United States v. Miller

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit

FILED
March 18, 2008

No. 06-11078 Charles R. Fulbruge III
Clerk

UNITED STATES OF AMERICA

Plaintiff-Appellee
v.

STEPHEN P. MILLER

Defendant-Appellant

Appeal from the United States District Court
for the Northern District of Texas

Before HIGGINBOTHAM, DAVIS, and SMITH, Circuit Judges.
PATRICK E. HIGGINBOTHAM, Circuit Judge:
A jury found Stephen Miller guilty of tax evasion in violation of 26 U.S.C.
§ 7201. Miller challenges the sufficiency of the evidence, as well as a number of
the district court’s evidentiary rulings. He also contends that the indictment
was duplicitous. Finally, Miller raises a claim of Brady error. We affirm.
I
The jury could have concluded from the evidence the following. During the
1990s, Stephen Miller accumulated large tax deficiencies. According to the
Government, Miller had tax liabilities – including deficiencies, penalties, and
interest – of more than $2 million. Miller was associated with Charles Matich,
a “financial planner.” Matich helped wealthy individuals like Miller decrease
 No. 06-11078

their tax exposure by moving their funds overseas. Matich’s business came to
an end when the Government seized his records in 2000 and then charged him
with conspiracy to impede income tax collection and personal tax evasion.
Matich pled guilty.
Miller had over $1 million in an Individual Retirement Account (IRA).
Rather than satisfy his tax obligations, and fearful that the IRS might seize the
funds, Miller and Matich concocted a scheme to protect the funds. In January
1999, Miller began transferring money from his IRA overseas to a shell company
called Euromex Leasing Limited, which Miller had previously formed and
Matich then controlled. Miller transferred approximately $600,000 under the
guise of repaying a loan to Euromex. Matich arranged to have Euromex send
Miller a “demand payment letter.” After Miller had “repaid” the loan, Euromex
sent Miller a letter saying his debt was satisfied. After Miller had “repaid” the
loan, he continued transferring money from his IRA overseas to accounts
controlled by Matich. He transferred more than $1 million from his IRA in 1999,
and he did report the IRA withdrawals on his tax return. Unbeknownst to Miller
until later, however, the money he transferred disappeared.
On March 25, 2000, the IRS received a Form 656 Offer in Compromise
from Miller, in which he proposed settling his tax liabilities for $7,500. On the
Offer form, Miller checked the box for “Doubt as to Collectibility—‘I have
insufficient assets and income to pay the full amount.’” Miller offered the
following explanation: “At my age and unavailability of assets, I do not feel that
I, nor my spouse, will live long enough to ever be able to pay the liabilities and
additional taxes assessed on our account.” The IRS requested more information.
Miller submitted a Form 433-A, which stated that he had a checking account
worth $15,000 and an IRA with a balance of $25,000; Miller did not list any
foreign accounts. The IRS again requested more information, and specifically
asked about the money withdrawn from his IRA. Miller responded that he used

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the funds to repay the Euromex loan, and further explained, “I have no idea
what happened to the proceeds. I assume the funds were repaid to the lenders
of the funds.” Miller repeated the story again in a subsequent correspondence
with the IRS:
I repaid those loans back to a Euromex Leasing corporation formed
in the Isle of Mann which had invested in some disastrous
investments in Mexico in which I lost $1,000,000 and was personally
responsible for. . . . These funds represented return of principal and
interest on funds borrowed. I have absolutely no idea what the
present officers of that corporation have done with those proceeds.
I do not have these funds nor do I have access to them.

