United States v. McKee

Opinions of the United
2007 Decisions States Court of Appeals
for the Third Circuit

10-29-2007

USA v. McKee
Precedential or Non-Precedential: Precedential

Docket No. 05-3297

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 PRECEDENTIAL

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No: 05-3297

UNITED STATES OF AMERICA

v.

KEVIN MCKEE,

Appellant

No: 05-3469

UNITED STATES OF AMERICA

v.

INGE DONATO,

Appellant

No: 05-3357
 UNITED STATES OF AMERICA

v.

JOSEPH DONATO,

Appellant

________

On Appeal from the United States District Court
for the District of New Jersey,
(D.C. Nos. 04-cr-00216-3, 04-cr-00216-2 & 04-cr-00216-1)
District Judge: Hon. Jerome B. Simandle

Argued: November 8, 2006

Before: SCIRICA, Chief Judge, McKEE and STAPLETON,
Circuit Judges

(Opinion filed: October 29, 2007)

Eileen J. O’Connor, Assistant Attorney General
John Hinton, III (Argued)
Alan Hechtkopf
Gregory Victor Davis

2
Brian D. Galle
Tax Division
Department of Justice
Post Office Box 502
Washington, D.C. 20044
Attorneys for Appellee, United States Department of Justice

Peter Goldberger (Argued)
Pamela A. Wilk
50 Rittenhouse Place
Ardmore, PA 19003-2276
Attorney for Appellants, Joseph Donato and Inge Donato

Rocco C. Cipparone, Jr., Esq. (Argued)
203-205 Black Horse Pike
Haddon, Heights, NJ 08035
Attorney for Appellant, Kevin McKee

George S. Leone, Esq.
Office of United States Attorney
970 Broad Street
Room 700
Newark, NJ 07102
Attorney for Appellee, USA

OPINION

3
McKEE, Circuit Judge.

Defendants, Kevin McKee, Joseph Donato, and Inge

Donato challenge their convictions for conspiracy to obstruct a

government function, failure to pay federal employment taxes,

and failure to file individual income tax returns for certain years.

Each defendant makes specific claims regarding his/her

conviction, and they collectively challenge the jury instruction

on the conspiracy count, the sufficiency of the evidence, several

evidentiary rulings, and the sentences that were imposed. Since

we agree that the district court’s jury instruction constructively

amended the indictment, we will vacate the Defendants’

convictions on the tax evasion charges in Counts 2 through 13

and remand for a new trial on those charges. In addition, we

will reverse Inge Donato’s conviction on Counts 14 and 16

because the evidence was insufficient to establish guilt beyond

a reasonable doubt, and instruct the district court to enter a

4
judgment of acquittal on those counts on remand.1

I. Background

During the period charged in the indictment, Joseph

Donato and Kevin McKee owned and operated McKee-Donato

Construction Company (“the Partnership”), a small New Jersey

carpentry and home renovation business. Inge Donato

functioned as the Partnership’s bookkeeper. All three are

longstanding members of the Reformed Israel of Yaweh

(“RIY”), a small religious sect founded by Leo Volpe that

opposes payment of taxes based upon the members’ religious

opposition to war and the taxes that fund it.

1
Inasmuch as we are vacating each of the defendants’
convictions on Counts 2 through 13, and Inge’s convictions on
two counts, we need not address the claims of error that pertain
to sentencing. We will, however, address certain evidentiary
rulings that are challenged in this appeal as the same issues may
again arise if the Defendants are retried on the tax evasion
charges.

5
 The Partnership employed members of RIY as well as

non-members. When providing the Partnership’s payroll

records to accountants for preparation of quarterly payroll tax

returns (IRS Form 941), Inge Donato omitted payroll

information for the employees who were members of RIY.

Consequently, federal withholding taxes were not deducted from

their paychecks. However, the correct payroll information was

provided for employees who were not members of RIY, and

their taxes were properly withheld from their paychecks. The

omission resulted in incomplete and inaccurate quarterly tax

returns for the Partnership for the applicable years. The

Partnership also failed to withhold or pay employment taxes that

should have been collected from RIY-member/employees for

those same quarters. In addition, Kevin McKee and Joseph

Donato failed to file their individual federal income tax returns

for the years 1997 through 2000. As we shall explain, Joseph’s

6
failure to file had consequences for Inge, who was also charged

with failure to file for those years.

Kevin McKee and the Donatos were each charged

separately with conspiracy to defraud the United States (Count

1), and employment tax evasion (Counts 2 through 13). In

addition, they were each charged with failure to file their

individual federal income tax returns for the years 1997 through

2000, in violation of 26 U.S.C. § 7203. (Counts 14 through

21).2 The court granted Inge’s motion for judgment of acquittal

on Counts 15 and 17, charging her with failure to file for 1997

through 2000, because the evidence did not establish that she

had income for those tax years. The court denied her motion for

judgment of acquittal on Counts 14 and 16 based upon evidence

that we will discuss detail below. The jury returned guilty

2
The Donatos were charged in Counts 14 through 17 and
McKee in Counts 18 through 21.

7
verdicts against all Defendants on each of the remaining counts,

and this appeal followed their sentencing.

II. Discussion.

A. Constructive Amendment to the Jury Instructions

Defendants all contend that the jury instructions on

Counts 2-13 were erroneous because they constructively

amended the indictment. Defendants concede they did not raise

this argument in the District Court, but claim they are

nevertheless entitled to relief because the instructions

constituted plain error. See Fed.R.Crim.P. 52(b). We agree.

United States v. Olano, 507 U.S. 725 (1993).

An indictment is constructively amended when evidence,

arguments, or the district court’s jury instructions effectively

“amend[s] the indictment by broadening the possible bases for

conviction from that which appeared in the indictment.” United

8
States v. Lee, 359 F.3d 194, 208 (3d Cir. 2004). We have held

that a constructive amendment is an exceptional category of

error because it violates a basic right of criminal defendants, the

grand jury guarantee of the Fifth Amendment. Id. at 154 (3d

Cir. 2002) (applying United States v. Adams, 252 F.3d 276 (3d

Cir. 2001)). “A constructive amendment to the indictment

constitutes ‘a per se violation of the fifth amendment’s grand

jury clause.’” Id. at 148 (quoting United States v. Castro, 776

F.2d 1118, 1121-22 (3d Cir. 1985)). A constructive amendment

of the charges against a defendant deprives the defendant of

his/her “substantial right to be tried only on charges presented

in an indictment returned by a grand jury.” United States v.

Syme, 276 F.3d 131, 149 (3d Cir. 2002) (citation omitted).

Thus, where a trial court constructively amends a jury

9
instruction, our plain error analysis presumes prejudice. Id.3

Here, in instructing the jury about conduct that could

establish the charged conspiracy, the court included failing to

report information to the Partnership’s accountant, and

falsifying books and records. The court explained:

Various schemes and devices may be used in an attempt
to evade or defeat a tax. Affirmative attempts to evade
federal employment taxes include, for example, filing

3
Courts of Appeals are split on whether a constructive
amendment to an indictment are per se reversible error under plain
error review. Compare United States v. Floresca, 38 F.3d 706,
712-13 (4th Cir. 1994) (en banc) (holding that constructive
amendments, which are per se reversible under harmless error
analysis are also per se reversible under plain error analysis) with
United States v. Fletcher, 121 F.3d 187, 192-93 (5th Cir. 1997)
(refusing to reverse a constructive amendment absent an objection
because “it could not have affected the outcome of the trial” and
therefore there was no prejudice under a plain error analysis); United
States v. Remsza, 77 F.3d 1039, 1044 (7th Cir. 1996) (“In the context
of plain error review, the amendment must constitute a mistake so
serious that but for it the defendant would probably have been
acquitted in order for us to reverse.”) (internal quotations omitted).
In United States v. Syme, 276 F.3d 131, 154 (3d Cir. 2002), we held
that although constructive amendments are not per se reversible, they
give rise to a rebuttable presumption of prejudice.

10
 false Employers Quarterly Federal Tax Returns (Forms
941), falsifying books and records so as to conceal the
payment of wages and the employment taxes due thereon,
or failing to report to your accountant all of the wages
paid to employees.

Appendix (“App”). 984 (emphasis added).4

The superseding indictment charged each of the

Defendants with attempted evasion of employment taxes by

preparing, signing, and causing the filing of false and fraudulent

federal employment tax returns. App. 73, in Counts 2 through

13.5 Even though the government introduced evidence that

books and records were falsified and information was withheld

4
In adopting this instruction, the court apparently relied upon
the points for charge that the government had tendered, and may not
have realized that the italicized language included conduct that was
supported by testimony, but not charged in the indictment.
5
These taxes were not due from any individual, but from the
employer, McKee-Donato Construction Company. Defendants were
prosecuted as third parties, alleged to have attempted to evade (or to
have aided and abetted the attempted evasion of) the taxes due from
the Partnership as the “employer.”

11
from the Partnership’s accountant, that conduct was never

charged in the indictment. Accordingly, the court’s instructions

had the effect of broadening the indictment to include conduct

not charged in the indictment; conduct that government

witnesses testified about during the course of the trial.

Defendants argue that the examples of tax evasion

explained in the jury instruction but not charged in the

indictment improperly broadened the indictment in violation of

Stirone v. United States, 361 U.S. 212 (1960). There, the Court

held that a defendant’s Fifth Amendment right to due process

includes the right to be tried only on charges returned by a grand

jury, and that right is violated if the evidence and jury

instructions broaden the possible grounds for conviction beyond

that alleged in the indictment. Id. at 218-19.

