NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 08a0020n.06
Filed: January 8, 2008
Case No. 06-4593
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
UNITED STATES OF AMERICA, )
)
Plaintiff-Appellee, ) ON APPEAL FROM THE
) UNITED STATES DISTRICT
v. ) COURT FOR THE SOUTHERN
) DISTRICT OF OHIO
WALTER L. DAULTON, )
)
Defendant-Appellant. )
BEFORE: BATCHELDER and GILMAN, Circuit Judges; and VARLAN, District Judge *
THOMAS A. VARLAN, District Judge. Defendant Walter L. Daulton was sentenced
to a term of imprisonment of 46 months for preparing fraudulent tax returns. On appeal,
Daulton argues that (1) the district court erred in permitting the government to introduce
evidence of other acts that were not charged in the indictment; (2) the district court violated
Daulton’s constitutional rights by not allowing him to introduce evidence that he prepared
other returns that were not fraudulent; (3) the district court’s tax-loss calculation was clearly
erroneous and should have been determined under a heightened burden of proof; (4) the
district court erred in applying an enhancement for sophisticated means; and (5) the district
*
The Honorable Thomas A. Varlan, United States District Judge for the Eastern District of
Tennessee, sitting by designation.
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court’s application of the harsher Guidelines in effect at sentencing rather than those in effect
at the time of the offense violates the Ex Post Facto and Due Process Clauses. For the
reasons that follow, we AFFIRM the judgment of the district court.
I. Background
At all relevant times, Walter L. Daulton operated Daulton’s Tax Service (a.k.a.
“Daulton’s Income Taxes” and “Daulton’s Truck Tax Systems, LLC”), a tax preparation
business that specialized in preparing tax returns for truck drivers. As a former truck driver
himself, Daulton advertised that he was able to get his clients larger refunds because he was
particularly familiar with the deductions truck drivers frequently make.
The record indicates that Daulton told his clients that they were entitled to certain
deductions regardless of whether they incurred the expenses, even though he knew that
deductions must be based on actual expenses. Daulton would tell his clients that they were
allowed to take per diem deductions for certain items and services, including tarping and
untarping fees, costs for bedding and truck washes, shower fees, and other purchases related
to trucking. He instructed his employees to use a formula for computing these deductions
based on the number of weeks worked or loads driven rather than using actual expenses. On
one occasion, after a client told Daulton that he did the tarping himself, Daulton stated, “I
didn’t hear you say that.”
On February 18, 2004, Daulton was indicted on ten counts of aiding or assisting in the
preparation or filing of false federal income tax returns in violation of 26 U.S.C. § 7206(2)
for returns he prepared for the years 1997 and 1998. On September 15, 2004, Daulton was
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indicted on eight additional counts. A jury convicted Daulton of counts 1-10 and counts 12-
18 on April 28, 2005. On December 1, 2006, the district court sentenced Daulton to 46
months’ imprisonment followed by one year of supervised release.
At trial, the district court permitted the government to introduce evidence from clients
regarding tax returns that were not the subject of the indictment, but included fraudulent
deductions and statements of Daulton’s former employees whom he trained to prepare tax
returns. The court admitted this evidence on the basis that it was intrinsic evidence.
Additionally, the court noted that even if the evidence was extrinsic, it was admissible to
show intent, preparation, plan, knowledge, or absence of mistake. Daulton then sought to
introduce testimony from clients who had their tax returns prepared by Daulton’s Tax
Service for several years and whose returns never included false deductions. The court did
not allow Daulton to present such evidence, finding it irrelevant and potentially confusing
to the jury. In calculating the tax-loss, the court looked at tax returns listed in the
indictment, returns of testifying witnesses that were not listed in the indictment, returns of
Daulton’s clients who were interviewed and audited before trial but not called as witnesses,
including those interviewed by the IRS, amended returns prepared by Daulton’s Tax Service
and rejected by the IRS, and a return audited during trial. The district court found a total loss
of $326,375. The court considered the advisory sentence range under both the 1998 and
2005 Sentencing Guidelines Manuals and relevant factors under 18 U.S.C. § 3553 in
imposing Daulton’s sentence.
