Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-91-04061/USCOURTS-ca10-91-04061-0/pdf.json

Parties Involved:
Harry Edward Thomas
Appellant
United States of America
Appellee

Document Text:

FIL . .J 

Unlt.ed States Cot: :t of Appealii 

IN THE UNITED STATES COURT OF 

FOR THE TENTH CIRCUIT 

APPEALS Tenth Cirtuit 

FEB 2 3 1993 

UNITED STATES OF AMERICA, ROBERT L. HOECKER 

Plaintiff-Appellee, 

v. 

HARRY EDWARD THOMAS, 

Defendant-Appellant, 

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No. 91-4061 

(D.C. No. 89-CR-218A} 

(District of Utah} 

Clerk . 

ORDER AND JUDGMENT• 

Before EBEL, circuit Judge, McWILLIAMS, Senior Circuit Judge, and 

EISELE .. 

EISELE, District Judge. 

Back in 1984 and 1985 the Securities and Exchange Commission 

and the Internal Revenue Service conducted an investigation into 

the defendant's promotion and operation of a number of tax 

shelters. In connection with that investigation the United States 

applied for a search warrant before United States Magistrate Judge 

Ronald Boyce on January 11, 1985. The warrant was issued and 

executed on that same date. A great volume of papers and records 

along with some office equipment was seized from the offices of the 

• This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, except 

for the purposes of establishing the doctrines of law of the case, 

res judicata or collateral estoppel. 10th Cir. R. 36.3. 

•• Honorable G. Thomas Eisele, Senior United States District 

Judge for the Eastern District of Arkansas, sitting by designation. 

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defendant which offices were shared by a large number of 

corporations and partnerships. 

On November 29, 1989, a grand jury sitting in the District of 

Utah, Central Division, returned an indictment against the 

defendant alleging in 16 counts various violations of 26 USC§ 

7206(2). A trial was held in the United States District Court from 

September 17, to September 28, 1990. On October 2, 1990, the jury 

found the defendant guilty on all 16 counts. The defendant was 

sentenced to three years imprisonment on Counts I, II, III, IV, and 

V, such sentences to be concurrent one with the other; two years on 

Count VI, consecutive to the sentences imposed under Counts I 

through v; a suspended sentence of two years on Counts VII through 

XVI with five years of probation to commence upon release from 

imprisonment. On March 29, 1991, the defendant filed his appeal in 

this Court challenging both the conviction and the sentence 

imposed. The appellant, Mr. Thomas, lists eight issues. He 

contend~ t.hai: : 

1. The trial court erred in admitting evidence seized in 

violation of his Fourth Amendment rights. 

2. The Grand Jury lacked subject matter jurisdiction and the 

trial court lacked venue over Counts 7, 8, 9, 10 and 13 under 

Article III of the Constitution and Federal Rule of Criminal 

Procedure No. 18. 

3. He received ineffective assistance of counsel. 

4. The charges in the indictment are multiplicitous. 

5. The trial Court erred in refusing to grant him a 

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continuance so that he could file a bill of particulars. 

6. There was insufficient evidence to convict him. 

7. The Court improperly instructed the jury that his intent 

was to be determined upon an objective rather than a subjective 

basis. 

8. The Court incorrectly calculated the amount of damages for 

the purpose of sentencing. 

I. FOURTH AMENDMENT ISSUE 

on January 11, 1985, Kenneth w. Crittenden, Special Agent with 

the IRS and Norman J. Korb of the Securities and Exchange 

Commission applied to Magistrate Judge Ronald Boyce for a search 

warrant in connection with their investigation of Mr. Thomas' 

promotion and operation of tax shelters. They presented to Judge 

Boyce certain affidavits for search warrant signed under oath by 

one or both of said officers. One of the affidavits states: 

"That they have reason to believe that on the premises 

known as R.D.S., Inc., suite 320, 5505 South, 900 East, 

Murray, Utah, c1 building locate:d 0.1 the east side of 900 

East and 5505 South being a three story light sand 

colored brick with the name 'Sports Mall Office Plaza', 

Suite 320. Suite 320 is located on the southwest corner 

of the third floor, in the Central Division District of 

Utah. There is now being concealed certain property 

namely: 

1. Articles of incorporation, certificates of 

Limited Partnerships and all related records, 

minutes of shareholders' meetings, limited 

partnership meetings, directors and management 

meetings, and resolutions, directives, 

memoranda and other records thereto. These 

records are believed to be located in the file 

cabinet in Sandy Thomas' office, and in file 

cabinets in a file room located in the north 

end of the reception area in Suite 320. 

(hereinafter referred to as file room no. 

one). 

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2. Contracts, agreements and leases which related 

to business operations and services, and to 

the ownership of assets, including equipment 

and real property, together with fixtures and 

appurtenances thereto. These are believed to 

be located in a file cabinet in Sandy Thomas' 

office, and in file cabinets in file rooms 

number one, and in another file room which is 

located at the south end of the reception area 

in Suite 320. 

3. Financial journals, and ledgers and records of 

the various entities, including but not 

limited to, general journals and ledgers, 

account ledgers, receipt and disbursement 

journals, financial statements and supporting 

records, adjusting journal entries, accounting 

work papers, analysis sheets, asset lists, 

equipment lists, budgets, charts, cashier's 

checks couchers, computer codes, computer 

runs, inventory records, insurance records, 

microfilm records, microfiche records, 

property appraisals, checking accounts 

statements together with deposit records, 

cancelled checks, debit and credit memoranda, 

duplicate deposit accounts and all related 

documents. Some of these records may be on 

computer printouts or storage disks and are 

believed to be in the file cabinets in Rolayne 

Nielsen's office and the file cabinets in Gary 

Houtz's office. 

4. Broke!'."s accounts and do:::um;,mts showing 

investments and transactions in securities, 

including statements, confirmations, 

memoranda, correspondence, and documents 

relating thereto . These are believed to be 

located in file rooms nos. one and two. 

5. Stock and limited partnership records showing 

equity ownership including placement 

memoranda, stockholders' lists and ledgers, 

limited partnership subscription lists, 

cancelled stock certificates, stock transfer 

instructions, investment letters, 

correspondence, and all other documents 

relating thereto. These are believed to be in 

the file cabinets in Sandy Thomas' office and 

file room no. two and in large binders located 

on top of a wall storage unit in Rolayne 

Nielsen's office. 

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6. Written correspondence, memoranda, appointment 

books, cassette tapes and other records and 

documents relating to the business affairs of 

the enumerated corporations and limited 

partnerships as listed on the attached 

affidavits, which record dates, places and 

purposes of meetings, and the identity of 

persons with which business was negotiated or 

transacted. Various of these records believed 

to be in all of the individual office, 

including Thomas' office. 

7. Bugging devices and telephone tape recording 

paraphernalia including all recordings from 

the same, which are believed to be in the 

conference room and in Thomas' office. 

