United States v. Smith ( 1998 )

USCA1 Opinion

                 United States Court of Appeals

                     For the First Circuit











No. 97-1927



                    UNITED STATES OF AMERICA,



                            Appellee,



                                v.



                         STUART L. SMITH,



                      Defendant, Appellant.







           APPEAL FROM THE UNITED STATES DISTRICT COURT



                    FOR THE DISTRICT OF MAINE



             [Hon. Gene Carter, U.S. District Judge]







                              Before



                      Lynch, Circuit Judge,

           Coffin and Bownes, Senior Circuit Judges.









     Theodore A. Barone with whom William F. Sullivan was on brief

for appellant.

     F. Mark Terison, Assistant U.S. Attorney, with whom Jay P.

McCloskey, United States Attorney, and Jonathan A. Toof, Assistant

U.S. Attorney, were on brief for appellee.











June 10, 1998













     COFFIN, Senior Circuit Judge.  A three-count indictment

charged Stuart L. Smith with drug conspiracy, criminal forfeiture

on the drug count, and tax conspiracy.  After severance of the tax

conspiracy charge, Smith was acquitted of drug conspiracy and

therefore forfeited no property.  Smith was then tried for tax

conspiracy, i.e., conspiracy to defraud the Internal Revenue

Service (IRS).  Evidence of drug trafficking was admitted in the

tax conspiracy trial to demonstrate receipt of revenue that was not

reported to the IRS.  Smith was convicted and now appeals.  He

argues that the district court erred in refusing to inform the jury

of his acquittal on the drug conspiracy charge and in barring his

cross-examination of prosecution witnesses on their knowledge of

his acquittal.  Finally, Smith contends that the district court

should have instructed the jury that failure to file tax returns

was an insufficient basis upon which to convict him of tax

conspiracy.  We find no error and affirm.

                       I.  Relevant Facts

     We have described the procedural background of this case

before, see United States v. Morris, 99 F.3d 476, 478 (1st Cir.

1996), and present only a review of the relevant facts here.

     In the tax conspiracy trial, the government introduced

evidence that Smith paid no taxes from 1986 through April 1994, the

period charged in the indictment.  The government's theory was that

during this period Smith derived substantial income from

distributing marijuana and had a tacit agreement with the others

involved in the drug distribution activity not to report this

income to the IRS.  To prove its theory, the government relied

heavily on evidence of Smith's participation in the drug

trafficking.  Much of this evidence duplicated that introduced in

the drug conspiracy trial.  In addition, a number of witnesses who

did not testify in the earlier trial testified to their involvement

in the marijuana distribution.  They identified Smith as either an

active participant in marijuana trafficking or a recipient of drug

proceeds.  Other evidence introduced by the government in support

of its case against Smith included:  (1) a cash purchase by Smith

of a boat and equipment for $17,000; (2) flights in which Smith had

first class tickets; (3) a calendar showing periodic payments by a

codefendant to Smith of money that witnesses linked directly to

drug proceeds; (4) a check signed by Smith for a stock purchase of

$10,000; (5) a bank account with an initial deposit in 1990 of

$10,000 and another with an initial deposit in 1993 of $30,000; and

(6) an IRS agent's testimony that a search of IRS records revealed

that Smith filed no individual tax returns during the charged

period.

     Smith admitted that he did not file individual tax returns

during the charged period and that he derived income during this

period.  He denied, however, receiving money from or having

knowledge of a drug conspiracy.  He testified that he generated

income in legitimate ways, such as renting and buying property,

selling antiques, frames and collectibles, and investigating

building lots and delivering money for a codefendant's real estate

business.  His former wife confirmed that Smith generated cash

income from his lawful businesses, and testified that she had never

seen evidence that he was involved in a drug conspiracy.

                         II.  Analysis

     We begin with Smith's claim that the court erred in refusing

his request for a jury instruction on his acquittal in the earlier

drug conspiracy trial.  We review challenges to jury instructions

for abuse of discretion.  United States v. Mitchell, 85 F.3d 800,

809 (1st Cir. 1996).  "We must look at the instructions in light of

the evidence and determine whether they fairly and adequately

submit the issues in the case to the jury."  Id. (citations

omitted).

     In its instructions to the jury, the district court declined

to inform the jury of Smith's acquittal on drug conspiracy charges,

but the court did provide fairly comprehensive instructions

concerning the drug conspiracy evidence.  In its preliminary

instructions, the court stated, "What I want you to clearly

understand is that [the defendant] is not on trial here for having

committed any drug offense, any conspiracy or any trafficking or

possession, or anything of that kind."  And, in final instructions

after argument from both parties, the court stated:

          I want to make it very clear to you that you cannot

     consider that this defendant is or was in the past guilty

     of a drug conspiracy offense, that is, the subject of

     another count of the superseding indictment and about

     which you have heard some testimony.

          You have heard some references in this evidence to

     these other proceedings against this defendant . . . ,

     and I instruct you again in the strongest terms that you

     may not consider in any way or indulge in any speculation

     whatsover about those proceedings in deliberating upon

     your verdict in this case . . . .  Anything that happened

     with respect to that charge including the disposition is

     wholly irrelevant to the disposition of the charge of

     participation by this defendant in a tax conspiracy. . .

