United States v. Bishop

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

________________________

No. 00-20282
________________________

UNITED STATES OF AMERICA

Plaintiff-Appellee

-vs-

GEORGE MEREDITH BISHOP, III

Defendant-Appellant

_____________________________________________________

Appeals from the United States District Court
for the Southern District of Texas
______________________________________________________

August 29, 2001

Before HIGGINBOTHAM and BENAVIDES, Circuit Judges, and LITTLE, District Judge.*

LITTLE, District Judge:

Today we consider George M. Bishop III’s appeal of three convictions centered upon income

tax and reporting violations. The first and third counts involve attempted tax evasion,1 in the 1991

*
Chief Judge F.A. Little, Jr. of the Western District of Louisiana, sitting by designation.
1
26 U.S.C. § 7201.
and 1994 tax years, respectively. The second count relates t o knowingly filing a false income tax

return, under penalty of perjury, for 1991.2 Finding no reversible error, we affirm each conviction.

The operative facts are not in serious dispute. During all times material to counts one, two

and three, Bishop was the sole proprietor of George M. Bishop and Associates (GMBA), a law firm

in Houston, Texas. In 1994, the Internal Revenue Service (IRS) initiated an audit of Bishop’s

account, because he did not file federal income tax returns for the years 1989, 1990, and 1991.

Bishop explained the delay was caused by tensions in his marriage, leading to his divorce in 1991.

Under the pressure of the audit and with the assistance of his accountants, Bishop filed the missing

returns in August 1994, September 1994, and December 1994, respectively.

The audit continued because IRS employees suspected Bishop understated his income. In

September 1995, Mark E. Locus, the IRS agent in charge of the case, received an anonymous letter

suggesting that Bishop omitted a substantial fee he received in April 1991 from Harold Scharold, a

client in a breach of contract suit. A review of Bishop’s records showed that, on 5 April 1991,

Scharold paid a $933,333.33 legal fee. The check was payable to GMBA, but was deposited in

Bishop’s personal account at Dean Witter. Joye Wilson, Bishop’s bookkeeper, initially recorded the

amount as fee income in the GMBA general ledger, in accordance with the normal office procedure.

At Bishop’s instruction, Wilson reversed the first ledger entry by debiting the account. GMBA’s

monthly profit and loss statements therefore did not reflect receipt of the fee.

Bishop did not report the fee either. His 1991 tax return stated that his gross income from

the practice of law was $988,599.00. IRS agent Kay Campbell, Locus’ successor, determined that

2
26 U.S.C. § 7206.

2
at most, Bishop reported $352,945.81 out of the $933,333.33 fee he received from Scharold. The

$352,945.81 included $140,000 which is the sum Bishop paid to his ex-wife and advised his

accountant to add to his reported income, and $212,945.89 that Campbell could not attribute to other

sources. Campbell also found that Bishop may have failed to report other income of $150,344.77,

the total of amounts added to the GMBA general ledger during the last four months of the year but

not included on Bishop’s return.

Additionally, in August 1991, Bishop received a $183,666.67 fee plus $28,513.42 in litigation

expenses, for representing the Cash children in a legal malpractice suit. Both sums were paid into

Bishop’s trust account. Bishop should have reported the $183,666.67 as income. During the week

after receiving the money, however, he withdrew $111,120.59 from the trust account and deposited

it in two personal accounts. He did not report any portion of this money as income. Accordingly,

his total unreported income for 1991 was at least $841,822.80. Campbell recalculated Bishop’s taxes

for the year, making appropriate adjustments in Bishop’s favor as well as adding the unreported

income. Bishop’s return reported a tax of $107,973.00, but according to Campbell, he actually owed

$358,002.00. There was an underpayment in excess of $250,000.3

Campbell also reviewed Bishop’s return and records for 1994. Bishop filed his 1994 return

in April 1995, reporting gross income from t he practice of law of $676,262. In a matter settled

during the year, Bisho p received a $575,000 fee. One of the opposing lawyers paid Bishop a

$400,000 portion of the fee. Bishop requested that the lawyer wire transfer the money to Bishop’s

personal account at Chappell Hill Bank. The lawyer refused to wire transfer the money, but did send

the check directly to Chappell Hill Bank. Consequently, the payment was not recorded in the GMBA

3
This figure includes $10,247.00 in self employment tax. The rest is income tax.

3
general ledger. Upon receipt of a Form 1099 regarding the $400,000 payment, Pat Schulmeier,

Bishop’s new bookkeeper, informed Bishop’s accountant of receipt of only $196,006.74 out of the

$400,000, for reasons that remain unclear.4 A $10,000 check, which was a part of the $575,000 fee

but from a different source, also was deposited at Chappell Hill Bank and omitted from Bishop’s

return. As a result, Bishop failed to report $179,532.41 to $213,993.26 of fee income received in

1994.5

In October 1996, Bishop amended his 1994 return in an attempt to correct the problem,

increasing his gross income from the practice of law by $400,000, resulting in a total of $1,076,262.

He also adjusted his deductions, and paid appropriate additional taxes. Later, Bishop discovered that

$196,006.74 of the $400,000 had in fact been included in the initial return and filed a second amended

return in July 1998. Now Bishop’s reported gross income from the practice of law was $890,255.6

In light of Campbell’s findings, and Bishop’s efforts to conceal his income and spending habits

from IRS agents and his own accountants, a fraud investigation and criminal prosecution began. On

24 March 1999, a grand jury returned a three count indictment against Bishop. After a seventeen day

trial, the jury convicted Bishop on all three counts. Subsequently, Bishop discovered that one of the

jurors, Jodi Tharp, had been less than candid concerning her prior experiences with the law.

