all counts the tax counts and the doesn't count was willfulness the only question was whether mr snyder did what he did willfully or whether he did it in good faith and the district court committed several  and each of those errors went directly to this sole disputed element in the case i want to talk st about the errors involving the so called cognitive it note and i'll move on to others if  permits but let me start with that one the government's theory supporting the admission of this note and later the jury instruction concerning it was that mr snyder had concocted this note shortly before trial so that he would have a trial defense and specifically the government's theory was that mr snyder prevailed upon mr hoke who had loaned him the money to characterize this three hundred thousand dollars that had been paid over much earlier to characterize it as a loan so that it could be argued at trial that the money was not available to pay the tax in four hundred and one dollars k obligations of the t v that was the government's theory this is one of those situations where there is literally no evidence to support that theory that in fact all of the evidence such as it is is contrary to that theory for example mr hope testified at trial that it was he and his lawyer not mr snyder who came up before the change that's true that they did they had a meeting and the purpose of the meeting was mr snyder wanted to borrow fifty thousand dollars from mr hogan and in the course of trying to coax fifty one thousand dollars out mr hope the three hundred thousand dollars that mr hogan paid years earlier came into play but had not been had not been repaid that's correct and so that the context of this discussion with mr hope was snyder's need and there's no evidence on the record for why he needed it but it was shortly before trial and i think one can surmise why he would want fifty thousand dollars shortly before trial that was the context of the discussion  hoke agreed to provide the fifty thousand dollars in fact i think ended up providing more than that and had his lawyer draw up a document that would support that this cognitive note and it was mr hope and his lawyer who put in the loan language so it's not like mr snyder is pushing to call this a loan he's not that's mr hope and his lawyer because they were pushing in your theory hope was pushing to have the prior three hundred thousand dollars characterized as that right it to the extent anybody was pushing this yes it was mr hoke and his lawyer it's not like this is something that was extensively discussed or debated it was simply put into the agreement by mr hope and his lawyer and mr snyder did well isn't the language isn't some of the testimony a little at least ambiguous if not contradictory as i read said you know they said yes it was drafted by hoke and his lawyers but they said the wording was pretty much in keeping with what snyder and i were talking about and then they said it probably came from me and my attorney as well did you discuss the language there with snyder well it came from him as well i mean i said it and he said it now that surveyed or could be taken different ways but it's rather different from i signed it sent it to him and that was the end of it i'm misquoting any of what i just said no you're not it and that and the testimony which which came from mr hope was somewhat jumbled on this whole point but what's completely missing is any suggestion mr snyder was pushing for this loan language he was not there is testimony which your honor quoted that i mean that they're talking about the loan language isn't the government asks where did this language this language come from and they said well i mean i said it if he said it which is you know doesn't say that it certainly doesn't say affirmatively that snyders is the only source but neither does it say that oh well of course my lawyer put it in because we always put that language in you know on all the later i think very close to that when asked where the language came from i think mr hope does say that it came from either him or his lawyer but there's no no more the other way that the original state the earlier statement is that you know we did it and then on the further examination it it gets vaguer that's the way i read it but we can look at it i guess the point i would want to make  is if if the theory here is that snyder cooked this up so he would have a defense at trial there is not a shred of evidence to support that however the loan language might have developed between  snyder and hope there's no suggestion from anybody that snyder was pushing for this night or originated it and beyond that if the point had been to put this language in this note to have it as a defense at trial and that's the only way this note would be relevant you would expect mr snyder to have at least pointed out to his lawyers and he didn't in fact the evidence is absolutely clear that  the st time that his defense lawyers the people presenting his case in court ever heard of this note was when the government produced it at trial and it was a it was a surprise i think it was a surprise to the government it was also a surprise to mr instruction i think we have laid it out in more detail subsequently but for example you're honored just to show that it wasn't like the district court didn't didn't get this in our bail application now this is post senate saying we're trying to keep him out pending appeal we laid this out exactly the way i'm laying it out to you in much the way we did in our brief to the district judge and the district judge rejected the argument defended the decision to admit the evidence and give the instruction and the government largely relied on what the district court said in its bill ruling in its in its brief and then we responded to that in our reply brief my right that then the assistant was at snyder assistant also testified and again there was kind of a little back and forth but which sometimes she thought it was an investment and didn't know when it would be came alone that sort of thing yes and then that goes to a  slightly different question which was certainly much debated at trial and that is back at the beginning back at the time a three hundred thousand dollars was paid over was it an investment or a loan and there was testimony both ways mr hope for