IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
February 17, 2009
No. 07-60926 Charles R. Fulbruge III
Clerk
UNITED STATES OF AMERICA
Plaintiff - Appellee
v.
JON DALE ADAMS
Defendant - Appellant
Appeal from the United States District Court
for the Southern District of Mississippi
USDC No. 3:07-CR-31-1
Before WIENER, GARZA, and DeMOSS, Circuit Judges.
PER CURIAM:*
Defendant-Appellant Jon Dale Adams was convicted on two counts of filing
false income tax returns in violation of 26 U.S.C. § 7206(1). He appeals his
conviction, contending that he is entitled to acquittal because the government
improperly charged him with one count and, in any event, that there was
insufficient evidence to support the jury’s verdict. In the alternative, Adams
claims that the district court abused its discretion in denying him a new trial.
*
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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .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.
No. 07-60926
We vacate Adams’s conviction as to one count, affirm his conviction as to the
other count, and remand for re-sentencing.
I. FACTS AND PROCEEDINGS
Adams is the former owner of Secrets Cabaret strip club and Stardust
Oasis bar in Jackson, Mississippi. He filed a federal income tax return for 1999
(the “1999 Form 1040”) that failed accurately to reflect at least $450,000, being
proceeds of the sale of the strip club in October 1999. Adams signed the
inaccurate return and mailed it to the IRS in June 2000. Then, in early 2001,
Adams hired accountant and former IRS agent Perry Smith in what Adams’s
counsel describes as an effort to “get his taxes straight.” On February 27, 2001,
with Smith’s guidance, Adams completed, signed, and mailed a Form 1040X
“Amended U.S. Individual Income Tax Return” (the “Form 1040X”), which
amended the 1999 Form 1040 to report an additional $450,000 in gross income
from the sale of the strip club. The Form 1040X included a jurat signed by
Adams, which stated:
Under penalties of perjury, I declare that I have filed an original
return and that I have examined this amended return, including
accompanying schedules and statements, and to the best of my
knowledge and belief, this amended return is true, correct, and
complete.
IRS Form 1040X instructs taxpayers to “[a]ttach only the supporting forms
and schedules for the items changed.” In this case, the supporting form was
Adams’s Form 4797, which he properly appended to the Form 1040X. In
addition, however, Adams also included an unsigned copy of his 1999 Form 1040
together with a copy of his 1999 “Schedule C” — “Profit or Loss From Business”
— that had been originally submitted with, and was considered part of, the 1999
Form 1040. The parties agree, and IRS instructions and Treasury regulations
confirm, that Adams was under no obligation to submit the 1999 Form 1040 and
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No. 07-60926
Schedule C with the Form 1040X. In fact, he was affirmatively instructed not
to do so.
In August 2001, again with Smith’s assistance, Adams completed, signed,
and mailed his 2000 Form 1040 tax return (the “2000 Form 1040”). On that
return, he reported gross receipts of $400,423.
In 2002, the IRS assigned Agent Jerry Porter to investigate whether
Adams had violated tax statutes in reporting his 1999 and 2000 income. On
February 22, 2007, a grand jury indicted Adams, charging him with two counts
of filing false income tax returns in violation of 26 U.S.C. § 7206(1). This offense
is distinct from tax evasion, which “requires proof of an intention to evade or
defeat a tax, whereas § 7206(1) penalizes the filing of a false return even though
the falsity would not produce tax consequences.”1
Count I of the indictment relates to the Form1040X. It specifically alleges
that Adams did not believe the amended return was true “in that the . . . Form
1040X reported gross receipts on Line 1 of Schedule C of the 1999 U.S.
Individual Income Tax Return Form 1040 attached thereto as $227,415.21,
whereas, as he then and there well knew and believed, he had gross receipts
substantially in excess of the amounts reported . . . .” The government contends
that Adams had continued to understate his 1999 income by omitting
$277,551.46 in gross receipts from the Form 1040X.
Count II of the indictment relates to the 2000 Form 1040. It specifically
alleges that on this return Adams had “reported gross receipts on Line 1 of
Schedule C as $400,423.00, whereas, as he then and there well knew and
believed, he had gross receipts in excess of the amounts reported . . . .” 2 The
1
United States v. Citron, 783 F.2d 307, 313 (2d Cir. 1986) (citation and internal
quotation marks omitted).
2
Unlike in Count I, the Schedule C referred to in Count II was filed as a required part
of the tax return in question, not as a part of a prior return.
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No. 07-60926
government contends that the 2000 Form 1040 understated Adams’s income by
$66,013.
A jury convicted Adams on both counts. He subsequently filed a Rule 29
motion for judgment of acquittal, or in the alternative, for a new trial pursuant
to Rule 33. The district court denied the motion and this timely appeal followed.
II. ANALYSIS
A. Standards of Review
We review de novo the district court’s denial of a post-trial motion for
judgment of acquittal.3 In reviewing for sufficiency of the evidence, we must
affirm the jury’s verdict “if a reasonable trier of fact could conclude from the
evidence that the elements of the offense were established beyond a reasonable
doubt, viewing the evidence in the light most favorable to the verdict and
drawing all reasonable inferences from the evidence to support the verdict.” 4
Here, however, Adams’s challenge to his Count I conviction is an attack on the
sufficiency of the indictment.5 When, as here, the defendant has challenged the
3
United States v. Bellew, 369 F.3d 450, 452 (5th Cir. 2004).
4
United States v. Ragsdale, 426 F.3d 765, 770–71 (5th Cir. 2005) (citation and internal
quotation marks omitted).
5
Although the parties frame their appellate arguments in words of “sufficiency of the
evidence,” Adams asserts that the government is prohibited from pursuing the charges as
stated in Count I of the indictment, i.e., that the indictment was insufficient. Although the
dissent disagrees and would rule that Adams waived this argument, we are satisfied that
Adams raised it adequately to preserve it. His opening brief focuses on the “argument that
the Schedule C to the unsigned original return is not covered by the statement in the 1040X
jurat that ‘this amended return is true.’” As we explain below, this is the argument that forms
the basis of our sufficiency-of-the-indictment holding today. The dissent also cautions that we
“simply do not know how the Government might have responded to a claim that the
indictment was insufficient.” Although this appears to be the type of concern that justifies our
waiver doctrine, see, e.g., Edwards v. Johnson, 209 F.3d 772, 776 n.1 (5th Cir. 2000), in the
instant case, we need not speculate how the government would reply. In its brief, the
government responds to Adams’s sufficiency argument, contending that “Adams cannot so
easily ignore the significance of the accompanying Schedule C, whose inclusion with the
unaltered corresponding figures on the Form 1040X, necessarily meant he was representing
that the Schedule C information did not need to be amended.”
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No. 07-60926
sufficiency of the indictment in district court, we review the indictment’s
sufficiency de novo,6 taking its allegations as true.7 We review the district
court’s denial of a motion for new trial for abuse of discretion.8
B. Applicable Law
We cannot emphasize too strongly the framework for considering this case:
We will perform a sufficiency-of-the-evidence review only when we first determine that
conviction on Count I is possible as a matter of law. Whatever Adams labels his challenge, it
is illogical to fast-forward to sufficiency of the evidence if in fact no amount of evidence would
be sufficient to convict Adams on Count I. It should be uncontroversial that an indictment
sufficient to convict a defendant is a condition precedent to the government’s entitlement to
offer sufficient evidence at trial to support a conviction.
6
United States v. Fuchs, 467 F.3d 889, 900 (5th Cir. 2006). If, however, Adams had
failed to challenge the indictment in the district court for the same reasons advanced on
appeal, we would review for plain error. Id. The dissent states that we make a “significant
leap” in determining that Adams challenged the indictment’s sufficiency in the district court.
