United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
January 12, 2007
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk
No. 05-10943
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
v.
LORI KAY SPURLOCK; JERRY LEWIS POORE,
Defendants-Appellants.
Appeals from the United States District Court for the
Northern District of Texas, Dallas
Before JOLLY, DAVIS, and BENAVIDES, Circuit Judges.
BENAVIDES, Circuit Judge:*
In 2004, a federal grand jury returned an 11-count indictment
against Jerry Lewis Poore and Lori Kay Spurlock. Poore and
Spurlock were each indicted on charges of conspiring to defraud the
United States (Count 1), conspiring to commit bankruptcy fraud
(Count 9), and concealing bankruptcy assets (Count 10). The
government charged Poore alone with three counts of attempting to
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
evade and defeat taxes (Counts 2, 4 and 7) and three counts of
failing to file a tax return (Counts 3, 5 and 8). It charged
Spurlock alone with concealing bankruptcy assets (Count 11). The
government dropped one count (Count 6) on its own motion.
A jury found Poore and Spurlock guilty on all remaining
counts. Poore was sentenced to 33 months’ imprisonment followed by
three years of supervised release, along with a concurrent sentence
of 12 months’ imprisonment followed by one year of supervised
release. Spurlock was sentenced to 27 months’ imprisonment
followed by three years of supervised release. They were also
ordered to pay, joint and severally, $164,002 in restitution.
Poore and Spurlock contest the sufficiency of the evidence on
several of their convictions. Spurlock further argues that her
conviction for conspiracy to commit bankruptcy fraud was based on
time-barred evidence, and that she should not have been held
jointly and severally liable for the full restitution amount.
Finding sufficient evidence as to each contested conviction, and no
merit in Spurlock’s two independent arguments, we AFFIRM the
judgments of the district court.
I. BACKGROUND
The convictions relate to a printing and copying business
Spurlock and Poore operated called Color Laser Institute (“CLI”).
The incriminating facts generally fall under the categories of (1)
tax fraud and evasion, and (2) bankruptcy fraud.
A. Tax Fraud and Evasion
CLI had two business bank accounts at Bank One—one for
operations and one for petty cash. Poore and Spurlock commonly
would pay personal bills out of the operating account at Bank One,
drawing checks for country club fees, mortgage payments, car
payments, lawn service and a down payment on Poore’s second home.
CLI paid some employees in cash and did not pay taxes on those
amounts.
While CLI’s employees and accountant knew about the Bank One
accounts, Spurlock and Poore also kept a secret account at Bank of
America (“BofA”) on which Poore was the sole signatory.1 Checks
written to CLI were often deposited there, and some companies
wrote CLI checks to Poore personally, which were then deposited in
this account. The defendants often used the BofA funds for
personal expenses.
CLI’s accountant, Michael Law, was hired to perform
compilation services and create CLI’s statements based on financial
data provided to him. He was not hired to audit or verify the
financial information he received. Law kept CLI’s books on the
accrual method, whereby income is counted when earned rather than
collected, and expenses are counted when they are incurred rather
than deducted.2 When balancing the books for a company that uses
1
While it is not entirely clear, it appears that the
accountant, Michael Law, only knew of the Bank One operating
account and was unaware of the Bank One petty cash account. That
fact is unimportant to the issues at hand, so we focus on Law’s
ignorance of the BofA account.
2
The alternative to the accrual method of accounting is
the cash method. Under the cash method, sales and expenses are
the accrual system, sales should equal cash deposits plus the
change in accounts receivable. If the formula does not work, at
least one of the figures is wrong and must be adjusted to balance
company books.
In 1999, Law began to notice that CLI’s sales numbers were
consistently higher than its recorded deposits in the Bank One
operating account, and change in accounts receivable did not make
up the difference. Toward the end of that year, Law asked Spurlock
if all CLI’s deposits were being made. Spurlock replied that they
were and suggested that sales be adjusted downward to account for
any discrepancy. The lower CLI’s sales number, the less taxable
income it had. Spurlock did not tell Law about the BofA account or
the deposits made into it, which might have accounted for the
discrepancies. Deposits into the BofA account totaled $34,205 in
1997, $198,736 in 1998, $329,893 in 1999 and $37,227 through August
2000.