example testified that he kind of thought of it as alone but my argument here today is it doesn't make any difference that the only way it becomes relevant the only way it comes in the only way you get this jury instruction is if it goes to consciousness of guilt if snyder was in fact trying to manufacture a defense by characterizing it as a loan in the two thousand and eighteen note that he and mr hook  limit it that much but we don't depend on myers i think myers is a helpful way to to look at this kind of evidence but even if it's simply a question of whether there was evidence to support the instruction without any more precision than that argument is the evidence did not support this instruction even if you draw the inference as in favor of the government the evidence did not support this instruction and it should not have been given the evidence should have been admitted and the instruction should not have been given and you can choose your own time but can i ask you about the personal tax parts where the government there is evident there is a discussion in the record about the government's witness saying that they  were investigating or that your man had not filed his axes my question st is just kind of procedurally or factually was this in play earlier or did the witness just quote blurted out and st of all one of our arguments is it was not in play earlier because the government didn't give notice under four hundred and four b that the personal tax issues were going to be brought up so yes the witness the witnesses both on redirect both government witnesses both former government employees one's an agent the others a former revenue officer they both brought it up the government's argument is that they put something in their earlier papers look let's pass that test in terms of i use the word blurting because i had a number of cases in a different context where the government's witness always blurts out that oh yes he was on parole then when it's not proper so i'm just trying to see how this came in and that is why why was the gut did that did the agent say it at that point why was the question i asked what was your feeling there at trial that i was in that trial but my very knowledgeable about the previous but my sense is that both of the these were on redirect both were in response to questions from the government and i i guess it's probably best to let the government explain why those questions were asked but the questions did not specifically ask for personal income tax information did they i don't believe they did your honor so it was in a sense the blurting out by the agent i guess in a sense it was although and with respect to ms terry there was no objection raised that's true defendant and with respect to the other agent there was an objection to a question that was being asked by the government which could have been answered yes or no but then and that was overruled but then the agent did give this information about the personal income tax income tax failure in my correct until the comment by the usa at closing argument there was no additional evidence but it was certainly emphasize in closing argument well emphasized meaning there was was a statement that closing argument yes right yes so so when you're just looking at what the evidence was it was just these individual statements by the two agents on redirect that's correct that great i see  for this reason and i will say upfront that if the only thing that had come in was the evidence i probably wouldn't have much of an argument what happened though is that in closing argument the government linked that evidence to a propensity argument and basically said he's done it before he's doing it again and tied that to that personal tax information and of course that argument went directly to the only disputed element in the case which is mr snyder's will and i think when you link those things together you have you have personal tax information that really is is not connected to the issue in the case it is then a link in closing argument by a propensity argument to the question in the case on all accounts not just the tax counts but on count eight as well i think you have a real problem with prejudice there there was no objection raised at the closing argument though that's true and that's the argument is a plane there is no question about that good afternoon and may it please the court i'm meghan miller assistant u s attorney on behalf of the government your honour's in this case david snyder was using the i r s as a bank over four years the evidence demonstrated that he willfully withheld one thousand dollars in taxes from his employees he did not pay that money over to the i r s but instead used it to pay his company's other creditors and support his own lavish lifestyle during that time he also embezzled one hundred and thirty thousand dollars in employee for a one k contributions mr snyder has now released in his brief and alleges in front of the court today two assignments of air that i tend to address based on the court's questioning i will st began with the court's admission of the cognitive it no between snyder and mr hoke and then i will address the admission of the personal income tax statements both of these the court adequately considered and thoroughly addressed after hearing from the parties and she properly exercised her discretion in making these rulings and we will ask the court to affirm at the end of the argument your honors with respect to the cognitive it no the court did not abuse its discretion and allowing its admittance and there are three concepts that underscore why the district court got it right and this particular case and those concepts are the contradiction there was a contradiction between the cub no it notes characterization of the three hundred thousand dollars payment as a loan versus other trial testimony that it was an investment nd the district court looked at the timing of the  in relation to the government's case and finally the permissive nature of the jury instruction that the court gave based on this particular issue of his own arrest in your opponent's argument it is that it was this whole ambiguous was the language of the club know that no characterizing the three hundred thousand dollars payment as a loan and that contradicted two prior witnesses at trial leslie