United States v. Green

• Decision Date: 24 August 2022
• Docket Number: 21-10651 CONSOLIDATED WITH No. 21-10672
• Citation: 47 F.4th 279
• Parties: UNITED STATES of America, Plaintiff—Appellee, v. John O. GREEN, Defendant—Appellant, United States of America, Plaintiff—Appellee, v. Thomas D. Selgas, Defendant—Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

47 F.4th 279

UNITED STATES of America, Plaintiff—Appellee,
v.
John O. GREEN, Defendant—Appellant,

United States of America, Plaintiff—Appellee,
v.
Thomas D. Selgas, Defendant—Appellant.

No. 21-10651 CONSOLIDATED WITH No. 21-10672

United States Court of Appeals, Fifth Circuit.

FILED August 24, 2022

Terri-Lei O'Malley, Assistant U.S. Attorney, U.S. Department of Justice, Tax Division, Arlington, VA, Katie Sue Bagley, Samuel Robert Lyons, U.S. Department of Justice, Criminal Appeals & Tax Enforcement Policy Section, Washington, DC, Leigha Amy Simonton, Assistant U.S. Attorney, U.S. Attorney's Office, Dallas, TX, Joseph Brian Syverson, U.S. Department of Justice, Tax Division, Washington, DC, for Plaintiff-Appellee.

Lowell Harrison Becraft, Jr., Esq., Huntsville, AL, for Defendant-Appellant.

Before Higginbotham, Dennis, and Graves, Circuit Judges.

James L. Dennis, Circuit Judge:

Appellants Thomas Selgas ("Selgas") and John Green ("Green") were convicted by a jury of conspiracy to defraud the Internal Revenue Service ("IRS") by interfering with its lawful functions. See 18 U.S.C. § 371. Selgas was also convicted of evasion of payment of taxes. See 26 U.S.C. § 7201. On appeal, Selgas and Green both challenge the sufficiency of the evidence supporting their convictions and raise challenges to a number of jury instructions. Selgas also argues that his indictment was constructively amended, that he received ineffective assistance of counsel, and that the district court should have granted him a continuance. We AFFIRM.

I.

Selgas and his wife Michelle were partners in a company called MyMail, Ltd.¹ MyMail sued alleged patent infringers, which resulted in $11 million in settlement proceeds in 2005, of which MyMail received $6.8 million after attorney fees. In February 2006, MyMail's CPA filed tax forms reporting that Michelle Selgas received $1.559 million in ordinary business income and $1.091 million in distributions from MyMail, and Selgas received $117,187 in business income and a $82,000 distribution.

In late 2005, the Selgases had MyMail send $1 million by wire transfer to Dillon Gage, a precious metals dealer in Texas with whom Selgas had an account, and, as instructed by Selgas, Dillon Gage used the money to buy 7,090 quarter-ounce $10 Gold Eagle coins for Selgas. While the Gold Eagle coins have a nominal $10 face value, the actual value of the coins is much higher and is based on the price of gold.

In April 2006, Selgas and Green—his lawyer—orchestrated an effort, along with MyMail partner Bob Derby, to amend MyMail's tax forms "based on the current laws of a constitutional $." According to Selgas and Green, "Federal Reserve Notes are valueless pieces of paper" and "lawful money" is instead measured by the "constitutional value" of a

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dollar, which is 371 ¼ grains of silver. The practical effect of employing this theory was to significantly underreport the amount of income that MyMail and the Selgases actually received. However, it is well-established that discounting the face value of money, i.e. Federal Reserve Notes, received as income based on the theory that the value of a dollar is tied to a specific weight of gold or silver "is not a legal method" of reducing taxes owed. Mathes v. Comm'r of Internal Revenue , 576 F.2d 70, 71 (5th Cir. 1978). "Congress has made the Federal Reserve note the measure of value in our monetary system ... and has defined Federal Reserve notes as legal tender for taxes .... Taxpayers’ attempt to devalue the Federal Reserve notes they received as income is, therefore, not lawful under the laws of the United States." Id. (internal citations and footnote omitted).

MyMail's CPA refused to amend the tax returns in line with Selgas and Green's so-called "constitutional dollar" or "lawful dollar" theory because the CPA thought it was "not a sustainable position before the IRS." Selgas and Green found another accountant to amend the forms. MyMail's amended tax form reported gross receipts for MyMail of $729,846 instead of $6.8 million; a distribution of $117,079 to Michelle Selgas instead of $1.091 million; and a distribution of $8,798 to Selgas instead of $82,000.

In 2006, Selgas filed a "Statement to the Internal Revenue Service," drafted by Green, for tax year 2005 instead of an income tax return. The Statement included an explanation of the "lawful dollar" theory; reported that the Selgases received $178,640 in "lawful dollars" but denied that this was "income"; and reported the Selgases’ expenses in Federal Reserve Note dollars. By using the discredited "lawful dollar" theory, the Statement significantly understated the Selgases’ actual income. Unlike a tax return, the Statement was not signed under penalty of perjury, although it purported to include a declaration pursuant to 28 U.S.C. § 1746, which provides a method for making unsworn declarations. At trial, an IRS witness testified that the 2005 Statement was not a valid tax return.