Which are fruits and instrumentalities of 

violations of§ 17(a) of the Securities Act of 

1933, 15 use § 77Q (a), and § 10 (b) of the 

Securities Exchange Act of 1934, 15 USC 

78j (b), Rule 17 C.F.R. 240; and 26 USC § 

7206(2). 

8. The above items listed in paragraphs 1, 2, 3, 

4, 5, and 6, only those which relate to the 

corporations and partnerships listed in the 

affidavits. 

Apparently there was another affidavit, or other affidavits, 

which set forth the names of the various partnerships and 

corporations allegedly involved in the scheme together with a 

description of the phony paperwork, and maps and diagrams of Mr. 

Thomas's corporate offices indicating where relevant documents were 

kept. One of the affidavits listed some sixteen corporations and 

fifteen limited partnerships by name. All of this information was 

presented to Magistrate Judge Boyce. 

Judge Boyce authorized the warrant, finding that there was 

probable cause to believe that the defendant was committing crimes 

and that evidence thereof would be found at the locati on specified 

in the warrant. At the direction of Judge Boyce the affidavits 

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were specifically incorporated into the warrant by reference . 

Ordinarily the affidavits would be attached to the warrant but 

the government moved to seal the Korb and Crittenden affidavits 

based on a finding that Mr. Thomas was a potential danger to the 

employees of Mr. Thomas (or of entities he controlled) who had 

cooperated with the government investigation. The Magistrate Judge 

granted the motion. 

So the warrant as issued specifically incorporated the 

supporting affidavits by reference, but those affidavits were not 

attached to the warrant since they had been ordered sealed by the 

Magistrate. 

The officers participating in the search were requested to 

read the affidavits before executing the warrant. And, during the 

execution of the warrant the agents were also given a list of the 

entities to which the warrant applied. 

such a list at the time of the search. 

Mr. Thomas was also given 

Furthermore, one of the 

affiants was pres ent when the warrant was executed and a v ailable t o 

answer any questions that any of the agents might have in regard to 

the search. 

A very large volume of documents and papers were seized during 

the search . Not all of those papers and documents belonged to the 

corporations and limited partnerships itemized in Mr. Korb ' s 

affidavit. However, the government contends that such documents 

were "related to'' those business entities. 

The lower Court took evidence and heard arguments regarding 

the defendant's motion to suppress on July 5, 6, 9 , and 10, 1990. 

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The Court ruled that the search warrant, if taken together with the 

supporting affidavits, would be sufficient and lawful. However, it 

expressed concern that the affidavits were not physically attached 

to the warrant at the time it was executed. It therefore asked the 

parties to further brief the issues of the legal effect of the 

failure to physically attach the affidavits to the warrant. 

The Fourth Amendment to the United States Constitution states: 

The right of the people to be secure in their persons, 

houses, papers, and effects, against unreasonable 

searches and seizures, shall not be violated, and no 

Warrants shall issue, but upon probable cause, supported 

by Oath or affirmation, and particularly describing the 

place to be searched, and the persons or things to be 

seized. 

The defendant argued that the warrant was a general warrant which 

must fail "due to its overbreadth and lack of particularity." As 

recognized by the lower court, the warrant would be general and 

therefore illegal if it were not supported by the information 

contained in the affidavits. Quoting US v. Leary, 846 F.2d 592, 

602 ( 10th Cir. 1388) the l.:)v.·er court observed that "practically 

speaking, the requirement that a warrant be particular means that 

the warrant must allow the executing officer to distinguish between 

items that may and may not be seized." 

The search warrant itself commanded the agents to seize the 

property itemized in numbered Paragraphs 1-8 of the affidavits of 

Mr. Crittenden and Mr. Korb. See quoted above. The lower court 

observed that the language set out in those eight paragraphs does 

not sufficiently limit the scope in the search because the 

description of the items seized is no where limited to a particular 

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entity or individual or to a specific transaction. By not limiting 

the search to a particular entity or transaction the above language 

encompassed virtually every document that one could expect to find 

at the place searched and did not "allow the executing officers to 

distinguish between items that may or may not be seized." To 

satisfy the Fourth Amendment "particularity" requirement it would 

be necessary to incorporate the detailed language in the affidavits 

into the warrant by reference. 

The defendant argues that the affidavits were not incorporated 

by using "suitable words of reference" as required by Leary. 

However, the lower court found that the supporting affidavits were 

specifically incorporated by reference into the warrant thereby 

concluding that the language used by the magistrate judge 

constituted "suitable words of reference . " We agree with the lower 

court's ruling on this point. This left defendant to argue that 

the failure to physically attach the affidavits destroyed the 

warrant's validity, laaving it genera! and ~verbrcad. 

The law in the Tenth Circuit presently requires the physical 

attachment of the affidavits and any other information needed to 

meet the particularity requirement of the Fourth Amendment. 

However, the Tenth Circuit rule was not established until after the 

search was conducted in this case on January 11, 1985. The 

government argued below, as it does here, that even if the court 

were to find that the warrant lacked particularity, the "good 

faith" exception granted in US v. Leon, 468 U.S. 897 (1984) should 

apply to this case and authorize the admission of the evidence 

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seized in the search. 

follows: 

The lower court discussed this issue as 

In Leon the Supreme Court modified the Fourth Amendment 

exclusionary rule by holding that the exclusionary rule 

should not bar the admission of evidence seized by 

officers acting in good faith and in objectively 

reasonable reliance on a warrant issued by a detached and 

neutral magistrate but later found to be invalid. Id. at 

913; Leary, 846 F.2d at 607, citing United States v. 

Medlin, 798 F.2d 407, 409 (10th Cir. 1986). Leon applied 

the good faith exception to a search warrant which lacked 

probable cause. In Massachusetts v. Sheppard, 468 U.S. 

981 (1984), a case decided in conjunction with Leon, the 

Supreme Court extended the good faith exception to apply 

to a search warrant that lacked particularity. Id. at 

988. The government argues that the officers reasonably 

believed that the affidavits were incorporated into the 

warrant and thus sufficiently limited its scope. The 

issue before the court is whether the circumstances in 

this case show that the officers acted in good faith and 

in objectively reasonable reliance on the warrant and 

their belief that the affidavits were incorporated 

therein even though the affidavits were not attached to 

the warrant. 

The circumstances surrounding the (sic) both the 

application for and the execution of the warrant are 

relevant to the issue of the officer's good faith and 

reasonable reliance on the warrant. The agents applied 

for the warrant from a magistrate experienced in the 

field of criminal procedure. Magistrate Eoyce is a well 

known law professor at the University of Utah, 

specializing in criminal law and procedure. When the 

agents presented the warrant to Magistrate Boyce he noted 

that it lacked particularity. Thus, before authorizing 

the warrant, Magistrate Boyce incorporated the supporting 

affidavits into the warrant to give the warrant 

sufficient particularity. To do this he used the words 

"incorporated by reference" on the face of the warrant. 

