United States v. Joe S. Duncan and Michael M. Downing

perfect, trial and that is all to which he was

entitled.

I would affirm the verdict. America,

UNITED STATES of

Plaintiff-Appellee,

Joe S. DUNCAN and Michael M.

Downing, Defendants-Appellants. 87-5896,

Nos. 87-5897. Appeals, States Court of

Sixth Circuit.

Argued Feb. 1988.

Decided June

Rehearing Denied No. 87-5897 1,1988.

Sept.

year violating 7206(1) 1982 of 26 U.S.C. §§ 7206(2), prohibit which making the preparation the of a tax return containing a false statement as to a material matter. question The 1982 tax return in contained separate two and distinct statements which alleged the indictment were false. The ambiguous structure of the indictment and given by judge response instructions question to a from combined to create a substantial likelihood of con- fusion, with the result that it is unclear which of jurors the statements the found to be false and whether their verdict on either was unanimous. appeal question raises whether a go beyond gen- should the usual unanimity charge give

eral augment- an jurors ed instruction that agree unanimously particular on a false state- underlying ment as an predicate for convic- tion. We hold that due to a number of including pretrial specifi- motions factors— cally pointing problem out the and a mid- question jury raising deliberation from the genuine possibility that conviction could occur as the result of jurors using different underly- a different false statement as the ing predicate guilt factual for District —the sufficiently apprised spe- Court was unanimity problem cific that it should have (argued), Steven Oberman W. Zane Dan- augmented instruction iel, Ritchie, (argued), Charles W.B. Fels jurors agree falsity must all on the willful Dillard, Knoxville, Tenn., Fels and for de- one, one, of at least and the same false fendants-appellants. statement. Justice, Rogers, Dept, Martha P. Tax addition, we hold that there was suffi- Div., Div., Chief, Paup, Criminal Michael L. presented cient evidence that the District Section, Div., Appellate Dept, Tax of Jus- Court should have instructed the tice, Washington, D.C., Dumey, Michael D. taxpayer theory Duncan’s that he lacked Rose, Jr., Allen, Gary William S. R. Robert good criminal intent because he relied in Lindsay, Hechtkopf (argued), Alan upon professional opinion faith plaintiff-appellee. accountant, public certified codefendant Downing. ENGEL, Judge*, Before Chief KENNEDY, MERRITT and Circuit I. The Indictment and Proof

Judges. Downing The indictments of Duncan and MERRITT, Judge. Circuit investigation grew out of an extensive into case, In this false statement tax defend- collapse of the so-called Butcher bank- Downing, early ant Duncan and defendant who ing empire in East Tennessee Butcher, Jr., fig- preparer, acquitted principal was Duncan’s tax were 1980’s. C.H. banks, year for the tax 1981 and convicted for the ure in the Butcher was the third April Engel *The Honorable Albert J. assumed the duties of Chief effective person appel- named indictment 30, 1981, with On October the Knox Federal Butcher, directors, lants. The indictment board of point which to that Duncan, majority-controlled by Downing conspiring with Duncans Curtises, expanded to include a the United by impeding defraud num- ber of Butcher associates. On November ascertainment collection of income tax- 6, 1981, Downing’s insistence, at Butcher (Count es violation of 18 U.S.C. wrote a confirming letter arrangement One); charged violating Duncan with that would relieve defendant Duncan’s debt 7206(1) by making U.S.C. false § returns and Jim guarantee. Duncan’s Addressed years (Count Two) the for and 1982 Duncan, to defendant it said: (Count Three); charged Downing with The purpose of this letter is to confirm violating 7206(2) 26 U.S.C. by aiding in my you provide commitments to to preparation the of false returns for the sources of during income 1981 and/or (Count years Four) (Count and 1982 1982 in a which hopefully manner can be Five). The acquitted Duncan and your to advantage best for income tax Downing on all except counts for counts purposes in aggregate approxi- of year for the 1982. The 1982 tax return mately $311,500, which in turn will be contained two allegedly false statements— by you utilized discharge existing in- $115,000 that of income received was a Knoxville, debtedness to of UAB which is capital gain income, rather ordinary than represented by promissory notes dated $8,800 and that Duncan paid had in interest August 25th, 30th, 1980 and June 1981. he when had not. Tr. 367. Butcher, who pleaded had earlier guilty $311,500 Butcher testified repre- One, to Count testified for the Government. sented a “fee” being to Duncan “my for testimony, His and the Government’s theo- conduit to a smooth transition” at the S & ry, described a whereby scheme Butcher L. Crabtree testified that at Butcher's re- sought gain control of the Knox Federal quest, he studied Duncan’s financial situa- Savings Loan, & a mutual S & L over tion and determined way that the best Duncan’s family which partial exercised taxability $300,000 avoid to “turn was control. In return for the assistance of the payment into a capital gain” short term Duncans and of the controlling other fami- against could be offset Duncan’s exist- Curtis, ly, named agreed Butcher to under- ing capital short term losses. The creation separate take financial transactions favor- capital gain, however, would involve a able family. Crabtree, to each David a “sham transaction” that would involve Butcher, that, close associate of testified papering transactions, “some of backdating acting Butcher, as a nominee bought of he documents.” Crabtree said that he told building arrangement housed Knox Butcher the Federal would be “techni- cally from the Curtises for “significantly reality in- correct” but in a sham. Crab- $525,000 price flated” tree said replied of as Butcher “aspect that this “wasn’t problem, buying his solved & seats.” it his side of Board Defend- [S L] deal, Duncan, that was the meanwhile, problem.” ant Duncans’ $310,- Tr. had about 000 in indebtedness to the United American (UAB) Knoxville, Bank which Butcher’s “capital ultimately asset” used was family $90,000 controlled. Some right of first buy percent refusal to a 40 guaranteed debt was by Duncan’s brother interest Downing, Knoxville motel.