     .

          . . . .

          . . . [W]hat you cannot do is to reach or use any

     conclusion that the defendant is guilty of a drug

     conspiracy offense in determining whether he is guilty of

     this tax conspiracy offense.  You must treat the

     defendant as not guilty of any offense of drug conspiracy

     throughout your deliberations.

          . . . .

          Accordingly, you may use any evidence that you have

     heard about drug trafficking in this case as you see fit

     to find the facts of the case as that evidence is

     relevant to the issues generated by all the evidence and

     the instructions in this tax conspiracy case, as long as

     you do not treat the defendant as guilty of participating

     in a conspiracy with intent to distribute marijuana.



(emphasis added).



     Smith objects specifically to the court's statements, "you

cannot consider that this Defendant is or was in the past guilty of

a drug conspiracy claim," and "You must treat the Defendant as not

guilty of any offense of drug conspiracy throughout your

deliberations."  He argues that this language, combined with the

plentiful evidence of his participation in drug trafficking,

created a substantial risk that the jury believed he had been found

guilty of drug conspiracy in the earlier trial and that it

convicted him for tax conspiracy on those grounds.  Smith maintains

that this risk could have been avoided by an instruction informing

the jury of his acquittal.

     In support of this position, Smith relies heavily on Dowlingv. United States, 493 U.S. 342 (1990), in which the district court

allowed the introduction of evidence relating to an earlier trial

of the defendant, Reuben Dowling, but also instructed the jury that

the trial had resulted in an acquittal.  Dowling was a bank robbery

case in which a witness, Vena Henry, identified Dowling as the

person who burgled her home on a previous occasion.  She had

testified to the same in the trial in which Dowling was acquitted.

On appeal, Dowling argued that admission of the burglary testimony

therefore violated his double jeopardy and due process rights.  The

Supreme Court disagreed.  The Court explained, inter alia, that the

category of infractions that violate fundamental fairness is very

narrow.  It then stated, in language upon which Smith hooks his

argument, "Especially in light of the limiting instructions

provided by the trial judge, we cannot hold that the introduction

of Henry's testimony merits this kind of condemnation."  Dowling,

493 U.S. at 353.  Directly thereafter, the Court reviewed carefully

Dowling's arguments, dispelling each in turn; none of these

arguments concerned the acquittal instruction.  The Court did not

directly refer to the acquittal instruction in any portion of its

due process discussion, and mentioned the limiting instruction only

in the above quoted sentence.

     Smith reads Dowling as holding that an acquittal instruction

is essential to avoid fundamental unfairness to a defendant against

whom evidence of acquitted conduct has been introduced at trial.

Dowling, however, cannot bear the weight Smith assigns to it.  We

emphasize, as the Seventh Circuit has recently done in United

States v. Tirrell, 120 F.3d 670, 677 (7th Cir. 1997), that the

Supreme Court's holding in Dowling does not require that the jury

be told of an acquittal.  As the acquittal instruction was given

rather than excluded by the district court, Dowling never addressed

the issue now before us.

     Moreover, the sentence in Dowling that begins, "Especially in

light of the limiting instructions," does not identify the language

to which "limiting instruction" refers.  We know only, from the

section of the opinion laying forth the background of the case,

that "[w]hen Henry left the stand, the District Court instructed

the jury that petitioner had been acquitted of robbing Henry, and

emphasized the limited purpose for which Henry's testimony was

being offered.  The court reiterated that admonition in its final

charge to the jury."  Dowling, 493 U.S. at 346.  In referring to

"limiting instructions," the Court may have meant only the

instructions on the limited purpose of Henry's testimony and not

the portion on acquittal.  In any case, the opinion does not say

that without the instructions a due process violation would have

occurred.  The Court simply observes that the limiting instructions

-- however they may be defined -- reinforce the conclusion that the

defendant's rights were not violated.

     Dowling therefore does not foreclose us from concluding, like

the Seventh Circuit in Tirrell, 120 F.3d 670, and the Eighth

Circuit in United States v. Riley, 684 F.2d 542, 546 (8th Cir.

1982), that an acquittal instruction is not required when evidence

of acquitted conduct is introduced.  Stating that it "'afford[ed]

substantial deference to a district court's decision to exclude'

evidence of an acquittal," the court in Tirrell found no abuse of

discretion in the trial court's exclusion of the acquittal

instruction.  120 F.3d at 678 (quoting United States v. Jones, 808

F.2d 561, 566-67 (7th Cir. 1986)).  The court reasoned that the

fact of acquittal was irrelevant to the present charge and

commented that the trial court excluded references to the earlier

trial and to defendant's conviction in yet another trial.  Id.  In

Riley too, the court found no abuse, reasoning that defendant's

acquittal on one charge of violating the Mann Act on a date not

charged in the present case was not relevant.  Riley, 684 F.2d at

546.