paige who is mr snyder's personal assistant she testified that she that the three hundred thousand dollars payment was an investment because she heard it from mr snyder and she saw an agreement recognizing it as such and also a tivo contrail or irrawaddy santos so testified that the three hundred thousand dollar payment was in fact an investment in a tivo it matters your honor because the cud know of it note described this payment as alone as the district court found this is therefore probative of in other words whether or not the three hundred thousand dollars payment was an investment in the company and therefore could have been used to pay the i r s balance i'm sorry the defense to your case yes your honor doesn't it str represented by counsel if counsel is unaware that it is your honor and i think that the confusion there lies with mr snyder and his counsel's attempt to equate the consciousness of guilt question with whether or not it's ultimately used as a trial strategy what goes into the consciousness of guilt inquiry is whether or not there was sufficient evidence of a retired jurors ation and whether in light of the law that if it's going to be a defense if it's going to create this fusion if it's going to show way of and it has to be put forward in the case and argued it's part of the center was always aware and the defense was always asserting that he didn't do this willfully and one of the primary reasons that he didn't do this willfully according to the defense was that he lacked the money to pay this went so far as for the defense to ask for a jury instruction talking about the ability of the defense to pay so this was one aspect that went to the willfulness now i don't know when the government can't tell what was in mr snyder's mind in see whether there is a retired to his asian nd to look at that reek eric there is asian in the timing of the government's case and notably here it was two months after he had been indicted and one month after the government provided it notice in its discovery that this was going to be an issue and since you're going to be an issue when you say this was going to be the issue well that wilfulness was going to be an issue generally and more specifically that the government intended to suggest that one of the cash infusions going to a tivo during the two thousand and twelve timeframe was this three hundred thousand dollars payment from the mis note is the time mean that in effect the government you might say sprang the note at some point during its case in chief the government only learned of the no at all when mr hoke appeared for trial testimony and literally pulled out of his pocket and no those so converse  lee again this is speculation but if they had wanted to spring it up as a defense they could have done it during their case before the fact the government raised the note was not impossibly contradictory to mr snyder telling his lawyers hey let me let's pull this no doubt i think that is up there and i'm on my right about the trial timing that is correct on the trial timing because you're saying the stuff that we're you raised willfulness two months before trial that wasn't with the no you only knew about the note at trial that's correct and one of the things that the government and defense counsel h specifically discussed was the fact that there were cash infusions coming into the company during the two thousand and twelve timeframe that could have been used to pay the i r s deficiency and that would be probative of willfulness whether or not the particular funds were available during that time and i think that's one of the reasons why the district court reopened this inquiry precisely because a jury could find that there was a re of the snow but notably the district court did not mandate this finding the inquiry that she allowed and that she further instructed the jury to undertake based on her jury instruction was twofold st she left it up to the jury to determine whether there was even a recurrent there is asian at all only then if the juror found that there was a record to his asian could the juror then decide whether that was evidence of consciousness of guilt so th admission evan in and of itself of the cognomen note and the testimony surrounding it was certainly probative from a general relevant standard in that the two thousand and twelve timeframe went directly to count four which was the st quarter of two thousand and twelve talking about the failure to pay over the funds to the i r s so this note which referenced a payment that was made in two thousand and twelve spoke precisely to that issue so it was r t to the tax personal tax law questions i'm concerned about the world for be issues when you put in when you use this as evidence to own taxes he'd done it before and he was doing it this time and that that certainly sounds like propensity evidence to me and i'm struggling with the use of this appropriately where does not seem to me to fit the requirements that you could say that it is playing or perceiving that this person undertakes to make it a science in tree of evidence and you've got here three things that don't match in this one you've got snyder his failure to file his personal income tax why the personal income taxes are properly considered for a four b evidence for this type of crime and then i'll discuss why the government statement on closing wasn't propensity as it relates to the substantial similarity inquiry this court in harris in two thousand and six which is one of the cases that judge pearson relied on in her written order permitting the four a four b evidence looked at tax obligations broadly and in that particular case there was a conspiracy to evade taxes and the district court allowed in evidence of failure to file corporate taxes failure to file personal taxes and found that it was all part of a substantially similar scheme because one the particular defendant was the responsible party for all of those obligations which is what we have here mr snyder was the responsible party for filing his income tax statements and trial evidence came out that he was also the responsible party for filing a or willfully fail to pay over and the evidence did support that a tivo both failed to pay over and failed to file for the two thousand and nine tax frame which was also part of this it's also part of a