United States v. Gladstone Morrison
2016 U.S. App. LEXIS 14888
| 5th Cir. | 2016Background
- Jacqueline and Gladstone Morrison ran JMA, a tax prep firm with staff including relatives; most clients filed Schedule Cs showing large losses.
- A high and unusual rate of Schedule C losses for JMA clients contrasted with national statistics, suggesting inflated losses to generate refunds.
- An undercover IRS visit showed JMA fabricating a day-care business to boost refunds, evidencing fraud.
- Post-IRS investigation, the Morrisons entered a franchise with Express Tax and sold client lists, while misrepresenting there were no investigations.
- Through various schemes, the Morrisons redirected client fees and funds, including a $100,000+ unauthorized reroute, and hid ongoing investigations.
- A jury convicted them on conspiracy to submit fraudulent returns, aiding/abetting false returns, and multiple wire-fraud counts related to sales and client proceeds.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was there sufficient evidence of an unlawful conspiracy? | Morrison involvement showed an agreement and overt acts | No clear agreement; responsibility overstated and shared by Jacqueline | Yes; sufficient evidence of conspiracy |
| Was there sufficient evidence of aiding and abetting in fraudulent returns? | Gladstone and Jacqueline knowingly aided false returns | Some defendants did not directly prepare returns; liability uncertain | Yes; logistically sufficient evidence supports aiding/abetting counts |
| Was there sufficient evidence to sustain the wire-fraud convictions? | Wire transfers and misrepresentations facilitated fraud in sale and financing | Jurisdiction and evidentiary links questioned; some transfers lacked cross-state element | Yes; evidence supports wire-fraud counts |
| Did the district court properly manage Jacqueline Morrison's testimony and recusal issues? | Time limits and rulings were proper and non-prejudicial | Time limits violated defense rights and recusal was warranted | No reversible error; limits reasonable and recusal not required |
Key Cases Cited
- United States v. Mann, 493 F.3d 484 (5th Cir. 2007) (elements of conspiracy include agreement, knowledge, and overt act)
- United States v. Mudekunye, 646 F.3d 281 (5th Cir. 2011) (conspiracy evidence can be inferred from conduct and central role)
- United States v. Clark, 577 F.3d 273 (5th Cir. 2009) (aiding and abetting liability for false returns)
- United States v. Searan, 259 F.3d 434 (6th Cir. 2001) (aiding and abetting liability broader than direct preparer role)
- United States v. Lombardi, 138 F.3d 559 (5th Cir. 1998) (distinguishing conspiracy from aiding and abetting; elements)
- Nye & Nissen v. United States, 336 U.S. 613 (1949) (convincing that certain acts may serve dual purposes in conspiracy and aiding)
- Neder v. United States, 527 U.S. 1 (1999) (materiality of false statements under tax fraud statutes)
- United States v. Holmes, 406 F.3d 337 (5th Cir. 2005) (evidence sufficient to support wire fraud convictions)