United States v. Udo

• Decision Date: 24 July 2015
• Docket Number: No. 12–3092.,12–3092.
• Citation: 795 F.3d 24
• Parties: UNITED STATES of America, Appellee v. Enyinnaya E. UDO, Appellant.
• Court: U.S. Court of Appeals — District of Columbia Circuit

795 F.3d 24

UNITED STATES of America, Appellee

v.Enyinnaya E. UDO, Appellant.

No. 12–3092.

United States Court of Appeals, District of Columbia Circuit.

Argued Dec. 9, 2014.

Decided July 24, 2015.

Rosanna M. Taormina, Assistant Federal Public Defender, argued the cause for appellant. With her on the briefs was A.J. Kramer, Federal Public Defender. Tony Axam Jr., Federal Public Defender, entered an appearance.

Elissa R. Hart–Mahan, Attorney, U.S. Department of Justice, argued the cause for appellee. With her on the brief were Ronald C. Machen, U.S. Attorney, Frank P. Cihlar, Chief, Criminal Appeals and Tax Enforcement Policy Section, U.S. Department of Justice, and Gregory Victor Davis, Attorney. Elizabeth Trosman, Assistant U.S. Attorney, entered an appearance.

Before: HENDERSON, TATEL, and GRIFFITH, Circuit Judges.

Opinion

Opinion for the Court filed by Circuit Judge GRIFFITH.

GRIFFITH, Circuit Judge:

A jury convicted Enyinnaya Udo of twenty-five counts of aiding or assisting in the filing of a false tax return. He appeals those convictions, alleging that the court improperly instructed the jury and that he received ineffective assistance of counsel. Finding neither error in the jury instruction nor prejudice from the alleged ineffectiveness, we affirm Udo's conviction. Udo also appeals the restitution order imposed as a condition of his supervised release. The government has conceded error on this point, and we agree that the court improperly calculated the restitution. We thus remand the case to the district court to reconsider that aspect of Udo's sentence.

I

Udo was a certified public accountant (CPA) who owned a firm that derived most of its revenue from preparing personal tax returns. Trouble for Udo arose when the IRS noticed that returns he prepared frequently claimed thousands of dollars in unreimbursed employee expenses. An employee incurs these expenses, such as travel costs, use of a personal vehicle for business, or professional insurance premiums, as part of her job but is not reimbursed for them. A taxpayer can lower her tax liability or increase her tax refund by claiming deductions for such expenses on her tax return. See generally Internal Revenue Service, Miscellaneous Deductions, Department of the Treasury 2–3 (Dec. 29, 2014), http://www.irs.gov/pub/irs-pdf/p529.pdf.

Udo prepared dozens of returns that claimed unreimbursed employee expenses for clients who never told him they had incurred such expenses or asked him to claim them on their returns. Some of these claims were in excess of $20,000. Sometimes, Udo would arrange a loan that would provide a client with upfront cash in anticipation of the tax refund Udo's work had secured. Udo would then deduct his fee from this loan.

Suspicious of these returns, the IRS conducted a sting operation targeting Udo in 2008. An undercover agent posed as a walk-in client and asked for Udo's help preparing a fake tax return while she surreptitiously videotaped the consultation. After an initial calculation showed that the “client” owed taxes, Udo prepared a return claiming $14,684 in unreimbursed employee expenses without the agent suggesting that she had incurred them. This adjustment transformed the agent's apparent tax liability into a tax refund of $1,301. Udo had the agent sign the IRS form that claimed the expenses. He then arranged for his fee to be deducted from a loan that he arranged for her to receive that day in anticipation of her tax refund. A grand jury later indicted Udo on twenty-five counts of violating I.R.C. § 7206(2), which makes it a felony to “[w]illfully” help a taxpayer file a materially false tax return.

We recount only the events at Udo's trial relevant to this appeal. During his opening statement at trial, Udo's counsel told the jury that the case “comes down to ... he said, she said.” Trial Tr. 168 (Aug. 1, 2012). Counsel went on to promise that the jury would “hear from Mr. Udo,” who would explain that he acted in good faith based on what his clients had told him about their expenses. Id. at 173. But Udo never testified.

Instead, when the government's case came to a close, Udo's counsel asked the court for a ruling limiting any cross-examination of Udo to those issues about which he would testify: his background, his education, and his knowledge of the law and his professional duties. Relying on Brown v. United States, defense counsel argued that a defendant who testifies in his own defense does not waive the Fifth Amendment's protection from self-incrimination to matters unrelated to his testimony. Cf. Brown v. United States, 356 U.S. 148, 154–55, 78 S.Ct. 622, 2 L.Ed.2d 589 (1958). In response, the government argued that, at the very least, Federal Rule of Evidence 608(b) permitted questioning Udo about his character for truthfulness.¹ Skeptical of Udo's request, the court stated that it would be “very, very, very surprised” if counsel was correct. Trial Tr. 67 (Aug. 3, 2012). After a short break to consider the question, the court announced that it would not limit cross-examination before Udo testified, and that his credibility was fair game for the government to examine.² Udo's counsel decided not to call him to testify.

