United States v. Sertich

• Citation: 879 F.3d 558
• Decision Date: 08 January 2018
• Docket Number: No. 16-51210,16-51210
• Parties: UNITED STATES of America, Plaintiff–Appellee, v. Anthony P. SERTICH, Jr., Doctor, also known as Anthony Patrick Sertich, Jr., also known as Anthony Sertich, Jr., also known as Anthony P. Sertich, Defendant–Appellant.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

879 F.3d 558

UNITED STATES of America, Plaintiff–Appellee,

v.Anthony P. SERTICH, Jr., Doctor, also known as Anthony Patrick Sertich, Jr., also known as Anthony Sertich, Jr., also known as Anthony P. Sertich, Defendant–Appellant.

No. 16-51210

United States Court of Appeals, Fifth Circuit.

FILED January 8, 2018

Joseph H. Gay, Jr., Assistant U.S. Attorney, U.S. Attorney's Office, Western District of Texas, San Antonio, TX, Zachary Carl Richter, Assistant U.S. Attorney, U.S. Attorney's Office, Western District of Texas, Austin, TX, for Plaintiff–Appellee.

Shane John Stolarczyk, Esq., Keller Stolarczyk P.L.L.C., Boerne, TX, for Defendant–Appellant.

Before HIGGINBOTHAM, PRADO, and HIGGINSON, Circuit Judges.

EDWARD C. PRADO, Circuit Judge:

Anthony P. Sertich, Jr. was charged and convicted by a jury with ten counts of violating 26 U.S.C. § 7202 for willfully failing to account for and pay over to the Internal Revenue Service ("IRS") the federal income taxes he withheld from his employees between 2008 and 2010. He was also charged and convicted of one count of violating 26 U.S.C. § 7201 for willfully attempting to evade and defeat payment of payroll taxes, penalties, and interest due and owing to the United States. On appeal, Sertich argues that the district court issued an incorrect jury instruction as to the elements of an offense under § 7202 and that the trial evidence was insufficient to support his convictions pursuant to §§ 7201 and 7202. For the reasons given below, we AFFIRM.

I. BACKGROUND

Sertich was a medical doctor and plastic surgeon who owned two medical entities: South Texas Otorhinolaryngology ("STO") and Advanced Artistic Facial Plastic Surgery of Texas ("Advanced Artistic"). These entities employed staff to whom Sertich paid wages and from whom he withheld payroll taxes. Between 2002 and 2011, the total balance due for Sertich’s entities was $2,927,366.45, which Sertich accounted for in the entities' tax filings, yet failed to pay over to the IRS.

In 2014, a grand jury charged Sertich in a superseding indictment for criminal violations of two federal tax laws. Sertich was charged with ten counts of violating § 7202 by willfully failing to account for and pay over taxes withheld from his employees in each quarter between the fourth quarter of 2008 and 2010. He was also charged with one count of violating § 7201 by willfully attempting to evade and defeat the payment of more than $2.9 million in taxes owed by him and his medical entities. The case went to a five-day jury trial. The facts are lengthy and complex, but we detail the relevant evidence below.

At trial, the jury heard evidence that Sertich had submitted wage and tax statements to the IRS showing that money had been withheld from his employees at STO, and that he had claimed credit against his personal tax liabilities for the withheld amounts. The jury also heard evidence that he repeatedly failed to pay over those withheld funds. In 2004, partially because Sertich was behind on STO’s tax liabilities, STO went out of business, and Sertich moved himself and his staff to Advanced Artistic. In October 2004, Sertich filed for Chapter 11 bankruptcy—the fourth time since 1992. Because he filed under Chapter 11, the government’s collection efforts ceased until Sertich again failed to make scheduled payments.

Several IRS officers testified. One officer noted, for example, that the IRS attempted to contact Sertich in 2005 at his personal residence and mailed him a letter to encourage him to file quarterly tax returns for STO. Sertich made no reply. Another officer testified that beginning in November 2006, the IRS attempted to visit Sertich at his business address. The officer testified they repeatedly sent letters to try and work with Sertich to deposit amounts withheld from the paychecks of Advanced Artistic’s employees and requested financial records from Sertich, yet Sertich failed to comply with those requests even as late as mid-2007. In late 2007, the IRS issued a levy to Sertich’s bank.

In January 2008, Sertich filed bankruptcy for a fifth time, on behalf of Advanced Artistic, once again halting collection efforts. Sertich and his attorney met with the IRS for an interview and produced information about his assets and liabilities. Sertich agreed to make payments while his bankruptcy was pending, but failed to make those payments. His bankruptcy case was dismissed in 2009.

