United States v. SecorUnited States v. Secor
Case Information
*1 Before WILKINS, Chief Judge, and TRAXLER and GREGORY, Circuit Judges.
Affirmed by unpublished per curiam opinion.
COUNSEL ARGUED: David Glenn Barger, WILLIAMS MULLEN, P.C., McLean, Virginia, for Appellant Dougherty; Thomas W. Carpenter, THOMAS W. CARPENTER, P.C., Newport News, Virginia, for Appellant Secor; Stephen John Weisbrod, WEISBROD & PHILLIPS, P.C., Hampton, Virginia, for Appellant Blanchard. Raymond Edward Patricco, Jr., Assistant United States Attorney, Alexandria, Virginia, for Appellee. ON BRIEF: Edward W. Wolcott, Jr., Samuel W. Meekins, Jr., WOLCOTT, RIVERS, WHEARY, BASNIGHT & KELLY, P.C., Virginia Beach, Virginia, for Appellant Dougherty. Paul J. McNulty, United States Attorney, Alexandria, Virginia; Rob- ert J. Seidel, Jr., Assistant United States Attorney, Norfolk, Virginia, for Appellee.
Unpublished opinions are not binding precedent in this circuit. See Local Rule 36(c).
OPINION
PER CURIAM:
In this consolidated appeal, Franceyn Secor ("Secor"), John Blan- chard ("Blanchard"), and William Dougherty ("Dougherty") challenge their convictions and sentences resulting from charges that they attempted to conceal Blanchard’s income from the Internal Revenue Service ("IRS") in violation of several provisions of the Internal Rev- enue Code (the "Code"). Separately, Secor and Dougherty also chal- lenge the validity of several of the district court’s evidentiary rulings and its refusal to give certain jury instructions. For the following rea- sons, we find that their challenges lack merit and therefore affirm the judgment below.
I.
In 1989, Franceyn Secor and John Blanchard married and moved from New York to Williamsburg, Virginia, where Blanchard began working as a commissioned salesperson for Berryman Chemicals. Blanchard requested that Bob Berryman, the President of Berryman Chemicals, direct deposit his commission payments into Secor’s bank account in Buffalo, New York. The government alleges that Blan- chard made this request in order to evade payment of an existing tax liability to the IRS dating back to the early 1980s.
Shortly after moving to Virginia, Blanchard and Secor hired Wil- liam Dougherty, a tax attorney and certified public accountant ("CPA"), to assist them with various tax-related matters. The forma- tion of this business relationship would ultimately lead to the underly- ing prosecution. Blanchard, Secor, and Dougherty would become the brain trust behind the fraudulent tax scheme at issue. Dougherty’s role in this scheme was both to assist Blanchard in avoiding his existing tax liability and to limit Secor’s tax liability. To accomplish these objectives, Dougherty prepared and filed false tax returns on behalf of Blanchard and Secor throughout the early and mid-1990s. These tax returns falsely indicated that Secor earned income from Berryman Chemicals. In fact, Secor had never been employed by Berryman Chemicals but was instead employed by a local real estate company in Virginia.
In May 2001, a grand jury indicted Secor, Blanchard, and Dou-
gherty on charges that they: (1) conspired to defraud the United States
in violation of
During the course of a two-week trial in October 2001, the govern- ment tried its case against Secor, Blanchard, and Dougherty. The gov- ernment offered testimonial and documentary evidence to demonstrate the existence of a scheme to avoid paying Blanchard’s tax liability. First, the government offered Bob Berryman’s testimony that Secor had never worked for his company, a fact which Blanchard affirmed when he testified in his own defense. [1] Second, the govern- ment proffered Dougherty’s notes from meetings with Blanchard and Secor, which documented his advice to the couple to prepare their taxes in a manner that would permit Secor to evade tax liability and conceal Blanchard’s ability to satisfy his existing tax liability. For example, in October 1991, Dougherty noted that "in order to keep [Secor] clear of [the] IRS," he would need to "redo[ ] [Secor’s] 1040s showing all income to [Blanchard]" and that "[p]erhaps [B]lanchard should file, all income to him, MFS (‘married filing single’) for [19]89 and [19]90 — then wait two years — and go bankrupt." Addi- tionally, in a February 5, 1996 letter to Blanchard, Dougherty wrote, "Do you need to rehide this money?" "I don’t like the IRS having photocopies of all the financial activity — but know of no way to (a) suppress the date, not (b) delay any further."