To the contrary, we reach this conclusion based on a straight-forward reading of Adams’s
district court filings. For example, Adams’s motion to dismiss asserted, inter alia, that (1)
“[t]he unsigned copy of the original return cannot support the Section 7206(1) violation
charged in Count 1,” and (2) “the unsigned original return including its attached Schedule C
was superfluous to the charge reported in the 1040X.” For these reasons, Adams asked the
district court to dismiss Count I because, despite the government’s artful drafting, it could not
properly prosecute a time-barred claim for a false statement on the Schedule C of the 1999
Form 1040 by phrasing the indictment in terms of submitting a false 1999 Form 1040X. It
takes no leap to read this as a challenge to that part of the indictment.
The dissent also notes that Adams technically moved to dismiss based on a statute-of-
limitations defense rather than the insufficiency of the indictment. Although this is so, we
disagree with the dissent to the extent that it would rely on a “hyper-technical reading” to
deprive Adams of our de novo review of this issue. See generally, United States v. Uni Oil, Inc.,
710 F.2d 1078, 1080 n.1 (5th Cir. 1983) (“In the absence of substantial prejudice to a party, it
is too late in the day to revive the kind of hyper-technical reading of legal papers that might
have prevailed under a nineteenth-century code pleading system.” (citing 16 C. WRIG HT , A.
MILLER , E. COOPER & E. GRESSM AN , FEDERAL PRACTICE AND PROCEDURE § 3949 (1977 &
Supp.1983))); Jacksonville Mar. Ass’n v. Int’l Longshoremen’s Ass’n, 571 F.2d 319, 324 (5th Cir.
1978) (warning of the “inappropriateness of a talismanic invocation” of pleading rules).
7
United States v. Ratcliff, 488 F.3d 639, 643 (5th Cir. 2007) (emphasis added).
8
United States v. Robertson, 110 F.3d 1113, 1118 (5th Cir. 1997).
5
No. 07-60926
It is not a criminal tax evasion case;9 it is not a criminal failure-to-file case.10 It
is a perjury case — specifically, the filing of a tax return, under penalty of
perjury, that contains false statements, which is criminalized in 26 U.S.C.
§ 7206(1).11 Under that section, the government has the burden of proving that:
“1) the accused willfully made and subscribed to a tax return, 2) the return
contained a written declaration that it was made under penalties of perjury, [ ]
3) the accused did not believe that the return was true as to every material
matter[,]” 12 and 4) that the return was false as to a material matter.13 Here,
Count I of the indictment pinpoints precisely the sole material matter that the
government, via the grand jury, insists made Adams’s Form 1040X false: the
amount of gross receipts reported on the copy of the Schedule C from his 1999
income tax return that he included with the Form 1040X. Count II of the
indictment also pinpoints precisely the alleged material false statement: the
reported gross receipts on the Schedule C from his 2000 income tax return
included with that same 2000 return.
9
See 26 U.S.C. § 7201.
10
See id. § 7203.
11
See United States v. Marashi, 913 F.2d 724, 736 (9th Cir. 1990) (“Section 7206(1) is
a perjury statute . . . .”).
12
United States v. Loe, 262 F.3d 427, 435 n.5 (5th Cir. 2001) (citing United States v.
Mann, 161 F.3d 840, 848 (5th Cir. 1998)).
13
United States v. Fontenot, 628 F.2d 921, 923 (5th Cir. 1980) (requiring the
government to prove “both falsity as to a material matter in the tax return and knowledge of
such falsity by the accused at the time” the taxpayer signed the return); United States v.
Jernigan, 411 F.2d 471, 473 (5th Cir. 1969) (holding that the offense requires that the return
be “false as to a material matter”).
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No. 07-60926
C. Motion for Acquittal: Count I – False Form 1040X
1. Relationship of the Form 1040X to the 1999 Schedule C
An amended tax return, Form 1040X, can give rise to liability for filing a
false tax return in the same manner as can any other tax return.14 Additionally,
a Schedule C can give rise to liability because “section 7206(1) requires the same
duty of honest reporting on schedules as it requires for entries on the Form
proper.”15 This liability attaches because “schedules, when appropriate, become
integral parts of” the forms to which they relate and “are incorporated therein
by reference.” 16
A copy of Adams’s 1999 Schedule C had been appended to his original 1999
Form 1040. The government, however, did not seek to indict Adams for making
false statements on his 1999 Form 1040, nor could it have, because by the time
the government indicted Adams, the applicable statute of limitations barred
charges of making a false statement on his 1999 Form 1040.17 But, if Adams had
been so indicted, we would first have asked the relatively straight-forward
question whether the 1999 Schedule C was an integral part of the 1999 Form
1040. As we have previously answered that question in the affirmative,18 we
know that a falsity on the Schedule C could have served as the basis for a charge
of filing a false 1999 return.
14
United States v. Clayton, 506 F.3d 405, 411 (5th Cir. 2007).
15
United States v. Taylor, 574 F.2d 232, 237 (5th Cir. 1978).
16
Id.; see United States v. Damon, 676 F.2d 1060, 1064 (5th Cir. 1982) (finding that
Schedule Cs were integral parts of their corresponding tax returns and thus incorporated by
reference).
17
See 26 U.S.C. § 6531(5) (establishing six-year limitations period for violations of
section 7206(1)). In contrast, the government had until February 27, 2007 to bring charges
as to the Form 1040X; Adams was indicted five days prior to this deadline.
18
See Damon, 676 F.2d at 1064.
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No. 07-60926
The crime charged in Count I, however, was submitting a false Form
1040X, specifically the Form 1040X to correct Adams’s return for the 1999 tax
year. Moreover, the indictment based this charge only on the falsity of Adams’s
1999 Schedule C, a document that IRS instructions and Treasury regulations
indicate Adams need not have and should not have submitted with the Form
1040X.19 The government nevertheless contends that Adams may be held
criminally liable for statements on the 1999 Schedule C because, by signing the
jurat on his Form 1040X, he swore to the truth of “accompanying schedules.”
The IRS argues that this includes the 1999 Schedule C that, despite instructions
not to attach it to the Form 1040X, Adams had voluntarily attached. Adams
counters that the Form 1040X’s jurat cannot be read as extending to the 1999
Schedule C, so that, as a matter of law, he cannot be held criminally liable for
any false statements that may appear in that attached schedule. Here is why
we agree with Adams.
The jurat on the Form 1040X states that Adams swears that he “examined
this amended return, including accompanying schedules and statements, and to
the best of my knowledge and belief, this amended return [no mention of
schedules or statements] is true, correct, and complete.” 20 By specifying that the
signer’s examination extends to the amended return and all attachments while
limiting the signer’s assurance of truth, correctness, and completeness to just the
amended return, the jurat’s language makes a clear distinction between that
which Adams examined and that which he swore was true — a classic example
19
See IRS Form 1040X (“Attach only the supporting forms and schedules for the items
changed.”); see also 26 U.S.C. § 6011(a) (indicating that taxpayers shall make returns
“according to the forms and regulations prescribed by the Secretary”).
20
IRS Form 1040X (emphasis added). Of course, the government could have brought
charges alleging that an entry on the Form 1040X itself was incomplete. See, e.g., Indictment
¶¶ 10, 12, United States v. Clayton, No. 06-cr-0069, 2006 WL 4968112 (W.D. Tex. Aug. 2, 2006)
(alleging false statements made on the Form 1040X). Instead, Count I alleges only a falsity
on line one of the 1999 Schedule C.
8
No. 07-60926
of the maxim Inclusio unius est exclusio alterius. In the common case, this
distinction is insignificant because accompanying schedules and statements are
generally considered integral parts of the return to which the jurat applies. 21 In
this case, though, Adams’s 1999 Schedule C — which did constitute an integral
part of his 1999 Form 1040 — does not constitute an integral part of the Form
1040X: It was not a supporting schedule for the item being amended, and it was
attached only as a “courtesy.” 22 In signing the jurat on the Form 1040X, Adams
swore that he had examined, inter alia, the copy of the 1999 Schedule C, but
swore to the veracity of only the amended return (and of any accompanying
documents integral to the amended return, a set of documents that does not
include the Schedule C from his 1999 Form 1040). As the 1999 Schedule C
cannot be incorporated by reference into the Form 1040X,23 it is a leap too far for
the government to bootstrap the falsity in the time-barred 1999 Schedule C as
the basis for a criminal charge of submitting a false Form 1040X.24 We again
21
See Damon, 676 F.2d at 1064; Taylor, 574 F.2d at 237.