Jim. Butcher that to testified enlist the engaged who had negotiations been support,1 Duncans’ Crabtree, he and with buy properties other motel from the same Downing middleman, as a devised an ar- seller, Blalock, Clyde persuaded Blalock to rangement to write off defendant Duncan’s convey this “first refusal” to Duncan for debt. nominal consideration. The first refusal er, Duncan, 1. Butcher father, testified that discussed he the S & L Jim and their John J. Dun- Duncan, takeover with defendant Joe his broth- can. Downing.2 assigned by nary Duncan to income. The 1981 then return had identi- granting “Inv., the first re- fied the agreement transaction as Both Howard John- son,” zero, assignment Sep- gross were dated the cost price fusal and the as sales 21, 1981, although $200,000, Blalock gain testified as and therefore tember as $200,000. agreement actually that he believed Counts Three and Five had drawn October November. that the 1982 return was been false because it (1) day $115,704.28 testified that on the Blalock also reflected as a short term signed Downing him agreement capital gain took ordinary rather than as in- office, come, which was in the same to Duncan’s expense an interest deduction building Downing’s separate $8,817.59 office of- of to which Duncan was not enti- fice, signed three discussed and and the tled. gain The 1982 return had listed a said agreement. Blalock he did not know $115,704.28 without further identifica- assignment until he was told tion price. or detail of cost or sale couple agents years federal later. trial, At the Government’s case included Duncan’s indebtedness to UAB was dis- Butcher, Crabtree, testimony Blal- manner, charged following with con- ock, employees Downing, some and sev- sequences for both the 1981 tax return for government agents. eral bank officials and acquitted defendants were which the Lund, Downing employee, A Mark testified they the 1982 return for which were con- prepared that he had Duncan’s 1982 return By check dated victed. November Downing get and that had told him to $200,000. Downing paid Duncan The figure by calling interest on Duncan’s loans check was drawn on the account of Down- Downing UAB. Neither nor UAB told firm, ing’s apparently funded but a Desh, Duncan, paid Lund that not had $200,000 loan from UAB made November interest, An and Lund did not ask. IRS 27, 1981. The loan went to Desh Invest- expert testified at the close of the Govern- Corporation, separate Downing en- ment that, ment’s case-in-chief based on all the terprise with which Butcher and Crabtree presented, right evidence of first refus- also were involved. Duncan endorsed the valueless, al was the “asset” transaction $200,000 apply check to to his UAB sham, $200,000 pay- was a and both the indebtedness. $115,000 payoff in 1981 and in ment 1982 should have been classified as ordi- April May or UAB advanced a cross-examination, $115,704.28. nary income. On totaling second loan to Desh expert acknowledged that the stated, Government application As the loan the funds right of first refusal transaction could have pay were used to off Duncan’s loan. At gain time, Downing reported properly capital as a approximately the same been paying there had substance to the trans- wrote a check on a Desh account been “[i]f action, fact, $8,817.59 was, option.” it a viable owed in interest on Dun- UAB loans. Neither to Desh ever was Tr. 1266. can’s loan loans, $315,000,

repaid; totaling about defendant testified. Both of- Neither eventually were another written off testimony expert fered from law school bank that assumed them UAB failed. after professors the Blalock transaction reasonably Four have been treated as a Indictment Counts Two and could presented Downing capital gain. The defense had charged that Duncan3 and had Hitson, willfully testimony from an Atlanta prepared filed and a false return William Inns, $200,000 Days he and founder of for 1981 which reflected the as a investor gain rights of first refusal capital short term rather than as ordi- often traded had assignment granted right, Two also that Duncan will- 2. The title and 3. Count "all ... $11,600.89 right ordinary fully interest" in the ation of documents Crabtree considered some of first in consider- he refusal income omitted "$200,000 contemporary cash." Other employer, his J.C. Bradford & Co. received from testimony Butcher and from charge against corresponding There was no indicated, however, parties Downing on Count Four. would be full consideration $310,000spread years. over two Unanimity II. Issue negotiated a that he had properties, motel earlier in 1981 of possible purchase Downing argue that the Dis- Duncan and question, and that in his motel in Knoxville aug- by failing give trict Court erred Blalock document had value opinion the when the mented instruction $500,000. Downing’s expert of at least interrupted to ask its deliberations reported should have said that Duncan also find a defendant knew that whether it must $8,800 income and payment interest one, both, statements were false. of two it. entitled to deduct then would have been agree. We to the theory presented The Government thus, Blalock jury, the entire Motions, Jury Instruc- A. Pretrial concocted phony scheme transaction was tions, Jury Confusion capital gain what was disguise as a language, Tracking statutory Counts Duncan, paid by Butcher to really a flat fee charged that Duncan had Three and Five accomplished by back- that the scheme was not a return which he “did believe filed Sep- dating from November to documents every as to material be true and correct tember, Downing and Duncan that both Downing had advised the matter” and that nature, and that were aware of its sham preparation a return which was “false it opinion difference of about how real as to a material matter” and fraudulent reported did not exist at should have been represented that Duncan that the return being by the the time but was created $115,000 report the item as was entitled to experts after the fact. The de- defense gain than as capital a short term rather right theory presented fense was that the income, ordinary and that Duncan was valuable, genuine and of first refusal was $8,800 item as inter- dated, entitled to deduct that the documents were not back paid the interest classify in est when he had neither proper that it the income was gain years capital $8,800 as a or as a paid by both either Desh into his nor taken taxpayer forgiveness of debt while the income. own in no insolvent—which would have resulted the indict- pretrial A motion to dismiss tax due—and that errors made were ment, Downing, and joined by both Duncan honest and nonwillful mistakes occasioned Three and Five were argued that Counts upon Downing by Duncan’s reliance charged duplicitous each a defend- because carelessness, health, ill mis- Downing’s one offense and created ant with more than placed upon employees. reliance his own danger verdict.4 a of a nonunanimous acknowledged Downing's counsel sought dismissal or reformu- The motion mistake, a interest deduction was but containing multiple the counts one. lation of called it an honest offense, Congress single charges considered a duplicitous one for what 4. A indictment is may falsely suggest separate single prolix offenses in a count. The overall and that recitation jury duplicity jury vice of general is that the cannot a defendant has committed not one finding Wright, supra, render its on each of verdict See C. 142 § but severed crimes. fense, making whether it difficult to determine at 475-76 & n. 19. only one of the offenses or a conviction rests pleading, duplicity the defects of As rules of may on both. Adverse effects on a defendant multiplicity fatal to an indictment are not charges against improper notice of the include him, may by reformulation. In deter- but be cured evidentiary prejudice shaping duplicity multiplicity mining whether there is rulings, sentencing, limiting review on legislative are intent and the decisive criteria jeopardy, appeal, exposure to double and of legislative separate proof. intent is am- When danger course the that a conviction will result lenity prescribes biguous, that doubt the rule of single from a less than unanimous verdict as to each against turning a transac- will be resolved offenses, separate brook, Also offense. See United. States v. multiple and therefore tion into denied, (6th Cir.), predicates 620 142 cert. combining multiple F.2d factual favor of States, S.Ct. 66 L.Ed.2d 51 449 Ü.S. Bell v. United same count. See into the (1980); Wright, 620, 622-23, 81, 83-84, & Proce 1 C. Federal Practice L.Ed. 75 S.Ct. (1982); (1955); dure: Criminal 2d 2 W. LaFave & Wright, supra, § 142 at 477-78. § C. Israel, 19.2(e)(1984). challenges multiple- J. Criminal Procedure rejecting duplicity Courts however, counts, premise their charges single predicate often multiplicitous A indictment augmented rulings later dangers condition that are that on the offense in several counts. Its protect adequately the de- given multiple jury will may instructions the defendant be sentences _ ground precise that a specifications on offense not guilty/guilty “patchwork” nonunanimous composite or motion to dis might result. The verdict charged in Count 3 of the indictment. specific this risk. quite miss was about Alsobrook, Relying on United States Cir.), Question We, jury, five. unanimous- L.Ed.2d 51 ly find the Defendant Michael M. Down- Droms, (1980), ing Cir.1977), (2d defendants _ offense danger of conviction warned of the not guilty/guilty unanimous ... “divided less than charged