The government concedes that the jury instructions did

12
not match the charges contained in the superseding indictment.

However, the government reminds us that we must assess the

jury instruction as a whole and rely upon the “almost invariable

assumption of the law that juries follow their instructions.”

Richardson v. Marsh, 481 U.S. 200, 207 (1987). The

government cites numerous cases from other jurisdictions to

support its contention that “no constructive amendment arises

from the admission of acts not charged in the indictment when

the court’s instructions to the jury preclude the possibility that

the defendant was convicted on those acts.” See, e.g., United

States v. Gonzalez, 661 F.2d 488, 492 (5th Cir. 1981) (no

constructive amendment in trial for conspiracy to distribute

methaquaalone, despite admission into evidence of other types

of illegal narcotics).6

6
See also United States v. Johnson, 248 F.3d 655, 665 (7th
Cir. 2001) (admission of evidence of pre-conspiratorial events did not

13
 However, the problem here is that the jury instructions

broaden scope of conspiracy charged and therefore constructively
amend the jury instruction); United States v. Novak, 217 F.3d 566,
575 n.22 (8th Cir. 2000) (no constructive amendment where court
admitted evidence of wrongdoing prior to the time period alleged in
the indictment); United States v. Paredes-Rodriguez, 160 F.3d 49, 55-
56 (1st Cir. 1998) (no constructive amendment: “the setting forth, in
approximate form, of [a] date in the indictment does not preclude the
admission of evidence relating to events which occurred earlier.”);
United States v. Frank, 156 F.3d 332, 337-38 (2d Cir. 1998) (the
overt act element of a conspiracy charge may be satisfied by
admission of evidence of an overt act that is not specified in the
indictment, so long as there is no prejudice to the defendant); United
States v. Lokey, 945 F.2d 825, 831-32 (5th Cir. 1991) (proof of the
conspiracy’s existence before February 1987 was not a constructive
amendment of the indictment); United States v. Schnabel, 939 F.2d
197, 203 (4th Cir. 1991) (no constructive amendment where jury
instructions did not vary from the indictment); United States v.
Medina, 761 F.2d 12, 16 (1st Cir. 1985) (the possibility that the jury
might have convicted defendant of a different kidnapping than the
one listed in the indictment was obviated by the district judge who
charged the jury that evidence of a different kidnapping was not the
crime with which defendant was charged “but would at most
constitute evidence of similar overt acts as alleged in Count One of
the indictment”); United States v. Clark, 732 F.2d 1536, 1540 (11th
Cir. 1984) (no constructive amendment where defendants were
charged with conspiracy to distribute one type of drug, but where a
different drug was introduced at trial; the jury was clearly apprised
that they had to find conspiracy to distribute the type of drug in the
indictment to convict).

14
informed the jury that the Defendants could be convicted on the

basis of conduct that was not charged in the indictment, of

which they had no notice. The trial court gave a specific

instruction on tax evasion that identified the conduct that could

satisfy the affirmative act element of the charged conspiracy.

As will be discussed in greater detail below, the government

only had to prove one—not all—of the overt acts charged in the

indictment. United States v. Adamo, 534 F.2d 31, 38 (3d Cir.

1976). Nevertheless, the Defendants can not be convicted on

the basis of an overt act that is included in jury instructions, but

not charged in the indictment. Syme, supra.

The language we have italicized in the above-quoted jury

instruction, though only intended as examples of offending

conduct, plainly referred to particular evidence in the case and

therefore allowed the jury to convict the Defendants for

15
uncharged conduct. Accordingly, the court’s instructions

improperly amended the indictment. See, e.g., United States v.

Thomas, 274 F.3d 655, 670 (2d Cir. 2001) (constructive

amendment occurs when the terms of the indictment are

effectively modified by the court’s actions such that “there is a

substantial likelihood that the defendant may have been

convicted of an offense other than that charged in the

indictment”).7 Unless the government can show with certainty

7
Because the error affected the charging terms of the
indictment, it is a constructive amendment, not a variance. See
United States v. Castro, 776 F.2d 1118, 1121-22 & n. 1(3d Cir.
1985) (distinguishing constructive amendments from variances).
“[A]mendments . . . occur when the charging terms of the indictment
are altered . . . .” Id. at 1122. Variances occur when the charging
terms are unchanged, “but the evidence at trial proves facts materially
different from those alleged in the indictment.” Id. If a variance
between the indictment and the evidence “does not alter the elements
of the offense charged, we will focus upon whether or not there has
been prejudice to the defendant.” Id.; see also United States v.
Syme, 276 F.3d 131, 154 (3d Cir. 2002) (“The presumption of
prejudice [of constructive amendments] under plain error analysis
does not extend to the more frequently encountered category of
variances from an indictment, which may be dismissed as harmless

16
that the jury did not convict Defendants based on those improper

examples, we must find plain error and reverse Defendants’

convictions on Count 1.

We realize that the court properly admonished the jury

that Defendants were not on trial for any conduct not alleged in

the indictment. The government relies upon that introductory

instruction and the jury charge as a whole to argue that

Defendants were not prejudiced by the constructive amendment

because, as just noted, we presume that jurors follow the court’s

instructions on the law. Syme, 276 F.3d at 155. However, that

legal axiom cuts both ways here. The government’s argument

ignores the fact that the court then gave examples of evidence

that would establish the Defendants’ guilt for the charged

crimes, and included conduct the jury heard testimony about that

even when properly objected to at trial.”).

17
was not charged in the indictment. If we presume, as we must,

that the jury followed the court’s instructions, we must conclude

that there is a real possibility that the jury relied upon the

uncharged examples of conduct to convict the Defendants, just

as the court instructed.

The government insists, relying on United States v. Boffa,

688 F.2d 919 (3d Cir. 1982), cert. denied, 460 U.S. 1022 (1983),

that we can conclude “with certainty” that the Defendants’

conviction for tax evasion was based only on the affirmative

acts of preparing, signing, and causing the filing of false federal

employment tax returns, as alleged in the superseding

indictment. In Boffa, the court held there was no prejudice

where a curative instruction clarified that the jury could not

convict the defendants of a RICO conspiracy unless it found that

the conspiracy existed after a certain date. Id. The curative

18
instruction specifically pin-pointed the time period during which

the conspiracy had to have been established. Here, however,

there was no analogous instruction. The court did not tell the

jury to rely only upon evidence of the specific overt acts charged

in the indictment.8

In Syme, we recognized the difficulty of a defendant

proving actual prejudice in this situation. 276 F.3d at 154. That

difficulty caused us to reject the government’s argument that the

pattern of convictions demonstrated that the jury had not relied

on the court’s erroneous instructions. Id. at 155. As we have

explained, it is nearly impossible for a defendant to demonstrate

that his/her conviction was based on particular evidence or a

particular theory. Id. Similarly, there is no way to determine

8
In distinguishing between this case and Boffa, we do not
intend to suggest anything about whether such a curative instruction
would have negated the presumption of prejudice.

19
whether the jury convicted any or all of the Defendants here on

the second and third examples in the instruction. See id.

Accordingly, the presumption of prejudice arising from the

constructive amendment has not been rebutted. See id. at 155.

Leaving this error uncorrected would seriously affect the

fairness and integrity of the proceeding. Id. at 155-56 (citing

United States v. Olano, 507 U.S. 725, 736 (1993)). We must

therefore vacate Defendants’ convictions on Counts 2 through

13 of the superseding indictment and remand for further

proceedings on those counts.

B. Sufficiency of the Evidence

Although we are vacating the convictions on Counts 2

through 13, and remanding to the district court, the Defendants

can only be retried on those counts if the Government

introduced sufficient evidence to sustain those convictions;

20
otherwise, we must direct a judgment of acquittal on remand in

order to avoid a violation of the Double Jeopardy clause. We

must therefore determine if the evidence was sufficient to

convict any of the Defendants on any of those counts.

Accordingly, we will first address whether the evidence was

sufficient to sustain the convictions on Counts 2 through 13, and

then address the Defendants’ remaining challenges to the

sufficiency of the evidence.

We review the evidence in the light most favorable to the

government. We do not reweigh the evidence or assess witness

credibility. See United States v. Peppers, 302 F.3d 120, 126 (3d

Cir. 2002). Viewed in that light, we must sustain the verdict “if

a rational trier of fact could have found [the] defendant guilty

beyond a reasonable doubt, and the verdict is supported by

substantial evidence.” United States v. Coyle, 63 F.3d 1239,

21
1243 (3d Cir. 1995). If there is substantial evidence to support

the jury’s determination, we will “not disturb the verdict

although on that evidence we might not have made the same

decision.” Cooper, 121 F.3d at 133 (citing United States v.

Hannigan, 27 F.3d 890, 892 (3d Cir. 1994)). Thus, our inquiry

is limited to determining whether the jury’s verdict is

permissible. See United States v. McGill, 964 F.2d 222, 229 (3d

Cir. 1992). We begin that inquiry with the Defendants’

convictions for payroll tax evasion.