Specifically, Tharp was charged with third degree felony embezzlement in 1997. Over the course of

eight months, Tharp stole $42,250 from the bank where she worked. She pled guilty in Texas state

4
$196,006.74 may have been the portion of the $400,000 remaining after Bishop repaid a loan and sent
$100,000 to his ex-wife.
5
The checks for the remaining portion of the $575,000 fee were reported properly. Campbell could not
determine the source of $34,460.85 of Bishop’s reported 1994 income. Accordingly, there is a slight possibility that
the amount was attributable to the two checks deposited at Chappell Hill Bank.

6
Apparently no adjustment was made with regard to the omitted $10,000 check.

4
court, and adjudication of the matter was deferred for ten years. At the time of Bishop’s trial, she

was paying a fine and restitution in installments, and was under community supervision, which is

equivalent to probation.

On a juror questionnaire, Tharp responded “no” to the questions “Have you ever been

convicted of a state or federal crime punishable by imprisonment for more than one year?” and “Have

you ever been charged criminally other than with a traffic ticket?” During voir dire, she did not raise

her hand in response to several questions as to whether she had ever been involved in a criminal

matter, as an accused, witness, or victim. Nor did she respond when the judge gave the jurors an

opportunity to raise their hands if they had anything to add regarding the previous questions.

After Tharp’s criminal history was revealed, Bishop moved for a new trial. The district court

held an evidentiary hearing and determined that Tharp was statutorily disqualified from serving on

a jury, but denied Bishop’s motion because he failed to demonstrate that Tharp was biased and that

he suffered as a result of that bias. Bishop appeals this ruling and asserts that the district court made

several other reversible errors before, during, and after the trial. We address each point raised, some

in more detail than others.

II.

Bishop contends that counts one and three of the indictment are defective because they omit

the tax deficiency and knowledge elements of tax evasion, and that count two contains no allegation

he acted willfully in filing a false return. An indictment must allege each element of the charged

offense, in order to insure that the grand jury finds probable cause that the defendant committed each

element, to prevent double jeopardy, and to provide notice to the accused. See United States v.

5
Cabrera-Teran, 168 F.3d 141, 143 & n.5 (5th Cir. 1999). We consider the sufficiency of the

indictment de novo. See id. at 143.

The crime of tax evasion as defined in 26 U.S.C. § 7201 has three essential elements: (1) the

existence of a tax deficiency; (2) willfulness; and (3) an affirmative act constituting evasion or

attempted evasion of the tax. See United States v. Townsend, 31 F.3d 262, 266 (5th Cir. 1994)

(citing Sansone v. United States, 380 U.S. 343, 351, 85 S. Ct. 1004, 1010, 13 L. Ed. 2d 882, 888

(1965)).

After describing the results of the audit in detail, count one of the indictment boldly alleges

the following:

[Bishop] did knowingly and willfully attempt to evade and defeat a substantial income
tax due and owing by him. . . by: failing to timely file an income tax return on or
about October 15, 1992, causing false and misleading books and records to be
created, providing incomplete or misleading information to his tax preparer,
concealing information likely to alert the IRS Revenue Agents to unreported income,
and other affirmative acts of evasion.

Count three describes the misreporting of the fees deposited at the Chappell Hill Bank and states that

Bishop “did willfully attempt to evade and defeat a substantial income tax due and owing by

him. . . by preparing and causing to be prepared, and by signing and causing to be signed, a false and

fraudulent United States Individual Income Tax Return–Form 1040.”

Both count one and count three explicitly charge that a tax deficiency existed, that Bishop’s

acts were willful, and that he committed affirmative acts constituting evasion or attempted evasion.

All elements were presented to the grand jury. Bishop argues that the indictment fails to

acknowledge certain items that would offset any deficiency. This argument has no merit. The non-

6
existence of credits, refunds, and other payments may affect the extent of any deficiency, but is not

a specific element of tax evasion. There is no need to list each potentially offsetting item in the

indictment. Counts one and three throughly describe the omission of large fees received in 1991 and

1994, respectively, the filing of the returns, and the related investigation. There is no question as to

the nature of the charges. Counts one and three are legally sufficient.

A person commits the felony of filing a false tax return in violation of 26 U.S.C. § 7206(1)

when he “willfully makes and subscribes any return, statement, or other document, which contains

or is verified by a written declaration that it is made under the penalties of perjury, and which he does

not believe to be true and correct as to every material matter.” 26 U.S.C. § 7206(1). Count two of

the indictment reads as follows:

[Bishop] did willfully make and subscribe a United St ates Individual Income Tax
Return–Form 1040, which was verified by a written declaration that it was made
under the penalties of perjury and was filed with a Revenue Agent. . . which 1991
income tax return [Bishop] did not believe to be true and correct as to every material
matter in that the said federal income tax return reported Schedule C Gross Receipts
of $988,599.00, whereas, [Bishop] then and there well knew and believed, that
[Bishop’s] 1991 Schedule C Gross Receipts were false, that is, that the Schedule C
Gross Receipts were actually in excess of $1.5 million during 1991.

Bishop was charged with “willfully” filing a tax return that he “believed” to be “false.” The

indictment not only tracked the language of the statute, but also explicitly stated that Bishop knew

the return was false but nonetheless chose to file it. Count two specifies that Bishop’s Schedule C

gross receipts for 1991 were understated, and additional discussion of the 1991 return appears in

other portions of the indictment. No element of the crime was omitted. Count two of the indictment

is also legally sufficient.

