U.S. v. Stone, 81-6025

• Decision Date: 21 April 1983
• Docket Number: No. 81-6025,81-6025
• Citation: 702 F.2d 1333
• Parties: 83-1 USTC P 9314, 13 Fed. R. Evid. Serv. 57 The UNITED STATES of America, Plaintiff-Appellee, v. John W. STONE, Shirley M. Stone, et al., Defendants-Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1333

702 F.2d 1333

83-1 USTC P 9314, 13 Fed. R. Evid. Serv. 57

The UNITED STATES of America, Plaintiff-Appellee, v. John W. STONE, Shirley M. Stone, et al., Defendants-Appellants.

No. 81-6025.

United States Court of Appeals Eleventh Circuit.

April 21, 1983.

John G. Delancett, Orlando, Fla., for defendants-appellants.

John F. Murray, Act. Asst. Atty. Gen., Michael L. Paup, Thomas Preston, Tax Div., U.S. Dept. of Justice, Washington, D.C., for plaintiff-appellee.

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

Before HILL and ANDERSON, Circuit Judges, and LYNNE ^*, District Judge.

PER CURIAM:

Appellants, John and Shirley Stone, were indicted and convicted on four counts. Count I charged appellants under 26 U.S.C.A. Sec. 7201 (West 1967) with attempting to evade or defeat tax in calendar year 1974. Count II charged appellants under 26 U.S.C.A. Sec. 7206(1) (West 1967) with filing a false income tax return for calendar year 1974. Count III charged appellants under Sec. 7201 with tax evasion in calendar year 1975, and Count IV charged appellants under Sec. 7206(1) with filing a false tax return in calendar year 1975. The district judge sentenced John Stone to six months of imprisonment on Count IV and three concurrent terms of three years of imprisonment on Counts I, II, and III. The district judge then suspended the sentence on Counts I, II and III, placing John Stone on probation for three years, with this period of probation running consecutively to the six-month term of imprisonment. As for Shirley Stone, the district judge sentenced her to three years of imprisonment on each count, the sentence on each count running concurrently. But then the judge suspended the sentence of imprisonment, placing Shirley Stone on probation for three years.

After considering appellants' several claims of error, we reject all but one. Appellants point out that Count II is a lesser-included offense of Count I and Count IV is a lesser-included offense of Count III. The government agrees. Accordingly, we remand with instructions for the district court to vacate the conviction and sentence for either Count I (the 1974 year greater offense) or Count II (the 1974 year lesser-included offense) and to vacate the conviction and sentence for either Count III (the 1975 year greater offense) or Count IV (the 1975 year lesser-included offense).

I. SUFFICIENCY OF THE EVIDENCE

Appellants' main argument concerns the sufficiency of the evidence. We note the governing standard--evidence is sufficient to sustain a criminal conviction if a reasonable trier of fact could find that the evidence establishes guilt beyond a reasonable doubt. United States v. Bell, 678 F.2d 547, 549 (5th Cir.1982) (Unit B) (en banc), cert. granted, --- U.S. ----, 103 S.Ct. 444, 74 L.Ed.2d 600 (1982). ¹ To evaluate the sufficiency of the evidence, the evidence is viewed in a light most favorable to the government. Glasser v. United States, 315 U.S. 60, 80, 62 L.Ed.2d 457, 469, 86 L.Ed. 680 (1942).

We hold that the evidence was sufficient to allow a reasonable jury to find that appellants violated Sec. 7201 by attempting to evade tax for calendar years 1974 and 1975. We also conclude, a fortiori, that the evidence was sufficient to sustain the conviction for the lesser-included offenses of violating Sec. 7206(1). Since the Sec. 7206(1) offenses are lesser-included, and since we find the evidence sufficient to affirm the Sec. 7201 tax evasion offenses, we need only explain why the evidence is sufficient to sustain the Sec. 7201 convictions.

Section 7201 provides in pertinent part that "any person who willfully attempts in any manner to evade or defeat any tax imposed by this Title or the payment thereof shall" be guilty of the felony offense of tax evasion. The evidence showed that the Stones understated their income for the years 1974 and 1975. In 1974, the Stones understated their total income by $167,339.70. The additional tax due and owing from 1974 equaled $86,744.57. In 1975, the Stones understated total income by $70,683.69. The additional tax due and owing for 1975 was $41,265.18. The Stones understated their income received from three principal sources: (1) receipts from the sale of potatoes grown on their farm, (2) interest, and (3) capital gains. By far, the understatement in farm income constituted the bulk of the problem. The Stones do not dispute their failure to report their farm income accurately. They concede that they lost track of farm income totalling $119,100.00 (in 1974) and $89,260.00 (in 1975). But they attribute their omission to inadvertence. Thus, their defense centers on the element of willfulness.

