United States v. Ramon Aguirre

[DO NOT PUBLISH]

IN THE UNITED STATES COURT OF APPEALS

FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 09-13731 ELEVENTH CIRCUIT
MARCH 18, 2010
Non-Argument Calendar
JOHN LEY
________________________
CLERK

D. C. Docket No. 08-00053-CR-1

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

versus

RAMON AGUIRRE,

Defendant-Appellant.

________________________

Appeal from the United States District Court
for the Southern District of Georgia
_________________________

(March 18, 2010)

Before TJOFLAT, WILSON and FAY, Circuit Judges.

PER CURIAM:
 Ramon Aguirre appeals from his convictions and sentences for tax evasion,

in violation of 26 U.S.C. § 7201. On appeal, he raises various arguments related to

the district court’s denial of his motion to suppress, its evidentiary rulings, and his

sentencing. Aguirre contends that the court erred in denying his motion to

suppress because the warrant authorizing a search of New Era Tax Service

(“NETS”) was overly broad on its face, and the Internal Revenue Service (“IRS”)

agents who searched his office exceeded the scope of the warrant. Addressing the

court’s evidentiary rulings, Aguirre argues that the court abused its discretion

under Fed.R.Evid. 404(b) by: (1) denying his motion to exclude evidence that he

defrauded the Department of Veterans Affairs (“VA”), thus overruling his

objection that the government’s notice of its intent to introduce this extrinsic

evidence was untimely; and (2) prohibiting him from introducing evidence related

to Jose Cruzastol’s preparation of fraudulent tax returns for various individuals.

He also contends that the court infringed on his Sixth Amendment right to present

a defense by barring his proposed evidence concerning Cruzastol.

Regarding his sentence, Aguirre argues that the district court clearly erred in

calculating the tax loss amount at sentencing by holding him responsible for Rabel

General Service’s (“RGS”) corporate tax liability, because it failed to make factual

findings in support of its determination of the amount of RGS’s tax liability.

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Finally, Aguirre asserts that the court erred by increasing his offense level under

U.S.S.G. § 2T1.1(b)(1) based on his illegal receipt of VA benefits. In connection

with this argument, he asserts that, while this guideline may apply where a

defendant fails to report income from an illegal kickback scheme to the IRS, it

does not apply where a defendant conceals income from the VA. He further argues

that this increase to his offense level was inappropriate because his trial focused on

his failure to report his income to the IRS, not VA fraud.

For the reasons set forth below, we affirm in part, and remand in part for the

limited purpose of permitting the district court to make factual findings in support

of its determination of the amount of RGS’s corporate tax liability.

I.

A federal grand jury indicted Aguirre for the following offenses: (1) falsely

reporting that he and his wife had no taxable income for 2001 (“Count 1”);

(2) failing to file a personal income tax return for 2002 (“Count 2”); (3) failing to

file a personal income tax return for 2003 (“Count 3”); and (4) failing to file a

personal income tax return for 2004 (“Count 4”), all in violation of 26 U.S.C.

§ 7201. (R1-1).

The magistrate judge entered a scheduling order, which provided that, under

the court’s local rules, the government should provide Aguirre with written notice

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of any evidence it intended to admit under Fed.R.Evid. 404(b) within 20 days after

arraignment. The order specified that any notice of 404(b) evidence should

“outline in general form the evidence to be offered” and state the purpose for

which it was offered. Aguirre was arraigned on April 28, 2008.

Shortly after the magistrate entered the scheduling order, Aguirre filed a

written request that the government provide him with notice of any evidence of

previous crimes or bad acts that it intended to present at trial. On May 27, 2008,

the government responded, stating that it intended to introduce, under either Rule

404(b) or as evidence inextricably intertwined with the charged offenses, “any

evidence now known or later learned regarding the defendant’s prior frauds against

the government.”

Aguirre filed a motion to suppress, explaining that, on August 18, 2005, IRS

Agent Stephanie Huebner obtained a warrant to search the “office and storage

areas” of NETS, which was formerly known as J.R. Cruz Tax Service (“JRCTS”).

He further explained that Jose Cruzastol owned this tax preparation service, which

was located at 3107 Old McDuffie Road, Augusta, Georgia. Aguirre stated that he

owned an automotive repair service, RGS, which was located next to NETS at

3109 Old McDuffie Road. Aguirre alleged that, despite the fact that Huebner was

aware that he maintained a separate office at 3107 Old McDuffie Road, she failed

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to specify this fact in the warrant, and, on August 19, IRS agents searched the

entirety of the premises at 3107 Old McDuffie Road, including his office. Aguirre

arrived at the location during the search, and informed the agents that his office

was used only for RGS business. The agents, however, refused to discontinue their

search, and seized documents which, on their face, pertained to RGS. Almost two

months after the search, IRS agents informed Aguirre that he was the subject of a

criminal investigation. On November 3, 2005, March 14, 2007, and April 10,

2007, Aguirre met with IRS agents and answered their questions about RGS,

NETS, and his personal financial information.