7
III.

Bishop challenges several of the district court’s evidentiary rulings. We review these for

abuse of discretion but affirm so long as any error is harmless. See United States v. Taylor, 210 F.3d

311, 314 (5th Cir. 2000); United States v. Skipper, 74 F.3d 608, 612 (5th Cir. 1996). In order to

obtain a reversal, the complaining party must demonstrate that the district court’s ruling caused him

substantial prejudice. See United States v. Izydore, 167 F.3d 213, 218 (5th Cir. 1999).

Both the government and the defendant introduced summary evidence. Bishop argues that

Robert Simpson, an IRS agent who acted solely as the government’s summary witness and not as an

expert, testified to matters of which he had no personal knowledge, testified to the contents of letters

that were hearsay, and gave his opinion on a variety of issues. Bishop also contends that the district

court should not have admitted charts summarizing and clarifying the government witnesses’ analysis,

because the documents were misleading and confusing, and were not tempered by appropriate jury

instructions.

The use of summary testimony and documents is governed by Rule 1006 of the Federal Rules

of Evidence, which is broadly interpreted. See Taylor, 210 F.3d at 315; United States v. Winn, 948

F.2d 145, 158 (5th Cir. 1991). Rule 1006 allows admission of summaries when (1) the evidence

previously admitted is voluminous, and (2) review by the jury would be inconvenient. See Taylor,

210 F.3d at 315; United States v. Stephens, 779 F.2d 232, 239 (5th Cir. 1985). A summary may

include only evidence favoring one party, so long as the witness does not represent to the jury that

he is summarizing all the evidence in the case. See Flemister v. United States, 260 F.2d 513, 517 (5th

Cir. 1958).

8
Summary evidence must have an adequate foundation in evidence that is already admitted,

and should be accompanied by a cautionary jury instruction. See United States v. Means, 695 F.2d

811, 817 (5th Cir. 1983). Full cross-examination and admonitions to the jury minimize the risk of

prejudice. See United States v. Castillo, 77 F.3d 1480, 1500 (5th Cir. 1996); United States v.

Jennings, 742 F.2d 436, 442 (5th Cir. 1984). We previously approved a cautionary instruction that

“summaries do not, of themselves, constitute evidence in the case but only purport to summarize the

documented and detailed evidence already submitted,” and an instruction that a witness’s summary

“is not the evidence, the evidence is the documents themselves that he has been referring to.” United

States v. Lavergne, 805 F.2d 517, 521-22 (5th Cir. 1986) (quoting United States v. Diez, 515 F.2d

892, 905 (5th Cir. 1975)).

Summary charts in particular are admissible when (1) they are based on competent evidence

already before the jury, (2) the primary evidence used to construct the charts is available to the other

side for comparison so that the correctness of the summary may be tested, (3) the chart preparer is

available for cross-examination, and (4) the jury is properly instructed concerning use of the charts.

See United States v. Goodwin, 470 F.2d 893, 899 (5th Cir. 1972); McDonnell v. United States, 343

F.2d 785, 789 (5th Cir. 1965). Summaries may accompany the jury to the jury room. See Winn, 948

F.2d at 158-59.

We first note that it was appropriate to use summary evidence in this case. The trial

consumed seventeen days of technical testimony and scores of exhibits were presented. Bishop

argues that Simpson, a summary witness, testified to matters beyond the scope of a summary, but the

government correctly explains that the bulk of Simpson’s testimony was a recitation of facts already

in the record. An exception is Simpson’s expression of the opinion that several people harbored ill

9
will toward Bishop, but this comment was a response to Bishop’s lawyer’s question as to whether

Simpson concurred in Locus’ belief that the tip about the undisclosed Scharold fee came from

Bishop’s ex-wife. The only other opinion that Simpson expressed was that the government’s case

was correct, but this was acceptable because he summarized only the evidence favorable to the

government. Simpson spoke only of evidence already in the record, and, on direct and cross

examination, he fully expressed the limited basis of his testimony. We see no error in allowing

Simpson to speak.

Campbell and Simpson based their summary charts on testimony and documentary evidence

presented to the jury and available to the defense before trial. Both witnesses underwent extensive

cross-examination.7 Bishop argues that the charts should have been excluded because they did not

include evidence elicited from government witnesses during cross-examination. This contention fails

for the reason given above, that is, that a summary need not address all of the evidence. Bishop also

protests that the charts were flawed because they did not list various items that arguably reduced his

tax liability. Whether offsets were available was disputed at trial, and therefore, evidence regarding

them was in the record and available to the jury, regardless of whether it appeared on the charts.

Summaries admitted under Rule 1006 may go to the jury room. There was no abuse of discretion

in admitting the summary testimony and exhibits.

The jury instructions regarding the summary evidence were sufficient:

Charts and summaries were shown to you in order to make the other evidence
more meaningful and to aid you in considering the evidence. They are no better than
the testimony and the documents upon which they are based, and are not themselves

7
Moreover, at trial, Bishop did not object to admission of many of Campbell’s summaries, so review is limited
to a determination as to whether a clear error occurred. See United States v. Cantu, 167 F.3d 198, 204 (5th Cir. 1999).

10
independent evidence. Therefore, you are to give no greater consideration of these
schedules and summaries than you would give to the evidence upon which they are
based.
It is for you to determine the accuracy of the summary charts. You are
entitled to consider the charts, schedules, and summaries if you find that they are of
assistance to you in analyzing the evidence and understanding the evidence.

This instruction covered both the summary testimony and charts, and properly advises the jury that

the information underlying the summaries, not the summaries themselves, is evidence, although the

summaries may be a useful aid. The instruction was correct and submission to the jury was not an

abuse of discretion.

