigated), submitted to his bank a signed financial statement that detailed in exact amounts all of his assets including cash on hand as of the beginning of the prosecution period. The Government used this statement to establish its beginning cash on hand figure. Soulard did not object to the admission into evidence of this statement. Even if he had, the signed financial statement constituted a pre-offense statement of Soulard, which was fully admissible without corroboration. Warszower v. United States, 312 U.S. 342, 347, 61 S.Ct. 603, 606, 85 L.Ed. 876 (1941).

Thus, because there was evidence supporting the Government's beginning cash on hand figure, the District Court did not abuse its discretion by admitting the bank deposits analysis based on that figure. That there was potentially conflicting evidence as to the figure does not, of course, necessarily mean that the admission of the bank deposits analysis was an abuse of discretion. The jury was properly instructed as to the bank deposits method of proof and the figures used therein. It was for the jury to determine whether the figure in the Government's bank deposits analysis properly represented Soulard's cash on hand at the beginning of the prosecution period. ...