1. Payroll Tax Evasion.

Tax evasion requires the government to prove beyond a

reasonable doubt: (1) an attempt to evade or defeat a tax; (2) an

additional tax due and owing; and (3) willfulness. See Sansone

v. United States, 380 U.S. 343, 351 (1965); see 26 U.S.C.A. §

7201. The “affirmative act” of evasion can be “any conduct, the

22
likely effect of which would be to mislead or to conceal.” Spies

v. United States, 317 U.S. 492, 499 (1943). Here, we believe

that each element is established beyond a reasonable doubt as to

all Defendants for each of the periods charged in Counts 2

through 13.

a. Affirmative Act of Evasion

Defendants dispute the sufficiency of the evidence to

convict them of tax evasion for the last three quarters of 2000

because the authenticity of the signatures on the corresponding

941 forms was not established. Defendants claim that the jury

could not rely on 26 U.S.C. § 6064, which provides that the fact

of a signature on the tax return is prima facie evidence that the

return was signed by the named individual.

The government alleged that false Partnership

employment tax returns for the quarters ending in March 1998

23
through January 2001 qualified as affirmative acts of evasion for

Counts 2 through 13. Sansone v. United States, 380 U.S. 343,

352 (1965) (crime of tax evasion is complete as soon as the false

understatement of taxes is filed); see also United States v.

Schafer, 580 F.2d 774 (5th Cir. 1978), cert. denied, 439 U.S.

970; Swallow v. United States, 307 F.2d 81, 83 (10th Cir. 1962),

cert. denied, 371 U.S. 950 (1963).

The Defendants are correct in noting that the signatures

on the 941 forms were never authenticated. However, the fact

that a return may have been signed by someone other than one

of the Defendants does not necessarily undermine the jury’s

conclusion that Defendants knew the returns were false and

approved the filings to evade applicable employment taxes.

“The law does not require the defendant’s own signature to

sustain a conviction under § 7201: it merely requires sufficient

24
circumstances . . . from which a reasonable jury could find that

the defendant did authorize the filing of the return with his name

subscribed to it.” United States v. Fawaz, 881 F.2d 259, 265

(6th Cir. 1989). The jury could therefore reasonably have

concluded that either Joseph or Inge Donato signed the 941

Forms and that each Defendant authorized the fraudulent filings.

Inge Donato was McKee-Donato’s bookkeeper and there

was no evidence to suggest that her duties changed during

2000—the disputed time period. The jury could therefore

conclude that Defendants continued to execute the payroll for

the Partnership in the same manner they had during the previous

eleven years: Inge generated and managed the company payroll

records upon which the false tax returns were based, and each

payday Joseph Donato and/or Kevin McKee handed out

“untaxed” paychecks to their RIY-member/employees and

“taxed” paychecks to their other employees. Given our

25
obligation to draw all reasonable inferences in favor of the

verdict winner, Jackson v. Virginia, 443 U.S. 307 (1979), we

can not conclude that the evidence on Counts 2 through 13 was

insufficient.

Moreover, the overt acts of Joseph and Inge on behalf of

the Partnership may be imputed to Kevin McKee for the period

1997 through 2000. During that period, McKee shared the

obligation of filing employment taxes on behalf of the

Partnership. An employer has a duty to deduct from its

employees’ gross wages, scheduled amounts for their social

security contributions, and to pay income tax, 26 U.S.C.A. §§

3102(a), 3402(a); and to hold them in trust for the United States

until remitted. Id. § 7501(a). The tax laws provide for criminal

liability for any person who “willfully attempts in any manner to

evade or defeat any tax imposed by this title or the payment

26
thereof . . . .” 26 U.S.C.A. § 7201. Section 7343 of the U.S.

Code explains that the term “person,” as used in the chapter of

the Internal Revenue Code concerning criminal liability for tax

evasion, “includes . . . a member or employee of a partnership,

who as such officer, employee, or member is under a duty to

perform the act in respect of which the violation occurs.” 26

U.S.C. § 7343. Defendants all satisfy the code’s definition of a

“person” for purposes of criminal tax liability. Inge and Joseph

were actively involved in the process of filing the tax returns.

As partners, Kevin McKee and Joseph Donato each had a legal

duty to file accurate tax returns on behalf of the Partnership.

Accordingly, the fraudulent filings satisfied the overt act of tax

evasion for all three Defendants.

Defendants also argue that the government failed to

establish that they intended to conceal or mislead. They contend

27
that without that mens rea, the government’s proof fails. See

Donato’s Br. at 29. Defendants are correct that the mere failure

to file a tax return cannot, by itself, support a finding that he/she

affirmatively attempted to evade the payment of taxes. A person

cannot be convicted of tax evasion based merely on an omission;

“the person must also undertake an affirmative act of evasion.”

United States v. Romano, 938 F.2d 1569, 1573 (2d Cir. 1991);

see also McGill, 964 F.2d at 231 (mere failure to pay assessed

taxes, without more, does not constitute evasion of payment,

though it may satisfy requirements for willful failure to pay

taxes).

Here, however, we have more than a mere “omission.”

Defendants filed tax returns that falsely stated the total amount

of employee wages owed to the United States by deliberately

om itting R I Y - m e m b e r / e m p l o ye e wages. Their

28
misrepresentation of the total wages subject to employment

taxes was a willful act of concealment. Thus, they did not

merely fail to file, or fail to pay, like the defendants in Romano

and McGill respectively. Rather, they filed returns that misled

by affirmative misstatement, thus concealing crucial tax

information. See McGill, 964 F.2d at 231 (“[A]ffirmatively

evasive acts-acts intending to conceal-are punishable under §

7201.”). In rejecting a challenge to the sufficiency of the

evidence, we have instructed that Spies and its progeny:

simply require that there be some evidence from which
a jury could infer intent to mislead or conceal . . . . [I]t is
for the jury to determine, as a matter of fact, whether the
affirmative act was undertaken, in part, to conceal funds
from or mislead the government.

United States v. Voigt, 89 F.3d 1050, 1090 (3d Cir. 1996).9

9
As we have repeatedly stated, circumstantial evidence is
routinely offered to satisfy the intent element in criminal cases. See
generally United States v. Iafelice, 978 F.2d 92, 98 (3d Cir. 1992) (“It

29
Defendants’ misstatements of the total employee wages subject

to federal taxation satisfy this requirement, notwithstanding their

public and vocal opposition to taxes. See Swallow v. United

States, 307 F.2d 81, 83 (10th Cir. 1962) (“A wilful intent to

evade or defeat tax liability may be inferred from the conduct of

the taxpayer.”) (footnotes omitted).

Defendants also claim that their failure to file accurate

returns was equally consistent with innocent activity. Donatos’

is not unusual that the government will not have direct evidence.
[Mens rea] is often proven by circumstances.”). This rule applies
equally to tax evasion prosecutions. United States v. Voigt, 89 F.3d
1050, 1090 (3d Cir. 1996). The Supreme Court has stated that “any
conduct, the likely effect of which would be to mislead or conceal,”
is sufficient to satisfy the “affirmative act” element. Spies v. United
States, 317 U.S. 492, 499 (1943); accord United States v. Conley, 826
F.2d 551, 556 (7th Cir. 1987) (rational jury can infer intent to evade
upon learning of manner in which defendant conducted his financial
affairs). This requires that there be “some evidence from which a jury
could infer an intent to mislead or conceal beyond mere failure to pay
assessed taxes; it is for the jury to determine, as a matter of fact,
whether the affirmative act was undertaken, in part, to conceal funds
from or mislead the government.” Voigt, 89 F.3d at 1090.

30
Br. at 28 (citing United States v. Matsinger, 191 F.2d 1014,

1016 (3d Cir. 1951) (“[A] case may not be submitted to a jury

when the actions of the accused are as consistent with innocence

as with guilt . . . .”)). However, the evidence we have already

discussed was sufficient to allow the jury to conclude that the

false filing was intentional, see, e.g., 26 U.S.C.A. § 3102(a)

(employer’s duty to deduct from its employees’ gross wages

scheduled amounts for their obligations to make social security

and other tax contributions), even if Defendants’ also had an

“innocent” motive. See United States v. Jungles, 903 F.2d 468,

473-74 (7th Cir. 1990) (activity that is itself lawful can

constitute an affirmative act to evade); see also United States v.

Pollen, 978 F.2d 78, 86 (3d Cir. 1992) (transporting funds to

foreign countries, thereby making it more difficult to trace,

provides inference of intent to evade), cert. denied, 508 U.S.

906 (1993).

31
 Therefore, even if Defendants’ failure to accurately

report the total wages subject to employment taxes was

motivated by their desire to respect their employees’ religious

convictions, that “innocent” motive does not exempt Defendants

from their obligation to deduct federal taxes and accurately

report the wages subject to that tax, particularly since the

cornerstone of the tax system is voluntary self-reporting.

Thomas v. United States, 41 F.3d 1109, 1113 (7th Cir. 1994)

(The tax code “requires employers to withhold federal Social

Security and income taxes from the wages of their employees

and to hold those taxes in trust for the government. 26 U.S.C.

§§ 3102 , 3402. Employers must report and pay the taxes they

withhold quarterly.”). Given the evidence here, failure to

comply with these requirements by concealing wages subject to

withholding is sufficient to support a finding that Defendants

intended to evade the Partnership’s employment tax obligation.

32
 b. Tax Due and Owing

The existence of a tax deficiency is an essential element

of the crime of tax evasion. However, the government need not

allege or prove the precise amount of additional tax due and

owing. See United States v. Citron, 783 F.2d 307, 314-15 (2d

Cir. 1986). The evidence need only establish a substantial tax

deficiency. See United States v. Johnson, 319 U.S. 503, 517-18

(1943); United States v. Burdick, 221 F.2d 932, 934 (3d Cir.

