UNITED STATES COURT OF APPEALS
For the Fifth Circuit
No. 99-41372
UNITED STATES OF AMERICA,
Plaintiff-Appellant,
VERSUS
HENRY BLUME LOE,
Defendant-Appellee.
No. 99-41506
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
VERSUS
HENRY BLUME LOE,
Defendant-Appellant.
Appeals from the United States District Court
for the Eastern District of Texas
August 15, 2001
Before REAVLEY, SMITH, and DeMOSS, Circuit Judges.
DeMOSS, Circuit Judge:
In April 1998, a multi-count, superseding indictment was
returned against several individuals including Defendant Henry
Blume Loe (“Blume Loe”). Among the various counts charged against
Blume Loe were those for conspiracy to defraud the United States,
submitting false statements, and tax fraud. After several weeks of
trial, a jury convicted Blume Loe of all ten counts that were
charged against him, but the district court ultimately granted a
judgment of acquittal with respect to five of the counts.
On appeal, the government seeks a reversal of the district
court’s judgment of acquittal. Blume Loe cross-appeals, hoping to
reverse his remaining convictions and sentences. For the following
reasons, we affirm the convictions and sentences assessed against
Blume Loe, but reverse the district court’s judgment of acquittal.
I. BACKGROUND
In 1946, the Loe family started Loe’s Highport, Inc. (“LHI”),
a marina located on Lake Texoma on property leased from the United
States Army Corps of Engineers (“COE”). At the times pertinent to
these appeals, Cornelius Dewitte Loe, Jr. (“C.D. Loe”), and Babo
Beazley Loe (“Babo Loe”) operated LHI. Of their three sons, only
Blume Loe worked at the marina. Neither Cornelius Dewitte Loe,
III, nor William Loe played a significant role in the marina’s
operations, and neither was charged with any criminal activity in
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the indictment.
In 1996, the Federal Bureau of Investigation executed a search
warrant on the marina facilities of LHI, which later culminated in
the multi-count indictment against Blume Loe, C.D. Loe, Babo Loe,
and others. Not all of the counts were pressed against all of the
defendants. Thereafter, the district court partially granted a
motion to sever, and a trial on some of the counts against some of
the defendants occurred. That first trial pertained to Counts 17,
22-25, and 29-31 of the multi-count indictment and did not involve
Blume Loe. The second trial concerned the remaining counts and
included Blume Loe as a defendant. Approximately five weeks into
the second trial, however, one of Blume Loe’s attorneys became ill
and was unable to proceed. As a result, the district court severed
Blume Loe’s case and continued the trial with the remaining
defendants.
When the government finally proceeded with the third trial
against Blume Loe, he faced ten criminal counts, generally grouped
into three categories. First, Counts 1-5 charged Blume Loe with
conspiracy to defraud the COE and related substantive acts of
submitting false statements. Under the lease agreement with the
COE, LHI owed rent based upon a percentage of the gross receipts of
its business. LHI reported the rent to be paid on a COE form
called the “Graduated Rent System Rental Computation Form.” Count
1 alleged that Blume Loe entered into a conspiracy to defraud the
COE by submitting false rental numbers, and Counts 2-5 complained
3
of individual substantive acts of submitting false statements.
Second, Counts 12-15 charged Blume Loe with making false statements
on his personal income tax returns for the 1992-95 tax years. The
government maintained that in the returns for those years, Blume
Loe underreported his income and did not include as compensation
thousands of dollars that he received from an off-the-books account
of LHI. Third, Count 16 charged Blume Loe with failing to file a
Form 8300, a document required to be filed with the Internal
Revenue Service whenever a person receives $10,000 or more in cash
or cash equivalents in a business transaction. Specifically, the
government alleged that Blume Loe sold a boat to Gene DeBullet in
or around November 1994 for $21,000 in cash and that Blume Loe
failed to file a Form 8300 reporting that transaction.
The jury convicted Blume Loe on all counts, but the district
court granted a judgment of acquittal with respect to Counts 1-5.1
In general, the district court held that there was no evidence that
Blume Loe had anything to do with completing or filing the rental
reports with the COE or in supervising those persons who did. The
government filed this appeal to seek review of that judgment.
