United States v. Sutton

F I L E D
United States Court of Appeals
Tenth Circuit
UNITED STATES COURT OF APPEALS
FEB 18 1998
TENTH CIRCUIT
PATRICK FISHER
Clerk

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v. No. 96-5189
(D.C. No. 96-CR-16-H)
JAMES E. SUTTON, (N.D. Oklahoma)

Defendant-Appellant.

ORDER AND JUDGMENT*

Before BALDOCK, LOGAN, and LUCERO, Circuit Judges.

After examining the briefs and appellate record, this panel has determined

unanimously to grant the parties’ request for a decision on the briefs without oral

argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1.9. The case is therefore ordered

submitted without oral argument.

Defendant James E. Sutton appeals following his conviction by a jury on one count

of submitting false documents to the Internal Revenue Service in violation of 18 U.S.C.

*
This order and judgment is not binding precedent, except under the doctrines of
law of the case, res judicata, and collateral estoppel. This court generally disfavors the
citation of orders and judgments; nevertheless, an order and judgment may be cited under
the terms and conditions of 10th Cir. R. 36.3.
§ 1001. The false documentation purported to substantiate defendant’s tax basis in his

residence1 for purposes of net operating loss carry forward deductions on income tax

returns. His 1990 and 1991 income tax returns, filed jointly with his spouse, claimed net

operating loss carryover deductions from that loss. During an audit, defendant submitted

false documentation that represented the tax basis in the residence as approximately

$201,000, rather than $155,000. Appellant’s Br. at 12 (referencing that defendant

admitted documents were falsified). On appeal defendant raises three alleged district

court errors.

Defendant first argues that the district court abused its discretion in excluding

expert testimony. Defendant attempted to present testimony from a tax expert explaining

an alternative tax basis computation for the residence. The expert would have testified

that, despite the discrepancy in documentation provided in response to the audit,

defendant correctly reported his tax liability in 1990 and 1991 because he made

improvements that increased the residence’s value. The district court excluded this

evidence, finding that computations of an alternative tax basis were not relevant to the 18

U.S.C. § 1001 charge that defendant made false representations during his audit.

The government need not prove pecuniary loss to establish a § 1001 violation,

United States v. Gilliland, 312 U.S. 86, 93 (1941) (explaining amendments to § 1001 that

broadened its application); rather, the gravamen of a § 1001 prosecution is false

1
Defendant’s personal residence was destroyed by a fire in 1989.

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documentation. Thus, it would be of no consequence if defendant were to establish the

accuracy of the tax liability in his 1990 and 1991 tax returns using different

documentation than originally submitted in the audit. Defendant’s proffered expert

testimony explaining an alternate method of establishing the tax basis in his property was

irrelevant.

Defendant next argues that the district court abused its discretion by admitting

certain impeachment evidence. The district court permitted two individuals to testify

about the approximate cost of remodeling or other improvements they performed on

defendant’s residence. The district court allowed the government to impeach one of those

defense witnesses, Ernie Hallmark, with evidence that he had pleaded guilty to conspiracy

to commit grand larceny, a felony.

Federal Rule of Evidence 609 generally permits use of prior felony convictions to

impeach a witness but contains an exception as follows:

(c) Effect of pardon, annulment, or certificate of rehabilitation.
Evidence of a conviction is not admissible under this rule if (1) the
conviction has been the subject of a pardon, annulment, certificate of
rehabilitation, or other equivalent procedure based on a finding of the
rehabilitation of the person convicted, and that person has not been
convicted of a subsequent crime which was punishable by death or
imprisonment in excess of one year, or (2) the conviction has been the
subject of a pardon, annulment, or other equivalent procedure based on a
finding of innocence.

Fed. R. Evid. 609(c).

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 The Oklahoma state court imposed a deferred sentence on Hallmark that defendant

claims was expunged after Hallmark completed that sentence. Defendant asserts that

under Oklahoma law this is not treated as a conviction and should be subject to the

exclusion of Rule 609(c). We held in United States v. Turner, 497 F.2d 406, 407 (10th

Cir. 1974), that a guilty plea on Oklahoma state charges is treated as a conviction even if

it results in a deferred sentence. Defendant argues that Turner does not control because it

was decided before the evidence rules became effective on January 2, 1975. Although

Turner predated the effective date of the rules, it was decided eighteen months after the

Supreme Court promulgated the rules, pending express congressional approval. See 1974

U.S.C.C.A.N. 7051, 7052 (1974) (legislative history explaining Supreme Court

promulgation, with July 1, 1973 effective date, and congressional action deferring that

effective date until full approval by Congress); Pub. L. No. 93-595, 1974 U.S.C.C.A.N.

(88 Stat. 1926) 2215. But even if Turner is not controlling and the district court erred in

allowing the impeachment, the error was harmless because the witness’ testimony was

irrelevant to the controlling issue whether defendant submitted false documentation.

Finally, defendant argues that the district court erred in rejecting his proposed jury

instructions. We review jury instructions to determine whether as a whole they correctly

state the law and fairly cover the issues presented. United States v. Janus Industries, 48

F.3d 1548, 1559 (10th Cir. 1995). The proffered instructions would have allowed the jury

to find for defendant if it concluded that defendant accurately reported his tax basis in the

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destroyed residence. A defendant is only entitled to instructions on a defense if there is

sufficient evidence in the record for the jury to return a verdict on that basis. United

States v. Grissom, 44 F.3d 1507, 1512 (10th Cir. 1995). We have already concluded that

the district court correctly rejected testimony that would support this theory. The district

court did not err in also rejecting the related jury instructions.

AFFIRMED.

Entered for the Court

James K. Logan
Circuit Judge

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