Aguirre argued that the IRS agents who conducted the search violated his

Fourth Amendment rights, and requested that the court suppress any evidence and

statements obtained as a result of the search. Aguirre asserted that the agents

exceeded the scope of the warrant by searching his office and seizing RGS

documents. He argued that he had placed the agents on notice that his office was

used only for RGS business, and that the agents were required to discontinue their

search as soon as he provided them with this notice. Aguirre also argued that the

statements he made during his subsequent three interviews with IRS agents should

be suppressed because these interviews were based on the fruits of the illegal

search. He alleged that he became the subject of a personal tax fraud investigation

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based on the documents that IRS agents seized during the August 19 search.

Aguirre attached a copy of the search warrant and Huebner’s supporting

affidavit to his motion. The warrant authorized IRS agents to search the:

Office and storage areas of the business known as New Era Tax
Service fka J.R. Cruz Tax Service
3107 Old McDuffie Road
Augusta, Georgia 30906

The warrant listed the items to be seized as “contraband, fruits and

instrumentalities and evidence of the commission of the crime of a violation of 18

U.S.C. § 371 and 26 U.S.C. §§ 7206(1) and 7206(2) as described in the attached

affidavit.”

The warrant was supported by an affidavit executed by Huebner. In her

affidavit, Huebner alleged that the IRS had been conducting surveillance on NETS,

and that the results of this surveillance gave them reason to believe that Cruzastol

was preparing client tax returns that grossly exaggerated business expenses and

charitable deductions. Aguirre had prepared a fraudulent tax return for at least one

NETS client, and, along with Cruzastol, had attended a meeting with an IRS officer

in order to discuss the IRS’s concerns about NETS’s tax filings. Thus, Huebner

believed that Cruzastol filed false tax returns for NETS clients, and that Aguirre

was a NETS employee. Huebner stated that Aguirre’s hardware, software, and

documents likely contained evidence of tax fraud because he worked at NETS and

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had prepared a fraudulent tax return for at least one NETS client. Huebner

included NETS and JRCTS client documents in her list of items to be seized.

The magistrate conducted a hearing regarding Aguirre’s motion to suppress.

At this hearing, Huebner testified that, when she and other IRS agents arrived at

NETS offices to conduct the search on August 19, 2005, the door to Aguirre’s

office was unlocked. Although the door to Aguirre’s office had a picture of a car

on it, it did not bear any signs or lettering with the words “Rabel General Services”

or “RGS.” Aguirre arrived at NETS during the course of the search, and told the

agents that they should not be inside of his office because he used it to conduct

business on behalf of RGS only. In response to Aguirre’s statement, Huebner

asked the other IRS agents whether there was an RGS sign on Aguirre’s door, and

the agents informed her that there was no such sign, and that they had found

numerous documents related to NETS business inside of Aguirre’s office.

Huebner ordered the agents to continue the search. In addition, Huebner testified

that RGS was a tax client of NETS and JRCTS.

The magistrate entered a report and recommendation, recommending that the

court deny Aguirre’s motion to suppress. The magistrate found that, at the time of

the search, Aguirre’s office was unlocked and was not labeled as an RGS office.

The magistrate further found that the IRS agents did not exceed the scope of the

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warrant because Aguirre’s office fell within the parameters of the warrant. The

magistrate reasoned that the warrant authorized a search of NETS, and Aguirre

assisted with NETS business. The magistrate further found that the agents did not

exceed the scope of the warrant because there was no evidence that the agents

should have been on notice that 3107 Old McDuffie Road contained RGS offices

or property. In support of this finding, the magistrate noted that agents found

numerous NETS documents in Aguirre’s office. Addressing Aguirre’s argument

that IRS agents impermissibly seized documents related only to RGS, the

magistrate found that this seizure was permissible because RGS was a client of

NETS. The magistrate concluded that, because the August 19, 2005 search was not

illegal, Aguirre’s statements to IRS agents during his November 2005, March

2007, and April 2007 interviews should not be suppressed as fruits of an illegal

search. The court adopted the magistrate’s report and recommendation over

Aguirre’s objections.

On January 8, 2009, which was several days before trial, Aguirre filed a

motion in limine, informing the court that he had just received notice that the

government intended to introduce documents showing that he had illegally

received VA disability benefits. He argued that this evidence should be excluded

under Fed.R.Evid. 404(b) and 403. He asserted that the government’s disclosure

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of the VA documents occurred only five calendar days and two business days

before trial, thus depriving him of the ability to meaningfully defend against the

evidence. He also asserted that this disclosure violated the magistrate’s scheduling

order. Aguirre noted, however, that, in its discovery, the government had disclosed

to him an IRS memorandum in which Huebner related that she had contacted the

VA regarding Aguirre’s disability status.

Aguirre attached a copy of Huebner’s memorandum to his motion in limine.

In the memorandum, which was prepared in September 2007, Huebner averred that

she had called Kathy Hersey, a special agent employed by the VA Office of the

Inspector General, on June 8, 2007. In response to Huebner’s questions regarding

Aguirre’s disability status, Hersey stated that Aguirre was awarded 100% disability

status in 1999 based on his representation that he could not work due to a

disability. Aguirre had informed the VA that he had sold his automotive repair

business, and did not report to the VA that he subsequently found employment

elsewhere. Huebner stated that she asked for copies of Aguirre’s VA documents,

but “Hersey was reluctant to provide the documents since [the] VA was not

officially involved in the investigation.”