The district court should not have admitted IRS agents Campbell and Locus’ notes regarding

meetings they had with Bishop. Personal notes made by an investigator such as an IRS agent are not

ordinarily admissible because they are hearsay. See Fed. R. Evid. 801(c), 803(8)(B). Rule

801(d)(1)(B) provides an exception when the notes are offered to “rebut an express or implied charge

against the declaring of recent fabrication or improper influence or motive.” United States v. Pena,

949 F.2d 751, 757 (5th Cir. 1991) (quoting Fed. R. Evid. 801(d)(1)(B)).

Bishop’s lawyers implied that Locus made mistakes or lied while testifying, but it does not

appear that his supposed fabrications were recent or made with an improper motive. The cross

examination of Campbell was an attempt to refresh her recollection rather than an effort to imply that

her earlier testimony was false. Rule 801(d)(1)(B) cannot be construed to allow the admission of

what would otherwise be hearsay every time a law enforcement officer’s credibility or memory is

challenged; otherwise, cross-examination would always transform hearsay notes into admissible

evidence. The error, however, was harmless, as the content of the notes was throughly discussed on

11
both direct and cross examination. Admitting the notes themselves added little to the weight of the

evidence in the case.

Bishop submits that the district court erred when it excluded testimony regarding statements

made by the defendant’s former bookkeeper, Pat Schulmeier, and by the defendant himself. Actually,

the statements were hearsay and were not admissible. “‘Hearsay’ is a statement other than one made

by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the

matter asserted.” Fed. R. Evid. 801(c). Hearsay is not admissible unless an exception applies as

provided by the Federal Rules of Evidence, other rules adopted by the Supreme Court, or statute.

See Fed. R. Evid. 802. Bishop argues that Schulmeier’s statements, and his own, may be admitted

as “statement[s] of the declarant’s then existing state of mind, emotion, sensation, or physical

condition (such as intent, plan, motive, design, mental feeling, pain, and bodily health), but not

including a statement of memory or belief to prove the fact remembered or believed.” Fed. R. Evid.

803(3).

Schulmeier was Bishop’s bookkeeper from 1991 to 1997. She died in February 1998. At

trial, Bishop sought to introduce testimony that during 1996, Schulmeier met with Marc Grossberg,

Bishop’s tax lawyer, and Terri Raybourne, Bishop’s legal assistant. The testimony proffered through

Grossberg was that Schulmeier said she knew Bishop received a $400,000 fee in 1994, that it was

her fault it was omitted from the books used to prepare his tax returns, and that she did not know

why she failed to record the fee.

Bishop offered Schulmeier’s statements in order to prove the truth of their content, that is,

to show it was not his fault that all or a portion of the $400,000 fee was not reported to the IRS.

12
Schulmeier’s tendered statement was not an explanation of her current state of mind, but rather was

a recitation of her memories of what she did and thought at an earlier date. The district court

properly excluded the testimony regarding her statements.

Bishop asserts that his own statements to Grossberg are subject to the same exception to the

hearsay exclusion. Grossberg testified that Bishop hired him in 1996 to assist with a 1996 civil audit,

but was not allowed to say that Bishop said he did not expect the scope of the matter to be any

greater, that is, he did not expect he would face criminal charges. The district court properly

excluded this testimony. Bishop’s statements to Grossberg did not reflect his then current feelings

or plans, but rather were self-serving assertions that he did not have the requisite intent for the crime

now charged.

IV.

Bishop moved for a directed verdict at the close of the government’s case in chief and again

prior to submission of the matter to the jury. He also sought post conviction relief. As to counts one

and three, he continues to assert there was not sufficient evidence that a tax deficiency existed, that

he acted willfully, or that he committed an affirmative act of evasion. He also argues that there was

not sufficient evidence of willfulness in support of count two.

We review the evidence in a light most favorable to the government and make all reasonable

inferences and credibility choices in support of the jury’s verdict. See United States v. Moreno, 185

F.3d 465, 471 (5th Cir. 1999); United States v. Chesson, 933 F.2d 298, 303 (5th Cir. 1991); United

States v. Kim, 884 F.2d 189, 192 (5th Cir. 1989). If any rational trier of fact could have found proof

of the essential elements of the crime beyond a reasonable doubt, the verdict will stand. See Kim, 884

F.2d at 192. “The evidence need not exclude every reasonable hypothesis of innocence or be wholly

13
inconsistent with every conclusion except that of guilt, and the jury is free to choose among

reasonable constructions of the evidence.” United States v. Bermea, 30 F.3d 1539, 1551 (5th Cir.

1994).

To support a conviction for attempted tax evasion, as alleged in counts one and three, the

government must prove beyond a reasonable doubt that there was a tax deficiency, an affirmative act

constituting an attempt to evade or defeat the tax, and willfulness. See Sansone, 380 U.S. at 351, 85

S. Ct. at 1010, 13 L. Ed. 2d at 888. A deficiency is the amount by which the tax imposed by statute

exceeds the sum of (1) the amount of tax shown on the return, (2) plus the amount of any previously

assessed deficiency, (3) minus any rebate previously received. See 26 U.S.C. § 6211; United States

v. Wright, 211 F.3d 233, 236 (5th Cir. 2000); Chesson, 933 F.2d at 303-04.8 The government must

demonstrate the existence of a deficiency beyond a reasonable doubt, but need not prove the extent

of the deficiency with mathematical certainty. See Chesson, 933 F.2d at 304. There is no deficiency

in the absence of a showing that the government is actually due a tax in excess of that reported. See

