*1 America, UNITED STATES
Plaintiff-Appellee,
v. BOULWARE, Michael H. Defendant-Appellant. America, United States Plaintiff-Appellant, Boulware, Michael H. Defendant-
Appellee. 02-10287, 02-10338. Nos. Appeals, United States Court of Ninth Circuit. Argued and Submitted Dec. 2003. Sept. Filed *4 TASHIMA, THOMAS,
Before
SILVERMAN, Judges. Circuit TASHIMA;
Opinion Judge Dissent by Judge SILVERMAN.
TASHIMA, Judge. Circuit appeals Michael H. conviction, by jury, after trial on five returns, filing four counts false evasion, of tax count of counts one *5 conspiracy to make false statements to a federally-insured financial institution. He contends that all of his convictions must be government reversed because the failed to counts, proof meet its burden of on the tax constructively amended the indictment trial, during engaged prosecutorial and in misconduct. He also contends that prejudicially district court erred in exclud- key ing giving inadequate evidence and misleading jury Finally, and instructions. he contends that his sentence must be vacated, because the district court failed to disputes regarding resolve factual amount of the tax cross-ap- loss. its peal, contends that refusing district erred to enhance jus- Boulware’s sentence for obstruction tice.
Although alleged by most of the errors Boulware do not warrant reversal of his convictions, one of them does. The district by excluding court abused its discretion Waters, Monica, CA, Robert J. Santa evidence of a state-court O’Connor, Honolulu, HI, Dennis E.W. directly supported Boulware’s defense to defendant-appellant cross-appel- and charges directly the tax and that contra- lee. government’s theory dicted the Division, Quesnel, Karen M. Tax U.S. case—that Boulware had stolen Justice, DC, Department Washington, closely-held corporation gift- from his and for the plaintiff-appellee cross-appel- girlfriend. ed it to his the error As went lant. to the heart of Boulware’s defense and was II doubt, beyond not harmless reasonable trial is entitled to a new on Vending Boulware started M & S in nine tax counts. working telephone while as a repair- company placed man. The video games restaurants, quickly bars and and it ex- I business, panded into other lines of such as investigation by In- six-year After a cigarette sales. In about compa- (“IRS”), ternal Revenue Service Boulware ny was renamed Enterpris- Hawaiian Isles filing on four counts of false (“HIE”); was indicted es Boulware owned all of the years, tax returns for 1989-1992 shares. HIE branched out into coffee sales, 7206(1), roasting § and formed a subsid- violation of 26 U.S.C. one count iary named Hawaiian Isles Kona Coffee conspiring to make a false statement to Company. acquired Boulware later a bot- institution, federally-insured financial tled water company transferred its § violation of 18 U.S.C. and four to HIE. By reporting stock HIE was statements, making counts of such false million, gross receipts of over $55 A violation of 18 U.S.C. tenth 1992 sales had topped million. $85 sought count forfeiture of funds associated trial, At superseding government sought with the false statements. A to prove systematically Boulware had diverted filing indictment added five new counts of funds from HIE in to support order returns, false tax for the 1993-1997 tax lifestyle. lavish In particular, gave that he evasion, in years, and four counts of tax *6 millions of HIE money dollars of to his of for violation 26 U.S.C. the 1994- Lee, girlfriend, Jin Sook and millions of years. Finally, tax second su- wife, Boulware, dollars to his Mal Sun (“the indictment”), perseding indictment reporting any money without of this on his allegations amended the factual of the con- personal According income tax returns. to count. spiracy government, siphoned he off this mon- six-day trial After and two-and-a-half ey primarily by writing employ- checks to deliberations, days jury of convicted having ees and friends and them return 29, 2001, Boulware on of all November him, by the cash to diverting payments customers, nine tax counts.1 The also convicted HIE submitting fraudulent conspiring by laundering him of to make false statements to and HIE invoices money institution, through companies Kingdom in the federally-insured to a financial Tonga Hong Kong. of and him acquitted but of the substantive false statements counts. The district court sen- regard With to the false statements tenced Boulware to a 36-month term of counts, government attempted prove to on false tax re- imprisonment each that Boulware and a business associate counts, turn 51 months on each of the tax Kushiyama named Lorin received financ- counts, evasion and 51 months on the con- ing Company from General Electric Credit count, (“GECC”) all run spiracy terms to concurrent- based on the submission of false ly.2 particular, invoices. In trial, During imposed three-year tax 2. The court also term of false return counts severed, release, fines, years the 1994-1997 tax were redact- supervised and forfeiture indictment, $495,814. ed from the and later dismissed prejudice. with court ordered Lee to return the financing pur- state prove