Aguirre also attached copies of the VA documents that the government had

recently provided to him. These documents included, among other things:

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(1) three letters from the VA to Aguirre, dated 2002, 2003, and 2004, asking that

Aguirre inform the VA if he had found employment or had become self-employed,

as his employment income could result in a decrease to his disability

compensation; and (2) a letter from the VA to Aguirre, dated 1999, informing

Aguirre that he was entitled to disability compensation in light of the fact that he

had sold his business and was unable to secure other employment.

The government also filed a motion in limine, requesting that, pursuant to

Fed.R.Evid. 609, Aguirre be prohibited from cross-examining any government

witness concerning the witness’s prior bad acts or specific instances of misconduct,

unless the matter involved dishonesty.

Immediately before the trial began, the government addressed Aguirre’s

motion in limine concerning the VA documents. The government stated that the

VA had initially refused to turn Aguirre’s documents over to Huebner, and that it

had provided Huebner’s memorandum about her conversation with Hersey to

Aguirre shortly after his arraignment. The government explained that it did not

obtain the VA records until Aguirre requested a document that Huebner had

referenced in her memorandum, and the government responded to Aguirre’s

request by issuing a subpoena for the VA records. The government averred that it

forwarded the documents to Aguirre immediately after it received them. The

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government conceded that the evidence of Aguirre’s VA fraud was extrinsic, but

asserted that it should be admitted because it provided a motive for Aguirre’s

failure to report his employment income to the IRS. The court deferred its ruling

on the matter.

During Aguirre’s trial, Huebner testified that she investigated Aguirre for tax

evasion for the years 2001-2004. Huebner identified certain documents as

financial statements that Aguirre had provided to banks between 2001 and 2004 in

order to obtain loans or other lines of credit. These documents generally reflected

that Aguirre received at least $80,000 in annual income from his employment with

RGS, and that he had over $1,000,000 in assets. Huebner also reviewed Aguirre’s

IRS records for 2001 to 2004, which reflected that Aguirre reported that he did not

receive any employment income in 2001. These documents also reflected that

Aguirre did not file a personal income tax return for tax years 2002, 2003, and

2004. As part of her investigation, she met with Aguirre on several occasions to

review his finances. During these meetings, they reviewed Aguirre’s and RGS’s

transactions, and Aguirre would classify each transaction as a business or personal

expense. Based on this process, Huebner was able to calculate Aguirre’s

unreported taxable income for 2001-04. During one of these meetings, Aguirre

told Huebner that he did not want to report his income in his tax returns because it

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would affect his VA disability payments.

After the conclusion of Huebner’s testimony on direct examination, Aguirre

addressed the government’s motion in limine to prohibit him from questioning

government witnesses about their previous bad acts. Aguirre argued that, in the

event that the government called Cruzastol as a witness, he should be able to

question Cruzastol regarding the fact that he falsified information such as

deductions on client tax returns, because these were acts of dishonesty. He

asserted that evidence that Cruzastol prepared fraudulent tax returns was “at the

heart of [the] defense” because he had relied on Cruzastol as a tax preparer. He

also argued that the evidence was admissible under Fed.R.Evid. 406 as evidence of

Cruzastol’s business habits. Aguirre stated that he also wished to present the

testimony of Lisa Owens Smith, who would testify that Cruzastol forged her name

to fraudulent tax returns.

The court determined that Fed.R.Evid. 404 and 403 prohibited the defense

from presenting evidence that Cruzastol filed fraudulent tax returns for various

individuals. The court reasoned that the defense sought to show that Cruzastol had

a particular character trait, and that he must have acted in conformity with this trait

when he handled Aguirre’s tax returns. The court further found that this evidence

regarding Cruzastol was extrinsic. The court explained that it did not want to

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suggest to the jury that it should compare Aguirre’s culpability to Cruzastol’s

culpability, or that it should consider whether Aguirre, rather than Cruzastol, was

properly prosecuted by the U.S. Attorney’s Office. Thus, the court determined

that, to the extent the government’s motion in limine sought to exclude this

evidence, it was granted.

Addressing his motion in limine to exclude the evidence of his VA disability

benefits, Aguirre argued that this was extrinsic evidence of which the government

had failed to provide timely notice, as required by Rule 404(b). Aguirre argued

that, even if Hersey had refused to give Aguirre’s VA documents to Huebner, the

government could have subpoenaed the VA documents. Aguirre further argued

that, in any event, these documents constituted extrinsic evidence that could cause

the jury to conclude that he had defrauded the VA.

The court stated that it had “some concern” that this evidence could confuse

the jury or prejudice Aguirre. It also expressed its concern with the timeliness of

the government’s disclosure, although it credited the government’s assertion that it

did not receive the VA documents until shortly before the trial began. With these

concerns in mind, the court ruled that the government could present only the VA

documents that reflected that: (1) Aguirre received 100% disability compensation

from the VA; and (2) he was required to report any employment income to the VA,

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as this could reduce his disability payments. The court reasoned that, “these

documents flush out precisely what [Aguirre] had to lose if he filed a true tax

return.” The court excluded the remaining VA documents, finding that the

introduction of all of this evidence could confuse the jury and prejudice Aguirre by

showing that he concealed another crime.