Revenue officers once again took steps to collect. The IRS representative testified that the IRS made multiple attempts in 2009 and 2010 to contact Sertich and collect on his tax delinquency. A revenue officer informed Sertich that if he did not satisfy his tax delinquency by selling or mortgaging his residence, forced collection would begin. The IRS eventually issued levies on Sertich’s bank accounts and insurance reimbursements and money was diverted to the IRS to satisfy his tax delinquencies. In the fall of 2010, a revenue officer served Sertich with a summons seeking financial records and testimony. In December 2010, Sertich filed for bankruptcy, once again halting collection efforts. This 2010 bankruptcy filing was dismissed in August of 2011.

Throughout the relevant time period, Sertich’s accountants and others told him "on a regular basis" that he owed taxes, that he needed to file and pay his taxes timely, that "it’s going to become an issue," and that the "IRS ... will not understand the circumstances." Sertich ultimately racked up a tax delinquency of over $2.9 million.

At trial, Sertich took the stand in his own defense. He told the jury that he always intended to pay his taxes. He stated that his failure to do so was related to personal and family issues, and because he lacked the financial ability to comply. Sertich admitted he pursued bankruptcy filings to develop a payment plan, stressing that he always intended to make good on his debts. He also explained that because his accountant told him he would have to pay interest on his tax delinquency, he "assumed" the delinquency "was a loan" from the federal government.

The jury found Sertich guilty on all counts. The district court sentenced Sertich to 41 months of imprisonment followed by three years of supervised released. Sertich filed and renewed a motion for a judgment of acquittal after the Government’s case-in-chief and the jury’s verdict. Sertich also filed a motion for a new trial following the jury’s guilty verdict. The district court denied his motions. Sertich timely appealed.

II. DISCUSSION

We have jurisdiction pursuant to 28 U.S.C. § 1291 and 18 U.S.C. § 3742(a). On appeal, Sertich challenges the district court’s jury instructions as to § 7202 and the sufficiency of the evidence supporting his convictions pursuant to §§ 7201 and 7202.

A. The Jury Instruction as to 26 U.S.C. § 7202

Sertich argues that the district court issued an incorrect jury instruction as to the elements of an offense under § 7202. He also contends that the district court wrongly denied his request for a new trial on this ground.

Sertich objected to the challenged jury instruction in the district court and therefore preserved this issue for appellate review. Normally, this Court reviews a jury instruction for abuse of discretion and gives the district court substantial latitude in describing the law. United States v. Thompson , 811 F.3d 717, 728 (5th Cir. 2016) (citing United States v. Williams , 610 F.3d 271, 285 (5th Cir. 2010) ). "Under this standard, we consider whether the charge, as a whole, was a correct statement of the law and whether it clearly instructed the jurors as to the principles of the law applicable to the factual issues confronting them." Id. (quoting Williams , 610 F.3d at 285 ). "However, when a jury instruction hinges on a question of statutory construction, our review is de novo." Id. (quoting Williams , 610 F.3d at 285 ). Since Sertich also raised this claim in his unsuccessful motion for a new trial, we review that as well. This Court reviews an order denying a new trial for abuse of discretion, evaluating questions of law de novo. United States v. Pratt , 807 F.3d 641, 645 (5th Cir. 2015).

Section 7202, titled "[w]illful failure to collect or pay over tax," provides that "[a]ny person required ... to collect, account for, and pay over any tax imposed by this title who willfully fails to collect or truthfully account for and pay over such tax shall ... be guilty of a felony." 26 U.S.C. § 7202 (emphasis added). The statute thus naturally breaks into two offenses: (1) willful failure to collect employees' taxes; or (2) willful failure to truthfully account for and pay over withheld taxes. At issue in Sertich’s case is the second offense: willful failure to truthfully account for and pay over the taxes. The district court instructed the jury that as to this offense, "the government must prove that the defendant failed to comply with one of the two duties for which he was responsible," either accounting for or paying over a tax. The district court explained by example that § 7202 is violated if "a responsible person who collects taxes from his employees and files [returns] with the Internal Revenue Service ... willfully fails to pay over the taxes to the United States."

Sertich challenges this jury instruction because he believes that liability under this portion of § 7202 requires that a person both fail to account for and pay over a tax. That is to say, Sertich suggests that § 7202 states the two elements in the conjunctive. He asserts that a disjunctive interpretation of § 7202 is contrary to the plain language, purpose, and statutory history of § 7202, and that the rule of lenity guides a decision in his favor. Under Sertich’s reading, a proper jury instruction would have noted that he would not be guilty if he had truthfully accounted for the taxes but failed to pay them over. The Government asserts that § 7202 is violated by the failure to account for or pay over a tax.

This is an issue of first impression in our...