In the
United States Court of Appeals
For the Seventh Circuit
No. 11-1426
U NITED S TATES OF A MERICA,
Plaintiff-Appellee,
v.
C HRIS J. K OKENIS,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 07-CR-801—Milton I. Shadur, Judge.
A RGUED S EPTEMBER 28, 2011—D ECIDED N OVEMBER 23, 2011
Before B AUER, W OOD , and T INDER, Circuit Judges.
T INDER, Circuit Judge. A jury found Chris J. Kokenis
guilty of eight counts of filing a false income tax return
in violation of 26 U.S.C. § 7206(1). He appeals both the
convictions and his sentence. He contends that the
district court erred in ruling that he could not present
evidence of good faith unless he waived his Fifth Amend-
ment rights and testified. He also argues that the court
erred by relying on acquitted conduct in determining the
2 No. 11-1426
sentence to be imposed. Although the district court
applied the wrong standard in determining whether
Kokenis could assert good faith, the error was harmless
given the overwhelming evidence of a lack of good faith.
The court properly excluded the evidence at issue, and
our precedent precludes Kokenis’s argument about
acquitted conduct. We therefore affirm.
I. Background
Jim Kokenis, Chris Kokenis’s father, started two compa-
nies, Delta Oil Corporation and Delta Energy Corpora-
tion, which explored for oil and natural gas, leased
mining rights from landowners, and sold “working
interests” in their drilling projects to investors. Chris
Kokenis was president of both Delta Oil and Delta
Energy and, along with his two sisters, was a share-
holder of Delta Energy.1 Delta Energy was a Subchapter S
corporation for federal taxation purposes, which means
that its income and tax burden flow through directly to
its shareholders and the shareholders are supposed to
report the income on their tax returns and pay the appro-
priate tax. Orlando Mondero was the controller and
accountant for Delta Oil and Delta Energy. In 1998 he
contacted the Internal Revenue Service with concerns
about fraudulent transactions.
1
From this point forward we will refer to Chris Kokenis as
Kokenis. If we are referring to Jim Kokenis, we will use his
full name to distinguish the two.
No. 11-1426 3
The IRS audited Delta Oil, Delta Energy, Jim Kokenis,
and Delta Energy’s shareholders: Kokenis and his two
sisters. IRS Revenue Agent Thomas Dorsey, who con-
ducted the audit, reviewed large sales transactions be-
tween the two Delta corporations and two gas and
oil investment companies, Roemer-Swanson Energy
Corporation and Whiting Petroleum Corporation. He also
reviewed compressor sales between Delta Energy and
Robert Rosin and personal expenses of Kokenis that were
paid by Delta Energy. These included real estate taxes on
his residence, residential construction upgrades on his
residence, and a sales commission on the sale of his
residence.
Steve Swanson, former president of Roemer-Swanson,
testified that in 1996 Roemer-Swanson purchased a work-
ing interest in a well project from Delta Oil with a
purchase price of approximately $3.92 million. In Septem-
ber 1996, Delta Oil transferred $1,721,376 of the money
it received from Roemer-Swanson to Delta Energy.
Swanson testified that no portion of the purchase price
was allocated as an advance to pay for future drilling
and that Roemer-Swanson did not give any money to
Delta Oil to hold in an account on behalf of Roemer-
Swanson.
Mondero recorded the Roemer-Swanson sale in Delta
Energy’s books, noting that Delta Oil owned $695,424 and
Delta Energy owned $1.7 million, with the remainder
going elsewhere. When he prepared Delta Energy’s 1996
tax return, he included the $1.7 million as income and
gave a draft of the return to Kokenis. Mondero testified
that Kokenis said there was too much money and it had
4 No. 11-1426
to be reduced. Mondero said that he prepared another
tax return as Kokenis requested and when he showed it
to Kokenis, Kokenis told him it had to be reduced further
and to show no profit on the sale. Mondero did as re-
quested, and the final tax return did not show any
income from the Roemer-Swanson sale. Kokenis signed
the return, and Mondero mailed it to the IRS. Mondero
testified that Kokenis later told him to recognize the
transaction as a liability rather than a sale. As instructed,
Mondero prepared a journal entry, dated December 31,
1997, reversing the sale. The entry noted: “Sales to record
drilling liability to Roemer Swanson Energy Corpora-
tion[.]” The effect was to reduce Delta Energy’s income by
$1.7 million.
