United States v. Hesser

• Citation: 800 F.3d 1310
• Decision Date: 08 September 2015
• Docket Number: No. 13–11712.,13–11712.
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. Peter HESSER, Defendant–Appellant.
• Court: U.S. Court of Appeals — Eleventh Circuit

800 F.3d 1310

UNITED STATES of America, Plaintiff–Appellee

v.Peter HESSER, Defendant–Appellant.

No. 13–11712.

United States Court of Appeals, Eleventh Circuit.

Sept. 8, 2015.

Linda Julin McNamara, Suzanne C. Nebesky, Robert E. O'Neill, U.S. Attorney's Office, Tampa, FL, Douglas Molloy, U.S. Attorney's Office, Fort Myers, FL, for Plaintiff–Appellee.

Richard Carroll Klugh, Jr., Law Offices of Richard C. Klugh, Miami, FL, Kevin Clifford Shirley, Law Office of Kevin Clifford Shirley, Port Charlotte, FL, for Defendant–Appellant.

Appeal from the United States District Court for the Middle District of Florida. D.C. Docket No. 2:11–cr–00083–JES–SPC–1.

Before TJOFLAT and FAY, Circuit Judges.^*

Opinion

PER CURIAM:

In this appeal, Peter Hesser challenges his convictions for three counts of submitting false claims, in violation of 18 U.S.C. § 287, and one count of attempting to evade or defeat a tax imposed by the Internal Revenue Code, in violation of 26 U.S.C. § 7201. The three false-claims counts relate to income tax returns Hesser filed for 2005, 2006, and 2007. The tax-evasion count relates to actions Hesser took to avoid paying income taxes he owed for 2001, 2002, and 2003.

Hesser challenges both his convictions and his sentence on multiple grounds. First, with regard to the false-claims counts, he contends that there was insufficient evidence that his filings were actually false. Second, as to the tax-evasion count, he argues that the Government failed to prove that he had a tax deficiency for 2001–2003 or that he willfully committed any affirmative act of tax evasion. Third, Hesser identifies a number of other errors, which, he claims, individually or cumulatively rendered his trial fundamentally unfair. Fourth, Hesser argues that the District Court erred in applying a two-level obstruction-of-justice enhancement in determining his sentence range under the Sentencing Guidelines. Finally, Hesser contends that the District Court erred when it ordered him to pay more in restitution to the Internal Revenue Service (“IRS”) than the agency actually lost.

Of these challenges, only the last has merit. Accordingly, though we affirm Hesser's conviction and sentence of imprisonment (with the period of supervised release) imposed with the application of the obstruction-of-justice enhancement, we vacate the court's restitution order and remand the case for reconsideration of the restitution due the IRS.

I.

A.

For our purposes, the chain of events leading to this appeal began in 2002, when Hesser failed to file a personal income tax return for 2001. At that time, Hesser was the president of PPCH Company, a painting contracting business in Port Charlotte, Florida. Hesser had incorporated PPCH in 1998, and he and his wife, Cheryl Hesser, were the company's sole shareholders. PPCH similarly failed to file a corporate tax return for 2001 by the corporate filing deadline of March 15, 2002. In February of 2003, however, Hesser reversed course and filed corporate tax returns for PPCH for 2001 as well as 2002, both of which reflected small net losses (and thus no tax liability).¹ In April of 2003, Hesser filed a personal tax return for 2002, which claimed a refund for that year. In 2004, Hesser filed a personal tax return for 2003, which claimed a refund for that year.²

In 2004, after noticing that Hesser had claimed a refund for 2002 but had not filed a tax return in 2001, the IRS flagged Hesser's returns for further review. The ensuing investigation soon was expanded to include PPCH's tax returns as well. Pursuant to that examination, Piksum Blau, an IRS revenue agent, attempted to contact Hesser to set up an audit appointment. When Hesser failed to cooperate, Agent Blau scheduled a “firm appointment” for Hesser to meet with her and produce books and records verifying PPCH's income and expenses. Hesser failed to appear, so Agent Blau summonsed Hesser and the banks at which PPCH had accounts to obtain financial records for the years in question.

Hesser responded to several of these summonses with letters drafted by his then-counsel, Milton Baxley.³ In these letters, Hesser demanded evidence of the authority for the IRS's investigation and purported to refuse the summonses on behalf of the banks. The letters asserted, variously, that the summons were barred by Federal Rule of Criminal Procedure 9(b), that the IRS's authority limited to taxpayers living outside the United States, and that the IRS only had authority to administer the Internal Revenue Code, not enforce it. Agent Blau wrote back to inform Hesser that his arguments were meritless. She urged him not to be misled by people who make dubious claims about the federal tax laws and entice others to deliberately violate those laws. Because the federal courts had repeatedly rejected his objections, Agent Blau explained, she would not engage in further dialogue on the points he had raised.