There was significant disagreement at trial as to how many of
CLI’s BofA deposits had corresponding sales reports filed with
Law.3 These disputed reports are referred to here as the “BofA
recorded only when income is received and payments deducted.
3
This dispute is significant because, under the accrual
method of accounting, if all sales are reported then where the
amounts are deposited may be irrelevant. However, when an
accountant is checking the sales numbers against bank deposits
and adjusting the numbers so they match—as was the case here when
sales numbers were adjusted downward to match deposits—having
accurate deposit reports is crucial under the accrual method.
4
sales figures”. There is no dispute that Law did not have access
to the BofA accounts or deposit slips, but the defense argued that
the sales figures given to Law included all amounts deposited into
the BofA account.
While prosecution witnesses suggested that BofA sales figures
were regularly unreported, defense witnesses tried to interpret the
data provided to Law as including the BofA sales figures. However,
even the defense’s fraud examiner testified that some of the checks
deposited in the Bank of America account did not have corresponding
sales information recorded in CLI’s books.
A revenue agent testified that the payments to Poore funneled
through the Bank of America account should have been recognized by
him as income. The total income tax Poore should have paid, but
did not pay for 1998 through 2000, was $93,243. Poore did not file
any tax returns from 1992 to 2000. Spurlock filed no returns
between 1993 and 1997. Her 1997 and 1998 returns were filed late
in November 1999. No returns or extension requests were filed for
1999 or 2000.
B. Bankruptcy Fraud
In August 2001, Spurlock and CLI underwent bankruptcy
proceedings. The bankruptcy court entered an order of relief
freezing CLI’s assets. Spurlock submitted schedules declaring her
assets and liabilities. Spurlock listed assets of only $3,100 and
liabilities of $412,991 and no income. She listed only one Bank
5
One account with a balance of $100. A bank statement for the CLI
operating account showed a balance of $3,704 as of the date of the
petition. Spurlock failed to list one of her homes, and listed no
household goods and furnishings, no accounts receivable, no
vehicles, and no business equipment or furnishings.
Spurlock did not provide Bank One statements for the period
from August 22 through November 22, 2001. Those statements showed
large balances and numerous deposits and withdrawals, even though
the business had been frozen by that point. For instance, in
September 2001, $11,000 was wire transferred to Spurlock’s father.
Spurlock instead provided the statement for November 23 to December
22, 2001, which showed a small balance due to large withdrawals and
payments in previous months.
At a creditors’ meeting, Spurlock stated under oath that the
equipment CLI possessed was returned to the equipment’s lender or
owner. However, in 2001 Poore sold a Toyota van, production
equipment, and three pallets of supplies such as paper and binders
to Michael Buban, who owned a litigation support business and
printing company that neighbored CLI. The equipment purchased by
Buban was located on CLI’s premises and was being used by CLI. A
CLI employee testified that the equipment was of the type purchased
and used by CLI. Payments for these items totaled approximately
$50,000. Without the benefit of this information, the bankruptcy
trustee concluded that there were no assets to distribute to
6
creditors and Spurlock was discharged.
II. ANALYSIS
Poore argues that there was insufficient evidence to support
his convictions for (1) conspiracy to defraud the United States,
(2) tax evasion and (3) conspiracy to commit bankruptcy fraud.
Spurlock joins Poore’s first argument and further alleges that her
bankruptcy fraud conviction was illegal as potentially predicated
on statements made outside the statutory period, and that the
restitution order improperly imposed joint and several liability.
A. Sufficiency of the Evidence
In reviewing sufficiency claims, this court asks “whether,
viewing the evidence in the light most favorable to the verdict and
drawing all reasonable inferences from the evidence in support of
the verdict, a rational trier of fact could have found that the
evidence established the essential elements of the offense beyond
a reasonable doubt.” United States v. Ferguson, 211 F.3d 878, 882
(5th Cir. 2000).