The parties entered into a second contract in Novem-
ber 1996, pursuant to which Roemer-Swanson bought
a larger stake in some of the same well projects from
Delta Oil for $6.75 million. Swanson testified that this
contract, like the first, did not allocate any portion of the
purchase price for future development or drilling and
that Roemer-Swanson did not advance any money to
Delta Oil to cover the cost of future drilling under
that contract. Mondero recorded the sale in a journal
entry on the Delta Energy books, reflecting receipt of
$1.9 million from Delta Oil and recognizing the money
as a sale to Roemer-Swanson. Mondero testified that he
prepared a tax return for Delta Energy for the tax year
1997 based on the profit and loss statements and balance
sheet. He said that he presented the income statement
and tax calculations to Kokenis who told him to reduce
the income, specifically instructing him to reverse the
No. 11-1426 5
sale to Roemer-Swanson by recognizing it as a liability
instead of a sale. Mondero did as instructed and reversed
the sale in a journal entry. The effect of the reversal was
that the money received from the sale was not reported
as income by Delta Energy. Dorsey testified that the
money was treated as an advance from the investor.
Mondero stated that he prepared a tax return after the
transaction had been reversed on the books. Kokenis
signed it and Mondero, at Kokenis’s direction, sent the
return to the IRS.
This pattern was repeated with two Whiting Petro-
leum transactions. First, in June 1998, Whiting Petro-
leum entered into a purchase and sale agreement with
Delta Oil and others to purchase a working interest in
well projects for approximately $4.8 million. Whiting
Petroleum entered into a second purchase and sale agree-
ment with Delta Oil in December 1999 for the purchase
of interests in oil and gas wells for $4.15 million. The
settlement date was January 10, 2000. John Hazlett, a
Whiting Petroleum vice president in the late 1990s,
testified that no portion of the purchase price for either
transaction was allocated to pay the cost of drilling new
wells in the future. He also said that Whiting Petroleum
did not advance any money to Delta Oil to pay for such
a cost and did not pay Delta Oil any money to be held
on account on behalf of Whiting Petroleum.
Mondero testified that he initially recorded the Whiting
Petroleum transactions in the Delta Energy books and
records as sales, explaining that Kokenis identified them
to him as sales. Mondero prepared a tax return for Delta
6 No. 11-1426
Energy for the tax year 1998 based on the profit and
loss statements and his tax calculations. He testified that
when he presented his calculations to Kokenis, Kokenis
told him that the income was too big and needed to be
reduced. Kokenis instructed him to reverse the sale to
White Petroleum. Mondero did as instructed, increasing
Delta Energy’s liability and reducing its taxable income
by $2.7 million. Mondero received no supporting docu-
mentation to support the reversal. Then Mondero
prepared a tax return based on Kokenis’s instructions,
Kokenis signed it, and Mondero filed it with the IRS.
Mondero also testified that he prepared the tax return
for Delta Energy for the tax year 2000 based on the profit
and loss statements and his tax calculations. He claimed
that when he showed his calculations to Kokenis,
Kokenis told him to reduce the income from the Whiting
Petroleum sale. Mondero did so and recorded a liability
to Whiting Petroleum instead of proceeds from the sale,
thus reducing taxable income. Mondero testified that he
was not holding any money on behalf of Whiting Petro-
leum and had no documentation to that effect. According
to Mondero, Kokenis never offered any explanation why
he wanted Mondero to reverse or reduce the sales trans-
actions. Nor did Kokenis explain why the money
received wouldn’t be treated as income.