Subsequent to the submission of the Offer, Matich, who was working with
the Government, called Miller. Investigators recorded the conversation. A fair
interpretation of the call is that Miller transferred the money to shield it from
the IRS, believed the money was still his, and wanted it back. The call
indicated that Miller was only then learning that his money was gone. Miller
and Matich also discussed how they could characterize their various transactions
if questioned.
Miller was charged with one count of tax evasion in violation of 26 U.S.C.
§ 7201. The Government’s theory was that Miller’s Offer in Compromise
constituted an attempt to evade his income taxes in that he lied by stating that
because of unavailability of assets he could only pay $7,500 to satisfy his tax
liabilities. This was a lie because Miller believed that he had over $1 million
overseas, which he did not reveal to the IRS. The case went to trial, and Matich
testified as a Government witness. The jury found Miller guilty, and the district
court sentenced him to 46 months’ imprisonment and three years supervised
release, and ordered him to pay $968,836.27 in restitution. Miller appealed.
After Miller filed his opening brief, the Assistant U.S. Attorney notified
him that she had become aware of a criminal referral involving Matich by the
U.S. Trustee in Montana. The referral referenced the Government’s possession

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of Matich’s business records. We abated Miller’s appeal so he could file a motion
for a new trial in the district court. Miller did so, arguing that the Government
violated Brady by failing to disclose the criminal referral and turn over all of
Matich’s business records. The district court denied Miller’s motion, and he filed
a supplemental brief in this court raising the Brady issue.
II
Miller challenges the sufficiency of the evidence. We review the evidence
in the light most favorable to the Government, drawing all reasonable inferences
and credibility determinations in favor of the jury’s verdict.1 “If any rational
trier of fact could have found proof of the essential elements of the crime beyond
a reasonable doubt, the verdict will stand.”2
26 U.S.C. § 7201 provides that “[a]ny person who willfully attempts in any
manner to evade or defeat any tax imposed by this title or the payment thereof
shall . . . be guilty of a felony.” “The crime of tax evasion as defined in 26 U.S.C.
§ 7201 has three essential elements: (1) the existence of a tax deficiency; (2)
willfulness; and (3) an affirmative act constituting evasion or attempted evasion
of the tax.”3 “[W]illfulness is ‘a voluntary, intentional violation of a known legal
duty.’ Evidence is usually circumstantial as direct proof is rarely available.”4
Many kinds of conduct can constitute a willful attempt to evade taxation:
keeping 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

1
United States v. Bishop, 264 F.3d 535, 549 (5th Cir. 2001).
2
Id.
3
Id. at 545.
4
Id. at 550 (quoting United States v. Kim, 884 F.2d 189, 192 (5th Cir. 1989)) (citations
omitted).

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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 of income, or spending
large amounts of cash that cannot be reconciled with the amount of
reported income.5

There is no question that Miller had a tax deficiency. Miller’s argument is a
hybrid of the second and third elements: he claims that the Government failed
to prove that he had access to, or control of, the money he transferred out of his
IRA and, therefore, his Offer in Compromise, which was based on his claim of
unavailability of assets, was not fraudulent. Put differently, the Government
failed to prove that the funds he transferred were “available” to him. This proof,
his argument goes, is necessary for conviction. We are not persuaded.
Where Miller’s money was located, and who had access to and control of
it, matters, on the facts here, only to the extent that it bears on Miller’s
knowledge and belief as to the state of his financial affairs when he submitted
his Offer; that is, what Miller’s intent was in submitting his Offer.
The evidence was sufficient for the jury to conclude that when Miller
submitted his Offer, he believed that he had $1 million squirreled away
overseas. The recorded phone call with Matich, which occurred after submission
of the Offer, makes clear that Miller continued to believe that the money he
transferred was his. The call further reveals that, while Miller had an inkling
that there was a problem with his money, he did not know his money was in fact
gone. Moreover, Miller’s responses to the IRS’s requests for further information
after he submitted his Offer are compelling evidence that he was trying to hide
his assets from the IRS. Miller did not say that the money transferred from his
IRA had disappeared or that he could not retrieve it; rather he twice told the IRS

