United States v. VanDemark
| Decision Date | 30 June 2022 |
| Docket Number | 21-3470 |
| Citation | 39 F.4th 318 |
| Parties | UNITED STATES of America, Plaintiff-Appellee, v. Gregory VANDEMARK, Defendant-Appellant. |
| Court | U.S. Court of Appeals — Sixth Circuit |
ARGUED: Patrick J. Hanley, Covington, Kentucky, for Appellant. Megan Gaffney Painter, UNITED STATES ATTORNEY'S OFFICE, Cincinnati, Ohio, for Appellee. ON BRIEF: Patrick J. Hanley, Covington, Kentucky, for Appellant. Megan Gaffney Painter, UNITED STATES ATTORNEY'S OFFICE, Cincinnati, Ohio, for Appellee.
Before: GILMAN, STRANCH, and NALBANDIAN, Circuit Judges.
This case is about a millionaire car salesman who tried to hoodwink the IRS. Gregory VanDemark owns the Used Car Supermarket, which sells cars from two lots in Amelia, Ohio. In 2013 and 2014, VanDemark funneled away his customers’ down payments and left them off his tax returns. He used this stashed-away cash to finance the mortgage on his mansion. The IRS caught wind soon enough. The government charged VanDemark with crimes related to his scheme, and a jury convicted him of six counts. VanDemark moved for an acquittal on three of these counts and a new trial on all six. The district court denied both motions. For the reasons below, we AFFIRM.
Gregory VanDemark made his fortune selling cars. He's built something of a minibusiness empire in Amelia, Ohio. At the center of it all is the Used Car Supermarket, a C-corporation owned solely by VanDemark. Flanking the Supermarket are VanDemark's three S-corporations: the VanDemark Group, the VanDemark Corporation, and Gregory Properties. Each supports the Supermarket in its own way.1 And because these are S-corporations, VanDemark must report flow-through income and deductions on his personal returns.
The Supermarket's clientele is by and large low-income and low-credit. Customers typically finance their cars by entering into lease-to-buy agreements. The process kicks off with a large down payment.2 These down payments, and VanDemark's efforts to hide them, are at the heart of this appeal.
Before 2013, everything was above board at the Supermarket on the tax front. The Supermarket's protocols ensured all the down payments remained within the IRS's view. To begin with, VanDemark kept a handwritten ledger at each of the two lots. Every time a customer made a down payment, his employees recorded it in one of these ledger books. They made sure to deposit every payment into the Supermarket's bank account as well. Afterward, employees entered the bank receipts into an accounting software called QuickBooks. And as a final step, VanDemark's tax preparer used the QuickBooks files to complete the necessary tax returns.
But in 2013, VanDemark began to short-circuit this process. He instructed an employee named Christopher McAfee to start stashing this cash in a safe at the main office. McAfee did as he was told. And, not surprisingly, the amount of cash deposited into the Supermarket's bank account plunged in 2013 and 2014. In 2012, VanDemark deposited $265,499.25 in cash into the account. But in 2013 and 2014, that number was much reduced to $12,194.63 and $71,150.86, respectively. Because the stashed-away cash never reached the bank account, it never made it into VanDemark's QuickBooks files. And because VanDemark's tax preparer relied on those QuickBooks files, he failed to report the cash on VanDemark's tax returns.
It turned out that VanDemark used most of this cash to pay the mortgage on his multimillion-dollar mansion. Wary of attracting the IRS's attention, VanDemark asked an employee at his bank to confirm the IRS reporting threshold. She told VanDemark that the bank had to report "[a]nything over 10,000 in cash" to the IRS. (R. 73, Trial Tr. (Luck), PageID 1086-87.) So with this information in hand, VanDemark began to make cash payments toward his mortgage several times a month, keeping each payment below $10,000.
But VanDemark's tax evasion didn't stop there. He overreported deductions on his personal returns as well. Aside from his Ohio mansion, VanDemark owned two other residences: a novelty house built in the shape of a paddleboat and an oceanfront property in Florida. VanDemark claimed construction, maintenance, and insurance expenses on these properties as business expenses for his S-corporations. He pulled this off by telling the IRS that he was building the paddleboat house as a bed and breakfast, the Florida residence was his business headquarters, and his Ohio mansion was a rental property. Thanks to these efforts, VanDemark and the Supermarket paid no federal income tax in 2013 and 2014.
Soon, all of this caught up with VanDemark. His enquiries at the bank had raised some eyebrows. The bank employee reported her conversation with VanDemark to her Bank Secrecy Act officer. This information made its way to the IRS, which deployed a special agent to investigate.