1. Conspiracy to Defraud the United States
Spurlock and Poore both argue that there was insufficient
evidence supporting their convictions for conspiracy to defraud the
United States in violation of 18 U.S.C. § 371. The elements of the
offense are “(1) an agreement between two or more persons to pursue
an unlawful objective, (2) the defendant’s knowledge of the
unlawful objective and voluntary agreement to join the conspiracy,
7
and (3) an overt act by one or more of the members of the
conspiracy in furtherance of the objective of the conspiracy.”
United States v. Freeman, 434 F.3d 369, 376 (5th Cir. 2005).
The indictment set forth the manner and means of the
conspiracy as follows:
1. The defendants concealed income to CLI by diverting CLI
receipts into the bank account at Bank of America.
2. Thereafter the defendants failed to record these
receipts on the books and records of CLI.
3. The defendants used these funds for living expenses and
the acquisition of personal assets.
4. The defendants knowingly failed to file tax returns
with the Internal Revenue Service to report this
taxable income.
Poore and Spurlock argue that the second prong was not proven, as
there was significant testimony indicating that all of the BofA
sales figures were recorded on CLI’s books.
A review of the record reveals that the evidence supporting
the verdict on this charge was more than sufficient. While there
was conflicting evidence regarding whether the BofA sales figures
were recorded on CLI’s books, “[t]he jury is free to choose among
reasonable constructions of the evidence.” Ferguson, 211 F.3d at
832. Here, the jurors may have credited the testimony of
Silverman, the prosecution’s auditor, who indicated that a number
of deposits to the BofA account were not accounted for in the sales
figures provided to Law. The defendants’ fraud examiner similarly
noted certain deposits in the BofA account that he could not find
8
a corresponding sales receipt for. While he suggested that the
slips may have been lost or misplaced by Law, the jurors were not
obligated to credit such hypothetical explanations. Considering
that Poore and Spurlock kept a BofA account hidden from Law, had
customers write checks to Poore personally, and used BofA funds for
significant personal expenditures, a reasonable jury could have
concluded that Poore and Spurlock conspired to underreport CLI’s
sales.4
Moreover, even if all of the BofA sales figures were reported
to Law, the evidence was still sufficient to convict Poore and
Spurlock on this count. This is what government witness Silverman
was suggesting when he stated, as appellants repeatedly stress,
that “I give you the fact that [the BofA sales figures] may have
even all been reported by CLI.” He was not recanting his testimony
as to the numerous BofA sales figures that went unreported, but
merely posing a hypothetical that even in such an event the
evidence still supports a finding of conspiracy to defraud.
We agree with Silverman, and disagree with Poore’s argument
that, “[i]f the income (the sales) is being regularly reported to
the accountant[,] and if it appears on the books of CLI, then there
is no concealment or attempt to conceal these assets.” By not
4
While general manager Marco Nunnerly indicated that he
recorded all payments he received on CLI’s books, he also
testified that Lori Spurlock would occasionally open up company
checks outside of his presence and take them to Poore. There was
no indication that these checks were ever recorded.
9
providing Law with the BofA account, and by instructing Law to
adjust sales downward in the face of sales/deposits discrepancies,
a reasonable jury could have found that those were overt acts aimed
at concealing income and defrauding the United States of tax
revenue. Especially where, as here, the sales data was provided in
a rather sloppy and incomprehensive form, making an accountant
especially likely to rely on the deposit numbers.
This is what Silverman meant when he explained that Law would
have expected that all deposits were made to the operating Bank One
account, and “not knowing where all those bank accounts are, or
whether they exist, he can’t properly do a tax return that reflects
the correct income.” Providing an accountant with sloppy sales
data without the appropriate deposit numbers to compare it against,
and then advising a downward adjustment to the sales numbers is one
method of fraud consistent with the first “manner and means”
alleged in the indictment.5 That provides sufficient evidence to
5
Appellants also argue that the proof at trial was at fatal
variance with the indictment. A variance occurs when the
charging terms of an indictment remain unaltered but the evidence
at trial proves facts other than those alleged. United States v.