Willingham v. United States, 289 F.2d 283, 285 (5th Cir. 1961). Therefore, undeclared deductions,

credits, losses carried over from prior years, and so on, should be considered when calculating the

8
Contrary to Bishop’s suggestion, the five items he identifies were not “rebates” reducing the extent of any
deficiency which would otherwise exist. Rebates are not credits, refunds, or other payment made by the taxpayer, but
rather are payments the IRS makes to a taxpayer “on the ground that the income tax imposed. . . is less than the excess
of (1) the amount shown as the tax by the taxpayer upon the return increased by the amount previously assessed (or
collected without assessment) as a deficiency over (2) the amount of rebates previously made.” Treas. Reg. § 301.6211-
1(f). For example, a refund made because too much tax was withheld at the source is not a rebate, but a refund made
because the IRS determined taxpayer’s return overstated the tax due is a rebate. See id. Moreover, the existence of
a rebate will actually increase the extent of deficiency, not decrease it according to the formula above, as the taxpayer
returns the credit now known to be unwarranted. See Miles Prod. Co. v. CIR, 987 F.2d 273, 276-77 & n.3 (5th Cir.
1993); United States v. Wilkes, 946 F.2d 1143, 1149 (5th Cir. 1991).

14
deficiency. See Sansone, 380 U.S. at 353, 85 S. Ct. at 1011, 13 L. Ed. 2d at 888; Wright, 211 F.3d

at 236-37; United States v. Fogg, 652 F.2d 551, 555 (5th Cir. 1981); Willingham, 289 F.2d at 285.

Under 26 U.S.C. § 7201, willfulness is “a voluntary, intentional violation of a known legal

duty.” Kim, 884 F.2d at 192. Evidence is usually circumstantial as direct proof is rarely available.

See id. A wide range of conduct can support a finding of willful attempt to evade taxation, for

instance: keeping a double set of books, making false entries or alterations, creating false invoices

or documents, destroying books or records, concealing assets or covering up sources of income,

handling one’s affairs to avoid making the records normally accompanying transactions of a particular

kind, any conduct likely to mislead or conceal, holding asset s in others’ names, providing false

explanations, giving inconsistent statements to government agents, failing to report a substantial

amount of income, a consistent pattern of underreporting large amounts of income, or spending large

amounts of cash that cannot be reconciled with the amount of reported income. See Chesson, 933

F.2d at 304; Kim, 884 F.2d at 192; United States v. Calles, 482 F.2d 1155, 1159-60 (5th Cir.1973).

At trial it was established that Bishop owed a tax for 1991, even giving due regard for all

appropriate credits. Bishop identifies five items he asserts offset any underpayment attributable to

his failure to report the fees he received in 1991. He first explains he made a “payment of $75,000

to the IRS in 1988 when he had a net loss that has not been shown as a credit elsewhere.” This was

a payment of employment taxes, he received an appropriate deduction, and the pay ment has no

further role in his income tax liability.9 Second, Bishop asserts he made a $38,360 overpayment in

9
Locus testified that he was suspicious of a net operating loss of approximately $85,000 reported on Bishop’s
1988 return, and was particularly interested in a $75,000 expense attributed to payroll taxes and related interest
expenses. Locus determined that a check for $75,000, payable to the IRS, was drawn on Bishop’s account at Bear

15
1989, and that this payment was not applied to his 1990 estimated tax, as he requested. Third,

Bishop says his 1989 income was overstated because his return was prepared using the status

“married filing joint return.” Bishop later changed his status to “married filing separate return” but

made no other adjustments. At trial, he presented testimony that under Texas community property

law, his wife should have reported half the income. The net effect of this error, however, was not

specified at trial and remains doubtful because other errors in the return may have displaced any

positive effect of the error in filing status.10 Next, half of a $50,000 payment Bishop made to the IRS

in April 1991 should have been applied to 1990. The IRS treated the entire amount as an estimated

tax payment for 1991 instead, ignoring the instructions accompanying the check. Finally, Bishop

indicates the IRS never refunded $43,171 attributable to excessive estimated tax payments made

during 1991. Bishop clearly underreported his income that year and there is no reason to believe he

should receive this refund.

Accordingly, Bishop was not entitled to credit for the first and fifth items, and the amount of

the third is an indeterminate amount. The four items of known quantity total $181,531. A

substantial deficiency therefore remained if one accepts Campbell’s virtually uncontested testimony

that Bishop underpaid by at least $250,000.00. 11 Of course, the exact amount of the deficiency

Stearns. His information returns master file transcript, a record of all payments made to the IRS, shows a $74,896
payment drawn from the Bear Stearns account to pay employee benefits taxes.
Bishop’s 1988 tax return is not in evidence, but a draft of a portion of the return shows a net operating loss
of $86,327. Bishop’s 1989 return includes a net operating loss of $85,226, with no further explanation. The
government suggest the loss from the prior year was carried over, and there is no evidence to the contrary.
10
The effect of Bishop’s filing status was also discussed in his presentence filings. According to Charles O.
Matthys, Bishop’s expert witness, Bishop failed to report all of his 1989 income, and this displaced the positive effect
of the error in filing status.

11
This figure includes $10,247.00 in self employment tax. Matthys largely agreed with Campbell’s analysis,
particularly regarding the Scharold and Cash fees, although Matthy s believed Bishop’s unreported income from the
last quarter of 1991 was $110,085.72, not $150,344.77 as Campbell stated. Matthys did not provide an estimate as

16
cannot be determined. The point is first, that the evidence does not show that Bishop was entitled

to credit for all five items he identifies, and second, that a substantial discrepancy still exists when

credit is given. Accordingly, Bishop’s argument that there was not sufficient evidence of deficiency

is without merit.