     Turning to the specific language used by the district court in

instructing the jury on how it should weigh the evidence of Smith's

drug trafficking, we do not agree that the phrases identified by

Smith created a misimpression curable only with an acquittal

instruction.  The phrase that gives us pause is "you cannot

consider that this Defendant is or was guilty of any offense of

drug conspiracy throughout your deliberations."  Had the court used

"whether" in place of "that," or "is not" in place of "was," there

would be no cause whatever for concern.  Standing alone, the

sentence might be understood to indicate that Smith had been found

guilty of drug conspiracy.  But in context, and given the court's

warning to the jury that it "should not indulge in any speculation

whatsoever about . . . [the drug] proceedings," we do not think

such an interpretation reasonable.  Smith also objects to the

court's statement that the jury "must treat the defendant as not

guilty of any offense of drug conspiracy throughout your

deliberations," apparently reading "treat" as analogous to

"pretend."  In fact, "treat" means "to act or behave toward a

person in some specified way" or "to consider or regard in a

specified way."  Random House Dictionary 2015 (2d ed. 1983).

Simply put, the court emphasized that the jury could not view Smith

as guilty of a drug conspiracy, and could not allow speculation on

the outcome of the drug conspiracy trial to affect deliberations in

the tax conspiracy case.

     We have no reason to believe that the jury did anything other

than follow the directives given by the trial court.  We "must

presume that jurors, conscious of the gravity of their task, attend

closely the particular language of the trial court's instructions

in a criminal case, and that they follow those instructions."

United States v. Houlihan, 92 F.3d 1271, 1287 (1st Cir. 1996)

(citations omitted).  We therefore find no abuse.

     Smith also argues that the court erred in barring him from

cross-examining prosecution witnesses on their knowledge of his

prior acquittal.  Determining the scope of cross-examination is a

matter within the district court's discretion, and will not be

disturbed absent abuse.  See United States v. Morla-Trinidad, 100

F.3d 1, 4 (1st Cir. 1996).  "When a witness' credibility is in

issue, the trial court may impose limits on cross-examination as

long as the court grants the defendant sufficient leeway to

establish 'a reasonably complete picture of the witness' veracity,

bias, and motivation.'"  United States v. Laboy-Delgado, 84 F.3d

22, 28 (1st Cir. 1996) (quoting United States v. Boylan, 898 F.2d

230, 254 (1st Cir. 1989)).

     Smith's impeachment theory was that the witnesses, who were

friends and co-conspirators, testified against him in the tax

conspiracy trial after not having done so in the earlier case

because they knew that he faced a lesser penalty as a result of the

acquittal.  Assuming that Smith had developed this theory, for

which he provided no support, cross-examination on acquittal would

have opened the discussion to complicated sentencing issues.

Also, the jury would have had to sort through the meaning of a

legal judgment of acquittal.  See United States v. Kerley, 643 F.2d

299, 300-01 (5th Cir. 1981) (no abuse of discretion in barring

cross-examination on a prior acquittal because an acquittal does

not demonstrate innocence, and because the probative value of the

evidence was outweighed by the danger of unfair prejudice or

confusion).  Most importantly, that the witnesses may have been

more inclined to testify because they believed the remaining risk

to Smith to be relatively small is not itself a motive to testify.

Rather, the motive was lesser punishment for the witnesses

themselves.  As the district court allowed Smith to cross-examine

the witnesses on incentives they received from the government,

Smith was able to provide the jury with a reasonably complete

picture of their motivation to testify, without unduly complicating

the issues.  The limitation on the cross-examination was therefore

a reasonable way of avoiding confusion without prejudicing the

defendant, and was entirely within the court's discretion.

     Finally, Smith argues that the district court erred in

refusing to instruct the jury that it could not convict based only

on the failure to file tax returns.  A full reading of the

instructions on tax conspiracy and a review of the evidence

presented at trial reveal that the instructions given adequately

explained the law.  Mitchell, 85 F.3d at 809.  The instructions

could not reasonably be construed to permit a finding of guilt

based only on the failure to file.  For example, the court

emphasized the conspiracy aspect of the charge, defining conspiracy

as "a kind of partnership for criminal purposes in which each

member becomes the agent of every other member of the conspiracy,"

and explaining, "[t]he gist or core of the offense is a combination

or an agreement to disobey or to disregard the law," and "[w]e

cannot conspire with ourselves."  And, in describing the crime with

which Smith was charged, the court stated,

     [T]he purpose of the statute which makes it a crime to

     impair, impede or obstruct the lawful functions of, in

     this case the Internal Revenue Service, or to wilfully

     agree to do so is to prohibit taxpayers or other persons

     from hindering the efforts of the Internal Revenue

     Service to obtain information potentially available to it

     and to which it is entitled in the performance of

     governmental functions.



Finally, Smith's failure to file by no means made up the bulk of

the government's evidence.  Rather, the government's case

emphasized large cash payments, receipt of money connected to drug

distribution, a fairly expensive lifestyle, and limited or no

apparent legitimate income.  Given the emphasis on these facts and

the language of the instructions, we do not believe that the jury

reasonably could have concluded that it could convict on the basis

of failure to file alone.

     For the reasons stated above, the judgment of the district

court is affirmed.