22
Conceptually, we view Adams’s attachment of the 1999 Schedule C as analogous to
a taxpayer’s attaching a letter of good-character or any other extraneous document to his tax
return. They are simply not integral to the amended tax return. This does not mean that
unrequested documents can never be integral to an amended tax return. For example, it is
not difficult to envision a taxpayer including a letter with his tax return explaining particular
items in the return. The inquiry into whether such a letter would be integral is fact-specific.
But, when, as here, the taxpayer simply attaches a copy of an old filing as a “courtesy,” the
copy is not integral to the new filing as a matter of law.
23
We recognize that the issue of materiality of a false statement is one committed to
the jury’s peculiar competence. United States v. Gaudin, 515 U.S. 506, 512 (1995). The
materiality of Adams’s allegedly false statement in the Schedule C of his 1999 Form 1040 is
irrelevant, however, because, as a matter of law, Adams never swore to the truth of the 1999
Schedule C when executing the 1040X.
24
The government could have avoided its current predicament by either (1) indicting
Adams for filing a false Form 1040X based on a false statement on the Form 1040X itself (or
on an attached document that was integral to the Form 1040X), or (2) acting within the statute
of limitations to indict him for filing a false 1999 Form 1040 based on falsities in the 1999
Schedule C.
9
No. 07-60926
emphasize that this is a perjury case, not a tax-evasion case. In a tax-evasion
case, Adams’s alleged failure to report taxable receipts would be relevant,
irrespective of which form(s) tended to demonstrate the tax deficiency. But,
when, as here, the government alleges perjury, the specific false statement
charged is the very essence of the offense. In such cases, we must hold the
government to proving the particular falsity it alleges even if the evidence
should demonstrate that the defendant made other false statements for which
liability could have properly attached.
We reject the overly expansive reading that the government would have
us give to the jurat. Taking the government’s theory to its logical conclusion
would result in amending taxpayers incurring liability virtually every time they
include a copy of an original tax return with their amended returns. After all,
by the time a taxpayer files a Form 1040X, he already knows that his original
return is erroneous. Indeed, that is the very reason for filing the amended
return. Still, for completeness, taxpayers frequently attach copies of the
originals to the amended returns.25 Under the government’s theory that the
Form 1040X’s jurat extends to the truthfulness of not only the Form 1040X and
integral schedules but to any attached copies of previous tax returns as well, the
amending taxpayer would be vouching for the accuracy of the very tax return
that he is recognizing as erroneous in his voluntary amendment. This result
defies all logic: It cannot be the case that the amending taxpayer is swearing to
the veracity of each statement contained in the admittedly deficient original
return that he is attempting to correct as well as in every attachment to that
original return. Thus, the ambit of the amended return’s jurat cannot be read
25
The IRS represents to this court that forty percent of taxpayers include unsigned
copies of their original returns when they file amended returns.
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No. 07-60926
so broadly as to cover statements in the original return and its schedules and
attachments.26
Having determined that by signing the jurat of the Form 1040X, Adams
did not expose himself to potential liability for false statements contained in the
1999 Schedule C, we next assess the sufficiency of the indictment.
2. Sufficiency of the Indictment
The Federal Rules of Criminal Procedure require that the
indictment be “a plain, concise and definite written statement of the
essential facts constituting the offense charged.” F ED . R. C RIM. P.
7(c)(1). The indictment is sufficient if it alleges every element of the
crime charged and in such a way as to enable the accused to prepare
his defense and to allow the accused to invoke the double jeopardy
clause in any subsequent proceeding. When reviewing the
indictment, we must keep in mind that the law does not compel a
ritual of words and that an indictment’s validity depends on
practical, not technical, considerations. And the starting place for
any determination of whether the charged conduct is proscribed by
a criminal statute is a reading of the language of the charging
instrument and the statute itself.27
An indictment that describes the offense by tracking the relevant statute’s
unambiguous language is generally sufficient; yet, “that general description
26
The government responds that its theory does not prove too much, assuring us that
the government would never prosecute a taxpayer for the specific original falsity that he
accurately amended, only for falsities that remain uncorrected and that render the amended
return itself materially false. We have no reason to doubt the government on this point, but
its reasoning fails to convince us that our interpretation of the jurat’s ambit is too narrow. The
mere fact that the government promises not to prosecute absurdities does not alter the illogical
meaning that it would have us give the jurat — that of swearing to the truthfulness of the copy
of the admittedly fallacious original return attached as an exhibit to the amended return.
We note that the IRS has the authority to draft a new version of its jurat if it wishes
to make clear to taxpayers that they can be held criminally liable for false statements in any
document they submit to the IRS. Such a revised jurat would send a clear message to
taxpayers and accountants that they must be cautious when submitting accompanying
documents, including those enclosed as a “courtesy.”
27
United States v. Ratcliff, 488 F.3d 639, 643 (5th Cir. 2007) (citations and internal
quotation marks omitted).
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No. 07-60926
‘must be accompanied with such a statement of the facts and circumstances as
will inform the accused of the specific offense, coming under the general
description, with which he is charged.’”28
In this case, we interpret Adams’s challenge as asserting that the
indictment fails to allege an offense under 26 U.S.C. § 7206(1) because it alleges
a falsity in a document that cannot serve as the basis for filing a false Form
1040X itself. We agree with Adams: Here, the devil is in the details. The
government specifically alleged a falsity only on the 1999 Schedule C, and when
the government sets forth “only one particular kind of falsity,” it has the burden
of convicting on solely that falsity.29 Thus, the Adams indictment’s statement
of the “facts and circumstances” of the offense is deficient; it does not adequately
or accurately state the element of falsity.
Yet, this determination does not end our inquiry. If an indictment fails to
allege an element, we review the failure for harmless error, provided that, as
here, the defendant properly raised the issue at the district court.30 Under the
harmless error standard, we ask “whether the error affects substantial rights,”
that is “whether it appears ‘beyond a reasonable doubt that the error complained
of did not contribute to the verdict obtained.’” 31 Relevant to this inquiry are the
two primary functions of an indictment: “that it (1) provides notice of the crime
28
United States v. Quinn, 359 F.3d 666, 672–673 (4th Cir. 2004) (quoting Hamling v.
United States, 418 U.S. 87, 117–18 (1974)); see Hogue v. United States, 184 F. 245, 248–49 (5th
Cir. 1910) (stating, in a perjury case, that “the charge of the offense itself [ ] must be direct and
specific, intelligible, and plain” — “reasonable fullness and particularity are required, for [the
description of the alleged falsity] pertains to the very gist of the offense”).
29
United States v. Chambers, 408 F.3d 237, 243 (5th Cir. 2005) (quoting United States
v. Adams, 778 F.2d 1117, 1125 (5th Cir. 1985)).
30
United States v. Dentler, 492 F.3d 306, 310 (5th Cir. 2007) (citing United States v.
Robinson, 367 F.3d 278, 286–87 (5th Cir. 2004)).
31
Robinson, 367 F.3d at 286–87 (quoting Chapman v. California, 386 U.S. 18, 23
(1967)).
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No. 07-60926
for which the defendant has been charged, allowing him the opportunity to
prepare a defense; and (2) interposes the public into the charging decision, such
that a defendant is not subject to jeopardy for a crime alleged only by the
prosecution[.]”32
After careful review, we cannot say that it appears beyond a reasonable
doubt that the indictment’s error did not contribute to Adams’s conviction on
Count I. The indictment, on its face, sends the clear message that Adams need
only mount a defense against the accusation that he falsely “reported gross
receipts on Line 1 of Schedule C of the 1999 U.S. Individual Income Tax Return
Form 1040 attached thereto as $227,415.21.” Instead, the government
apparently meant to accuse Adams of submitting an amended tax return that,
in combination with his previous 1999 Form 1040 and accompanying Schedule
C, under-reported gross income by continuing to refrain from reporting
substantial gross receipts derived from his businesses in 1999. In an indictment
sufficient to pursue that theory, the government could have made the straight-
forward allegation that Line 1, Column C of the Form 1040X, “adjusted gross
income,” was false because it failed to account for — omitted — significant
32
Id. at 287 (citations omitted).