There also was ample evidence that Bishop willfully engaged in attempts to evade income tax

due for 1991. The evidence established that Bishop, as proprietor of GMBA, kept track of the firm’s

finances. He obviously knew when substantial fees were received. He directly caused the reversal

of the initial GMBA ledger entry regarding the $933,333.33 Scharold fee. He deposited that fee and

a substantial portion of the $183,666.67 Cash fee in his personal accounts, circumventing his firm’s

normal record keeping process. Responsibility for accounting for the fees shifted to Bishop himself,

but he did not fulfill his responsibility.

Instead, he provided incomplete and inaccurate information to his return preparer, Elwyn

Shaw, and to Joel Reed, who replaced Shaw and completed the 1991 return. When Shaw asked

about the two entries regarding the Scharold fee, Bishop declined to explain them. Bishop did not

let Reed see the ledger at all, and told him that income received during the last quarter of 1991 and

recorded in GMBA’s general ledger would appear on a corporate return, which was not true.

Although Locus and Campbell generally found Bishop to be cooperative, he concealed or declined

to provide information regarding receipt of non-reported income, depositing business checks in

personal accounts, and purchases of expensive assets including real estate and jewelry for his then-

fiancée. Bishop acknowledged reviewing the 1991 return. He advised Reed to add $140,000 to his

income because he paid that sum to his ex-wife, but ignored the fact that his final reported gross

to the amount of tax Bishop owed, but obviously there would be a significant underpayment.

17
income from the practice of law, $988,599.25, could not possibly include the total of the Scharold

and Cash fees, let alone his other business income. The evidence of Bishop’s actions more than

adequately supports the jury’s verdict as to 1991.

Bishop’s claim that there is no evidence of an affirmative act of evasion with respect to the

1994 tax year is incorrect. As stated above, Bishop knew when large fees were received at the firm.

The payments deposited at Chappell Hill Bank were substantial. Bishop specifically requested that

the $400,000 check be deposited in his personal account, knowing that such a transaction would

prevent the fee from being recorded in his firm’s books. He then gave inaccurate and misleading

information to his return preparers, telling them that there was no income other than that listed on

the firm’s books. He reviewed the return before signing it. His confusion with regard to the partial

reporting of the $400,000 does not excuse his other actions, particularly when they are viewed in

combination with Bishop’s experience as a lawyer, his failure to file timely returns, and the large sums

of money involved.

To prove the willful filing of a false return in violation of 26 U.S.C. § 7206, the government

must show (1) that a false return was made and signed, (2) that the false entry was material, (3) that

the return contained a written declaration that it was made under the penalties of perjury, (4) that the

defendant did not believe that the return was true and correct when signed, and (5) that the defendant

signed willfully and with specific intent to violate the law. See United States v. Bishop, 412 U.S. 346,

350, 93 S. Ct. 2008, 2012, 36 L. Ed. 2d 941, 945 (1973); United States v. Wisenbaker, 14 F.3d 1022,

1024 (5th Cir. 1994); United States v. Robinson, 974 F.2d 575, 579 (5th Cir. 1992).

18
Bishop admitted that he signed the 1991 return, the falsity of which was virtually undisputed.

The amount of the underreported income is such that the error was material. The reversal of the

initial Scharold fee ent ry, along with the bypassing of the operating account with the Cash fee,

supported a finding of knowledge and willfulness. The evidence produced at trial is sufficient to

sustain the conviction.

Bishop asserts that the district court’s jury inst ructions as to the deficiency element of tax

evasion were inadequate. Jury instructions must, as a whole, correctly state the law and clearly

inform jurors of the principles of law applicable to the factual issues. See United States v. Martinez,

190 F.3d 673, 678 (5th Cir. 1999); United States v. Cartwright, 6 F.3d 294, 300 (5th Cir. 1993). The

elements of the crime that the government needs to prove beyond a reasonable doubt must be

explained to the jury through the court’s instructions. See Sandstrom v. Montana, 442 U.S. 510,

520, 99 S. Ct. 2450, 2457, 61 L. Ed. 2d 39, 48 (1979); United States v. Moser, 123 F.3d 813, 826

(5th Cir. 1997). The trial judge is not obligated to give a requested instruction if its content is

adequately covered by the other charges. See United States v. Asibor, 109 F.3d 1023, 1035 (5th Cir.

1997).12

As we have already stated, the elements of tax evasion are: (1) a tax deficiency, (2) an

affirmative act constituting an evasion or attempted evasion of the tax, and (3) willfulness. See

Sansone v. United States, 380 U.S. at 351, 85 S. Ct. at 1010, 13 L. Ed. 2d at 888. The district court

12
“No party may assign as error any portion of the charge or omission therefrom unless that party objects
thereto before the jury retires to consider its verdict, stating distinctly the matter to which the party objects and the
grounds of the objection.” Fed. R. Crim. P. 30. At trial, Bishop did not challenge the instruction on deficiency,
although he objected to the instruction on willfulness, and, prior to trial, proposed a somewhat more detailed instruction
on deficiency.

19
advised the jury that a deficiency was present if “the defendant owed substantially more federal

income tax for the calendar years 1991 (Count One) and 1994 (Count Three) than was declared due

on his income tax returns.” There were no additional instructions as to how to calculate the

deficiency. According to Bishop, the instruction limited the jury’s inquiry to the content of the

returns he filed, and prevented consideration of five credits, refunds, or payments he made or qualified

for but did not report on his returns. Therefore, he asserts he paid more than he actually owed and

did not commit tax evasion, as no deficiency was present.