When Huebner resumed her testimony on cross-examination, she testified

that Cruzastol had prepared Aguirre’s personal tax returns during the 1990’s.

During her interviews with Aguirre, Aguirre told her that Cruzastol had handled

RGS’s corporate tax returns for tax years 2001-2004. Aguirre also told Huebner

that he had not reviewed the 2001 tax return that Cruzastol prepared for RGS.

Aguirre also told her that Cruzastol had prepared the financial statements that he

had provided to banks between 2001 and 2004, and that he had not reviewed these

statements after he received them from Cruzastol. Aguirre further stated to

Huebner that he thought that Cruzastol had filed his tax returns for him.

Brandon Barnes, a VA representative, testified that he had received a request

to bring Aguirre’s VA records to court. Aguirre objected to this line of questioning

and the introduction of documentary evidence from the VA, adopting his previous

objections to this evidence under Rules 403 and 404(b). Barnes identified a

document as a letter that had been sent from the VA to Aguirre in February 1999,

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and the court admitted this document into evidence over Aguirre’s objection.

Barnes explained that his letter notified Aguirre that his disability benefits had

been modified, and that he now received disability benefits at a rate of 100%

because he was unemployable. Barnes identified a set of three documents as letters

that were sent from the VA to Aguirre, each of which instructed Aguirre to notify

the VA if he received any income from employment, as this could decrease the

amount of compensation he received. Aguirre had received these letters in 2002,

2003, and 2004. The court admitted these letters into evidence over Aguirre’s

objection.

Shelley Berry testified that she had worked for Aguirre over the course of

four years, beginning in 2003. She testified that Aguirre was the “head man” who

ran NETS, and that Aguirre handled hiring decisions and writing checks on behalf

of NETS. On cross-examination, Berry testified that Cruzastol had inflated the

mileage reports on his clients’ tax returns. Cruzastol, along with another

employee, had been responsible for preparing client tax returns. Cruzastol had

prepared her personal tax returns in 2003 and 2004. Berry admitted that these tax

returns falsely reported that she did not receive any income from RGS.

After the conclusion of the government’s case, Aguirre presented the

testimony of several witnesses in his defense. Aguirre did not testify in his own

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defense, and none of the defense witnesses testified that Aguirre relied on

Cruzastol to file his personal tax returns between 2001-2004. The jury convicted

Aguirre of Counts 1-4.

In preparing Aguirre’s presentence investigation report (“PSI”), the

probation officer noted that, under U.S.S.G. § 2T1.1(a), the base offense level for

tax evasion was based on the amount of tax loss caused by the defendant’s

conduct. In calculating the tax loss, the probation officer found that Aguirre

should be held responsible for both his personal tax liability and RGS’s corporate

tax liability. The officer stated that, “RGS’s tax liability for tax years 2001

through 2004 was $40,676; $100,708, $54,043, and $43,918, respectively.” The

officer did not explain how he arrived at these figures. In addition, the officer

noted that IRS officials determined that Aguirre had a personal tax liability of

$108,204. The officer combined Aguirre’s personal and corporate tax liability to

find that Aguirre’s tax loss amount was $347,549. Pursuant to the loss table set

forth in U.S.S.G. § 2T4.1(G), the officer determined that this tax loss amount

yielded a base offense level of 18.

The probation officer then increased Aguirre’s offense level by two levels

under § 2T1.1(b)(1), because the fact that he did not report income between 2001-

2004 enabled him to receive VA disability benefits of approximately $15,708 each

16
year. The officer increased Aguirre’s offense level by another two levels under

§ 2T1.1(b)(2) based on his finding that Aguirre’s offense involved the use of

sophisticated means. Accordingly, the officer determined that Aguirre’s total

offense level was 22. Based on a total offense level of 22 and a criminal history

category of I, the officer set Aguirre’s guideline range at 41 to 51 months’

imprisonment.

Aguirre filed written objections to the PSI. He objected to the two-level

increase under § 2T1.1(b)(1) , arguing that his receipt of VA disability benefits was

not at issue in this case, and that § 2T1.1(b)(1) typically applied in situations where

a defendant had failed to report to the IRS income received from illegal kickbacks.

Aguirre also objected to the probation officer’s determination that RGS’s corporate

tax liability should be included in his tax loss amount under § 2T4.1, asserting that

the government had failed to present any evidence establishing the amount of

RGS’s tax liability.

At sentencing, Aguirre reiterated his objection to the increase under

§ 2T1.1(b)(1), again arguing that this guideline was typically applied where a

defendant failed to report income received from an illegal kickback scheme to the

IRS, not where one failed to report income to the VA. The court reasoned that

Aguirre’s receipt of VA disability benefits played a large role in his case because

17
his interest in these benefits motivated him to fail to report his employment

income. The court also reasoned that it saw no difference between a defendant’s

failure to report income to the IRS and a defendant’s failure to deal honestly with

the VA.

Aguirre also reiterated his objection to the PSI’s aggregation of his personal

tax liability and RGS’s tax liability. The government responded that, at trial,

Huebner had testified regarding Aguirre’s business and personal expenses. The

government asserted that this testimony had reflected RGS’s income. Aguirre

argued that no government agent had testified regarding RGS’s tax liability. The

court found that the PSI appropriately aggregated Aguirre’s and RGS’s tax

liabilities, but did not make any statement concerning the specific amount of

corporate tax liability attributed to RGS.