Third, the government called IRS Agent Munn, who testified that: (1) each time the IRS attempted to levy one of Blanchard’s accounts, he and Secor would open a new account in Secor’s name and have his commission payments from Berryman Chemicals deposited into the new account; (2) Dougherty and Blanchard delayed the IRS’s investigation of Blanchard by requesting numerous time extensions, failing to appear at scheduled appointments, and failing to bring the requested information with them when they did appear for the appointments; (3) the IRS’s investigation of Blanchard revealed that from 1995 to 1998, Secor claimed on her tax filings to earn $542,232 from Berryman Chemicals, which was actually income that was earned by Blanchard; and (4) from the mid to late 1990s, despite Blanchard’s protestations that his income was "very low," Blanchard and Secor maintained a "lavish lifestyle," which included purchases of items such as a cruise vacation, a membership to a golf club, and a Lexus LS400.
At the close of evidence, a jury convicted Blanchard on Counts 1- 6 and 12 of the indictment, Secor on Counts 1, 7-11, and 13 of the [1] Indeed, on cross-examination, Blanchard conceded that the income reflected on Secor’s 1099’s from 1988-2000 was income earned by him, not Secor.
indictment, and Dougherty on Counts 14-21 of the indictment. The jury acquitted Dougherty of conspiring to defraud the United States, Count 1 of the indictment. In January 2002, the district court sen- tenced Secor to 33 months of imprisonment on Counts 1, 7-11, and 13, to run concurrently, and ordered her to pay restitution in the amount of $253,746.52, as well as the costs of prosecution. The dis- trict court sentenced Blanchard to 57 months of imprisonment on Counts 1-6 and 12, to run concurrently on each count, and ordered him to pay $345,350.13 in restitution as well as the costs of prosecu- tion. Finally, Dougherty was sentenced to 36 months of imprisonment on Counts 14-21, to run concurrently on each count, and ordered to pay restitution in the amount of $93,542.00 and the cost of prosecu- tion. Secor, Blanchard, and Dougherty then timely filed this consoli- dated appeal.
II.
In reviewing a challenge to the sufficiency of the evidence support-
ing a conviction, we must sustain the verdict if "there is substantial
evidence, taking the view most favorable to the Government, to sup-
port it."
United States v. Gallimore
, 247 F.3d 134, 136-37 (4th Cir.
2001) (quoting
Glasser v. United States
, 315 U.S. 60, 80 (1942)).
Questions concerning the admissibility of evidence or the propriety of
including jury instructions are reviewed for abuse of discretion.
See
United States v. Chin
,
III.
A.
On appeal, Blanchard raises four issues. First, he challenges the
sufficiency of the evidence supporting his conviction for conspiring
to defraud the United States in violation of
1.
In order to satisfy its burden in proving a violation of
Blanchard also challenges the sufficiency of the evidence support-
ing his conviction under
Any person who willfully attempts in any manner to evade . . . any tax imposed by this title or the payment thereof shall, in addition to other penalties provided by law, be guilty of a felony and upon conviction thereof, shall be fined not more than $100,000 . . . or imprisoned not more than 5 years, or both, together with the costs of prosecution.
The government, however, introduced evidence demonstrating that Blanchard: (1) requested that Berryman deposit his commission pay- ments into an account held by Secor; (2) opened new bank accounts in Secor’s name when the IRS attempted to levy on his old accounts; and (3) misled IRS agents by informing them on at least one occasion that his income was "very low" while, in fact, he had received sub- stantial commission payments. Given the foregoing evidence and Blanchard’s admission that the income from Berryman Chemicals listed on Secor’s Form 1099’s was income earned by him, the jury had ample basis to conclude that Blanchard took affirmative steps to evade payment of his tax liability.