Dorsey reviewed questionable Delta Energy journal
entries concerning a transaction for $2,757,773.60. The
first entry, date stamped July 20, 1998, classified the
transaction as a sale and stated: “To record proceeds from
Roemer-Swanson for drilling of new wells in various
projects.” (The reference to Roemer-Swanson instead of
No. 11-1426 7
Whiting Petroleum appears to have been an error.) A
second journal entry reversed the sale with the effect of
decreasing Delta Energy’s income by approximately
$2.7 million. Curiously, Dorsey received two different
copies of the second journal entry. The first, Government
Exhibit 36, was from Mondero; the other, Government
Exhibit 37, was from accountant Vito Loisi (speaking for
Kokenis through power of attorney) in response to
Dorsey’s request for documents related to the 1998
Whiting Petroleum sale. Dorsey testified that the copy of
the journal entry from Mondero noted: “To reverse sale
of working interest in various wells to Whiting Petro-
leum per Chris Kokenis . . . .” However, the copy provided
by Loisi stated: “To reclass proceeds from Whiting Petro-
leum transaction.” Dorsey testified that this would
likely refer to a deposit or an advance rather than a
sale. Dorsey requested backup documentation and an
explanation as to where the transaction was described as
an advance. He was never provided that information.
Dorsey also testified the attachments to the two copies of
the journal entries were not the same and the wrong
account number was used on the copy he received
from Loisi.
Robert Rosin testified that in 1997 he invested just
over $300,000 in Delta Energy by purchasing a working
interest in compressors. He identified a letter, dated
November 26, 1997, which said that it “shall evidence
an agreement by and between Delta Energy Corporation
and yourself with respect to your purchase of an interest
in nine (9) specific compressors.” The letter stated that
the total purchase price was $303,250 and referred to an
8 No. 11-1426
attached list specifying the nine compressors by unit
and serial number with handwritten notations refer-
encing the particular projects involved. Rosin identified
two checks he made on December 4, 1997, to Delta
Energy for a total of approximately $317,000, which
reflected the purchase price and some additional charges.
As part of his examination, Dorsey reviewed Delta
Energy’s records regarding the sale of an interest in
compressors to Rosin. A journal entry, dated July 20,
1998, stated: “To record sale of ten percent working
interest in compressors to Robert Rosin per attached.”
Dorsey copied the journal entry and attachments while
in Loisi’s office. The sale was reversed in another journal
entry, date stamped March 10, 1999, and April 12, 1999,
which said: “To reverse sale of compressors to Robert
Rosin per Chris Kokenis.” When Dorsey subsequently
attempted to review the transaction at a later time, the
journal entry reversing the transaction was missing from
the book of journal entries. Dorsey asked Loisi to provide
him a copy of the entry and supporting documentation
for the transaction. Loisi advised that there were two
checks, one for $200,000 for an advance for future com-
pressor purchases and the remaining $117,250 for a sale.
Dorsey asked for backup documentation, and Loisi re-
ported that the journal entry page was placed back in
the book. Dorsey questioned Loisi why the transaction
was booked in 1998 instead of 1997, when the corpora-
tion received the money that was paid by Rosin. Loisi
reported that the taxpayer was unsure which compressors
were being sold and didn’t book the transaction until
that was determined. Recall, however, that the Novem-
No. 11-1426 9
ber 26, 1997, letter to Rosin identified the nine com-
pressors by unit and serial number.
Loisi also provided Dorsey with a copy of a letter to
Rosin in an attempt to substantiate the claimed advance.
The letter identified only a portion of the entire trans-
action as a sale with a purchase price of $103,250 and
identified $200,000 as an advance or investment. The
effect was to reduce the corporation’s income by
$200,000. Rosin testified that the signature on the letter,
purportedly indicating his agreement with the letter’s
terms, was not his own. He also testified that giving
Delta Energy $200,000 to hold for future purchase of
unidentified compressors was not consistent with his
investment strategy at the time. Rosin added that a net
return of $6,100 per month, as indicated on Delta
Energy’s October 21, 1997, letter offering him the oppor-
tunity to purchase an interest in the compressors would
be “quite a return” on a $103,000 investment.