5
Id.

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that he used the money to satisfy the fictitious Euromex loan obligation, which
Miller knew did not exist and, in fact, had helped to concoct.
The irony in Miller’s argument is that he transferred his money to Matich
precisely because he believed this would shield it from the IRS. Despite his
understanding that he had $1 million overseas, Miller stated in his Offer that
he could only afford to pay $7,500 in satisfaction of his tax liabilities. One can
understand his submission of the Offer as, inter alia, “concealing assets,”
“conduct likely to mislead or conceal,” “providing false explanations,” or some
combination thereof. The Government proved the required affirmative act.
The Government also introduced sufficient evidence to support a finding
of willfulness, including admissions made by Miller during the recorded phone
call; Miller’s statements to the IRS, both written and oral, including his telling
the IRS that he used the IRA funds to pay off the fictitious Euromex debt; and,
other documentary evidence, such as Miller’s and Matich’s various letters,
emails, and faxes.
There is sufficient evidence to support the jury’s verdict.
III
Miller challenges some of the district court’s evidentiary rulings. We
review the district court’s evidentiary ruling for abuse of discretion.6 “If this
court finds an abuse of discretion in admitting or excluding evidence, this court
will ‘review the error under the harmless error doctrine, affirming the judgment,
unless the ruling affected substantial rights of the complaining party.’”7
A
Miller argues that the district court erred by limiting the testimony of his
witness, Donald Williams, a former IRS employee. The district court ruled that

6
United States v. Sharpe, 193 F.3d 852, 867 (5th Cir. 1999).
7
United States v. Ragsdale, 426 F.3d 765, 774-75 (5th Cir. 2005) (quoting Bocanegra
v. Vicmar Servs., Inc., 320 F.3d 581, 584 (5th Cir. 2003)).

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it would exclude three areas of Williams’s testimony: (1) because Miller’s Offer
was “incomplete,” the IRS ran afoul of its internal policies by assigning it to an
offer specialist; (2) the offer specialist assigned to Miller’s Offer was unusually
knowledgeable; and, (3) Williams’s opinion regarding whether Miller had access
to the funds that were transferred to Euromex when Miller submitted his Offer.
The first and second areas of testimony are plainly irrelevant. Rule 402
provides that “[e]vidence which is not relevant is not admissible.” Rule 401
defines “relevant evidence” as “evidence having any tendency to make the
existence of any fact that is of consequence to the determination of the action
more probable or less probable than it would be without the evidence.” Neither
the IRS’s adherence to its internal procedures nor the offer specialist’s
knowledge bears upon what Miller did, knew, or intended. The testimony is not
probative of any fact of consequence and was properly excluded.
Assuming Williams’s opinion about Miller’s access to the money is
relevant, the exclusion was harmless. The excluded evidence does not bear on
the contested issue at trial: Miller’s intent in submitting his Offer. Williams
would have testified only that he believed Miller did not have access to the
money when he submitted his Offer because the documents Williams reviewed
did not show where the money was or even if it still existed. Williams would not
have testified about what Miller knew.
Moreover, Matich testified that the money “disappeared” shortly after
Miller transferred it, which of course means that Miller could not access it. The
evidence further demonstrated that Matich had control of the overseas bank
accounts into which the money was transferred. Finally, the evidence of Miller’s
guilt was substantial. The “exclusion was harmless because it could not have
affected the jury’s determination [on] any of the charged counts.”8

8
United States v. Harms, 442 F.3d 367, 377 (5th Cir. 2006), cert. denied, 127 S. Ct. 2875
(2007).

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B
Miller next urges that the district court erred by admitting evidence of a
past act of his under Rule 404(b). Our review of the admission of Rule 404(b)
evidence is “heightened.”9 The Rule provides that
[e]vidence 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 . . . .

Our decision in United States v. Beechum creates a two-step inquiry for
analyzing the admissibility of Rule 404(b) evidence. “‘First, it must be
determined that the extrinsic offense evidence is relevant to an issue other than
the defendant’s character. Second, the evidence must possess probative value
that is not substantially outweighed by its undue prejudice and must meet the
other requirements of [R]ule 403.’”10
The district court admitted evidence that in 1997 Miller opened a bank
account under a false name and with fraudulent identification for the purpose
of, as Miller euphemistically told investigators, “financial privacy.” Miller had
attempted to deposit $5,000 in cash in the account. The evidence was admitted
as intent evidence.
A large part of Miller’s defense turned on his mental state, that he lacked
an unlawful intent in submitting his Offer. Miller also based his defense on a
claim that he was innocently following Matich’s orders. Yet, in 1997, Miller was
caught attempting to hide money under false pretenses, and he did so, according
to Matich’s testimony, even though Matich told him not to. Miller’s acts in 1997,
therefore, are probative of his intent.

