United States Court of Appeals
For the First Circuit
No. 04-1576
UNITED STATES OF AMERICA,
Appellee,
v.
JOHN BISANTI,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Michael A. Ponsor, U.S. District Judge]
Before
Selya, Lynch, and Howard,
Circuit Judges.
Raipher D. Pellegrino, with whom Hope C. Button and Raipher D.
Pellegrino Associates, P.C. were on brief, for appellant.
Ariane D. Vuono, Assistant United States Attorney, with whom
Michael J. Sullivan, United States Attorney, was on brief, for
appellee.
July 8, 2005
LYNCH, Circuit Judge. John Bisanti was found guilty,
after a ten-day jury trial, of tax evasion for the years 1994 to
1998. 26 U.S.C. § 7201. On February 4, 2004, he was sentenced to
prison for 41 months, the minimum Guideline sentence under the
then-mandatory federal Sentencing Guidelines.
He attacks his conviction based on claims of evidentiary
error: that the district court erroneously 1) permitted the
defendant's tax accountant, Paul Mancinone, who is also an
attorney, to testify about matters within Bisanti's attorney-client
privilege, and 2) excluded evidence about Bisanti's incarceration
during and acquittal of charges in Bisanti's prior federal
prosecution for money laundering.
He attacks his sentence, arguing that he is entitled to
a remand for resentencing under United States v. Booker, 125 S. Ct.
738 (2005).
None of Bisanti's arguments as to trial error has any
merit. However, we agree that his sentence should be remanded
under Booker.
I.
At trial, the government alleged that Bisanti used
several mechanisms to willfully avoid paying his taxes, such as
selling his share of a chiropractic business and transferring the
assets to various trusts and foreign bank accounts, purchasing an
international bank and depositing the funds, and establishing an
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investment account under an alias. He did this in order to hide
the money, rather than paying it to the Internal Revenue Service
(IRS). Bisanti's defense at trial was not that he had in fact paid
his taxes; nor did he deny that he formed and funded various trusts
and bank accounts and purchased an international bank. Bisanti
characterized these latter two events as having an independent
commercial justification; he argued that he never intended to
conceal these assets from the government, but set up the trusts and
the bank in order to "protect [his] assets." Bisanti's primary
defense was that he intended to pay his taxes once he received a
"final bill" from the IRS, and so he never made an intentional
effort to avoid paying taxes. He argued that he was not in
violation of the law as the statute only punishes "[a]ny person who
willfully attempts in any manner to evade or defeat any tax"
liability. 26 U.S.C. § 7201 (emphasis added). The jury, of
course, concluded he did have such an intent.
Bisanti's tax troubles, leading to this prosecution,
began in early 1998 when he received notice of an audit from the
IRS for the 1994 and 1995 tax years. On February 24, 1998, Bisanti
authorized Mancinone, who was both an accountant and an attorney,
and who prepared Bisanti's tax returns for 1996 and 1997, to act as
his representative to the IRS through the audit process. In 1999,
the IRS expanded the audit to include the 1996 to 1998 tax years;
Mancinone also represented Bisanti for those years. Mancinone's
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negotiations with the IRS produced some corrections. On January 3,
2000, the IRS assessed Bisanti's corrected tax liability for 1994
and 1995, plus penalties, for a total of approximately $585,000.
On April 17, 2000, and March 21, 2001, the IRS assessed Bisanti's
liability for tax years 1996 and 1997, respectively, adding an
additional $120,000 in taxes and penalties.
Bisanti never paid any of this $700,000-plus tax
liability. A lien was placed on his property in Florida by the IRS
in October 2000. He was indicted on the tax evasion charges on
August 15, 2002; trial lasted from August 20, 2003, to September 4,
2003.