The court adopted the PSI’s factual findings and guideline applications, with

the exception that it found that Aguirre’s conduct did not warrant a two-level

increase for the use of sophisticated means under § 2T1.1(b)(2). Thus, the court

determined that Aguirre had a total offense level of 20 which, when combined with

his criminal history category of I, produced a guideline range of 33 to 41 months’

imprisonment. The court sentenced Aguirre to a term of 36 months’ imprisonment.

The court asked the parties if they had any objections to the sentence or the manner

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in which it was calculated, and Aguirre stated that he adopted his previously filed

written objections to the PSI.

II.

“We review a district court’s denial of a motion to suppress evidence as a

mixed question of law and fact, with rulings of law reviewed de novo and findings

of fact reviewed for clear error.” United States v. Lindsey, 482 F.3d 1285, 1290

(11th Cir. 2007). In addition, we view the facts “in the light most favorable to the

prevailing party in [the] district court.” Id. Where a defendant fails to raise an

argument before the district court, however, we will review the argument on appeal

only for plain error. United States v. Martinelli, 454 F.3d 1300, 1310 (11th Cir.

2006). In order to satisfy plain-error review, the defendant must demonstrate:

“(1) error, (2) that is plain, and (3) that affects substantial rights.” Id. at 1310-11

(quotation omitted). “If all three conditions are met, an appellate court may then

exercise its discretion to notice a forfeited error, but only if (4) the error seriously

affects the fairness, integrity, or public reputation of judicial proceedings.” Id. at

1311 (quotation omitted).

The Fourth Amendment guarantees “the right of the people to be secure in

their persons, houses, papers, and effects against unreasonable searches and

seizures.” U.S. Const. amend. IV. The Fourth Amendment’s Warrant Clause

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requires that a search warrant must “particularly describ[e] the place to be

searched, and the persons or things to be seized.” Id.; Maryland v. Garrison, 480

U.S. 79, 84, 107 S.Ct. 1013, 1016, 94 L.Ed.2d 72 (1987). The purpose of this

requirement is to prevent “wide-ranging exploratory searches.” Garrison, 480 U.S.

at 84, 107 S.Ct. at 1016. Statements obtained from a defendant as a result of an

illegal search may be suppressed as the fruit of an illegal search. See United States

v. Terzado-Madruga, 897 F.2d 1099, 1112-13 (11th Cir. 1990).

A warrant is sufficient where it describes “the place to be searched with

sufficient particularity to direct the searcher, to confine his examination to the

place described, and to advise those being searched of his authority.” United

States v. Burke, 784 F.2d 1090, 1092 (11th Cir. 1986); see also Steele v. United

States, 267 U.S. 498, 503, 45 S.Ct. 414, 416, 69 L.Ed. 757 (1925) (holding that

“[i]t is enough if the description is such that the officer with a search warrant can,

with reasonable effort[,] ascertain and identify the place intended”). The

particularity requirement allows a practical margin of flexibility, depending on the

type of property to be seized, and “a description of property will be acceptable if it

is as specific as the circumstances and nature of activity under investigation

permit.” United States v. Wuagneux, 683 F.2d 1343, 1349 (11th Cir. 1982).

In Garrison, the Supreme Court addressed a situation where the police

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obtained a search warrant to search a third-floor apartment, believing that there

was only a single apartment on the third floor. 480 U.S. at 80, 107 S.Ct. at 1014.

In fact, there were two apartments on the third floor, and the police, in executing

the search warrant, conducted a search of the second apartment before discovering

that it was a separate apartment. Id. Acknowledging that the search warrant’s

description of the place to be searched was inaccurate, the Supreme Court

nevertheless held that the warrant did not violate the particularity requirement

because the affiant had reasonably believed that the third floor housed only one

apartment. Id. at 85-86 & n.10, 107 S.Ct. at 1017 & n.10; see also United States v.

Ofshe, 817 F.2d 1508, 1514 (11th Cir. 1987) (holding that a warrant was

sufficiently particular, despite the fact that it failed to mention that one of the seven

offices in a multiple-use commercial building was used for a separate business,

because the officers reasonably believed that all of the offices inside the building

were part of the business that was the target of the warrant). The Supreme Court

also held, however, that the executing officers were “required to discontinue the

search of [the defendant’s] apartment as soon as they discovered that there were

two separate units on the third floor.” Garrison, 480 U.S. at 87, 107 S.Ct. at 1018.

Although Aguirre argued to the district court that the IRS agents exceeded

the scope of the warrant by searching his office and seizing RGS documents, he

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did not argue that the warrant lacked sufficient particularity on its face. As a

result, plain-error review applies to Aguirre’s argument that the warrant lacked

sufficient particularity. The court did not err, let alone plainly err, in failing to find

that the warrant lacked sufficient particularity because it failed to note that 3107

Old McDuffie Road housed an RGS office as well as NETS offices. Huebner’s

affidavit reflected that she and other agents had conducted surveillance of NETS

for approximately two years before they obtained the warrant, and that, during this

time, they observed that Aguirre prepared at least one tax return for a NETS client

and attended meetings concerning NETS business. In addition, this surveillance

revealed no indication that Aguirre’s presence or use of his office at 3107 Old

McDuffie Road was related to RGS, and not NETS, business. Moreover, RGS was

located at 3109 Old McDuffie Road, and thus had a separate address from NETS.