if vote to different members in Count 5 of the indictment. charged in on different violations convict In day the middle of the second of delib- distinct Noting count.” that “two falsi erations, sent a note to the Court requiring “entirely alleged, were dif ties” indicating alleged confusion about the two proof ferent as to the two matters al asking false statements and for clarifica- leged,” they urged that tion: jurors, example, be con- [s]ix expense regard only vinced that the interest de- With to Counts Two and Three: the other six improper, duction is while question A wording exists relative to the only cap- may believe that the short-term of the Counts in the Indictment. gain improper. ital Two, Count two sums are discussed rela- Authorities, Memorandum of Points and agree tive to the 1981 tax return. If we 11A, The District Docket No. at 8-9. probably that one was known and one Court denied motion. filed, how, was not when the return was trial, the District At the conclusion of possible, apply your do we instructions jury that as one of the Court accepted to this dilemma? Must both be conviction, the Government elements for guilty before a verdict on this Count can required prove wording in be determined? Is the exact did not believe that defendant Duncan paraphrasing or the Indictment the correct as to this tax return was true and Judge’s Charge precedence? to take every material matter counsel, The District convened and that note, proposed supple- read them the Downing defendant knew the income tax jury mental instruction that first told the return at issue was false or fraudulent that there was no difference between as to a material matter. charges against description of the the de- a matter of law that: The Court ruled as fendants in the instructions and the con- I have concluded that the statements indictment, jury of the but that tents material statements. were perceived any, gov- indictment would Therefore, there is no issue of materiali- supplemental The instruction told the ern. ty you to decide. for alleged false statements jury that both 1953, 1956, Finally, Court’s Tr. you “if were “material matters” and that charge on was a standard one: that Defendant Duncan’s are convinced ... verdict, In order to return a it is neces- respect with to either one return was false sary juror agree. The that each verdict you should con- of these matters ... then must be unanimous. on this count.” Tr. vict the Defendant Tr. 1970. The verdict form read: 1999-2000. We, Question jury, three. unani- objected to this instruc- Duncan’s counsel mously find the Defendant Joe S. Dun- tion: can — U.S. -, denied, 54, (D.C.Cir.), against 56-58 cert. the risk of a nonunanimous

fendant (1987); See, Shorter, e.g., L.Ed.2d 35 98 verdict. United States v. 608 Cir.1981). (2d (D.D.C.1985), aff’d, Margiotta, F.Supp. F.2d 881-82 then proposed recall The instruction was Honor will Your Mr. Oberman: unanimity. on without instruction question we raised I believe later, reported that jurors Three hours arguing motion, I’m not earlier cannot reach a unanimous verdict.” “[w]e motion, ruling on that the Court’s with hour, They for another went deliberated our motion is for the basis but that was overnight, hour of home and after about an confusion, and some cause that it would day reported their on the third deliberation ruling— light the Court’s of jury polled The for unanimi- verdicts. cause confusion? would The Court: What count, ty on each but the District Court Downing The fact we have two post-verdict by motion to Mr. Oberman: denied a jurors permitted question 2 of be here that Count separate items the basis of their verdict. ascertain position they is that Our the indictment. Mr. in order to convict must find both Required “Specific” Unanimity B. That’s what the indictment Duncan. For Each False Statement reads. general problem raised these The Court turned its attention Tr. 1993. danger composite or events is the materiality and did not com- question “patchwork” verdict violation question confusion or ment on the principle that a ver- Sixth Amendment unanimity. This reference question unanimous.5 dict be defendants’ by Duncan’s counsel to the 553 F.2d 453 Gipson, concerning possi- joint pretrial motion (5th Cir.1977), held that a the Fifth Circuit nonunanimity sufficiently spe- bility of agree one of federal on at least defend- preserve cific to the issue both “conceptually” distinct multiple alternative ants, Downing’s did not although counsel would constitute the actus reus acts that unanimity prob- specifically readdress the Gipson court also laid of the crime. The merely continued his lem at that time but jury must down a broad dictum that the objection court’s comments on mate- agreement just to the as to “be substantial did.”6 at 457. what a defendant Id. riality. Trubitt, Verdicts, (6th Cir.1984) (immaterial in vio generally 1202-03 5. See Patchwork Dif- Verdicts, Jury and American Theo- U.S.C. whether defendant’s lation of 18 ferent-Jurors ry: statutory are Invalidated Juror Whether Verdicts bank fraud intent was to deceive Issues, Disagreement Okla. L. Rev. 473 on "any body politic” or "the Con alternatives Gelowitz, (1983); Jury Unanimity Questions Currency’ "any agent or exam troller of the Six and Six Do Not Material Fact: When bank”), iner of such Note, (1987); Twelve, Queen's Equal L.J. 66 (1985); S.Ct. 85 L.Ed.2d 159 Jury Agreement in Crim- and the General Verdict Zeidman, Cir. Cases, Land and Water L. Rev. 207 inal (1984); 1976) (immaterial whether scheme to defraud Note, Right Jury Unanimity on Mate- Failla, creditor); People v. 64 Cal.2d debtor or 560, Gipson, States v. 91 rial Fact Issues: United 103, (1966) (imma Cal.Rptr. 414 P.2d 39 51 (1977). Harv. L. Rev. 499 felony burglar intended to com terial which represent equiv upon entry premises); mit or opinions Subsequent in the Fifth Circuit and carry penalty, the same alent criminal roles that principle. elsewhere have refined this broad 691, see, Carothers, Wash.App. e.g., State v. 9 514 Baldwin, 441, See, e.g., State v. 101 Wis.2d 304 murder/murder), (1973) (felony aff’d, P.2d 170 742, (1981) (immaterial in sexual 747 N.W.2d 256, (1974); United 84 Wash.2d 525 P.2d 731 is element of crime wheth assault when "force" 64, Peterson, (2d Cir.) 768 F.2d 67 States v. by achieved actual blow or raised er force J.), abettor) (Friendly, (principal/aider cert. and fist). relationship tying between alternative The 923, 257, denied, L.Ed.2d 474 U.S. 106 S.Ct. 88 they merely represent may specifications be that (1985). 264 continuing closely portions related or of a statutory interpretation Additional issues of conduct, see, e.g., United course Schiff, denied, specified legislature the has arise when 108, (2d Cir.1986), cert. F.2d 114-15 801 multiple modes or — a statute definitional 1603, within U.S. -, S.Ct. 94 L.Ed. 107 essentially committing multiple means of Sutherland, (1987); v. 656 States 789 See, e.g., v. McPher- crime. United States Cir.1981), same 1181, (5th cert. 455 (6th Cir.1986) (crime L.Ed,2d son, (1982); F.2d 66 under 102 S.Ct. "embezzle, abstract, rea, purloin or § U.S.C. 656 to in mens differences represent immaterial or funds; aug- McGuire, willfully misapply’ absence of bank 744 F.2d see, e.g.,