Using summonsed bank records and information already in the IRS's possession, Agent Blau established that Hesser had received unreported constructive dividends from PPCH.⁴ In other words, Hesser had been using PPCH funds for personal expenses without reporting the transfers as income.⁵ Agent Blau ultimately determined that PPCH had underreported $75,887 of income on its 2001 return, resulting in a $13,615 tax deficiency, and that for tax year 2002, the company had underreported $99,822 of income, resulting in a $19,465 deficiency. Based on the same unreported dividends, Agent Blau determined that Hesser had personal tax deficiencies for 2001, 2002, and 2003: $16,685 for tax year 2001, $26,506 for 2002, and $4,455 for 2003.⁶ Agent Blau proposed adjustments to the returns for those years.

After sending preliminary notices to Hesser and PPCH, the IRS sent a statutory notice of deficiency (commonly called a “ninety-day letter”) to Hesser for PPCH on October 6, 2005. The letter detailed the results of Agent Blau's audit of PPCH and explained that PPCH had ninety days to contest the IRS's deficiency determination by petitioning the United States Tax Court.

On April 3, 2006, the IRS sent Hesser a ninety-day letter notifying him of the deficiency assessments for 2001, 2002, and 2003. Three days later, on April 6, Hesser and his wife quitclaimed the family home to a trust operated by Michael Harris, the administrator of Power N Unity. Hesser, testifying at his trial, said that the purpose of the transfer was not to evade payment of the assessments. Rather, as Harris testified, the Hessers transferred the house so that Power N Unity could investigate the circumstances surrounding the execution of their mortgage and, if fraud were discovered, take legal action.

Nearly a year later, on March 14, 2007, the IRS filed federal tax liens against Hesser based on the April 3, 2006, assessments. On April 3, 2007, Connie Lewis, an IRS revenue officer, visited the Hessers' home. The purpose of her visit was to try to persuade Hesser to voluntarily comply with the IRS's collection of the assessed taxes. Typically, this process begins with the taxpayer filling out “[a] financial statement listing assets, income, liabilities, and expenses submitted by the taxpayer,” known as a Collection Information Statement (“CIS”). I.R.M. 5.8.1 –1. Hesser refused to fill out the CIS, telling Officer Lewis he had already “wasted enough time” with the IRS. Officer Lewis then served Hesser with a summons to prepare the CIS at her office, along with a final notice of intent to levy if payment was not forthcoming.

Two weeks prior to the scheduled meeting with Officer Lewis, on April 16, 2007, Hesser bought $262,000 worth of gold and silver bullion and had it shipped to his house. Hesser testified that he purchased the bullion in consultation with his mother, for the benefit of, and using funds provided by, Riverside Trust, a family trust that had originally been set up by his father. Hesser's brother was the trustee at the time, and he had previously transferred $301,000 of the trust's money to an account controlled by Hesser for him to invest. Cheryl Hesser testified that when the bullion arrived, Hesser hid it around the house because he was afraid that if IRS agents came, they would find it. Hesser explained that the bullion was shipped to his house for safety reasons, but that shortly after receiving it, he transferred it to his mother's possession and she placed most of it in a safe deposit box.

When the time came for the meeting with Officer Lewis on April 30, 2007, Hesser showed up, but was uncooperative. First, he brought a friend who was not licensed to represent taxpayers before the IRS. Then, as the meeting began, he questioned Officer Lewis's authority to conduct it. He refused to accept her credentials, which she showed him, and demanded to see further identification. He also demanded that she sign an “incrimination waiver.” She refused. Officer Lewis warned Hesser that if he did not answer her questions and provide the documents she was requesting, she would end the interview and the IRS would enforce the summons. Hesser refused to cooperate, so she ended the meeting.

After the summons were referred to the U.S. Attorney's Office for enforcement, the IRS reassigned Hesser's case to another revenue officer, Chuks Bailey. On December 27, 2007, upon discovering that Hesser's home and office telephone numbers had been disconnected, Officer Bailey sent Hesser successive letters warning him that if he failed to pay his taxes, the IRS would soon take enforcement action against him. Hesser responded with letters that Officer Bailey deemed frivolous.⁷ In the following weeks, levies were directed to several of Hesser's bank accounts, but were met with little success. Either the accounts had been closed or had negligible balances.

B.

The CIS summons enforcement, tax liens, and levies were still pending when, on October 1, 2008, Officer Bailey sent Hesser yet another notice warning of impending enforcement action against him. Six days later, Hesser's tax...