tried to money to HIE. Kushiyama’s company to allow portedly to it game machines video purchase that, The defense also tried to show According to HIE. lease or sell would then entrepre- success as an despite Boulware’s already HIE owned government, to the neur, relatively unsophisticated he was a loan Kushiyama gave the machines person paid neither understood nor who proceeds to Boulware. A certain accounting attention to issues. disregard corporate formalities was also that Boulware did The defense case was fact that he owned and ran the due to the income in of the rele- underreport addition, company. the nature his HIE maintained years, because vant (e.g., purchasing business coffee beans ownership of all of the funds beneficial Kona) growers required cash from on underreport Even if he did question. to corporate he receive advances make income, good-faith acted in he at all times always comptrol- deals. He informed his counsel. reliance on the advice of transactions, Merwyn Manago ler of these (or Boulware, he intended to According they to were Boulware was under the were) they in this case on money impression reported use most of the at issue in HIE’s and tax returns. buy out his wife’s marital interest books not, HIE was therefore loans, regard With the GECC not, to him. He arguably at least taxable defense made a case that the transactions for a divorce asked his wife govern- were not fraudulent. What him liquidate to force she threatened ment portrayed as false invoices were real- mil- agreed give HIE her unless $5 ly legitimate appraisals game of the video Boulware and lion and a million house. $1 machines, which were to serve as collateral that it would take time for his wife realized for a loan from to HIE. GECC buy HIE out her interest. When he agreement, Lee about the Ill told Jin Sook to hold the as was she asked Judg- A. Exclusion of the State-Court *7 wanted to accumulating, because she make ment it for the divorce. sure he saved His argues Boulware that the district court (1) him a lawyer his wife had advised improperly excluded of a evidence Hawaii company half of the as her marital right to judgment, civil which determined that (2) HIE, share and if Lee held the funds of HIE money owned the that Boulware had HIE, money in trust for would be given to Jin Sook Lee between 1987 and taxable to Boulware. 1994. As the state court found that Boul- Boulware testified that 1994 he had gifted ware had not the funds to Lee and enough HIE, HIE collected redeem belonged that the funds he con- his company wife’s share of the and final- liability tends that he had no federal tax Lee, however, ize their argues divorce. refused to for funds. He that the im- those reason, money. return the proper For this Boul- exclusion of this evidence violated process right ware had to to present scramble to obtain other funds due evidence buy out in his defense. his wife’s marital interest. For example, he received a million loan $1.7 1. of Standard Review 1997, in Finally Harold Okimoto. Hawaii state-court found that generally We review district holding belonged evidentiary rulings Lee was to HIE. for court’s abuse
801 Sua, 1987,' States v. discretion. United 307 F.3d Boulware was married to denied, time, Mal Sun Boulware. At that cert. 1150, Cir.2002), due to 537 1152 differences, irreconcilable Michael Boul- 1221, 1327, 154 L.Ed.2d U.S. 123 S.Ct. ware and Mal agreed Sun Boulware (2003). standard, Under this reversal they get would divorced because their appropriate only where the trial court marriage beyond redemption. clearly made an error of or a errone law Boulware understood and realized that fact, reviewing or where the finding ous “ division of property the marital would definite, firm court has ‘a and conviction require substantial sums of cash the district court committed a clear properties in satisfy ” order to his wife’s United States v. Fin judgment.’ error of demands. Boulware wanted to insure (9th Cir.2002) ley, 301 F.3d that he would not have to sell [HIE] (quoting United States v. Benavidez-Be result of the divorce. Boulware advised navidez, (9th Cir.2000)). Lee that he and his wife had decided to review de novo the We district court’s divorce and the'parties’ advised her of interpretations of Federal Rules property division discussions agree- Angwin, States United Evidence. ments and that such agreements would (9th Cir.2Q01). require payment of substantial sums in cash and properties.... Background 2. Factual Commencing 6.. about 7, 1994, a year On October over after 1987[HIE] advanced monies from time Boulware became aware that the IRS was pursuant time to Boulware to oral and him, investigating but four-and-a-half understandings written and debt instru indicted, years before he was Jin Sook Lee whereby ments agreed to ac conversion, complaint filed a breach of repay for and all such monies not count contract, unjust enrichment against properly accounted for as business ex HIE Boulware and in Hawaii state court. penditures incurred on behalf of the complaint, alleged In the Lee that .Boul- company. Commencing or about 1987 ware, individually agent and as an and continuing through approximately $840,000 directly had cash from a safe Boulware transferred taken Lee, home, Lee, or caused to deliver to wrongfully acquired [HIE] her had a real pursuant certain monies to the oral and her, property belonging to and had de- understandings written referenced faulted on a million note. sought She $1.2 times, above. At all Lee understood and compensatory punitive damages. agreed that all funds not used such 17, 1994, On November Boulware and *8 purposes Boulware and Lee for of ad HIE complaint answered Lee’s and denied [HIE], vancing the business interests of allegations. all the relevant Boulware and repaid' had to be in full to Boulware and against HIE also filed a counterclaim Lee [HIE], Lee further understood and contract, fiduciary breach breach of agreed portion that a of the paid funds . enrichment, duty, unjust constructive by satisfy back her would be used to trust, conversion, title, quiet accounting, property agreements settlement be relief, declaratory cancellation of instru- tween Boulware and his then wife Mai ments, compensatory punitive and and Boulware. Sun damages. * * * counterclaim, In Boulware and HIE’s they-alleged following regarding herein, facts 22. At all times relevant a con- payments relationship to Lee: fidential existed between being
