United States v. Thomas K. Schoppert ( 2004 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 03-1964
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United States of America, *
*
Appellee, *
* Appeal from the United States
v. * District Court for the District of
* North Dakota.
Thomas K. Schoppert, *
*
Appellant. *
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Submitted: February 11, 2004
Filed: April 1, 2004
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Before MORRIS SHEPPARD ARNOLD, HANSEN, and RILEY, Circuit Judges.
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MORRIS SHEPPARD ARNOLD, Circuit Judge.
A jury convicted Thomas Schoppert of income tax evasion under 26 U.S.C.
§ 7201, after the government presented evidence at his trial that he attempted to evade
the payment of more than $450,000 in federal income taxes by making extensive use
of cash, obtaining assets using a third party's credit card, and making false statements
to Internal Revenue Service (IRS) agents attempting to collect his taxes. He appeals
and we affirm.
I.
Mr. Schoppert first contends that the government's concession that the
existence of a "tax deficiency" is a required element for prosecution under § 7201,
and its further concession that he did not owe tax in addition to what was reported on
his returns, compelled a judgment of acquittal. We disagree.
Section 7201 makes it a felony for a person "willfully [to] attempt[] in any
manner to evade or defeat any tax imposed by [Title 26] or the payment thereof."
26 U.S.C. § 7201. The statute encompasses two separate types of offenses: "the
offense of willfully attempting to evade or defeat the assessment of a tax as well as
the offense of willfully attempting to evade or defeat the payment of a tax." Sansone
v. United States, 380 U.S. 343, 354 (1965). Mr. Schoppert was convicted of the latter
type of offense.
The Supreme Court has held that "the elements of § 7201 are willfulness; the
existence of a tax deficiency; and an affirmative act constituting an evasion or
attempted evasion of the tax." Sansone, 380 U.S. at 351 (internal citations omitted).
We have ourselves noted the existence of these three elements in several cases. See,
e.g., United States v. Willis, 277 F.3d 1026, 1030 (8th Cir. 2002). During Mr.
Schoppert's trial, the district court1 instructed the jury that the first essential element
of the crime of tax evasion (the "deficiency" element) is that "the defendant owed
substantial income tax in addition to that paid by the defendant." The parties disagree
over whether this was a correct description of what the statute requires.
While § 7201 does not itself describe what a "deficiency" is (indeed, it does not
even mention the word), the term is defined elsewhere in the Internal Revenue Code.
The provision of the Code entitled "Definition of a deficiency," see 26 U.S.C. § 6211,
1
The Honorable Rodney S. Webb, United States District Judge for the District
of North Dakota.
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provides in part: "For purposes of [Title 26] in the case of income ... taxes ... the term
'deficiency' means the amount by which the tax imposed ... exceeds ... the amount
shown as the tax by the taxpayer upon his return." Thus, "there is no 'deficiency,' in
the tax code sense, where a taxpayer reports on his return that he owes an amount, but
simply fails to remit such amount to the IRS." Perez v. United States, 312 F.3d 191,
197 (5th Cir. 2002) (per curiam) (internal quotations omitted).
The Internal Revenue Code's definition is expressly applicable to Title 26 in
cases involving income tax, and Title 26 includes the offense of tax evasion under
§ 7201. But, as we have already noted, § 7201 does not itself include the term
"deficiency"; the term is only at issue here because judges have used it as a way of
explaining the requirements of the statute. It is not self-evident to us that, in
describing the offense of tax evasion by using this word, courts were attempting to
invoke the technical definition of the term provided in the tax code.
The government in fact maintains that the "tax deficiency" element of § 7201
does not require a showing that there is a deficiency in the technical sense, but rather
is judicial shorthand signifying the requirement that there must be "tax due and
owing." In the government's view, a deficiency would arise where a person reports
the proper amount of tax on his return, but subsequently willfully fails to pay that
amount. We must determine whether the tax deficiency element of § 7201 may be
satisfied only by the existence of a deficiency in the narrow, technical sense.
Some of our past cases do indeed seem to support Mr. Schoppert's contention
that a deficiency, as that term is defined in the tax code, is required to support a
§ 7201 conviction. In United States v. Brooks, 174 F.3d 950, 954 (8th Cir. 1999), we
stated that "[t]o prove a tax deficiency, the first element [of income tax evasion under
§ 7201], the government must show that the taxpayer had unreported taxable
income." Id. at 954. Similarly, in United States v. Abodeely, 801 F.2d 1020 (8th Cir.