II. Admission of Rule 404(b) Evidence
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Daulton argues that the district court erred in permitting the government to introduce
evidence of other acts not charged in the indictment. This court reviews the district court’s
determination of whether other-act evidence is admissible for a lawful purpose de novo.
United States v. Weinstock, 153 F.3d 272, 277 (6th Cir. 1998). We review a district court’s
determination that the probative value is not substantially outweighed by its unfairly
prejudicial effect for an abuse of discretion. Id.
Rule 404(b) prohibits the use of extrinsic evidence of other crimes, wrongs, or acts
in order to show that a person acted in conformity therewith. Fed. R. Evid. 404(b); see also
United States v. Barnes, 49 F.3d 1144, 1149 (6th Cir. 1995). This court has determined that
Rule 404(b) does not apply when the other-acts evidence is intrinsic or part of a continuing
pattern of illegal activity or where it is “‘inextricably intertwined’ with evidence of the crime
charged in the indictment.” Barnes, 49 F.3d at 149. Evidence is inextricably intertwined
when the charged conduct and the uncharged conduct “are part of the a single criminal
episode or the other acts were necessary preliminaries to the crime charged.” United States
v. Williams, 900 F.2d 823, 825 (5th Cir. 1990).
The district court determined that the other-act evidence was intrinsic to the charged
offenses as part of a continuing criminal episode and therefore not within the scope of Rule
404(b). The other-act evidence that was admitted at trial includes statements of clients
regarding preparation of returns for years not included in the indictment, statements by
Daulton in various media forms, including his advertising videotapes, and statements of
former employees of Daulton’s Tax Service who testified regarding the procedures the
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defendant instructed them to follow in preparing returns. For some clients, the indictment
only included returns from the years 1997 and 1998; however, many of the defendant’s
clients had been using his services since 1996 and earlier. It was therefore necessary for
these witnesses to testify about the preparation of their tax returns for years outside of those
charged in the indictment because that is when their initial meeting with Daulton occurred
in which he explained his methodology and gathered information from the clients.
Daulton’s promotional video shows his emphasis on taking deductions, including
suggestions that truck drivers are automatically entitled to take a certain amount of deduction
for some items and services. The testimony of Daulton’s former employees included
information about Daulton’s general practices, including that the defendant did not ask or
instruct his employees to ask clients about their actual expenses, but rather calculated
deductible expenses using a formula based on the number of weeks worked or loads driven.
Such evidence provides background information for understanding the fraudulent deductions
on the returns charged in the indictment and therefore is intrinsic evidence.
Daulton argues that, because he was not charged with a conspiracy or scheme to
defraud, the other acts cannot be admissible as part of a single criminal episode. Conspiracy
does not need to be charged for the court to admit evidence as part of the same criminal
episode. United States v. Toney, 161 F.3d 404, 413-14 (6th Cir. 1998). This additional
information offered by the government sheds light on the charged conduct by revealing the
procedures Daulton used to prepare his clients’ returns. Because the other acts are so closely
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related to the charged acts, the district court was correct in finding that they are intrinsic and
therefore Rule 404(b) is not implicated.
Even if the district court erred in concluding that the other-acts evidence was intrinsic,
it correctly noted that such evidence would be admissible for purposes other than showing
behavior in conformity therewith. When evidence of other crimes, wrongs, or acts is
extrinsic, it is admissible to show “motive, opportunity, intent, preparation, plan, knowledge,
identity, or absence of mistake or accident.” Weinstock, 153 F.3d at 277. The evidence
offered was of the nature to show Daulton’s methods for preparing tax returns. Testimony
of clients as well as Daulton’s promotional videotapes demonstrate Daulton’s preparation
and plan for including false deductions. Testimony regarding formulas he instructed his
employees to use shows intent and absence of mistake. Therefore, such evidence would not
be excluded by Rule 404(b).
Daulton additionally argues that admitting this evidence was unfairly prejudicial
because it lessened the government’s burden of proof on each count. The court may exclude
any evidence if its probative value is substantially outweighed by its risk of having an
unfairly prejudicial effect. Fed. R. Evid. 403. Evidence is not unfairly prejudicial simply
because it provides more support for a conclusion that the defendant committed the crime.
