United States v. Vaughn , 254 F. App'x 175 ( 2007 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 06-4703
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
versus
CHARLES E. VAUGHN,
Defendant - Appellant.
Appeal from the United States District Court for the Northern
District of West Virginia, at Elkins. Irene M. Keeley, Chief
District Judge. (2:04-cr-00014-IMK-JS)
Submitted: October 17, 2007 Decided: November 15, 2007
Before NIEMEYER, KING, and DUNCAN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Joel F. Hansen, HANSEN & HANSEN, L.L.C., Las Vegas, Nevada, for
Appellant. Sharon L. Potter, United States Attorney, Robert H.
McWilliams, Jr., Sherry L. Muncy, Assistant United States
Attorneys, Wheeling, West Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Charles E. Vaughn was convicted by a jury of criminal tax
evasion, 26 U.S.C. § 7201 (2000), and sentenced to fifty-one months
imprisonment. He appeals, claiming that the district court denied
him the opportunity to present a “good faith” defense and the right
to challenge the accuracy of the underlying deficiency. He also
challenges the district court’s ruling that a formal assessment is
not an element of tax evasion. Finally, Vaughn alleges that the
prosecution engaged in overreaching and misconduct by indicting or
threatening to indict two defense witnesses. For the reasons that
follow, we affirm.
After reaching a settlement with the Internal Revenue
Service in tax court, Vaughn owes approximately $30,248.00 in
federal incomes taxes for the 1993 tax year. Shortly after
agreeing to settle, Vaughn submitted an offer in compromise,
offering to settle his outstanding tax liability for $400. On the
accompanying form Vaughn listed two businesses he had previously
operated, his income as “commission,” and one bank account
containing $125. He also wrote “NA” on the question regarding
ownership or interest in any type of real property, and answered
“No” to the question asking if he was a participant or beneficiary
of any trust, estate, or profit sharing venture.
Vaughn was subsequently indicted for willfully attempting
to evade payment of his income tax when it was discovered that he
- 2 -
had substantial assets he had failed to disclose to the IRS. At
trial, the Government introduced evidence establishing that,
beginning in 1999, Vaughn had transferred his income and assets to
two companies (“Lifestyles, LLC,” and “Falcon Asset Management
Company”), neither of which were disclosed on the forms submitted
to the IRS, and which had a combined net worth of $332,013.
Between April 1999 and October 2004, Vaughn received a total of
$588,759 in cash on sales of real property through Lifestyles, LLC.
From 1999 through 2002, $314,607.77 of Vaughn’s personal living
expenses were paid by the two companies he fully owned. At the
time of trial, Vaughn, through his companies, controlled at least
eight properties, three of which were on the market for a total of
$950,000. Finally, the government introduced evidence to show
that, contrary to the $125 that Vaughn claimed he had in the bank,
the companies he controlled had accounts containing approximately
$32,000 in cash. Based on this evidence, the jury found Vaughn
guilty. The district court sentenced him to fifty-one months
imprisonment. Vaughn timely appeals.
Vaughn argues, first, that the district court denied him
the ability to present his good faith defense. Vaughn’s “good
faith” argument rested on his assertion that the underlying tax
court decision was inaccurate. Our review of the record discloses
that the district court did allow defense counsel to introduce
evidence concerning Vaughn’s audit history and to argue the facts
- 3 -
about those audits in his closing argument in order to attack the
willfulness element. Moreover, Vaughn testified extensively and
was allowed to explain his doubts as to his liability for the tax
at issue. Although he argues that he was nevertheless prevented
from introducing evidence with respect to his good faith defense,
Vaughn failed to identify what specific evidence was allegedly
improperly excluded nor did he make a proffer in the district court
after given the opportunity to do so.
Next, Vaughn argues that the district court erred in
preventing him from attacking the “accuracy” of the tax court
decision. The tax court’s decision was based on the agreement of
the parties. We agree with the district court that Vaughn may not
challenge that decision in a later criminal proceeding.
Vaughn also argues that the district court erred in
ruling that a valid assessment is not a necessary element of
criminal tax evasion. Section 7201 states that “any person who
willfully attempts in any manner to evade or defeat any tax imposed
by this title or the payment thereof shall, in addition to other
penalties provided by law, be guilty of a felony.” 26 U.S.C.
§ 7201. The statute does not limit its application to taxes that
have been assessed. Here, the district court properly instructed
the jury that, to find Vaughn guilty of tax evasion, the government
was required to prove three elements beyond a reasonable doubt:
(1) that Vaughn owed a substantial income tax liability; (2) that
- 4 -
he attempted in any manner to evade or defeat the payment of that
tax; and (3) that he did so willfully. United States v. Wilkins,
385 F.2d 465, 472 (4th Cir. 1967). Because a formal assessment is
not required to prove tax evasion, see, e.g., United States v.
Silkman, 156 F.3d 833, 835 (8th Cir.1998), the district court
properly ruled that the Government did not need to prove that a
valid assessment had been issued.
Finally, Vaughn asserts that he was “denied any witnesses
to support his defense” because, on the day before trial, the
prosecution informed him that one of his witnesses was about to be
indicted. That witness, Booker Walton, then invoked his Fifth
Amendment privilege and refused to testify on Vaughn’s behalf.
Vaughn argues that the district court erred in refusing to grant
him immunity.
A district court is without authority to confer immunity
on a witness sua sponte. See United States v. Klauber, 611 F.2d
512, 517 (4th Cir. 1979). Rather, the decision of whether to grant
immunity is within the sole discretion of the prosecution. See,
e.g., 18 U.S.C. § 6003(b) (“A United States attorney may, with
approval of the Attorney General . . . request an order [of
immunity from the district court].”); United States v. Karas, 624
F.2d 500, 505 (4th Cir. 1980). While a district court may, in very
limited circumstances, compel the prosecution to grant such
immunity, a “‘defendant bears a heavy burden when seeking to have
- 5 -
the district court compel the grant of immunity.’” United
States v. Mitchell, 886 F.2d 667, 669 (4th Cir. 1989) (quoting
United States v. Gravely, 840 F.2d 1156, 1160 (4th Cir. 1988)).
This court has held that “a district court is without authority to
issue such an order unless a defendant has made (1) ‘a decisive
showing of prosecutorial misconduct or overreaching and (2) the
proffered evidence would be material, exculpatory and unavailable
from all other sources.’” United States v. Washington, 398 F.3d
306 (4th Cir. 2005) (quoting United States v. Abbas, 74 F.3d 506,
512 (4th Cir. 1996)). We agree with the district court’s
conclusion that Vaughn failed to make the requisite showing.
We therefore affirm Vaughn’s conviction. We dispense
with oral argument because the facts and legal contentions are
adequately presented in the materials before the court and argument
would not aid the decisional process.
AFFIRMED
- 6 -