1986), after noting that a conviction of tax evasion under § 7201 requires the
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government to prove that "there is a tax deficiency for the relevant year that is due
and owing," we stated that, "[i]n order to prove a tax deficiency, the government must
show first that the taxpayer had unreported income, and second, that the income was
taxable." Id. at 1023 (internal quotations omitted). We later stated in the same
opinion that "[u]nder any § 7201 tax evasion case the government must show
unreported taxable income as an element of its proof." Id. at 1025. And in United
States v. Vannelli, 595 F.2d 402, 405-06 (8th Cir. 1979), we said that "[i]n a tax
evasion prosecution it is necessary to show that an individual received more income
than he reported."
While these cases seemingly equate § 7201's deficiency element with
unreported taxable income, they all involved the evasion of an income tax
assessment, see Brooks, 174 F.3d at 952-53; Abodeely, 801 F.2d at 1021-22; Vannelli,
595 F.2d at 403-04, which is not what Mr. Schoppert was convicted of. Our
statements in these cases setting forth the elements of § 7201 have to be read in the
context of the allegations that the government was attempting to prove. Neither party
has pointed out any case involving only the evasion of an income tax payment in
which we have explained the required elements of § 7201. In United States v.
Silkman, 156 F.3d 833 (8th Cir. 1998), however, we discussed the concept of a
§ 7201 deficiency as it relates to both evasion of assessment and evasion of payment,
stating:
Section 7201 is broadly worded, reflecting the fact that willful tax
evasion can occur at any stage of the IRS's complex process for
determining, assessing, and collecting federal taxes. But whether a
taxpayer is charged with tax evasion by willfully attempting to defeat
the IRS's ascertainment of his tax liability, or by willfully attempting to
evade the payment of a tax, the government must prove that the tax was
in fact "imposed by this title," in other words, a tax deficiency.
Conversely, a taxpayer-defendant has a right to establish as a defense
that he owed no tax in addition to what he had paid.
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Id. at 835 (emphasis added) (internal citations omitted). Later in the opinion, we
described proof of the "deficiency" element as proof "that taxes were in fact owed."
Id.
"The starting point in any question of statutory interpretation is the language
of the statute itself." United States v. Milk, 281 F.3d 762, 766 (8th Cir. 2002).
Section 7201 plainly establishes a violation if anyone "willfully attempts in any
manner" to evade a tax or its payment. 26 U.S.C. § 7201. Evading the assessment
of an income tax can be accomplished only through a course of action that includes
underreporting of income, and thus requiring the existence of unreported taxable
income for this species of § 7201 offense is consistent with the statutory language.
Evading the payment of an income tax, however, can be accomplished even when a
taxpayer reports all taxable income on his return.
We think that our discussion in Silkman correctly described § 7201's deficiency
element in a generic way that is applicable to both evasion-of-assessment and
evasion-of-payment cases: the taxes evaded must have been imposed by the Internal
Revenue Code and owed by the taxpayer. Similarly, the Third Circuit has described
the deficiency element of § 7201 as "tax due and owing," United States v. McGill,
964 F.2d 222, 229 (3d Cir. 1992), cert. denied, 506 U.S. 1023 (1992), and "equivalent
to a failure to pay a tax," id. at 240, and the Ninth Circuit has described the element
as "an unpaid tax," United States v. DeTar, 832 F.2d 1110, 1113 (9th Cir. 1987). Any
more restrictive interpretation of this element of § 7201 would not square with the
clear language of the statute, which under no reasonable reading suggests that the
existence of unreported taxable income is required for the government to succeed in
a case charging a defendant with evading the payment of a tax.
