United States v. Graham

• Decision Date: 04 December 2020
• Docket Number: No. 18-15299,18-15299
• Citation: 981 F.3d 1254
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Richard Lee GRAHAM, Defendant-Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

981 F.3d 1254

UNITED STATES of America, Plaintiff-Appellee,

v.Richard Lee GRAHAM, Defendant-Appellant.

No. 18-15299

United States Court of Appeals, Eleventh Circuit.

December 4, 2020

Samuel Robert Lyons, U.S. Department of Justice, Tax Division, Washington, DC, Sandra J. Stewart, U.S. Attorney Service - Middle District of Alabama, U.S. Attorney's Office, Montgomery, AL, Elissa Hart-Mahan, U.S. Department of Justice, Chief Appellate Section Tax Division, Washington, DC, Alexander Patrick Robbins, U.S. Attorney's Office, Los Angeles, CA, for Plaintiff - Appellee

Stewart Davidson McKnight, III, Dillard McKnight James & McElroy, LLP, Birmingham, AL, William J. Baxley, Baxley Jackson Law Firm, Vestavia Hills, AL, Sam Heldman, The Gardner Firm, Washington, DC, Samuel Robert McCord, Sr., Samuel Robert McCord, Jr., Samuel Robert McCord Sr., Attorney at Law, Birmingham, AL, for Defendant - Appellant

Before GRANT, MARCUS, and JULIE CARNES, Circuit Judges.

GRANT, Circuit Judge:

The IRS spent years trying to collect overdue taxes from Richard Graham. Five years into the process, Graham attempted to satisfy his tax obligations once and for all—with a fraudulent $3.6 million check known as an international bill of exchange. When he was caught, a jury convicted him of passing a fictitious financial instrument, in violation of 18 U.S.C. § 514(a)(2), and of corruptly endeavoring to obstruct the administration of the Internal Revenue Code, in violation of 26 U.S.C. § 7212(a). That second conviction is the main focus of this appeal.

Not long ago in this Circuit, the government could have convicted Graham under § 7212(a) by proving only that he (1) "knowingly tried to obstruct or impede the due administration of the internal revenue laws," and (2) "did so corruptly." United States v. Croteau , 819 F.3d 1293, 1307–08 (11th Cir. 2016). But recently the Supreme Court added a third element. Now, the government must also prove a "nexus between the defendant's conduct and a particular administrative proceeding, such as an investigation, an audit, or other targeted administrative action." Marinello v. United States , ––– U.S. ––––, 138 S. Ct. 1101, 1109, 200 L.Ed.2d 356 (2018) (quotation marks omitted). The question for us is whether the IRS's collection activity qualifies as a "particular administrative proceeding." We hold that it does. Because there was sufficient evidence of a nexus to support Graham's conviction and because we reject his laundry list of objections to the district court's evidentiary rulings, we affirm.

I.

Graham earned a fortune running bingo games. But from 2006 through 2009, he paid only a portion of his income taxes. Penalties and interest accrued on the unpaid taxes, and eventually the IRS came to collect.

The IRS assigned Revenue Officer Lawrence Barron to Graham's case. In 2009, Barron sent Graham a final notice of "intent to levy"—stating that the IRS planned to levy his assets and that it could file a notice of federal tax lien on his property. After that, Barron began making repeated contact with Graham and reported that he and his attorneys were always prompt in responding. Graham was not, however, prompt in making full payment. Instead, he would make smaller payments that did not satisfy his debt. In 2012, a second IRS officer, Linda Brown, took over the case and began sending regular lien and levy notices to Graham. Under Brown's supervision, the IRS confiscated and sold several pieces of Graham's real estate. But even these sales didn't satisfy the debt. In June 2014, the IRS sent him a notice of levy informing him that his tax liability totaled just under $3.6 million.

Around that time, Graham met Thomas Walker, who claimed to specialize in "credit repair." Walker told Graham that he knew of "some people" who could "help use a bill of exchange" to pay off his taxes and promised to help for the low price of $10,000.

Graham paid the fee and Walker put him in contact with two men—Ben and James—who sent a packet of documents to Walker. In July 2014, Walker and Graham went together to the IRS building in Montgomery, Alabama, to deliver these documents, which included a $3.6 million check entitled an "international bill of exchange," a copy of the notice of levy that Graham had received a month earlier, and a signed statement that Graham was not an "individual" under the tax code and that he was "not subject to any revenue tax or tax withholding."

