IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 94-60648
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
JIMMY D. MCGUIRE,
Defendant-Appellant.
Appeal from the United States District Court
For the Southern District of Mississippi
October 31, 1996
Before POLITZ, Chief Judge, KING, GARWOOD, JOLLY, HIGGINBOTHAM,
DAVIS, JONES, SMITH, DUHÉ, WIENER, BARKSDALE, EMILIO M. GARZA,
DeMOSS, BENAVIDES, STEWART, PARKER, and DENNIS, Circuit Judges.
PER CURIAM:
We took this case en banc to consider the difficult problems
attending application of United States v. Gaudin, 115 S. Ct. 2310
(1995), which held that materiality is a question for the jury, not
the court. With the benefit of additional briefing and oral
argument before the en banc court, we are now persuaded that the
district court did not withhold the element of materiality from the
jury on the count on which defendant McGuire was convicted. See
Victor v. Nebraska, 114 S. Ct. 1239, 1243 (1994) (“proper inquiry
is not whether the instruction could have been applied in
unconstitutional manner, but whether there is a reasonable
likelihood that the jury did so apply it.”) (emphasis in text).1
It is clear that Instruction 20, pertaining to a count upon which
McGuire was acquitted, incorrectly removed the issue of materiality
from the jury. Instruction 36, however, which specified the
elements of the only count for which McGuire was convicted, did not
do so. Finding no Gaudin error or other reversible error, we
affirm the judgment of conviction.
AFFIRMED.
APPENDIX
INSTRUCTION NO. 15
A separate crime is charged in each count of the indictment.
Each count and the evidence pertaining to it should be considered
separately and each element must be proved beyond a reasonable
doubt. The fact that you may find the defendant guilty or not
guilty as to one of the crimes charged should not control your
verdict as to any other of the crimes charged.
* * *
INSTRUCTION NO. 20
Title 26, United States Code, Section 7206(1), as charged in
Count 5 of the indictment in Criminal No. 1:93cr35BrR, makes it a
crime for anyone willfully to make a false statement on an income
1
The dissent continues to adhere to the view that the
instructions took the issue of materiality away from the jury with
respect to McGuire’s violation of 26 U.S.C. § 6050I. The
instructions speak for themselves. We include the relevant
portions of the jury charge in an appendix.
2
tax return. “Willfully” means with intent to violate a known legal
duty.
For you to find the defendant guilty of this crime, you must
be convinced that the government has proved each of the following
beyond a reasonable doubt:
First: That the defendant signed an income tax
return that contained a written declaration that it
was made under penalties of perjury;
Second: That in this return the defendant falsely
stated the amount of gross receipts on the Schedule
C for his law practice during 1988;
Third: That the defendant knew the statement was
false; and
Fourth: That the defendant made the statement on
purpose, and not as a result of accident,
negligence or inadvertence.
If you find that the government has proved these things, you
need not consider whether the false statement was a material false
statement, even though that language is used in the indictment.
This is not a question for the jury to decide.
* * *
INSTRUCTION NO. 36
Count 4 of the indictment charges the defendant with a
violation of 26 U.S.C. § 6050I(f)(1)(B). The statute provides in
pertinent part that:
No person shall for the purpose of evading the return
requirement of this section--
(B) cause or attempt to cause a trade or business to
file a return required under this section that contains
a material omission or misstatement of fact.
3
The essential elements that must be proved under that section
are:
FIRST, that the defendant knew of a trade or business’s duty
to report currency transactions in excess of $10,000;
SECOND, that with such knowledge, the defendant knowingly and
willfully caused or attempted to cause a trade or business to file
a report required under this section [an 8300 form] that contained
a material omission or misstatement of fact; and
THIRD, that the purpose of the material omission or
misstatement of fact was to evade the transaction reporting
requirement.
In this case the trade or business alleged in the indictment
is the defendant’s law practice. You may find the defendant guilty
of violating § 6050I(f) whether or not the trade or business filed,
or failed to file, a true and accurate 8300 form. In other words,
if you find beyond a reasonable doubt that the defendant caused or
attempted to cause a trade or business to file a return that
contained a material omission or misstatement of fact, and that he
did so for the purpose of evading the transaction report
requirements, then you should find the defendant guilty as charged
as to this count. If you do not so find, then you should find the
defendant not guilty.