In addition to this manipulation of Delta Energy’s books
to reduce the income reported, the evidence at trial sup-
ported a finding that for tax years 1997 through 2000,
Kokenis used Delta Energy funds to pay personal
expenses and caused them to be recorded as business
expenses. This had the effect of reducing Delta Energy’s
income as well as his own. In 1997 Kokenis used Delta
Energy funds to pay Santefort Enterprises, Inc., a high-end
residential builder, for upgrades to the new home he
was purchasing. Thomas Santefort testified that Kokenis
was one of his clients and had purchased three homes
from his company. Santefort identified a $69,258.77
10 No. 11-1426
check payable to Santefort Enterprises for extras associ-
ated with the home Kokenis purchased at Five York Lake
Court in Oak Brook, Illinois. The check was written on
Delta Energy’s account. Santefort identified another
record pertaining to additional extras performed on that
residence and payment by a $10,470.66 check written
on Delta Energy’s account.
Dorsey testified that he requested backup and sup-
porting documentation from Loisi regarding these pay-
ments to Santefort Enterprises. Loisi told Dorsey that
Kokenis had confirmed that the expenses were business
expenses. Dorsey again requested backup documents.
Loisi presented Dorsey with two invoices purportedly on
Santefort letterhead related to drilling pipeline expenses
for items such as plastic line pipe and transportation
charges. At trial, Santefort testified that the letterhead
had been changed—the reference to “real estate invest-
ment and development” was gone. He also said that his
company did not provide the kind of supplies and
services identified in the purported invoices, the invoices
were not prepared by his company, and he had not autho-
rized the use of his company letterhead or preparation
of the invoices.
In addition, the evidence established that in 1999,
Kokenis used Delta Energy funds to pay Santefort a $75,000
sales commission in connection with the sale of his
home at Five York Lake Court. Kokenis paid the com-
mission in four separate $18,750 checks each drawn on
Delta Energy’s account payable to Thomas Santefort or
his brother, David Santefort. The Delta Energy general
No. 11-1426 11
ledger listed the payments as a commission expense,
thus reducing Delta Energy’s income. Thomas Santefort
testified that his company never provided any goods or
services to Delta Energy.
Dorsey reviewed Delta Energy’s general ledger for
the tax years 1997 through 2000 and discovered that
the corporation paid the personal real estate taxes for
Kokenis’s residence. The general ledger entries indicated
that these were business expenses, reducing the income
reported by the corporation. Delta Energy did not own
any real estate. The parties stipulated that if called as a
witness, Kathleen Guerra would testify that she has
been employed by Delta Energy, that Kokenis identified
which bills would be paid and when, and that she gener-
ated the checks from a list he provided.
Kokenis did not contest the evidence that he told
Mondero to reverse the sales transactions involving
Roemer-Swanson and Whiting Petroleum or that his
personal expenses were deducted as business expenses.
Nor did he contest that false documentation was
provided to the IRS, although he emphasized that
Dorsey did not receive any of the documents from him
personally. Kokenis vigorously challenged whether
Mondero was truthful and argued that the government
failed to prove that he committed the offenses willfully.
Kokenis requested a jury instruction on good faith, but
the district court refused to give it because it believed
that he had to testify to be entitled to such an instruction.
The jury convicted Kokenis of four counts of willfully
making and causing to be made false income tax returns
12 No. 11-1426
of Delta Energy for tax years 1997-2000 and four counts of
willfully making false individual income tax returns
on behalf of himself and his wife for tax years 1997-2000,
all in violation of 26 U.S.C. § 7260(1). He was acquitted of
counts involving his sisters’s returns. Kokenis moved
for a new trial, arguing that he was entitled to a good-faith
instruction, that the district court erred in excluding
testimony from several witnesses which related to good
faith, and that the district court shifted the burden of
proof to him. The motion was denied, Kokenis was sen-
tenced, and he appealed.
II. Discussion
At trial Kokenis wanted to argue that he had a good-
faith belief that he wasn’t violating the tax laws. He
argues that the district court erred because it would not
allow him to present any evidence of good faith or even
a good-faith argument unless he testified. This, he
claims, burdened his Fifth Amendment and due process
rights. He also argues that he was entitled to a good-
faith jury instruction. Finally, he challenges the court’s
consideration of acquitted conduct at sentencing.