9
United States v. Mitchell, 484 F.3d 762, 774 (5th Cir. 2007), cert. denied, 128 S. Ct.
297 (2007), and cert. denied, 128 S. Ct. 869 (2008).
10
Id. (quoting United States v. Beechum, 582 F.2d 898, 911 (5th Cir. 1978) (en banc)).

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Miller argues that the past act is too remote in time to be admissible.
While the length of time is relevant to our analysis, the past acts occurred
shortly before Miller began transferring money from his IRA and his
involvement in developing the sham Euromex loan, the course of conduct that
culminated in Miller’s submission of his Offer. And, there were common actors,
Miller and Matich, involved in both schemes. The time lapse on these facts does
not render the past acts inadmissible.11 Nor was the other evidence of Miller’s
intent so substantial that it was error to admit the past acts. Thus, the evidence
was relevant to an issue other than Miller’s character, and its probative value
was not substantially outweighed by undue prejudice.
Finally, the district court instructed the jury – orally after the jury heard
the evidence and in its written charge – that the evidence could be used only for
the limited purpose of evaluating Miller’s intent, which minimizes any
prejudicial effect.12 Accordingly, the district court did not abuse its discretion.
IV
Miller contends that the indictment is duplicitous because it describes both
the transfer of money from his IRA and the submission of his Offer, which
created the danger of a nonunanimous verdict. Miller’s argument runs thus.
The Government, under its theory of the case, had to prove that Miller’s
submission of his Offer was the affirmative act of evasion. But, because of the
wording of the indictment, some jurors might have viewed Miller’s transfer of

11
See United States v. Arnold, 467 F.3d 880, 885 (5th Cir. 2006) (“We have upheld the
admission of Rule 404(b) evidence where the time period in between was as long as 15 and 18
years.”), cert. denied, 127 S. Ct. 2445 (2007); United States v. Adair, 436 F.3d 520, 527 (5th Cir.
2006) (“Third, Adair’s prior money-laundering scheme was temporally significant [under Rule
404(b)], as it occurred less than three years before the conduct at issue in the instant appeal.”),
cert. denied, 126 S. Ct. 2306 (2006).
12
See, e.g., Adair, 436 F.3d at 527 (explaining that one reason the admitted Rule 404(b)
evidence “had little opportunity of creating unfair prejudice” was that “the district court
mitigated any prejudicial effect by giving the jury a limiting instruction”).

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money as the affirmative act while others viewed his submission of his Offer as
the affirmative act. Thus, there is a danger of a nonunanimous verdict.
We review de novo a claim that an indictment is duplicitous.13 Duplicity
occurs when a single count in an indictment contains two or more distinct
offenses.14 Even if an indictment is duplicitous, a defendant must be prejudiced
to receive relief;15 the risk of a nonunanimous verdict is one recognized source
of prejudice,16 and it is the only prejudice Miller alleges. Assuming that the
indictment is duplicitous, an assumption that is not without problems, there was
no danger of a nonunanimous verdict.
“The danger of a nonunanimous jury verdict may be avoided by proper jury
instructions.”17 The district court instructed the jury that
[t]he phrase “attempts in any manner to evade or defeat any tax”
involves two things: first, the formation of an intent to evade or
defeat a tax; and, second, willfully performing some act to
accomplish the intent to evade or defeat that tax.

