United States v. Kevin Witasick , 443 F. App'x 838 ( 2011 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 10-4593
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
KEVIN JOHN WITASICK,
Defendant - Appellant.
Appeal from the United States District Court for the Western
District of Virginia, at Danville. Jackson L. Kiser, Senior
District Judge. (4:07-cr-00030-jlk)
Submitted: July 29, 2011 Decided: August 18, 2011
Before MOTZ, GREGORY, and WYNN, Circuit Judges.
Affirmed by unpublished per curiam opinion.
Jerald C. Thompson, Tempe, Arizona, for Appellant. Frank P.
Cihlar, Gregory Victor Davis, Tax Division, DEPARTMENT OF
JUSTICE, Washington, D.C.; Timothy J. Heaphy, United States
Attorney, Roanoke, Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Kevin John Witasick appeals his conviction and
fifteen-month sentence for two counts of tax evasion in
violation of 26 U.S.C. § 7201 (2006), two counts of tax perjury
in violation of 26 U.S.C. § 7206(1) (2006), one count of failure
to file a tax return in violation of 26 U.S.C. § 7203 (2006) and
one count of health care fraud in violation of 18 U.S.C. § 1347
(2006). He argues that insufficient evidence supported his
convictions and that the trial on the tax counts was infected by
prosecutorial misconduct. We affirm.
Briefly, the Government alleged that Witasick, who was
an attorney in the Arizona firm of Witasick, Parker, and
Thompson before moving to Virginia in 1999, owned Stoneleigh, a
historic property in Stanleytown, Virginia. While Witasick
operated an office of the Arizona firm out of Stoneleigh, he
claimed, on his 1999 tax return, that 75% of the (considerable)
funds he spent remodeling and renovating Stoneleigh were
deductable as business expenses. In 2000, he claimed that 100%
of the expenses were deductable. He filed no tax return in
2001. The resulting tax loss alleged by the Government was over
$100,000.
At the same time, Witasick falsely claimed that
Stoneleigh’s groundskeeper (and Witasick’s personal trainer)
2
Zeke Ca-stle 1 was the property manager of his firm’s Virginia
office, and listed Ca-stle as an employee on his firm’s group
health insurance plan.
I. Insufficient Evidence (Tax Charges)
Witasick first argues that insufficient evidence
supported his convictions for tax evasion, filing a false tax
return, and failure to file. He argues that he was entitled to
rely on the advice of his accountant and his attorney; in the
alternative, he alleges that the Government adduced no evidence
of tax loss.
We review de novo challenges to the sufficiency of the
evidence supporting a jury verdict. United States v. Kelly, 510
F.3d 433, 440 (4th Cir. 2007). “A defendant challenging the
sufficiency of the evidence faces a heavy burden.” United
States v. Foster, 507 F.3d 233, 245 (4th Cir. 2007). We review
a sufficiency of the evidence challenge by determining “whether,
after viewing the evidence in the light most favorable to the
prosecution, any rational trier of fact could have found the
essential elements of the crime beyond a reasonable doubt.”
United States v. Collins, 412 F.3d 515, 519
1
Although the parties use the spelling Castle in the
briefs, we have used the spelling Ca-stle gave when he
identified himself during the trial.
3
(4th Cir. 2005)(quoting United States v. Fisher, 912 F.2d 728,
730 (4th Cir. 1990)). We review both direct and circumstantial
evidence, and accord the government all reasonable inferences
from the facts shown to those sought to be established. United
States v. Harvey, 532 F.3d 326, 333 (4th Cir. 2008). In
reviewing for sufficiency of the evidence, we do not review the
credibility of the witnesses, and assume that the jury resolved
all contradictions in the testimony in favor of the government.
Kelly, 510 F.3d at 440. We will uphold the jury’s verdict if
substantial evidence supports it, and will reverse only in those
rare cases of clear failure by the prosecution. Foster, 507
F.3d at 244-45.
In order to establish a violation of 26 U.S.C. § 7201
(2006), the Government must prove that Witasick acted willfully
and “committed an affirmative act that constituted an attempted
evasion of tax payments” and, as a result, “a substantial tax
deficiency existed.” United States v. Wilson, 118 F.3d 228, 236
(4th Cir. 1997). Moreover, in order to obtain a conviction for
filing false tax returns and failing to file tax returns, the
Government must similarly prove that Witasick’s actions were
willful. See United States v. Aramony, 88 F.3d 1369, 1382
(4th Cir. 1996) (filing false tax returns); United States v.