In December 2014, an IRS special agent contacted VanDemark. Posing undercover as a businessman, he expressed an interest in buying VanDemark's businesses. The pair spoke over the phone several times. In one of these calls, VanDemark spilled the beans. He boasted that he had about "$16 million in assets" and his businesses "net over $1 million a year." (R. 90, Gov't Ex. 2, PageID 1524-25, 1546.) VanDemark all but admitted to tax evasion by explaining that he "pulled out ... 25% of that big figure" "in the last couple of years [2013 and 2014]." (Id. at PageID 1549-50.) What's more, he kept track of the stashed-away 25% "just in case." (Id. at PageID 1551.) VanDemark let slip about his deductions as well. He admitted that he "shoved all expenses on the company" so that he wouldn't "end up paying a bunch of dang taxes." (Id. at PageID 1527.) And to top it all off, VanDemark confessed he was "kind of ... giving [the agent] information [he] shouldn't even be talking about." (Id. at PageID 1550.)
The IRS had heard enough. In July 2016, it executed search warrants at VanDemark's three residential properties and the two Supermarket lots. Agents recovered the handwritten ledgers from the two lots. They found VanDemark at his paddleboat-shaped house and interviewed him for over three hours. He told the agents that his QuickBooks files contained all of his business records. At no point did he mention the ledger books. Asked whether he had skimmed cash from his dealership, VanDemark claimed that his employees deposited everything into the Supermarket's bank account.
Fast forward a year and a half, and a grand jury indicted VanDemark on six counts. The first four charged VanDemark with helping prepare false tax returns, in violation of 26 U.S.C. § 7206(2). Counts One and Two dealt with the Supermarket's 2013 and 2014 corporate returns. Counts Three and Four concerned VanDemark's 2013 and 2014 personal returns. Count Five charged VanDemark with structuring payments, in violation of 31 U.S.C. § 5324(a)(3). And Count Six charged VanDemark with making false statements to federal agents, in violation of 18 U.S.C. § 1001.
The trial began in March 2020. After the government rested, VanDemark made a Rule 29(a) motion for acquittal on Counts One, Two, and Three. The district court denied the motion. But VanDemark renewed it twice before the jury reached its verdict: once at the end of his case and again after the district court instructed the jury. The district court denied the motion twice more.
The trial lasted six days. In the end, the jury found VanDemark guilty on all counts. VanDemark renewed his motion for acquittal under Rule 29(c). He also moved for a new trial on all six of his counts under Rule 33. In a 17-page written order, the district court denied both motions. In May 2021, the district court entered judgment. And now, VanDemark appeals.
"The district court's refusal to grant a motion to acquit is a legal question that we review de novo ." United States v. Keeton , 101 F.3d 48, 52 (6th Cir. 1996). We "must affirm the district court's decision if, ‘after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt.’ " United States v. Cunningham , 679 F.3d 355, 370 (6th Cir. 2012) (quoting Jackson v. Virginia , 443 U.S. 307, 319, 99 S.Ct. 2781, 61 L.Ed.2d 560 (1979) ). No doubt, "[t]his standard is a great obstacle to overcome." United States v. Hughes , 505 F.3d 578, 592 (6th Cir. 2007). What's more, "[t]he general hesitancy to disturb a jury verdict applies with even greater force when," as here, "a motion of acquittal has been thoroughly considered and subsequently denied by the trial judge." United States v. Lee , 359 F.3d 412, 418-19 (6th Cir. 2004).
And as for VanDemark's second motion: A new trial is an extraordinary remedy for "extraordinary circumstances." United States v. Burks , 974 F.3d 622, 625 (6th Cir. 2020) (quoting Hughes , 505 F.3d at 593 ). Only "when the verdict exceeds the bounds of reasonableness[ ] should the district court order a new trial." Id. at 625. Our "review of the trial court's ruling [denying a new trial] is limited to determining whether it was a clear and manifest abuse of discretion." Hughes , 505 F.3d at 593.
The first two counts charged VanDemark with assisting in the preparation of false corporate returns for 2013 and 2014. VanDemark's argument begins and ends with Commissioner v. Indianapolis Power & Light Co. , which says that a deposit isn't taxable income unless "the taxpayer has some guarantee that he will be allowed to keep the money."3 493 U.S. 203, 210, 110 S.Ct. 589, 107 L.Ed.2d 591 (1990) (emphasis added). VanDemark claims that the lease agreements tied the Supermarket's hands. If a customer decides not to purchase the car at the lease's end, says VanDemark, the customer can demand a refund of the down payment under the contract. And so, the argument goes, the Supermarket lacked the necessary "guarantee," and the down...
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