After the parties rested, the court instructed the jury on the elements of I.R.C. § 7206(2) by tracking the language of the statute and using the same definition of “willfully” employed by the Supreme Court in Cheek v. United States, 498 U.S. 192, 201, 111 S.Ct. 604, 112 L.Ed.2d 617 (1991). Udo urged that to establish that he acted willfully, the government must also prove that he knew that the tax returns in question were materially false or fraudulent. The court refused that request. The court also instructed the jury on tax principles drawn from titles in the Code of Federal Regulations governing the Treasury Department and the IRS. Udo's counsel agreed to that instruction.

The jury convicted Udo on all twenty-five counts. At sentencing, the government's sentencing memorandum claimed that Udo owed $311,791 in restitution. An IRS revenue agent explained that he calculated this figure based on the twenty-five false returns Udo was convicted of preparing and numerous other false returns that the IRS discovered and considered to be part of Udo's same criminal scheme. After crediting payments that Udo's former clients had made toward outstanding tax liabilities, the government requested that the court order Udo to pay restitution of $262,966 as a condition of supervised release. The court sentenced Udo to twenty-four months imprisonment and ordered him to pay that amount in restitution as a condition of supervised release.

II

Udo argues that the court erred by failing to instruct the jury that I.R.C. § 7206(2) requires the government to prove beyond a reasonable doubt that he knew that the income tax returns in question were materially false. The government contends we must review the instruction for plain error because Udo made no objection to it at trial. Cf. Fed.R.Crim.P. 52(b) (permitting only plain error review for issues “not brought to the court's attention” below). Udo insists that he objected to the instruction before trial, preserving the question for our de novo review. See United States v. Stadd, 636 F.3d 630, 639–40 (D.C.Cir.2011). But we need not resolve this dispute. Udo's challenge fails under either standard.

I.R.C. § 7206(2) criminalizes “willfully aid[ing] or assist[ing]” in the filing of a false or fraudulent tax return. The Supreme Court has held that in tax cases, “willfully” or “willfulness” means “the voluntary, intentional violation of a known legal duty.” Cheek, 498 U.S. at 201, 111 S.Ct. 604 (internal quotation marks omitted). Udo maintains that he could not have voluntarily and intentionally aided or assisted in the filing of a false or fraudulent tax return without knowing that the returns were in fact false or fraudulent.³ He argues his conviction should be set aside because the instruction on the elements of the offense did not require the government to prove as much.

We have previously held that a court's refusal to give a requested jury instruction is not reversible error if that instruction was “ ‘substantially covered in the charge actually delivered to the jury.” ’ United States v. Hurt, 527 F.3d 1347, 1351 (D.C.Cir.2008) (quoting United States v. Taylor, 997 F.2d 1551, 1558 (D.C.Cir.1993) ). This follows from the principle that courts do not review discrete elements of a jury instruction in isolation but rather in the overall context of how the court told the jury to go about its work. See Boyd v. United States, 271 U.S. 104, 107, 46 S.Ct. 442, 70 L.Ed. 857 (1926).

Udo's argument falters under this standard. He seizes upon the court's failure to provide his proposed instruction as part of the instruction on the elements of I.R.C. § 7206(2), but he overlooks other instructions that “adequately conveyed the substance of the requested instruction to the jury.” Hurt, 527 F.3d at 1351. Beyond the specific instruction that Udo finds inadequate, the court also instructed the jury that “[g]ood faith is an absolute defense to the charges in this case,” and “[a] defendant is under no burden to prove his good faith; rather the prosecution must prove that the defendant knew the deductions and credits were false or fraudulent.” Trial Tr. 27 (Aug. 6, 2012). This instruction on good faith informed the jury in no uncertain terms that Udo had an “absolute defense” to the charges against him unless he “knew the deductions and credits were false or fraudulent.”Id. at 26–27. The jury thus understood that it could not convict Udo unless it found that he knew the returns were materially false—precisely what Udo wanted the jury to understand with his proposed instruction on the elements of I.R.C. § 7206(2).

Reading the instructions as a whole, we conclude that the court's instruction on good faith “substantially covered” the knowledge element that Udo requested. See Hurt, 527 F.3d at 1351. His challenge to the...