Puig-Infante, 19 F.3d 929, 935 (5th Cir. 1994). The appellants
argue that the government’s theory on this count changed when it
failed to show that CLI was not reporting all of its income and
instead attempted to show that it failed to file 1099s, W-2s and
K-1s. But “the government is not limited to the overt acts
pleaded in the indictment in proving a conspiracy, but may show
other acts of conspirators occurring during its life.” United
States v. Carlock, 806 F.2d 535, 550 (5th Cir. 1986). A fatal
variance only occurs when the indictment does not provide a
defendant sufficient notice of the evidence introduced at trial.
Here, where the indictment charges Poore and Spurlock with
10
uphold the convictions on this count.
2. Tax Evasion
Poore alone was charged with and convicted of tax evasion. To
establish tax evasion, there must be a tax deficiency and an
affirmative act taken as a willful attempt to evade or defeat the
tax. United States v. Bishop, 264 F.3d 535, 550 (5th Cir. 2001).
Poore does not contest that there was a tax deficiency, but argues
that he made no willful attempt to evade the taxes. The failure to
file a tax return, even if willful, is insufficient to sustain a
conviction for tax evasion. United States v. Doyle, 956 F.2d 73,
75 (5th Cir. 1992).
This court has pointed to a “wide range of conduct” that
supports finding a willful attempt to evade taxes:
[K]eeping a double set of books, making false entries or
alterations, creating false invoices or documents, destroying
books or records, concealing assets or covering up sources of
income, handling one’s affairs to avoid making the records
normally accompanying transactions of a particular kind, any
conduct likely to mislead or conceal, holding assets in
others’ names, providing false explanations, giving
inconsistent statements to government agents, failing to
report a substantial amount of income, a consistent pattern of
underreporting large amounts in income, or spending large
amounts of cash that cannot be reconciled with the amount of
reported income.
Bishop, 264 F.3d at 550. Contradicting Poore’s argument that the
concealing income and failing to file tax returns, they had
sufficient notice that their failure to file financial documents
in relation to CLI, such as W-2s, could be an issue.
11
government showed nothing more than a failure to file a tax return,
the evidence at trial demonstrated that Poore used several of the
tactics supporting willful tax evasion listed in Bishop. He
concealed assets using the BofA account, used the BofA funds for
personal expenses, handled affairs in cash to avoid making records,
and repeatedly failed to report large amounts of income. The
activities are comparable to those in Bishop, where this court
found the defendant “deposited [substantial sums] in his personal
account. . . . [and] gave inaccurate and misleading information to
his return preparers.” Id. at 552.
Based on this evidence, a rational juror could have found that
Poore took a number of actions that constituted a willful attempt
to evade or defeat certain taxes.
3. Conspiracy to Commit Bankruptcy Fraud
Poore also contests the sufficiency of the evidence supporting
his conviction for conspiracy to commit bankruptcy fraud. It is
uncontested that Poore sold a Toyota van, production equipment, and
three pallets of supplies to Michael Buban while bankruptcy
proceedings against Spurlock and CLI were underway. Poore argues
that this activity could not support his conviction because (1) he
was not a party to Spurlock’s bankruptcy proceeding, and (2) the
sold items were his own property.
First, one need not be the named party in a bankruptcy
12
proceeding to be guilty of conspiring to commit bankruptcy fraud.
See 18 U.S.C. § 152(1). To support a charge of conspiracy, all
that must be shown is that there are two or more people with an
unlawful purpose, the defendant’s knowledge of that purpose, and an
overt act in furtherance of it. 18 U.S.C. § 371.
Second, there was sufficient evidence to find the items Poore
sold to Buban did in fact belong to CLI’s estate. The machinery
and copy supplies were of a type normally used in CLI’s business
operations; a CLI employee, Brandy Arney, testified that he
purchased some of the equipment; the equipment was all located on
CLI’s premises; and CLI depreciated such equipment in its taxes.
Given these facts, and considering that the timing of this large
sale coincided with the initiation of bankruptcy proceedings, the
jury could reasonably have inferred that Poore and Spurlock
conspired to conceal property of CLI’s estate.