Blume Loe cross-appeals, maintaining that: 1) there was
insufficient evidence to support his convictions for the other five
counts; 2) the district court erred in calculating his sentence; 3)
1
Blume Loe moved for a judgment of acquittal on all counts after
the close of the government’s case in chief. The district court
took the matter under advisement and filed an order three months
after trial had ended.
4
the district court made improper evidentiary rulings; and 4) the
district court should have granted his motion for a mistrial based
on prejudicial communications between the jurors and others.
II. DISCUSSION
A. Counts 1-5
The government maintains that the district court erred in
granting Blume Loe’s motion, pursuant to Rule 29, for a judgment of
acquittal on Counts 1-5. When reviewing such a decision, we give
no deference to the district court’s ruling. United States v.
Baytank (Houston), Inc., 934 F.2d 599, 616 (5th Cir. 1991).
Instead, we review de novo a district court’s grant of a judgment
of acquittal, applying the same standard as the district court.
United States v. Sanchez, 961 F.2d 1169, 1179 (5th Cir. 1992).
That standard asks whether a reasonable jury could conclude that
the relevant evidence, direct or circumstantial, established all of
the essential elements of the crime beyond a reasonable doubt when
viewed in the light most favorable to the verdict. See United
States v. Scott, 159 F.3d 916, 920 (5th Cir. 1998). The standard
does not require that the evidence exclude every reasonable
hypothesis of innocence or be wholly inconsistent with every
conclusion except that of guilt, provided a reasonable trier of
fact could find that the evidence establishes guilt beyond a
reasonable doubt. Baytank, 934 F.2d at 616. “‘A jury is free to
5
choose among reasonable constructions of the evidence.’” Id.
(quoting United States v. Bell, 678 F.2d 547, 549 (5th Cir. Unit B
1982) (en banc)). And it retains the sole authority to weigh any
conflicting evidence and to evaluate the credibility of the
witnesses. United States v. Millsaps, 157 F.2d 989, 994 (5th Cir.
1998).
As previously noted, Count 1 alleged that Blume Loe, his
mother Babo Loe, and others entered into a conspiracy to defraud
the COE by submitting false rental numbers, in violation of 18
U.S.C. § 371, and Counts 2-5 complained of individual substantive
acts of submitting false statements, in violation of 18 U.S.C. §
1001.2 The crux of those five charges pertained to the conspiracy
charge as the individual substantive act counts were predicated on
Pinkerton v. United States, 328 U.S. 640 (1946).3 To establish a
violation of 18 U.S.C. § 371, the government must establish beyond
a reasonable doubt: 1) that two or more people agreed to pursue an
2
The indictment also referred to the aiding and abetting statute,
18 U.S.C. § 2.
3
“In Pinkerton, the Supreme Court held that ‘a party to a
conspiracy may be held responsible for a substantive offense
committed by a coconspirator in furtherance of a conspiracy, even
if that party does not participate in or have any knowledge of the
substantive offense.’” United States v. Gobert, 139 F.3d 436, 439
n.22 (5th Cir. 1998) (quoting United States v. Jensen, 41 F.3d 946,
955-56 (5th Cir. 1994)). Blume Loe’s liability for the substantive
offenses appears to be based on his coconspirators’ actions, which
were apparently clear violations of 18 U.S.C. § 1001. Blume Loe
does not challenge the government’s reliance on Pinkerton for
Counts 2-5.
6
unlawful objective; 2) that the defendant voluntarily agreed to
join the conspiracy; and 3) that one or more members of the
conspiracy committed an overt act in furtherance of the conspiracy.
United States v. Dien Duc Huynh, 246 F.3d 734, 745 (5th Cir. 2001).
