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Nature of Suit Code: 510
Nature of Suit: Prisoner Petitions - Vacate Sentence
Cause of Action: 

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United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

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Argued September 15, 1995 Decided December 8, 1995

No. 92-3037

UNITED STATES OF AMERICA,

APPELLEE

v.

CHARLES N. LLOYD, JR.,

APPELLANT

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CONSOLIDATED WITH

94-3121

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Appeals from the United States District Court

for the District of Columbia

(No. 91cr00190-01)

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Sean F. Foley argued the cause for appellant. Carol E. Bruce, appointed by the court, and Newman

T. Halvorson, Jr. were on the briefs for appellant.

Alan M. Boyd, Assistant United States Attorney, argued the cause for appellee, with whom Eric H.

Holder, Jr., United States Attorney, John R. Fisher, Thomas C. Black, and Richard W. Roberts,

Assistant United States Attorneys, were on the brief for appellee. Thomas J. Tourish, Jr., and

Elizabeth Trosman, Assistant United States Attorneys, entered appearances for appellee.

Before: EDWARDS, Chief Judge, SENTELLE and TATEL, Circuit Judges.

Opinion for the Court filed by Circuit Judge SENTELLE.

SENTELLE, Circuit Judge: Charles N. Lloyd, Jr., a tax preparer, was convicted on three

counts of aiding and abetting in the preparation of false federal income tax returns and one count of

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first degree fraud in causing a false District of Columbia income tax return to be filed. On a previous

appeal, we remanded the case for reconsideration of Lloyd's claim that he was unfairly prejudiced by

the trial court's refusal to order the government to disclose the returns of the government's taxpayer

witnessesfor the yearsimmediately preceding the years ofthe returns upon which the indictment was

based. United States v. Lloyd, 992 F.2d 348 (D.C. Cir. 1993). On remand, the District Court

concluded that the undisclosed tax returns probably would not have produced an acquittal on any of

the four counts. It accordingly denied Lloyd's motion for a new trial, and Lloyd appeals that denial

to this court. Because we conclude that the District Court applied the wrong legal standard to the

new trial motion and erroneously determined that a new trial was not required, we reverse the

convictionsinCounts 7 and 11 and remand for new trial. We uphold the convictions in Counts 3 and

5.

I. FACTUAL BACKGROUND

In 1991, Charles N. Lloyd, Jr., was convicted under 26 U.S.C. § 7206(2) (1988) and 18

U.S.C. § 2 (1988) on three counts of aiding and abetting in the preparation of false federal income

tax returns and under 22 D.C.CODEANN. §§ 3821(a), 3822(a)(1) and 105 (Repl. 1989) on one count

of first degree fraud in helping to file a false District of Columbia income tax return. Since the early

1980s, Lloyd had owned and operated a tax preparation business in Southeast Washington, D.C.,

called Delta Tax Service. Many of Lloyd's clients were unable to pay him at the time he prepared

their returns, so he arranged for their tax refund checks to be sent to his post office box. The client

would pay Lloyd out of the refund proceeds. Following a lengthy investigation, Lloyd was indicted

on numerous tax fraud counts stemming from tax returns he had prepared for some of his clients.

Lloyd sought pre-trial discovery of tax returns for his clients named in the indictment for the

three years preceding the years of the returns which Lloyd had prepared. The government obtained

some of the requested prior returns, but determined that 26 U.S.C. § 6103 (1988) prohibited

disclosing the tax returns without a court order. Lloyd requested such an order, arguing that if the

earlier tax returns revealed that the clients had filed fraudulent returns in the past, it would support

his defense that the clientsthemselves, and not Lloyd, supplied the false information in the indictment

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returns. The court refused to issue the order, concluding that Lloyd had failed to meet his burden of

showing that the returns would be useful in his defense. After trial, the jury convicted Lloyd on four

counts: Count 3, aiding and abetting in the preparation of a false federal income tax return for Phyllis

Burton for the tax year 1984; Count 5, the same charge involving Juanita Pressley's 1985 return;

Count 7, the same charge involving Diane Caldwell's 1985 return; and Count 11, first degree fraud

in causing D.C. to be deprived of tax revenues. Count 11 involved the D.C. tax returns of Calvin

Toler, Diane Caldwell, Michael Worthy, Thelma Davis and Donald Cooper.