We note at the outset that the government can use circumstantial evidence to prove willfulness. Spies v. United States, 317 U.S. 492, 499, 63 S.Ct. 364, 368, 87 L.Ed. 418 (1943); United States v. Daniels, 617 F.2d 146, 148 (5th Cir.1980). The facts concerning the understated farm income begin with a three-week summer vacation taken by the Stones in 1974. John asked his father, Thomas Stone, to pick up the Stones' mail and newspapers while they were gone. According to Thomas, John had also asked him to look for checks received from potato buyers. Record, vol. 6, at 401. Although John did not give Thomas deposit books, Thomas obtained a new deposit book and, during the Stones' vacation, deposited checks received ($119,100) into John's account in the bank John used. Thomas testified that he placed duplicates of the deposit slips in a box along with the mail and the newspapers he had collected during the Stones' vacation. Thomas either left that box on his porch or took the box to the Stones' residence. The evidence does not clarify who took the box to the Stones' home. It is clear, however, that the Stones received the box and possessed the duplicates of the deposit slips. Moreover, after returning from vacation, John had thanked Thomas for performing "the duties for him." Record, vol. 6, at 421. Also, in response to the prosecutor's questions, Thomas said that John might have asked if the checks had been deposited. Record, vol. 1, at 489. A similar sequence of events was repeated in 1975, when Thomas deposited $89,260 in farm income during the short period when the Stones were away on vacation.

The Stones argue that they were completely unaware of the deposits made by Thomas until they looked into the matter after Internal Revenue Service agents had begun their investigation. The Stones seem to suggest that they were unaware of the existence of deposit slips used by Thomas because the duplicates were mixed in with 20 days of newspapers and other mail. Why then did the Stones fail to discover the deposits when they reviewed their income in preparing their tax returns? They said that they prepared summary sheets, which they gave to their accountant who prepared their tax returns for 1974 and 1975, by using deposit slips rather than bank statements to total their income, and their collection of deposit slips did not include the duplicates of the deposits made by Thomas.

Despite the Stones' version of events, the jury could have reasonably viewed the evidence as showing that the Stones were aware of the deposits made by Thomas Stone. First, duplicate copies of the deposits made by Thomas were segregated from the mail and newspapers. According to Shirley Stone, the Stones regularly used grocery bags to store checks, deposit books, and other financial records. These bags were marked by tax year. Shirley Stone testified that, after the investigation began, she found the duplicates of the deposit slips in the 1974 and 1975 grocery bags. Record, vol. 7, at 688-89. This shows that the Stones had separated the deposit slips from the mail and newspapers. In addition, the Stones may have possessed and used the actual deposit book first used by Thomas in 1974. At least the jury was entitled to infer, from the exhibits, that the Stones made deposits from the deposit book used by Thomas. ²

Additional facts bolster the jury's verdict. The government cites more than one instance where John Stone's conduct was, according to the government, suspect. Most compelling, perhaps, is the fact that all of this began with a routine audit, after which the revenue agent thought that the Stones had understated expenses. As a result, the agent proposed refunds amounting to $12,450 for 1975 and $1,025 for 1974. In response, John Stone said that he did not want a refund. When the agent informed his group supervisor of this, the supervisor advised a more detailed examination of the Stones' income.

The facts on farm income alone ³ support an inference of willfulness which the jury was entitled to find and which we cannot countermand on this appeal. Indeed, a showing of willfulness has been based on similar facts. The magnitude of the error was substantial. United States v. Daniels, 617 F.2d at 149; United States v. Schechter, 475 F.2d 1099, 1101 (5th Cir.), cert. denied, 414 U.S. 825, 94 S.Ct. 127, 38 L.Ed.2d 58 (1973). The understatement of farm income occurred not once, but twice. United States v. Schafer, 580 F.2d 774, 781 (5th Cir.), cert. denied, 439 U.S. 970, 99 S.Ct. 463, 58 L.Ed.2d 430 (1978) (repetitious conduct); United States v. Daniels, 617 F.2d at 149. The Stones' method of recording their income was obviously inadequate. United States v. Skalicky, 615 F.2d 1117, 1120 (5th Cir.), cert. denied, 449 U.S. 832, 101 S.Ct. 100, 66 L.Ed.2d 37 (1980). We hold that the evidence is sufficient under the Bell standard.

The defense contends that, even if the evidence is sufficient to convict John Stone, the evidence is still insufficient to convict Shirley Stone. In evaluating this question, we note once again the standard for evaluating the sufficiency of the evidence. All reasonable inferences and credibility choices are viewed in favor of the jury's verdict. United States v. Daniels, 617 F.2d at 149. The evidence is...