Lee and Counterclaimaints. Based in by held constructive trust Plain- by tiff and Plaintiff upon arising and out of said confidential which has been and being unjustly relationship, enrichedf.] Counterclaimants trans- properties ferred to Lee monies and val- case, adopt this Boulware moved to in prom- ued excess of million. Lee $5 controlling as the state court’s determina- to ised hold said assets for benefit money tion that the at belonged all times prevent to dissipation and their of[HIE] HIE and was therefore not to taxable reconvey and to them to Counterclaim- him. The district court denied the motion upon ants demand.... jury the ground only on that the deter- ownership mined as sought Boulware and HIE a declaration between Lee and and not asked to that the was deter- gifts. transfers Lee were not ownership mine as HIE and between Boul- merits, a jury After trial on the ware. found that the monies not gifts were and belonged the monies HIE. The then filed motion limine to question relevant on special preclude government verdict from referring to read, form gifts, follows: the monies transferred to Lee as subject factual issue that had been to ad- Question No. 10. Jin Sook Lee claims court, testing versarial in the state al- her, the cash and checks delivered to ternatively to allow the introduction of the March, during period 1987 to judgment govern- state court to rebut the May, by Michael Boulware and gift theory. ment’s Enterprises Hawaiian Isles gifts. were turn filed motion limine to exclude Michael Boulware and Hawaiian Isles introduction of the state court judgment on Enterprises claim the monies were not (1) grounds: four the judgment had no gifts but were to be held Jin Sook effect, preclusive because the United Lee and to requested. be returned when action; party States was not a to the state your findings State below: (2) the court judgment state was not rele- gifts The monies were to Jin Sook Lee Yes No vant, ownership because determined / moneys only as between Lee and HIE and so was not belong The monies inconsistent with the theo- to Hawaiian ry reportable that the income Enterprises Isle Yes No / (3) Boulware; the judgment was unreli- able, admitting would Likewise, in deciding equitable issues confuse the and would lead to a mini- unjust enrichment and constructive trial to show the deficiencies in the evi- trust, the court judge state found clear (4) case; dence considered in the state convincing evidence that the monies hearsay. was inadmissible gifts were not judgment pro- Lee. The part: in relevant vides opposition In Boulware’s to the govern- I, III, V, limine, As to Counts argued IV ment’s motion in favor of estoppel collateral is not the issue. Rath- Defendant/Counterclaimant *9 ENTERPRISES, er, HAWAIIAN property ISLES as a determination of rights, against INC. and Plaintiff judgment the the state court has preclusive [Lee] $4,551,931.00, amount of purposes said amount be- effect for of determining whether ing property addition, liability. he had a tax In federal Defendant/Counter- claimant HAWAIIAN ISLES ENTER- the state court was relevant to PRISES, INC. gifted which has been and is the issue of money whether he to thereby money money, diverted HIE for return the Lee and and that she was forced to return million or million purposes. judgement would to HIE. personal $5 $6 argue him to that his to also allow failure Analysis good-faith returns amend his tax was judgment. on the state court He reliance a. Does the Judgment State Have Pre- that argued further the district court did clusive Effect? jurisdiction question not to have the relia- argues Boulware the state court bility of the court a state absent judgment precluded government showing Finally, of collusion. Boulware relitigating ownership of the funds he argued that the was admissible argument delivered Lee. He bases his property rights as a record of under Fed- not on the affirmative defense of collateral 803(14), eral Rule of Evidence and that its estoppel, government because the was not
probative
outweighed any danger
value far
lawsuit,
a party to the state
but rather on
issues,
unfair prejudice,
confusion of the
the principle that state law determines the
or
of time.
waste
property rights to which federal
at-
law
consequences.
taches tax
Because the
motions,
granted
The district court
both
jury
state court
found that Boulware had
explaining that “the characterization of
gifted
the funds to Lee and that the
gift
this transfer as a
is not relevant to the
belonged
funds
argues
that he
ultimate issues
the case” and that the
liability
had no federal tax
for those funds.
jury should decide the case based on the
disagree.