Blanchard also contests his conviction under Count 12 — filing
false tax returns with the IRS in violation of
The government may prove a violation of
Finally, Blanchard argues that the district court failed to charge the
jury with the lesser-included offense
B.
On appeal, Secor challenges the sufficiency of the evidence sup-
porting her convictions for: (1) conspiring to defraud the United
States (Count 1); (2) attempting to evade tax payments in violation of
1.
Based on the evidence discussed above, the jury reasonably con-
cluded that Blanchard and Secor conspired to defraud the United
States in violation of
Secor also argues that this Court should reverse her five convic-
tions for attempting to evade tax payments in violation of
Finally, Secor challenges the sufficiency of the evidence support-
ing her conviction for making a false statement to the IRS in violation
of
The government alleges that on November 10, 1997, Secor told an
IRS agent that since 1988, Blanchard had worked for her in her chem-
ical trading business and that she had conversations with Bob Berry-
man concerning potential chemical purchases. Secor also claimed that
she directed Berryman to deposit commission payments into her bank
account because she would have a more active role in the chemical
trading business. However, Berryman and Blanchard testified that
Secor was
not
involved in Berryman’s chemical business. This evi-
dence supports the jury’s conclusion that Secor’s statement to the
contrary was false and made in a willful effort to conceal Blanchard’s
actual income from the IRS, which was of course material. We con-
clude that there is sufficient evidence to sustain Secor’s conviction
under
In addition to her sufficiency of the evidence challenges, Secor
argues that the district court abused its discretion by refusing to
instruct the jury on the lesser-included offenses of (1) conspiracy to
fail to pay taxes, which Secor maintains is contained in
First, we have concluded that there is sufficient evidence to sustain
Secor’s conviction under
Here, Secor fails to satisfy the plain error test. Even assuming that
Secor had proffered the misdemeanor failure to pay taxes instruction,
the Supreme Court has explained that under
Next, Secor argues that the district court abused its discretion by
refusing to admit a letter written by Dougherty to the IRS on January
1, 1998. Secor contends that the admission of this letter, which
attempted to persuade the IRS that Secor’s and Blanchard’s financial
activities were legitimate and not worthy of investigation, was rele-
vant to her reliance upon advice of counsel defense.
[2]
The district court
properly excluded Dougherty’s letter because the statements con-
tained therein were offered to prove the truth of the matter asserted
— namely, that Secor’s and Blanchard’s income tax apportionment
scheme was lawful — and thus were inadmissible under
Having affirmed Secor’s convictions, we now turn to the two sen- tencing issues she has raised on appeal. First, Secor challenges the amount of tax loss the district court attributed to her at sentencing. Second, Secor contends that the district court erred in refusing to rec- ognize that she was a "minor participant" in the offenses committed, a finding which would entitle her to a two to three-level decrease in her total offense level. After reviewing the record and the relevant statutory and case law, we affirm Secor’s sentence.
Section 2T1.1(c) of the United States Sentencing Guidelines estab-
lishes a formula for the determination of the tax loss attributable to
a defendant. Section 2T1.1(c) provides in relevant part: "If the offense
involved tax evasion or a fraudulent or false return, statement, or
[2]
Both Secor and Blanchard argue that they are entitled to invoke the
reliance on advice of counsel defense. In order to properly invoke this
defense, the defendant must demonstrate: (1) full disclosure of all perti-
nent facts to counsel; and (2) good faith reliance on counsel’s advice.
See
United States v. Butler
,
other document, the tax loss is the total amount of loss that was the object of the offense (i.e., the loss that would have resulted had the offense been successfully completed)." U.S.S.G. § 2T1.1(c). At sen- tencing, the district court relied upon the facts and calculations set forth in Secor’s pre-sentence report and concluded that Secor was lia- ble for $253,746.52, the amount of tax deficiency owed by Blanchard during the years that Secor falsely claimed income from Berryman Chemicals. We conclude that this finding is not clearly erroneous.