This evidences the magistrate's intent to incorporate the 

affidavits into the warrant and to limit the scope of the 

search through the affidavits. 

A few hours prior to the execution of the warrant the 

participating agents read the affidavits and subsequently 

relied on that information to limit the search. During 

the search the agents were provided with a list of 

entities which were the subject of the search. The 

agents gave a copy of the list to the defendant at the 

time of the search. This entity list was part of the 

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Korb affidavit and included the following corporations: 

Pen-Tee International, Inc. , Magma Energy & Petrol Corp. , 

Empire Redit Corp., Titan Corp., Terra Corp., RDS Inc., 

International Equities Inc., 1st National Credit Corp., 

National Fund, Inc., Petro Corp., Transworld Petroleum 

Oil services, Inc., 1st Western Corp., 1st Equities Corp. 

The list also included the following limited 

partnerships: Drillco Ltd., Drillco No . 2, Drillco No. 3, 

Drillco No. 4, Drillco No. 5, Energy Leasing Ltd., Energy 

Leasing No. 2, Energy Leasing No. 3, Leasco No. 6, 

Wyoming Leasing, XL Leasing Ltd., 1st Lease, MMM Leasing, 

Big Sky Leasing, and P.E.J. Leasing. 

Defendant argues that because the affidavits were not 

physically attached to the warrant, the participating 

agents could not have reasonably relied on their belief 

that the affidavits were incorporated. The circumstances 

surrounding the failure to attach the affidavits, 

however, support the agents' claim of good faith. The 

affidavits were not physically attached to the warrant 

because they had previously been sealed by the 

magistrate. Magistrate Boyce sealed the affidavits after 

finding that the defendant was a potential danger to the 

employees who had cooperated in the government's 

investigation. Thus, a physical attachment of the 

affidavits would create a risk of harm. Moreover, the 

agents' reliance on the magistrate's decision to seal the 

affidavits, thus precluding attachment to the warrant, 

appears reasonable in light of the magistrate's finding 

that the defendant was a potential danger to his 

employees who cooperated with the government 

investigation. 

Additionally, the Tenth Circuit's rule of physical 

attachment had not yet been decided when Magistrate Boyce 

issued the warrant in this case. As previously noted, 

the physical attachment rule was first mentioned by the 

Tenth Circuit in 1986 in United States v. Medlin, 798 

F.2d 407, 410 n.l {10th Cir. 1986). The rule was 

subsequently discussed in depth in United Sates v Leary, 

846 F.2d 592 {1988) . It would be improper to find that 

the agents in this case acted in bad faith or 

unreasonably by not attaching the affidavits to the 

warrant when the physical attachment rule had not yet 

been established in the Tenth Circuit. Id. at 609 

(noting that agents are not expected to "anticipate legal 

determination or resolve ambiguities in the law"). 

The Court agrees with Judge Anderson's analysis and his conclusion 

that, under the facts and circumstances found by him, the 

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government was entitled to the good faith exception established by 

Leon. 

With respect to documents seized that related to entities 

other than those noted on the entity list we agree with the 

analysis and disposition by the trial judge: 

The fact that the officers seized documents relating to 

entities other than those included on the entity list 

does not mandate the conclusion that such a seizure was 

improper. Nor does it show that the officers lacked good 

faith in executing the warrant. Agent Kenneth 

Crittenden, who was present at the time the warrant was 

executed, testified, that, many items seized - while not 

expressly listing a named entity - were related to a 

named entity through prior transactions. "When a logical · nexus exists between seized but unnamed items and those 

items listed in the warrant, the unnamed items are 

admissible." United States v. Gentry. 642 F . 2d 385, 387 

(10th Cir. 1981) (and cases cited therein). If there is 

evidence offered that was seized outside the scope of the 

warrant with no logical nexus to the listed entities, its 

admissibility may be considered at trial. However, the 

exclusionary rule does not act to suppress evidence 

seized within the scope of a warrant simply because 

evidence outside the scope of the warrant was also 

unlawfully seized. United States v. Tamura, 694 F . 2d 

591, 597 (9th Cir. 1982), citing United States v. 

Daniels, 549 F2d 665, 668 (9th Cir. 1977). 

III. CLAIM THAT THE TRIAL COURT LACKED SUBJECT MATTER JURISDICTION 

OVER CERTAIN COUNTS OF THE INDICTMENT. 

Counts VII, VIII, IX, X and XIII of the indictment all involve 

violations of 26 u.s.c. § 7206(2), which provides that any person 

who 

"(w)illfully aids or assist in, or procures, counsels, or 

advises the preparation or presentation under, or in 

connection with any matter arising under, the internal 

revenue laws, of a return, affidavit, claim, or other 

document, which is fraudulent or is false as to any 

material matter, whether or not such falsity or fraud is 

with the knowledge or consent of the person authorized or 

requires to present such return, affidavit, claim or 

document ... " 

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shall be guilty of a crime against the United States of America. 

Specifically, Mr. Thomas, (whose partnerships, in-house accountant 

and various other employees and entities were all based in a suite 

of offices located in Salt Lake City, Utah), was convicted of 

providing false and fraudulent K-1 forms to Wyoming investors. 

Those false forms were used by the Wyoming investors to prepare and 

file tax returns. The tax returns were thus prepared in Wyoming. 

The Wyoming investors at issue sent their tax returns to the 

Internal Revenue Service Center in Ogden, and the filing therefore 

took place in Utah. 

Defendant challenges his convictions on these counts, claiming 

that all of the acts which comprise the alleged criminal activity 

in these counts took place in Wyoming, and, therefore, it is only 

in Wyoming that jurisdiction and venue for these charged offenses 

is appropriate. He is wrong. The crime may have been completed in 

Wyoming but on the venue issue that is not controlling. As stated 

by JudgE Seth in U.S. v. Swego, 657 F.2d 248, 251 {1981): 

18 u.s.c. § 3237{a) provides that any offense against the 

United States begun in one district and completed in 

another or committed in more than one district may be 

inquired of and prosecuted in any district in which such 

offense was begun, continued, or completed. 

[6,7) The proper venue for the offense of making false 

statements to a federally insured bank may be either 

where the false statements were prepared, executed, or 

made, or where the offense was completed upon receipt of 

the false information by the bank. 

Article III§ 2 of the United States Constitution provides 

that the "trial of all crimes ... shall be held in the state 

where the said crimes shall have been committed." Reiterated in 

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the Sixth Amendment, this requirement is further codified in 

Federal Rule of criminal Procedure 18, which provides that criminal 

prosecutions "shall be had in i! district in which the offense was 

committed." Fed.R.Crim.Pro. 18 (emphasis added). Rule 18 thus 

recognizes that in many instances, all aspects of an offense are 

not committed within a single district; the crime may expand beyond 

the borders of a single district. Congress has also recognized 

this phenomenon and addressed it in 18 u.s.c. § 3237(a), which 

provides: 

(A) ny offense against the United States begun in one 

district and completed in another, or committed in more 

than one district, may be inquired of and prosecuted in 

any district in which such offense was begun, continued, 

or completed. Any offense involving the use of the mails 

. .. is a continuing offense and ... may be inquired 

of and prosecuted in any district from, through, or into 

which such ... mail ... moves. 