B. Spurlock’s Conspiracy to Commit Bankruptcy Fraud Conviction
Spurlock raises a separate argument concerning her conviction
for conspiracy to commit bankruptcy fraud. The conspiracy
indictment listed two objects: (1) concealing property belonging to
the debtor estate and, (2) knowingly making “a false statement or
declaration under penalty or perjury in relation to a bankruptcy
case under Title 11.” Spurlock argues that her conviction may
have been based on the conspiracy’s second object of knowingly
making a false statement, and that the indictment—referencing only
13
a false statement and a bankruptcy case—made it possible for the
jury to render its verdict based on evidence of statements made in
bankruptcy proceedings from 1993 or 1995. Such a verdict would be
barred by the applicable statute of limitations. The district
court denied Spurlock’s motion for acquittal and we review the
denial of a motion for acquittal de novo. Ferguson, 211 F.3d at
882.
We need look no further than the indictment to dismiss
Spurlock’s argument. Consider the disputed paragraph of this
indictment in its entirety:
Beginning in or about August 2001 and continuing through in or
about March 2002, the exact dates being unknown to the Grand
Jury, in the Northern District of Texas and elsewhere, the
defendants Jerry Lewis Poore and Lori Kay Spurlock, aided and
abetted by each other, knowingly and willfully combined,
conspired, confederated, and agreed with each other to commit
certain offenses against the United States, namely: in a
bankruptcy case filed under Title 11 of the United States
Code, knowingly and fraudulently conceal from creditors and
the United States Trustee property belonging to the estate of
the debtor, in violation of 18 U.S.C. § 152(1); and (b)
knowingly make a false statement or declaration under penalty
of perjury in relation to a bankruptcy case under Title 11, in
violation of 18 U.S.C. § 152(3).
(Superseding Indictment, Count 9) (emphasis added). It is clear
from this language that the indictment alleges that false
statements were made roughly between August 2001 and March 2002.
Spurlock reads the paragraph’s opening language limiting the time
frame of the offense as applying only to the concealment object of
the conspiracy, leaving the false statement object entirely without
14
time constraints. This reading is curious and unsupported.
A more natural reading of the indictment is that everything
prior to “namely:” constrains each of the two objects that follow.6
The district court, therefore, properly denied the motion for
judgment of acquittal.
C. The Restitution Order
Finally, Spurlock argues that the district court erred in
ordering her to pay, jointly and severally with Poore, a total of
$164,002 in restitution to the IRS and a defrauded bankruptcy
trustee. Spurlock did not challenge the restitution order in the
district court, therefore this court reviews for plain error.
United States v. Inman, 411 F.3d 591, 595 (5th Cir. 2005).
Spurlock does not contest the propriety of a restitution order
per se, but argues that she is less culpable than Poore and
therefore should be responsible for less than the full amount.
Spurlock was convicted of conspiring to defraud the United States
and conspiracy to commit bankruptcy fraud. If a defendant
contributes to the loss of each victim, “the court may make each
defendant liable for payment of the full amount of restitution or
may apportion liability among the defendants to reflect the level
6
It is admittedly peculiar that the false statement object
is preceded by a “(b)” while the concealment object lacks a
corresponding “(a)”, but that is without consequence. It does
not affect the opening language that limits the jury to
considering false statements made from 2001-2002.
15
of contribution to the victim’s loss and economic circumstances of
each defendant.” 18 U.S.C. § 3664(h) (emphasis added). This Court
has previously upheld the imposition of joint and several liability
among multiple defendants. See, e.g., United States v. Chaney, 964
F.2d 437, 454 (5th Cir. 1992).
Spurlock relies on facts indicating that Poore was her
superior at CLI, and that he was abusive in their personal
relationship. This, she argues, makes her less culpable than Poore
and should reduce the amount of restitution she is responsible for.
While evidence of Poore’s superior status at CLI and of his abusive
behavior might make him more culpable — and a judge could have held
him liable for a greater amount than Spurlock — we cannot say that
it was plain error for the district court to hold Spurlock equally
liable. The proper question is not whether she is more or less
culpable than Poore, but whether she contributed to each of the
losses the victims incurred. Here, she conspired in the schemes
that damaged the IRS and bankruptcy trustee, thereby allowing her
to be held fully liable for the damages they incurred.
III. CONCLUSION
The judgments of the district court are AFFIRMED.
16