Lastly, Secor argues that the district court erred when it concluded that she was not a "minor participant" in the tax evasion scheme, for the purpose of determining her total offense level. In order to deter- mine whether a defendant is a "minor participant," the critical inquiry is . . . not whether the defendant has done fewer ‘bad acts’ than his [or her] co-defendants, but whether the defendant’s conduct is mate- rial or essential to committing the offense." United States v. Palinkas , 938 F.2d 456, 460 (4th Cir. 1991). Here, the jury found that Secor filed false tax returns and made false statements to the IRS in an effort to conceal Blanchard’s actual income from the IRS. Based on this evidence, this Court concludes that the district court’s finding on this point was not erroneous, let alone clearly erroneous. Having affirmed Secor’s convictions and sentence, the Court will now review the merits of Dougherty’s appeal.
C.
Dougherty raises a number of issues on appeal. First, Dougherty
argues that there is insufficient evidence to support his convictions for
aiding and abetting in the preparation of false tax returns in violation
of
Dougherty first challenges the sufficiency of the evidence support-
ing his convictions for aiding in the preparation of a false tax return
in violation of
From 1995 until 2000, Dougherty prepared Secor’s tax returns, which stated that she received income from Berryman Chemicals. Dougherty insists he was unaware that Secor was not employed at Berryman Chemicals. Blanchard, however, testified at trial that Dou- gherty was aware since 1994 that Blanchard, not Secor, earned income from Berryman Chemicals. Dougherty’s records, which chronicle his practice of arbitrarily transferring income between Blan- chard and Secor, similarly suggest he was aware that Secor was not employed by Berryman Chemicals. For example, in October 1991, Janel Lucas, a former employee of Dougherty’s, wrote:
With the chemical market "gone to hell[,]" apparently your cash flow has "gone to hell[.]" This puts a whole new per- spective on how to proceed in filing these returns. If we file Franceyn’s return showing the income as we had considered doing, she will of course owe tax. Now that cash flow is so bad, she will not be able to pay the tax and will be in serious tax trouble. That would make both of you in serious tax trouble. If we file the income going back to John, we have only one individual in trouble.
In Dougherty’s November 25, 1991 written notes, he opined: "The original plan had been for [Secor] to be the primary money winner, with John working for her . . . . [Secor] said they don’t have money for tax . . . . Most important — Keep [SECOR] clear of IRS, which I agree. This[ ] [will] mean redoing [ ] [Secor’s] 1040’s showing all income to John."
In addition to arbitrarily transferring Berryman Chemical income
between Blanchard and Secor, Dougherty also prepared and filed
Secor’s tax returns, reporting "cost of goods sold" deductions for
chemical trade commissions Secor allegedly paid to Blanchard. As
discussed above, however, Bob Berryman testified that Secor was
never employed by, nor involved in any way with his chemical trad-
ing business, a fact which Blanchard affirmed. We conclude therefore
that there is sufficient evidence to support the jury’s finding that Dou-
gherty willfully prepared and filed false tax returns in violation of
Dougherty also argues that his convictions on Counts 15, 17, 19 and 21 should be reversed because of an alleged material variance in the indictment and the government’s proffered evidence. According to Dougherty, "the government charged [in the indictment] that Secor’s Schedule C overstated her costs of goods sold in that she reported $73,000, $43,000, $81,466, and $66,808, when she allegedly should have reported ‘0.’" Br. of Appellants, at 27. At trial, however, the government offered evidence that Secor overstated her income.
The inquiry for determining whether a material variance exists
requires this Court to assess whether "the government, through its
presentation of evidence and/or its argument, . . . broadened the bases
for conviction beyond those charged in the indictment . . . ."
United
States v. Randall
,
Counts 15, 17, 19, and 21 allege that Dougherty prepared and filed
false tax returns in violation of
Next, Dougherty alleges that the district court abused its discretion when it made several evidentiary rulings and refused to provide the jury with a "deliberate ignorance" instruction. We find these chal- lenges to be without merit.