Id. (emphasis added). Part (b) of this same statute provides that 

when the prosecution is for an offense in violation of certain 

Internal Revenue Code provisions, such as 26 U.S.C. § 7206(2), the 

defendant may elect to be tried in the district in which he resided 

at the time of the crime rather than in a district where venue is 

based solely on a mailing to the Internal Revenue Service in that 

district. Questions of venue "are not merely matters of formal 

legal procedure," but raise "deep issues of public policy . " United 

States v. Johnson, 323 U. S . 273, 276 (1944). The underlying 

concern of venue provisions is to protect the accused "against the 

hardship and unfairness incident to a trial conducted in a remote 

place." United States v. Jackson, 482 F.2d 1167, 1178 (10th Cir. 

1973). 

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Section 7206(2) does not expressly identify where a violation 

is deemed to have occurred. In such a situation, "the locus 

delicti must be determined form the nature of the crime alleged, 

and the location of the act or acts constituting it." United sates 

v. Anderson, 328 U.S. 699, 703 (1946). The location of the crime 

must be determined from the "key verbs" in the statute, which are 

"aids," assists in," "procures," "counsels," or "advises" the 

preparation or presentation of a false return. 

Griffin, 814 F.2d 806, 810 (1st Cir. 1987). 

United States v. 

Thomas argues that because the "communication" of sending the 

false K-1 forms to the investors was not complete until the forms 

were received in Wyoming. Thus, Thomas argues, the alleged crime 

did not occur until the forms were received in Wyoming, completing 

the "communication." 

Thomas misses the point. The key verbs in the statute are 

mentioned above; "communicates" is neither listed, nor would it be 

disposi ti ve . The defendant 0..:-9.::..:.ized., established ar.d direc't.~d ::aY. 

shelters in Utah. Documents used by the investors to determine the 

extent of their deductions were prepared at the direction of the · 

defendant in Utah. Defendant's offices were in Utah. The 

fraudulent tax returns, which relied in part upon defendant's 

documents, were filed in Utah. 

Defendant is accused of providing the false documents and 

information which facilitated the preparation of false returns. 

All of the acts performed by him to accomplish this illegal task 

occurred in Utah. Defendant is not charged with making or 

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presenting false returns in violation of 26 u.s.c. S 7206(1), but 

with aiding or assisting such presentation in violation of 26 

u.s.c. S 7206(2). That aid or assistance was provided by 

defendant's acts in Utah, and defendant was properly indicted and 

tried in that district. See United States v. Bryan, 896 F.2d 68 

(5th Cir. 1990); United States v. Hirschfeld, 964 F.2d 318 (4th 

Cir. 1992). 

Furthermore, as noted above, Congress has already dealt with 

this issue in 18 u.s.c. 3237(a), the continuing offense statute. 

Under that statute, the locality of a crime for the purpose of 

venue extends "over the whole area through which force propelled by 

an offender operates." United States v. Johnson, 323 U.S. 273, 275 

(1944). Here, Thomas sent forth the fraudulent information from 

Utah to Wyoming. Although the violation continued in another 

district, it was set in play in Utah. See United States v. 

Marchant, 774 F.2d 888, 891 (8th Cir. 1985). 

court st.ated: 

As the Hirschfeld 

[The defendant) reads§ 7206(2) too narrowly in focusing 

only on where the return was prepared, mailed, and filed. 

The prohibition by its own terms reaches conduct which 

consists of aiding and assisting in the preparation of a 

false return. See United States v. Nealy, 729 F.2d 961, 

962-63 ( 4th Cir. 1984) (upholding conviction under § 

7206(2) of a defendant who assisted in the preparation of 

a false engineering report which he knew would be used to 

compute unjustified deductions). 

Hirschfeld, 964 F.2d at 321. This case concerns an offense which 

was begun in one district and completed in another; under such 

circumstances, venue may be proper in more than one district. See 

United States v. Blecker, 657 F. 2d 629, 632 ( 4th Cir. 1981) . 

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Without deciding whether venue could be proper in Wyoming, this 

Court finds that venue is clearly proper in Utah . The Court also 

notes that inquiring and trying the defendant in Utah in no way 

violated any of the underlying principles of our venue 

requirements. Thomas was indicted and tried on his home turf, 

which also happened to the be locus delicti of the crime for which 

he is accused. Venue was proper therein. 

III. INEFFECTIVE ASSISTANCE OF COUNSEL CLAIM 

Under the Sixth Amendment a defendant in a criminal case is 

guar~nteed the right to counsel which has been interpreted to mean 

the right to "effective assistance" of counsel. Strickland V . 

Washington, 466 U. S. 668, 686. Strickland established a two-prong 

test. Fi rst, the defendant must show that his or her attorney's 

performance was in fact defective . Second, the defendant must 

show that the defective representation prejudiced the defense to 

the point that: 

. there is a reasonable probability that, but for 

counsel's unprofessional errors, the result .. . would 

have been different. A reasonable probability is a 

probability sufficient to undermi ne confidence in the 

outcome. 

Id. 6914. 

The defendant contends that his trial attorney's illness 

precluded a meaningful completion of the discovery process 

resulting in ineffective assistance of counsel. 

Prior to the trial defendant's then counsel suffered from an 

illness which in time resulted in surgery. More particularly, 

during the week of May 27, 1990, he became ill and was unable to 

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work full time . The surgery occurred on June 4, 

infection followed which required additional surgery . 

1990. An 

Defendant 

claims that, as a result, his attorney's ability to function was 

impaired; that he was absent from his office until approximately 

June 18, 1990; and that his ability to function effectively 

remained impaired until June 22, 1990. As a consequence defendant 

contends 1) his trial attorney failed to provide certain exhibits 

as required, resulting in some of those exhibits being excluded 

from evidence; 2) his attorney failed to file a motion for a bill 

of :particulars or a motion to dismiss; and 3) his attorney's 

illness precluded adequate preparation for trial including an 

investigation of the government's witness. Finally defendant 

argues that his attorney's illness, "coupled with the refusal of 

the court to grant a continuance" seriously damaged his defense. 

The defendant, however, makes no particularized showing, 1) 

with respect to any exhibits that were excluded because of his 

counsel's failur e to pLOv~~~ same in a timely manner or how their 

exclusion unfairly prejudiced him; 2) with respect to the 

information that should have been sought by any bill of particulars 

and how its unavailability prejudiced him; or 3) as to any 

particular witness or witnesses, defendant's counsel's illness 

prevented him from investigating or how the failure to do so 

prejudiced him. 

