United States v. Kimberly Horner
853 F.3d 1201
| 11th Cir. | 2017Background
- Kenneth and Kimberly Horner owned Topcat Towing (an S‑corporation) and deposited large sums of cash from business receipts into business and personal accounts (2005–2008); $380,883 and $522,026 in personal cash deposits in 2007 and 2008.
- The Horners used H&R Block to prepare corporate and personal returns but did not disclose the personal cash deposits; their 2005–2008 returns did not report those deposits as income.
- IRS audit concluded the personal deposits were diverted Topcat receipts; Horners were indicted for assisting in preparation of fraudulent corporate returns (26 U.S.C. § 7206(2)) and filing false individual returns (26 U.S.C. § 7206(1)) for 2007 and 2008.
- At trial the government introduced evidence of numerous near‑$10,000 cash deposits and characterized this pattern as “structuring”; it also introduced evidence about the Horners’ 2005–2006 returns.
- IRS Agent Owens testified as to corrected tax liabilities based on unreported deposits; defense cross‑examination highlighted possible unclaimed business expense deductions.
- Jury convicted on all counts; sentence: 18 months imprisonment, 3 years supervised release, and $144,455 restitution. Horners appealed on four principal grounds; Eleventh Circuit affirmed.
Issues
| Issue | Horner(s)' Argument | Government's/Respondent's Argument | Held |
|---|---|---|---|
| Prosecutorial misconduct (Giglio) — alleged false/unretracted testimony by IRS Agent about unclaimed deductions | Owens’s trial testimony minimized effect of unclaimed deductions; later sentencing figures showed larger deductions, so testimony was false/misleading and should have been corrected | Owens’s answers were responsive to specific cross‑examined checks and repeatedly acknowledged limits and assumptions; not knowingly false or material | No Giglio violation — testimony not shown false or willfully false; any discrepancy was tied to sample scope, harmless |
| Jury instruction — good‑faith reliance on accountant | Requested specific pattern language (including regulatory language) emphasizing reliance and preparer failures; court’s refusal impaired defense presentation | Court gave modified Eleventh Circuit pattern instruction substituting "accountant" for "counsel," covering full‑disclosure and actual reliance elements | No abuse of discretion — given charge adequately conveyed the good‑faith reliance defense |
| Jury instruction — due diligence obligations of tax preparers (separate instruction) | Horners sought explicit instruction on preparer duties (Treasury/IRS regs) to show preparer fault and support reliance defense | Preparers’ regulatory duties are largely irrelevant to defendants’ specific‑intent defense absent record evidence Horners knew those duties; the jury could consider preparer care via cross‑examination and argument | No abuse of discretion — no evidentiary support for separate due‑diligence charge and omission did not impair defense |
| Evidentiary rulings — admission of structuring and 2005–2006 tax evidence under Rules 404(b) and 403 | Admission of structuring/earlier returns was unduly prejudicial and amounted to extrinsic uncharged‑crime evidence barable under Rule 404(b) and excludable under Rule 403 | Evidence was inextricably intertwined with charged offenses or admissible to prove intent/motive; probative value outweighed prejudice; government avoided labeling structuring as a crime to mitigate prejudice | No abuse of discretion — both structuring and prior‑year return evidence admissible as intrinsic or proper 404(b) evidence; alternatively any error was harmless |
Key Cases Cited
- Giglio v. United States, 405 U.S. 150 (U.S. 1972) (prosecutor must correct known false testimony)
- United States v. McNair, 605 F.3d 1152 (11th Cir. 2010) (standard on prosecutorial misconduct review)
- United States v. Kottwitz, 614 F.3d 1241 (11th Cir. 2010) (good‑faith reliance on expert advice: elements and evidentiary threshold)
- United States v. Morris, 20 F.3d 1111 (11th Cir. 1994) (good‑faith defense and instruction adequacy)
- United States v. Matthews, 431 F.3d 1296 (11th Cir. 2005) (three‑part test for 404(b) other‑acts admissibility)
- Old Chief v. United States, 519 U.S. 172 (U.S. 1997) (Rule 403 unfair prejudice explained)
- United States v. U.S. Infrastructure, Inc., 576 F.3d 1195 (11th Cir. 2009) (intrinsic evidence/inextricably intertwined doctrine)
- United States v. Ford, 784 F.3d 1386 (11th Cir. 2015) (uncharged similar‑act evidence admissible as intrinsic)
- United States v. Edouard, 485 F.3d 1324 (11th Cir. 2007) (factors balancing probative value vs. prejudicial effect for other‑acts evidence)