Based on the unambiguous language of § 7201, we thus conclude that our
previous statements in cases involving the evasion of a tax assessment requiring the
existence of unreported taxable income are not at home in the instant case. In United
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States v. Hook, 781 F.2d 1166, 1168 (6th Cir. 1986), cert. denied, 479 U.S. 882
(1986), the Sixth Circuit affirmed a conviction under § 7201 for evasion of tax
payments where, inter alia, the defendant "filed timely and accurate tax returns with
the IRS for the 1975 through 1980 tax years showing a total of almost $300,000 in
taxes due, but paid only a few thousand dollars in satisfaction of this liability." And
the Seventh Circuit, in United States v. Conley, 826 F.2d 551 (7th Cir. 1987), also
affirmed a conviction under § 7201 for willfully attempting to evade the payment of
income taxes, citing Hook for the proposition that "the filing of accurate returns does
not exonerate the defendant's attempts to then evade the actual payment of his taxes
by concealing his assets." Id. at 558. Consistent with these cases, we conclude that
Mr. Schoppert's filing of accurate returns did not preclude his prosecution under
§ 7201 for his subsequent willful acts of attempting to evade payment of the taxes
that he computed on those returns.
II.
Mr. Schoppert next contends that the district court abused its discretion in
refusing to instruct the jury, as he requested, that "[m]ere failure to pay a tax when
due and owing is not a crime." We reject this argument.
Mr. Schoppert "is entitled to an instruction that conveys the substance of his
request if his request is timely, it is supported by evidence in the case, and is a correct
statement of the law." United States v. Tucker, 137 F.3d 1016, 1036 (8th Cir. 1998).
He "is not entitled to any particular formulation, as long as the instructions given
adequately convey the law." Id.
The district court instructed the jury that to convict Mr. Schoppert of tax
evasion, the government was required to prove beyond a reasonable doubt that
Mr. Schoppert "owed substantial income tax in addition to that paid by the
defendant," "attempted to evade or defeat the payment of the tax as manifested by
some affirmative act," and "acted willfully in the attempted evasion." The court went
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on to instruct the jury on what constituted an "attempt," what it means to "evade or
defeat" payment of a tax, and what constituted an "affirmative act."
We think that the district court's instructions to the jury adequately stated the
law and clearly explained each of the three elements that the government needed to
prove beyond a reasonable doubt to support a guilty verdict. The instructions plainly
conveyed to the jury that any course of conduct that did not include each of these
three elements would not constitute a violation of the tax evasion statute. Explicitly
instructing the jury that they could not convict Mr. Schoppert based on his mere
failure to pay a tax when due and owing would have been redundant. We detect no
error here.
III.
Mr. Schoppert asserts that the prosecutor unfairly prejudiced his defense by
asking him a question during cross-examination about a motion in limine that he had
filed. Before his trial, Mr. Schoppert filed a motion seeking to invoke his marital
privilege and limit the testimony of Carolyn Brown, who had been married to
Mr. Schoppert on two separate occasions. The district court denied the motion. At
trial, the government called Ms. Brown as a witness, and she testified that the reason
for the second marriage was that Mr. Schoppert "was getting deeper in trouble with
the IRS and he didn't want [her] to be able to testify against him and he told [her she
would] be safe against having to testify against him if [she] was his wife."
Under direct examination, in response to a question from his attorney as to
whether he married Ms. Brown for the second time to prevent her from testifying
against him, Mr. Schoppert answered, "Absolutely not. That's a misstatement of the
law." He then testified that marriage does not prohibit one spouse from testifying
against the other spouse, and that he would not have told Ms. Brown that if she
married him, she could not testify against him, because that was not a correct
statement of the law. On cross-examination, he again denied telling Ms. Brown that
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one of the reasons he was marrying her was that she would be unable to testify
against him in a criminal case. The prosecutor then asked him whether he was aware
"that your attorneys and you filed a motion in order to keep [Ms. Brown] from
testifying in this case." Mr. Schoppert's attorney objected to the question, arguing
that it referred to a pretrial motion that could not be disclosed and that the motion was
nothing more than a legal issue. The district court sustained the objection, but
refused to strike the question.
Mr. Schoppert contends that the government's reference to his attempted
invocation of the marital privilege improperly drew attention to the discrepancies
between his testimony and Ms. Brown's, and implied to the jury that he felt that his
ex-wife's testimony was potentially incriminating. He is entitled to a new trial only
if the government's question was improper and so affected his substantial rights as to
deprive him of a fair trial. See United States v. Swanson, 9 F.3d 1354, 1360 (8th Cir.
1993).