Part of the trial dealt with what came to be called the
"Florida legal proceeding." This term was used to describe a
federal investigation of Bisanti in Florida in 2000 to 2001, which
resulted in Bisanti being charged and tried on a federal criminal
charge of money laundering. He was ultimately acquitted on
February 8, 2001. That case involved a sting operation resulting
from a joint investigation of the FBI, IRS, and Miami-Dade Police
Department, in which Bisanti attempted to sell a custom Ferrari
racing car worth approximately $700,000 to an undercover officer
who had represented to Bisanti that the money used to purchase the
car was the proceeds of an international prostitution ring. After
being arrested on the money laundering charge, Bisanti stated to
Miami-Dade Police Detective Jay Huff that he owed more than a
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million dollars to the IRS. Before that trial Bisanti spent about
three months in federal prison, from late November 2000 to early
February 2001.
II.
Claims of Trial Error
A. Attorney-Client Privilege Claim
There is no common law accountant-client privilege,1 so
Bisanti's claim depends on his showing that Mancinone was acting as
his attorney as to the statements admitted. See Cavallaro v.
United States, 284 F.3d 236, 246 (1st Cir. 2002). The burden is on
Bisanti, as the party claiming attorney-client privilege, to
establish that the privilege exists and covers the statements at
issue here. In re Keeper of Records, 348 F.3d 16, 22 (1st Cir.
2003).
Although the parties cite an early case in which this
court said that the existence of the attorney-client privilege is
a factual determination, see United States v. Wilson, 798 F.2d 509,
512 (1st Cir. 1986), that is not quite correct, as our later case
law makes clear. We have since said that issues of privilege are
subject to a three-part standard of review, depending on which
1
Congress has passed a limited statutory accountant-client
privilege. See 26 U.S.C. § 7525(a)(1). However, the privilege
only extends to communications that would be privileged were they
between a taxpayer and an attorney, id., and therefore would
provide Bisanti no further protection than the attorney-client
privilege he argues existed here. Neither party argues the issue
of statutory privilege.
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question is presented to us. "On an appeal respecting a privilege
claim, the standard of review depends on the issue." Cavallaro,
284 F.3d at 245 (citing United States v. Mass. Inst. of Tech., 129
F.3d 681, 683 (1st Cir. 1987)). Factual determinations are
reviewed for clear error, legal determinations are reviewed de
novo, and evidentiary determinations are reviewed for abuse of
discretion. Id.
The essential elements of the claim of attorney-client
privilege are as follows:
(1) Where legal advice of any kind is sought
(2) from a professional legal adviser in his
capacity as such, (3) the communications
relating to that purpose, (4) made in
confidence (5) by the client, (6) are at his
instance permanently protected (7) from
disclosure by himself or by the legal adviser,
(8) except the protection be waived.
Id. (citations omitted).
The district court addressed the issue of privilege on
two different occasions. The first was in a pre-trial hearing on
Bisanti's motion in limine to preclude the government from calling
Mancinone as a witness. The district court noted that it did not
need to decide broadly whether Mancinone was acting as an
accountant or an attorney, but rather would address privilege
issues on a statement-specific basis. The court ruled that any
statements made by Mancinone to the IRS were clearly outside any
privilege, and that any statements made by Bisanti to Mancinone
with the understanding that the information would be divulged to
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the IRS were also clearly outside any privilege. The court also
ruled that Mancinone could testify as to any information given to
him by the IRS that he then passed on to Bisanti. The court did
say, however, that any inculpatory statements attributed to Bisanti
would be covered by the privilege and inadmissible.
The court revisited the issue of privilege again during
Mancinone's testimony. Bisanti objected to two proffered questions
the government intended to ask Mancinone, arguing that the answers
would require disclosure of privileged information. No appeal is
taken from the first question, which was whether Mancinone ever
discussed with Bisanti his obligation to pay the taxes assessed as
a result of the audit, and the consequences of not doing so. The
court ruled that this was routine accountant-client communications,
and not protected by the attorney-client privilege.