lili Thus, terms, in common law the second because the agree required that a defendant did an to disclose augmented actus una- nimity requirement question is, jurors reus with a mens to the rea. The as a mat- ter of they law when sought specific alleges infor- when the State alternative acts or mation about their agree need to on one or intents,7 each of which satisfy would more of the statements. or required, actus reus mens rea must the jury agree on the same or actus reus mens To resolve the question whether there speci- real Sometimes alternative factual must have been “specific” unanimity about closely fications are so statements, related that a alternative false we must look at the statute and at need not be unanimous the two as to which factual false alleged. statements 7206(1) U.S.C. predicate specification supports or §§ the de- (2) and criminalize the willful filing and guilt. fendant’s this is a Often matter of preparation of a “return” that is not “true common charge sense. If the is assault and correct as to every matter,” material battery, and the evidence is that the 7206(1), and that is “fraudulent or § ... defendant hit the victim the face or on matter,” false as to 7206(2). material § shoulder, few would insist Relying part on practice its of filing one jurors agree on more than the fact of the return, indictment count for each supra see blow, precise not on its location. note argues Government To decide whether jurors these should essence of the filing statute is the of the have been they instructed that must all (or untrue) false By return. this reason- agree particular that a statement was will- ing, need be only unanimous on false, fully we must examine two issues: return, the overall falsity of the but not on (1) jury’s Must the actually verdict have any particular false statement. been unanimous as to one or the other We believe instead that the essence of specific statement? and If unanimity the statute lies in the falsity willful of a required, jury actually must the have Although 7206(1) statement. is not in- § requirement? been told of this We believe voked taxpayer unless a subscribes to a questions that both these must be answer- return penalties “under the perjury,” ed affirmatively first because the two —the sought criminal conduct proscribed— to be alleged false statements themselves consti- gist preparation offense—is the culpable proscribed tuted the essential acts making statements, of false not the by statute and each false statement was a signature filing. final act of See Unit- discrete requiring separate proof, fact Haynes, ed States v. charge error); plain mented 7(c) not visory explains Committee Note to Rule Gipson, (18 pro provision 553 F.2d at § U.S.C. 2313 that this was "intended to eliminate "receiving, concealing, storing, hibits bartering, multiple the use of purpose counts for the selling, disposing”; alleging the commission of first three and last the offense differ- three ways.” Alleging ent means or "conceptual groupings" terms form in different two mul- count, tiple however, ways single means or necessary group as to each but not may specify predicate more than component one factual group); as to each Frazin, jurors’ that could underlie individual (9th Cir.) (in determina- mail guilt. tions of a cases, defendant's jurors or wire fraud must be instructed to agree fraud,” Department Tax Division of the Justice "single existence of a scheme to de appears routinely charge necessarily not defendants who particular “a set of facts”), multiple have made false statements on tax re- denied sub nom. Miller v. United States, multiple years L.Ed.2d turns for with one count of vio- 7206(1) lating year, apparent for each rec- 84 ognition statutory language appears that the prosecutor's charge 7. A upon filing decision to could what focus ly of a "return" that is willful- multiple constitute criminal violations within untrue as to each false An statement. indict- the same governed by charged count of an indictment is ment that a defendant who had made legislative considerations of prose- multiple single intent and of false statements on a tax return discretion, by pleading cutorial multiple violating the difficult with counts of the statute duplicity multiplicity. arguably might rules of expose greater Fed.R.Crim. the defendant to 7(c) permits prosecutor P. allege punishment Congress "in a than intended and there- single count subject multiplicitous ... that the defendant committed fore be to dismissal as a [the one or more supra offense] means.” The Ad- indictment. See note 4. Cir.) (willful separate is the falsification “focal “three transactions of Beros’s denied, cases), cert. conduct,” point” Judge of 439 criminal Higginbotham § 154, 850, Judge U.S. 99 S.Ct. 58 L.Ed.2d 153 Unit- reasoning follows Wisdom’s (1978). Gipson, ed (5th The tax return States juris is the federal 553 F.2d 453 Cir.1977), dictional element. The false statement is that such circumstances the culpable act.8 require[s] unanimity “sixth amendment ... regarding specific act” because analogous great variety cases in a government prose- chooses to “[w]hen contexts, statutory other alternative factu multiple may cute under ... theories” it predicates require al have been held to “rely composite theory guilt, not on a See, e.g., United “specific” unanimity. producing jurors twelve who were not Beros, 455, (3d States 833 F.2d 460-62 unanimous in their assessment of which act Cir.1987) (three alternative transactions supported the verdict.” 833 F.2d at 461-62 charged in same count as occasions of “em (emphasis original). Likewise, bezzling, stealing, abstracting or convert Friendly in Peterson: point makes the same ing to own use” union funds: unauthorized Natelli, United States v. 311, 527 F.2d card, excessively expensive use of credit denied, (2 Cir.1975), cert. 324-25 room, portion stay per hotel of hotel 934, 1663, U.S. 96 S.Ct. 48 L.Ed.2d 175 Peterson, reasons); United States v. sonal (1976), strongly implies, if it does not 64, (2d Cir.) (two 768 F.2d in discrete hold, actually must be drug possession charged stances of in same “specification” unanimous as to each glassine envelopes count: three found on indictment, count of an on which it finds glassine envelope defendant’s brother and case, one guilty; defendant in that denied, wall), cert. nearby stored charged count the indictment 923, 257, 106 S.Ct. 88 L.Ed.2d 264 with making rep two (1985); Payseno, United States v. 782 F.2d defendants resentations in a false statement, proxy 832, (9th Cir.1986) (three charged acts wit, earnings an statement and a foot of extortion persons made to different at holding note. A clear that the must times, different person some in and some respect be unanimous with to at least one by telephone); United v. Margiotta, sufficiently proved act 729, (2d was made and Cir.1981) (in single 646 F.2d Gipson, United States v. explicated in alleging mail fraud count numerous mail 453, (5 Cir.1977) 553 F.2d 456-59 ings, jury agree on “at least one (Wisdom, J.). there, however, denied, item”), The court 913, 103 461 U.S. S.Ct. qualification principle added the 189, (1983). 