A. Evidentiary Rulings
Kokenis argues that the district court precluded him
from presenting evidence that would have supported a
good-faith argument. He specifically challenges the
exclusion or limitation of testimony by five wit-
nesses: John Tripp, Steve Swanson, Jim Kokenis, Orlando
No. 11-1426 13
Mondero, and Timothy Brock. We review evidentiary
rulings for an abuse of discretion. United States v.
Stallworth, 656 F.3d 721, 727 (7th Cir. 2011).
Tripp, a tax accounting professor, would have testified
that the pool of capital theory allows for “non-recognition
for tax purposes in the year of the transaction of certain
sales of working interests in oil and gas development
projects.” In deciding whether to admit expert testimony,
a district court must determine whether the expert “had
sufficient specialized knowledge to assist the jurors
‘in deciding the particular issues in the case.’ ” Kumho Tire
Co. v. Carmichael, 526 U.S. 137, 156 (1999) (quoting 4 J.
McLaughlin, Weinstein’s Federal Evidence ¶ 702.05[1], p. 702-
33 (2d ed. 1998)); see also Uniloc USA, Inc. v. Microsoft
Corp., 632 F.3d 1292, 1316 (Fed. Cir. 2011) (“The bottom line
of Kumho Tire . . . is that one major determinant of whether
an expert should be excluded under Daubert is whether
he has justified the application of a general theory to
the facts of the case.”). Tripp did not offer any opinion
that the theory was applicable to any transaction in this
case. Furthermore, Kokenis offered no evidence that he
actually relied on the pooling capital theory, so testimony
about the theory would be irrelevant, confusing, and
perhaps even misleading. Therefore, the testimony was
properly excluded under Federal Rules of Evidence 402
and 403. See United States v. Loughry, No. 10-2967, 2011 WL
4790540, at *3 (7th Cir. Oct. 11, 2011). Even if Kokenis’s
testimony was the only means by which Kokenis could
lay a proper foundation for Tripp’s testimony, Kokenis’s
Fifth Amendment rights would not be violated simply
because he had to choose between not testifying and
14 No. 11-1426
laying that foundation. See Williams v. Florida, 399 U.S. 78,
84 (1970) (“That the defendant faces . . . a dilemma de-
manding a choice between complete silence and
presenting a defense has never been thought an invasion
of the privilege against compelled self-incrimination.”);
United States v. Lewis, 641 F.3d 773, 785 (7th Cir. 2011) (“Just
because [the defendant] would have had to take the
stand to present his theory of the defense does not mean
he was penalized for not doing so.”).
Kokenis also maintains that Tripp would have testified
that the labels on relevant transaction documents are
not determinative of tax treatment, small differences in
transaction structure can lead to different taxable out-
comes, and errors can be made. Such testimony would
have been irrelevant given the uncontested testimony
by Swanson and Hazlett that the transactions at issue
were in fact sales transactions, none of the purchase
price was allocated for future drilling, and no money
was advanced for future drilling. Moreover, Tripp did
not analyze any of the transactions at issue in this case.
Offering testimony on a theory in general, without tying
it to the case on trial is insufficient. See, e.g., Naeem v.
McKesson Drug Co., 444 F.3d 593, 608 (7th Cir. 2006) (con-
cluding that expert testimony was admitted in error
where expert’s opinions “were not tied to specific
portions of the [document at issue] and appeared to
be general observations regarding what is normal or
usual business practice”).
Swanson was to explain “Delta Energy’s contin-
uing development obligations to the landowner and
No. 11-1426 15
working interest owners, and its obligation to the re-
maining working interest owners in the event of non-
consent by others.” This testimony, Kokenis submits, was
relevant to Jim Kokenis’s testimony about times when
Delta Oil did not meet its obligations. Jim Kokenis was
to testify that “funds from sales of interests in well
projects needed to be set aside by Delta Energy to meet
its continuing obligations to mineral rights owners
for future project development, i.e., a drilling fund.” To-
gether, this evidence purportedly would have estab-
lished reasons why Kokenis needed to set aside money
in a drilling fund. Jim Kokenis’s testimony that Delta Oil
had a drilling fund has little bearing on whether Delta
Energy, a separate corporation, also had a drilling fund.