1955). The government established this element with the

uncontested testimony of an IRS agent regarding the deficiency

charged in Counts 2 through 13.

c. Willfulness

As we have already explained, the element of willfulness

protects the average citizen from criminal prosecution for

innocent mistakes in filing tax forms that may result from

33
nothing more than negligence or the complexity of the tax laws.

Willfulness requires the voluntary, intentional violation of a

known legal duty as a condition precedent to criminal liability.

Cheek v. United States, 498 U.S. 192 (1991) (citations omitted);

see also United States v. Pomponio, 429 U.S. 10, 12 (1976).

Defendants argue that their opposition to payment of federal

taxes was openly expressed, Donatos’ Br. at 27, and, therefore,

the government failed to prove intent or wilfulness. They

characterize the proof at trial as “consistent with [defendants’]

having only intended to respect the religious convictions and

wishes of [RIY] employees.” Id. at 29.

We reject that argument based upon the totality of the

evidence we have already discussed. See United States v.

Habig, 390 U.S. 222, 222-23 (1968) (citing Swallow, 307 F.2d

at 83 (“The offense is complete when the taxpayer files a false

34
and fraudulent return with intent to evade or defeat any part of

the tax due. A wilful intent to evade or defeat tax liability may

be inferred from the conduct of the taxpayer.”) (footnotes

omitted)).

The Defendants were selective in not reporting wages.

The jury could certainly conclude that this was not merely

negligence or an unfortunate coincidence, but could only have

been willful and deliberate. That conduct was inherently likely

to mislead or conceal. See Spies, 317 U.S. at 499 (affirmative

willful attempt may be inferred from conduct such as keeping a

double set of books, making false entries of alterations, or false

invoices or documents, destruction of books or records,

concealment of assets or covering up sources of income,

handling of one’s affairs to avoid making the records usual in

transactions of the kind, and any conduct, the likely effect of

35
which would be to mislead or to conceal). “[W]e have often

held that repetitious conduct resulting in underpayment of taxes

may be sufficient to show willfulness.” Ashfield, 735 F.2d at

105 (consistent failure to include all income on the books and

records of a defendant’s business); see also United States v.

Alker, 260 F.2d 135, 148 (3d Cir. 1958) (“consistent

understatement [of tax liability] is evidence of willfulness”);

United States v. Frank, 245 F.2d 284, 287-88 (3d Cir. 1957)

(proof of a consistent pattern of underreporting “is itself

enough” to sustain a jury finding of willful tax evasion). See

also United States v. Greenlee, 517 F.2d 899, 903 (3d Cir. 1975)

(“a two year pattern of derelictions . . . [is] itself indicative of

the willfulness”). That is precisely what the government

established here.

Moreover, since Defendants were aware of Leo Volpe’s

36
criminal conviction, they knew that their religiously based

opposition to taxes did not excuse compliance with the revenue

laws or immunize them from the consequences of their willful

conduct. The Defendants argue that the government’s consistent

failure to prosecute them even though they were outspoken in

their opposition to paying taxes, caused the Defendants to

believe that the IRS had excused them from paying federal

taxes. The jury obviously rejected this interpretation of the

evidence, and so do we. On the contrary, willfulness may be

proven through the evidence of Defendants’ tax protestor

activities. See United States v. Hogan, 861 F.2d 312, 316 (1st

Cir. 1988) (jury was properly allowed to consider animosity

toward the IRS as an indication of defendant’s willfulness);

United States v. Grosshans, 821 F.2d 1247, 1252 (6th Cir. 1987)

(defendant’s attendance at tax protestor organizational meetings

admissible to show willfulness); United States v. Turano, 802

37
F.2d 10, 11-12 (1st Cir. 1986) (defendant’s statements and

actions at tax protestor meetings useful to establish state of

mind); United States v. Reed, 670 F.2d 622, 623 (5th Cir. 1982)

(defendant’s philosophy, motivation, and activities as tax

protestor admissible to show intent).

Defendants maintain that Volpe’s conviction for criminal

tax evasion was inadmissible because he was convicted for

failure to pay taxes, while Defendants were charged with failure

to file taxes. Defendants thus claim that the evidence was

irrelevant and prejudicial and should have been excluded. The

distinction Defendants make, though technically correct, is not

sufficient to alter our analysis of the evidence here because

Volpe’s conviction put Defendants on notice that failure to

comply with tax laws can have criminal consequences even if

motivated by religion.

38
 McKee argues that the government did not establish that

he knew that the Partnership was selectively withholding

employee payroll taxes or that he agreed to it since he did not

sign the fraudulent tax forms and was not involved with the

financial aspects of the Partnership. See Benatar v. United

States, 209 F.2d 734 (9th Cir. 1954) (finding that defendant

president’s signature on tax forms was sufficient evidence to

support conviction for conspiracy with corporation to defraud

Government by obstructing proper functions of IRS); United

States v. Sun Myung Moon, 718 F.2d 1210 (2d Cir. 1983)

(upholding conviction of conspiracy to file false tax returns

and/or obstruct justice based on evidence that executive

defendant closely scrutinized his personal affairs and was aware

of information contained in his tax returns); United States v.

Cyprian, 23 F.3d 1189, 1202 (7th Cir. 1994) (finding that

evidence supported conviction for conspiracy to defraud

39
government where defendant personally paid employees in cash,

and was responsible for filing tax forms on behalf of employees

and providing them with W-2 forms).

McKee is correct that unlike the proof in Benatar, Sun

Myung Moon and Cyprian, the government did not present

evidence that he signed tax forms, closely scrutinized the payroll

records that Inge maintained, regularly paid employees, or was

responsible for filing tax forms on behalf of employees or

providing them with W-2 forms. However, as we have already

stressed, “rank and file” employees were aware of what was

happening with withholding on wages of RIY members and

non-members. It was therefore reasonable for the jury to infer

that McKee, a named partner involved with the operation of the

business, also knew. The evidence established that employees

who worked for the company knew generally that “any [RIY]

40
member who worked for McKee-Donato did not pay federal

income tax . . . that was a help to both parties to not - - it was a

relationship to get out of paying those taxes.” App. at 658-59;

see also App. at 296-97 (non-RIY-member/employee testifying

that RIY member/employees were paid by a different payroll

company and were not subject to withholding). Moreover, the

cases McKee relies upon did not involve individuals with a long

history of protesting taxes and instructing others on how to

avoid audit trails to minimize chances of detection.

On this record, the jury could conclude that McKee had

to have known that the federal payroll forms omitted RIY-

member/employees’ information; yet, he took no steps to correct

the situation or report the unreported wages. That is sufficient

to establish willfulness.

2. Conspiracy To Defraud the Government (Count 1).

41
 In order to prove a conspiracy to defraud the United

States in violation of 18 U.S.C. 371 (Count 1), the evidence

must establish the following elements beyond a reasonable

doubt: (1) an agreement to defraud the United States, (2) the

defendant’s knowing and voluntary participation in the

conspiracy, and (3) each conspirator’s commission of at least

one overt act in furtherance of the conspiracy. See United States

v. Rankin, 870 F.2d 109, 113 (3d Cir. 1989).10 “To conspire to

defraud the United States means primarily to cheat the

government out of property or money, but also means to

interfere with or obstruct the government by deceit, craft,

trickery, or at least by means that are dishonest.”

Hammerschmidt v. United States, 265 U.S. 182, 188 (1924).

10
The conspiracy that was charged in Count 1 is known as “a
Klein conspiracy,” referring to United States v. Klein, 247 F.2d 908
(2d Cir. 1957), cert. denied, 355 U.S. 924 (1958).

42
We address the sufficiency of the proof of each of these

elements in turn.

a. Agreement

Defendants make much of the fact that the government

failed to introduce any direct evidence of an agreement;

however, direct evidence is not required. Rather, a

conspiratorial agreement can be proven circumstantially based

upon reasonable inferences drawn from actions and statements

of the conspirators or from the circumstances surrounding the

scheme. See, e.g., United States v. Smith, 294 F.3d 473, 478 (3d

Cir. 2002) (A reasonable juror could certainly conclude that a

tacit agreement exists amongst a group of people when they

engage in “so many unusual acts.”); see also United States v.

Barr, 963 F.2d 641, 650 (3d Cir. 1992) (“It is well settled that

a written or spoken agreement among alleged co-conspirators is

43
unnecessary; rather, indirect evidence of [a] mere tacit

understanding will suffice.”). Thus, a conspiratorial agreement

does not have to be explicit. See United States v. Perez, 280

F.3d 318, 353 (3d Cir. 2002) (In determining the scope of the

criminal activity that the particular defendant agreed to jointly

undertake . . . the court may consider any explicit agreement or

implicit agreement fairly inferred from the conduct of the

defendant and others.”). Indeed, common sense suggests, and

experience confirms, that illegal agreements are rarely, if ever,

reduced to writing or verbalized with the precision that is

characteristic of a written contract. Rather, the illegal agreement

can be, and almost always is, an implicit agreement among the

parties to the conspiracy. See, e.g., United States v. Price, 13

F.3d 711, 728 (3d Cir. 1994) (many of the understandings in

drug distribution conspiracies are implicit).

44
 Here, proof of an agreement included undisputed

evidence of RIY’s anti-tax teachings, Defendants’ commitment

to those teachings, their positions within RIY, and their steady

ascent up the tiers of influence within the organization.

However, Defendants can not be convicted solely because of

their associations. See Barnes Found. v. Township of Lower

Merion, 242 F.3d 151, 163 (3d Cir. 2001) (citing N.A.A.C.P. v.