Mr. Schoppert cites several cases concluding that a prosecutor's elicitation of
testimony that a defendant invoked the marital privilege, or a prosecutor's comment
about the absence of a witness who has the marital privilege not to testify, constituted
misconduct. See, e.g., United States v. Sanchez, 176 F.3d 1214, 1222-23 (9th Cir.
1999); United States v. Morris, 988 F.2d 1335, 1337-41 (4th Cir. 1993); United States
v. Chapman, 866 F.2d 1326, 1334 (11th Cir. 1989), cert. denied, 493 U.S. 932
(1989); United States v. Smith, 591 F.2d 1105, 1110-12 (5th Cir. 1979). All of these
cases, however, involved situations in which the spouse actually failed to testify. The
cases that Mr. Schoppert refers us to reflect a concern that prosecutorial comments
would lead the jury to speculate about what testimony the non-testifying spouse
would have given and to improperly infer that such testimony would have been
unfavorable to the defendant. Allowing the government to disclose to the jury the
successful assertion of the marital privilege would turn the privilege into an "empty
promise," Morris, 988 F.2d at 1339, pressuring defendants to forsake the privilege if
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they did not want jurors to be led to assume the worst about the absence of spousal
testimony.
In contrast to these cases, Mr. Schoppert never successfully used the privilege
to prevent Ms. Brown from testifying. Because Ms. Brown actually testified, there
was no danger that the government's question relating to Mr. Schoppert's failed
invocation of the privilege would cause the jurors to speculate about what
Ms. Brown's testimony might have been. The jurors had no occasion to draw an
improper inference about any absence of testimony. They were able to assess for
themselves whether Ms. Brown's testimony was detrimental to Mr. Schoppert, and we
do not see how the government's question would have caused them to draw improper
inferences about that testimony.
Mr. Schoppert's testimony during his direct examination, moreover, suggested
that he would never have tried to exclude Ms. Brown's testimony because it was not
possible to do so under the law. After Mr. Schoppert brought up the topic of his
views on the applicability of the marital privilege to Ms. Brown's testimony, it was
fair for the prosecutor to continue inquiring into the subject on cross-examination.
Even if the objection to the question about whether he had sought to keep Ms. Brown
from testifying was properly sustained by the district court, the question did not
prejudicially affect Mr. Schoppert's substantial rights such that he was deprived of a
fair trial. Any prejudicial effect on Mr. Schoppert's defense was slight, the evidence
that he had evaded taxes was substantial, and the jury was instructed that lawyers'
questions are not evidence.
IV.
Mr. Schoppert maintains that he was denied his sixth amendment right to an
impartial jury because the jury possibly overheard bench conferences between the
lawyers and the district judge. He urges us to remand the case to the district court for
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a hearing to determine whether the trial was tainted by any prejudicial information
heard by the jury that had not been admitted into evidence.
During the third day of trial, at a bench conference, Mr. Schoppert's attorney
asserted: "The jury is hearing me." The district court responded: "Music is being
played for them. It's actually white noise." The matter was then dropped. At the
beginning of the next day of trial, Mr. Schoppert's attorney stated that he believed the
jury was able to overhear conversations at side-bar, because "they're closer to the
side-bar than Mr. Schoppert was and he was able to hear us way over here. I don't
know what's happening. I don't know if the system is working correctly." The
district court replied that the system was "pretty well proven" and that if the white
noise was directed at the jury, the jurors would not be able to overhear conversations
during bench conferences. The court then stated: "We'll try to be quiet when we talk
at side-bar." Later that day, following a recess, the district court addressed the jury
in relation to bench conferences, stating:
Before we get started, let me suggest to you folks, I have been told that
perhaps I'm speaking too loud at bench conferences. I want to tell you
that you're not supposed to listen to us when we have bench
conferences. I have Darlene turn on that music. Make it a little higher
in the future. Please try not to pay attention to what we're saying. It's
not meant for your consideration. So accept my apology if we have been
speaking too loudly, but try not to listen to what we are saying.
When a defendant contends that jury deliberations have been affected by some
extraneous influence, "a district court may hold a hearing to determine whether any
private communication, contact, or tampering with a juror has occurred in a criminal
case and, if so, whether such incident has prejudiced the defendant." United States
v. Cunningham, 133 F.3d 1070, 1074 (8th Cir. 1998), cert. denied, 523 U.S. 1131
(1998) (citing Remmer v. United States, 347 U.S. 227 (1954)). Trial judges are
afforded considerable discretion in determining what steps, if any, are required to
make certain that a jury has not been tainted. We thus review a district court's refusal
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to conduct a so-called "Remmer hearing" or to grant a new trial based on allegations
of a tainted jury for an abuse of discretion. See id. at 1075.