4
DeMOSS, Circuit Judge, dissenting:2
In Griffith v. Kentucky, 479 U.S. 314, 107 S. Ct. 708, 93
L.Ed.2d 649 (1987), the Supreme Court held that “a new rule for the
conduct of criminal prosecutions is to be applied retroactively to
all cases, state or federal, pending on direct review or not yet
final, with no exception for cases in which the new rule
constitutes a `clear break’ with the past.” Id. at 328. Embracing
a view previously expressed by Justice Harlan, the Court stated
that “failure to apply a newly declared constitutional rule to
criminal cases pending on direct review violates basic norms of
constitutional adjudication.” Id. at 322.
Such a new rule was announced by the Supreme Court on June 19,
1995, in United States v. Gaudin, ___ U.S. ___, 115 S. Ct. 2310,
2320, 132 L.Ed.2d 444 (1995), wherein the Court held that “[t]he
Constitution gives a criminal defendant the right to have a jury
determine, beyond a reasonable doubt, his guilt of every element of
the crime with which he is charged. The trial judge’s refusal to
allow the jury to pass on the `materiality’ of Gaudin’s false
statements infringed that right.” At the time the Supreme Court
decided Gaudin, McGuire’s appeal to this Court was awaiting oral
argument and both sides filed supplemental briefs addressing the
2
Judge Wiener and Judge Dennis join in the entirety of
this dissent. Judge Smith joins in all but the last four
paragraphs of this dissent but would affirm the conviction on the
basis of harmless error.
applicability of the Gaudin decision to this case. Clearly,
therefore, under Griffith, McGuire was entitled to claim whatever
benefits the new rule in Gaudin made applicable to his case.
Obviously, if materiality is an element of the crime which
must be submitted to the jury under Gaudin, then the next corollary
question is how the materiality element should be submitted to the
jury. The question of a proper jury instruction was, of course,
not present in Gaudin because the trial court in Gaudin had simply
instructed the jury that the issue of materiality was not a matter
for the jury to decide. But in its analysis of why the issue of
materiality was one which had to be decided by the jury, the
Supreme Court made several comments relevant to determining the
manner in which materiality should be submitted to the jury. The
Supreme Court stated:
Deciding whether a statement is “material” requires
the determination of at least two subsidiary
questions of purely historical fact: (a) “what
statement was made?”; and (b) “what decision was
the agency trying to make?”. The ultimate
question: (c) “whether the statement was material
to the decision,” requires applying the legal
standard of materiality (quoted above) to these
historical facts.
Id. at 2314. Earlier in its opinion, the Supreme Court favorably
quoted the definition of “materiality” which the parties had
recognized in that case:
[T]he statement must have “a natural tendency to
influence, or [be] capable of influencing, the
decision of the decisionmaking body to which it was
addressed.” Kungys v. United States, 485 U.S. 759,
770, 108 S. Ct. 1537, 1546, 99 L.Ed.2d 839 (1988).
6
Id. at 2313. While the criminal statute involved in Gaudin was 18
U.S.C. § 1001 (falsifying a material fact concerning a matter
within the jurisdiction of a government agency), the same analysis
should be applicable to the criminal statutes involved here in
McGuire: 26 U.S.C. § 7206(1) (willfully drafting an income tax
return which is not true and correct as to every material matter)
and 26 U.S.C. § 6050I(f)(B) (causing a business to file a return
regarding cash receipts over $10,000 which contains a material
omission or mis-statement of fact).3 Both of these returns were
3
The indictment under which McGuire was convicted
contained the following counts, and the jury’s verdict to each of
these counts is as indicated:
Count 1: Conspiracy from August 1989 to December 1992
between McGuire and other individuals “both known and
unknown to the Grand Jury” to defraud the United States
by impeding, obstructing and defeating the functions of
the Internal Revenue Service in the ascertainment,
computation, assessment and collection of revenue: to-wit
income taxes. In violation of 18 U.S.C. § 371.
NOT GUILTY.
Count 2: Between February 5, 1992 and continuing through
February 19, 1992, McGuire did knowingly conduct and
attempt to conduct a financial transaction affecting
interstate commerce, that is defendant deposited $20,000
in United States currency into a bank account at Hancock
Bank, Gulfport, Mississippi, such $20,000 having been
represented by a special agent acting in an undercover
capacity, to be the proceeds of an unlawful activity. In
violation of § 1956(a)(3)(B) and (C) of Title 18.
NOT GUILTY.