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No. 07-60926
taxable 1999 receipts.33 Although the indictment surely put Adams on notice
that the government was charging him with willfully under-reporting gross
receipts for 1999 in the filing of the 1040X amended return, reasonable doubt
exists regarding his opportunity to prepare a defense. It is not difficult to
imagine that Adams would defend against an alleged falsity on the 1999
Schedule C in a different manner than he would defend against a falsity on the
Form 1040X. For one thing, Adams had completed the 1999 Schedule C without
the assistance of a paid tax preparer; accountant Smith prepared Adams’s Form
1040X. If Adams had been relieved of the burden of concentrating on the 1999
Schedule C, he might have had an enhanced opportunity to negate the offense’s
willfulness element by shifting blame to Smith, e.g., “My accountant told me the
Form 1040X was fine.” This assertion is far more improbable if Adams is under
the impression that he must defend the veracity of the 1999 Schedule C, which
he completed at a time when he had no one at whom he could point the
proverbial finger. This distinction alone is sufficient to hold that it does not
appear beyond a reasonable doubt that the error in the indictment did not
contribute to the jury’s verdict on Count I. We decline to further hypothesize
how the error affected Adams’s opportunity to prepare for trial, and we do not
33
We are aware that it is alternatively possible to view this as a constructive
amendment case. “[A] constructive amendment of the indictment occurs when the jury is
permitted to convict the defendant upon a factual basis that effectively modifies an essential
element of the offense charged. In such cases, reversal is automatic, because the defendant
may have been convicted on a ground not charged in the indictment.” Adams, 778 F.2d at
1123 (citations omitted); see Stirone v. United States, 361 U.S. 212, 217 (1960) (describing a
defendant’s “substantial right to be tried only on charges presented in an indictment returned
by a grand jury”); Chambers, 408 F.3d at 243 (quoting Adams, 778 F.2d at 1125 (“[W]hen only
one particular kind of falsity is charged to have been made . . . , a conviction must rest on that
charge and not another . . . .”)). It is conceivable that the government alleged a specific falsity
— that regarding gross receipts on the 1999 Schedule C — and that the jury convicted on
another, a false statement in Line 1, Column C, on the Form 1040X. As we conclude that
conviction on the erroneous indictment requires reversal in this case, we need not determine
whether the district court permitted the jury to convict Adams on a factual basis different from
that alleged on the essential element of falsity.
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No. 07-60926
reach the issue of the error’s affect on the indictment’s second purpose, that of
ensuring that grand jurors, not just prosecutors, make charging decisions based
on probable cause.34
We conclude that the jury convicted Adams on an erroneous indictment,
and we cannot say that the error was harmless. Thus, the conviction on Count
I must be vacated.35 Nothing we have stated, however, precludes the
government, in its prosecutorial discretion, from re-indicting Adams in the
proper form.36
34
If we had reached this issue, we would, on appeal “focus[] solely on the question
whether, on the basis of the evidence that would have been available to the grand jury, any
rational grand jury presented with a proper indictment would have charged that [Adams]
committed the offense in question.” Robinson, 367 F.3d at 288. Because, our other analysis
establishes that we cannot say the erroneous indictment was harmless, we need not make this
additional inquiry.
35
Even if our standard of review on this issue were plain error, it would be arguable
that the district court plainly erred, viz, (1) the court erred; (2) the error was clear under
existing law, and (3) the error affects Adams’s substantial rights. See United States v. Salinas,
480 F.3d 750, 756 (5th Cir. 2007). If Adams were to fulfill these three conditions, we could
“grant relief if ‘the error seriously affects the fairness, integrity, or public reputation of judicial
proceedings.’” See id. (quoting United States v. Ibarra-Zelaya, 465 F.3d 596, 606 (5th Cir.
2006)). At a minimum, the public reputation of judicial proceedings is compromised when we
permit a jury to convict a defendant on an indictment that alleged no offense.
36
Whenever an indictment or information charging a felony is
dismissed for any reason after the period prescribed by the
applicable statute of limitations has expired, a new indictment
may be returned in the appropriate jurisdiction within six
calendar months of the date of the dismissal of the indictment or
information, or, in the event of an appeal, within 60 days of the
date the dismissal of the indictment or information becomes
final . . . .
18 U.S.C. § 3288. “[W]here an original indictment is brought within the limitations period,
but is dismissed for failure to allege the exact elements of the crime or some other technicality,
the savings clause merely allows the government to do what it had a right to do in the first
place.” United States v. Shipsey, 363 F.3d 962, 970 (9th Cir. 2004) (citation and internal
quotation marks omitted). This statute serves the important purpose of “prevent[ing]
defendants from reserving legal challenges to indictments until after the applicable statute
of limitations has run.” United States v. Peloquin, 810 F.2d 911, 912 (9th Cir. 1987),
superceded by statute on other grounds, Anti-Drug Abuse Act of 1988, Pub. L. No. 100-690,
15
No. 07-60926
Furthermore, we would have reached this result regardless whether we
(1) focused on the substance of Adams’s argument, i.e., assessed the indictment’s
sufficiency, or (2) took the dissent’s more technical approach — glossing over the
fact that the government charged Adams with committing a crime for which he
could not be convicted — and focused on a sufficiency-of-the-evidence inquiry.
Under the dissent’s approach, we would have asked if, when viewing the
evidence and drawing all inferences in the light most favorable to the verdict,
the record contained evidence on which a reasonable jury could have determined
that Adams swore the 1999 Schedule C was “true correct, and complete.” Our
analysis demonstrates that Adams could not have sworn to the truth of the 1999
Schedule C as a matter of law. For this reason, the district court should never
have asked a jury to consider the issue; no reasonable jury could have convicted
Adams on Count I.
The dissent, in contrast, would hold that there is sufficient evidence to
support Adams’s conviction on Count I because he swore that the Form 1040X
was complete when in fact it was not because the Form 1040X, combined with
the attached copy of the 1999 Form 1040 and accompanying Schedule C, did not
represent a full accounting of Adams’s 1999 income. Yet, the dissent either
ignores or loses sight of the fact that the government has never charged Adams
with failing to submit a complete return. The government instead charged that
Adams made a specific false statement on line 1 of the Schedule C. The
government’s election to charge Adams in this manner forecloses our making a
post-hoc determination that there is sufficient evidence that Adams’s return
simply was not complete. If we were to do that, we would affirm a conviction
based on how the government wishes it had charged Adams, not on how it did
§ 7081(a), 102 Stat. 4181, 4407, as recognized in Shipsey, 363 F.3d at 968–69. Here, the
government is free to re-indict Adams alleging a falsity on the Form 1040X itself because that
charge was not time-barred at the time of Adams’s original indictment.
16
No. 07-60926
charge him. We cannot be so quick to give the government this break, and we
reiterate that when the government alleges “only one particular kind of falsity,”
it must convict solely on that falsity.37 We repeat for emphasis that the
government had multiple opportunities to charge Adams properly for a section
7206(1) violation. Even a federal court of appeals is in no better position than
is the government to conclude that there exists sufficient evidence for a
conviction on an uncharged crime.
D. Motion for Acquittal: Count II – False 2000 Form 1040
1. Government’s Burden
The government did not present direct proof that Adams’s 2000 gross
receipts were greater than the $400,423 that he reported. Instead, the
government employed an indirect method of proof — one known as the “bank
deposits and cash expenditures method.”38
Under this method, all deposits to the taxpayer’s bank and similar
accounts in a single year are added together to determine the gross
deposits. An effort is made to identify amounts deposited that are
non-taxable, such as gifts, transfers of money between accounts,
repayment of loans and cash that the taxpayer had in his possession
prior to that year that was deposited in a bank during that year.