77 L.Ed.2d 282 applies only insofar as the acts on which by Judge Higginbotham discussions unanimity required is fall into “distinct Judge Friendly Third Circuit and conceptual groupings.” Peterson, the Second Circuit in Beros added). (emphasis 768 F.2d at 66-67 supra, gen- are sufficient to illustrate the exceptions, see, point. describing eral After e.g., the embezzle- With a few purloining ment Bouquett, States v. alleged count which 820 F.2d prosecution single If this were a for tax evasion false statements contained in a return be reasoning charged under 26 multiple § U.S.C. would be means the same count. gist charge different. The compel tax evasion unanimity It does not a conclusion that by filing may willful evasion of tax a return that culpable dispensed as to the act can be with. multiple complex involve understatements or pleading require placing multiple Rules of continuing omissions made in a course of con- specifications within the same count do not Lennon, duct. eliminate the need for unanimous determina Cf. (2d Cir.1957) (separate acts of understate- specifications they tion of those Indeed, are distinct. exemptions ment of income and fraudulent duplicitous one cure for an otherwise single named in count were "different methods give augmented indictment is to instruction single which a offense have been effec- requiring on one or the other tuated”). ap acts within a count that otherwise Accepting arguendo pear separate to constitute See the Government’s conten- offenses. Cir.1981), (2d Congress only Margiotta, tion that intended one term of punishment for each false return in violation of rt. ce requires only that conclusion 77 L.Ed.2d 282 Gipson, assignment Cir.1987) (dictum reject of the details preparing seems of the applicable Beros, return employee. rationale but to his His Peterson willfulness on unclear), rela authorities are capital gain the principle mainly turned on his status principle, tively uniform on this and skill participation as a CPA and on his in each individual judgment of question planning in the with Crabtree and Butcher. distinguishing of becomes one case then Proof of Duncan’s willfulness toward groupings” from a sin conceptual “distinct $8,800 payment required interest an assess- of related gle conceptual grouping facts. ment of an ambiguity unresolved in the Judge Friendly noted italicized As signed case of he whether the return itself above, quote of the Peterson portion declaration, or a later and thus never saw containing representa “two false count Deciding the return. his willfulness on the representations in the in tions” like capital gain entailed consideration of his normally containing treated as stant case is law, knowledge relationship of tax his conceptual groupings.” two “distinct Clos Downing, his knowledge actual statutory the cases in point est on are other alleged details of the “sham” transaction. requiring specific unanimity for contexts proof required When distinct is to establish 18, 1014, ex false statements. Title for § distinct affirmative acts as elements of an making ample, in terms criminalizes the offense, specific unanimity necessary. is report.” It has “any false statement or good Franco, See the discussion in v. State single that a doc been construed to mean 96 Wash.2d 639 P.2d 1328-31 containing multiple false statements ument (1982) (Utter, J., dissenting). pleading and must be treated for sentenc We therefore conclude that the offense count, single ing purposes as a see United charged underlying and the facts Counts (5th Sahley, 526 F.2d States v. Three and Five make this case one which Cir.1976). Yet courts 1014 cases have § required part is as to one specific unanimity in augmented held that multipart count of an indictment. The single are when a structions warranted Circuit, reaching Ninth a similar conclu- alleges multiple count falsities. See Unit sion, unanimity on has held that alterna- (3d Ryan, v. 828 F.2d 1010 Cir. ed States necessary tives is “discrete acts are when 1987); Mangieri, v. 694 F.2d United States count, alleged single charges such as (D.C.Cir.1982); see also United States statements, separate any one of false Cir.1979) Jessee, (9th v. which is sufficient to convict.” United (count bankruptcy alleging false oath (9th Ferris, 719 F.2d statements; alleged separate nine false Cir.1983) J.). (Kennedy, augmented approved); instruction (2d Cir.1977) Droms, v. 566 F.2d 361 States Instruction Necessity C. (noting in dicta that alternative falsifica whether, giv inquiry Our second tions in count under 26 U.S.C. verdict, necessity for a unanimous en 7206(1) “required entirely different required to instruct proof’). necessity. authorities, Under these developed in other cir general rule agree on the willful in this case needed to indictment count is that even when an cuits falsity factually one distinct false state (“dis provides or more factual bases two “concep ment because the statements are conceptual groupings,” tinct Although inter tually distinct.” both the upon a conviction phrase) which Wisdom’s deduction and the income character est rest, only general instruction could transaction, arose from the same ization necessary advise the unanimity is of their formulation and the circumstances they be unanimous “on whatever falsity proof bearing upon their willful guilty the basis of the specifications form Downing’s willfulness to were distinct. verdict,” Ryan, 828 $8,800 interest deduction turned ward Pay (quoting 1019-20 having signed Desh’s at principally on his Cir.1986)); seno, see interest, paid and on his check that 892, acts, general Murray, F.2d instruction States v. Cir.1980), (2d under the count in unless does not suffice. (1) nature of the question: evidence is any potential To correct confusion in complex or the exceptionally alternative case, judge a the trial aug- such contradictory only are specifications or general ment instruction to en- other; (2) related to each or marginally jury sure the understands duty its between indictment and there is a variance unanimously agree particular to a trial; tangible proof at or there is indi set facts. confusion, jury jury cation of as when the (emphasis supplied); 719 F.2d at 975 ac- questions or the has has asked court 837; Payseno, cord F.2d at regular supplementary instructions that Mastelotto, v. 717 F.2d 1238 States significant nonunanimity. create a risk of Cir.1983). presence has been the touchstone (emphasis original). 833 F.2d at 461 genuine jury risk that the is confused or may that a occur as the result of conviction case, jury’s the context of this jurors concluding different a that defend request just for clarification manifested ant committed different acts. See United tangible jury risk such a confusion and Beros, 455, (3d v. 833 F.2d 460-62 nonunanimity necessary on a element of Cir.1987); Ryan, 828 United States v. charged. the offense Presented with this 1019-20; Ferris, at 719 risk, appears unfortunately 1407; F.2d at v. Echeverry, United States appreciated not to have the thrust of the 375, (9th Cir.1983), 698 F.2d 376-77 mod Instead, jurors’ problem. judge merely 974, (9th Cir.1983) (en ified, 719 F.2d ruling materiality restated his im- banc) (question jury indicating from confu parted ambiguous ju- advice that the sion); Schiff, 801 F.2d you rors should convict “if are convinced — (2d Cir.1986), 114-15 respect return was false with [that the] -, 107 S.Ct. 94 L.Ed.2d 789 either one of these matters.” This instruc-