general compliance with tax law obligations and that's i think what courts look at the compliance with tax laws that the i r s sets forth a scheme where one has to file taxes for and pay for taxes both personally and as a corporate entity and when an individual person is responsible for all of those obligations makes payment to the same victim and during the same time frame that is relevant to the charges that is what this court can look at in terms of finding a substantial or substantial similarity to the crime at hand what is the world for b purpose that you think the personal income tax failure to crow was relevant to again it was clear from the very beginning that the defendant intended to challenge the indictment on a willfulness ground and so in order to establish that he was willful and failing to pay over these prior instances of  noncompliance with tax on legations can demonstrate a lack of mistake can demonstrate a pattern in practice and can demonstrate intent all three of which are proper purposes under four of four b for which this type of evidence can be required this was sort of particularly proper as i read the record it wasn't like the government was introducing this initially as a major point i used the word word seen with your colleagues that are really did seem as though the agents were prepped or prompted that they just sort of threw it out there which it undercuts something of the argument that this is a really strong point that the government was going to put in that's correct your honor and both instances for example beginning with revenue officer terry she was being asked why were you looking at the particular corporate shareholders both mr snyder and mr burr mr in deciding to assess a ta and she had been questioned as to why she was focusing on that and she came back and your honor i see my time is about to expire but now i believe that we have to continue she had been asked repeatedly about those particular question so the question that she was asked is why do you in looking at the company also look at the corporate individuals who were responsible and how did that affect your decision in assessing a lien for this corporation at that time she responded that mr snyder had been noncompliant with filing eleven ortiz i'm sorry one thousand and forty s since two thousand since she was looking at the record whereas mr barry mr was not so or was so i think that's important for two reasons st it went to correct an impression that a shareholders personal tax record doesn't affect focus on the personal tax so i think the singular comment made by revenue officer terry in this particular instance was certainly not plain air as it written you have the government have tried to introduce the personal  matters through a notice that's required for four of four be correct your honor yes the four a four b notice did not specifically reference personal taxes however the note said the government will provide additional authority for this during in its trial brief in its trial brief the government went through multiple types of tax obligations that could bear on willfulness and that the government may introduce at trial the district court when she wrote on the particular issue of allowing these tax to these tax obligations in as forty four b evidence did not distinguish amongst any particular type and it was the defense who specifically challenge those two thousand and nine employee income or employment pay over trust fund tax obligations so when she wrote on the four a four b and response to that she both relied on case law that doesn't differentiate between different tax obligations and she generally allowed for other tax obligations to come in as evidence of intent was with either of your earlier statements would a defen attorney have said oh we better be prepared to see whether he filed personal income tax or whether he has an excuse ms or anything of that sort that would have put them on crew notice that you better be prepared on that i didn't read it that way government provided both the returns as well as the i r s transcripts during discovery whatever reflected the failure to pay the personal income taxes but it would mean to provided documents there was nothing that says affirmatively he didn't file you just that if you looked at the transcript you would see that he didn't file that's correct or ok and we also marks them as exhibits at trial the defen object to them in writing they objected on prejudicial grounds but not noticed i'm sorry i was going to say that i think one critical thing in this case is the closing argument statement that you heard testimony that defendant wasn't even paying his own taxes he'd done it before and he was doing it this time and why isn't that totally impermissible propensity argument that is harmful or no there was no objection by the defendant but it seems that it is saying he didn't pay his taxes before and he's doing it this time it seems to be blatant i think the defense would have this quote focus on that one particular statement but when considering a prosecutorial misconduct as it relates to statements such as these it's important to consider the context and the context of that statement was made in this way the government said that wilfulness is a contested issue here and the jury can infer that the defendant was willful for the following three reasons st the prosecutor pointed to the way that mr snyder h the relationship i don't think that was clear but certainly it arose out of the fact that they were floating him money but there was also testimony from phil tram an employee at a tivo who said that mr one of mr snyder's considerations in bringing it in house versus finding another payroll company was that would give added flexibility in these particular payroll determinations so that was one of the factors that the government was pointing to the jury to say this is how mr snyder exercised control over these funds and over the decision to make these payments the government then moved on to say you can also know that it's willful because he had done it before for and at that point the government specifically referenced to two thousand and nine employment tax obligations that the district court had permitted the prosecutor also said that the court instructed you just instructed you in the jury instructions that you can