Here, the district court generally observed that “[t]here is
no evidence that Henry Blume Loe had anything to do with completing
or filing the rental reports with the Corps of Engineers or
supervised those persons who did.” It further recited the
substance of various aspects of the government’s evidence: 1)
testimony and written job descriptions indicating that Blume Loe
had an important role and major duties at LHI; 2) testimony stating
that Blume Loe was brought in to run the business; 3) testimony
observing Blume Loe’s attendance in Babo Loe’s office discussing
marina business; 4) and testimony from Marie Ward, a coconspirator
of Babo Loe’s, that Blume Loe returned from a meeting with the COE
and stated certain possibly incriminating statements. Despite the
standard of review afforded motions for judgments of acquittal, the
district court found the evidence insufficient. Ultimately, the
district court seemed persuaded by the fact that there was no
direct evidence of Blume Loe’s participation in accounting
functions and by the fact that, regardless of any title held by
Blume Loe, the bulk of the evidence showed that Babo Loe ran the
marina.
Babo Loe’s management of LHI, however, does not mean that
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Blume Loe did not or could not have entered into a conspiracy as to
the underreporting of boat sales. Admittedly, none of the evidence
presented to the jury directly linked Blume Loe with the COE
reports. The government’s case clearly rested on circumstantial
evidence. We, however, do not differentiate between direct and
circumstantial evidence when reviewing a grant of a judgment of
acquittal. See Scott, 159 F.3d at 920. The key issue then is
whether the circumstantial evidence established all of the
essential elements of the crime beyond a reasonable doubt, and we
must draw all reasonable inferences from that evidence in favor of
the verdict.
Doing so, we find that the evidence cited by the district
court, and the evidence it did not mention, sufficient to convict
Blume Loe of a § 371 violation. A reasonable inference from the
testimony about Blume Loe being the “heir apparent” of the marina
business and from the job descriptions and other evidence
indicating Blume Loe’s level of responsibility at the marina is
that he knew about the underreporting of boat sales.4 It is not
unreasonable to infer that a son presumed to be the next head of
the corporation would probably know what is going on with the
affairs of that business, especially in light of his frequent
4
One of the descriptions denoted his responsibilities as
including 1) the supervision of employees in all departments, 2)
the review of weekly payroll and sales reports, and 3) the review
of monthly corporate financial statements.
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meetings with the parent that supposedly ran the business.
Furthermore, the jury could have reasonably concluded that Babo Loe
would not have sent Blume Loe to meet with the COE, where the
parties talked about matters such as future development and the new
lease format, unless he had some knowledge regarding the reporting
of boat sales. And most importantly, a reasonable inference from
Ward’s testimony about the statements made by Blume Loe after he
returned from meeting with the COE is that he knew about LHI’s
underreporting. Ward testified on direct testimony that after
returning from the COE meeting in Tulsa, Blume Loe said that “the
Corps told him that everyone kept two sets of books.” On cross,
she responded positively to defense counsel’s question as to
whether Blume Loe told her that the COE stated that LHI was due a
refund because LHI had been overpaying for brokerage boats and that
he wanted her to go back and try to calculate the refund. Later on
re-direct, Ward elaborated, stating that she told Blume Loe that
she did not have time and that the recalculation “wouldn’t offset
the other changes [LHI] had already made.” By “other changes,”
Ward meant prior underreporting by LHI. The jury could have
reasonably inferred that Ward’s statement that any new calculations
would not offset the previous other changes reflected a common
knowledge and tacit agreement by the parties involved in the
underreporting. There is no evidence showing that Ward had to
define “other changes” to Blume Loe or that Blume Loe responded in
any fashion demonstrating innocence. Rather, the evidence in the
9
record seems to suggest that Blume Loe accepted, without challenge,
Ward’s comments. Thus, even the evidence recited by the district
court could reasonably create the inference in the minds of the
jurors that Blume Loe knew of and was involved in the reporting of
the COE forms.
What is also equally damning of Blume Loe is the evidence that
the district court failed to discuss in its order. Besides failing
to note that Blume Loe sought the COE meeting, where the parties
discussed future development and the new lease format, the district
court did not evaluate in its order Blume Loe’s control and access
over the bank account where LHI kept the proceeds of the boat sales
that were not reported to the COE, and which he definitely utilized
for personal purposes. With respect to that latter fact, a jury
could have reasonably inferred that a person utilizing thousands of
dollars from a bank account would have had some knowledge of how
that money got there and had some direction in the money’s
procurement.