The IRS employee assisting Graham was skeptical about the bill of exchange's validity, so she privately consulted with her manager and a special agent. The special agent, agreeing that the check "looked suspicious," advised accepting but not processing it. The employee returned stamped copies of the documents to Walker and Graham and provided the originals to the special agent. Graham repeated this ruse three more times that summer—once at the Birmingham IRS office and twice at the Alabama Department of Revenue.

The international bills of exchange were indeed suspicious, and soon discovered to be fraudulent. A grand jury indicted Graham on one count of passing a fictitious financial instrument, in violation of 18 U.S.C. § 514(a)(2), and one count of corruptly endeavoring to obstruct the administration of the internal revenue laws, in violation of 26 U.S.C. § 7212(a).¹ Graham opted to go to trial and was convicted on both counts. The district court denied Graham's motion for judgment of acquittal and sentenced him to 48 months of imprisonment. Graham now appeals, challenging the sufficiency of the evidence for his § 7212(a) conviction and several of the district court's evidentiary rulings.

II.

We turn first to Graham's argument that there was insufficient evidence of a nexus between his actions and an administrative proceeding. We review de novo the sufficiency of the evidence to support a conviction, affirming the jury's verdict if "any reasonable construction of the evidence would have allowed the jury to find the defendant guilty beyond a reasonable doubt." United States v. Crabtree , 878 F.3d 1274, 1284 (11th Cir. 2018) (quotation marks omitted).

The Omnibus Clause of § 7212(a) makes it a felony when a defendant "corruptly or by force ... endeavors to obstruct or impede, the due administration of" the Internal Revenue Code. See 26 U.S.C. § 7212(a). District courts in this Circuit have traditionally informed juries that a conviction under this statute must be supported by two elements: that the defendant (1) "knowingly tried to obstruct or impede the due administration of the internal revenue laws," and (2) "did so corruptly." See, e.g. , Croteau , 819 F.3d at 1307–08 (citing jury instructions). The Supreme Court's recent decision in Marinello v. United States changed that. 138 S. Ct. at 1109.

In Marinello , the Supreme Court took issue with the potentially expansive range of conduct that could qualify as "obstruct[ing] or imped[ing], the due administration of" the Internal Revenue Code. 26 U.S.C. § 7212(a). This phrase, it noted, could transform any and all tax violations into felonies. Marinello , 138 S. Ct. at 1107. It could make a felon of any "person who pays a babysitter $41 per week in cash without withholding taxes, leaves a large cash tip in a restaurant, fails to keep donation receipts from every charity to which he or she contributes, or fails to provide every record to an accountant." Id. at 1108 (citations omitted). That, the Court surmised, Congress could not have intended. Id.

The Court's solution was to read a third element—a "nexus" element—into the statute. Id. at 1109. That is, it held that to "secure a conviction under the Omnibus Clause, the Government must show (among other things) that there is a ‘nexus’ between the defendant's conduct and a particular administrative proceeding, such as an investigation, an audit, or other targeted administrative action." Id. While it declined to "exhaustively itemize the types of administrative conduct that fall within the scope of the statute," it emphasized that the defendant must do something more than interfere with "routine, day-to-day work carried out in the ordinary course by the IRS, such as the review of tax returns." Id. at 1110. The obstructive act needed to have a "relationship in time, causation, or logic with the [administrative] proceeding." Id. at 1109 (quoting United States v. Aguilar , 515 U.S. 593, 599, 115 S.Ct. 2357, 132 L.Ed.2d 520 (1995) ) (alteration in original).

So, the question is, did Graham's submission of a falsified bill of exchange to the IRS have a "relationship in time, causation, or logic" with some administrative proceeding? Graham thinks not. He suggests that "liens, levies, and related notices" do not qualify as "administrative proceedings" under Marinello . A "proceeding," he argues, must "take place over a period of time, akin to a grand jury proceeding or other investigatory proceeding," where there is "summoning of witnesses and documents" and "questioning under oath." And the IRS's tax collection activities do not bear those particular marks.

Our Court has not had occasion to further define the "nexus" requirement since Marinello . But we do not think the Court's definition of a "proceeding" was so narrow. The Supreme Court nowhere suggested that a defendant must interfere with a quasi-judicial proceeding—like Graham describes—to violate the Omnibus Clause. Indeed, the Court was careful not to identify exhaustively what qualified as an "administrative proceeding" or "other targeted administrative action." Id. at 1109–10. Its concern, instead, was to exclude relatively innocuous conduct from prosecution under the Omnibus Clause. Id. The government could not prosecute someone for interfering with "routine, day-to-day work carried out in the ordinary course by the IRS, such as the review of tax returns." Id. There had to be something more—some "targeted administrative action." Id. at 1109.

We need not draw a perimeter setting out what that "something more" encompasses. This...