Claiborne Hardware, 458 U.S. 886, 918-19) (1982) (additional

citation omitted)). First Amendment protections require that the

government produce more than evidence of association to

impose liability for conspiracy. The Supreme Court has

instructed that, “[f]or liability to be imposed by reason of

association alone, it is necessary to establish that the group itself

possessed unlawful goals and that the individual held a specific

intent to further those illegal aims.” Claiborne Hardware, 458

U.S. at 920. Moreover, evidence of intent must be judged

45
“according to the strictest law.” Id. at 919.

We believe that the evidence here satisfies this

“strictissimi juris” doctrine. The government produced evidence

of RIY’s advocacy of non-tax-payment as well as overt acts and

omissions on the part of the Partnership to effectuate those

goals. For example, the Partnership failed to file 941 payroll tax

reporting forms for employees who were members of RIY so

that they did not have to pay federal taxes; yet, that information

was provided for employees who were not members of RIY.

Accordingly, the taxes of those nonmembers were withheld as

required by law. The jury could infer an agreement to run the

Partnership in a manner that was consistent with RIY’s

teachings based on the roles Kevin McKee and Joseph Donato

had in the Partnership. Both men were perceived as the “boss,”

exercising positions of supervisory authority at McKee-Donato

46
Construction. App. 292, 313, 318-19. Although Joseph Donato

was usually the one who handed employees their paychecks, the

evidence established that both men did so. Moreover,

depending on who was primarily responsible for a given job,

both McKee and Donato exercised final decision-making

powers. App. 319. Although Kevin McKee and Joseph Donato

never executed a written partnership agreement, the evidence

established that both regularly received Partnership distributions

over the years, and it was undisputed that both had an ownership

interest in the Partnership. App. 854.

McKee contends that he had no knowledge of any illegal

agreement and he could therefore not be convicted of

conspiracy. Although a defendant’s failure to report income can

be an overt act in furtherance of a Klein conspiracy, the

government must “still prove there was an agreement whose

47
purpose was to impede the IRS (the conspiracy), and that each

defendant knowingly participated in that conspiracy.” United

States v. Adkinson, 158 F.3d 1147, 1154 (11th Cir. 1998). Of

course, as we have just explained, where there is no direct

evidence “of an agreement by all for each to evade his income

taxes,” the government can rely on circumstantial evidence. Id.

Nevertheless, “[t]he failure to disclose income is, without more,

generally insufficient . . . .”, id., to support a conviction for a

Klein conspiracy. “To be sufficient, the evidence must

establish an agreement among the conspirators with the intent to

obstruct the government’s knowledge and collection of the

revenue due.” Id. “When the government relies upon

circumstantial evidence to establish a tax conspiracy, the

circumstances must be such as to warrant a jury’s finding that

the alleged conspirators had some common design with unity of

purpose to impede the IRS.” Id.

48
 McKee also argues that there was insufficient evidence

to convict him because the evidence did not establish that he

was involved with bookkeeping or general management. He

stresses that the evidence demonstrated that his partnership role

at McKee-Donato did not generally include business decisions

or filing the Partnership’s tax returns. For instance, the

representative for the firm that processed weekly payroll for the

Partnership testified that he dealt with Joseph Donato and every

941 payroll tax reporting form in evidence was purportedly

signed by either Joseph or Inge Donato, not McKee. Likewise,

no evidence was presented that McKee submitted (or even saw)

any payroll tax forms. The accountant for McKee-Donato

testified that during the eleven years that she did payroll tax

returns for the firm, she had never once spoken to McKee and

that she always received the company’s ledger from Inge

Donato.

49
 Nonetheless, inasmuch as we must interpret the evidence

in the light most favorable to the government and determine if

the evidence, so viewed, could establish guilt beyond a

reasonable doubt, United States v. Gambone, 314 F.3d 163 (3d

Cir. 2005), we believe the government’s proof of McKee’s

participation in the conspiracy and its failure to file 941s for the

Partnership was sufficient to establish his agreement.

It was widely known to McKee-Donato employees that

the paychecks of RIY-member/employees at McKee-Donato did

not have federal withholding taken out even though those taxes

were withheld from the paychecks of employees who were not

members of RIY. See App. 658-59, 290, 296-97. Moreover, for

a period of time, a separate payroll company was used for

employees who were not RIY members, see App. 296, and there

was a noticeable difference in the checks of members and

50
nonmembers. App. 300 (Michael Chambers, a Partnership

employee testified: “The paychecks were different, the

members’ paychecks were from the local bank, and all the

checks we received [sic] from the window envelope, mailing

envelope.”). One non-member/employee testified: “[I]t was

pretty noticeable that our checks were different. They came in

different envelopes each week.” App. 296 (Chambers).11 The

jury could certainly conclude that McKee knew at least as much

as his employees about the difference between the checks of

members and nonmembers. This is particularly true since

McKee occasionally handed out the paychecks, see App. at 327,

the company was very small and had only two partners, McKee

11
According to one witness, the non-RIY employees’
paychecks had a window envelope and were paid through Ajex
Enterprises, an outside bookkeeping company, whose name appeared
at the top of the check. App. 300, 430. The RIY-employees’ checks
were different. Id. at 299-300. They were paid by McKee-Donato
bookkeeping and appeared to come from the local bank. Id.

51
and the Donatos had a close relationship through the Partnership

as well as through RIY, and all three openly subscribed to the

anti-tax principles of RIY. App. 290 (Chambers testified: “They

[Joe and Kevin] didn’t believe in federal income taxes is the

statement Joe made . . . . Joe indicated that it was a war tax,

and they didn’t believe in war.”).12 In addition, McKee’s

personal belief that paying federal taxes was wrong was

expressed openly to Partnership employees. App. 320-21

(Michael Gruszkoski, a Partnership employee testified: “Joe and

Kevin both mentioned they don’t think paying federal taxes is

right, that the military spending on it was wrong.”).

The jury could conclude, based on the foregoing

evidence, that McKee intended that the business in which he

was a partner be run in a manner that was consistent with his

12
This statement was not admitted for its truth, but rather as
proof that Kevin McKee was open about his stated beliefs.

52
personal beliefs about the evils of paying taxes, and that he

entered an agreement to that effect. App. at 321. Additional

evidence proffered by the government further supports the jury’s

conclusion. This includes evidence that all three Defendants

were involved in leadership positions with RIY—a group that

counseled its members on how to conceal audit-trails in order to

avoid detection by the IRS, and the fact that McKee did not file

his personal federal income taxes. Given our deferential

standard of review, this evidence was clearly sufficient to

convince a reasonable fact finder beyond a reasonable doubt that

Kevin McKee had agreed with the Donatos to engage in

practices that interfered with the government’s ability to collect

taxes from the members of RIY who were employed by the

Partnership, and that all three were criminally culpable for the

Partnership’s failure to file 941 forms as charged in Counts 2

53
through 13.13

b. Participation.

To prove Defendants’ participation in the conspiracy, the

government also had to establish “a ‘unity of purpose,’ intent to

achieve a common goal, . . .” United States v. Wexler, 838 F.2d

88, 90-91 (3d Cir. 1988); see also United States v. American

Investors of Pittsburgh, Inc., 879 F.2d 1087, 1100 (3d Cir.),

cert. denied, 493 U.S. 955 (1989). The government must proffer

evidence that he/she knew of the agreement and intended both

to join it and to accomplish its illegal objects. See United States

v. Rankin, 870 F.2d 109, 113 (3d Cir. 1989).

Our discussion of the evidence of an agreement is equally

13
The evidence of Joseph and Inge’s agreement is even more
substantial than McKee’s. Everything we have discussed regarding
McKee applies with greater force to Joseph Donato who was more
directly involved in the business of the Partnership and an equally
active member of RIY. Inge functioned as the bookkeeper.

54
applicable here. The knowing and intentional participation of

Defendants in the charged conspiracy is a fair inference from the

evidence of their positions in RIY and their involvement in the

Partnership. A defendant’s knowledge and intent may be

inferred from conduct that furthered the purpose of the

conspiracy. See Direct Sales Co. v. United States, 319 U.S. 703,

711 (1943). Inge’s deliberate embrace of the conspiracy and its

illegal objectives is clear from her role in the preparation of the

federal payroll tax returns that falsely omitted the names and

wages of the RIY employees and from her signature on RIY

employees’ paychecks that McKee and Donato distributed.

Joseph’s deliberate participation was established by his role as

supervisor of McKee-Donato employees, his activities managing

the business, and ultimately by evidence of his signature on the

payroll records and tax returns.

55
 Kevin McKee’s participation was less direct. To support

its argument that his conviction should be sustained, the

government relies on case law holding that membership in a

conspiracy may be satisfied with evidence of only a slight

connection to the scheme. See United States v. McGlory, 968

F.2d 309, 321 (3d Cir. 1992). However, “those having no

knowledge of the conspiracy are not conspirators.” United

States v. Falcone, 311 U.S. 205, 210 (1940). “At a minimum,

. . . it must be shown that . . . a person has knowledge of the

conspiracy’s illicit purpose when he performs acts which further

that illicit purpose.” United States v. Klein, 515 F.2d 751, 753

(3d Cir. 1975). Nevertheless, it goes without saying that,

notwithstanding the quantum of evidence needed to connect a

defendant to a given scheme, guilt must still be established

beyond a reasonable doubt. To establish McKee’s participation,

we must determine whether there was sufficient evidence for the

56
jury to find that McKee was aware of the nature of the

conspiracy and that he was committed to it. See United States

v. DiPasquale, 740 F.2d 1282, 1292 (3d Cir. 1984).