In due course, the IRS audited MyMail's 2005 taxes and disallowed the amended return that incorporated the "lawful dollar" theory. MyMail unsuccessfully challenged the adjustment in district court, and this court affirmed on appeal, stating that "courts have long held such arguments" as Selgas and Green's theory "are frivolous." MyMail Ltd. v. Comm'r of I.R.S. , 498 F. App'x 388 (5th Cir. 2012) (citing Mathes , 576 F.2d at 70–71 ; Juilliard v. Greenman (The Legal Tender Cases) , 110 U.S. 421, 448, 4 S.Ct. 122, 28 L.Ed. 204 (1884) ).

Owing unpaid taxes for 1997–2002 and 2005, the Selgases engaged in a pattern of behavior that concealed their income and assets from IRS collection efforts.² For example, the Selgases did not keep money in bank accounts in their own names. Instead, from 2007 through at least 2017, the Selgases deposited more than $857,000 into Green's client trust accounts, and

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Green paid the Selgases’ expenses and credit card bills out of his trust accounts. In 2008, the Selgases sold their home in Garland, Texas and bought a new home in Athens, Texas, paying the $385,000 purchase price with 1,667 $10 Gold Eagle coins. Green represented the Selgases in both transactions. The buyer of the Garland home refused to pay in gold coins, so Selgas and Green had the title company send the buyer's payment directly to Dillon Gage to be converted into gold coin. They also attempted to get the Athens house assessed for property taxes purposes based on the purported "constitutional lawful money" dollar price of $16,670 instead of the actual purchase price. In 2012, Selgas sold the Athens house for $8,400 "lawful money" to a trust controlled by a family member.

In May 2014, IRS Revenue Officer Jonathan Daniel was assigned to collect the Selgases’ tax deficiencies. After running into difficulty contacting the Selgases, Daniel contacted Green at the post office box listed on the Selgases’ IRS power of attorney form. Neither Selgas nor Green responded to multiple letters Daniel sent. In January 2015, Daniel found retirement accounts for the Selgases funded with gold coins, but Selgas withdrew the coins from the accounts before Daniel could seize them. Daniel contacted Green again in July 2015 to request financial information. This time, Green responded that the Selgases had already paid their taxes and requested additional information from Daniel, but otherwise did not respond to Daniel's requests. Daniel eventually located the Athens residence (an initial search of property records was unsuccessful because the title had been transferred to the trust), and he contacted Selgas and Green to advise them that it would be seized. Daniel did not learn that the Selgases putt money in Green's trust accounts, and he was ultimately never able to collect any money to satisfy the Selgases’ tax debt.

In July 2018, a grand jury charged Selgas and Green with conspiracy to defraud the United States by impeding and obstructing the IRS in violation of 18 U.S.C. § 371 (Count One). Selgas was also charged with income tax evasion for years 1998–2002 and 2005, in violation of 26 U.S.C. § 7201 (Count Two).³ At the final pre-trial conference on January 6, 2020—the day before jury selection was set to begin—Selgas made an oral motion to substitute counsel Charles McFarland for counsel Franklyn Mickelsen and sought a six-to-eight-week continuance so that McFarland could prepare for trial. The district court denied the motion for continuance, but allowed McFarland to act as lead counsel with Mickelsen assisting. After an eight-day jury trial, Selgas and Green were found guilty as charged.

II.

Because Selgas and Green preserved their sufficiency-of-the-evidence challenges by moving for a judgment of acquittal, our review is de novo. FED. R. CRIM. P. 29(a) ; United States v. Frye , 489 F.3d 201, 207 (5th Cir. 2007). This court will uphold the jury's verdict if a rational trier of fact could conclude from the evidence that the elements of the offense were established beyond a reasonable doubt. Jackson v. Virginia , 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979). We review the evidence, both direct and circumstantial, as well as all reasonable inferences from that evidence, in the light most favorable to the verdict. Id. In doing

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so, we do not reweigh the evidence or assess the credibility of witnesses, as this is the responsibility of the jury. Id.

Constructive amendment claims are typically reviewed de novo, United States v. Jara-Favela , 686 F.3d 289, 299 (5th Cir. 2012), and challenges to jury instructions are reviewed for abuse of discretion and are subject to harmless error review, United States v. Johnson , 990 F.3d 392, 398 (5th Cir. 2021). However, objections not raised before the trial court are reviewed for plain error. Puckett v. United States , 556 U.S. 129, 134–35, 129 S.Ct. 1423, 173 L.Ed.2d 266 (2009). If (1) there is an "error," (2) that is "clear or obvious," and (3) that error "affected the appellant's substantial rights," then (4) we have...