Count 3: Forfeiture of the $20,000 described in Count 2
which was represented to the defendant to be proceeds of
cocaine trafficking pursuant to § 982, Title 18, and §
853, Title 21.
NO JURY ANSWER REQUIRED.
Count 4: In February 1992 McGuire did knowingly and
7
filed with the Internal Revenue Service which is clearly a
government agency charged with making a variety of decisions on the
basis of the information reported in each of these returns. So
applying the reasoning and analysis of Gaudin as to the manner and
form in which the issue of materiality under each of these statutes
should be submitted to the jury would require the following:
a. Was there an omission or misstatement of fact in the
return in question;
b. Was that omission or misstatement of fact material; and
c. A definition of “material” as being a matter which “would
have a natural tendency to influence or be capable of influencing
willfully cause his law practice to file an IRS form 8300
in connection with a transaction involving the receipt of
$20,000 of U.S. currency which contained material
omissions or misstatements of fact. All in violation of
§§ 6051I(f)(1)(B) and 7206(1) of Title 26.
GUILTY.
Count 5: On January 27, 1989, McGuire made and
subscribed an individual tax return for the calendar year
1988 which was filed with the IRS on August 1, 1989,
which tax return he did not believe to be true and
correct as to every material matter in the return. In
violation of § 7206(1) of Title 26.
NOT GUILTY.
Note that count 2, § 1956(a)(3)(B) and (C), money laundering,
related to the very same $20,000 which the undercover agents
delivered to McGuire as a retainer for his legal services and the
jury found McGuire not guilty on this count. Secondly, note that
the indictment states that count 4 is in violation of both §
6050I(f)(1)(B) and § 7206(1).
8
the decision of the decision making body to which it was addressed,
i.e. the Internal Revenue Service.4
Now the government contends that Instruction No. 36, which was
submitted as to count 4 of the indictment charging a violation
under § 6050I(f)(1)(B), properly submitted the element of
materiality to the jury. Regretfully, a majority of my colleagues
at the en banc hearing have inferentially bought this contention.
Insofar as a statement of the elements of the crime are concerned,
Instruction 36 states:
The essential elements that must be proved
under that section are:
FIRST, that the defendant knew of a trade or
business’s duty to report currency transactions in
excess of $10,000;
SECOND, that with such knowledge the defendant
knowingly and willfully caused or attempted to
4
Since the Supreme Court decision in Gaudin, the Ninth
Circuit has published a new form in its model jury instructions for
use in counts relating to 18 U.S.C. § 1001 (false statement to
government agency) which states in relevant part as follows:
In order for the defendant to be found guilty
of that charge, the government must prove each of
the following elements beyond a reasonable doubt:
First, the defendant [made a false statement]
[used a writing which contained a false statement]
in a matter within the jurisdiction of the [e.g.
United States Customs Service];
Second, the defendant acted willfully, that is
deliberately and with knowledge that the statement
was untrue; and
Third, the statement was material to the
_________’s activities or decisions.
A statement is material if it could have influenced
the agency’s decisions or activities.
9
cause a trade or business to file a report required
under this section [an 8300 form] that contained a
material omission or misstatement of fact; and
THIRD, that the purpose of the material
omission or misstatement of fact was to evade the
transaction reporting requirement.
This submission is defective for the following reasons:
a. It does not separately require the jury to determine that
there was both an omission or misstatement of fact and that such
omission or misstatement of fact was material; and
b. It does not give a definition of “materiality” which
would require the jury to address whether the omission or
misstatement of fact had a natural tendency to influence or was
capable of influencing the decision of the IRS. Nowhere else in
the Court’s charge was there a definition of “materiality”.
However, in the Court’s charge under Instruction 20 regarding count
5 which charged violation of § 7206(1), there was the following
paragraph:
If you find that the government has proved these
things you need not consider whether the false
statement was a material false statement, even
though that language is used in the indictment.
This is not a question for the jury to decide.
This concluding paragraph was taken verbatim from the Fifth Circuit
Pattern Jury Instructions Manual (1990 edition) and reflects the
prevailing practice, which existed in this Circuit prior to the
Supreme Court’s decision in Gaudin, that materiality was not an
issue for the jury. This manual proposes that this same paragraph
be used as part of the pattern jury instructions in indictments
charging violations under the following statutory provisions:
10
(a) false claim against the government, 18 U.S.C.
§ 287;
(b) false statements to firearm dealers, 18 U.S.C.