It must be noted that the trial was held from September 17, 

1990, until September 28, 1990. Defendant focuses on his 

attorney's intermittent illness from May 27, 1990, until June 22, 

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1990, during which his ability to work was "impaired." 

Furthermore, the record reflects that the court did, indeed, grant 

a continuance "since defendant's attorney has been ill and unable 

to effectiv ely prepare for trial." (Order, App.A 153) As a 

consequence the trial was postponed from July 9, 1990, until 

September 17, 1990. 

We have carefully reviewed the record and find no merit in 

defendant's ineffective assistance claim. He has failed to 

demonstrate that his counsel's performance was defective. Nor has 

he shown how he was prejudiced. As a consequence there is no basis 

for his claim that, but for his counsel's unprofessional errors, 

the result in his trial would probably have been different. 

IV. MULTIPLICIOUS CLAIM 

The defendant contends that he jury was presented with a 

sixteen-count indictment whereas the indictment should have 

contained only six counts. 

Unde::::- the first six c.:::iunts }tr. Thomas is charged with 

assisting in the preparation of false and fraudulent tax returns 

for five limited partnerships and one sub-chapter S corporation in 

violation of 26 u.s.c. § 7206(2). In the remaining ten counts Mr. 

Thomas is charged with violations of the same statute by providing 

false and fraudulent K-1 forms to individual Wyoming investors so 

that those investors would use such false forms in the preparation 

of their individual tax returns. 

The appellant contends that there was no evidence that he 

assisted the ten individual Wyoming investors "in any manner other 

18 

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than providing them copies of a portion of the return for which he 

was indicted in the first six counts." He therefore contends that 

the charges in counts 7-16 are multiplicious and that he is 

entitled to a new trial. 

"An indictment is multiplicious if it charges a single offense 

in more than one count." U.S. v. Haddock, 956 F . 2d 1534, 1546, 

cert. denied 113 s.ct. 88 (1992) (10th Cir. 1992). 

The appellant is wrong in his contention that he is charged 

with the same criminal conduct in counts 7-16 as that charged in 

counts 1-6. The first six counts charge him with assisting in the 

preparation of the false returns on behalf of the five limited 

partnerships and Wyoming Leasing. The remaining counts charge him 

separately with willfully aiding in the preparation of ten false 

individual returns. He is therefore charged with aiding in the 

preparation and presentation of sixteen separate false tax returns. 

And the proof established more than that the defendant merely 

prov i de d copies of t h e false inf0r ma tiort from t h e s i x limited 

partnerships and the sub-chapter S corporation returns to the ten 

individual investors. The proof also shows that the defendant, or 

persons working under his direction, convinced the individual 

Wyoming investors to invest their funds in these ventures, often by 

representing that said investors would receive extensive tax 

benefits. 

It is clear that the defendant could have been convicted on 

the first six counts even if he had not provided the Wyoming 

investors with the false K-1 forms. It is also true that he could 

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be found guilty of the violations alleged in counts 7-16 even if he 

had not actually caused the filing of the six false entity returns. 

See U.S. v. Isrealski, 597 F.d 2, 24-25 (2nd Cir. 1979) There 

convictions for separate corporate and personal tax evasion were 

up-held where "separate steps were necessary to complete each 

evasion and it was the intentional causing of false information to 

be filed in each entity's false tax return that was the criminal 

act in each instance." 

This court, in dealing with such a challenge, discussed 

charges filed under 18 U.S.C. § 1001. It observed "we feel the 

statute aims at the making or using of such 'false writings or 

documents' and intends the wrong connected with each to be a 

separate offense." U.S. v. Bettenhausen, 499 F.2d 1223, 1234 (10th 

Cir. 1974). The applicable "unit" of prosecution is the tax 

return. U.S. v. Esch, 832 F.2d at 541. Therefore each false tax 

return that the defendant willfully caused to be filed gave rise to 

a separate offense. The defendant multiplicious claim is without 

merit. 

V. CLAIM OF ABUSE OF DISCRETION FOR REFUSAL TO GRANT CONTINUANCE 

This Court held in U.S. v. Mitchell, 765 F.2d 130, 132 (10th 

Cir. 1985): 

The decision to grant or deny a motion for continuance is 

committed to the sound discretion of the trial judge. 

His decision will be reversed on appeal only upon a 

showing of clear abuse of discretion resulting in 

manifest injustice. 

And, as stated in U.S. v. Rivera, 900 F.2d 1462, 1475 (10th Cir. 

1990) : 

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A trial judge's decision to deny a motion for a 

continuance constitutes an abuse of discretion only if 

the denial was "arbitrary or unreasonable and materially 

prejudiced the [defendant]." 

The appellant, in support of his contention that the trial court 

abused its discretion by failing to grant his motion - for a 

continuance, states that his trial "counsel had been diligent in 

his trial preparation until such time as he became ill" and that 

"prior to that time defendant had conducted significant discovery 

and had filed a number of motions." Brief of Appellant, p . 30. 

However, appellant has a problem. The trial court granted the 

continuance, moving the trial from July 9, 1990, to September 17, 

1990, a postponement in excess of two months. When the government 

makes this point in its brief, appellant returns to his argument 

that the trial court erred in refusing to permit him to file a bill 

of particulars. We have already dealt with that contention. See 

under "Ineffective Assistance of Counsel Claim," supra. 

VI. CLAIM OF INSUFFICIENCY OF THE EVIDENCE 

The narrow focus of appellant's contentions here is that there 

was insufficient evidence that he had the required criminal intent, 

one of the elements of each of the crimes for which he has been 

convicted . 

Appellant argues his lack of education (only high school) and 

that he relied entirely upon the advice of tax professionals, both 

attorneys and accountants, to guide him in this "complex area. of 

the tax law." He contends that he did not conceal any information 

from the accountants or tax attorneys who helped him set up the 

shelters. 

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On review of a claim of insufficient evidence the appellate 

court must determine whether a rational jury, viewing the evidence 

in the light most favorable to the government, could have found the 

defendant guilty beyond a reasonable doubt. United States v. 

Boure, 892 F.2d, 1494, 1497 (10th Cir. 1990). After a careful 

review of the evidence the court concludes that a rational jury 

could find the defendant guilty beyond a reasonable doubt on the 

evidence presented. 

It is not necessary to detail all of the evidence. In short, 

Thomas had a tax-shelter scheme in which he controlled one 

corporation and five limited partnerships. He would buy certain 

assets at fair market value from outside third parties and, through 

a series of paper transactions between the related companies, 

"resell" the assets at grossly inflated prices. The assets would 

then be carried on the limited partnership books at the inflated 

values, and investors would receive depreciation deductions and 

i11ves·Lme11t. tax c.;redi ts bast=~ on investments in the limited 

partnerships. Thomas' business entities prepared false Schedule Kl's that reflected the deductions and credits. 

