F I L E D
United States Court of Appeals
Tenth Circuit
PUBLISH
FEB 10 2003
UNITED STATES COURT OF APPEALS
PATRICK FISHER
Clerk
TENTH CIRCUIT
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v. No. 01-4260
LARRY F. ANDERSON,
Defendant - Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH
(D.C. No. 2:99-CR-131-C)
Submitted on the briefs:
Thomas N. Thompson, Haskins & Associates, P.C., Salt Lake City, Utah,
for Defendant-Appellant.
Paul M. Warner, United States Attorney, Elizabethanne C. Stevens, Assistant
United States Attorney, Salt Lake City, Utah, for Plaintiff-Appellee.
Before BRISCOE , Circuit Judge, BRORBY , Senior Circuit Judge, and HARTZ ,
Circuit Judge.
BRISCOE , Circuit Judge.
Appellant Larry F. Anderson appeals his conviction for tax evasion,
a violation of 26 U.S.C. § 7201. He argues that his tax liability arose in 1992 and
the six-year statute of limitations applicable to tax evasion cases had expired
when the government filed its indictment against him in 1999. 1 We join our sister
circuits in holding that in tax evasion cases where, as here, the defendant commits
acts of evasion after incurring a tax liability, the statute of limitations begins to
run on the date of the last affirmative act of evasion. In this case, Anderson’s
final evasive act occurred in 1996. As a result, the indictment filed against
Anderson in 1999 was filed well within the six-year statute of limitations.
Anderson also argues that the district court committed reversible error by
disqualifying his trial counsel. We conclude the district court did not err in its
ruling. We affirm Anderson’s conviction.
I.
On March 24, 1999, the United States filed an indictment charging
Anderson with violations of the Hobbs Act, mail fraud, tax evasion, and false
statements in his tax returns. Count III charged Anderson with tax evasion under
26 U.S.C. § 7201, alleging (1) Anderson received a $50,000 payment on February
1
After examining the briefs and appellate record, this panel has determined
unanimously to grant the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
ordered submitted without oral argument.
-2-
28, 1991, that was placed in a Swiss bank account; (2) he received a $50,000
payment on July 1, 1991, that was placed in a Swiss bank account; (3) he filed
a tax return on April 15, 1992, in which he failed to report this income and he
denied any interest in a foreign bank account; and (4) on his tax returns for 1993,
1994, 1995, and 1996, he denied any interest in a foreign bank account. A jury
found Anderson guilty of Count III, as well as other charges that are not appealed.
II.
Under 26 U.S.C. § 7201, it is a felony for any person to “willfully attempt[]
in any manner to evade or defeat any tax” imposed under the Internal Revenue
Code. In order to prove a defendant guilty of tax evasion, the government must
show (1) a substantial tax liability, (2) willfulness, and (3) an affirmative act
constituting evasion or attempted evasion. United States v. Mounkes, 204 F.3d
1024, 1028 (10th Cir. 2000). The statute of limitations period for this offense is
six years. 26 U.S.C. § 6531.
Anderson argues that, because the crime of tax evasion was complete when
he filed his return on April 15, 1992, the indictment filed on March 24, 1999, fell
outside the six-year statute of limitations. The government argues that because
Anderson filed a false return in 1996, the prosecution was timely. We review the
district court’s interpretation of the statute of limitations de novo. See Foutz v.
United States, 72 F.3d 802, 804 (10th Cir. 1995).
-3-
While neither the United States Supreme Court nor this court has addressed
the issue, a number of other circuit courts have concluded that when a defendant
commits a series of evasive acts over several years after incurring a tax liability,
the statute of limitations begins to run on the date of the last evasive act. We
previously have noted this rule is not inconsistent with our own jurisprudence,
see United States v. Payne, 978 F.2d 1177, 1179 n.2 (10th Cir. 1992), and now
expressly adopt the rule.
In United States v. Ferris, 807 F.2d 269, 271 (1st Cir. 1986), the defendant
incurred tax liabilities in 1976 and 1977, failed to file returns in those years,
made a false statement to IRS agents as late as 1983, and was indicted in 1985.
Id. at 270. The First Circuit concluded that while the defendant incurred his tax
liabilities in 1976 and 1977, his affirmative act of evasion in 1983 brought the
offense within six years of the indictment. The court distinguished the felony
offense of tax evasion under § 7201 from the misdemeanor offense of failing to
file a tax return under § 7203. Id. at 271. Section 7201 criminalizes not just the
failure to file a return or the filing of a false return, but the willful attempt to
evade taxes in any manner. Id. In light of the fact that evasive acts following the
filing of a return may be considered part of the offense, the court held that “it
is the date of the latest act of evasion, not the due date of the taxes, that triggers
-4-
the statute of limitations.” Id. 2
The Sixth Circuit reached the same conclusion in United States v. Dandy,
998 F.2d 1344, 1355 (6th Cir. 1993), emphasizing that “to hold otherwise would
only reward a defendant for successfully evading discovery of his tax fraud for
a period of six years subsequent to the date the returns were filed.”
A number of other circuits have followed suit. See United States v. Wilson,
118 F.3d 228, 236 (4th Cir. 1997) (limitations period for violation of § 7201
begins to run at date of last affirmative act of evasion); United States v. Winfield,
960 F.2d 970, 973-75 (11th Cir. 1992) (acts of evasion following the filing of tax
return may satisfy affirmative act element of the offense of tax evasion under
26 U.S.C. § 7201; therefore, prosecution is timely so long as last affirmative act
of evasion occurred within six years of filing indictment); United States v. DeTar,
832 F.2d 1110, 1113 (9th Cir. 1987) (“Even if the taxes evaded were due and
payable more than six years before the return of the indictment, the indictment is
timely so long as it is returned within six years of an affirmative act of evasion.”);
United States v. Trownsell, 367 F.2d 815, 816 (7th Cir. 1966) (where indictment
2
While this formulation of the rule is correct under the facts of Ferris where
the defendant committed acts of evasion after incurring a tax liability, under some
circumstances the limitations period will begin to run on the due date of the taxes.