The district court did not specify that the jury should consider unreported payments Bishop

may have made in previous years. The jury could, however, still take such items into account when

determining the amount of tax Bishop actually owed, regardless of whether each item appeared on

his returns. In closing arguments, Bishop’s lawyers stressed that he made substantial payments to the

IRS on several occasions. The jury had the opportunity to consider these past payments when

determining whether a deficiency was present. The jury may not, however, have found the evidence

to be convincing. As we explain above, Bishop was not entitled to credit for all five items, and even

if he was, a substantial deficiency would remain. Therefore, the outcome of the trial was consistent

with the jury’s consideration of the potential credits identified by Bishop.

Bishop also complains that the trial court did not require the jury to find that he knew of any

tax deficiency. Knowledge is an essential element of tax evasion and of signing a false tax return.

Bishop’s assertion, however, is without merit. The court repeatedly and throughly informed the jury

that proof of knowledge on the part of the defendant was required. Instructions included definitions

of the terms “knowingly” and “willfully.” The court explained that the charged crimes were specific

intent crimes, and that therefore the government must prove the defendant not only had the intent to

20
perform a particular act, but also knew that act was illegal. Methods of demonstrating intent were

described. Willfulness was discussed as an element of each of the charged crimes. As we state

above, there was ample evidence of intent on Bishop’s part. The jury properly, and in accordance

with the court’s instructions, found that Bishop had knowledge of the deficiency.

VI.

Bishop appeals the district court’s ruling denying his motion for a new trial in light of juror

Tharp’s criminal history. A district court’s decision denying of a motion for a new trial on the basis

of juror bias is reviewed for abuse of discretion. See United States v. Doke, 171 F.3d 240, 246 (5th

Cir. 1999); United States v. Soto-Silva, 129 F.3d 340, 343 (5th Cir. 1997). In order to obtain a new

trial, the moving party must demonstrate that a juror failed to answer a material voir dire question

honestly, and that a correct response would have been a valid basis for a challenge for cause. See

McDonough Power Equip. Corp. v. Greenwood, 464 U.S. 548, 556, 104 S. Ct. 845, 850, 78 L. 28

L. Ed. 2d 663, 671 (1984); Doke, 171 F.3d at 246-47. Motivations for concealing information may

vary, but only those affecting a juror’s impartiality can truly be said to affect the fairness of a trial.

See McDonough, 464 U.S. at 556, 104 S. Ct. at 850, 28 L. Ed. 2d at 671. Therefore, once the trial

is complete, a felon’s serving as a juror is not an automatic basis for a new trial. The defendant must

demonstrate that the juror was actually biased or fundamentally incompetent. See Soto-Silva, 129

F.3d at 343; United States v. Scott, 854 F.2d 697, 698-99 (5th Cir. 1988); United States v. Gates,

557 F.2d 1086, 1088 (5th Cir. 1977) (quoting Ford v. United States, 201 F.2d 300, 301 (5th Cir.

1953)). See also Coughlin v. Tailhook Ass’n, 112 F.3d 1052, 1058-59 (9th Cir. 1997); United States

v. Langford, 990 F.2d 65, 68-70 (2d Cir. 1993); United States v. Humphreys, 982 F.2d 254, 261 (8th

Cir. 1992); United States v. Boney, 977 F.2d 624, 633-35 (D.C. Cir. 1992).

21
Actual bias exists when a juror fails to answer a material question accurately because he is

biased. See McDonough, 464 U.S. at 556, 104 S. Ct. at 850, 784 L. Ed. 2d at 671. In the majority

of situations, the party seeking a new trial must demonstrate bias through admission or factual proof.

See Scott, 854 F.2d at 699 (quoting United States v. Nell, 526 F.2d 1223, 1229 (5th Cir. 1976)).

Bias may, however, be implied or presumed in extreme circumstances, including when the juror is

employed by the prosecuting agency, is a close relative of a participant in the trial, or is somehow

involved in the transaction that is the subject of the trial. See id. (quoting Smith v. Phillips, 455 U.S.

209, 222, 102 S. Ct. 940, 948, 71 L. Ed. 2d 78, 89 (1982) (O’Connor, J., concurring)). Indicia of

partiality are particularly problematic when coupled with the juror’s lies or other efforts to hide a

potential disqualification. See id. at 699-700.

The Ninth Circuit presumed bias was present in two recent cases in which jurors engaged in

a pattern of lying and other conduct intended to cover up their disqualifications. In Dyer v. Calderon,

151 F.3d 970 (9th Cir. 1998), a juror in a homicide case did not respond to voir dire questions as to

whether she or any close family members had a criminal history or were crime victims. Later, it was

discovered that the juror’s brother was shot and killed six years earlier. The juror explained that she

did not think she had to say anything because she believed her brother’s death was an accident. The

court presumed she was biased because her explanation was not plausible. She was close with her

brother, was the plaintiff in a civil suit regarding his death, knew he was shot several times in the back

and head, and knew the shooter was charged with murder. Moreover, she failed to mention that her

husband was charged with rape a month before the trial, that she was the victim of a number of

burglaries and other crimes, and that a number of her close relatives committed serious crimes. Her

22
pattern of conduct showed that she sought to serve on the jury despite circumstances that she knew

could disqualify her and which may well have affected her ability to be impartial.

In Green v. White, 232 F.3d 671 (9th Cir. 2000), a juror failed to reveal his assault conviction

in a juror questionnaire and in voir dire. He explained that the questions were confusing and said he

forgot about his conviction, but it was impossible that he forgot the six months he spent in jail. He

also commented during the trial that he always knew the defendant was guilty. Again, the pattern of

lies suggested a desire to serve on the jury and determine the outcome of the case.