For example, Thomas bought a VCR and wide screen television 

for $5,130; by the time the units reached the final limited 

partnership, they were carried on the books at 307,800. He bought 

twenty horses for a total of $12,400; the horses were eventually 

carried on the books at $3 million. 

The jury could have found the necessary willfulness and 

criminal intent on the basis of such evidence alone. The obviously 

22 

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sham nature of these transactions could lead to such an inference. 

But there was more evidence relating to defendant's intent. 

Mr. Thomas did not sign the tax returns filed by the 5 

partnerships and Wyoming Leasing. instead he paid someone who 

personally had little information about his business to sign as the 

"general partner" of the partnerships and the appropriate officer 

of Wyoming Leasing. This raises an inference of guilty knowledge. 

More directly, the evidence of the defendant's instructions to his 

daughter on how to describe the resold equipment ("lengthy and 

f low~ry") and his instructions not to keep records showing the 

inflation of assets because "it would destroy him" support the 

jury's verdicts. And this evidence negates his position that he 

relied solely on the advice of professionals. Furthermore, the 

manner in which the defendant used professionals, and his attitude 

toward them, could further undermine his "reliance" defense. 

According to Mr. Preston, a salesman for some of Mr. Thomas' 

companies, Mr. Thoraas s~ated: 

" . you need to decide what you want to have happen and 

then supply the professional with the proper 

documentation and figures, statistics, in order to get 

back the predetermined idea what you wanted." 

While there was much evidence from which a rational jury could have 

found for the appellant in the issue of willfulness, there was also 

ample evidence to support its finding of criminal intent. 

VII. THE CLAIM THAT THE COURT IMPROPERLY INSTRUCTED THE JURY ON 

THE STANDARD FOR DETERMINING INTENT 

Mr. Thomas argues that the instructions given by the trial 

court in this case to the jury, individually and in their overall 

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effect, were given under an impermissible objective standard. He 

therefore urges that the jury's verdict should be vacated and the 

matter returned for a new trial. 

Specifically, Mr. Thomas objects to Jury Instructions #18 3 , 

274 , 325 , 386 , 397 , 428 , 449 , 4510 , and 49". Mr. Thomas also 

3 "The element of knowledge may be established by proof that 

the defendant deliberately closed his eyes to what otherwise would 

have been obvious to him. In other words, the requirement that the 

defendant has acted knowingly does not mean that the defendant need 

to have positive knowledge of the fact in question. If the 

defendant failed to have knowledge of the fact in question only 

because he consciously avoided learning the truth, the requirement 

of knowledge may be satisfied. 

Furthermore, the required element is established if the 

defendant is aware of a high probability of the existence of the 

fact in question, unless he actually believes it does not exist." 

4 "In order to prove the defendant guilty of the offense 

charged in counts 1 through 16 of the indictment, the United States 

must prove beyond a reasonable doubt each of the following elements 

as to each count: 

First: that a tax return was prepared and presented to the 

United states by the taxpayer identified in the 

indictment; and 

Second: that the return wdo false or frauduler.t us to a 

material matter as alleged in the indictment; and 

Third: that the defendant aided, or assisted in, or 

procured, or counseled, or advised, the preparation, 

or the presentation, of such false or fraudulent 

return; and 

Fourth: that the defendant did so willfully." 

5 "Intent ordinarily may not be proved directly, because there 

is no way of fathoming or scrutinizing the operations of the human 

mind. But you may infer the defendant's intent from the 

surrounding circumstances. You may consider any statement made and 

done by the defendant, and all other facts and circumstances in 

evidence which indicate his state of mind. 

You may consider it reasonable to draw the inference and find 

that a person intends the natural and probable consequences of acts 

knowingly done. As I have said, it is entirely up to you to decide 

what facts to find from the evidence." 

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6 "One may generally sell assets from one business entity he 

controls to another entity he controls, and be entitled to earn a 

profit. However, to be acceptable for tax purposes, the 

transaction must be one which would contain approximately the same 

terms and figures you would expect to find in business dealings 

between independent, unrelated parties, each seeking its own 

financial gain." 

7 "The law allows a deduction for depreciation if the property 

is used in a bona fide trade or business, or held for production of 

income. 

However, the law does not allow such a dedu~tion if there is 

no real prospect of gain and the investment in the property was 

entered into, or the property was held, merely for the purpose of 

avoiding taxes." 

8 "The defendant claims that he is not guilty of willful 

wrongdoing because he acted on the basis of advice from his 

attorneys and accountants. 

If the defendant before taking any action sought the advice of 

attorneys and accountants whom he considered competent, in good 

faith and for the purpose of securing advice on the lawfulness of 

his possible future conduct, and made a full and accurate report to 

his attorneys and accountants of all material facts of which he has 

the means of knowledge, and acted in accordance with the advice of 

those professionals, then the defendant would not be willfully 

doing something the law forbids. 

Whether the defendant before taking any action sought the 

advice of attorneys and accountants who he considered competent, 

whether he acted in good faith for the purpose of securing legal 

advice relating to his possible future conduct, whether the 

defendant made a full and complete report to his attorneys and 

accountants, and whether the defendant acted in accordance with the 

advice of those attorneys or accountants, are questions for you to 

determine. However, because of the duty on the defendant to 

provide all material facts to those professionals on whose advice 

he claims to have relied, reliance on advice of counsel is not an 

absolute defense, but is a factor for you to consider in assessing 

good faith and intent." 

9 "Bearing on the facts at issue, evidence has been received 

from Mr. Thomas claiming he had substantial assets, a growing 

construction business, numerous projects under way with significant 

financial return and with others awaiting, representing a prospect 

of continuing need for equipment of the type in question for the 

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Appellate Case: 91-4061 Document: 010110175865 Date Filed: 02/23/1993 Page: 25 
projects. In addition, it has been claimed the projects had been 

undertaken after advice from a CPA and attorneys he relied upon, 

and that if the projects had been allowed to carry to conclusion, 

they would have produced substantial tax deferral for the 

investors, with no tax loss to the government, and that said plan 

was not illegal. 

The government has introduced evidence of claimed exaggeration 

of the value of the equipment and transactions between controlling 

corporations without economic reality on either side of the 

transaction. The government claims documents were signed in a 

manner evidencing no sincere business purpose. Further, it is 

asserted Mr. Thomas had a lifestyle of living in relative luxury, 

using homes, cars, planes and a boat of the companies involved, 

frequently without business purpose, while claiming only a modest 

income in his income tax return, while the project transactions 

involved substantial sums. Mr. Thomas asserted that his modest 

personal income was because of his desire to be frugal until the 

projects worked out and the investors were paid. 