The sole testimony on which the claim of privilege is
made on appeal concerns the government's questions to Mancinone as
to whether Bisanti had ever asked Mancinone to enter into an "offer
in compromise" with the IRS concerning payment of his tax
obligations as calculated by the IRS. The court at conference
asked the government to rephrase the question. As a result, the
precise question asked was "did you discuss the possibility of an
offer [in] compromise on behalf of John Bisanti with the revenue
agent with whom you were dealing for the '94 and '95 tax years?"
Mancinone responded that he had. The government then asked, "Did
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you pursue an offer [in] compromise on behalf of John Bisanti for
his tax liability for the 1994, 1995 tax years with any IRS
representative?" Mancinone responded that he had not. The
government then asked why he had not done so, and Maninone replied
that he had not been authorized to do so by Bisanti.
Whether or not Mancinone acted on occasion as counsel
(not as accountant), not all communications with counsel are
privileged. Cavallaro, 236 U.S. at 245. "The rationale for the
privilege is that safeguarding communications between attorney and
client encourages disclosures by the client to the lawyer that
facilitate the client's compliance with the law and better enable
the client to present legitimate arguments should litigation
arise." Id.
Neither of the first two questions relating to the offer
in compromise asked about communications between Mancinone and
Bisanti. Rather, they asked about Mancinone's communications with
the IRS, and thus were clearly outside any privilege.
As to the third "why" question, which had the potential
to elicit information about Bisanti's communications with Mancinone
concerning authority to negotiate a tax matter, the district court
found that this situation was characteristic of an accountant-
client relationship, that the context did not show an attorney-
client relationship, and so the answer was not privileged. This
determination was clearly correct. Because we find there was no
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error in the admission of the statement, we do not reach Bisanti's
argument that the answer was somehow prejudicial to him.
B. Refusal to Admit Evidence of Bisanti's
Incarceration and Acquittal
We review the claim that the district court erroneously
excluded evidence for abuse of discretion. United States v. Otero-
Mendez, 273 F.3d 46, 53 (1st Cir. 2001). The district court was
plainly correct.
The government introduced the testimony of Detective Jay
Huff of the Miami-Dade Police Department, that during a post-arrest
interview he had with Bisanti during the earlier federal money
laundering investigation in Florida, Bisanti stated that he owed a
million dollars to the IRS. There is no appeal from the denial of
the motion in limine to preclude the government from introducing
any statements Bisanti made during that investigation.
Bisanti argues that as a result of the district court's
decision to admit this evidence, he should have been permitted to
introduce testimony that he could not pay the government the taxes
he owed because he was incarcerated during that earlier money
laundering prosecution, of which charges he was eventually
acquitted. Bisanti did put into evidence that a major asset of
his –- a Ferrari automobile worth an estimated $700,000 -- had been
confiscated by the government and was unavailable to him to pay his
taxes. He was able to make his main point: that he had no intent
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to evade payment of taxes -- he simply lacked the ability to pay
what was owed.
Bisanti is being disingenuous when he argues on appeal
that he was precluded from putting on evidence that he was
incarcerated. He was given the opportunity to do so when he took
the stand and declined, and there are obvious reasons that it was
not in his interest to testify that he had been incarcerated on
earlier federal criminal charges.
Before trial, the district court granted the government's
motion in limine to preclude Bisanti from introducing evidence of
his acquittal, but did not address any other aspects of the earlier
investigation. The district court later specifically stated that
its preclusive order was limited to Bisanti offering evidence of
his acquittal. When Bisanti took the stand, the district court
asked Bisanti's counsel how he intended to get into the money
laundering prosecution, the arrest, and the incarceration.
Bisanti's counsel said that he would refer to the entire event as
the "Florida legal proceeding." There was no offer by Bisanti of
any evidence that he was incarcerated, so he can hardly complain
now.
Bisanti's last argument is that, given the admission of
his statements made during the money laundering investigation, he
was entitled to offer evidence that he was acquitted of the money
laundering charge and that the district court abused its discretion
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in refusing to allow him to do so. To the contrary, the fact of
acquittal in a prior court proceeding involving similar subject
matter is usually not admitted into evidence. See United States v.