Ostendorff, 371 F.2d 729, 730 (4th Cir. 1967) (failing to file
tax returns).
4
Willfulness, in this context, means a “voluntary,
intentional violation of a known legal duty.” Cheek v. United
States, 498 U.S. 192, 201 (1991)(quoting United States v.
Bishop, 412 U.S. 346, 360 (1973)). A belief, in good faith,
that one has complied with the tax laws negates willfulness and
is therefore a defense, even if the belief is unreasonable. See
id. at 201-02. In other words, the Government must demonstrate
that Witasick did not have a subjective belief, however
irrational or unreasonable, that he was compliant with tax laws.
“Good faith reliance on a qualified accountant has
long been a defense to willfulness in cases of tax fraud and
evasion.” United States v. Bishop, 291 F.3d 1100, 1107
(9th Cir. 2002). The good faith reliance defense is not
applicable, however, where the defendant has failed to fully and
accurately disclose all relevant tax-related information to the
accountant upon whose advice the defendant claims reliance.
See, e.g., Bishop, 291 F.3d at 1107; United States v. Masat, 948
F.2d 923, 930 (5th Cir. 1991). This is so because if a
defendant did not make full disclosure to his accountant, he
likely did not act in good faith. See Bishop, 291 F.3d at 1107;
see also United States v. DeClue, 899 F.2d 1465, 1472
(6th Cir. 1990) (“A taxpayer who relies on others to keep his
records and prepare his tax returns may not withhold information
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from those persons relative to taxable events and then escape
responsibility for the false tax returns which result.”).
We have reviewed the evidence adduced at trial, and we
conclude that the Government adduced ample evidence of
Witasick’s guilt, and the jury properly concluded that he did
not rely on the advice of his accountant. In fact, the evidence
reveals that Witasick directed his accountant to over-deduct his
business expenses, despite being repeatedly informed by the
accountant that only business expenditures were deductable.
Thus, there is no basis in the record for Witasick’s claim that
he relied in good faith on the advice of his tax preparer.
The same is true of Witasick’s claim with regard to
his failure to file charge. The evidence shows that Witasick
was not told by his attorney not to file a tax return until more
than a year after the return was due, at which time the offense
was complete.
Witasick argues in the alternative that the Government
did not adduce admissible evidence of a tax loss. We do not
agree. As discussed above, in order to prove a violation of
§ 7201, the Government must prove, among other elements, “the
existence of a tax deficiency.” Boulware v. United States, 552
U.S. 421, 424 (2008)(quoting Sansone v. United States, 380 U.S.
343, 351 (1965); see also Wilson, 118 F.3d at 236. To show a
tax deficiency, the Government must prove first that the
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taxpayer “had unreported income, and second, that the income was
taxable.” United States v. Abodeely, 801 F.2d 1020, 1023
(8th Cir. 1986). The Government need not prove the precise
amount of the tax due and owing. United States v. Citron, 783
F.2d 307, 314-15 (2d Cir. 1986). To prove a violation of 26
U.S.C. § 7206(a), tax perjury, the Government must prove that
“(1) the defendant made and subscribed to a tax return
containing a written declaration; (2) the tax return was made
under penalties of perjury; (3) the defendant did not believe
the return to be true and correct as to every material matter;
and (4) the defendant acted willfully.” United States v.
Aramony, 88 F.3d 1369, 1382 (4th Cir. 1996).
The gravamen of Witasick’s objection is that the
Government’s summary witness, IRS agent Jacqueline English,
exceeded the scope of summary testimony and testified as an
expert. We need not resolve this claim, however, as multiple
witnesses testified that the amount of space at Stoneleigh being
used for business purposes was considerably less than 75% and
100% in the tax years 1999 and 2000, respectively. Thus, the
Government adduced sufficient evidence that tended to show that
Witasick over-deducted his business expenses, and substantially
so. Thus, the jury could properly infer that Witasick made
material representations in his tax return that resulted in a
7
tax deficiency. We therefore affirm his convictions for the
tax-related charges.
II. Sufficiency of the Evidence (Health Care Fraud)
Witasick next argues that there was no evidence that
he personally acted to place Ca-stle on his firm’s health
insurance policy, that he and the law firm were one and the
same, and that this type of case falls outside the scope of 18
U.S.C. § 1347.
To prove health care fraud, the Government had to
prove that Witasick “knowingly and willfully executed a scheme
to defraud any health care benefit program.” United States v.