This process is called “purification.” It results in a figure called net
taxable bank deposits.
The government agent then adds the amount of expenditures made
in cash, for example, . . . cash [a] doctor received from fees, did not
deposit, but gave to his wife to buy groceries. The total of this
amount and net taxable bank deposits is deemed to equal gross
income.39
37
Chambers, 408 F.3d at 243 (quoting Adams, 778 F.2d at 1125).
38
See United States v. Boulet, 577 F.2d 1165, 1167 (5th Cir. 1978).
39
Id. In a tax evasion case, the government next reduces gross income by applicable
deductions and exemptions to arrive at “corrected taxable income.” Id. This step is
unnecessary in prosecutions under section 7206(1). See United States v. Lassiter, 819 F.2d 84,
87–88 (5th Cir. 1987).
17
No. 07-60926
The government then compares this gross income figure to the income that the
taxpayer reported. “In asking the jury to rely on this analysis, as a basis for
deciding that the taxpayer willfully under[stated] his true income, the
government necessarily relies on circumstantial evidence.” 40
In these cases, courts require the government to meet well-established
criteria — in addition to the indirect calculation of gross receipts — without
which it fails, as a matter of law, to establish guilt beyond a reasonable doubt.
Specifically, a court should not allow a case to reach a jury unless the
government establishes “with reasonable certainty” two components designed
to ensure that the expenditures and deposits represent taxable income for the
year in question.41 First, the government must demonstrate with reasonable
certainty the taxpayer’s cash on hand at the beginning of the tax year in
question.42 Second, the government has the burden of proving that the receipts
in question were taxable. Supreme Court precedent permits the government to
satisfy this second burden in either of two ways: “It can show that there is a
likely taxable source of the unreported income, Holland v. United States, 348
U.S. 121, 138 (1954), or it can negate all possible nontaxable sources of income,
United States v. Massei, 355 U.S. 595 (1958).” 43 Because of the difficulties
40
Boulet, 577 F.2d at 1167; see also Holland v. United States, 348 U.S. 121, 125 (1954)
(describing another indirect method, the “net worth method,” as “fraught with danger for the
innocent”).
41
Boulet, 577 F.2d at 1168, 1170.
42
Id. at 1169–70.
43
United States v. Hiett, 581 F.2d 1199, 1201 (5th Cir. 1978); see Massei, 355 U.S. at
595 (“[S]hould all possible sources of nontaxable income be negatived, there would be no
necessity for proof of a likely source.”); see also United States v. Abodeely, 801 F.2d 1020, 1025
(8th Cir. 1986) (citing Holland, 348 U.S. at 137–38) (“Proof of a likely income source
necessarily negatives all non-taxable sources.”). Both Hiett and Massei were cases in which
the government used the net worth method rather than the bank deposits and cash
expenditures method used here. Yet, regardless of which indirect method the government
uses to determine whether a taxpayer has unreported income, the inquiry into possible non-
18
No. 07-60926
associated with proving a negative, the government proves “reasonable
certainty” of the lack of non-taxable income sources by demonstrating that it
performed an “adequate investigation that did not disclose non-taxable
sources.”44
The “government must prove a full and adequate investigation” that
“establish[es] a guarantee of essential accuracy in the circumstantial proof at
trial as an element of the government’s burden of proving guilt beyond a
reasonable doubt.” 45 The government need not, however, “conjecture about and
either prove or negate every conceivable defense once it has met its own burden,
explored every reasonable avenue and investigated every lead furnished by the
taxpayer.” 46 Each investigation’s adequacy “necessarily turns on its own
circumstances. The critical question is whether the investigation was sufficient
to support the inference that the unexplained excess in deposits was in fact
attributable to currently taxable income.”47
taxable sources remains the same. Hiett, 581 F.2d at 1201–02; see United States v. Marrinson,
832 F.2d 1465, 1472 (7th Cir. 1987) (allowing the government, in an expenditures case, either
to prove a likely source of income or to negate all possible sources of non-taxable income);
Abodeely, 801 F.2d at 1025 (finding that “the various safeguards expressed in Holland
regarding the use of circumstantial evidence apply equally” regardless of the government’s
chosen indirect method of proof). But see Boulet, 577 F.2d at 1168 (citing United States v.
Bianco, 534 F.2d 501, 507 (2d Cir. 1976) (“suggesting that, in a cash expenditure case, proof
of a likely taxable source does not suffice to relieve the prosecution of its duty to negate
probable sources of non-taxable income.”)).
44
Boulet, 577 F.2d at 1168.
45
Id. (citation and internal quotation marks omitted).
46
Id. at 1172–73; see Hiett, 581 F.2d at 1201 (noting that the government’s burden
shall not be construed to “require the government to exhaust the inexhaustible[,] to conduct
an absolutely limitless investigation”); id. at 1202 (indicating that once “the government
establishes its Prima facie case,” if the defendant remains silent, he takes “the risk that the
jury would believe the government’s witnesses and find him guilty”) (citation and internal
quotation marks omitted).
47
Boulet, 577 F.2d at 1171 (citation and internal quotation marks omitted).
19
No. 07-60926
2. Gross Receipts
We are satisfied that the government provided the jury with sufficient
evidence that in 2000 Adams received gross receipts greater than the $400,423
that he reported. Agent Porter testified how his investigation yielded gross
receipts of $466,436, and the government introduced the relevant supporting
data into evidence. Although on appeal Adams denies having had year-2000
receipts of $466,436, he does not directly attack the government’s calculations,
concentrating instead on the sufficiency of cash-on-hand and source-of-receipts
evidence.
a. Cash on Hand
The government’s calculations were based on the assumption that Adams
had no cash on hand at the beginning of 2000. Given the government’s $466,436
calculation, if Adams had at least $66,013 cash on hand on January 1, 2000, the
government would be unable to bear its burden because the unreported deposits
could have come from cash on hand rather than from year-2000 receipts. The
government advances that it investigated as much as it reasonably could and
thus met its duty, particularly given that Adams was in control of key facts. For
example, the government learned from Adams that he maintained a safe deposit
box which could have contained currency. Accordingly, Agent Porter verified the
box’s existence and looked at records that reflected the frequency of Adams’s
visits to the box. Yet, these actions did not provide direct evidence of cash on
hand; Agent Porter had no way of knowing what was actually inside the box.
When a defendant provides some facts that corroborate a “hoarding” claim, the
government cannot sit idle and rely “solely upon a natural disinclination to
believe that large sums of money are ever cached away.” 48 In this case, the
48
United States v. Bethea, 537 F.2d 1187, 1190 (4th Cir. 1976); see Merritt v. United
States, 327 F.2d 820, 823 (5th Cir. 1964) (quoting Holland, 348 U.S. at 135–36) (indicating
that the government has the duty to track down leads supplied by the defendant that are
20
No. 07-60926
government did not sit idle; it investigated the safe-deposit-box lead. Adams was
free to present his own witnesses to testify about his cash hoard, and the jury
was free to discredit Agent Porter’s testimony. But, requiring anything more of
the government’s investigation into hoarding would allow defendants to defeat
tax prosecutions in virtually every case in which a hoarding defense is
mounted.49
The government set forth at least a dozen factors supporting the
conclusion that Adams had no cash on hand. Tracing Adams’s financial history
from 1996, each factor tended to show that he had no cash on hand in January
2000. For example, in a 1996 bankruptcy petition, he claimed to have only
$128.32 in cash; and when Adams updated that figure in 1999, he did not claim
any additional cash on hand. Further, Adams filed a motion in the bankruptcy
court in 1999 stating that he had no money to obtain counsel in a pending
lawsuit.
Adams responds that although these and other factors may be sufficient
to establish no cash on hand for the average taxpayer, he is not the average
taxpayer because he had just sold Secrets Cabaret for $450,000, and thus was
wealthy. Adams asserts that “[h]is actions in bankruptcy court and his dealings
with his lawyer cannot make him poor when the numbers show him to be rich.”50
“reasonably susceptible of being checked”).