It is unfairly prejudicial if it serves to “inflame the passions of the jury” and causes them to
ignore the evidence. United States v. Whittington, 455 F.3d 736, 739-40 (6th Cir. 2006);
United States v. Thomas, 49 F.3d 253, 258-59 (6th Cir. 1995). “[U]sually, although not
always, unfairly prejudicial evidence appeals to the jury’s emotions rather than intellect.”
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Fed. R. Evid. 403 cmt. Here, evidence of Daulton’s regular practices in his business
demonstrated by testimony of his clients and former employees was highly probative and did
not serve to inflame the jury’s emotions against Daulton. Although this evidence may have
supported the government’s case and therefore helped the government reach its burden of
proof, it did not lessen the burden of proof. Therefore, the court properly refused to exclude
such evidence.
III. Exclusion of Reverse Rule 404(b) Evidence
Daulton argues that he should have been permitted to present evidence of non-
fraudulent tax returns prepared by Daulton’s Tax Service. A district court’s determination
of admissibility based on relevance and prejudice is reviewed for an abuse of discretion and
will not be overruled lightly. United States v. Jackson-Randolph, 282 F.3d 369, 376 (6th Cir.
2002). Reversal due to an exclusion of evidence under Rule 404(b) is appropriate only if this
court is “firmly convinced of a mistake that affects the substantial rights and amounts to
more than harmless error.” Pressman v. Franklin Nat’l Bank, 384 F.3d 182, 187 (6th Cir.
2004) (citation and quotation marks omitted).
“[T]he Constitution guarantees criminal defendants ‘a meaningful opportunity to
present a complete defense.’” Holmes v. South Carolina, 547 U.S. 319, 319 (2006) (quoting
Crane v. Kentucky, 476 U.S. 683, 690 (1986)). “[E]vidence of noncriminal conduct to negate
the inference of criminal conduct is generally irrelevant.” United States v. Dobbs, 506 F.2d
445, 447 (6th Cir. 1975) (finding that the district court’s exclusion of evidence of
noncriminal conduct in the preparation of some tax returns was appropriate); see also
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Derango v. United States, 18 F.2d 778, 778 (6th Cir. 1927) (excluding testimony that the
accused had refused to commit similar crimes to the crimes charged on other occasions).
Evidence of noncriminal activities “would only be relevant if the indictment charged the
defendants with ceaseless criminal conduct.” United States v. Scarpa, 913 F.2d 993, 1011
(2d Cir. 1990).
Daulton argues that the district court’s exclusion of evidence of instances when he
prepared non-fraudulent returns violated his constitutional right to present a defense.
Daulton sought to introduce testimony from seven clients whose tax returns he prepared
without false deductions. The district court excluded this evidence as irrelevant and
immaterial to whether Daulton prepared the eighteen false returns listed in the indictment.
Daulton argues that because the government was permitted to present evidence of acts
outside the indictment to show a common scheme, he should be able to negate such evidence
with evidence of noncriminal acts. In Dobbs, this court found noncriminal conduct irrelevant
because the defendants were charged with separate instances of criminal conduct and not a
scheme. 506 F.2d at 447. Similarly, Daulton was charged with separate instances of
preparing fraudulent tax returns. The government did not contend that the defendant always
engaged in criminal activity when preparing tax returns, but rather that the defendant had a
method for maximizing refunds by including deductions for expenses that were not incurred.
Therefore, the proffered evidence of instances when Daulton prepared truthful returns is
irrelevant to the charged instances.
8
Daulton argues that the government tried his case like a conspiracy by using evidence
not charged in the indictment and by including charges for returns that were not prepared by
him personally but instead by his employees. Although this argument may make the overall
decision regarding whether the defendant should have been permitted to present the proffered
evidence a close question, any error in excluding such evidence was harmless.
“An error is harmless unless one can say, with fair assurance that the error materially
affected the defendant’s substantial rights–that the judgment was substantially swayed by the
error.” United States v. Murphy, 241 F.3d 447, 453 (6th Cir. 2001). This court must
determine whether an error is harmless in light of all other evidence presented at trial and not
by looking at the evidence in isolation. Id. When there is overwhelming evidence of the
defendant’s guilt, admission of Rule 404(b) evidence is harmless. Id. Similarly, when there
is overwhelming evidence of defendant’s guilt, exclusion of reverse Rule 404(b) evidence
is harmless. See United States v. Hayes, 219 Fed. App’x 114, 120 (3d Cir. 2007) (citing
United States v. Casoni, 950 F.2d 893, 902 (3d Cir.1991)) (applying the same rule to reverse
404(b) evidence).