We
testimony of the witnesses. The court
Boulware relies on cases such as Freuler
ruled that no witnesses should discuss the
Helvering,
v.
291 U.S.
54 S.Ct.
judgment,
state court
but that he would
(1934),
Comm’r,
L.Ed. 634
Blair v.
open
leave the matter
to reconsideration.
(1937),
U.S.
S.Ct.
804
1277,
(1960),
Supreme precedent pre gave Court income to post-Bosch suggests holding that its does to Lee to hold for him in an effort to hide Comm’r, apply outside of the estate-tax context. it from the See v. IRS. Chism (9th Cir.1963) States, Aquilino (holding 959-60 United U.S. *11 refusing the tax court did not err in to sive effect as to the ownership that of the mo- by a state court determination be bound nies.. closely-held
that withdrawals from cor- dividends, poration were loans and not be- b. Was the Judgment State-Court Ad- legal “it not the existence of a cause is missible Evidence? obligation repay controlling”; that (1) Relevance
rather, whether a withdrawal is a loan “is though Even the state factual court question upon ‘to be determined effect, judgment preclusive did not have consideration of all the circumstances case, question the still present particular depends in a remains whether it was evidence that upon the existence of an intent at the time admissible the district court improperly it the withdrawal is made that should be excluded. The district court ” Comm’r, paid (quoting judgment back.’ Clark 266 excluded the state court pursu Cir.1959))). 710-11 ant to Federal Rules Evidence 402, stating that whether the transfers to argues that the court state gifts Lee were “is not' relevant to the finding holding money that Lee was ultimate issues the case.” This ruling binding. for HIE is also The state trust was erroneous. Evidence is it relevant if money in question did find “any tendency has to make the existence HIE belonged to and that Lee had been fact that consequence is of to the holding and was “constructive trust” probable determination of the action more hand, for HIE. although On the other probable than it less would be without from record the state court action is not the evidence.” Fed.R.Evid. 401. Whether part appeal, of the record on the owner- HIE Boulware transferred the funds to ship money as between Boulware personal purposes Lee for for her to or. appear and HIE does not to have been key hold trust for HIE was a issue in subject testing. special adversarial the case. That pursued he. a successful jury form verdict asked the to determine litigation against Lee to force her to re ownership only as between Lee and turn the HIE monies to has some tenden presumably because Boulware never cy likely gave to make it more that he money claimed the was his. If main- Lee Indeed, monies to her to hold in trust. tained money that she had received the argument conceded at oral gift, Boulware contended that he had judgment the state court is relevant.3 given money her the to hold in trust for HIE, there would have been no reason to (2) Hearsay if money,
ask the Boulware owned the because it not an issue -in the lawsuit. Hearsay is “a statement other reasons, than
For these we hold that one made the declarant while tes ruling tifying= hearing, district court did not err in at- the trial or offered in state court preclu- prove does not have evidence to truth of the matter argument prove 3. The dissent’s that the a fact in issue and the cer- prove, prove” “does not or even tend to tainly tendency has to make Boulware’s some siphon Boulware did not off the (that explanation gave money to Lee to he mistaken, legally factually. HIE is both hpld HIE) probable in trust for more and the relevant, For evidence to be and thus admissi- (that government's theory case sim- ble, require "prove” Rule 401 that it does Lee) ply gave probable. less anything. only requirement Rule 401’s is that requires no Rule more. proffered tendency evidence have a *12 806 801(c). conveyances. fraudulent Id. at 1351. prior Fed.R.Evid. A were
asserted.”
hearsay to the ex
testimony
is therefore
that admission of the
We held
truth of
prove
tent that it is offered to
not plain
was
error:
in
A
judgment.
matters asserted
not,
challenged testimony
was
as
however,
hearsay,
judgment is not
to
prior
Perry urges, offered as substantive
legally
extent
that
it is offered as
scheme. A review
proof of
fraudulent
that determined
operative verbal conduct
testimony
of the record shows that the
parties.
and duties of the
See
rights
only
Perry
offered
was
was
show
Pang,
v.
States
362
United
properties
of certain
true owner
Cir.2004).
(9th
Although
Rule 803
nominally
owned
his relatives. See
exceptions
contains
for certain kinds of
Proud,
Greycas, Inc. v.
826 F.2d
of
judgments,
judgments
previous
such as
(7th Cir.1987)
(“a
...
judgment,
felony
judgments
convictions and
as
property rights,
insofar as it fixes
should
history
family,
general
or
or
personal,
official
of
be admissible as the
record
803(22)
boundaries, see Fed.R.Evid.
&
just
rights,
such
like other documents of
(23),
comfortably
judgments
civil
do not fit
title”).
evidence,
turn,
in
This
was rele-
any hearsay exception.4
into
prove
Perry
vant to
had concealed
argues that
the state court
it,
his assets. From the
could infer
exceptions
fits the
set forth in
Perry
had intended
evade federal
803(14)
(16).