49
In Holland v. United States, the Supreme Court had occasion to evaluate a hoarding
defense. 348 U.S. 121. There, defendants argued that they had accumulated their cash in
prior years and stored over $100,000 at various times in “a canvas bag, a suitcase, and a metal
box.” Id. at 133. The government could not directly refute this claim, and instead relied on
the inference that hoarding that amount of money was inconsistent with defendants’ financial
difficulties. Id. The Supreme Court found sufficient support for the jury’s verdict that
defendants had no cash cache. Id. at 133–34. In the instant case, as in Holland, the
government could not directly disprove the safe-deposit-box hoarding theory and instead had
to rely on other factors that created an inference that Adams did not have cash on hand.
50
Our point of inquiry is not whether Adams was wealthy but rather whether he had
cash on hand.
21
No. 07-60926
Adams specifically references the $450,000 proceeds from the Secrets Cabaret
sale, but this is money that could not have constituted cash on hand because it
was used to purchase a certificate of deposit and was no longer held in cash on
January 1, 2000. Adams also represents that because he withdrew $87,134 from
one of his bank accounts in 1999, that money still could have been on hand in
2000. The government countered with testimony that Adams was spending
more money than he made in 1999, and offered evidence sufficient for the jury
to conclude that Adams had exhausted the withdrawal in covering his significant
ongoing debts.
Agent Porter’s investigation was adequate. He took detailed steps,
beginning with Adams’s 1996 tax returns, to reconstruct Adams’s cash-flow for
the several years leading up to the tax year covered by his 2000 tax return; and
the agent followed relevant leads to the extent possible. On the discrete facts of
this case, these actions meet the reasonable-certainty standard for submitting
evidence to a jury and provide sufficient support for a finding, beyond a
reasonable doubt, of no cash on hand. For Adams’s theory to prevail, the jury
would have to ignore his bankruptcy filings, previous tax filings, and other
evidence that pointed to his having no cash on hand. The jury was under no
obligation to do so.
b. Likely Taxable Source / Negating Non-Taxable Sources
Adams insists the government stipulated that lawful activity at the
Stardust Oasis was the sole source of his 2000 gross receipts, so that the
government had the burden of establishing the Stardust Oasis as the likely
source of unreported receipts. Unable to point to an actual stipulation, Adams
directs us to (1) the district court’s decision to prohibit the government from
introducing testimony regarding receipts from a video store that Adams might
have owned, and (2) the district court’s statement that its “understanding” was
that the government had stipulated that Stardust Oasis and Secrets Cabaret
22
No. 07-60926
were the only sources of Adams’s income. Assuming arguendo that it did in fact
stipulate that it would not rely on other income sources, the government asserts
that (1) it was under no obligation to prove the likely income source because it
adequately established the absence of non-taxable sources, and (2) even if it were
required to prove the likely source, it did so.
Agent Porter testified that he investigated and found no non-taxable
income sources. This investigation included searching for non-taxable sources
such as loans, gifts, and inheritances. Agent Porter reviewed Adams’s check
registers, deposit slips, and other bank documents for any indication of non-
taxable receipts, and he found none. Moreover, Adams provided Agent Porter
with no non-taxable leads that he neglected to pursue. Adams fails to explain
with particularity how Agent Porter’s non-taxable source investigation was
deficient; and once it conducts a thorough investigation, the government need
not “negate all possible non-income sources of the deposits, particularly where
the source of the income is uniquely within the knowledge of the taxpayer.”51 We
conclude that Agent Porter’s investigation into non-taxable sources was
sufficiently thorough.
Given this conclusion, the government was under no obligation to
demonstrate an adequate investigation into likely income sources. Proving both
(1) lack of non-taxable income and (2) lack of cash on hand is sufficient to
establish that gross receipts for the year in question were taxable.52 In so ruling,
we are not relieving the government of any portion of its burden. Even after the
trial court confirms the adequacy of the government’s investigation, the jury still
51
Boulet, 577 F.2d at 1168–69.
52
See United States v. Conaway, 11 F.3d 40, 44 (5th Cir. 1993) (stating, in a bank
deposits and cash expenditures case, that if the government satisfies the burden of
establishing cash on hand while negating non-taxable income sources, the jury may find a
defendant guilty).
23
No. 07-60926
may not find a defendant guilty unless the government establishes each element
of the section 7206 offense beyond a reasonable doubt.53 That is precisely what
the jury found in this case, and Adams presents no justification for our
disturbing that finding. Accordingly, Adams is not entitled to acquittal on
Count II.
E. Motion for New Trial
Adams asserts that the trial court committed reversible error in making
rulings of two categories: (1) denial of a mistrial after Agent Porter testified as
to Adams’s mental state, and (2) evidentiary rulings regarding Agent Porter’s
investigation report.
A trial court may grant a Rule 33 motion for new trial “if the interest of
justice so requires.”54 “[M]otions for new trial are not favored, and are granted
only with great caution.”55
53
Adams relies on the Second Circuit’s opinion in United States v. Grasso for the
proposition that once the government recognizes a suggested taxable income source — here,
the Stardust Oasis — it must verify that the taxpayer in fact under-reported the income from
that source. See 629 F.2d 805, 808 (2d Cir. 1980) (per curiam). The facts of Grasso are
distinguishable, however, from those of the current case. There, the taxpayer “apparently kept
meticulous records” and any under-reported income from his bonding business would have
been easily detected by reference to public records. Id. In sum, that case involved allegedly
unreported receipts from “sources suggested but not verified by the government (although
apparently verifiable) and which [were] not even plausible much less proved.” Id.
Additionally, Grasso recognized the general rule that the government can show a likely
taxable income source or negate possible non-taxable sources. Id.
Here, in contrast, Adams did not keep organized business records, and he filed a sworn
statement (which he now disavows) that he derived significant income in 2000 as a bar owner.
Proving that the Stardust Oasis was the likely source of Adams’s unreported income would
have been far more difficult than proving the income source in Grasso. As the government
adequately established lack of a non-taxable income source, the government’s investigation
into the bar’s income-generating capacity, an investigation that the record does not reveal as
particularly deficient, does not cause us to question whether the government failed to establish
an element of its case.
54
FED . R. CRIM . P. 33(a).
55
United States v. O’Keefe, 128 F.3d 885, 898 (5th Cir. 1997); see United States v.
Valentine, 401 F.3d 609, 614 (5th Cir. 2005) (stating that a new trial should be granted only
in “exceptional cases”).
24
No. 07-60926
1. Rule 704(b): Testifying as to Mental State
Federal Rule of Evidence 704(b) states:
No expert witness testifying with respect to the mental state
or condition of a defendant in a criminal case may state an opinion
or inference as to whether the defendant did or did not have the
mental state or condition constituting an element of the crime
charged or of a defense thereto. Such ultimate issues are matters
for the trier of fact alone.
Soon after Agent Porter took the stand as an expert witness, the following
exchange took place:
Q: And after you completed your investigation of the defendant, did you
come to a conclusion?
A: Yes, sir.
Q: What was that conclusion?
A: After completing the investigation, I concluded that the
defendant, under penalties of perjury, willfully filed a 1999 Form
1040X and a 2000 Form 1040, knowing that it was false in that the
-- it was false as to a material matter.
Defense counsel immediately objected pursuant to Rule 704(b) and requested a
mistrial, insisting that “willfully” is an ultimate issue for the jury. The trial
court sustained the objection but denied the motion for mistrial, offering the
following curative instruction:
[Y]ou heard testimony from the witness generally stating that he
had concluded that the defendant acted willfully in filing a false
claim. The rules do not permit an expert witness to give an opinion
about what . . . a criminal’s mental state is. So I’m going to strike
that portion of his testimony from the record. I’m going to instruct
you not to consider that opinion. Okay? I’m instructing you that
you cannot consider the expert’s opinion as to what he thinks Mr.
Adams’ mental state is.