No charge has been filed nor evidence introduced that 

establishes falsity of Mr. Thomas' tax return. The evidence of the 

foregoing matters may be considered, along with all the other 

evidence in considering the issues in this case and in determining 

credibility or assisting your determination of questions of intent, 

whether lawful or unlawful. But remember, the government must 

prove specific criminal intent as defined for you in these 

instructions, by evidence that persuades you beyond a reasonable 

doubt, as well as establishing all of the other elements at issue 

by evidence that persuades you beyond a reasonable doubt. The 

J efendant has no obligation to pr~sent any evidence, to c3ll any 

witnesses, or to meet any burden of proof." 

10 "You are here to determine the guilt or innocence of the 

accused from the evidence in the case. You are not called upon to 

return a verdict as to the guilt or innocence of any other person 

or persons. So, if the evidence in the case convinces you beyond 

a reasonable doubt of the guilt of the accused, you should so find, 

even though you may believe one or more other persons are also 

guilty. But if any reasonable doubt remains in your minds after 

impartial consideration of all the evidence in the case, it is your 

duty to find the accused not guilty." 

11 "In your consideration of this case you are expected to use 

your good sense, considering the evidence in the case for only 

those purposes for which it has been admitted, and giving it a 

reasonable fair consideration in the light of your common knowledge 

of the natural tendencies and inclinations of human beings. 

26 

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objects to the Court's refusal to give certain instructions 

requested by defendant. Specifically, Mr. Thomas objects to the 

refusal to use the second paragraphs of defendant's proposed 

instructions # 312 and 913 , as well as defendant's proposed 

If the accused be proved guilty beyond reasonable doubt, say 

so. If not so proved, say so. 

Keep constantly in mind that it would be a violation of your 

sworn duty to base a verdict of guilty upon anything other than the 

evidence in the case; and remember as well that the law never 

imposes on a defendant in a criminal case the burden or duty of 

calling any witnesses or producing any evidence. 

Remember also that the question before you can never be: will 

the Government win or lose the case? The government always wins 

when justice is done, regardless of whether the verdict be guilty 

or not guilty." 

12 11 A reasonable doubt exists if, after careful and impartial 

consideration of all the evidence in the case, you do not feel 

convinced to a moral certainty that Mr. Thomas is guilty of the 

charge against him. Mr. Thomas is entitled to every inference in 

his favor that can reasonably be drawn from the same facts, if an 

inference is consistent with guilt and is also consistent with 

innocence, Mr. Thomas is entitled to the inference that is 

consistent with h.is innocence. If the e:vidence merely creates a 

suspicion of Mr. Thomas' guilt, or the thought that he is possibly 

or probably guilty, then there is a state of reasonable doubt and 

he is entitled to the benefit of such reasonable doubt, and you 

must find him not guilty. A reasonable doubt of Mr. Thomas' guilt 

may arise from the bad character or motives of the witnesses who 

testified against him, or from the evidence or failure of proof, or 

from the presumption of innocence that the law gives him. Each of 

you is entitled to decide for himself or herself whether a doubt 

you entertain is or is not reasonable. If it appears reasonable to 

you, it is your duty to acquit Mr. Thomas. " 

13 "The presumption of innocence is not an idle phrase and must 

not be taken lightly. It is an important fundamental right 

belonging to every person accused of a crime and you must entertain 

it conscientiously, sincerely, and ungrudgingly, without any mental 

reservation or evasion whatever, and to give the defendant the full 

benefit of it. The presumption of innocence continues throughout 

the criminal trial and the jury's deliberations, until overcome by 

the prosecution. It is legal proof of innocence, and is sufficient 

27 

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instructions 2 014 and 2115 • 

First, the Court notes the standard of review for jury 

instructions. Jury instructions are reviewed as a whole. United 

states v. Pinto, 838 F.2d 426, 435 (10th Cir. 1988). That is, the 

overall impact must be examined, rather than merely focusing on the 

specific language of an individual instruction. Furthermore, 

to acquit Mr. Thomas unless, after careful and impartial 

consideration of all the evidence, you are satisfied beyond a 

reasonable doubt of Mr. Thomas' guilt." 

~ "To aid or assist in the preparation or presentation of a 

false tax return, it is necessary that the government prove that 

Mr. Thomas willfully associated himself in some way with such a 

criminal venture, and willfully participated in it as he would in 

something he wishes to bring about; that is to say, that he 

willfully seeks by some act to make the criminal venture succeed. 

In order to have aided and abetted the commission of a crime 

Mr. Thomas must, before or at the time of the alleged crime, 

(1) have known that the crime of filing a false return was 

being to committed or going to be committed, 

(2) have knowingly acted in some way for the purpose of 

aiding or causing the filing of a false tax return, and 

( 3) 

filed." 

have willfully intended that a false tax return be 

15 "In determining whether Mr. Thomas aided or assisted in or 

procured or advised the preparation or filling the false income tax 

returns, it is not necessary that the defendant sign the income tax 

return in question. But it must be shown that he knew his 

fraudulent act or acts would become incorporated into a tax return 

Regarding the investors which are the subject of Counts 7 

through 17, the government need not prove that the investors knew 

their returns were false when filed; to convict the defendant on 

these counts, however, the government must prove that he aided and 

assisted the preparation of false investors returns. It is up to 

you to determine whether the investors returns are false and, if 

so, whether the defendant willfully aided and assisted in 

preparation or presentation of these returns." 

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"(t) he trial court is given substantial discretion in tailoring and 

formulating its instructions, so long as they correctly state the 

law and fairly and adequately cover the issues presented." Id. at 

436 (citing United States v. Pack, 773 F.2d 261, 267 (10th Cir. 

1985). This Court concludes that the trial court did not abuse its 

discretion in formulating the jury instructions for this case. 

Defendant bases his argument in large part on the case of 

Cheek v. United states, 111 s.ct. 604 (1991). Cheek held that a 

good-misunderstanding of the law or a good-faith belief that one is 

not _violating the law negates willfulness, whether or not the 

claimed belief or misunderstanding is objectively reasonable. 

Prior to Cheek, the Seventh Circuit had held that good-faith 

misunderstanding of the law negates willfulness only if the 

defendant's beliefs are objectively reasonable; in the Seventh 

Circuit, even actual ignorance was not a defense unless the 

defendant's ignorance was its elf objectively reasonable. See, 

~, United States v. B-:.;.c~~r.Gr, 83C :::-.:::d ::c2 (1987). The objected 

to instruction in Cheek provided in part that "an honest but 

reasonable belief is not a defense and does not negate 

willfulness." Cheek, 111 s.ct. at 608. 

This Circuit has long held that a subjective standard rather 

than an objective standard must be applied when assessing 

defendant's claimed belief that he was acting in good faith in a 

criminal tax prosecution. See, ~, United States v. Phillips, 

775 F . 2d 262 (10th Cir. 1985). The trial court's instructions in 

this case were consistent with the subjective standard requirement. 