On appeal, we examined Lloyd's claim that the District Court had erred by inflating the

materiality standard inFED.R.CRIM. P. 16 because of the statutory prohibitions on disclosing the tax

returns without a court order. We concluded that a materiality standard more demanding than Rule

16 might be appropriate in some casesinvolving the disclosure of tax returnsfor discovery purposes,

but that Lloyd's case was not one of them. We then remanded the case for consideration of a new

trial motion, instructing the District Court to appraise the returns' materiality under the normal

standard of Rule 16. United States v. Lloyd, 992 F.2d 348, 352 (D.C. Cir. 1993). On remand, the

parties agreed to stipulate to the materiality ofthe returnsfor discovery purposes and allow the court

to proceed directly to the merits of the new trial motion. The District Court applied Thompson v.

United States, 188 F.2d 652 (D.C. Cir. 1951), which set forth the test for whether newly discovered

evidence requires a new trial. The court denied the new trial motion, concluding that the undisclosed

returns (1) were irrelevant to the convictionsin Counts 3 and 5, (2) were of only slight impeachment

value as to the conviction in Count 7 and were unlikely to produce an acquittal, and (3) were either

cumulative or useless for impeachment as to the conviction in Count 11.

II. LEGAL ANALYSIS

A. History and Standards

In denying Lloyd's motion for a new trial, the District Court applied the rule of Thompson v.

United States, 188 F.2d 652 (D.C. Cir. 1951):

To obtain a new trial because of newly discovered evidence (1) the evidence must

have been discovered since the trial; (2) the party seeking the new trial must show

diligence in the attempt to procure the newly discovered evidence; (3) the evidence

relied on must not be merely cumulative or impeaching; (4) it must be material to the

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issues involved; and (5) of such nature that in a new trial it would probably produce

an acquittal.

Id. at 653. The District Court based its denial squarely on the grounds that the undisclosed returns

would probably not have produced an acquittal. However, we have already made it clear that the

Thompson test does not apply where the evidence in question was not newly discovered, but was

available to the prosecution at the time of trial, at least when the prosecution withheld that evidence

in violation of due process standards under Brady v. Maryland, 373 U.S. 83, 86-88 (1963). United

States v. Kelly, 790 F.2d 130, 133 (D.C. Cir. 1986). "[T]he fact that such evidence was available to

the prosecutor and not submitted to the defense places it in a different category than if it had simply

been discovered from a neutralsource after trial." United States v. Agurs, 427 U.S. 97, 111 (1976).

The present facts present the distinct question of whether the Thompson standard applicable

to newly discovered evidence or the Brady standard applicable to evidence which existed and was

known to the prosecution at the time of trial applies in a case in which the prosecution withheld the

disputed evidence but without wrongdoing on the part of the government and with full disclosure to

the court. We hold that it is the Brady analysis which must govern. The purpose in Brady is not to

punish a wrongdoing prosecutor, but rather to assure that the defendant was not convicted without

due process of law. As the Supreme Court stated in Brady, "suppression by the prosecution of

evidence favorable to an accused ... violates due process where the evidence is material either to guilt

or to punishment, irrespective of the good faith or bad faith of the prosecution." Brady, 373 U.S.

at 87 (emphasis added). Thus, the District Court should have analyzed the effect of the erroneous

withholding of the tax returns under the analysis applicable to Brady evidence rather than the

Thompson standard applicable to newly discovered evidence.

That leads us to the questions: What standard applies to Brady evidence, and was that

standard met in the present case? In Kelly, we applied the Supreme Court's test of whether the

defendant's lack of access to undisclosed evidence justifies a new trial:

[T]he District Court must determine whether the undisclosed evidence was "material"

to Kelly's conviction.... The Supreme Court has recently held that undisclosed

information is material if "there is a reasonable probability that, had the evidence been

disclosed to the defense, the result of the proceeding would have been different. A

"reasonable probability' is a probability sufficient to undermine confidence in the

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outcome." United States v. Bagley, 105 S. Ct. 3375, 3384, 87 L. Ed. 2d 481 (1985).

Kelly, 790 F.2d at 135-36. If the undisclosed evidence is "material" in the Bagley/Kelly sense, then

the defendant is entitled to a new trial. The Supreme Court recently elaborated on the meaning of

materiality under Bagley, stressing that the relevant inquiry focuses on the fairness of the trial the

defendant actually received rather than on whether a different result would probably have occurred

had the undisclosed evidence been revealed:

[A] showing of materiality does not require demonstration by a preponderance that

disclosure of the suppressed evidence would have resulted ultimately in the

defendant's acquittal.... Bagley's touchstone of materiality is a "reasonable

probability" of a different result, and the adjective is important. The question is not

whether the defendant would more likely than not have received a different verdict

with the evidence, but whether in its absence he received a fair trial, understood as a

trial resulting in a verdict worthy of confidence. A "reasonable probability" of a

different result is accordingly shown when the Government's evidentiary suppression