Accordingly, at the time Huebner executed her affidavit in support of the warrant,

she and other IRS agents, through their lengthy investigation of NETS, lacked

information that reasonably should have put them on notice that 3107 Old

McDuffie Road also housed an office and documents related only to RGS business.

Because Aguirre objected below that the IRS officers exceeded the scope of

the warrant by searching his office, he has preserved this issue for appeal, and we

review the district court’s rulings of law as to this issue de novo. The agents who

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executed the warrant did not exceed its scope. Once inside 3107 Old McDuffie

Road, the agents discovered that Aguirre’s office was unlocked, and that it lacked

any markings related to RGS. While the agents may have been on notice that this

was Aguirre’s personal office, the warrant, together with Huebner’s affidavit,

authorized a search of Aguirre’s office because he was believed to be a NETS

employee. By the time that Aguirre arrived at NETS and informed the agents that

his office was used for RGS business, the agents had already discovered numerous

documents inside the office that clearly related to NETS business. Accordingly,

the objective evidence available to the executing agents undermined Aguirre’s self-

serving contention that his office was not part of NETS. While Aguirre contends

that the warrant did not authorize the seizure of RGS documents, this contention

lacks merit because the warrant authorized the seizure of client documents, and

RGS was a client of NETS. Accordingly, the evidence available to the agents did

not reasonably place them on notice that Aguirre’s office was not part of NETS.

Thus, even assuming that Aguirre correctly argues that his subsequent interviews

with IRS agents were fruits of this search, the search was permissible and, as a

result, Aguirre’s statements did not warrant suppression as fruits of an

impermissible search.

III.

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 We review a district court’s decision regarding the admissibility of evidence

for abuse of discretion. United States v. Schlei, 122 F.3d 944, 990 (11th Cir.

1997).

Under Fed.R.Evid. 404(b):

Evidence of other crimes, wrongs, or acts is not admissible to prove
the character of a person in order to show action in conformity
therewith. It may, however, be admissible for other purposes, such as
proof of motive, opportunity, intent, preparation, plan, knowledge,
identity, or absence of mistake or accident, provided that upon request
by the accused, the prosecution in a criminal case shall provide
reasonable notice in advance of trial, or during trial if the court
excuses pretrial notice on good cause shown, of the general nature of
any such evidence it intends to introduce at trial.

Fed.R.Evid. 404(b). Only extrinsic evidence is subject to the requirements of

Fed.R.Evid. 404(b). Schlei, 122 F.3d at 990. “The policy behind 404(b) is to

reduce surprise and promote early resolution on the issue of admissibility.” United

States v. Perez-Tosta, 36 F.3d 1552, 1561 (11th Cir. 1994) (quotation omitted).

We consider three factors in determining the reasonableness of pretrial

notice under Rule 404(b): (1) when the proponent could have learned of the

availability of the evidence; (2) the extent of the prejudice to the opposing party

due to a lack of time to prepare to meet the evidence; and (3) how significant the

evidence is to the proponent’s case. Perez-Tosta, 36 F.3d at 1562.

Here, the district court did not abuse its discretion by denying Aguirre’s

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motion to exclude the documentary evidence of his VA fraud under Rule 404(b).

Aguirre correctly points out that the government did not timely provide him with a

document expressly informing him that it intended to introduce documents

indicating that he concealed his employment income from the VA so that he could

receive disability benefits. Aguirre certainly had some notice of this evidence,

however, because the government responded to his request concerning 404(b)

evidence by informing him that it intended to introduce any evidence of his “prior

frauds against the government,” and also disclosed Huebner’s memorandum

concerning the VA documents during discovery. Significantly, Aguirre failed to

explain below, and does not explain in his brief on appeal, how the lack of notice

deprived him of the ability to challenge this evidence at trial. Thus, he has failed to

demonstrate prejudice.

Finally, this evidence was significant to the government’s case because it

provided a motive for Aguirre’s failure to file tax returns. Although Huebner

testified that Aguirre told her that he did not want to report his employment income

because he received disability benefits, she did not testify about this subject at

length, and it does not appear that the government’s brief presentation of several

VA documents was needlessly cumulative. Accordingly, under these

circumstances, the court did not abuse its discretion in admitting this evidence.

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 IV.

Pursuant to Fed.R.Evid. 404(a), “Evidence of a person’s character or a trait

of character is not admissible for the purpose of proving action in conformity

therewith on a particular occasion.” Fed.R.Evid. 404(a). Nevertheless,

“[e]vidence of the habit of a person or of the routine practice of an organization,

whether corroborated or not and regardless of the presence of eye witnesses, is

relevant to prove that the conduct of the person or organization on a particular

occasion was in conformity with the habit or routine practice.” Fed.R.Evid. 406;

Loughan v. Firestone Tire & Rubber Co., 749 F.2d 1519, 1523 (1985).