13
United States v. Caldwell, 302 F.3d 399, 407 (5th Cir. 2002).
14
Id.
15
See, e.g., United States v. Lampazianie, 251 F.3d 519, 526 (5th Cir. 2001) (“We have
held that even when an indictment is duplicitous, reversal is not required if no prejudice
results.”); United States v. Baytank (Houston), Inc., 934 F.2d 599, 608 (5th Cir. 1991) (“If an
indictment is duplicitous and prejudice results, the conviction may be subject to reversal.”).
16
See United States v. Cooper, 966 F.2d 936, 939 n.3 (5th Cir. 1992) (“The ban against
duplicitous indictments derives from four concerns: prejudicial evidentiary rulings at trial; the
lack of adequate notice of the nature of the charges against the defendant; prejudice in
obtaining appellate review and prevention of double jeopardy; and risk of a jury’s
nonunanimous verdict.” (emphasis added)).
17
United States v. Fisher, 106 F.3d 622, 633 (5th Cir. 1997), abrogated in part on other
grounds by Ohler v. United States, 529 U.S. 753 (2000); see also Baytank (Houston), Inc., 934
F.2d at 609 (“Thus, the complaint comes down to whether the jury instructions were sufficient,
as it is clear that this aspect of a duplicity problem [danger of a nonunanimous verdict] can be
cured by appropriate special instructions which, for example, inform the jury that it must
unanimously agree on the specific basis (e.g., a given date or the like) on which it finds the
defendant guilty under the count in question.”).

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 No. 06-11078

The phrase “attempts in any manner to evade or defeat any
tax” contemplates and charges that the Defendant knew and
understood that during the calendar years 1993, 1995, 1996, and
1997, he owed a substantial additional federal income tax and then
tried in some way to avoid that additional tax.
In order to show “attempts in any manner to evade or defeat
any tax,” therefore, the government must prove beyond a reasonable
doubt that the Defendant Miller intended to evade or defeat the tax
due, and that the Defendant Miller also willfully submitted the Offer
in Compromise in order to accomplish this intent to evade or defeat
that tax. (emphasis added)

The court did not simply charge the jury that it had to find that Miller
committed “an act” to accomplish his unlawful intent; rather, the instruction
specifically required that the jury find that Miller’s submission of his Offer was
the affirmative act of evasion. The jury also received a general unanimity
instruction. The instructions thus required the jury to agree unanimously that
the Government proved beyond a reasonable doubt that Miller willfully
submitted the Offer to accomplish his intent of evading his taxes. In other
words, the jury was required to find exactly what Miller says the Government
had to prove.
Miller contends that the instructions are insufficient because “one without
a legal mind” could have voted to convict based on Miller’s transfer of money
from his IRA. This argument is without merit. The “legal mind” does not
describe a closed universe of intelligence, and certainly not common sense. The
instructions were plainly worded and clear. The instructions dovetailed with the
Government’s theory of the case and squarely framed the contested issue at trial:
whether Miller willfully submitted his Offer to accomplish his intent to evade his
tax obligations. Indeed, during closing the Government succinctly explained to
the jury that “in order to convict, you must find beyond a reasonable doubt . . .
that there was an affirmative attempt to evade – in this case, it’s the submission
of the Offer in Compromise – and, third, that the Defendant made the

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affirmative attempt in a willful manner.” Because Miller was not prejudiced, his
duplicity claim fails.
V
Finally, we turn to Miller’s allegation of Brady error. “While the standard
of review for a motion for a new trial is typically abuse of discretion, if the reason
for the motion is an alleged Brady violation then we review the district court’s
determination de novo.”18 We have cautioned that, as we review Brady claims
“at an inherent disadvantage” because of the cold record, we must accord due
deference to the trial court’s ruling on the alleged Brady error.19
To make out a Brady violation, “a defendant must show that (1) evidence
was suppressed; (2) the suppressed evidence was favorable to the defense; and
(3) the suppressed evidence was material to either guilt or punishment.”20
“Evidence is material under Brady when there is a ‘reasonable probability’ that
the outcome of the trial would have been different if the suppressed evidence had
been disclosed to the defendant.”21 The Supreme Court has explained that
the materiality inquiry is not just a matter of determining whether,
after discounting the inculpatory evidence in light of the undisclosed
evidence, the remaining evidence is sufficient to support the jury’s
conclusions. Rather, the question is whether “the favorable
evidence could reasonably be taken to put the whole case in such a
different light as to undermine confidence in the verdict.”22

“When there are a number of Brady violations, a court must analyze whether the
cumulative effect of all such evidence suppressed by the government raises a

18
United States v. Martin, 431 F.3d 846, 850 (5th Cir. 2005).
19
United States v. Sipe, 388 F.3d 471, 479 (5th Cir. 2004).
20
United States v. Runyon, 290 F.3d 223, 245 (5th Cir. 2002).
21
Id.
22
Strickler v. Greene, 527 U.S. 263, 290 (1999) (quoting Kyles v. Whitley, 514 U.S. 419,
435 (1995)) (citations omitted).