McKee was a name partner in a business entity that was

obligated to file withholding forms and pay withholding taxes

to the government. Although the relevant tasks were principally

carried out by Inge Donato, the evidence we have already

discussed, including the size of the partnership, the general

knowledge of employees that the checks of RIY members were

different from those of nonmembers, and the relationship

between the three Defendants, supports an inference that McKee

knew and consented to the manner in which Inge carried out

those tasks, and that he participated in the scheme. McKee was

not an absentee partner who knew nothing of the Partnership’s

activities. He was responsible for resolving problems that arose

57
on a given project (App. 319); supervising RIY-

member/employees, assisting with hiring and firing (App. 292),

and periodically distributing paychecks to RIY-employees that

always omitted withholding. (App. 327) Although a

conspirator’s stake in the venture is not an essential element of

the crime of conspiracy, the existence of such a stake is relevant

to the question of deliberate participation. See Direct Sales Co.,

319 U.S. 703, 713. Here, the Defendants’ stake in the venture

satisfied both a financial and a philosophical motive; it allowed

Joseph Donato and Kevin McKee to have an income without

compromising their opposition to the tax system because they

could undermine the government’s ability to collect the taxes

they opposed. App. 658-59.

In addition, as we previously stressed, the government

introduced evidence that the fraudulent withholding was

58
common knowledge amongst the Partnership’s employees. A

reasonable juror could certainly conclude that a name partner

with day-to-day involvement in McKee-Donato also knew of the

fraudulent activity, and participated in it as a partner. This is

particularly true since that activity benefitted McKee by

furthering his personal belief system, while allowing him to

offer employment to RIY-members that did not compromise his

opposition to the “war tax.”

In United States v. Bellomo, 176 F.3d 580, 591-592 (2d

Cir. 1999), the defendant’s conviction was upheld for his

participation in a Klein conspiracy consisting of acts of

concealing income. The evidence established that the defendant

controlled an organization that filed false tax returns, and that he

supervised members of his “crew” who collected money that

was never reported to the IRS, including the organization’s

59
treasurer. The court concluded that a rational juror could infer

from the importance of the cash payments to defendant’s crew

that the defendant must have been aware of them and benefitted

from them. Id. at 591.

We realize, of course, that the Partnership’s business is

a far cry from the illegal enterprise in Bellomo. There are limits

inherent in any analogy that attempts to compare a legitimate

home repair and carpentry company to a “business” operation

run by organized crime that is concerned only with profit and the

coercion and intimidation necessary to ensure it. The evidence

here was that the Partnership’s business was conducted

professionally. Thus, any attempt to compare the Partnership

with the enterprise in Bellomo, is limited at best. Moreover,

unlike the defendant in Bellomo, McKee did not independently

control the organization that filed false tax exempt returns;

60
McKee’s business management responsibilities at the

Partnership were significantly less than those of Joseph Donato.

Nonetheless, McKee’s activities at the Partnership, combined

with all of the other evidence in the case is sufficient to allow a

jury to conclude that McKee was also aware that fraudulent tax

returns were being filed by the Partnership, and that he

participated in the scheme.

Defendants correctly remind us that association alone

will not support a conviction for conspiracy. United States v.

Cole, 704 F.2d 554, 557 (11th Cir. 1983). However, there is

much more here than mere association. Moreover, the jury did

not have to ignore the anti-tax beliefs of RIY members, or the

association between the Donatos and McKee, either within RIY

or in the Partnership itself.

Based on the evidence we have already discussed, the

61
participation element is also satisfied for both Joseph and Inge

Donato. See Sleight v. United States, 82 F.2d 459 (D.C. Cir.

1936) (a partner is liable for the criminal acts of a co-partner if

he possesses guilty knowledge of the criminal act of his

co-partner or is an accessory thereto either before or after the

fact) (emphasis added); see also United States v. Ward, 168 F.2d

226, 229 (3d Cir. 1948) (same).

c. Overt Act
Proof of a Klein conspiracy also requires proof of at least

one overt act in furtherance of the charged conspiracy. An overt

act is any act performed by any conspirator for the purpose of

accomplishing the objectives of the conspiracy. See United

States v. Falcone, 311 U.S. 205, 207 (1940) (“[T]he gist of the

offense of conspiracy . . . is agreement among the conspirators

to commit an offense attended by an act of one or more of the

conspirators to effect the object of the conspiracy”). The

62
government’s evidence of an overt act focused on Inge Donato’s

role in the preparation and filing of the payroll taxes.

“The Supreme Court [has] held that the criminal act of

one conspirator in furtherance of the conspiracy is attributable

to the other conspirators for the purpose of holding them

responsible for the substantive offense.” United States v. Lopez,

271 F.3d 472, 480 (3d Cir. 2001) (citing Pinkerton v. United

States, 328 U.S. 640, 647 (1946)). (quotations and original

brackets omitted); see also United States v. Guadalupe, 979

F.2d 790, 793 (10th Cir. 1992) (Under 18 U.S.C. § 371, a

conviction for conspiracy requires that the government prove

beyond a reasonable doubt that the defendants agreed to defraud

the United States and that one of the conspirators committed an

overt act in furtherance of the conspiracy.). However, an overt

act of one conspirator is the act of all, even absent proof of any

63
agreement directed to that act. United States v. Walls, 225 F.3d

858, 864 (7th Cir. 2000). Viewed against the backdrop of RIY’s

tax animus, the Partnership’s failure to report income of its RIY

member employees established the overt act of concealment.

See Bellomo, 176 F.3d at 591-92.

Accordingly, we reject Defendants’ challenge to the

sufficiency of the evidence to prove the conspiracy charged in

Count One.14

14
Defendants were not charged with conspiring to commit a
substantive offense, but more generally with conspiring to defraud the
United States. See United States v. Vasquez, 319 F.2d 381, 384 (3d
Cir. 1963). Willfulness is not an element of the crime of conspiring
to defraud the United States. See United States v. Shoup, 608 F.2d
950, 956 (3d Cir. 1979). Nevertheless, the Donatos also argue that,
based on our decision in United States v. Alston, 77 F.3d 713, 718-21
(3d Cir. 1996), the government was required to prove, in addition to
the statutory elements discussed in the conspiracy section supra, that
Defendants acted willfully with respect to the charged conspiracy.
We need not determine whether that case added an additional element
to the crime of conspiracy to defraud the United States because there
is clearly sufficient evidence of the Defendants’ willfulness with
regard to the substantive charges.

64
3. Failure to File Individual Tax Returns

a) Inge Donato

Inge Donato challenges the sufficiency of the evidence to

convict her for willful failure to file tax returns in 1997 and

1999, Counts 14 and 16. The district court granted Inge’s

motion to dismiss Counts 15 and 17 because the government did

not establish that she had income for those tax years. However,

the court denied her motion on Counts 14 and 16 based on

evidence of income in the form of proceeds of three Partnership

checks that purchased two cars titled in her name, and a paint

job on her home where she lived with Joseph. To sustain the

conviction, the evidence must be sufficient to prove each of the

following elements beyond a reasonable doubt: (1) she was

required to file the tax returns; (2) she failed to file them; and

(3) her failure was willful. See United States v. Foster, 789 F.2d

65
457, 460 (7th Cir. 1986). As we will explain, we agree that the

government’s evidence was not sufficient to establish her guilt

on Counts 14 and 16 beyond a reasonable doubt, and we will

direct the district court to enter a judgment of acquittal on those

counts.

A married individual’s tax responsibilities are separate

from those of her spouse with respect to her own income unless

she elects to file jointly. See 26 U.S.C.A. 1(a) (Married

individuals filing joint returns); 26 U.S.C.A. 6013 (Joint returns

of income tax by husband and wife). Accordingly, the district

court instructed the jury as follows:

[i]f the married couple files no returns, the law presumes
that the tax status of the husband and wife is married
filing separately. Therefore, if you find that no tax return
has been filed by a married person, you will assume that
his or her taxpayer status would be married filing
separately.

66
App. at 993. The court then informed the jury of the gross

annual income needed to trigger the legal requirement to file tax

returns in 1997 and 1999 for a taxpayer whose filing status was

married, filing separately. In 1997 that amount was $2,650 and

in 1999 it was $2,750.

The government conceded it lacked evidence that Inge

Donato was compensated for the services that she performed for

the Partnership with a regular paycheck, and that she was not

paid a salary. However, the government attempted to impute the

purchase of household items with McKee-Donato checks to her

as income. The government established that Partnership checks

totaling $29,887.80 were used to purchase a Honda Accord and

to pay for a paint job on the Donato’s residence in December

1997. The car was titled in Inge’s name. App. 852, 854. The

government thus claimed that Inge’s tax obligation in 1997 was

67
half the value of the Accord and the cost of painting the Donato

residence, or $14,943.90.

For the tax year 1999, the government presented evidence

that Inge earned half of the value of an Acura automobile that

was purchased with a Partnership check ($5,100). That car was

also titled in her name. The government’s theory was that the

proceeds from the Partnership checks in 1997 and 1999

constituted income to her because it represented compensation

for work Inge did for the Partnership. However, the government

did not establish that the proceeds were intended as

compensation for work Inge did for the Partnership or that if it

was, Inge knew that it was so intended and that she therefore

had a duty to file returns for those years.