We recognize that some of the circumstantial evidence in
isolation can be read to suggest a possibility other than guilt.
But when viewed in the light most favorable to the verdict, neither
the total composition of that evidence nor certain items, such as
Blume Loe’s control over the off-the-books bank account and his
statements to Ward after the COE meeting, seem to suggest an
equally viable theory of innocence. So long as a reasonable trier
of fact could find that the evidence established guilt beyond a
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reasonable doubt, the evidence need not exclude every reasonable
hypothesis of innocence or be wholly inconsistent with every
conclusion except that of guilt. Baytank, 934 F.2d at 616. That
is the case here, and the jury was free to choose among the
reasonable constructions of the evidence: one of which was
consistent with Blume Loe’s guilt. Id. Therefore, we reverse the
district court’s grant of a judgment of acquittal; we direct that
the district court reinstate the jury’s guilty verdict on Counts 1-
5; and we remand for sentencing proceedings consistent with these
determinations.
B. Counts 12-15
On his cross-appeal, Blume Loe questions the sufficiency of
the evidence with respect to his convictions for Counts 12-15.
Those counts charged Blume Loe with making false statements on his
personal income tax returns for the 1992-95 tax years, in violation
of 26 U.S.C. § 7206(1).5 During each of those years, besides his
normal salary compensation, Blume Loe received approximately
$90,000, which he used to pay the premiums on a life insurance
policy on Babo Loe. He also received various smaller amounts,
which were not utilized for the life insurance premiums. The
5
To establish a violation of § 7206(1), the government must show
that 1) the accused willfully made and subscribed to a tax return,
2) the return contained a written declaration that it was made
under penalties of perjury, and 3) the accused did not believe that
the return was true as to every material matter. United States v.
Mann, 161 F.3d 840, 848 (5th Cir. 1998).
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monies given to Blume Loe came from the off-the-books account, into
which LHI diverted sales income that it did not report to the COE.
Blume Loe’s tax returns did not include the extra monies as income.
According to Blume Loe, the government did not establish a
violation of § 7206(1) because it failed to prove 1) that the extra
monies constituted compensation or taxable income and 2) that he
knew that the income was taxable income.
We need not expend too much energy on Blume Loe’s arguments as
they are unavailing. The government introduced substantial
evidence reflecting Blume Loe’s guilt. First, Babo Loe maintained
“commission files” that indicated that much of the additional
monies received by Blume Loe were commission payments, i.e.,
taxable income. Second, several government exhibits showed that
Blume Loe claimed a salary in excess of $100,000 a year, far more
than the $52,000 that he noted on his income tax returns. Third,
after the government began its investigation of LHI and the Loes,
Blume Loe’s 1996 W-2 form suddenly complied with the greater income
figures, reporting that he made in excess of $100,000. Fourth,
Blume Loe left a job making more than $100,000 a year to come work
at LHI. The jury could have reasonably inferred that Loe would not
have taken a 50% pay cut unless other remuneration would be
provided. Fifth, the jury could have reasonably concluded that
based on the fact that Blume Loe oversaw the sales department and
reviewed the salesmen’s commissions and the fact that he himself
was eligible for those commissions, Blume Loe knew that he would
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receive more than the reported $52,000 salary. Finally, the jury
could have reasonably inferred from LHI’s and the Loes’
underreporting of boat sales that LHI would need a way to dispose
of some of the extra funds and that under-the-table money to Blume
Loe would be a good candidate for such funds. In light of all the
proffered evidence, we believe that sufficient evidence existed for
the convictions on Counts 12-15.
C. Count 16
Blume Loe also appeals his conviction on Count 16, which
charged Blume Loe with failing to file a Form 8300, a document
required to be filed with the Internal Revenue Service whenever a
person receives $10,000 or more in cash or cash equivalents in a
business transaction, in violation of 26 U.S.C. §§ 6050I(a) and
7203. Specifically, the government alleged that Blume Loe sold a
boat to Gene DeBullet in or around November 1994 for $21,000 in
cash and that Blume Loe failed to file a Form 8300 reporting that
cash transaction. In his brief, Blume Loe generally contends that
the evidence was insufficient because he was not present during the
actual cash transaction nor directed anyone not to file the form.