"undermines confidence in the outcome of the trial." Bagley, 473 U.S. at 678, 105

S. Ct. at 3381.

Kyles v. Whitley, 115 S. Ct. 1555, 1566 (1995). Kyles also made it clear that the Bagley analysis is

a one-step process"once a reviewing court applying Bagley has found constitutional error there

is no need for further harmless-error review." Kyles, 115 S. Ct. at 1566. No Bagley error could ever

be harmless, theCourt noted, because a reasonable probabilityof a different result "necessarily entails

the conclusion that the suppression must have had substantial and injurious effect or influence in

determining the jury's verdict." Id. (citations and internal quotation marks omitted). This court's

prior decisions are in accord.

The government argues in a footnote in its brief that the proper remedy for a District Court's

use of the wrong legal standard in ruling on a new trial motion is "to remand the case back to the

district court ... where the appropriate fact-based determination can best be made" under the proper

standard. Brief for Appellee at 21 n.18. While it is true that the determination of materiality for

Brady purposes "is inevitably fact-bound and so is committed to the trial judge in the first instance,"

Kelly, 790 F.2d at 136, it is also true that the facts necessary to the determination of this motion are

clear and undisputed. The undisclosed returns are part of the record, and no further facts need be

determined for resolution of the new trial motion. The remaining question is one of law, not

factdid the nondisclosure of the returns violate Lloyd's Brady rights as a matter of law? Such a

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determination was impossible the first time this case was before us, for the returns were not part of

the record at that time. See United States v. Lloyd, 992 F.2d 348, 351-52 (D.C. Cir. 1993)

(remanding for reconsideration of the Rule 16 materiality of the undisclosed returns). But now that

the returns are a part of the record, we can determine the proper resolution of Lloyd's new trial

motion without overstepping the bounds of appropriate appellate jurisprudence.

When we last considered this case, we discussed different ways in which the undisclosed

returns might be materially exculpatory. First, if a taxpayer who claimed that Lloyd was the source

ofthe fabrication in the indictment return could be shown to have made similar claimsin prior returns

which Lloyd did not prepare, that evidence would help Lloyd demonstrate that the taxpayer, not

Lloyd, wasthe source of the fabrication. Second, if a taxpayer took the stand and claimed that Lloyd

was the source of the false information in the indictment returns, these prior returns not prepared by

Lloyd would "have the makings of a promising tool for impeachment." Lloyd, 992 F.2d at 351. In

this context, we note that the Supreme Court has specifically held that there is not "any difference

between exculpatory and impeachment evidence for Brady purposes." Kyles, 115 S. Ct. at 1565.

With that background, we willproceed to examine each conviction and determine whetherthe returns

are materially exculpatory under Bagley and Kyles.

B. Application

1. Count 7

Count 7 alleged that Lloyd aided and abetted in the preparation and presentation of a false

federal income tax return for the year 1985 for the taxpayer Diane Caldwell. The District Court did

not order prosecution disclosure of any prior returnsfor Caldwell at trial, but the record now contains

Caldwell's 1984 federalreturn, which is under seal. (The government placed the 1984 return into the

sealed record in the proceedings on the new trial motion in the court below after stipulating to the

materiality of the return for discovery purposes.) Having reviewed this sealed 1984 return, we

conclude that it containsmateriallyexculpatoryevidence ofjust the sort contemplated in our previous

opinion in this case. This undisclosed evidence raises a reasonable probability of a different result had

it been disclosed at trial. We therefore hold that the District Court erred in denying Lloyd's new trial

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motion as to Count 7.

2. Counts 3 and 5

Count 3 mirrored Count 7 except it involved the tax return of Phyllis Burton for the tax year

1984. The record, however, contains no prior-year return for Burton. Apparently, the government

was unable to produce any prior returns for Burton. Lloyd, 992 F.2d at 350. When this case was

previously before this court, Lloyd claimed that the government'ssearch wasinadequate, but we held

at that time that he had failed to raise that claim below and was therefore barred from raising it on

appeal. Id. Count 5 also mirrored Count 7 except it involved the tax return of Juanita Pressley for

the tax year 1985. The record also contains no prior returns for Pressley.