Rule
The first of these
taxes, charges
income
for which he was
exceptions concerns records of documents
on trial.
property,
that affect an interest
in
(footnote
ending
Id. at 1351-52
cita-
reads as follows:
omitted). Similarly, Greycas,
tion
in
Inc.
affecting
documents
an in-
Records of
(7th Cir.1987),
Proud,
v.
property.
terest
The record of a
relied,
Perry
on
case
which
Seventh
purporting
document
to establish or af-
judg-
noted that
the state court
Circuit
property,
proof
fect an interest
as
of
ment at issue in the case should be admis-
original
the content of the
recorded doc-
803(14)
prior-
sible under Rule
show the
delivery by
ument and its execution and
liens,
ity
“fix[ing] Greycas’s rights,
person by
purports
each
whom it
title, in
farm ma-
equivalent to
Crawford’s
executed, if
have
the record is a
been
803(14)).
chinery.”
(citing
Id. at 1567
Rule
public
applica-
record of a
office and an
recording
ble statute authorizes the
Thus, Perry supports
proposi
of that kind in that office.
documents
previous judgment
tion that a
is admissible
803(14).
Fed.R.Evid.
803(14)
ownership
under Rule
to show the
of assets. To the extent
that Boulware
Perry,
In United States v.
.(3) reversible Rule^OS violation, we amounts to a constitutional in limine to exclude motion In its beyond a reasonable the “harmless apply ar- judgment, state Chapman v. Cali- doubt” standard. See unreliable, judgment was gued 87 S.Ct. fornia, 386 U.S. would confuse admitting (1967). L.Ed.2d 705 to a mini-trial to would lead con- the evidence the deficiencies show every hearsay error “[N]ot case. in the state sidered At a to a constitutional violation. amounts minimum, a defendant must demonstrate minimum, At a state *14 important was that the excluded evidence HIE the finding that owned court’s Lopez- States v. to his defense.” United HIE relevant to show that had in 1997was Alvarez, Cir.1992); 970 F.2d along the all rebut owned Saenz, that Boul- 179 F.3d government’s suggestions States v. the see also United (9th Cir.1999) “Lee as had concocted the whole ware that (holding “[e]r- story himself in the trustee” to defend prevents it ror cannot harmless where be that Any danger prosecution.5 criminal an evidentia- providing the defendant from given weight have undue would defense”). Here, ry his the state- basis for judgment court could have been the state judgment court was crucial to Boulware’s cautionary instruction. dealt with counts, judg on the tax and the defense Likewise, judg if introduction of the even directly govern ment contradicted prosecution ment have led the would theory of the case. The district ment’s witnesses about deficiencies cross-examine judgment denied court’s exclusion the state court the evidence heard meaningful opportunity to Boulware “a easily jury, judge the trial should have defense,” present complete Lopez-Alva any to control waste of time or been able rez, 587-88, at and thus violated issues, that confusion of the so admission process rights. We must therefore his due judgment of the state court would not have unless the error was harmless be reverse substantially outweighed probative val yond a reasonable doubt. ue of the evidence.6 that government argues The (4) Error Harmless him error was harmless because Boulware about self testified on direct examination Although it was error to exclude judgment.7 point, makes the judgment, the state court the error is not granted prosecutor argued, example, the ultimate issues of the case” and judg- government’s there was no evidence that Boulware owed to exclude motion anything "except his in the rather wife fertile "pursuant to Rules 401 and 402 of the ment imagination counsel].” of [his We Federal Rules of Evidence.” therefore novo, dis- review de rather than for abuse of 6. The dissent "would hold that the district cretion, judgment properly whether the was ruling abuse discretion in did not its excludable under Rule 403. inadmissible,” Hawaiian based on its belief the district court conducted an testimony subject was as 7.Boulware’s on this "[[Implicit probative ... value.” evaluation of follows: court, however, perform The district did not Q. So, rather, during period, in the balancing analysis; simply time Rule 403 divorce, ’94, you got your spring of after held that the evidence was "not relevant to however, that he was the least effective hold in trust for purchase of his ex- testify witness to about the be- wife’s marital interest.8 Boulware’s attor- perceived of his cause self-interest and ney McCarthy Michael testified that addition, although bias. he called wit- 1987 Boulware him retained to establish a nesses who testified that HIE at all times trust for Boulware and Lee’s nonmarital owned funds he transferred to son, Glenn Lee Boulware. Half of the in good Lee and that he relied faith on the shares of HIE put were into the trust. lawyer advice of his accountants not McCarthy Lee, advised Boulware that returns, reporting the funds on the trustee of a trust that held a 50% points out that prosecution sharply ownership HIE, interest would be a credibility witnesses, attacked the of these any constructive trustee of assets she re- and the would have key been ceived that belonged to HIE. He advised corroborative evidence. Boulware that HIE property given to Another reason the exclusion of Lee would continue to belong to state court judgment may have harm- been would never belong to Lee or Boulware. story less is that Boulware’s somewhat end, In the we are not beyond convinced Rather implausible. setting up than a for- *15 a reasonable doubt that jury the would mal arrangement by money which would have arrived at the same verdict had testi- be held in buy trust out his wife’s mony regarding the state HIE, interest in gave corporate Boulware and the itself not been excluded. money girlfriend. addition, to his he We therefore reverse Boulware’s convic- money transferred the to her in a series of tions on all of the tax evasion and tax false shady transactions. Rather putting than return counts and remand for a new trial. the cash in a bank account so that it could interest, earn Lee held the cash in a safe Sufficiency B. of the Evidence Finally, in their home. Boulware did not sue Lee return of the until funds she Boulware also contends that we sued him. must reverse his convictions for filing false