First, Dougherty contends that the government’s failure to produce
IRS Agent Turner’s Special Agent Report ("SAR") violated
Second, Dougherty claims that the district court erred by refusing
to admit a taped conversation between himself and his former
employee. Dougherty contends that this audiotaped conversation, in
which he told his employee to "tell the truth" to the IRS, demonstrates
his lack of willfulness in committing the offenses at issue and should
have been admitted into evidence under
Third, Dougherty argues that the government improperly argued at trial that Dougherty, as power of attorney for Blanchard and Secor, had a legal duty to produce the couple’s tax documents, which were requested by the IRS as part of its investigation. Dougherty claims that the district court’s failure to instruct the jury that Dougherty was under no such legal duty constituted an abuse of discretion. We dis- agree.
The indictment charged that Dougherty engaged in "obstructive behavior and delay tactics designed to conceal Blanchard and Secor’s income and assets from the IRS," by refusing "to provide the IRS with Blanchard’s and Secor’s bank statements and financial informa- tion, despite numerous requests and contacts by the IRS and assur- ances by Dougherty that he would provide them." The indictment did not allege that, as a power of attorney, Dougherty had a legal obliga- tion to provide the documents. During trial, it was Dougherty’s coun- sel who on direct examination first questioned Dougherty regarding his knowledge of any IRS rules or regulations that would obligate him to produce Blanchard’s records. Dougherty responded that he was aware of a provision in the Internal Revenue Code related to power of attorneys. Thus, Dougherty’s counsel "opened the door" to the gov- ernment to pursue this line of questioning, and thus, the district court did not abuse its discretion in either permitting this testimony or refusing to instruct the jury that Dougherty was under no such legal duty. See United States v. Mohr , 318 F.3d 613, 626 (4th Cir. 2003).
Finally, Dougherty objects to the district court’s decision to instruct
the jury regarding "deliberate ignorance." A willful blindness or
deliberate ignorance instruction allows a "jury to impute the element
of knowledge to [a] defendant if the evidence indicates that he pur-
posefully closed his eyes to avoid knowing what was taking place
around him."
United States v. Schnabel
,
Dougherty first contests the district court’s finding that he perjured
himself at trial and therefore was entitled to a two-level enhancement
under U.S.S.G. § 3C1.1. Section 3C1.1 permits the district court to
impose a two-level enhancement "if the defendant willfully
obstructed or impeded, or attempted to obstruct or impede, the admin-
istration of justice during the . . . prosecution of the instant offense."
U.S.S.G. § 3C1.1. In order to apply § 3C1.1 at sentencing, the district
court must review the evidence and make an independent finding that
the defendant: (1) gave false testimony; (2) concerning a material
matter; (3) with the willful intent to deceive, rather than as a result
of confusion or mistake.
United States v. Dunnigan
,
At Dougherty’s sentencing, the district court adopted the pre- sentence report, which detailed the statements with which Dougherty committed perjury. After reviewing the record, we are satisfied that these findings of fact are not clearly erroneous. The district court sat- isfied the evidentiary inquiry required under Dunnigan , and thus, we affirm Dougherty’s sentence. See United States v. Gilliam , 987 F.2d 1009, 1014 (4th Cir. 1993) (explaining that a court may adopt the findings of fact contained in a pre-sentence report at sentencing).
Dougherty also appeals the district court’s decision to impose a $253,746.52 restitution order. The findings of fact set forth in the pre- sentence report thoroughly detail the assistance Dougherty provided Blanchard in Blanchard’s attempt to evade paying his tax deficiency. Because the district court adopted these findings and we find that these factual findings are not clearly erroneous, we affirm the district court’s restitution order.
IV.
We have reviewed the record and the relevant statutory and case law and conclude that there are no infirmities warranting reversal of Blanchard’s, Secor’s, or Dougherty’s convictions or requiring re- sentencing. Accordingly, the jury’s verdict and the district court’s imposition of sentence in this matter are hereby
AFFIRMED .