(1987). tion did not deter the jury arriving from at Judge Higginbotham’s discussion in Be- composite a verdict. normally ros states the standard followed It seems obvious that the District in such situations federal courts: error in Court’s instruction was not harm determine, light task is Our jury less. This was a conscientious that allegations made and the statute parts had for days deliberated of two be charged, potential juror whether the for questions, fore it asked its deliberated not, confusion existed. We need and in- receiving more several hours after the an case, probably deed could not in each pronouncing swers before satisfy itself dead jury that ourselves locked, and then took several more hours Appeals confused. As the Court of fact day reaching into the next before its ver for the Ninth Circuit noted in United jury obviously dicts. The wrestled with its Echeverry, mod- (9th Cir.1983) (en problems ified, 719 F.2d 974 and returned with a discrimina banc), hypothesize ting acquitted are free to not verdict on some counts “[w]e agreed Although whether the indeed to and and convicted on others. we do theory reached, was clear on the” transaction or surely not look behind the verdict guilty. heightened which it found Beros there is a risk in such circum Rather, at 377. we adhere to the sim- composite, stances of nonunanimous ver pler, constitutionally more correct possibili dict. When there is a reasonable rule: ty that a has relied on an “unconstitu understanding of law” in tional reach appears

When it ... there is a verdict, genuine ing guilty that verdict must be possibility confusion or Franklin, set aside. that a conviction occur as the Francis jurors concluding result 322 n. 1975 n. of different L.Ed.2d 344 defendant committed different deliberating jury plete from often question A disclosure to his accountant of all pivotal moment in a criminal material facts of represents a which he had knowl- this, edge, like and Particularly strictly in a close case then acted in trial. accord- special care” ance with the advice judge “duty a trial has a of to him his responding request for “further accountant. when to a

light foreperson from the on a vital issue” Whether the good defendant acted in jury. Frankfurter of a confused As Justice faith in relying on an accountant whom said: honestly he competent, considered trial, whether he made a complete full and

Particularly in criminal a accountant, disclosure to his and whether judge’s apt word is to be the last decisive strictly he acted in accordance with the specific ruling If it a on a vital word. accountant, advice rendered to him his misleading, issue the error is not questions you are all for to determine. by prior unexceptionable and un- cured a illuminating charge.... abstract When good As evidence of his faith reliance explicit makes its difficulties a upon Downing, (1) pointed Duncan to away should clear them with overall circumstances of the transactions in accuracy. concrete question and relationship of his to Down- (2) ing; specific testimony States, prepa- about the Bollenbach United question; ration of 612-13, 402, 405, the returns 90 L.Ed. 350 hearsay his own statements of reliance which were admitted at trial via the testi- Upon III. Good Faith Reliance mony of live witnesses.9 Tax Accountant testimony There Downing, Evidentiary A. Foundation firm prepared CPA whose a modest num- addition, assigns Duncan error as basis, regular ber of tax returns on a give refusal of the District to regular preparer Duncan’s and indeed had following instruction: promised to handle Duncan’s returns each year charge, for the rest of his life for no complete