But even if Kokenis put funds from sales transactions
into a drilling fund (and he offered no evidence that he
did), that doesn’t explain why he didn’t also report the
funds as income. Furthermore, Swanson’s “obligations
testimony” was irrelevant and properly excluded under
Rule 402 as well as under Rule 403 based on considerations
of waste of time, jury confusion, and misleading the jury.
Mondero would have testified about treatises dis-
cussing circumstances under the law “in which the pro-
ceeds of sales of working interests need not be recognized
as income for tax purposes in the year of the transac-
tion,” basically, the pool of capital theory. Such testimony,
like Tripp’s testimony on the theory, was properly ex-
cluded. Kokenis offered no evidence that the theory
even applied to any of the transactions. There was, for
example, no evidence that Swanson-Roemer, Whiting
Petroleum, or Rosin funds were to be used for future
16 No. 11-1426
development. Indeed, the evidence was to the contrary.
And again, there was no evidence that Kokenis relied on
the theory. The mere existence of the theory without
evidence of Kokenis’s knowledge of and reliance on the
theory is insufficient to support the assertion of good
faith. See Naeem, 444 F.3d at 608.
Brock is a petroleum geologist who would have pre-
sented “background information about the business
of developing natural gas from the Atrium Shale in Michi-
gan, including the multiple business and risk consider-
ations at play.” Kokenis argues that Brock had “helpful
information about the drilling process and the eventual
delivery of gas to the buyer that would have provided
context.” This background information (what the
district court referred to as a “short course or a long
course in oil development”) was not relevant because
it was unconnected to the facts and issues in this case. It
wouldn’t have been helpful to the jury, and presenting
it would have been confusing and a waste of time, all
of which justify its exclusion under Rules 402, 403 and
702. See, e.g., United States v. Noel, 581 F.3d 490, 497 (7th
Cir. 2009) (concluding that testimony did “not pass
muster under Rule 702” because it was unhelpful to
the jury).
Kokenis also argues that Brock’s testimony “would
have provided a layer of credibility to [the] argument
that he did not act willfully when he proposed to
Mondero that the sales transactions not be reported as
income, and that companies in Delta Energy’s position
had to have funds available to account for unseen contin-
No. 11-1426 17
gencies.” Brock’s testimony would not lend credibility
to Kokenis’s good-faith argument because it was not tied
to the facts and issues in this case. In addition, a com-
pany’s need to prepare for unforseen contingencies has
no bearing on whether funds received should be treated
as income. And as the government notes, the court left
the door open for Kokenis to offer a limited amount of
testimony from Brock as necessary “to tee up” his ability
to assert a good-faith defense. Kokenis didn’t take ad-
vantage of that opportunity, however; he did not call
Brock to testify.
The district court’s exclusion and limitation of certain
evidence did not constitute an abuse of discretion.
B. Assertion of Good Faith
Kokenis next argues that the district court erred in
ruling that he could not assert a good-faith theory of
defense unless he testified. He also claims that he was
entitled to a jury instruction on good faith. We review
the district court’s determination of the proper legal
standard and its refusal of a theory-of-defense instruction
de novo, United States v. Martin, 618 F.3d 705, 735 (7th
Cir. 2010); United States v. Seals, 419 F.3d 600, 606 (7th Cir.
2005).
“A defendant is entitled to an instruction on his theory
of defense only if ‘(1) the instruction provides a correct
statement of the law; (2) the theory of defense is
supported by the evidence; (3) the theory of the defense
is not part of the government’s charge; and (4) the failure
18 No. 11-1426
to include the instruction would deprive the defendant
of a fair trial.’ ” United States v. Campos, 541 F.3d 735, 744
(7th Cir. 2008) (quoting United States v. Millet, 510 F.3d 668,
675 (7th Cir. 2007)). A defendant “only needs to demon-
strate a foundation in evidence, ‘however tenuous,’ to
support his theory, but a ‘mere scintilla of evidence . . .
is not sufficient to warrant a defense instruction.’ ”
United States v. Canady, 578 F.3d 665, 672-73 (7th Cir. 2009)
(quoting United States v. Buchmeier, 255 F.3d 415, 427 (7th
Cir. 2001)). Viewing the instructions as a whole, “a defen-
dant is not entitled to a specific instruction if a jury
was adequately instructed on [his] theory of defense.”