§ 922(a)(6);
(c) false statement to federal agencies and
agents, 18 U.S.C. § 1001;
(d) false statements in bank records, 18 U.S.C. §
1805 - ¶ 3;
(e) false statements to a bank, 18 U.S.C. § 1014;
(f) false statements before grand jury, 18 U.S.C.
§ 1623;
(g) false statements on income tax return, 26
U.S.C. § 7206(1); and
(h) aiding and preparation of false documents
under the Internal Revenue laws, 26 U.S.C. §
7206(2).
Furthermore, the 1990 edition of Fifth Circuit Pattern Jury
Instructions does not contain any definition of the word “material”
nor is there a pattern jury instruction for indictments brought
under 26 U.S.C. § 6050I. The Fifth Circuit Pattern Jury
Instruction manual is replete with comments and cites cases
indicating that materiality is a matter for decision by the court
and not by the jury. There is no pattern jury instruction in the
Fifth Circuit manual indicating the proper way that materiality
should be submitted as an issue to the jury under any other
statutory provision.
Against this background of regular, consistent and routine
withdrawal of the issue of materiality from the jury, the
government now has the temerity to contend that, by some fortuitous
circumstance, a rational decision was made in McGuire’s trial to
11
include the element of materiality for submission to the jury in
Instruction No. 36 on count 4. Anyone who has read the record in
this case will find that contention unsupportable. Surely if it
was the rational intention of the court and opposing counsel to
submit count 4 to the jury for a materiality determination and
count 5 without a determination of materiality by the jury,
somewhere, somehow, the difference in the jury’s responsibility
under these two counts would have been emphasized and brought to
the jury’s specific attention, hopefully in writing, but if not,
certainly through oral instructions. Yet nowhere in this record
nor in the jury argument of either counsel was that distinction
made; and, more convincingly, nowhere in the argument of either
counsel was the subject of “materiality” discussed at all.
Furthermore, at the time of trial, there was no Fifth Circuit
case which could have been cited for the proposition that the
element of materiality found in § 6050I requires submission of the
materiality element to the jury. But, if the Supreme Court’s
decision in Gaudin had been lying on the table when the district
court and opposing counsel prepared the jury charge in McGuire,
surely the format for instructions relating to the submission of
count 4, § 6050I, and count 5, § 7206, would have been different
from the instructions as actually submitted; and if Griffith means
anything at all, it means that McGuire is now entitled to have the
benefit of the new rules about materiality announced by Gaudin
applied in determining the propriety of the instruction on count 4.
12
Some of my colleagues have reasoned that if there was error in
the manner in which materiality was submitted to the jury as to
count 4, such error was “harmless” or that the concept of
“materiality” is a common everyday term for which the jury does not
need a definition. In my view, such reasoning seriously undermines
the impact of the decision in Gaudin to require the element of
materiality to be submitted to the jury in criminal prosecutions.
In my view, Gaudin’s requirement that materiality be tested by a
finding that the false information be capable of influencing a
decision of the government agency to which the form is addressed,
has a significant and beneficial purpose in protecting the rights
of citizens from government intrusions, which this case would so
clearly demonstrate if tried under Gaudin’s new rule. In such
event, all of the circumstances involved in count 4 grew out of a
sting operation initiated by the government. The Internal Revenue
Service had received information from various sources indicating
that McGuire was receiving large amounts of cash as fees for his
legal services and was not reporting those amounts of cash in
either his income tax returns or under the report form required by
§ 6050I. As a result, McGuire became the target of an undercover
sting operation in which Government Agent Narciso Hernandez posed
as Hector Flores, Government Agent Henry Montes posed as Hector
Martinez, and Government Agent David Barrientos posed as David
Bolivar. Bolivar contacted McGuire with a fictional story that
they wanted to hire McGuire to represent them in avoiding
forfeiture of some $280,000 in cash which had been seized during a
13
traffic stop by the Mississippi Highway Patrol. During their
discussions with McGuire, a retainer of $20,000 cash was agreed
upon and, after some delay to get the cash together, they presented
that sum to McGuire as a partial payment on his fee. The following
day McGuire prepared IRS form 8300 reporting the receipt of $20,000
cash. Part I of this form, which required the identity of the
“individual from whom cash was received,” was filled in with the
name “David Bolivar,” the fictitious name used by Agent Barientos
and the fictitious address and driver’s license and social security
number furnished by Agent Barientos. Part II of this form which
required the identity of the “person on whose behalf the
transaction was conducted” was left blank. Ten days later, McGuire
filed an amended form 8300. Part I of the amended form again
listed “Bolivar” as the payor but disclosed in Part II that “Hector