For example, this may be true when the crime of tax evasion is completed when
defendant fails to file a return and no subsequent evasive acts occur. See, e.g.,
Payne, 978 F.2d 1177; United States v. King, 126 F.3d 987 (7th Cir. 1997).
-5-
charged conduct ending on February 2, 1961, indictment returned April 16, 1964,
was timely).
III.
This court previously has addressed the question of the limitations period in
tax evasion cases under different circumstances. In Payne, 978 F.2d 1177, the
defendant’s evasive act preceded his tax liability and, as a result, we did not
address the precise question of when the limitations period should run where the
defendant commits acts of evasion after incurring a tax liability.
In Payne, the defendant provided false social security numbers to banks in
connection with certain accounts which were opened between 1977 and 1984. Id.
at 1178. The IRS issued 1099 forms for the years 1984-1987, but the defendant
did not file returns in those years. Id. In March 1991, the defendant was indicted
for tax evasion for the tax years 1984-1987, and he contested his prosecution on
statute of limitations grounds. Id. at 1178-79. This court held that while the
defendant’s evasive acts took place only between 1977 and 1984, the subsequent
tax liabilities incurred through 1987 brought the offense within the statute of
limitations. Id. Stated another way, while the defendant’s crime was complete as
early as 1984, his additional tax liabilities, in combination with existing acts of
evasion, extended the offense into the limitations period. We further examined
the case law of other circuits at length, and found our reasoning consistent with
-6-
those decisions holding that subsequent evasive acts extended the duration of the
offense:
Several circuits have held that a prosecution under § 7201 is timely if
commenced within six years of the last affirmative act of evasion.
Courts have relied on this reasoning to extend the statute of
limitations beyond six years after the defendant has incurred a tax
deficiency when the defendant has taken a subsequent affirmative act
to conceal his crime. Moreover, the Supreme Court has held that
when the defendant, charged under § 7201, files a false tax return
subsequent to the due date, the statute of limitations begins running
when the return is filed rather than when the return is due. We have
similarly held that when the defendant files a false amended return
after the due date, the statute of limitations in a tax evasion
prosecution does not begin to run until filing of the amended return
rather than the original due date. We do not read these cases to stand
for the proposition that the statute of limitations always commences
at the point the defendant takes his final affirmative act to evade
taxes. Rather, these cases are consistent with our holding that the
statute of limitations in a 7201 prosecution does not begin to run
until the defendant has taken an affirmative act and incurred a tax
deficiency.
Id. at 1179 n.2 (citations omitted).
The Seventh Circuit faced a factual scenario similar to Payne in United
States v. King, 126 F.3d 987 (7th Cir. 1997). In King, the defendant filed a false
W-4 in 1987, kept the form on file through 1993, and failed to pay taxes through
1993. Id. at 989. The defendant was charged with tax evasion in 1996, and
argued that the limitations period had expired in light of the fact that his last
affirmative act was in 1987. Id. The court agreed that merely leaving the W-4
on file did not constitute an affirmative act and therefore the last act of evasion
-7-
occurred in 1987. Nonetheless, by continuing to incur new tax liabilities (which
were concealed by the evasive act of 1987), the defendant extended the duration
of the offense. Id. at 993. However, the Seventh Circuit also adheres to the rule
that in cases where the defendant commits acts of evasion after incurring a tax
liability, the statute of limitations runs from the last affirmative act. Trownsell,
367 F.2d at 816.
In Payne, as in King, the defendant incurred additional tax liabilities after
taking an affirmative evasive act, and we concluded this extended the duration of
the offense. In the instant case, as in the other circuit court decisions discussed
above and noted in Payne, the defendant took additional evasive acts after
incurring a tax liability, similarly extending the duration of the offense. Thus,
Anderson’s affirmative acts of evasion through 1996 brought the offense within
the limitations period. This holding is consistent with our own precedent and
precedent in other circuits.
IV.
Anderson also argues that the district court erred in disqualifying his
chosen trial counsel. Under certain circumstances, we review the district court’s
decision to disqualify counsel for an abuse of discretion only. United States v.
Collins, 920 F.2d 619, 628 (10th Cir. 1990). However, where a defendant’s Sixth
Amendment right to counsel is implicated, and where the district court’s decision
-8-
is premised not on in-court conduct but on the interpretation of ethical norms as
applied to undisputed facts, our review is de novo. Id.
In this case, the government moved to disqualify Anderson’s trial counsel,
relying on Utah Rule of Professional Conduct 3.7, which states that “a lawyer
shall not act as an advocate at a trial in which the lawyer is likely to be a
necessary witness.” The district court agreed that disqualification was
appropriate because the attorney had represented Anderson in an earlier civil
matter to collect funds from an individual who was the alleged victim of fraud in
Count II of the indictment. Because of counsel’s personal involvement in this
matter, the government argued that were counsel not disqualified, he would be
free to function as an unsworn witness before the jury, or he would likely be
called as a witness at trial, particularly if Anderson asserted a defense based on
advice of counsel.
Under these circumstances, the district court was correct to conclude that,
given counsel’s involvement in matters related to the charges at hand, counsel
was likely to be called as a witness in the case. In that likely event, counsel’s
continued representation of Anderson would threaten the integrity of the
proceedings. See Collins, 920 F.2d at 633-34 (affirming district court’s
decision to disqualify attorney whose conduct violated state code of ethics
-9-
and thus threatened integrity of the proceedings).
AFFIRMED.
-10-