We can evaluate the district court's handling of Mr. Schoppert's concerns only
in light of the information that he provided to it at trial. Though Mr. Schoppert's
attorney stated his opinion to the district court that the jurors could overhear bench
conferences, he never recommended during the trial that the court conduct a hearing
or provide any other specific relief to deal with these concerns. Cf. LeBlanc v. United
States, 391 F.2d 916, 917 (1st Cir. 1968). A defendant must, moreover, make some
effort to support an allegation of jury taint before an evidentiary hearing or
declaration of a mistrial will be appropriate. A bald assertion of taint will not suffice;
the defendant needs to make a showing that his allegation is credible and that the
prejudice alleged is serious enough to warrant whatever action is requested.
In United States v. Hall, 85 F.3d 367, 369 (8th Cir. 1996), concerned that the
jury had overheard prejudicial information during bench conferences, we remanded
the case to the district court to conduct a factual inquiry to determine the extent to
which the jury was exposed to extraneous, prejudicial information. The defendant
had presented the district court with an affidavit from the jury foreman stating that he
and other jurors had overheard and discussed the judge's comments during a bench
conference "concerning whether there would be evidence of chop shop, prostitution
and murder admitted at the [drug conspiracy] trial." Id. at 368. These comments
were not intended to be heard or considered by the jury. See id. at 370. The affidavit
that the defendant offered constituted specific, verifiable evidence that bench
conferences were actually overheard, and described the specific comments that were
allegedly heard.
On the other hand, we held in Coast-to-Coast Stores, Inc. v. Womack-Bowers,
Inc., 818 F.2d 1398, 1402 (8th Cir. 1987), that a defendant moving for a mistrial had
not properly supported its assertion that the jury had overheard prejudicial statements
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made by the district court during a bench conference. We noted that affidavits from
one defendant and from counsel for another defendant "asserting that they had
overheard the court's remarks at their counsel table, which was located further from
the bench than was the jury," was insufficient support. Id. We suggested in Coast-to-
Coast Stores that the defendant should have asked to have the jurors polled to
determine whether they had overheard the district court's statements, see id., which
is a step that Mr. Schoppert failed to request.
Mr. Schoppert did not submit affidavits from jurors or anybody else indicating
that the jury overheard any prejudicial statements or that the audio system was not
working properly. He made no offer of proof as to what particular conversations at
the bench conferences were overheard. His argument that we should remand the case
rests on his speculative theory that the white noise machine aimed at the jury must not
have been functioning because the district judge, in response to Mr. Schoppert's
comments that the jury might be overhearing bench conferences, suggested to the jury
that he may have been speaking too loudly and urged them to pay no attention to the
conferences. Considering the generality of and lack of proof accompanying
Mr. Schoppert's comments to the district court about possible jury taint, and his
failure at the time to request a hearing, we think that the district court's chosen
method of handling the situation by instructing the jury not to pay attention to the
bench conferences was not an abuse of discretion.
V.
Mr. Schoppert finally argues that the evidence presented at the trial was
insufficient to support a finding beyond a reasonable doubt that he committed any
affirmative act of evasion. Reviewing the evidence in the light most favorable to the
jury's verdict, we cannot say that a reasonable fact-finder would have had to entertain
a reasonable doubt that Mr. Schoppert committed an affirmative act of evasion. See
United States v. Malone, 49 F.3d 393, 397 (8th Cir. 1995), cert. denied, 516 U.S. 877
(1995).
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"[A]ny conduct, the likely effect of which would be to mislead or to conceal"
for tax evasion purposes, can constitute an affirmative act of evasion. See Spies v.
United States, 317 U.S. 492, 499 (1943). The evidence in the record was sufficient
to support a finding beyond a reasonable doubt that Mr. Schoppert made extensive
use of cash, used another man's credit card to make purchases, and gave false
information to the IRS, and that all of these affirmative acts were committed to evade
the payment of taxes.
VI.
For the reasons indicated, we affirm Mr. Schoppert's convictions.
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