Good faith is a defense to the forgiveness apparently in of a More- debt. charges in good the Indictment since over, theory the Government’s own cast part faith on the is incon- defendant Downing the initiator as of the Blalock willfulness, sistent with the existence possession transaction and as of all in- which is an essential element of the formation relevant to it. proof crime. The burden of is not on the defendant, course, since he has no Second, Downing employee, one Burke prove govern- anything. burden to The Wallace, described Duncan’s tax return beyond ment must establish a reasonable “bag preparation job” as a which the willfully doubt that the defendant acted taxpayer bring in his would records charged in as the Indictment. bag brown and the accountants would have However, a through defendant will not be will- to sort them. Mark Lund’s de- doing fully wrong good scription preparation if he relied the 1982 honestly faith on an accountant whom he return was that he obtained all information competent, Downing. Although Downing neither believed made a full and com- from self-incrimination, argues right against special leniency 9. Duncan also on the ment or an ab when, here, required taxpayer standard of evidence requirement must solute taxpayer’s preparer nontestifying tax is a code- rely present on evi the evidence rather than testimony compelled fendant whose cannot be case, present prosecution’s dence for that for Fifth position Due our dis- Amendment reasons. principle run of the Due Process would afoul grounds, need of this issue on other we proof has the burden of that the Government possible question. not reach this constitutional as an element of the crime. establish willfulness note, however, ancillary principles We Phillips, See (7th Cir.1955); necessary standard of to warrant an evidence Mitchell, require- instruction cannot include absolute 1974) (reliance not abso Cir. taxpayer testify, ment for that willfulness). negate lute defense but taxpayer's would burden the own Fifth Amend- good inadvertence or mistake or due to a testimony specifically tended employee’s reliance, misunderstanding of each was consistent with faith the law. establish theory. However, if willfully an act is done voluntarily intentionally, done accom- Finally, Stanley Roy, a who CPA law, specific intent to violate the with conference panied Duncan to a 1984 audit specific or with the intent to fail do Mary Patricia agent an IRS named with something requires which the law to be Hitchcox, told the testified that Duncan done. Downing’s expertise agent he relied on will have established Government right specific on the issue of the both the willfulness element this offense prepara- general tax first refusal and for beyond it has been established a reason- tion: Defendant Duncan knew able doubt that him as to Q: Did ask Hitchcox] [Ms. prohibited filing of a materi- the law understood whether or not [Duncan] ally false or fraudulent tax return and per- option questions that and all those intentionally he filed such a return. taining option? to an As with other matters to be estab- said, “Well, Mike A: Yes. And he Down- case, lished in this Defendant Duncan’s ing really I don’t know handled that. by or intent be shown either direct it, he handled it too much about but circumstantial evidence. I paid and it off some debt that had at Tr. 1953-54. the bank.” opinion denying In its written Duncan’s trial, motion for a new the District Court Q: anything by stated Mr. Was there correctly described the elements of a re Agent your Duncan to Hitchcox (1) liance defense as full disclosure of all presence as to whether or not he had facts, pertinent good and faith reliance upon anyone preparing relied else his advice, citing on the accountant’s return? Whyte, 699 F.2d 375 Cir. objection]. The Court: Sustain [the Cox, 1983), and 348 F.2d leading question. That’s a 294, (6th Cir.1965). The Court also What, Q: by if anything, was said Mr. correctly noted that an instruction should pertaining preparation Duncan to the support evidentiary not be “if it lacks of the tax return? upon suspicion specula or is mere based Downing A: He said that he had Mike James, tion,” United States v. quoting prepare his he relied tax returns and 674, (6th Cir.1987), citing F.2d on him. Head, case, United States v. tax Tr. 1393. Ms. Hitchcox had testified (4th Cir.1982), earlier but was not called the Govern- 1132, 103 S.Ct. 77 L.Ed.2d 1367 testimony. ment rebut this (1983). conference, charge At the the District The District elaborated that Court rejected proffered instruction on Court the reliance first element of defense was saying reliance that reliance was a fac- not satisfied because there was no evidence argue that counsel could tual determination any that Duncan had made disclosure to but that the would have to to the “Downing Downing; contrary, pro- to the instruction on decide based on Court’s return vided as much information meaning “willfully.” Tr. 1838. as did Duncan.” The Government essen- general instruction The District Court’s appeal, agree, and we tially concedes was: on willfulness the District Court was incorrect on point. pointless, be Concerning “willfully,” an act It would the term case, voluntarily of this to insist on willfully if it is done circumstances done is rele- proof taxpayer disclosed all of a known intentionally violation preparer vant to the when evi- not willful it facts duty. legal Conduct preparer possessed all great, dence was that negligence, however from results outset, panel facts from the as the for a Judges Miller, the relevant Engel and transaction, underlying Weick, initiator of the that “when a theory of defense support there was thus no information for the tax- finds some in the evidence law, payer to disclose. a defendant is entitled to some mention of theory in the instructions.” The District Court held that the second Garner, element was not satisfied because there (6th Cir.), cert. denied sub nom. Brown v. was “no evidence” to that effect. The Dis- States, trict Court noted that Duncan “himself did 49 L.Ed.2d that, It is true as not take the witness stand” and discounted observed, Bazelon once attempt Roy’s testimony because it was made at precise quantitative formulate a mea return, the audit of Duncan’s 1981 not of sure the amount of evidence necessary his 1982 return. The Court characterized to raise an issue to requiring the level statement, reported Duncan’s by Roy, as produce instruction “can no more than an least, say ambiguous, “to somewhat illusory definiteness.” Tatum v. United approach not establishing would even States, (D.C.Cir.1951), necessary facts to establish a reliance de- Garner, cited by 529 F.2d at 970. Certain fense, if it even were directed at the 1982 ly the test cannot be one of reasonableness. return.” judge, It is not for the but rather for the The District Court said that the defend- jury, “appraise to the reasonableness or nothing ants had offered “next to the unreasonableness of the evidence” rela way regarding putative of evidence their theory. tive to the reliance ” trying ‘theories’ and were to have it Phillips, Cir.1954); 217 F.2d 442 ways.” “both The Court said there was Platt, United States v. good no evidence of defendant Duncan’s (2d Cir.1970) (reasonableness of reliance is relying upon Downing put what faith jury question). To hold otherwise would be knew, in the 1982 return. surely Duncan grant partial tantamount to a summary $8,817.59 example, paid that he never judgment to the Government in a criminal Bank, in interest to the United American case. Knoxville, yet the return shows such good A claimed defense of faith re payment. a In many these times when upon preparer liance a tax or tax counsel is prepare of us have accountants or others disposi- a critical circumstance that be returns, permit our tax the law cannot us tive of the central issue of willfulness. Id. merely eyes to close our the blame Particularly impor on an issue of such ap- accountant for the information which tance, we believe that the standard will be returns, pears the especially without “any if satisfied there is foundation in the any evidence that we acted innocently. bring evidence” sufficient to the issue into Memorandum and Order June case, “weak, the even that evidence is 4, App. (emphasis original). at insufficient, inconsistent, or of doubtful B. Entitlement to Instruction Tatum, 443; credibility.” Id. at see 616; Garner, F.2d at 529 F.2d at 970. sympathize While we with the District general desirability Court’s views on the The District Court believed that its accountability quarrel individual and do not general instruction on willfulness was suf with its recitation of the law on this sub- ficient and that Duncan’s counsel could ject, we nevertheless conclude that on the provide gen facts to fit within its give facts of this case its refusal to by arguing eral statement law usurped reliance instruction the function of there could intentional be “no violation jury by depriving oppor- Duncan of his legal duty known in that situa [reliance] tunity present theory to his of defense. approach tion.” Tr. 1838. This was insuf Notwithstanding by proper request the cases cited ficient. When a for an in Court, District theory it is the law in this Circuit struction on a criminal defendant’s elsewhere, made, explained as Weick of defense is it is reversible error not present theory to adequately in a full instruction on willfulness by the Dis- statement of the law. See Bird v. United trict Court thus could not have been cured States, 356, 361, 403, 405, 180 U.S. by argument S.Ct. of counsel. To contrary, (1901); 45 L.Ed. 570 might well have concluded that Blane, (6th Cir.), counsel’s argument hollow on reliance was contrary to, 88 S.Ct. 19 L.Ed. precluded by, judge’s 2d 96 statement of the law.