Nevertheless, tax the beneficial returns and tax ownership evasion because the government of the funds that prove Boulware transferred to failed to un he Lee was central to the against derreported Although entire case his income. we re him, government conviction, and the did not call Lee verse Boulware’s we must still any or other witness to rebut Boulware’s consider his contention that evidence the claim gave money that he the to her to conviction, was insufficient to sustain his Q. agree did Jin during Sook Lee to return period the But time the from 1994 company's money '97, to HIE? company didn’t receive its A. No. Lee, money back from Jin Sook did it? Q. you up Did end in lawsuits with Jin A. No. Sook Lee to force her to return the mon- ey? 8. The did call Boulware’s ex- A. Yes. wife, Boulware, stand, Mal Sun to the but she Q. approximately And then necessarily help government's did not Jin Sook Lee forced to return cross-examination, case. On she confirmed company? that when Boulware asked her for a divorce A. Yes. $5 $1 she demanded million and a Q. Approximately how much? million house because she believed she had Five, A. six million. ownership an interest in HIE. Q. sorry? I’m Five,
A. six million. 810 “(1) § under are sufficiency of tax evasion exis- challenge to the
because (2) a tax willfulness in implicates deficiency, a defendant’s tence of the evidence taxes, (3) Jeopardy Clause. evasion an attempted the Double of rights under Recio, constituting act an evasion or affirmative See States United Cir.2004); (9th States v. Ger attempted United Id. at 1377-78. evasion.” Cir.1999). 719, 724-25 gen, 172 F.3d 7206(1) §§ under Boulware’s convictions hinge on fact that he diverted and 7201 of Review 1. Standard report HIE funds from but did them Where, here, the defendant on his income tax re- personal as income we re timely acquittal, motions for made argues although Boulware turns. insufficiency claim of the evidence view question, gov- the funds controlled Odom, 329 F.3d States v. de United novo. introduced no evidence that this ernment (9th Cir.2003). deny We will ownership control was inconsistent with if, viewing the evidence the claim Although govern- the funds HIE. prosecution, light most favorable to the argued ment found could have any rational trier fact govern- “stole” the beyond proved of the crime elements the required ment did not establish doubt. Id. reasonable of theft under Hawaii law. Final- elements argues, the could not have ly, he diversions Analysis dividends, constructive constituted taxable 1-5 on counts Boulware was convicted positive earnings HIE had no because violation of tax returns in filing false during charged years in the profits 7206(1) for the 1989-1993 U.S.C. *16 indictment. years. on renum- He was also convicted sufficiency tax in violation The 6-9 of evasion evidence is bered counts government down to the § of 7201 for the 19941997 sue boils whether 26 U.S.C. years. proved could have the elements of 7206(1) beyond §§ a 7201 reasonable the offense The elements of that proving without either Boul doubt 7206(1) are returns filing false tax under the HIE or ware stole funds from that the as follows: funds were not loans or nontaxable returns (1) the and subscribed defendant made Miller, capital. v. 545 United States return, statement, document or other (9th Cir.1976), indicates that the F.2d mat- incorrect a material as to question “yes.” answer to this is (2) return, ter; or other the statement^ document the defendant subscribed Miller, case, like this concerned contained a written declaration the characterization of funds that a tax perju- the penalties was made under closely-held payer corpo diverted from his (3) the ry; not believe the defendant did ration. Id. at 1211. The defendant ar return, statement, document other that his for tax gued conviction evasion every material be true and correct as to stand, government could because (4) matter; falsely the defendant proved corporation had not that his had return, statement, or subscribed to the earnings during years any profits specif- willfully, other with document Therefore, Id. at 1210. question. ic intent violate the law. must be treated as return of diversions Marabelles, reject at The court capital. Id. 1210-11. United States Cir.1984). argument, stating this crim- “[i]n The elements ed proceeding inal tax the concern is not gation over to remove non-income deposits, type specific or the amount of the tax such as transfers between bank accounts. evaded, which the defendant has but Stone, United States v. willfully he has attempted
whether (9th Cir.1985). “The question critical payment evade the or assessment of a whether government’s investigation tax.” Id. at 1214. The court also held provided has sufficient evidence to support that the defendant had the burden of go- an inference that an unexplained excess in ing once government forward “demon- deposits bank is attributable to taxable taxpayer strates that the unexplained had income.” Id. at Although 844-45. funds which could be considered as income government must be especially thorough in taxpayer which the fails report in his investigation its presentation, “it is return.” Id. at 1215 & n. 13 (emphasis well government settled that is not added). obliged prove the exact amount of a Boulware counters that government deficiency long so as the taxpayer’s under- did prima not make out a facie case on the statement of income is substantial.” Id. at false tax return and tax evasion counts 845. because it used a bank-deposits method of Here, government per- witness who proof investigate and failed to leads that bank-deposits formed the analysis, Jerry reasonably
were
susceptible of being
Yamachika, testified that he “eliminated
checked.