Marrero-Ortiz, 160 F.3d 768, 775 (1st Cir. 1998); see also United
States v. Smith, 145 F.3d 458, 462 (1st Cir. 1998). That is
because such acquittals are not generally probative of the
defendant's innocence in the case at trial and the information has
a tendency to confuse the jury rather than assist it. Marrero-
Ortiz, 160 F.3d at 775. It is also potentially prejudicial to the
government. Here the earlier money laundering charge on which
there was an acquittal bears only a tangential relationship to the
tax charges; even if the acquittal were probative of Bisanti's
intent to evade taxes (and we think it is not), the district court
struck the correct balance.
In an attempt to minimize the potential prejudice to both
sides, the court instructed the jury that the statements made by
Bisanti were during "a legal proceeding brought by the United
States government," that the "details of the Florida legal
proceeding . . . were complex and not directly relevant to the
. . . case now before you," and that the proceeding "did not result
in any criminal conviction or finding of civil liability against
John Bisanti." There was no abuse of discretion in excluding the
evidence and no trial error.
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III.
Booker Sentencing Claim
Acknowledging that he did not raise a claim of Booker
error in the trial court, Bisanti argues that he has established a
reasonable probability that but for the error he would have
received a more lenient sentence had the Guidelines not been
mandatory. See United States v. Antonakopoulos, 399 F.3d 68, 75
(1st Cir. 2005). He relies on statements by the trial judge at
sentencing, particularly:
COURT: I mean, I will agree with you [defense
counsel], and I'll just say parenthetically I
have never had in many ways such a sad case.
Mr. Bisanti was taken advantage of by
practically everybody who made an effort to
take advantage of him. . . . It's almost
Grecian in the level of tragedy of somebody
who had it all right in his hands. . . . So
yes, I agree with you, he fell into the hands
of bad people who ripped him off beyond
belief, and gave him bad advice.
. . .
A judge cannot depart downward because he
feels bad for a defendant or feels bad for a
family, and if I did, I think what I've heard
from the defendant's family would certainly
touch me. It does touch me. Obviously he's
much beloved and respected and many people
have felt his kindness.
. . .
I just hope that you understand this is
Federal Court. These are the federal
sentencing guidelines. They're tough. . . .
It's a tough, tough arena we're in right now,
and the rules are very, very strict.
The court also noted that Bisanti, who had no other
criminal convictions, had voluntarily returned to the United States
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from Italy in order to face these tax charges, despite objections
from his family.
The court considered Bisanti's two requests for downward
departure but concluded that there was no available "species of
downward departure . . . that is recognized" under the then-
mandatory Guidelines. The suggested basis for the downward
departures were diminished mental capacity and family
circumstances. The court correctly rejected both, but commented
"I'm making this decision because I believe that's what the law
requires me to do." Indeed, the court noted that if it had granted
a downward departure, "that decision would be corrected by the
Court of Appeals." In accepting the government's recommendation of
the 41-month sentence, the court characterized it "to be the very
lowest sentence that I can impose under these circumstances."
We have said that whether a Booker remand is warranted is
not dependent on how vocal the district court is. Antonakopoulos,
399 F.3d at 81. Rather, our rule is that where the district court
has stated that it might well have given a different sentence had
its hands not been tied by the Guidelines, that information is
highly pertinent. Id. Notwithstanding the government's opposition
to a remand, the district court made its view perfectly plain on
this point and there is no reason not to listen.
Bisanti has satisfied his burden of showing a reasonable
probability of a more lenient sentence and is entitled to a remand
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for resentencing. We intimate no view as to the sentence to be
imposed on remand. See United States v. Mercado Irizarry, 404 F.3d
497, 503 (1st Cir. 2005).
Accordingly, we affirm Bisanti's conviction, vacate his
sentence, and remand to the district court for resentencing.
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