U.S. v. Theagene

• Decision Date: 15 April 2009
• Docket Number: No. 08-50160.,08-50160.
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Samuel M. THEAGENE, Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

565 F.3d 911

UNITED STATES of America, Plaintiff-Appellee, v. Samuel M. THEAGENE, Defendant-Appellant.

No. 08-50160.

United States Court of Appeals, Fifth Circuit.

April 15, 2009.

Joseph H. Gay, Jr., Asst. U.S. Atty., Elizabeth Berenguer (argued), San Antonio, TX, for U.S.

Nancy Blair Barohn (argued), Kansas City, MO, for Theagene.

Appeal from the United States District Court for the Western District of Texas.

Before KING, DENNIS and ELROD, Circuit Judges.

JENNIFER W. ELROD, Circuit Judge:

A jury convicted Dr. Samuel Theagene of one count of bribing a public official, 18 U.S.C. § 201(b)(1)(C), for making cash payments to an Internal Revenue Service revenue officer. The district court—calling the question "a close one"—denied Theagene's request for an entrapment instruction. Theagene now appeals the conviction, challenging the jury charge on this and other grounds. He also appeals his sentence. We hold that the evidence merited an entrapment instruction, and accordingly vacate the conviction and remand for a new trial.

I. FACTS AND PROCEEDINGS¹

From at least 2003 onward, Defendant-Appellant Theagene was delinquent in business and personal taxes. In 2004, IRS Revenue Officer Rick Geiger worked with Theagene to arrange an installment plan for back taxes of his business, a medical practice in San Antonio called the Pain & Neuromuscular Clinic of Texas, P.A.² Theagene made only one payment, however, and failed to pay newly accruing taxes. In 2006, the IRS sent Theagene demand letters for missing periodic reports, and for immediate payment of over $150,000 in business taxes, penalties, and interest. The letters instructed Theagene to call Geiger if he could not pay the amounts due.

After years of neglect, Theagene took action. He left a message for Geiger, and paid $14,863 toward the back taxes. He requested in writing that Geiger "abate . . . interest or penalties" because his clinic was experiencing "undue hardship." He wrote again, ascribed his business's delinquent taxes to "unfortunate oversight due to poor management," and stated that he had hired a payroll management company to rectify the problems. He enclosed two past-due returns and paid an additional $5,359.49, and again requested abatement of penalties and interest.

The IRS determined Theagene's response was inadequate. It denied abatement, and in September, 2006, Geiger began levying the Clinic's bank accounts and accounts receivable.

On October 3, 2006, in response to the levies, Theagene sent the IRS an unusual package. It was a manila envelope containing a letter and two smaller envelopes. Both the manilla envelope and the letter were addressed to the IRS and specifically to Geiger. One of the smaller envelopes contained two checks, one voided and the other made out to the U.S. Treasury for $2000. Theagene's letter requested that the IRS lift the tax levies and place him on a new installment plan. It identified the $2,000 check as "representing the first installment," and the voided check as a source of bank account information for future automatic withdrawals. It also requested abatement of interest and penalties. The letter did not acknowledge or explain the second small envelope. That envelope was addressed to "Internal Revenue Service Mr. Rick Geiger." It contained $500 cash with a sticky note on which Theagene had written, simply, "a token." It is extraordinarily unusual for a taxpayer to send cash to the IRS.

The Treasury Department decided to investigate Theagene. Initially an IRS collections agent, Henry Amezquita, called about the $500. Theagene told Amezquita to apply the $500 to his tax account, and claimed he had not attached a sticky note to the cash. Amezquita had some doubts whether the cash was meant to be a bribe, but lead Treasury Department Criminal Investigator Victor Guevara considered it "an obvious bribe." Guevara determined to investigate further, with Geiger's assistance.

On October 5, 2006, Geiger telephoned Theagene. Geiger testified at trial that from his perspective, the purpose of the call was to determine whether Theagene meant to bribe him. Guevara recorded the conversation, and the prosecution played the recording for the jury. In the call, Theagene thanked Geiger for "calling back," and Geiger stated he "got [Theagene's] messages" but had been out of the office. Theagene offered excuses for his delinquency, expressed willingness to pay back taxes, and asked again about abating interest and penalties. Geiger informed Theagene of three possible ways to escape interest and penalties.

The conversation then proceeded as follows:

Geiger: [. . .] Also, I'll send you the phone number and the, um, the, for the Taxpayer Advocates office.

Theagene: Okay.

Geiger: But what did you have in mind on how to—have me help you here?