In particular,
comptroller
HIE’s
...
may
loans that
have come—that
grand jury
testified to the
that HIE had
might
Mr.
gotten
have
from his
fully reported the
million at issue
$10.2
company-”
cross-examination,
On
Ya-
and submitted records in support of this
machika testified that he credited Boul-
addition,
contention.
ware with
deductions for
in the
bankruptcy
knew of a
action in which the
bank
buy coffee,
accounts
was used to
court affirmed the trustee’s determination
and that
analysis
“an
was done as to what
that assets held
belonged
Lee
to HIE.
given
credit he was
on his loan account at
theory
behind the bank-
corporation
to reduce his loan for the
*17
deposits
proof
method of
was described
purchases he made.” Based on the testi-
long ago, as follows:
trial,
mony at
evidence
“[t]he
was more
it be shown that a
[I]f
man has a busi-
adequate
than
to support
the inference
calling
ness or
of a lucrative nature and
that
the
deposits
defendant’s bank
were
constantly, day by day
is
by
and month
income from
and
[HIE]
were
fact cur-
month, receiving moneys
depositing
rently taxable but unreported income.”
them to his account
checking
Id. at 845.
against
uses,
them for his own
there is
potent
most
testimony that he has in-
argues
if
gov-
Boulware
that even
the
come, and, if the amount
exemp-
exceeds
case,
ernment did make
prima
out a
facie
deductions,
tions and
that the income is he met
going
his burden of
forward with
taxable.
the evidence
testifying that the diver-
States,
sions were
Gleckman v. United
loans and were accounted for as
(8th Cir.1935)
on
(quoted
put
in 2
such HIE’s books. This
Kenneth E.
burden
North,
23.41,
back on
government
prove
Criminal Tax Fraud
the de-
at
(3d ed.1998)).
using
posits
When
were not loans. The nature of the
bank-
deposits
transactions, however,
proof,
method of
was sufficient evi-
adequate
must conduct an
juror
and full investi-
dence for a rational
to conclude be-
invoices,
fraudulent
an
deposits
that the
submit
yond a reasonable doubt
conspiracy charge.
essential element
were not loans.
string
court sustained a
The district
ample evi-
conclude that there was
We
ques-
objections
grounds
on relevance
juror
a rational
could
dence from which
Kushiyama had
regarding
tions
whether
guilty
concluded that Boulware was
have
appraisals
invoices or
for other
prepared
willfully submitting
false tax returns for
Ku-
parties. When defense counsel asked
willfully
years
the 1989-1993 tax
and of
invoices, you are
shiyama “As far as these
evading
years.
for the 1994-1997 tax
taxes
intending
fake invoices
not
to submit
the—
anyone,
you?,”
judge sustained
were
Asserted Trial Errors
C. Other
objection and defense
government’s
Boulware further contends that
further.
pursue
counsel did not
the matter
his conviction should be reversed because
Although
completely
it
is not
clear
errors,
trial
in
of a number of asserted
whether “these invoices” referred
those
amendment of the in
cluding constructive
prepared
prepared
for Boulware or to ones
prosecutor
prosecuto-
dictment
customers,
for other
the court was obvi-
errors,
rial
Most of these
misconduct.
ously
impression
they
under the
re-
however,
trial;
objected
were not
to at
parties
ferred to invoices for other
therefore,
we would review them under
nothing
defense counsel did
to disabuse
52(b).
plain error rule
Fed.R.Crim.P.
impression.
him of this
Defense counsel
See, e.g.
Dipentino,
United States
question, explain
to the
did
reword
(9th Cir.2001).
