Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-06-01955/USCOURTS-ca8-06-01955-0/pdf.json

Parties Involved:
Richard E. Reiss
Appellant
United States of America
Appellee

Document Text:

1

The Honorable John F. Nangle, United States District Judge for the Eastern

District of Missouri, sitting by designation.

2

The Honorable Paul A. Magnuson, United States District Judge for the District

of Minnesota.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 06-1955

___________

United States of America, *

*

Plaintiff - Appellee, *

* Appeal from the United States

v. * District Court for the

* District of Minnesota.

Richard E. Reiss, *

* [UNPUBLISHED] 

Defendant - Appellant. *

___________

Submitted: May 14, 2007

Filed: May 17, 2007

___________

Before BYE and SMITH, Circuit Judges, and NANGLE,1

 District Judge.

___________

PER CURIAM.

Richard E. Reiss was convicted of eighty-four counts of aiding and assisting

with the preparation of false tax returns in violation of 26 U.S.C. § 7206(2). At

sentencing, the district court2

 applied a four-level leadership enhancement pursuant

to U.S. Sentencing Guidelines (U.S.S.G.) § 3B1.1(a). Reiss appeals three of the

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district court’s evidentiary rulings as well as its imposition of the enhancement. We

affirm.

Reiss first challenges the district court’s admission of prior bad acts evidence

during his jury trial. Such evidence is admissible if: 1) relevant to a material issue;

2) similar in kind and close in time to the crime charged; 3) proven by a

preponderance of the evidence; and 4) the potential prejudice does not substantially

outweigh its probative value. United States v. Voegtlin, 437 F.3d 741, 745 (8th Cir.),

cert. denied, 127 S.Ct. 368 (2006). We review admission of this evidence for an abuse

of discretion. United States v. Edelmann, 458 F.3d 791, 809 (8th Cir. 2006).

 

The district court admitted evidence of civil IRS penalties assessed against

Reiss in 1989 and 1990 for overstating deductions on over sixty taxpayers’ returns

between 1985 and 1987. Reiss argues this evidence was improperly admitted because

it did not occur close in time to his charged crimes, was not proven by a

preponderance of the evidence, and was prejudicial. We disagree. Although the bad

acts occurred eleven to thirteen years prior to Reiss’s charged conduct, they involved

assessments for overstating deductions, which is identical to much of the charged

conduct, see id. at 810 (holding three fifteen-year-old convictions for submitting

forged documents were “not too remote in time because of their similarities with the

crime charged”), and possessed significant probative value as the assessments put

Reiss on notice that overstating deductions violated tax law, see United States v.

Fletcher, 322 F.3d 508, 519 (8th Cir. 2003) (holding evidence of prior civil actions

arising out of the defendant’s provision of tax services was admissible as it “possessed

significant probative value, especially with respect to establishing Mr. Fletcher’s

intent, knowledge, and motive”). In addition, our review of the record indicates there

was sufficient evidence for the jury to find by a preponderance that Reiss overstated

deductions on returns between 1985 and 1987. Finally, the district court specifically

instructed the jury it could not consider the prior bad acts evidence to prove the

charged offenses, thus curing any potential prejudice. See United States v. Warfield,

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97 F.3d 1014, 1027 (8th Cir. 1996) (“[U]nfair prejudice is unlikely to be found where

the district court instructed the jury that the bad acts evidence was not to be used as

proof that the defendant committed the charged offense.”).

Reiss also challenges the district court’s admission of a small claims judgment

against him. This judgment, however, arose out of Reiss’s preparation of a couple’s

tax returns in 1998 and 1999 which made up two counts in his indictment. As such,

Federal Rule of Evidence 404(b) is not at issue because this is evidence of his charged

crimes, rather than his prior bad acts. See United States v. O’Dell , 204 F.3d 829, 833

(8th Cir. 2000) (“Our cases have firmly established that crimes or acts which are

‘inextricably intertwined’ with the charged crime are not extrinsic and Rule 404(b)

does not apply.”).

Reiss next argues the district court erred in excluding, as inadmissible hearsay,

tapes and a booklet used to market a fraudulent tax pyramid “system” used by many

of his clients, which advised them on how to set up a home business to secure various

tax deductions. We need not decide this issue, however, because we are satisfied any

error was harmless. Our review of the record gives us “reasonable assurance that the

jury would have reached the same conclusion had the evidence been admitted.” Wood

v. Valley Forge Life Ins. Co., 478 F.3d 941, 946 (8th Cir. 2007).

Finally, Reiss argues the district court erred in applying U.S.S.G. § 3B1.1(a)

which allows an enhancement “[i]f the defendant was an organizer or leader of a

criminal activity that involved five or more participants or was otherwise extensive.”

The court found Reiss organized and led a tax fraud scheme which involved five or

more participants and was otherwise extensive. We review such findings for clear

error. United States v. Senty-Haugen, 449 F.3d 862, 864 (8th Cir. 2006). The

evidence showed Reiss conceived and organized a broad tax fraud scheme and then

directed his employees to carry it out by preparing and filing false returns using

figures he reported. As for whether there were five or more participants, a participant

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must be criminally responsible for the offense, but need not be convicted. See

U.S.S.G. § 3B1.1 cmt. n.1. Reiss’s employees testified they knew they prepared

inaccurate and potentially illegal returns and some of his clients testified they knew

their returns stated improper deductions. Furthermore, even if the scheme lacked five

or more participants, it was easily “otherwise extensive” as it involved dozens of

taxpayers, over eighty returns, and a tax loss of $232,226. See Senty-Haugen, 449

F.3d at 864 (holding a tax fraud scheme involving eighteen taxpayers, twenty-nine

returns, and a $71,610.90 tax loss was “without question” otherwise extensive). In

sum, we cannot find the district court clearly erred in its findings.

For the foregoing reasons, we affirm the district court.

______________________________

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