On the other hand, inaccurate responses to voir dire questions are excused when caused by

inattention or when a query does not elicit the specific information relevant to the juror’s

disqualification. See cases cited in Scott, 854 F.2d at 700 & n.12. Failure to disclose a conviction

due to a mistaken, but honest belief the record was expunged, or due to embarrassment, also does

not suggest bias. See United States v. Langford, 990 F.2d at 66-67, 69-70; United States v.

Humphreys, 982 F.2d at 260-61. Even when a juror’s non-disclosure is dishonest as opposed to

mistaken, his behavior is not a basis for reversal unless the dishonesty appears to be rooted in bias or

prejudice. See Coughlin, 112 F.3d at 1061.

The deferred adjudication statutorily disqualified Tharp from serving on a jury. 28 U.S.C. §

1865(a) directs each federal judicial district to set up a system to determine whether each person

called for jury duty is qualified to serve. 28 U.S.C. § 1865(b) lists situations in which an individual

is statutorily disqualified from serving as a juror, including when he “has a charge pending against him

for the commission of, or has been convicted in a State or Federal court or record of , a crime

punishable by imprisonment for more than one year and his civil rights have not been restored.” 28

U.S.C. § 1865(b)(5).

23
Article 42.12, section 5(a) of the Texas Code of Criminal Procedure allows deferred

adjudication:

[W]hen in the judge’s opinion the best interest of society and the defendant will be
served, the judge may, after receiving a plea of guilty or plea of nolo contendere,
hearing the evidence and finding that it substantiates the defendant’s guilt, defer
further proceedings without entering an adjudication of guilt, and place the defendant
on community supervision.

Once the defendant successfully completes community supervision, the proceedings are dismissed.

See Tex. Code Crim Proc. art. 4212, § 5(c). If the defendant violates the conditions of supervision,

the court may enter an adjudication of guilt on the original charges and impose a punishment. See

id. § 5(b). A dismissal and discharge upon completion of supervision is not a “conviction” triggering

disqualifications or disabilities usually visited upon convicted felons. See id. § 5(c). Until supervision

is complete, however, the deferred adjudication is treated as a pending charge. See Thomas v. State,

796 S.W.2d 196, 197-98 & n.1 (Tex. Crim. App. 1990).

Accordingly, Tharp’s deferred adjudication was equivalent to a pending charge. A third

degree Texas felony is punishable by imprisonment for two to ten years. See Tex. Penal Code §

12.34. Therefore, under 28 U.S.C. § 1865(b)(5), Tharp could not serve on Bishop’s jury. Her status

was an appropriate basis for a challenge for cause. The inquiries on the questionnaire and during voir

dire sought to elicit information about her status, and were directly on point. Therefore her failure

to respond was material. A new trial, however, is not warranted because Bishop did not demonstrate

that Tharp was biased.

Tharp could not be presumed to be biased. Unlike the jurors in Dyer and White, she offered

a plausible explanation for her failure to answer the juror questionnaire and voir dire inquiries

regarding her criminal history accurately. She explained to the trial judge that the lawyer who

24
represented her in the embezzlement matter told her that because adjudication of the charge was

deferred, she need not tell anyone about it, for instance when applying for a job. Accordingly, she

answered “no” on the questionnaire and did not raise her hand during voir dire because she believed

the questions did not apply to her situation. Tharp was wrong, but it is quite possible she

misunderstood the nature of the deferred adjudication. As demonstrated by the discussion above, the

analysis required to arrive at the conclusion that Tharp could not serve is rather involved, especially

when considered in conjunction with Tharp’s lawyer’s instructions to her.

Tharp’s probation officer, Josette Robinson, suggested that Tharp did not respond to the

questions truthfully because she was in denial about her criminal history. Robinson believed Tharp

knew she could not serve on a jury, or at least knew she should have asked Robinson what to do.

This possibility alone is not determinative. Regardless of whether Tharp made a simple mistake or

actually lied in order to escape her past, there is no suggestion that she especially desired to serve on

the jury. Her motivations appear to have been purely personal and do not indicate she was

prejudiced. Nor are there any other troubling circumstances such as a relationship with one of the

participants. Accordingly, bias cannot be implied or presumed.

Nor did Bishop present factual proof that Tharp was partial to one side or the other. Tharp

herself denied she had any improper motive, and there is no contradictory evidence. She said she did

not especially want to serve on the jury. Her crime was somewhat similar to Bishop’s, and she knew

what it felt like to be in his position, but did not feel sympathy for him. Nor did she favor the

government. She did not reveal her experiences to the other jurors. She is not known to have

expressed any strong opinions at the time the trial took place, or later. As the trial court noted, she

probably was not particularly influential in deliberations, as the other j urors were older and more

25
highly educated, and the deliberations lasted only a day despite the length of the trial. Bishop’s

lawyer questioned Tharp about her bankruptcy discharge, which occurred about a year after the

embezzlement matter was considered, and suggested she owed taxes on the stolen money.

Apparently the possibility had not previously occurred to Tharp, and therefore could not influence

her. The district court did not abuse its discretion by denying Bishop’s motion for a new trial.

VII.

Although Tharp was statutorily disqualified from serving on Bishop’s jury, there is no

evidence she was biased against him. The district court should not have admitted the IRS agents’

notes, which were hearsay, but the error was harmless. Bishop’s remaining arguments are without

merit. We confirm Bishop’s convictions on all three counts.

AFFIRMED.