United States v. Melot
2013 U.S. App. LEXIS 21227
| 10th Cir. | 2013Background
- Bill Melot was convicted after a four-day jury trial of: corruptly endeavoring to impede IRS administration (26 U.S.C. § 7212(a)), attempting to evade tax (26 U.S.C. § 7201), six counts of willful failure to file (26 U.S.C. § 7203), and seven counts of making false statements to USDA (15 U.S.C. § 714m(a)).
- Evidence showed Melot stopped filing individual returns after 1986, deposited over $9.5 million into nominee accounts (often in amounts under $10,000), used false SSNs/EINs, transferred funds offshore, and routed assets through trusts and nominees.
- He received $226,526 in USDA farm subsidies while certifying on applications that his income matched IRS-reported adjusted gross income, despite not filing returns and providing a false SSN on subsidy forms.
- Melot admitted nonfiling but claimed a good-faith belief (based on tax-protester materials) that he was not a U.S. citizen or otherwise not subject to federal income tax, and said trusts/corporations explained nonfiling; prosecution presented extensive circumstantial evidence of concealment and evasion.
- District court sentenced Melot to 60 months’ imprisonment (significant downward variance from guidelines) and ordered $18,493,098.51 restitution to the IRS and $226,526 to USDA.
- On appeal the Tenth Circuit affirmed convictions, rejected the willfulness insufficiency challenge, upheld inclusion of state and federal fuel excise taxes and USDA restitution in tax-loss/restitution calculations, but reversed sentence because the district court clearly erred in granting a two-level acceptance-of-responsibility reduction (§ 3E1.1).
Issues
| Issue | Plaintiff's Argument (Melot) | Defendant's Argument (Government) | Held |
|---|---|---|---|
| Sufficiency of evidence to prove willfulness for tax evasion and failure to file | Melot: Good-faith belief (tax-protester literature) negated willfulness | Gov: Extensive circumstantial proof (structuring, false SSNs, nominee accounts, cash payroll, offshore transfers, inconsistent statements) supports inference of willfulness | Affirmed: Evidence sufficient; jury may infer willfulness from conduct |
| Inclusion of state and federal fuel excise taxes in tax-loss calculation | Melot: Excise taxes are not groupable/relevant conduct and Texas assessment was unreliable hearsay | Gov: Excise violations are tax offenses to be grouped; state tax assessments are prima facie evidence of tax loss | Affirmed: Excise taxes groupable and part of common scheme; Texas assessments admissible and reliable |
| Restitution to USDA for improper subsidy payments | Melot: Even with correct IDs he would have qualified; USDA harm was only IRS’s lost garnishment opportunity | Gov: False statements made Melot ineligible under USDA statutes/regulations; misrepresentations caused actual loss | Affirmed: District court properly ordered restitution to USDA because misrepresentations rendered him ineligible |
| Application of § 3E1.1 acceptance-of-responsibility reduction despite § 3C1.1 obstruction enhancement | Melot: Requested reduction and argued remorse/acceptance | Gov: District court erred; defendant did not accept responsibility and continued to deny willfulness pre- and post-trial | Reversed sentence: § 3E1.1 reduction clearly erroneous; remand for resentencing without the adjustment |
Key Cases Cited
- Cheek v. United States, 498 U.S. 192 (1991) (good-faith belief about tax law can negate willfulness element)
- United States v. Goode, 483 F.3d 676 (10th Cir. 2007) (forfeited sufficiency claims reviewed for plain error)
- United States v. Wilson, 107 F.3d 774 (10th Cir. 1997) (standard for sufficiency review: view evidence in light most favorable to government)
- United States v. Hoskins, 654 F.3d 1086 (10th Cir. 2011) (willfulness may be inferred from conduct)
- U.S. Sentencing Guidelines § 3E1.1 commentary (discusses rare situations where trial and acceptance coexist) [note: Guidelines referenced in opinion]
- United States v. Chisum, 502 F.3d 1237 (10th Cir. 2007) (tax assessments are prima facie evidence of tax loss)
- United States v. Higgins, 2 F.3d 1094 (10th Cir. 1993) (uncharged tax loss can be relevant conduct for sentencing)
- United States v. Clark, 415 F.3d 1234 (10th Cir. 2005) (standards for relevant conduct and grouping under § 1B1.3 and § 3D1.2)
- United States v. Salazar-Samaniega, 361 F.3d 1271 (10th Cir. 2004) (test for extraordinary cases permitting both § 3C1.1 enhancement and § 3E1.1 reduction)
- United States v. Ivy, 83 F.3d 1266 (10th Cir. 1996) (defendant bears burden to prove acceptance of responsibility)
- United States v. Gauvin, 173 F.3d 798 (10th Cir. 1999) (appellate review of acceptance-of-responsibility decision is deferential)