Moreover, general charge when the on We say do not mean District appears an issue specific to exclude the Court was required give the instruction theory being argued counsel, defense by by offered Duncan. As this Court said in here, it unsupported by Gamer, argument, did defendant entitled to “some an instruction to which the defendant is mention” theory defense, of his not nec entitled, may be help- more harmful than essarily to language the exact sug he has In Phillips, ful. 440-41, gested. F.2d at al- 529 F.2d at 970. present though there case, was no contention and no it would have been well within the proof that the report defendant failed to Court, discretion of the appro District gross through income negligence either priate, modify suggested instruction carelessness, the (1) court lower had refused tailoring prong the first of the re to instruct on what effect the should liance defense to reflect factual circum give proof that the omission was due to stances discussed combining above and upon reliance lawyer, advice of his but the reliance instruction with an instruction gave following instruction: on the adverse effect “willful blindness” good must have on a negligence

Nor would mere faith defense to crimi or careless- See, e.g., ness, nal intent. Williamson v. unaccompanied faith, bad render States, 425, 453, guilty. defendant (1908); L.Ed. 278 Lawson, Reversing conviction, the Seventh Cir- 535, (6th Cir.1985); F.2d cuit noted that argument reliance counsel’s Schiff, States v. 108, (2d F.2d 112-13 jury, to the unsupported by appropriate — denied, Cir.1986), U.S. -, instruction, aggravation “an constituted 1603, (1987). S.Ct. 94 L.Ed.2d 789 mitigation rather than a of the harmful effect of the Court’s refusal to instruct.” Nor are saying we that a reliance in Id. at 440. struction, with or without “willful blind Even if claim that his fell interest item were or misunderstanding was no claim that Duncan’s actions on the the law.” Tr. due to “inadvertence or mistake.” There duction could fit great, due to a es in which conduct would not be willful: merated for the Court’s “if it into results from ^[2] The same is true here. The District general good inadvertence or mistake or jury actions the three willfulness instruction enu faith misunderstanding of jury accepted into these due to either ^[1] three Only of the negligence, on the categories as specific the interest de categories law, factually capital negligence however instanc and no listed. gain es ^[3] as 2d 270 undertake course of to nied, study Cir.1976) (defendant cer S.Ct. miliarity with suit of overwhelming evidence to the contrary. parer’s a defendant asserts ness” Cf. (9th Cir.1976) (defendant instruction, course of advice in t. Hoopes, protest 51 L.Ed.2d 556 statutes action of internal revenue laws must be good that Schmitz, decided after S.Ct. 429 U.S. resulting he faith, action), thoughtful (1977); followed a admitted fa if there is whenever cert. de in 53 L.Ed. years prosecution), pur pre tablished arguments the reliance made What we hold this: some evidence counsel, Duncan’s it could not match brought good those faith reliance issue into arguments against any Tatum, judge’s ease, the trial this at categories exception. boilerplate The negate other evidence did not it. Under

1H9 circumstances, items, those the defendant is enti- indicates jurors that the were unani- tled to an instruction tells mous on one of the items. theory about a central of his defense. Two, In Count two sums are discussed relative to the 1981 tax return. If we Defendants’ remaining contentions on agree that one was prob- known appeal and one have been considered and are with- ably was not when the return filed, merit. judgments out in conviction how, possible, do we apply your the District are in- Court vacated for the rea- structions to this sons stated dilemma? and the Must cases both remanded for accepted be before a guilty new trial on Three and verdict on Counts Five consist- this Count can ent with be determined? opinion. Is the

exact wording in the Indictment or the KENNEDY, Judge, Circuit concurring paraphrasing in Judge’s Charge part dissenting in part. precedence? take I concur in III Part opinion Court’s The colloquy between the court and parts and in A and B of disagree Part II. I counsel their indicates attention was fo- majority’s holding with either cused on whether government had to District Court should have prove been alerted to the return was false in respects. both the item unanimity issue or that it was It is interesting that the of unanimity issue plain error not to instruct the that it falsity to the specific item was not should be unanimous as particular to the even appellants raised by Downing’s until items prepared by return Downing reply brief. were which false and fraudulent and which The jury polled responded each did Duncan not believe to be true and cor- were their verdicts individual ver- rect. dicts. The instructed the The majority concludes that because the that their verdict must be unanimous. This had, defendants in pretrial motion, raised I believe was sufficient. Accordingly, I the claim that Counts III and V were du- would affirm Downing’s conviction. plicitous and, in support claim, of that had

argued in jurors Duncan’s brief that the

might though convict jurors even were

not unanimous finding the returns were respects,

false the same court

should have problem. been alerted to the The record reflects that the motion and CARTER, Rosa Administratrix of the Es- 28,1986. brief were filed July The trial Carter, deceased, tate of Adrian Miles began in May 1987. The motion was one of Plaintiff-Appellant, Cross-Appellee, pretrial assigned magis- motions to the trate. The brief was never submitted to CHATTANOOGA, CITY OF TENNES- the District Court. defendants’ 22 SEE, Defendant-Appellee, pages objections magistrate’s Re- Cross-Appellant. port and pretrial Recommendation on mo- tions, only 84-5247, defendants mentioned issue Nos. 84-5276. in one vague sentence. A reference at trial Appeals, States Court of ato filed year memorandum earlier be- Sixth Circuit. judicial

fore different officer cannot be Argued Aug. 5, 1987. expected anyone anything. alert June Decided 1988. agree While I jurors’ questions should alert possible

problems, jurors’ here question, rather

than suggesting a lack as to Count Two had capital gain that Duncan knew report- short-term should been have $11,600 $200,000 salary and believed ed as income.

Case Details

Case Name: United States v. Joe S. Duncan and Michael M. Downing

Court Name: Court of Appeals for the Sixth Circuit

Date Published: Sep 1, 1988

Citation: 850 F.2d 1104

Docket Number: 87-5896, 87-5897

Court Abbreviation: 6th Cir.