Theagene: Well, that's the . . . I guess, actually all I want is for the, uh, if the interest and penalties could go away we'd probably just keep paying the stuff and then get it behind us. "Cause what I did is, I made sure that, uh, we brought in a company that's gonna take care of Payroll at once."³

Theagene then stated that he had fixed the problems leading to his delinquency, and that his medical practice was profitable enough to pay his back taxes, but that "with levies in place we cannot function to pay debts at all, be it IRS or anybody else's debts." He argued again for lifting the levies and allowing him to pay installments:

Theagene: So, if that can be put in place, then, um, I don't see . . . I don't know if it's gonna be automatic . . . I don't see how we can default on this.

Geiger: Well, I really wanna help you here.

Theagene: Okay.

Geiger: Okay, but, you know, we have our procedures here that I have to follow.

Theagene: Okay.

Geiger: You know, and so, um, the fact that the installment agreement did default, um, . . . but tell me what to do.

Theagene: Well, um, can you release all levies?

Geiger: Well yeah, I can release `em, yeah.

Theagene: Okay. And, um, that done then, um, we're going to start making payments.

Geiger: I mean, you mean like to reinstate the installment agreement?

Theagene: Uh, yes sir.

Geiger: [sic] On there. Okay. Well, like I'm still reviewing the file here and then, like I said, we've got the check for the two thousand. And let me ask you again, I may have asked you this already. Do you think it's gonna clear?

Theagene: [Y]es— . . . [Theagene explains that he postdated the check for October 15, and the funds would be available on that date. He proposes automatic withdrawals on the 15th of every month thereafter].

Geiger: Okay, well, let me ask you this. Did the . . . I'm kinda still going through the file and, yeah, the, uh, I'm trying to get caught up with everything here. We got the check. Now there was . . . there was also cash sent. Okay?

Theagene: Right.

Geiger: Som'em like $500.

Theagene: Right. Right.

Geiger: Was that for me or the account or what?

Theagene: Well, I, I, I, I really didn't . . . there is this . . . the bottom part of the, uh,—

Geiger: I wanna help you here, but you know, I need—

Theagene: No, I—

Geiger: Talk to me.

Theagene: Yeah, I understand that. Um, the bottom part of the, uh, of the levy is where it says, uh, there is a $308, which I'm not quite sure what . . . that's just interest and it's not . . . it's not money owed. And, um, what I was wondering if that could be applied towards that and, and, and, you know, just get that small part out of the way. I mean, I'm trying to get caught up as much as possible here with this—.

Geiger and Theagene briefly discussed the $308, and then Geiger asked about the note saying "a token":

Theagene: I really don't know what that is. And the reason—

Geiger: That's for me? or what?

Theagene: (Chuckle) Well let me . . . the reason why that went out the way it did is, is because a certain part of the . . . uh, I guess once I received, uh, letters with levies and all that happening, the concern became [sic] Well if you sent checks out, what if those checks, now they'll start bouncing left and right. So, I sent in a check to start the installment agreement and at the same time showing good faith that, um, we'll start getting some of the things behind us with, uh, with actual cash that will not go through bouncing—go through any bank or what have you.

At trial, Geiger conceded on cross examination that he began the telephone conversation suspecting bribery, but that by approximately this point in the conversation he "started thinking it was not a bribe." The conversation continued as follows:

Geiger: Okay, so the . . . what we did on the cash now, . . . like I said, I'm still kinda getting caught up here going through the file, but that's gonna be applied to the account [—]

Theagene: Okay. Okay.

Geiger: [—] cash but, but again, I'm just a little confused on there was a note that was attached to it that says "Token."

Theagene: Hmm.

Finally, Geiger put the bribery question directly to Theagene:

Geiger: And . . . and I . . . well, I thought it was for me, to be honest with you.

Theagene: (Laughs) Well, . . . well, we, we, we could meet. We could meet and we could sit down and we could talk about . . . I don't know, but, but, um, I really want this thing behind me.

Geiger: Yeah, sure, we can meet.

Theagene proposed to meet at his own office, but Geiger asked to meet in a restaurant. Geiger closed the telephone conversation by stating: "Tell you what, on the cash, I'm gonna go ahead and just keep the money for now and not apply it to your account." Theagene responded: "[o]kay."

At the restaurant, Theagene broke the ice as follows:⁴

Theagene: I made an attempt the other day. I sent the $500. And really, I just want to know what it will take to get this thing behind me[.] To zero it out.

Geiger: The whole thing?

Theagene: Yes.

During the conversation at the restaurant, Theagene explained his prior instructions (to Amezquita) to credit the $500 to his tax...