At the outset, we note that the government’s theory of

“compensation” is technical in the extreme in that it attempts to

68
hold Inge criminally liable for knowledge of the definition of

“taxable income” that would more appropriately be expected of

a tax attorney or accountant, rather than a spouse who helped out

at her husband’s business over the years. Although the

government argues that the paint job and the cars were

compensation in lieu of a salary, it only charged her with one

half the value of the two cars and half the value of the paint job.

There is no attempt to explain why the checks could not just as

likely have been intended as support, or interpreted as such.

Moreover, if the payment was intended as compensation for her

work at the Partnership, there is nothing to explain why only

half of the total amount of the three checks constituted

compensation although the cars were solely in her name, and no

explanation is apparent to us.

Inge disputes that the cars and the paint job were income

69
under the tax laws. She argues that they were just as likely to

have been support or gifts from her husband, the breadwinner,

and that they therefore did not constitute income. See 26

U.S.C.A. §§ 61, 102(a), 2501(a) (“Gross income” for tax

purposes does not include gifts, which are taxable to donor,

rather than to recipient); see also Bors I. Bittker & Martin

McMahon, Jr., Federal Income Taxation of Individuals, ¶ 5.02

(“Amounts paid by breadwinners to support their spouses and

minor children are routinely excluded from the beneficiary’s

gross income even though they satisfy a legal obligation.”)

(2007).

Inge only had a duty to file if the money that was used to

pay for the cars and the paint job was income to her, and not a

gift or support. See, e.g., 26 U.S.C. § 2502(c) (When a gift is

made, the gift tax liability falls on the donor). Even assuming

70
that the proceeds of the Partnership checks constituted income,

she can not be criminally liable for failing to pay taxes on that

income unless she knew that she had a duty to pay the resulting

taxes and “voluntarily and intentionally violated that duty.”

Cheek, 498 U.S. 192. The government must prove that an

individual has a duty to file a tax return based on the receipt of

taxable income. Clawson v. United States, 198 F.2d 792, 794

(9th Cir. 1952). However, “[o]nly true income can be

considered in determining whether [a defendant] was obliged to

file an individual tax return, and . . . the prosecution has the

burden of establishing any money received as being true

income.” Id.

The government cites United States v. Fogg, 652 F.2d

551, 553-55 (5th Cir. 1981); and United States v. Lacob, 416

F.2d 756, 760 (7th Cir. 1969), to support its argument that it

71
established a prima facie case by proving that Inge received

unreported funds that had the appearance of income. However,

neither case supports that contention. Both cases involved

individuals who received funds in consideration of a business

arrangement or for legal work and then failed to report it.

Moreover, the nature of the consideration in those cases was

sufficient to itself put the recipient on notice that he was

receiving compensation. In Fogg, the defendant received

“kickbacks” from an orange juice supplier. Id. at 553-54. The

defendant did not report these “kickbacks” as personal or

corporate income. Id. at 54. The court explained the situation

as follows:

This appeal concerns the amazing attempt of
appellant, the corporate president of a thriving
food store chain, to skim approximately $80,000
per year off the wholesale price that his company
paid for orange juice and pour it, tax-free, into his
own pocket.

72
Id. at 553. That is not this case, and Lacob does not advance the

government’s position any farther.

In Lacob, the defendant was an attorney specializing in

personal injury litigation who received funds in the form of

settlement checks, but did not deposit the entirety of the checks

received; giving the appearance of having received less and

thereby underreporting income to the IRS. 416 F.2d at 760.

The government provides no authority to support its

claim that a married spouse’s purchase of shared household

items with a check from the working spouse’s business puts the

receiving spouse on notice that some portion of the proceeds

constitute income with a concomitant tax obligation.15 The

15
Given the frequency with which spouses voluntarily help
out by doing work for the family business owned by the other spouse,
the general proposition the government is relying upon could have
sweeping consequences that would impose criminal tax liability for
all manner of gifts and support.

73
distributions the government relies on here could just as

reasonably be viewed as support or a gift from Joseph Donato

to Inge. Indeed, the fact that the government attributes only half

of the value of the cars and the paint job to Inge is consistent

with that view. Without evidence tying these checks to

compensation for work Inge did for the business her husband

partially owned, those checks could just as well have been

contributions to the marital household or support. This is

particularly true of the funds used to paint the Donatos’ home,

and no attempt was made to separate those proceeds from

proceeds to purchase the two cars that were titled solely in

Inge’s name.

There is no evidence here that would allow a jury to

reasonably relate the amount of any of the checks to the amount

of time Inge “worked” at the Partnership, or to conclude that the

74
checks were intended to compensate her for work she had

historically done on an unpaid basis. For example, the

government did not show that her hours in 1997 and 1999 were

so markedly different than her hours in other years that she

would have known that the checks were intended as

compensation for work she had historically done without pay.

Similarly, there is no evidence that Inge did substantially more

work in 1997 than in 1999 and therefore no attempt to explain

the disparity in the amounts of the Partnership checks used to

purchase the Honda and the paint job one year ($14,943.90), and

the Acura two years later ($5,100).

The only direct evidence the government provided to

prove these items were intended as compensation for work done

at the Partnership consisted of the “expert” testimony of an IRS

agent. He gave his legal opinion that the purchase of the Honda

75
and Acura and paint job constituted income chargeable to Inge.

However, that expert opinion does not appear to be based on

anything more than the checks and Inge’s work at the

Partnership; work she had historically done without

compensation. Moreover, even if we accept that unsupported

opinion, Inge is no tax expert and clearly can not be charged

with the tax knowledge of a purported IRS tax expert.

Furthermore, although the government claims that these items

constituted a personal benefit to Inge, demonstrating a personal

benefit is not enough. Support and gifts also benefit the

recipient. Indeed, it is hard to imagine giving a gift that the

grantor does not intend to benefit the recipient. The same is true

of support; it certainly benefits the recipient who may be

dependent upon it. Thus, benefit alone can not establish income.

A transfer of property is income if it is the result of “the

76
constraining force of any moral or legal duty, constitutes a

reward for services rendered, or proceeds from the incentive of

anticipated benefit of an economic nature.” United States v.

Harris, 942 F.2d 1125, 1128 (7th Cir. 1991) (quoting

Commissioner v. Duberstein, 363 U.S. 278, 285 (1960)).

“Under Commission v. Duberstein, the donor’s intent is the

critical consideration in distinguishing between gifts and

income.” Harris, 942 F.2d at 1127 (citations and quotation

marks omitted). The evidence here does not establish beyond a

reasonable doubt that Joseph intended to compensate Inge for

her help by giving her money to paint the home they lived in,

rather than simply conveying a gift. “A transfer of property is

a gift if the transferor acted out of a detached and disinterested

generosity, . . . out of affection, respect, admiration, charity, or

like impulses.” Id. at 1128 (citation and quotation marks

omitted).

77
 Harris is instructive. There, the jury convicted two

women for tax evasion based on a substantial sum of money

each was paid by a very wealthy widower who enjoyed the

company of younger women. On appeal, the convictions were

reversed because the evidence failed to show the money was

intended as income as opposed to a gift, and because the

government did not establish the recipients knew the money was

intended as income. In reversing, the court of appeals explained,

“[t]his failure to show [the donor’s] intent is fatal to the

government’s case.” Id. at 1129.

The same fatal flaw undermines the government’s proof

here. Moreover, even if Joseph intended the checks as

compensation, there is nothing to show that Inge knew of any

such intent on Joseph’s part for the Partnership checks she

received in 1997 and 1999. Accordingly, her convictions on

78
Counts 15 and 17 can not stand, and we will remand with

instructions to vacate the convictions on those counts, and enter

a judgment of acquittal.16

b) Joseph Donato

Joseph Donato also argues that the government did not

prove his failure to file an individual federal tax return was

willful.

As is evident from the preceding discussion of Inge’s

conviction, and as the Court of Appeals for the Sixth Circuit has

explained:

The word “willfully,” as used in this statute,
means a voluntary, intentional violation of a
known legal duty. In other words, the defendant
must have acted voluntarily and intentionally and
with the specific intent to do something he knew

16
Because we reverse Inge Donato’s conviction on those
Counts, we need not address her challenge to the pertinent jury
instructions.

79
 the law prohibited, that is to say, with intent either
to disobey or to disregard the law. Negligent
conduct is not sufficient to constitute willfulness.
United States v. Tarwater, 308 F.3d 494, 510 (6th Cir. 2002).

This element is satisfied here by evidence of Joseph’s failure to

file, together with his participation in routine strategy sessions

with RIY members regarding how to avoid the creation of audit

trails, his failure to file federal payroll taxes for the employees

of McKee-Donato, evidence of his tax protest activities, and his

knowledge of the conviction and sentencing of Leo Volpe for

failure to pay federal income tax.17

17
We recognize that this same evidence applies with equal
force to Inge; however, as we have explained, the evidence did not
establish that she had a duty to file, and proof of her willfulness is
therefore not enough to support a conviction. On the other hand,
Joseph Donato knew that he had income from his Partnership; the
business was his livelihood, and there is no issue about his knowledge
of his duty to file.
We of course appreciate the fact that the jury quite naturally
may have believed that Inge would not have paid taxes on any of the
income she received from the Partnership even if Joseph intended to
compensate her and even if she knew of that intent. However, that is
not dispositive. Absent that intent on the part of Joseph, and absent

80
 Although a reasonable jury could not conclude that Inge

Donato was guilty of a failure to file her individual tax returns

on the strength of the evidence presented, see United States v.

Cooper, 121 F.3d 130, 133 (3d Cir. 1997), Joseph Donato’s

conviction is supported by the evidence. Accordingly, we will

affirm Joseph Donato’s conviction for failure to file his

individual federal tax returns.