25
No. 07-60926
Adams contends that the trial court abused its discretion in refusing to
grant a mistrial on this ground. The government responds that Agent Porter’s
statement was at most “borderline,” and that even if the testimony were
inappropriate, the court’s instruction sufficiently cured the issue.
Agent Porter’s statement violated Rule 704(b), but the trial court’s
curative instruction adequately remedied the error.56 “A prejudicial remark may
be rendered harmless by curative instructions to the jury. Moreover this Court
gives great weight to the district court’s assessment of the prejudicial effect of
an objectionable remark.”57 Here, the district court was satisfied that there was
“no significant possibility of a substantial impact on the verdict.” The court
further noted that given the weight of the evidence, any error was harmless.58
The district court acted well within its discretion. This was a four-day trial with
extensive testimony that would have allowed the jury to reach a decision as to
willfulness. Even though it is true that willfulness is inherently not susceptible
to proof by direct evidence and that Agent Porter’s statement was likely the only
56
In United States v. Dotson, we concluded that the trial court did not abuse its
discretion by permitting testimony that a defendant’s conduct was “indicative, and based on
my experience shows to me, that he willfully and intentionally increased his income knowing
full well that he had not reported the taxes due thereon.” 817 F.2d 1127, 1132 (5th Cir. 1987),
vacated in part on other grounds, 821 F.2d 1034 (5th Cir. 1987). Interpreting the statement
in a light most favorable to the government, the testimony may have simply tied facts that the
witness recited immediately prior to the statement at issue to the conclusion that the expert
thought they indicated. Id. In the instant case, Agent Porter’s testimony is less ambiguous.
57
United States v. Reliford, 210 F.3d 285, 305 (5th Cir. 2000), vacated on other grounds
by Clinton v. United States, 531 U.S. 920 (2000) (internal citation omitted). But see Bruton v.
United States, 391 U.S. 123, 132–37 (1968) (finding a curative instruction an inadequate
substitute for a defendant’s constitutional right of cross-examination where the jury heard a
co-defendant’s confession implicating the defendant at a joint trial).
58
See United States v. Gutierrez-Farias, 294 F.3d 657, 663–64 (5th Cir. 2002) (finding
error harmless when the statements “constituted only a small portion of an otherwise strong
case”); see also id. at 664 (quoting United States v. Williams, 957 F.2d 1238, 1242 (5th Cir.
1992) (“[U]nless there is a reasonable possibility that the improperly admitted evidence
contributed to the conviction, reversal is not required.”)).
26
No. 07-60926
direct testimony that the jury heard about Adams’s mental state, the court was
within the bounds of its discretion in striking the testimony and instructing the
jury accordingly.
2. Evidentiary Rulings on Agent Porter’s Report
Adams urges that the district court’s rulings on Agent Porter’s
investigation report warrant a new trial. Adams claims that the court erred by
(1) refusing to permit defense counsel, on cross-examination, to elicit testimony
from Agent Porter that Adams had told him several things beneficial to his case,
and (2) failing to require the government to produce the entire report at trial as
Jencks Act material. The district court did not abuse its discretion in making
these rulings.
a. Cross-Examination of Agent Porter
Agent Porter’s report recounts various statements that Adams made
during two interviews in 2002. At trial, defense counsel wanted to ask Agent
Porter about Adams’s statements that (1) he did not operate Secrets Cabaret or
the Stardust Oasis in 2000; (2) $400,000 deposited in 2000 represented proceeds
generated by the club in previous tax years; and (3) he kept a large amount of
cash — totaling at least $200,000 — in a safe deposit box and in a safe at his
home. The district court granted the government’s motion in limine on this
issue, and restricted defense counsel to establishing that Adams told Agent
Porter that he had cash on hand at the beginning of 2000.
Adams submits three theories why he should have been able to elicit these
hearsay statements. First, Adams contends that without this information, the
jury had no way of assessing whether the government satisfied its burden of
conducting a full investigation of all leads.59 Under the circumstances of this
case, this argument is unconvincing. Through the testimony of others and the
59
See Grasso, 629 F.2d at 808 (citing Holland, 348 U.S. 121) (requiring exhaustion of
all leads as to sources and amounts of income).
27
No. 07-60926
argument of counsel, the jury was aware of Adams’s theories that, (1) in 2000,
the establishments were non-operational, (2) he maintained a safe deposit box,
and (3) the $400,000 was from a different tax year. We reject Adams’s
contention that, without the benefit of his own hearsay statements, the jury had
insufficient information to evaluate the government’s investigation.
Second, Adams asserts that under Federal Rule of Evidence 705, he has
the right to cross-examine an expert on any information, even hearsay
information, that the expert used to reach his opinion. Under this rule, an
expert witness may rely on reports that would be inadmissible as evidence, but,
on cross-examination, the expert may be required to disclose the facts or data
underlying his opinion.60 “While revealing the basis for an expert’s opinion is
allowed, such disclosure does not facilitate the admission of otherwise
inadmissible evidence.” 61 Limitations apply to this disclosure such that “the
evidence should be admitted only for the limited purpose of discrediting or
impeaching the testifying expert and the jury should be carefully instructed
about its restricted use.”62 Further, disclosure on cross-examination is subject
to Federal Rule of Evidence 403’s prejudice/probative value balancing test.63 The
district court viewed Adams’s statements as “unreliable and unredeemable”
hearsay that Adams wanted admitted for their truth rather than to discredit
Agent Porter or to show that he was on notice of potential leads. This
60
Polythane Sys., Inc. v. Marina Ventures Int’l, Ltd., 993 F.2d 1201, 1207 (5th Cir.
1993); see Fed. R. Evid. 703, 705.
61
Polythane Sys., 993 F.2d at 1207.
62
Id.
63
See Fed. R. Evid. 703 (indicating that disclosure of otherwise inadmissible facts or
data is subject to the court’s weighing whether “the probative value in assisting the jury to
evaluate the expert’s opinion substantially outweighs their prejudicial effect”); see also United
States v. A & S Council Oil Co., 947 F.2d 1128, 1134 (4th Cir. 1991) (citing United States v.
Gillis, 773 F.2d 549, 553–54 (4th Cir. 1985)).
28
No. 07-60926
determination — a clear indication that the trial court found that the intended
cross-examination did not meet the prejudice/probative value test — did not
constitute abuse of discretion.
Third, Adams contends that the “rule of completeness” requires admission
of the expert’s entire report. The Federal Rule of Evidence addressing
completeness, Rule 106, does not apply to a witness’s testimony at trial.64 As the
government did not introduce any portion of Agent Porter’s report into evidence,
Rule 106 is inapplicable.65 Neither does the common law rule of completeness
provide support for Adams. This rule allows “parties to present evidence
explaining, varying, or contradicting a witness’s portrayal of the conversation”;
the rule does not “provid[e] carte blanche to do so by any means desired.”66
Adams had ample opportunity to explain his position, and the trial court was
within its discretion in refusing to give Adams such “carte blanche.”
We take this opportunity to re-emphasize that “‘trial judges retain wide
latitude’ to limit reasonably a criminal defendant’s right to cross-examine a
witness ‘based on concerns about, among other things, harassment, prejudice,
confusion of the issues, the witness’[s] safety, or interrogation that is repetitive
or only marginally relevant.’” 67 We reject each of Adams’s claims of error
relating to his cross-examination of Agent Porter.
64
United States v. Garcia, 530 F.3d 348, 353 (5th Cir. 2008).
65
Cf. id. at 354 (discussing, but neither adopting nor rejecting, the Eleventh Circuit’s
“tantamount” standard in which Rule 106 applies if the agent’s statement was tantamount to
introducing the written statement).
66
Id. at 356.
67
Michigan v. Lucas, 500 U.S. 145, 149 (1991) (quoting Delaware v. Van Arsdall, 475
U.S. 673, 679 (1986)).
29
No. 07-60926
b. Jencks Act
“The Jencks Act requires that the government provide the defendant with
witness statements that relate to the subject matter on which the witness has
testified.” 68 Failure to comply with this requirement, coupled with a statement
that was “highly useful,” even “invaluable,” to the defense’s cross-examination
of a key witness, warrants reversal.69 At the close of Agent Porter’s testimony,
the defense asked that the government produce his report as Jencks material.