We have distinguished evidence of an individual’s habit under Rule 406

from character evidence under Rule 404:

Character is a generalized description of one’s disposition, or one’s
disposition in respect to a general trait, such as honesty, temperance,
or peacefulness. Habit . . . describes one’s regular response to a
repeated specific situation. If we speak of character for care, we think
of the person’s tendency to act prudently in all the varying situations
of life, in business, in family life, in handling automobiles, and in
walking across the street. A habit, on the other hand, is the person’s
regular practice of meeting a particular kind of situation with a
specific type of conduct, such as the habit of going down a particular
stairway two stairs at a time, or giving the hand signal for a left turn,
or of alighting from railway cars while they are moving. The doing of
the habitual acts may become semi-automatic.

Loughan, 749 F.2d at 1524 (quotation omitted). In order to establish that evidence

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of an individual’s conduct on specific occasions rises to the level of admissible

habit evidence, the proponent must show that the conduct occurred so often that it

permits an “inference of systematic conduct.” Id. (quotation omitted).

In considering whether a defendant should be permitted to introduce

extrinsic evidence under Fed.R.Evid. 404(b), a district court should consider

whether the evidence bears “special relevance” to the defendant’s guilt, and

whether there are any other practical means by which the defendant could prove

his point. See United States v. Cohen, 888 F.2d 770, 775-76 (11th Cir. 1989);

United States v. Rodriguez, 917 F.2d 1286, 1287, 1289-90 (11th Cir. 1990),

vacated on reh’g in part on other grounds, 935 F.2d 194 (1991). For example, we

have held that the district court abused its discretion under Rule 404(b) by

excluding evidence that the defendants’ co-conspirator, who was also the

government’s key witness, could have executed the charged fraudulent scheme

without the defendants’ involvement, because this evidence bore a special

relevance to the defendants’ guilt. Cohen, 888 F.2d at 775-76. In addition, in

Rodriguez, we held that the district court did not abuse its discretion under Rule

404(b) by excluding evidence that the law enforcement officers who prosecuted the

defendants may have entrapped a defendant in an unrelated case, because the

defendants did not otherwise produce evidence that he was entrapped, and were

27
permitted to cross-examine the officers regarding their investigation tactics. 917

F.2d at 1287, 1289-90.

Also in Rodriguez, we rejected the defendants’ arguments that the court’s

exclusion of various items of proffered evidence amounted to the denial of their

Sixth Amendment rights to present a vigorous defense. Id. at 1291. We reasoned

that the court had excluded only irrelevant evidence, and again noted that the

defendants were able to cross-examine the government agents concerning their

tactics. Id.

The court did not abuse its discretion in excluding Aguirre’s proposed

evidence regarding Cruzastol. As an initial matter, it appears that evidence that

Cruzastol falsified information on tax returns for approximately a dozen

individuals did not constitute evidence of habit under Rule 406. Evidence that

Cruzastol engaged in this behavior on a dozen occasions does not rise to the level

of demonstrating an individual’s “regular practice,” or his “semi-automatic”

response to a particular situation. Rather, the court did not abuse its discretion in

construing this proposed evidence as impermissible character evidence under Rule

404(b), because Aguirre sought to show that Cruzastol had acted dishonestly by

falsifying information on other individuals’ tax returns in support of his theory that

Cruzastol had acted dishonestly by failing to file his tax returns. This evidence

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appears to fall within Rule 404(a)’s prohibition on, “[e]vidence of a person’s

character or a trait of character . . . for the purpose of proving action in conformity

therewith on a particular occasion.”

Moreover, Aguirre’s proposed evidence that Cruzastol made fraudulent

statements on client tax returns did not bear a special relevance to the issue of his

guilt. Apart from eliciting Huebner’s testimony on cross-examination that Aguirre

stated to her that he thought that Cruzastol had filed his tax returns, Aguirre did not

present any evidence indicating that he had relied on Cruzastol to prepare his

personal tax returns between 2001-2004. Moreover, even if the court had

permitted Aguirre to introduce his proposed evidence, its probative value would

have been limited because it would have shown that Cruzastol falsified deductions

on tax returns, not that he repeatedly failed to file tax returns or completely omitted

employment income on tax returns. In addition, the fact that Berry testified that it

was Aguirre who controlled NETS further undermined the probative value of the

proposed evidence concerning Cruzastol. Accordingly, for the foregoing reasons,

the court did not abuse its discretion in excluding this evidence under Rule 404(b).

Finally, the court’s ruling on this matter did not infringe on Aguirre’s Sixth

Amendment right to present a vigorous defense, as this right does not encompass

the right to introduce evidence that violates the federal rules. Although Aguirre

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contends that his evidence regarding Cruzastol was crucial to his defense, the

record does not include any indication that the court barred Aguirre from calling

Cruzastol as a witness, or from testifying that he relied on Cruzastol to prepare and

file his tax returns. Moreover, the court permitted Aguirre to cross-examine Berry

about the fact that Cruzastol falsified information regarding mileage on client tax

returns, and that Cruzastol also omitted Berry’s RGS income from her 2003 and

2004 tax returns. The court also permitted Aguirre to cross-examine Huebner

regarding Cruzastol’s preparation of RGS’s tax returns and Aguirre’s financial

statements. Accordingly, Aguirre’s argument that the court prevented him from

presenting a full defense lacks merit.