Instead, he maintains that he told Ward to write out a receipt for
DeBullet.
13
Having reviewed the considerable evidence proffered by the
government, however, we find Blume Loe’s argument meritless.
Although he initially contends, and points to evidence, that he was
not the one who received the cash from DeBullet for the boat sale,
other testimony contradicts that view. We must defer to the jury’s
assessment of credibility and accept its apparent belief that Blume
Loe obtained the cash from DeBullet and then gave it to Ward. The
evidence clearly established that before the DeBullet sale, Blume
Loe knew about the reporting requirement, that he had personally
made boat sales exceeding $10,000 in cash, and that he had
attempted to divert those funds so as to escape the reporting
requirement. Furthermore, the evidence revealed that Blume Loe
lied to the IRS about not having done cash sales greater than
$10,000, that he refused to turn over records to the IRS, and that
neither he nor LHI had ever filed a Form 8300 on sales exceeding
$10,000. Thus, at the time of the DeBullet sale, the evidence
suggested that the jury could reasonably infer that Blume Loe had
the intent and knowledge to do the crime.
Of course, Blume Loe insists that he bears no responsibility
because he instructed Ward to document the transaction and because
he never told her not to do the Form 8300. But asking Ward to
document the sale does not mean that he wanted her to do the form.
Instead, the record indicates that LHI’s routine was not to file
the Form 8300; hence, a reasonable inference could have been that
Blume Loe was relying upon Ward to do the regular thing and not
14
file it. In any case, evidence showed that Blume Loe was the
person responsible for filing the Form 8300, and he cannot escape
blame for failing to do that act. Accordingly, we reject his
sufficiency of the evidence challenge as to Count 16.
D. Evidentiary Rulings
Besides his sufficiency of the evidence claims, Blume Loe
argues that the district court committed an “identifiable pattern
of consistently erroneous evidentiary rulings that disregarded the
evidentiary requirements and resulted in cumulative error that was
harmful in nature.” He charges that the district court “repeatedly
allowed summary witnesses with no personal knowledge whatsoever of
the events at issue to testify as to documents about which they had
no personal knowledge.” In addition, Blume Loe contends that the
district court admitted documents that were never properly
authenticated and that were never shown to be admissible business
records.
We review a district court’s evidentiary rulings for abuse of
discretion. United States v. Wilson, 249 F.3d 366, 374-75 (5th
Cir. 2001). After reviewing Blume Loe’s specific allegations, the
district court’s rulings, and the applicable law, we find no such
abuse. Accordingly, the district court’s evidentiary rulings are
affirmed.
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E. Alleged Sentencing Errors
Blume Loe also avers that the district court erred in its
calculation. With respect to that claim, he points to several
purported mistakes. First, Blume Loe maintains that the money he
received and then used to pay the life insurance premiums each
year should not have been included in the tax loss calculation for
1993-95. Second, he argues that the district court erred in
evaluating LHI’s purchase of a home in 1990 on his behalf as
relevant conduct and in including the “tax due” on that house in
the tax loss calculation. Third, Blume Loe believes that the
district court’s decision to include the value of the home as
taxable income for the tax loss calculation violated the holding of
Apprendi v. New Jersey, 120 S. Ct. 2348 (2000).6 Fourth, Blume Loe
challenges the district court’s inclusion in its tax loss
calculation $34,314.92 that Babo Loe’s notes indicate were paid
“tax-free” to Blume Loe. He states that the evidence is unclear as
to whether he received the money and that Babo Loe’s intent was to
give the funds tax-free. Finally, Blume Loe contends that the
district court wrongly utilized a 34% corporate tax rate in
calculating the tax loss, rather than the applicable 28% rate.
We review the district court's interpretation and application
of the sentencing guidelines de novo. United States v. Hill, 42
6
Apprendi held that any fact, other than a prior conviction, that
increases the penalty for a crime beyond the prescribed statutory
maximum must be submitted to a jury. 120 S. Ct. at 2363-64.
