United States v. Fontrise Charles, 702 F. App'x 288

Background

Fontrise Charles operated a tax-preparation business and electronically filed 967 returns (2009–2013), claiming nearly $4M in refunds; many returns claimed the Earned Income Tax Credit (EITC) and attached Schedule C forms.
A portion of refunds for many returns was deposited into bank accounts controlled by Charles; IRS review linked filings to IP addresses associated with her.
A 2015 indictment charged Charles with 25 counts of making false claims against the Government (relating to 25 client returns) and 2 counts for filing false personal tax returns.
At trial the government presented testimony from the ten taxpayers underlying the 25 charged returns who said the reported incomes were false and that Charles prepared the returns; the government also introduced Exhibit 116a, an IRS summary of all 967 returns as Rule 404(b) evidence.
The jury convicted on all counts; the district court applied a Guidelines loss amount (~$3.2M) and sentenced Charles to 60 months.
On appeal Charles argued (1) the court violated her jury-trial and due-process rights by using a preponderance standard for loss calculation, and (2) Exhibit 116a was improperly admitted under Rule 404(b) because it lacked foundation and was prejudicial. The Sixth Circuit affirmed.

Issues

Issue	Plaintiff's Argument (Charles)	Defendant's Argument (Government)	Held
Standard of proof for Guidelines factfinding (loss amount)	Due process and jury-trial rights require clear and convincing or beyond a reasonable doubt for large sentencing enhancements	Sixth Circuit precedent permits preponderance for sentencing factfinding unless it increases a statutory mandatory minimum	Affirmed: preponderance standard sufficient under circuit precedent (no timely objection at sentencing; plain-error review)
Admissibility of Exhibit 116a under Rule 404(b)	Exhibit lacked foundation to show the uncharged returns were false; improperly suggested hundreds of other bad acts, prejudicing defense	Exhibit is an IRS-based summary tied to Charles (IP, deposits); probative of intent/absence of mistake and relevant to unreported income	Assuming error, admission was harmless because record evidence of guilt was overwhelming; conviction affirmed
Need for district-court factual findings on other-act evidence	District court failed to make explicit finding that uncharged returns were fraudulent, preventing meaningful review	Court found summary based on IRS data admissible and linked to deposits to defendant’s account; exhibit also admissible under Rule 1006 as summary	Majority: did not require reversal; dissent: failure to find fact was clear error and prejudicial, would vacate and remand
Harmless-error analysis for improperly admitted other-act evidence	Admission of exhibit was highly prejudicial because trial was credibility contest; exhibit undermined Charles’ defense and was emphasized in closing	The ten taxpayers’ direct testimony and financial records provided overwhelming evidence independent of the exhibit	Majority: error (if any) was harmless; Dissent: error was not harmless and warrants new trial

Key Cases Cited

Huddleston v. United States, 485 U.S. 681 (rule that similar-act evidence must allow reasonable inference that act occurred and defendant was actor)
Dowling v. United States, 493 U.S. 342 (same principle on other-act evidence relevance)
United States v. Gates, 461 F.3d 703 (6th Cir.) (preponderance standard for sentencing factfinding post-Booker)
United States v. Brika, 487 F.3d 450 (6th Cir.) (due process does not require higher than preponderance for Guidelines enhancements)
United States v. Lattner, 385 F.3d 947 (6th Cir.) (requirement of substantial probability that prior bad acts occurred for admission)
United States v. Mack, 729 F.3d 594 (6th Cir.) (standard for 404(b) foundation and harmless-error discussion)
United States v. Clay, 667 F.3d 689 (6th Cir.) (harmless-error standard: conviction stands if evidence of guilt is overwhelming)