United States v. Reed, 539 F.3d 595, 599 (7th Cir. 2008).
The district court’s rulings can be reasonably under-
stood as requiring Kokenis to testify (and waive his
Fifth Amendment rights) in order to assert good faith. For
example, in ruling on the government’s motion in limine
to exclude certain statements under Rule 702, the court
said: “[I]n a criminal case the defendant has no obliga-
tion to introduce evidence. . . . When it comes, however,
to [a] good faith defense of the kind that I understand
to be asserted here, that is an obvious exception . . .
because good faith . . . has to do with intent.” The court
added that Cheek v. United States, 498 U.S. 192 (1991), taught
that “if somebody really had a subjective belief and it was
an honest belief, that that could constitute a good faith
defense. But by definition that is something that has
to come from the defendant.” And in denying the
motion for a new trial, the court wrote that “in order to ad-
vance . . . any assertion of a good faith defense and thus
No. 11-1426 19
to bring Cheek into play, Kokenis had to take the stand,
for no one else could demonstrate his good faith belief.”
The court erred in thinking that evidence of Kokenis’s
state of mind had to come from Kokenis’s own testimony.
See, e.g., United States v. Lindo, 18 F.3d 353, 356 (6th
Cir. 1994) (“ ‘[T]he standard of evidence necessary to
warrant a [good-faith reliance] instruction cannot
include an absolute requirement that the taxpayer must
testify, for that would burden the taxpayer’s own Fifth
Amendment right against self-incrimination.’ ”) (quoting
United States v. Duncan, 850 F.2d 1104, 1115 n.9 (6th
Cir. 1988)); United States v. Phillips, 217 F.2d 435, 442
(7th Cir. 1954) (noting that evidence of defendant’s good-
faith reliance on advice of counsel can come from the
government’s witnesses or the defendant’s witnesses).
Although a defendant’s own testimony might be the
best evidence of that defendant’s good faith, a defendant
can offer evidence of good faith in other ways. For exam-
ple, circumstantial evidence may tend to show good
faith and hearsay statements of the defendant may
suggest a defendant’s belief.
Nonetheless, Kokenis was not entitled to a good-faith
instruction. First, the evidence did not support this
theory of good faith. Kokenis’s claim that the district
court wouldn’t allow him to present evidence of good
faith unless he testified is wrong. He simply didn’t offer
any evidence relevant to his good faith. For example,
Kokenis wanted to present evidence of the pool of capital
theory and Delta Energy’s obligations to landowners
and working interest owners. He argues that this evi-
20 No. 11-1426
dence “would have provided a layer of credibility to [his]
argument that he did not act willfully when he proposed
to Mondero that the sales transactions not be reported
as income[.]” But Kokenis made no effort to tie such
evidence to his state of mind. He offers nothing but
speculation to suggest that he relied on such informa-
tion in directing Mondero to change records and tax
returns. Kokenis seems to be asserting that just because
there may be evidence to show that someone could
have had a good-faith belief that he wasn’t violating
the law, then he should be able to present such evidence
to the jury. Not so. Without any connection to his state
of mind, such evidence is irrelevant.
Furthermore, as the government points out, the
evidence of the pool of capital theory has no bearing on
Kokenis’s claims of personal expenses as business ex-
penses. The government was required to prove only that
he filed a return that he did not believe was true and
correct to “every material matter.” United States v. Pansier,
576 F.3d 726, 736 (7th Cir. 2009). Kokenis doesn’t offer
any explanation as to how claiming his personal
expenses as business expenses could have comported
with good faith. His suggestion that Mondero was re-
sponsible for the false statements regarding personal
deductions and fraudulent documents such as the fake
Santefort invoices and fallacious Rosin signature is
absurd. Thus, a finding of good faith with respect to
the sales transactions would not have precluded his
convictions.