16
F.3d 914, 916 (5th Cir. 1995). On the other hand, factual findings
of the district court, such as what constitutes relevant conduct,
must be supported by a preponderance of the evidence and are
reviewed for clear error. United States v. Nevels, 160 F.3d 226,
229 (5th Cir. 1998). An amount of loss finding is also reviewed
for clear error. Hill, 42 F.3d at 919.
Upon reviewing Blume Loe’s arguments, the record, and the
applicable law, we find his points of error unavailing. With
respect to his first point, it resembles his sufficiency of the
evidence claims against Counts 12-15. We previously found the
evidence sufficient for Counts 12-15; and here, despite the
different standard, we find no clear error in the district court’s
assessment to include the $90,000 per year payments in the tax loss
calculation. Likewise, we do not believe that the district court
clearly erred in including the home and its value. The evidence
revealed that Blume Loe “took” a substantial pay cut to come to
LHI, and the district court could have reasonably inferred that the
house was intended to be additional compensation. That finding is
buttressed by the fact that Blume Loe’s compensation suddenly
jumped after the government began its investigation of LHI and the
Loes. The district court could reasonably infer from that sudden
jump that Blume Loe’s actual compensation in the earlier years
included the value of the home and that he was merely not reporting
it. Additionally, including the home’s value as relevant conduct
17
did not amount to an Apprendi violation. Contrary to Blume Loe’s
assertion, the district court’s consideration of the home’s value
did not result in a sentence in excess of the statutory maximum.
Blume Loe received a sentence well within the three-year statutory
maximum for a violation of § 7206(1). As for Blume Loe’s
contention that the district court should not have included the
$34,314.92 that Babo Loe purportedly gave tax-free, we again
conclude that the district court did not clearly err. That sum was
part of the amount that formed the basis of Count 14, and the
government meticulously traced the checks and the funds that
comprised virtually all of the contested amount to LHI corporate
funds. Finally, we see no support for Blume Loe’s argument that
the district court applied an incorrect tax rate. The revised
presentence report reflects application of a 28%, not 34%, tax
rate. In light of the preceding, we conclude that Blume Loe’s
contentions with respect to his sentence are without merit.
F. Mistrial
The final item in Blume Loe’s cross-appeal relates to the
district court’s denial of his motion for a mistrial based on
allegations of juror misconduct. We review such denials for abuse
of discretion. United States v. Denman, 100 F.3d 399, 405 (5th
Cir. 1996).
Here, two allegedly improper contacts with the jury occurred.
In the first incident, one of the bailiffs essentially told the
18
jurors that the present case had been previously tried with other
defendants, that the case had to be severed because of health
problems associated with one of the defense counsel, that the
district court believed that the case should be decided within
three weeks, and that the trial could last much longer if it did
not end in three weeks. Upon learning of the possible length of
the trial, the jurors all groaned. In the second incident, a juror
ran into one of the government’s witnesses during lunch. That
witness told the juror that he was testifying for the second time
due to the prior trial being called off because of a defense
counsel’s heart attack. When the district court became aware of
the two incidents, it conducted interviews with each juror. The
district court found no prejudice and continued with the trial,
although it did remove the offending bailiff.
Blume Loe contends that through the contacts, inadmissible
information reached the jury, abridging his Sixth Amendment right
to confront the evidence against him and resulting in convictions
based in part on guilt by association. We disagree. None of the
communications arising from the contacts were material or
prejudicial. They did not inform the jurors about the outcome of
the prior trial nor did they cast any aspersions on Blume Loe or
the other defendants in the prior trial. Furthermore, the
communications did not concern any facts that would necessarily
have been a focus of cross-examination by the defendant.
Consequently, we conclude that the district court did not abuse its
19
discretion in denying Blume Loe’s motion for a mistrial based on
allegations of juror misconduct.
III. CONCLUSION
For the foregoing reasons, we affirm the convictions for
Counts 12-15 and for Count 16; we reverse the grant of a judgment
of acquittal on Counts 1-5; we direct that the district court
reinstate the jury verdict of guilty on Counts 1-5; and we remand
the case for resentencing consistent with this opinion.
20