Lloyd challenges his convictionsin bothCounts 3 and 5 on the groundsthat the nondisclosure

of all the prior returns that were retrieved corrupts all four convictions, not just those based on later

returns ofthe individualsfor whom prior returns were retrieved. To support this argument, he points

to the statement in Kyles that Bagley materiality is defined "in terms of suppressed evidence

considered collectively, not item by item." Kyles, 115 S. Ct. at 1567. More specifically, "the effect

of each nondisclosure must not only be considered alone, for the cumulative effect of the

nondisclosures might require reversal even though, standing alone, each bit of omitted evidence may

not be sufficiently "material' to justify a new trial." United States ex rel. Marzeno v. Gengler, 574

F.2d 730, 736-37 (3d Cir. 1978). Having considered the nondisclosed returns as a whole, however,

we are not convinced that they would have provided any assistance to Lloyd in impeaching either

Burton or Pressley or in buttressing his version of events as to their returns. We accordingly reject

this "corruption" argument.

As to Count 5 alone, Lloyd points to a comparison the prosecution made between Lloyd's

testimony regarding the Caldwell indictment return and his testimony regarding the Juanita Pressley

return, the basis of Count 5. According to Lloyd, this "linking" of the two returns shows that the

nondisclosed Caldwell return could have helped him to boost his credibility on Count 7, thereby

having a parallel effect as to Count 5. But examination of the trial transcript shows the weakness of

this argument. See Trial Transcript at 81-82. The prosecutor was attempting to show that Lloyd had

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falsified "original worksheets" for those returns which were being investigated by the IRS, including

the Caldwell and Pressley returns. All that Lloyd could have shown with the undisclosed Caldwell

return now in the sealed record was that he was not the source of the false information in the

Caldwell indictment return itself. The prior Caldwell return offers no evidence to counter the

prosecutor's suggestion that Lloyd falsified "original worksheets" for all the returns under

investigation. Even if Lloyd had not falsified the Caldwell indictment return, he had plenty of

incentive to falsify the "original worksheets" for the returns being investigated by the IRShe had

failed to preserve adequate records of the sources of the information in those returns. We therefore

reject Lloyd's invitation to grant a new trial as to Count 5.

3. Count 11

Count 11 alleged first degree fraud in violation of 22 D.C.CODEANN. §§ 3821(a), 3822(a)(1)

and 105 (Repl. 1989) by causing the District of Columbia to be deprived of more than $250.00 in tax

revenues by helping to prepare false District ofColumbia income tax returns. The returns supporting

Count 11 were the 1986 tax year returns of Calvin Toler, Diane Caldwell, Michael Worthy, Thelma

Davis and Donald Cooper. Lloyd had a copy of one of Davis' prior returns in his files, so he was able

to use it against her at trial. Lloyd, 992 F.2d at 351. The government was able to retrieve prior-year

returns for Toler, Caldwell, Worthy and Cooper. We have already held that the Caldwell prior-year

return contains materially exculpatory evidence under Bagley and Kyles. After reviewing the sealed

returns for Toler, Worthy and Cooper, we have determined that they also contain materially

exculpatory evidence ofthe sort we contemplated in our previous Lloyd opinion. As the government

points out, the jury only had to find a violation in one of the five returns to justify the conviction

under Count 11. It is therefore possible that the jury relied solely on the Davis return and that the

prior-year returnsfor the other four individuals would have had no effect on their decision to convict

Lloyd under Count 11. But we must construe the undisclosed evidence, in this case prior-year tax

returns for four of the five individuals named in the count, "collectively, not item-by-item." Kyles,

115 S. Ct. at 1567. We therefore hold that the combined weight of the materially exculpatory

evidence contained in the undisclosed Caldwell, Toler, Worthy and Cooper returns merits a new trial

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on Count 11.

4. Other uses of the earlier returns

Lloyd suggests other theories under which the earlier returns now part of the sealed record

could have been used at trial to impeach the government's witnesses as to all four counts on which

convictions were obtained. We have already held that the undisclosed returns contain materially

exculpatory evidence as to Counts 7 and 11, so it is unnecessary to consider Lloyd's other theories

for those counts. Lloyd is free, of course, to make use of these additional impeachment strategies

against government witnesses in a new trial on these two counts. None of the undisclosed returns

in the sealed record are related to Counts 3 or 5, however, so Lloyd's theorized impeachment

strategies could have had no effect on them. Lloyd's theories give us no reason to order a new trial

as to these two counts.

III. CONCLUSION

For the foregoing reasons, we hold that the relevant undisclosed returns constitute materially

exculpatory evidence under Bagley, Kyles and Kelly as to the convictions in Counts 7 and 11. The

District Court erred in denying Lloyd's new trial motion as to these two counts. We affirm the

District Court's denial of the new trial motion asto the convictionsin Counts 3 and 5, but we reverse

the District Court's denial of the motion asto Counts 7 and 11 and remand with instructions to grant

the motion as to the latter two counts.

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