Another reason Kokenis was not entitled to an instruc-
tion on good faith: the theory was already part of the
No. 11-1426 21
charge. Willfulness is an essential element of the tax
evasion offenses charged under 26 U.S.C. § 7206(1). United
States v. Hills, 618 F.3d 619, 634, 638-39 (7th Cir. 2010),
cert. denied, 2011 WL 4530535 (U.S. Oct. 3, 2011) (No. 10-
10220). The good-faith theory “is essentially a claim that
[the defendant] did not act willfully.” United States v.
Brimberry, 961 F.2d 1286, 1291 (7th Cir. 1992) (quotation
omitted); see also Cheek, 498 U.S. at 202 (government’s
burden of proving willfulness requires “negating a defen-
dant’s claim of ignorance of the law or a claim that
because of a misunderstanding of the law, he had a good-
faith belief that he was not violating any” law). The
district court properly instructed the jury on the
elements of the offenses under § 7206(1), including that
the government had to prove that “when defendant made
and signed the tax return he did so willfully and didn’t
believe that the tax return was true, correct and complete
as to every material matter.” The court properly defined
“willfully” as “the voluntary and intentional violation of
a known legal duty or the purposeful omission to do
what the law requires.” The court further instructed
that “defendant acted willfully if he knew it was his
legal duty to file truthful income tax returns and he
intentionally filed false returns.” We note, too, that the
court also instructed the jury that the government had
the burden of proving the propositions (elements)
beyond a reasonable doubt and that the burden of proof
stays with the government throughout the case. The
district court’s instructions on willfulness “necessarily
encompassed” the defense theory of good faith. See
Brimberry, 961 F.2d at 1291; see also United States v.
22 No. 11-1426
Pomponio, 429 U.S. 10, 13 (1976) (per curiam) (“The trial
judge . . . adequately instructed the jury on willfulness.
An additional instruction on good faith was unneces-
sary.”). The jury could not find both that Kokenis acted
willfully as defined in the instructions and that he acted
in good faith. See United States v. Koster, 163 F.3d 1008,
1012 (7th Cir. 1998) (“[T]he jury could not have found
that [the defendant] knowingly committed mail fraud
and/or knowingly made false statements . . . and
yet simultaneously have found that [he] acted in good
faith. . . . Accordingly, [his] theory of defense was
already part of the . . . charge.”).
Thus the district court did not err in refusing to give
Kokenis’s good-faith instruction. Moreover, the district
court’s mis-impression that Kokenis could not assert
good faith unless he himself testified was harmless
because it did not affect his “substantial rights.” Fed. R.
Crim. P. 52(a). The evidence of his guilt, especially the
phony documentation of personal deductions, was over-
whelming. The good-faith argument was directed only to
the income side of the false tax returns, not to the deduc-
tion of personal expenses. On the record before us, the
district court’s error did not affect Kokenis’s substantial
rights and does not require remand. See United States
v. Benabe, 654 F.3d 753, 772 (7th Cir. 2011) (Rule 52(a)
“means what it says: ‘Any error, defect, irregularity, or
variance that does not affect substantial rights must
be disregarded.’ ”).
No. 11-1426 23
C. Acquitted Conduct
Kokenis argues that the district court’s use of acquitted
conduct in determining his sentence violated his con-
stitutional rights. He concedes that circuit precedent
forecloses this argument, see, e.g., United States v. Black,
625 F.3d 386, 394 (7th Cir. 2010) (“ ‘A jury’s verdict of
acquittal does not prevent the sentencing court from
considering conduct underlying the acquitted charge, so
long as that conduct has been proved by a preponderance
of the evidence.’ ”) (quoting United States v. Watts, 519
U.S. 148, 157 (1997) (per curiam)), cert. denied, 131 S. Ct.
2932 (U.S. May 31, 2011) (No. 10-1038), and raises it only
to preserve it for review by the Supreme Court.
III. Conclusion
Kokenis’s convictions and sentence and the district
court’s judgment are A FFIRMED.
11-23-11