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reasonable probability that its disclosure would have produced a different
result.”23 Impeachment evidence falls within Brady’s reach.24
Miller bases his claim on the criminal referral letter sent by the Office of
the U.S. Trustee to the U.S. Attorney in Montana regarding Matich’s petition for
bankruptcy. The letter references the Government’s possession of Matich’s
business records, not all of which were given to Miller. We agree with the
district court that, assuming the evidence was suppressed, Miller has failed to
establish a “reasonable probability” that the outcome of trial would have been
different had the evidence been disclosed.
Miller claims that the evidence would have established beyond
peradventure that Matich had control of his money. However, this would have
been cumulative of other evidence introduced at trial. “‘[W]hen the undisclosed
evidence is merely cumulative of other evidence [in the record], no Brady
violation occurs.’”25 The trial evidence established that Miller’s money
“disappeared” soon after Miller transferred it overseas, which of course means
Miller had no access to it; that Matich controlled the overseas bank and trust
accounts; and that Miller wanted his money overseas and out of his control so
the IRS could not seize it. More fundamentally, that Matich may have stolen
Miller’s money, as opposed to someone else stealing it or the banks losing it, and
how Matich stole the money is relevant only to the extent that it sheds light on
what Miller knew and intended when he submitted his Offer. Miller has not
shown that the suppressed evidence speaks to these critical issues.
Miller also contends that his ability to cross-examine Matich was impeded
by his lack of access to the suppressed evidence. It is true that Matich’s

23
Sipe, 388 F.3d at 478.
24
Id. at 477, 478.
25
Id. at 478 (quoting Spence v. Johnson, 80 F.3d 989, 995 (5th Cir. 1996)).

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testimony was less than a paradigm of specificity. But Miller’s allegations
regarding the value of the suppressed documents are, as the district court noted,
“conclusory,” and some of those allegations are flatly contradicted by the record.
Even assuming the documents could fill factual gaps in Matich’s testimony,
those details would not bear on what Miller did, knew, and intended – the
documents would have revealed what Matich did and knew. And, while Miller
states, without any elaboration, that the documents would reveal his good-faith
reliance on Matich’s advice, the trial evidence reveals that Miller was a full
partner in the scheme, developing it alongside of Matich and fully aware of what
he was doing.
Nor does the impeachment value of the evidence establish materiality.
Although the suppressed evidence may well have impeached Matich’s testimony
about what happened to Miller’s money after Miller transferred it overseas and
Matich’s financial holdings, that does not touch upon the critical issues at trial:
what Miller did and intended. Moreover, Miller probed Matich’s credibility at
trial, examining him based on his guilty plea, his plea agreement and
cooperation with the Government, his financial holdings, and his control of his
clients’, including Miller’s, money.
Wholly apart from Matich’s testimony, there was a substantial body of
evidence establishing Miller’s guilt that is left unscathed by the suppressed
evidence, including, Miller’s admissions in the recorded phone call; Miller’s
statements, both written and oral, to the IRS regarding why he transferred the
money; Miller’s acts in 1997; and the documentary evidence presented by the
Government.26 While the criminal-referral letter would have presented Miller

26
See United States v. Weintraub, 871 F.2d 1257, 1262 (5th Cir. 1989) (“Courts have
found, for example, that impeachment evidence improperly withheld was not material where
the testimony of the witness who might have been impeached was strongly corroborated by
additional evidence supporting a guilty verdict.”).

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 No. 06-11078

a new angle from which to impeach Match, the impeachment value of the
evidence does not cast sufficient, if any, doubt on the verdict.
The cumulative effect of the suppressed evidence does not undermine
confidence in the verdict, and therefore, Miller’s Brady claim fails.
VI
Accordingly, we AFFIRM.

15