Flores,” the fictitious name used by Agent Hernandez, was the
person on whose behalf David Bolivar paid the $20,000. Neither
form used the name of Martinez, which was the fictitious name under
which Agent Montez was operating. Obviously, had McGuire not filed
a form 8300 at all or if McGuire had reported the receipt of only
$10,000 rather than $20,000 as actually paid to him, the sting
operation would have been successful in demonstrating that McGuire
was not reporting at all or was inaccurately reporting the sums
received by him in cash as attorney’s fees. But neither of those
circumstances occurred in this case. A very legitimate question
arises as to the materiality of any of the rest of the information
on the form 8300 because the government certainly knew that this
14
was a sting operation and that Bolivar, Flores and Martinez were
not real people. Consequently, even if the government should argue
that one of the purposes of form 8300 is to permit them to identify
individuals who are using large sums of cash in business
transactions, the information as to the “individual from whom cash
was received” and “the individual on whose behalf the transaction
was conducted” would be of no real value on the forms filed by
McGuire because the government knew those were fictitious
individuals. Surely the government could not contend that McGuire
could be liable for using the fictitious names given him by the
government agents in the sting operation. Likewise, the government
would have no reason to pass on to any other government agency the
fictitious names used by the agents in the sting operation as
individuals who were likely transacting business with large sums of
cash. In short, McGuire, the target of this sting operation, filed
a form 8300 and later filed an amended form 8300 which correctly
reported his receipt of the correct sum of money paid to him. The
rest of the information on these forms would not produce any
decision or action by the Internal Revenue Service and a reasonable
jury could conclude that any omission or misstatement in the rest
of these forms was not material to the Internal Revenue Service.
All of which emphasizes the importance of the jury being properly
instructed as to the definition of materiality and then being
permitted to decide the ultimate mixed question of fact and law
which Gaudin so clearly says is the jury’s ultimate decision.
15
Finally, I must register my dissent from the enigmatic per
curiam opinion which the majority has filed in this case. If, as
the majority seems to recognize, Gaudin held that materiality is a
question for the jury, then the corollary to that basic rule is
that the issue of materiality must be properly submitted to the
jury. The majority states that the district court did not withhold
the element of materiality from the jury but that does not address
the issue of whether materiality was properly submitted. If the
element of materiality is improperly submitted to the jury that is
just as incorrect as not submitting it at all. As discussed
earlier, there are genuine and serious defects with the way the
district court submitted the elements of § 6050I in Instruction 36.
But if the majority genuinely believes that the way the district
court submitted the issue of materiality in Instruction 36 is
correct and proper, then they should clearly so hold, and that
format can then become the established precedent for this Circuit
and the basis upon which a pattern jury instruction could be
developed regarding submission of the issue of materiality.
Likewise, a majority holding that Instruction 36 was a proper
submission of the materiality issue to the jury would give McGuire
a clear issue upon which to seek a writ of certiorari from the
Supreme Court. Interpreting Gaudin as defining error only to the
extent that the district court expressly withholds materiality from
the jury’s determination is a stingy and hyper-technical
interpretation which is more consistent with a judicial philosophy
that says that the primary role of this Court is to sustain a
16
conviction. Rather, we should be governed by a judicial philosophy
that says that the primary role of this Court is to see that
justice is done in each individual case. When the Supreme Court
announces a fundamental change in the law to the extent involved in
Gaudin, and when the Supreme Court has set an established policy
that such changes in the law shall be applied to cases pending on
appeal as it has done in Griffith, then a philosophy of dispensing
justice in an individual case will be better served by giving the
defendant the benefit of a retrial at which the district court, the
prosecutor and defense counsel can all give full consideration to
the change of law involved.
CONCLUSION
Essentially, McGuire’s case was tried on the wrong premise,
i.e., that materiality was not a question for the jury.
Inadvertently, McGuire’s count of conviction was submitted to the
jury without the standard language for withdrawing the materiality
issue from the jury contained in every pattern jury instruction in
the Fifth Circuit. As submitted, the definition of the elements of
§ 6050I failed to require a separate determination of materiality
as an element of the crime and failed to define the concept of
materiality itself. This conviction should be reversed and
remanded for a new trial where the element of materiality could be
properly submitted to the jury as required by Gaudin.
17
18