V.

In the sentencing context, we review a district court’s factual findings for

clear error, and its legal conclusions de novo. United States v. Gupta, 572 F.3d

878, 887 (11th Cir. 2009), cert. denied, 463 F.3d 1182. “When a defendant

challenges one of the factual bases of his sentence, the Government has the burden

of establishing the disputed fact by a preponderance of the evidence.” Id.

(quotation and alteration omitted). “This burden must be satisfied with reliable and

specific evidence.” Id. (quotation omitted). A court need only make a reasonable

estimate of loss. Id. at 888. However, a court must make factual findings

30
sufficient to support the loss amount set forth in the PSI, and “cannot simply rely

upon conclusory factual recitals of the PSI.” United States v. Renick, 273 F.3d

1009, 1026 (11th Cir. 2001) (quotation omitted). Where a district court fails to

identify the factual basis for its loss determination, meaningful appellate review is

not possible. Gupta, 572 F.3d at 889.

Here, it appears that the court clearly erred by failing to make factual

findings in support of its determination that RGS’s tax liability was $239,345.

Because Aguirre objected to this calculation of RGS’s loss amount, the court was

required to make factual findings concerning this matter, rather than simply rely on

the PSI. It bears noting that, in the PSI, the probation officer did not provide an

explanation as to how he arrived at this figure. The trial transcript reflects that

Huebner merely testified that she reviewed RGS’s business transactions. She did

not testify as to the amount of RGS’s corporate tax liability. While the probation

officer’s determination of RGS’s tax liability may have been based on the IRS’s

reliable and specific computation, the record does not demonstrate this fact.

Importantly, at the sentencing hearing, the parties and the court did not discuss the

basis for the computation of RGS’s tax liability, and it thus is not ascertainable

why or how the court concluded that it should adopt the PSI’s calculation of this

figure. Accordingly, it appears that meaningful appellate review of the court’s tax

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loss determination is not possible, and we remand as to this issue so that the district

court may clarify its factual findings in this regard.

VI.

We review the district court’s interpretation and application of the

Sentencing Guidelines de novo. United States v. Barakat, 130 F.3d 1448, 1452

(11th Cir. 1997). We may affirm the district court based on any ground supported

by the record. United States v. Campa, 529 F.3d 980, 998 (11th Cir. 2008).

In determining a defendant’s offense level, the district court should consider

not only the offenses of conviction, but also the defendant’s relevant conduct,

which includes, among other things, “all acts and omissions committed . . . by the

defendant.” U.S.S.G. § 1B1.3(1)(A); United States v. Ignancio Munio, 909 F.2d

436, 438-39 (11th Cir. 1990). The district court must take into account “the

totality of the criminal transaction in which the defendant participated and which

gave rise to his indictment, without regard to the particular crimes charged in the

indictment.” Ignancio Munio, 909 F.2d at 438.

The Guidelines provide that, in a tax evasion case, a defendant’s offense

level should be increased by two levels, “[i]f the defendant failed to report or

correctly identify the source of income exceeding $10,000 in any year from

criminal activity.” U.S.S.G. § 2T1.1(b)(1). Under this guideline, the term

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“criminal activity” refers to “any conduct constituting a criminal offense under

federal, state, local, or foreign law.” U.S.S.G. § 2T1.1 comment. (n. 3). Under 18

U.S.C. § 641, it is illegal for any individual to steal or embezzle money belonging

to a U.S. agency, including the VA. 26 U.S.C. § 641; See United States v. Moore,

504 F.3d 1345, 1347 (11th Cir. 2007) (noting that § 641 prohibits the theft of

money belonging to the VA).

Here, Aguirre’s argument that the court could not properly increase his

sentence due to his VA fraud because this conduct was not charged in the

indictment lacks merit, as our precedent forecloses this argument. Moreover, it

appears that Aguirre’s VA fraud qualified as relevant conduct under

§ 1B1.3(1)(A), since his failure to report his employment income, as charged in the

indictment, enabled his receipt of VA disability benefits.

Regardless of whether § 2T1.1(b)(1) could properly apply where a defendant

conceals income from the VA, the district court’s application of this guideline to

Aguirre may be upheld under an alternative rationale. Under the plain language of

§ 2T1.1(b)(1), a defendant may receive a two-level increase to his offense level

where he fails to report $10,000 or more in income derived from illegal activity to

the IRS. Because the commentary to this guideline provides that it applies to any

type of illegal activity, and 18 U.S.C. § 641 prohibits the theft of government

33
agency funds, it appears that Aguirre’s fraudulent receipt of VA disability benefits

falls within the guideline. Because the jury found Aguirre guilty of failing to file

tax returns in 2002, 2003, and 2004, the record reflects that Aguirre did not report

his illegally received income to the IRS. Accordingly, it appears that Aguirre’s

conduct falls within the plain meaning of § 2T1.1(b)(1), and Aguirre does not point

to controlling case law demonstrating otherwise.

Aguirre’s convictions are affirmed; his sentence is vacated and the case is

remanded for a recalculation of the loss amount to be used in resentencing.

AFFIRMED IN PART, REMANDED IN PART WITH

INSTRUCTIONS.

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