In Hayes, the court determined that the error was not harmless when the district court
stated on the record that if the excluded evidence was admitted at trial and the jury believed
it, the jury would be forced to find the defendant not guilty. 219 Fed. App’x at 120. We do
not have the same case here. Daulton was seeking to produce evidence that, on occasions
other than those charged, he prepared non-fraudulent tax returns. But even if the district
court had considered and believed such evidence, it would have proved only that Daulton did
9
not always include false deductions on his clients’ tax returns. Because this conclusion does
not negate Daulton’s guilt for the charged acts, we cannot say that judgment would have been
swayed by the evidence. Therefore, any error in excluding the evidence of Daulton’s good
acts was harmless.
IV. Tax-Loss Calculation
Daulton contests the district court’s tax-loss calculation for sentencing purposes and
argues that it should have been determined under a heightened burden of proof. We review
the district court’s legal interpretations of the Sentencing Guidelines de novo. United States
v. Gale, 468 F.3d 929, 934 (6th Cir. 2006). This court must affirm the factual findings at
sentencing as long as they are reasonable and not clearly erroneous. Id.
In determining the government’s loss for sentencing purposes, “[t]he guidelines
require a district court to make a reasonable estimate, which may be founded on general
factors such as the nature and duration of the fraud.” United States v. Milligan, 17 F.3d 177,
183 (6th Cir. 1994) (citing U.S.S.G. § 2F1.1 cmt. n.8). “Loss need not be determined with
precision.” Id. The amount of loss is based on the loss the defendant intended to inflict and
not the government’s actual loss. United States v. Kraig, 99 F.3d 1361, 1370-71 (6th Cir.
1996) (citing United States v. Moore, 997 F.2d 55, 60 (5th Cir. 1993)).
The Guidelines permit the use of uncharged conduct in calculating the tax-loss.
U.S.S.G. § 1B1.3(a)(2); United States v. Pierce, 17 F.3d 146, 150 (6th Cir. 1994). “In
determining total tax-loss attributable to the offense . . . all conduct violating the tax laws
should be considered as part of the same course of conduct or common scheme or plan unless
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the evidence demonstrates that the conduct is clearly unrelated.” U.S.S.G. § 2T1.1 cmt. n.2.
Additionally, hearsay evidence may be used to calculate tax-loss for sentencing purposes.
United States v. Stone, 432 F.3d 651, 654 (6th Cir. 2005).
IRS Revenue Agent Bridges testified as an expert that the IRS’s total tax-loss was
$337,979. She testified that this calculation was based on the tax-loss found by the jury, tax-
loss for additional tax returns of testifying witnesses, tax-loss for non-testifying taxpayers
who were interviewed or audited by the IRS during the investigation, tax-loss for taxpayers
whose returns contained the same type of deductions the jury found fraudulent, attempted
tax-loss on rejected returns, and tax-loss for a post-indictment client who admitted to false
items on his return. The district court adopted Agent Bridges’s tax-loss calculation less the
tax-loss for a taxpayer who died before he could be interviewed by the IRS and less part of
the tax-loss of a taxpayer who settled with the IRS for a lesser amount. The court therefore
found, “based upon a preponderance of the reliable evidence and testimony, that the
Government has established a tax-loss of $326,375.” The figure the court reached was based
on the tax-loss calculated by an expert in the field and adjusted by the court for reliability.
We cannot conclude that this figure was clearly erroneous.
The district court used a preponderance-of-the-evidence standard to calculate the tax-
loss. Daulton argues that a higher standard of proof should have been applied to the loss
calculation in this case because of the large amount of relevant conduct and the district
court’s reliance on hearsay information. Generally, the sentencing court “only need[s] to
determine the amount of loss by a preponderance of the evidence.” United States v.