C. Evidentiary Challenges

Kevin McKee challenges several evidentiary rulings, and

Inge and Joseph Donato adopt some of those challenges.

Although we have already granted all of the Defendants a new

trial on Counts 2 through 13, we still must consider the

evidentiary challenges relevant to those Counts in order to

provide guidance should the government choose to retry

Inge’s knowledge of such an intent, she simply can not be held
criminally liable for not filing returns as we have explained.

81
Defendants, and also to determine if a new trial should be

granted on any of the remaining counts. We hold that a new

trial is necessary only for Counts 2 through 13 based upon the

constructive amendment to the jury instruction that we discussed

at the outset.18

McKee challenges the evidence concerning the arrest and

prosecution of Leo Volpe. He argues that this evidence was

irrelevant and unduly prejudicial because “[a] defendant ha[s] a

right to have his guilt or innocence determined by the evidence

presented against him, and not by what happened with regard to

a criminal prosecution against someone else.” United States v.

Toner, 173 F.2d 140, 142 (3d Cir. 1949). Although we certainly

18
Our discussion of the evidentiary challenges pertaining to
Counts 2 through 13 necessarily overlaps our discussion of the
sufficiency of the evidence because much of the same evidence is
relevant to other counts in the indictment and that evidence had to be
considered as part of our analysis of the sufficiency of the evidence
to convict on other counts.

82
agree that none of the Defendants could be convicted based on

his association with Leo Volpe, that does not mean this

argument has merit. As the government points out, a jury may

properly take into account the defendant’s awareness of relevant

circumstances, including relevant court decisions that undermine

a defendant’s good faith defense with regard to interpretation of

the Internal Revenue Code. See Cheek, 498 U.S. at 202.

When willfulness is an element of a charged tax offense,

courts routinely allow the government to introduce evidence

that, prior to the conduct in question, a defendant became aware

of the tax improprieties inherent in that conduct. See, e.g.,

United States v. Dack, 987 F.2d 1282, 1285 (7th Cir. 1993).

Volpe’s prosecution and conviction for failure to pay taxes

based on religious practices embraced by the Defendants,

together with McKee’s knowledge of those facts, were thus

83
properly admitted for the purpose of disproving his good faith

defense even though Volpe’s charges were not identical to the

charges here. We also agree with the government that whether

the jury was correctly advised that Volpe was convicted of

willful failure to pay a tax or willful failure to file is irrelevant.

The applicable statute, 26 U.S.C. § 7203, governs persons who

both fail to file and fail to pay taxes and the willfulness element

applies equally to both.

We likewise find that the admission of evidence

regarding McKee’s marriage to Volpe’s widow was properly

admitted. We review the district court’s ruling for plain error

where, as here, there was no objection. App. 716 (objection

made and withdrawn). After Volpe died, Volpe’s widow

assumed a leadership role within RIY. McKee assisted her in

the leadership of RIY, and they subsequently married. As we

84
have explained, evidence of a tax protestor’s activities and

philosophies is admissible to prove willfulness. See, e.g.,

Grosshans, 821 F.2d at 1252. McKee’s relationship with the

leader of an organization that promoted tax-protestor

philosophies, and his leadership role, is relevant to his

willfulness. Moreover, even if the evidence of McKee’s

marriage to Volpe’s widow was improperly admitted, any error

would have been harmless in light of the overwhelming

evidence of McKee’s tax animus.

Defendants all object to the admission of statements by

Inge to a radio talk-show host, and statements by Joseph Donato

to law enforcement agents. We also review those rulings for

plain error and find none. Apart from Inge’s admission that she

does not pay taxes, Inge’s statements were offered to show that

RIY members openly protested taxes. That suggests an anti-tax

85
philosophy which was relevant to proving Inge Donato’s

willfulness. We note yet again that evidence of willfulness may

be found in a defendant’s tax protest activities and philosophies.

See Hogan, 861 F.2d at 316 (defendant’s attitude toward

Internal Revenue Service was relevant as indication of

willfulness of his attempted tax evasion); Grosshans, 821 F.2d

at 1252. Moreover, the limiting instructions were sufficient to

ensure that the jury considered the statements each defendant

made only with regard to his or her own guilt where appropriate.

McKee and Donato offer an alternative basis for the

judge’s alleged error in admitting Inge’s statements over the

radio. They maintain that the admission constituted plain error

under the Confrontation Clause of the Sixth Amendment and

violated the rule of Bruton v. United States, 391 U.S. 123

(1968). McKee and Inge make the same claims with regard to

Joseph Donato’s statements to the IRS. A Bruton analysis is

86
triggered where an admission of a co-defendant is so

“powerfully incriminating” or “devastating” that a limiting

instruction fails to adequately safeguard the defendant’s Sixth

Amendment rights. 391 U.S. at 135-36. Although Inge’s

statement was not a full confession, it provided evidence that

supported a key element of the government’s case: willfulness.

However, we do not agree that the circumstances here implicate

Bruton. The statements in question added little, if anything, to

the totality of the evidence against each defendant, the court

gave appropriate cautionary instructions, and the circumstances

are not such as to negate the effectiveness of those instructions.

Thus, the court’s rulings on these statements readily survive

plain error review. See Olano, 507 U.S. at 732.

Moreover, even if the district court erred in admitting the

radio broadcast evidence, it was harmless. Aside from Inge’s

87
broadcast, there was substantial evidence to establish that Inge,

McKee, and Joseph Donato had expressed their committed

opposition to paying the “war tax.” App. 321, 336-37, 531-33,

624-25, 650-52. Furthermore, Defendants’ conceded their

beliefs about the immorality of the federal tax system and their

self-exemption from the revenue laws. See Virgin Islands v.

Joseph, 964 F.2d 1380-90 (3d Cir. 1992) (holding that

admission of evidence in violation of Confrontation Clause was

harmless because it did not relate to the contested issue before

jury).

Likewise, there was no plain error in permitting the IRS

agent to testify about Joseph Donato’s admissions. These

included RIY’s open condemnation of the “war tax,” the non-

filing history of RIY’s members, and McKee’s status as

Donato’s business partner. App. 292, 354, 618-25, 648-49, 658-

88
59, 161-64. Defendants’ tax protestor philosophies and non-

filing histories were not contested, nor was Donato’s status as

McKee’s partner.19

D. Prosecutorial Misconduct

Finally, Defendants argue that the government committed

reversible misconduct during closing argument by questioning

the sincerity of their religious beliefs. Defendants contend that

misconduct occurred when the prosecution asked the jury why

the Defendants would not pay state taxes if their religious

beliefs were genuinely based on the “war” tax. The prosecutor

thus suggested that the only reason Defendants failed to file

19
Defendants further allege that the admission of Inge’s radio
interview and Joseph Donato’s statements to the IRS also violated
their Fifth Amendment right to a fair trial. This adds nothing to their
Bruton claims. See Bruton, 391 U.S. at 135-36 (analyzing the fair
trial consequences of Confrontation Clause violations). Moreover,
we reject the Defendants’ Fifth Amendment claim for the same
reasons we reject their Sixth Amendment claim.

89
state taxes was to hide their tax protestor activities, and to “stay

under the radar.” App. 1007. He also questioned how

Defendants’ beliefs explained their evasion of Social Security

and Medicare taxes. We do not believe that the prosecution’s

remarks “resulted in an egregious error or a manifest

miscarriage of justice.” United States v. Irizarry, 341 F.3d 273,

306 (3d Cir. 2003).

Although these remarks may be viewed as excessive or

overly zealous, they can also be viewed as a proper comment on

the evidence. Throughout the trial, Defendants introduced

evidence of their good-faith belief as well as the absence of IRS

action despite their open tax protest, to prove their lack of

criminal intent. These themes were advanced by Defendants in

their opening statements, their cross-examination of witnesses,

and in direct evidence of character and opinion evidence of

90
honesty, truthfulness and sincerity.20 See, e.g., App. 306

(defense cross-exam of witness Chambers regarding Joseph

Donato’s genuinely held belief against paying federal taxes

because he considered it a war tax), 336-37 (defense cross-exam

of witness Gruszkowski regarding Donato’s belief that the

federal tax supported war or killing), 638-39, 688, 495 (defense

cross-exam of witness Noto regarding defendants’ reputation for

honesty and trustworthiness), 503 (same, witness Gibson). But

compare App. 1026-27 (defense closing arguing that Donato’s

religious belief against paying the war tax is not his defense),

1032-33 (defense closing argument that individual defendants

were under no obligation to deduct taxes, only the construction

20
Defendants concede that appellant McKee’s opening theme
did advance the theme of religious sincerity, but argue that an
opening is not evidence and the government’s remedy, if McKee went
too far, was not to retaliate in closing, but to object and ask the court
to enforce its pretrial rulings. Donatos’ Reply Br. at 13, n.6.

91
company itself).

The prosecution was thus entitled to challenge

Defendants’ implicit good-faith defense, and to preemptively

address any sympathy arising from the Defendants’ religious

views.

CONCLUSION

For the foregoing reasons Defendants’ convictions on

Count 1 for conspiracy to defraud the United States are

affirmed. However, based on our constructive amendment

analysis, we will vacate Defendants’ convictions on Counts 2

through 13 of the superseding indictment and remand for a new

trial on those counts. Inge Donato’s convictions on Counts 14

and 16 will also be reversed and vacated, and the district court

will be ordered to enter a judgment of acquittal on both of those

counts on remand.

92