United States v. James Murphy, 2016 U.S. App. LEXIS 10441

Background

Murphy, an osteopath, diverted practice income into a trust from 2001 onward, dramatically reducing personal reported income while the trust reported large income offset by deductions.
After an IRS audit and collection efforts, in Feb. 2008 Murphy submitted four "bonded promissory notes" and related documents to the IRS purporting to pay his and his trust’s tax liabilities by routing credit through Secretary of the Treasury Henry Paulson and alleged "prepaid exemption" accounts.
Murphy also filed blank or inflated-refund personal returns for 2003–2007 claiming large overpayments with routing/account numbers; no refunds were issued.
In June 2012 Murphy was indicted on (1) interference with the administration of the tax laws (26 U.S.C. § 7212(a)), (2) four counts of presenting fictitious financial instruments (18 U.S.C. § 514), and (3) three counts of presenting false claims (18 U.S.C. § 287). A jury convicted him on all counts and the district court sentenced him principally to four years’ imprisonment.
On appeal, Murphy challenged sufficiency and instructional errors as to the § 514 counts (argument focused on whether instruments purported to be issued “under the authority of the United States”), claimed instructional error on § 287, alleged the § 7212(a) count was time-barred and duplicitous, and objected to the prosecutor’s rebuttal references to a prior conviction.
The Ninth Circuit found the evidence sufficient to avoid acquittal on § 514 but concluded the jury instruction omitted the element that the instrument must purport to be issued "under the authority of the United States," causing plain error that prejudiced Murphy; it vacated the § 514 convictions and remanded for a new trial on those counts, and affirmed the remaining convictions.

Issues

Issue	Plaintiff's Argument (Murphy)	Defendant's Argument (Government)	Held
Sufficiency of evidence for § 514 (did instruments purport to be issued under U.S. authority?)	Notes and cover documents ambiguous; did not clearly purport U.S. issuance.	Evidence (references to Treasury, Secretary Paulson, "for credit to" Treasury, and cover order) could support finding they purported to be issued under U.S. authority.	Evidence was sufficient to avoid acquittal but not overwhelming; conviction vacated for instructional error.
Jury instruction omission for § 514 (element omitted)	Omission deprived jury of element that instrument be issued "under the authority of the United States," violating right to have all elements submitted to jury.	Omission was error but evidence supports verdict; conviction should stand.	Plain error: omission was plain and prejudicial; vacated and remanded for new trial on § 514 counts.
§ 287 false-claims instruction (whether claimed refunds were "claims" against U.S.)	Returns sought to offset liabilities rather than demand a refund; court should have instructed that attempts to reduce tax liability are not "claims."	Filing false returns seeking refunds is a claim against the United States; returns included routing numbers and would have resulted in payments.	No error: false tax-return refunds qualify as claims; convictions affirmed.
§ 7212(a) timeliness and duplicity	Earlier conduct outside limitations should bar charge; indictment duplicitous by alleging nine acts.	Limitations runs from latest corrupt act within six years; listing multiple acts is permissible and unanimity instruction cured any risk.	Charge timely (jury found at least one act within six years); not duplicitous and unanimity instruction adequate; conviction affirmed.

Key Cases Cited

Jackson v. Virginia, 443 U.S. 307 (standard for sufficiency review)
United States v. Nevils, 598 F.3d 1158 (9th Cir. 2010) (applying Jackson sufficiency standard)
United States v. Howick, 263 F.3d 1056 (9th Cir. 2001) (§ 514 covers bogus obligations that resemble financial instruments)
United States v. Alferahin, 433 F.3d 1148 (9th Cir. 2006) (plain-error review of jury instructions)
United States v. Perez, 116 F.3d 840 (9th Cir. 1997) (when omitted-element error may not be prejudicial if jury likely found element)
Gaudin v. United States, 515 U.S. 506 (jury must find every element beyond reasonable doubt)
Neder v. United States, 527 U.S. 1 (harmless-error framework for omitted jury instructions)
United States v. Miller, 545 F.2d 1204 (9th Cir. 1976) (false tax returns can constitute false claims)
United States v. DeTar, 832 F.2d 1110 (9th Cir. 1987) (limitations for tax offenses measured from last affirmative evasion act)
United States v. Wilson, 118 F.3d 228 (4th Cir. 1997) (limitations for § 7212(a) begin at last corrupt act)
United States v. Arreola, 467 F.3d 1153 (9th Cir. 2006) (duplicity and multiple means of committing single offense)
United States v. UCO Oil Co., 546 F.2d 833 (9th Cir. 1976) (unanimity requirement for multipart allegations)
United States v. Choy, 309 F.3d 602 (9th Cir. 2002) (variance or instructional error can be fatal to conviction)
Johnson v. United States, 520 U.S. 461 (strength of evidence can inform harmless-error/plain-error disposition)