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Blackwell, 459 F.3d 739, 772 (6th Cir. 2006). “[I]n extreme circumstances, relevant conduct
that would dramatically increase the sentence must be based on clear and convincing
evidence.” United States v. Watts, 519 U.S. 148, 156 (1997) (per curiam). This court has
affirmed use of a preponderance-of-the-evidence standard for findings of loss that resulted
in a base-level increase much more than two levels. United States v. Triana, 468 F.3d 308,
320-21 (6th Cir. 2006) (upholding a sixteen-level enhancement). Relevant conduct in this
case did not dramatically increase Daulton’s sentence because the tax-loss calculation
increased Daulton’s base-offense level by only two levels, from 16 to 18. See U.S.S.G. §
2T4.1(F), (G). The increase does not justify departure from the preponderance-of-the-
evidence standard generally applied.
V. Sophisticated Means Enhancement
Daulton argues that his sentence should not have been enhanced for the use of
sophisticated means in the commission of his fraud. Pure factual questions underlying a
sentencing enhancement are reviewed for clear error. United States v. Pierce, 17 F.3d 146,
151 (6th Cir. 1994). Application of the Guidelines to a specific set of facts is reviewed de
novo. Id.
The Guidelines provide for a two-level enhancement to a defendant’s base-offense
level for use of sophisticated means in a tax fraud case. U.S.S.G. § 2T1.1(b)(2).
“Sophisticated means” is defined as “especially complex or especially intricate offense
conduct pertaining to the execution or concealment of an offense.” Id. at cmt. n.4. Even
when each of a defendant’s actions viewed in isolation may not be enough to constitute
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sophisticated means, taken as a whole, they may reveal a sophisticated attempt to deceive the
government. United States v. Tandon, 111 F.3d 482, 491 (6th Cir. 1997).
The district court found that Daulton’s use of promotional videotapes and expense
organizers suggesting calculated amounts for certain types of expenses were “sufficiently
planned and complex” to constitute sophisticated means. In Pierce, this court found that the
defendant used sophisticated means when, in addition to simply lying on his 1040 form, he
also provided false information to his employer, used multiple mailing addresses and aliases,
and instructed his wife to file misleading returns. 17 F.3d at 151. Similarly, Daulton did not
simply lie on his clients’ tax forms; he also used his specialized knowledge of the trucking
industry in order to calculate and list deductions for expenses common in the trucking
industry but not actually incurred by his clients, instructed his employees on the use of
formulas for calculating expenses that were not actually incurred, gave clients organizers to
record expenses that made falsification harder to detect, and made a promotional video
advertising his ability to get particularly high refunds.
Daulton’s use of specialized knowledge of the trucking industry was particularly
relevant. In United States v. Aragbaye, the Ninth Circuit affirmed an enhancement based on
sophisticated means for a defendant who “made use of tax credits that the average taxpayer
would not be knowledgeable about.” 234 F.3d 1101, 1108 (9th Cir. 2000). Daulton asserted
that he did not take deliberate steps to make detection of the false deductions difficult.
However, by listing common deductions, Daulton made the falsity less obvious. Because the
13
district court had a basis for concluding that Daulton used sophisticated means, the two-level
sentencing enhancement was not in clear error.
Daulton also argues that the district court erred in using enhancements for both being
in the business of tax preparation and using sophisticated means because doing so amounts
to double counting. There is no legal support for this argument because the two categories
are not mutually exclusive. United States v. Hunt, 25 F.3d 1092, 1098 (D.C. Cir. 1994)
(noting there is “no reason why these two enhancements cannot exist in the same case. It is
possible for a tax preparer to conduct a simple scheme and a nonpreparer to conduct a
complex one.”); see also United States v. Ambort, 405 F.3d 1109, 1119-20 (10th Cir. 2005)
(affirming a sentence that included enhancements for both preparation and sophisticated
means); Aragbaye, 234 F.3d at 1106-08 (same). Daulton was a tax preparer who engaged
in means beyond simply lying on the returns to secure larger refunds. As such, he was
eligible for an enhancement under both categories.
VI. Version of Sentencing Guidelines
Daulton argues that the district court erred in applying the 2005 Sentencing Guidelines
Manual in violation of the Ex Post Facto Clause. Whether a defendant’s sentence was
imposed in violation of the Ex Post Facto Clause is a legal question that this court reviews
de novo. United States v. VanHoose, 437 F.3d 497, 500 (6th Cir. 2006) (citations omitted).