The government asserted that it was under no obligation to produce the report
because it consisted of only two classes of items: (1) those unrelated to Agent
Porter’s testimony and (2) those related but merely duplicative of his testimony
and the other material produced.
After an in camera review of the report, the district court required the
government to produce a redacted version.70 Proceeding section by section
through Agent Porter’s report, the trial court required production of those
statements that were (1) within the scope of direct examination and (2) not
“merely a summary of what [had] been produced, with no reflection of his
analysis.” The court also required production of statements with impeachment
value and, erring on the side of caution, required production of any statements
“if it appeared that there was an intermingling of Agent Porter’s analysis”
between that which would be discoverable and that which would not.
We have previously approved of a district court’s decision to redact an
agent’s report. In United States v. Medel, also a tax case, we determined that an
68
United States v. Hodgkiss, 116 F.3d 116, 117 (5th Cir. 1997) (per curiam), vacated
on other grounds by 522 U.S. 1012 (1997) (citing 18 U.S.C. §§ 3500(b), (e)(1)); see 18 U.S.C.
§ 3500(b) (indicating that production occurs on the motion of the defendant once the
government’s witness has testified on direct examination). We review Jencks Act rulings for
clear error. United States v. Brown, 303 F.3d 582, 591 (5th Cir. 2002).
69
United States v. Beasley, 576 F.2d 626, 630 (5th Cir. 1978).
70
After trial, defense counsel received the entire report.
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No. 07-60926
agent’s report could be Jencks material but that the district court did not abuse
its discretion in ordering production of only a portion of the report.71 The Medel
court redacted “summaries of summaries,” other duplicative information, and
portions dealing with the agents’ evaluation of the strength of their case and
suggestions for rebutting the taxpayer’s defenses.72 According to Adams, the
redacted portions of the report here contain a rebuttal of Agent Porter’s finding
that Adams had no cash on hand. Adams views the report as demonstrating
that Agent Porter’s actual conclusions were contrary to those he related at trial.
Our review satisfies us that the district court’s redactions served their intended
purpose — the removal of unrelated or duplicative information — and that the
district court acted within its discretion.73 Adams’s challenge fails.
We affirm the district court’s decision to deny Adams a new trial.
III. CONCLUSION
We vacate Adams’s conviction on Count I. We affirm Adams’s conviction
on Count II, but remand for re-sentencing on that count as the sole count of
conviction.
VACATED in part; AFFIRMED in part; and REMANDED.
71
592 F.2d 1305, 1315–17 (5th Cir. 1979).
72
Id.
73
For example, the district court deleted a portion of the report that says “ADAMS
stated that the unreported gross receipts may have come from cash he had earned from
Secret[]s Cabaret or Stardust in prior years.” Adams contends that this statement would have
allowed him to impeach Agent Porter’s testimony that “Mr. Adams did not recall what specific
time frames he may have had – alleged to have had cash on hand.” The impeachment value
here is strained, particularly when (1) the court permitted defense counsel to ask Agent Porter
if Adams said that he had cash on hand prior to 2000 and (2) “prior years” is not a “specific
time frame.”
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EMILIO M. GARZA, Circuit Judge, concurring in part and dissenting in part:
Although I concur with the majority’s holding affirming Adams’ conviction
on the second count relating to the 2000 Form 1040, I respectfully dissent from
the holding vacating his conviction on the first count relating to the Form 1040X.
Because Adams has not raised a sufficiency of the indictment claim, and because
the evidence is sufficient to support the jury’s verdict on this count, I would
affirm the jury’s conviction as to the Form 1040X.
The majority admits that Adams frames his appeal in terms of “sufficiency
of the evidence,” yet makes the significant leap to construe his argument as
challenging the sufficiency of the indictment on Count I. One searches in vain
to find a sufficiency of the indictment claim in Adams’ briefing. Rather, Adams
is clearly challenging the district court’s denial of his Rule 29 motion for
judgment of acquittal. His argument on Count I is framed in terms of his
entitlement to an acquittal based on the fact that a “reasonable legal argument”
existed that the jurat on the 1040X did not include the 1999 Schedule C. In
other words, Adams is arguing that there was insufficient evidence to convict
him of making a false statement on his amended tax return because he did not
swear to the truth of the Schedule C. He does not argue that the indictment was
insufficient as to that claim. Importantly, the Government only responded to the
actual claim that Adams made regarding the insufficiency of the evidence to
support his conviction; we simply do not know how the Government might have
responded to a claim that the indictment was insufficient. Since Adams has not
properly challenged the sufficiency of the indictment in his opening brief, this
argument is waived. See, e.g., Edwards v. Johnson, 209 F.3d 772, 776 n.1 (5th
Cir. 2000); Yohey v. Collins, 985 F.2d 222, 224-25 (5th Cir. 1993); Lindsay v.
Prive Corp., 161 F.3d 886, 894 n.5 (5th Cir. 1998).1
1
Moreover, even if we could properly construe Adams' challenge to the district court's
denial of his motion for acquittal as a challenge to the sufficiency of the indictment, this claim
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Therefore, rather than reviewing the sufficiency of the indictment de novo,
we should review the denial of the motion for judgment of acquittal as Adams
has requested. We review the district court’s denial de novo, affirming the jury’s
verdict “if a reasonable trier of fact could conclude from the evidence that the
elements of the offense were established beyond a reasonable doubt, viewing the
evidence in the light most favorable to the verdict and drawing all reasonable
inferences from the evidence to support the verdict.” United States v. Ragsdale,
426 F.3d 765, 770-71 (5th Cir. 2005).
To support a conviction for filing a false tax return under 26 U.S.C.
§ 7206(1), evidence must be sufficient to show that: (1) the defendant wilfully
made and subscribed to a materially false tax return; (2) the return contained
a written declaration that it was made under penalties of perjury; and (3) the
defendant did not believe that the return was true as to every material matter.
See United States v. Loe, 262 F.3d 427, 435 (5th Cir. 2001). When Adams filed
his Form 1040X he swore it was true, correct, and complete. By swearing to the
completeness of the amended return Adams verified that the Form 1040X,
combined with the attached 1999 Form 1040, represented the changes necessary
to render a full accounting of his income for 1999. Whether Adams was required
by the IRS to attach the 1999 Form 1040 is immaterial. The crucial fact is that
Adams did attach this return. By doing so he necessarily swore that it, along
would have to be reviewed for plain error. See United States v. Fuchs, 467 F.3d 889, 900 (5th
Cir. 2006). The majority makes another significant leap to find itself "convinced" that Adams
challenged the sufficiency of the indictment in the district court, entitling him to a de novo
review of this issue. However, it is not enough that Adams may have challenged the
indictment in the district court; we must also determine that he challenged it for the same
reasons as in this appeal. See id. (reviewing for plain error because a motion to dismiss
particular counts of the indictment was made for different reasons than the challenge on
appeal to the sufficiency of the indictment). Although Adams moved to dismiss Count I of the
indictment before trial as barred by the statute of limitations, he never claimed that the
indictment was insufficient. Moving to dismiss a count of the indictment as barred by the
statute of limitations is an affirmative defense, distinct from an allegation that the indictment
is insufficient.
33
with the Form 1040X, accounted for his total 1999 income. However, evidence
at trial showed Adams continued to omit $277,551.46 in gross receipts. This
money should have been reported on Line 1 of Schedule C of the attached 1999
Form 1040. The Form 1040X plus the 1999 Form 1040 could not have reflected
his entire 1999 income, and thus when Adams swore that the information was
“complete” he wilfully made a false statement. Therefore, there was sufficient
evidence for the jury to find that Adams was guilty of violating 26 U.S.C.
§ 7206(1), and the jury’s verdict should be affirmed as to Count I.
Accordingly, I concur with the majority’s holdings in Part II.A, B, D, and
E, but respectfully dissent from Part II.C.
34