consider this type of evidence for the purpose of proving intent the prosecutor then reference another instruction that the court had just given that no one can know anyone's mind but rather if the one can infer intent from the words and natural consequences of a person's action so this was the framework and the context at which the prosecutor brought up the other tax obligations not to suggest that mr snyder was a bad guy who  rd reason looking at mr slater his own statements and a memo that he wrote suggesting that in that statement he said i chose when faced with the decision as to what to do with this money not to pay limiting instruction that's not a sure fire panacea well certainly we will point out that we did have a limiting instruction and that the jury can be presumed to follow that but i think what's important about the clay case is the facts of those of that particular case in that case there was a prior rape that was brought up and it was farther off in time and it was not the same victim and i believe that in clay there was a carjacking victim and they were trying to say that because this particular person the defendant had carjacked a person and placed and hit them with a gun and that this person had a prior threatened assault it was assault your honor a threatened assault that this is showing that this person has a propensity to commit crimes that have serious physical harm and the courts that that's going too far one because there's no real correlation between one conviction and another conviction as it relates to serious physical harm the court also looked at the underlying nature of the testimony on the assault where the actual victim came in and said she was afraid that she was going to die that day and it was that type of statement that was just unduly prejudicial i think it's very distinguishable in your honour's in this case where we do have the same victim being the i r s we still have the same tax scheme we have a relevant time frame we have no other than the two references in the prosecutor or the prosecutor statement says out of the entire two thousand pages of trial transcript that focuses on the personal income tax inquiry and under a plainer standard your honor i suggest that that is not the type of prejudice in which the c thank you thank you i'll talk quickly judge bugs you raise the possibility that that maybe mr snyder was planning to spring this in his defense but the cognitive note wasn't on the exhibit list so it probably would have been precluded that had been the plan and you would certainly expect his lawyers at least to know notice of any personal tax if you spelled out various things it did not mention personal taxes if it had and judge bob i think you raise this possibility in fact mr snyder had filed returns he filed them late  but the testimony that the witnesses gave was was not i'm sure it was not intentionally false but it was not correct and had he had notice he could have pointed that out and probably excluded the evidence entirely finally let me just say on the question of the government's use of this and even if we assume that the witnesses boarded this out and the government had no idea it was coming the government certainly made use of that evidence in closing do what he did and i'm believe i'm quoting directly here so forgive me if i get a word quote and you also know he meant to do it because he did it before that's how the government began that portion of the that theme you know he meant to do it because he did it before that's a propensity argument slightly less naked then the nd one but it's a propensity argument you know he did it this time because he did it before and then it wraps up that portion of the argument with he'd done it before and he was doing it this time which is almost exactly the language that johnson explicitly forbids let believe that an argument that this entire  of rd circuit case which we cite which would make exactly that point that it's very easy for for a for b evidence that's addressed to willfulness to slide into propensity and so in deciding whether for a for be evidence comes in on willfulness you you have to you that the district court has to make sure that the inference is connecting the four or four be evidence and willfulness do not include a propensity inference so here what would you say the government should have said haven't shouldn't have come in you know given that it did come in and basically without an objection on the situation of terri and with objection to a question but not to the answer in the other guy's case let me put it this way your honor the government could not have made have connected the personal tax information to willfulness in this case except through a propensity inference now the government certainly could have hidden that more more craftily than it did it here we have it laid out on the page for you wolf comes as a wolf and that's pretty unusual here is they don't say language princely language quite that nakedly put but there was no way to connect those two things without having a propensity inference in my view thank you and i have one request which is let's assume that you prevail on one or another of these arguments does that have any effect on the  embezzle moment if it does your honor and the reason of the reason it does is that the defense both of the prosecution theory and the evidence and the defense were identical on that count to the evidence and the theory on the tax counts and here's what i mean by that all of this happened because this company was in disastrous financial conditions and mr snyder was trying to keep it afloat that's why the tax is identical for both and mean it just seems like sometimes you can play a little word games with the government on tax than just taking somebody else's money the you know the tax instruction has particular language intentional violation of a known legal duty but really here your honor it came to the same thing it really came to the same thing i mean either either he took this money and did wrong knowing he was doing wrong or he took it in good because he was trying to keep the company afloat and he had every intention of paying it back and that goes equally to the tax and to the recent thank you thank you thank you both for your argument the case will be submitted and with the clerk of the next case