Factual findings are reviewed for clear error. United States v. Pierce, 17 F.3d 146, 151 (6th
Cir. 1994). We review the district court’s sentence based on application of the consulted
Guidelines for reasonableness. United States v. Davis, 397 F.3d 340, 346 (6th Cir. 2005).
14
“The court shall use the Guidelines Manual in effect on the date that the defendant is
sentenced.” U.S.S.G. § 1B1.11(a). This rule generally applies unless it would result in a
violation of the Ex Post Facto Clause. United States v. Gardiner, 463 F.3d 445, 462 (6th Cir.
2006). An ex post facto violation occurs when a law is retrospective and it harms the
offender. Weaver v. Graham, 450 U.S. 24, 29 (1981). A law is retrospective if it “changes
the legal consequences of acts completed before its effective date.” Davis, 397 F.3d at 347.
“The application of a particular version of the Guidelines is retrospective if the version went
into effect after the last date of the offense of conviction.” United States v. Kilkenny, 493
F.3d 122, 127 (2d Cir. 2007). While the Ex Post Facto Clause generally applies only to
legislatures, the Due Process Clause of the Fifth Amendment prohibits the judiciary from
punishing the defendant if the defendant did not have fair notice that such punishment was
possible due to ex post facto concerns. Bouie v. City of Columbia, 378 U.S. 347, 354 (1964).
Daulton argues that his sentencing violated the Ex Post Facto Clause because the
district court retroactively applied the 2005 Guidelines. Considering the district court’s
discussion of both the 1998 and the 2005 Guidelines at sentencing, we cannot reach that
same conclusion. A district court has discretion to consider updates to the Guidelines
Manual in determining an appropriate sentence. United States v. Meyer, 452 F.3d 998, 1001-
02 (8th Cir. 2006) (“While our court cannot retrospectively apply enhancing amendments to
the guidelines in order to calculate the defendant’s guidelines range, such amendments are
instructive as to whether a sentence outside of the guidelines falls within the range of
reasonableness.”); United States v. Johnson, 427 F.3d 423, 427 (7th Cir. 2005) (noting that
15
it is permissible to consider the version of the Guidelines in effect at sentencing “as one
benchmark to gauge the reasonableness” of the sentence without implication of ex post facto
concerns).
At the September 12, 2006 sentencing hearing, the government requested that the
district court use the 2005 Sentencing Guidelines Manual. Daulton objected and filed a
memorandum opposing the use of the 2005 Manual on the basis that to do so would amount
to a violation of the Ex Post Facto Clause. The district court addressed the argument at the
December 1, 2006 sentencing hearing and stated that it would use the 2005 Guidelines
Manual to calculate the advisory guidelines range. Despite the district court’s
pronouncement that it would use the 2005 Manual, it is apparent from the court’s further
discussion of sentencing that the court considered the sentence under both the 1998 and the
2005 Manuals.
The court proceeded at sentencing by stating that it was following the guidelines in
general rather than a particular version. As is required, the court considered factors relevant
to sentencing under 18 U.S.C. § 3553 and then imposed the defendant’s sentence of 46
months’ imprisonment. At no point during this discussion of factors did the court mention
either the 2005 or the 1998 version of the Sentencing Guidelines. We therefore cannot
conclude that the district court relied exclusively on the 2005 Guidelines in violation of the
Ex Post Facto Clause. The record indicates that the court considered both guideline ranges
and imposed a sentence that is sufficient but not greater than necessary as is required by 18
U.S.C. § 3553(a). See Rita v. United States, 127 S. Ct. 2456, 2463 (2007). Because the
16
district court considered the 2005 Guidelines Manual in conjunction with the 1998 Manual,
as it is permitted to do, there was no ex post facto violation.
Finally, any error in consideration of the 2005 Guidelines Manual was harmless. As
discussed above, the district court considered the 1998 and 2005 Guidelines in tandem.
There is no indication that the court gave greater weight to the 2005 Guidelines than the 1998
Guidelines. Under the 1998 Guidelines, the appropriate range was 37 to 46 months, while
under the 2005 Guidelines, the appropriate range for Daulton’s sentence was 41 to 51
months. Daulton was sentenced to 46 months’ imprisonment, a sentence that falls within
both ranges. This court affords a rebuttable presumption of reasonableness to sentences that
fall within the Guidelines range. United States v. Williams, 436 F.3d 706, 708 (6th Cir.