We see no
in-
inquiring
he was
about the
purpose
reviewing
useful
these asserted
case,
Kushiya-
call
voices at issue
this
First,
ruling
plain
errors.
under
error
ma as defense witness.
give
review will
the district court
little
reasons,
For
the limitation on the
these
it
rule
assistance on retrial on how should
Kushiyama
cross-examination of
was not
Second,
timely objection
if a
is made.
we
so severe as to amount to a violation of
will not
trial error
assume
rights.
Boulware’s Confrontation Clause
in a
likely
repeated
to be
retrial.
briefly address Boulware’s
We
Sentencing
D.
Issues
claim, however,
Confrontation Clause
be
issues,
Among
sentencing
other
directly
cause
relates
to his conviction
district court
Boulware contends
conspiracy
to make false statements to
erred
its calculation
loss
federally-insured
financial
institution.
offense,
including
attributed to his
Boulware contends that the district court
evidentiary
failure to
an
hear
court’s
hold
*18
rights
violated his
under
Confrontation
ing.
cross-appeal
In its
by limiting
Clause
his cross-examination of
court erred in
contends
district
Kushiyama,
alleged eo-eonspira
his
Lorin
declining to enhance Boulware’s sentence
tor
10.
limitations on
on count
Whether
justice.
for obstruction of
Given our re
cross-examination violate the Confronta
trial on the
versal and remand for
new
question
tion Clause is a
that we review de
counts,
purpose
no
would be served
Adamson,
novo. United States v.
291
sentencing
our
of
review the
issues.
(9th Cir.2002).
612
imposed
Sentence was
this case well
—
argues
Blakely Washington,
Boulware
that the district
before
v.
U.S.
-,
court would not
him to
124
jury determination of the forfeiture issue. credit for funds he returned. United Cf. argues (9th v. Bright, that the district States 353 F.3d Cir.2004) erroneous, court’s forfeiture order was be (holding that forfeited funds give cause did not him credit for funds need not applied restitution); be toward returned the lender. The con Feldman, United States v. victed Boulware of renumbered count 10 of Cir.1988) 663-64 (holding that indictment, conspiracy to make false sentencing option ordering restitution federally-insured statements to a financial “is not denied to the district court because institution, acquitted him but of the sub a defendant must proceeds also forfeit the (counts 11-14). charges stantive Renum illegal activity”).
bered count 15 of the charged indictment The district failing court did not err in proceeds that Boulware shall forfeit to reduce the amount of the forfeiture. directly indirectly he obtained as a re The criminal forfeiture statute contains charged sult the offenses in counts 10- nothing comparable to the civil forfeiture provision statute’s cases “[i]n involv- 982(a)(2) provides: U.S.C. ing process fraud in the of obtaining a loan court, in imposing on sentence credit, or extension of the court shall allow person of, convicted of a violation or a the claimant a deduction from the forfei- conspiracy to violate— ture the extent that the loan repaid, was (A) title, ... section 1014 ... of this satisfied, or the debt without fi- affecting a financial institution ... victim,” nancial loss to the Civil Asset For- *19 2000,
feiture Reform Act of
Pub.L. 106-
-
-,
(U.S.
Supreme
granted
9. The
Court has
L.Ed.2d
respectfully dissent. IV reverse Boulware’s conviction We filing tax evasion and false tax returns conspiracy affirm his conviction for federally-in- make false statements to sured financial institution. We vacate on the false statement count and sentence proceedings further consistent remand for Agustín CAMPOSECO-MONTEJO, opinion. with this Petitioner, part, AlFFIRMED in REVERSED part, and REMANDED. Attorney ASHCROFT, John SILVERMAN, Judge, Circuit General, Respondent.
dissenting: view, my district court did not No. 02-74259. in refusing abuse its discretion to admit of Appeals, United States Court the state court into evidence. Circuit. Ninth no than establish The does more that, as between Jin Sook Lee and Hawai- Argued April and Submitted 2004. Enterprises, money belonged ian Isles Enterprises. This has Hawaiian Isles Filed Sept. bearing no on whether Boulware diverted girlfriend funds to his for his
corporate tax on the paying own benefit without only money. establishes not the cash. keep that she was entitled prove, prove, It or even tend to does siphon that he didn’t off the corporation, Why tax-free. would it? That was not at issue in the case.
District courts have wide latitude in rul- ing relevancy on the of evidence. United (9th Alvarez, States v. Cir.2004). Implicit ruling such anis probative evaluation of value. McCor- mick on Evidence at 637 ed. 1999) (“There components are two to rele- materiality probative vant evidence: value.”). judg- Because state against any light
ment Lee sheds little if on whether Boulware committed tax eva- sion, I would hold that the district court ruling
did not abuse its discretion in