Girod, Nos. 10-30128, 10-30339, 2011 WL 2675925, at *5
(5th Cir. July 11, 2011); see 18 U.S.C. § 1347. To prove a
scheme to defraud, the Government had to show that Witasick
“acted with the specific intent to defraud, which may be
inferred from the totality of the circumstances and need not be
proven by direct evidence.” United States v. Godwin, 272 F.3d
659, 666 (4th Cir. 2001) (internal quotation marks omitted). In
particular, we look to the “common-law understanding of fraud,”
which includes “acts taken to conceal, create a false
impression, mislead, or otherwise deceive.” United States v.
Colton, 231 F.3d 890, 898 (4th Cir. 2000).
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Turning to Witasick’s first claim that there was no
evidence that he directed Ca-stle’s name be placed on the health
care policy, we find the claim belied by the record. Ample
evidence was introduced that showed that Witasick, either alone
or in concert with his law partners, made the decision to
falsely list Ca-stle as a law firm employee. Furthermore, the
Government adduced evidence that Witasick made false
representations to representatives from Anthem, the insurer,
when questioned about Ca-stle’s employment status. Thus, we
conclude that the Government adduced substantial evidence that
Witasick engaged in fraud.
We also reject Witasick’s argument that he and his law
firm were one and the same at the time the alleged misconduct
occurred. Anthem’s representative testified that Anthem had a
policy with “Witasick, Parker & Thompson,” the law partnership,
rather than with “Witasick & Associates,” the sole
proprietorship that existed after Witasick falsely listed Ca-
stle as an employee. Thus, Witasick’s claim that his personal
employee could be considered his firm’s employee is without
merit.
Finally, we turn to Witasick’s argument that § 1347,
the statute under which Witasick was prosecuted, does not
contemplate criminal liability for the activities alleged. We
review questions of statutory interpretation de novo. United
9
States v. Carr, 592 F.3d 636, 639 n.4 (4th Cir. 2010). In
interpreting the scope of a statute, we look first to the
language of the statute. See North Carolina ex rel. Cooper v.
Tenn. Valley Auth., 515 F.3d 344, 351 (4th Cir. 2008).
Here, the language of the statute provides that a
person is guilty of health care fraud if he:
knowingly and willfully executes, or attempts to
execute, a scheme or artifice--
(1) to defraud any health care benefit program;
or
(2) to obtain, by means of false or fraudulent
pretenses, representations, or promises, any of the
money or property owned by, or under the custody or
control of, any health care benefit program,
in connection with the delivery of or payment for
health care benefits, items, or services[.]
18 U.S.C. § 1347. While Witasick seeks to invoke the rule of
lenity that ambiguous criminal statutes must be construed in
favor of the accused, we conclude that the statute is not
ambiguous. Witasick was convicted of knowingly making false
statements to Anthem and its representative, and with improperly
listing Ca-stle on the law firm’s group health insurance policy
-- a classic example of a scheme to defraud. This conduct falls
squarely within the statute’s ambit, and no further inquiry into
10
the legislative history is required. 2 Thus, we affirm his health
care fraud conviction.
III. Prosecutorial Misconduct
Finally, Witasick argues that he was the victim of
prosecutorial misconduct. He claims that the prosecutor was
required to present exculpatory evidence to the grand jury and
did not do so. To succeed on a claim of prosecutorial
misconduct, a defendant must show that the prosecutor’s conduct
was improper and that it “prejudicially affected his substantial
rights so as to deprive him of a fair trial.” United States v.
Scheetz, 293 F.3d 175, 185 (4th Cir. 2002). “In reviewing a
claim of prosecutorial misconduct, we review the claim to
determine whether the conduct so infected the trial with
unfairness as to make the resulting conviction a denial of due
process.” Id. (internal quotation marks omitted).
Witasick’s argument that the prosecution must present
exculpatory evidence to the grand jury is similar to that
rejected by the Supreme Court in United States v. Williams, 504
U.S. 36, 44-46 (1992). While Witasick seeks to distinguish
2
Our conclusion is supported by the Second Circuit’s
decision in United States v. Josephberg, 562 F.3d 478 (2d Cir.
2009), a case in which the court affirmed a conviction under §
1347 for conduct virtually identical to that at issue here.
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Williams, we find his attempts unpersuasive. The Court was
emphatic that “[i]mposing upon the prosecutor a legal obligation
to present exculpatory evidence in his possession would be
incompatible with [the adversarial] system.” Id. at 52. We
also find no support in Witasick’s claim that the Citizens
Protection Act, 28 U.S.C. § 530B(a) and the Virginia Rules of
Professional Conduct require such disclosure.
Accordingly, we affirm the judgment of the district
court. 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
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