2006). We have adopted this presumption, in large part, because the fact that the Sentencing
Commission and a sentencing judge agree on an appropriate sentence “significantly increases
the likelihood that the sentence is a reasonable one.” United States v. Liou, 491 F.3d 334,
339 (6th Cir. 2007) (quoting Rita, 127 S. Ct. at 2463). Because the district court imposed
Daulton’s sentence only after considering the relevant factors under 18 U.S.C. § 3553 and
the advisory range under both the 1998 and 2005 Guidelines, we conclude that any error in
sentencing was harmless.
VII. Conclusion
For all the reasons discussed above, we AFFIRM the judgment of the district court.
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RONALD LEE GILMAN, Circuit Judge, concurring. I write separately because of a
difference of opinion with my colleagues over the district court’s exclusion of the “reverse 404(b)”
evidence proffered by Daulton. Daulton sought to introduce testimony by seven taxpayers in the
truck-driving business who had their taxes prepared for many years by Daulton or his employees
and who never had false deductions appear on their tax returns. The district court excluded this
evidence, concluding that it was irrelevant and immaterial.
I fully agree with the principle that “evidence of noncriminal conduct to negate the inference
of criminal conduct is generally irrelevant.” United States v. Dobbs, 506 F.2d 445, 447 (6th Cir.
1975) (emphasis added). But there are, as Daulton notes, exceptions to this rule. On this score,
Daulton points out that the government used evidence not charged in the indictment to show that
he was involved in a continuing pattern of illegal activity. He therefore argues that he was entitled
to present evidence that he prepared nonfraudulent tax returns during the relevant time period, which
would counter the government’s theory that he had a “method” for preparing fraudulent tax returns.
Under Rule 401 of the Federal Rules of Evidence, relevant evidence is “evidence having any
tendency to make the existence of any fact that is of consequence to the determination of the action
more probable or less probable than it would be without the evidence.” Fed. R. Ev. 401. Daulton’s
defense was that his clients either gave him incorrect information or that he mistakenly included
incorrect deductions, but that he did not instruct his employees to put false deductions on the clients’
tax returns. Testimony that Daulton prepared at least some nonfraudulent tax returns for his clients
in the truck-driving business would thus bolster Daulton’s defense that, contrary to the government’s
theory, he did not have a method for fraudulently preparing tax returns. I therefore believe that the
evidence Daulton sought to introduce was relevant and material to his defense.
18
Moreover, I believe that such evidence should have been admitted as “reverse 404(b)”
evidence to corroborate Daulton’s defense that he did not have a modus operandi, and that the
fraudulent returns were actually the product of a mistake or accident. See United States v. Robinson,
2007 WL 4153412, at *7 (6th Cir. Nov. 19, 2007) (explaining that Rule 404(b) “contemplates”
prior-act evidence “being offered as exculpatory evidence by the defendant as ‘reverse 404(b)
evidence’”) (quoting United States v. Lucas, 357 F.3d 599, 605 (6th Cir. 2004)). For these reasons,
I believe that the district court erred in excluding the evidence proffered by Daulton.
But as the majority correctly acknowledges, “[w]e review the district court’s exclusion of
evidence for abuse of discretion, and reverse only if we are firmly convinced of a mistake that
affects substantial rights and amounts to more than harmless error.” Pressman v. Franklin Nat’l
Bank, 384 F.3d 182, 187 (6th Cir. 2004). The very fact that there is disagreement between myself
and my colleagues on this issue is presumably enough to show that the district court did not abuse
its discretion in excluding the evidence proffered by Daulton. See Merriweather v. Family Dollar
Stores, Inc., 103 F.3d 576, 584 (7th Cir. 1996) (“If reasonable persons can disagree on a district
court’s actions, there is no abuse of discretion.”). I therefore concur despite what I believe was an
evidentiary error by the district court.
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United States v. Daulton
Court: Court of Appeals for the Sixth Circuit
Date filed: 2008-01-08
Citations: 266 F. App'x 381
Copy CitationsCombined Opinion