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Instruction 18 (footnote 1, supra) is correct as a matter of 

law and has been addressed by this Court before. This Court 

specifically approved the first paragraph of that instruction, 

while specifically recommending the second paragraph. United 

States v. Glick, 710 F.2d 639, 642-644 (10th Cir. 1983), cert. 

denied, 465 U.S . 1005 (1984). 

Instruction 27 (footnote 2, supra), informed the jurors of the 

elements of the offense and explained that the Government had to 

prove each element beyond a reasonable doubt. There is no 

"objective" standard imposed on the defendant's state of mind in 

this instruction. 

Instruction 32 (footnote 3, supra) recognizes what this Court 

has long held regarding proof of intent: "The issue of criminal 

intent is a factual question seldom provable by direct evidence but 

may be inferred from all the facts and circumstances of the case 

which reasonable tend to show a mental attitude." United States v. 

Fleming, 479 F.2d 56, 57 (:iOth Cir. 1973). The inst:::-uction at 

issue specifically focuses on the defendant's state of mind, a 

properly subjective standard. 

Instructions 38 and 39 were requested by the defendant. 

Instruction 38 (footnote 4 , supra) describes the law, not the state 

of mind . It explains that the transaction must be "arms-length" to 

be acceptable for tax purposes; it does not state that a non-armslength, and hence unacceptable for tax purposes, transacti on would 

be sufficient to supply the requisite "willfulness" in this 

criminal matter. Instruction 39 (footnote 5, supra) also merely 

30 

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describes the law and does not impose an objective state of mind 

standard. 

Defendant objected to Instruction 42 {footnote 6, supra) 

because he claimed that reliance of the advice of counsel was an 

absolute defense fully negating willfulness. Defendant misstates 

the law, which was correctly stated by the trial court's 

instruction. If a client goes to an attorney and provides the 

attorney with incomplete information, receives advice based upon 

that incomplete information, and then acts "in reliance" on advice 

of counsel, he has not necessarily acted in good faith, and 

willfulness may still be found by the jury. This is the point 

which the trial court attempted to clarify by adding the last 

sentence to a stock instruction. There was no need for 

clarification, and the repetitious focus on the defendant's duty 

was also unnecessary. The last sentence, taken alone, might leave 

a question as to the standard. And of course, had the trial court 

instLU~~~d th2 jury that it could consider the defendan t's r eli ance 

on legal advice as a defense only if that reliance was reasonable, 

Cheek concerns would be implicated. That was not the case here. 

Furthermore, the remote possibility of jury confusion in light of 

this one added sentence is more than offset and compensated for by 

the instructions as a whole. 

Mr. Thomas's objections to Instructions 44, 45, and 49 are 

also unfounded. Instruction 44 (footnote 7, supra) specifically 

reminds the jury that "the government must prove specific criminal 

intent ... ", and is clearly proper. Instruction 45 (footnote 8, 

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Appellate Case: 91-4061 Document: 010110175865 Date Filed: 02/23/1993 Page: 31 
supra) and 49 (footnote 9, supra) are also correct statements of 

law, with no impermissible inferences. 

The defendant, of course, has no right to have his proposed 

instructions utilized by the Court. He has the right to have the 

jury properly and adequately instructed as to the law. If the jury 

is so instructed, the defendant has no cause to complain. In this 

case, the District Court repeatedly instructed the jury to 

determine the issue of willfulness based on defendant's state of 

mind, and to acquit unless the government proved beyond a 

reasonable doubt that Mr. Thomas had voluntarily and intentionally 

violated a known legal duty not to aid or assist others in the 

filing of false returns. The jury was told that "an act is done 

willfully if done voluntarily and intentionally and with the 

specific intent to do something the law forbids" and that an act is 

not willful if "the result of negligence, or reckless disregard for 

the requirements of the law, or due to a good faith 

mi~w~e~standing of the requirements of the law." The jury was 

further advised that: 

"Under our system of laws, individuals are not punished 

criminally for mere mistakes, mere mismanagement, mere 

carelessness, or mere errors of judgment. Nor are they 

punished for greed. They are punished only for 

intentional wrongdoing. The defendant is not on trial 

for errors of judgment, being greedy, making mistakes, or 

mismanagement. He is on trial for acting with a criminal 

intent, which is incumbent upon the government to prove 

to your satisfaction and beyond a reasonable doubt ... " 

These are but some examples of the many times that the District 

court emphasized the need for specific, subjective, criminal 

intent. Viewing these instructions as a whole, this Court 

32 

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concludes that the instructions properly and adequately instructed 

the jury, and that the District court did not abuse its discretion 

in formulating the instructions used in this case. 

VIII. CLAIM OF INCORRECT CALCULATION OF DAMAGES FOR SENTENCING 

PURPOSES 

The appellant contends that the trial judge, for sentencing 

purposes, incorrectly calculated the amount of the loss suffered by 

the government and that therefore the sentences should be vacated. 

He asks for a new sentencing hearing at which the government would 

be required to produce the information necessary to determine the 

true loss. 

This is a pre-guidelines case for sentencing purposes. Under 

that regime the District Courts enjoyed wide, and generally 

unreviewable discretion in determining the sentences to be imposed. 

See United States v. Bryant, 892 F.2d 1466, 1470 (10th Dir. 1989), 

cert. denied 110 s.ct. 3220 (1990). 

Here the defendant contested a statement in the pre-sentence 

report as to the amount of the loss. The Court held a hearing, 

then issued a ruling. In that ruling the Court stated that its 

purpose was not to arrive at a "precise dollar figure" that the 

government was incapable of collecting because of defendant's 

crimes. The Court stated that its objective was to measure "the 

depth and breadth of defendant's fraudulent scheme" and to gain a 

"shorthand indication" of the "general" damages suffered by the 

government. The Court found that the scheme resulted in $1. 37 

million in overstated investment tax credits. And the Court 

accepted revenue agent's analysis that the losses from fraudulent 

33 

Appellate Case: 91-4061 Document: 010110175865 Date Filed: 02/23/1993 Page: 33 
depreciation claims exceeded $649,291. Thus the total tax loss was 

more than $2,000,000. The trial Court further noted that this did 

not include losses of time, effort and money by the investors. The 

lower Court also observed: "The Government's disallowance of 

fraudulent claims and eventual recovery of some portion of taxes 

owed does not diminish the extent of the fraud perpetuated by the 

defendant." 

The actual sentencing occurred on March 22, 1991. See 

Supplemental Appendix F of the Appellee, Vol. IV P. 410-421. The 

government was arguing for a sentence of 48 years imprisonment. 

The defendant was urging probation. The judge weighed the 

arguments of both parties. He spoke of the sentencing objectives 

of deterrence and punishment. He spoke of the "size of this thing" 

(some 110 investors); of the impact on a lot of people who "gave 

their savings, some retirement benefits" because they thought the 

program was sound. He referred to them as "vulnerable people." 

The judge also noLed the po~~ti a ~hin~s about the defendant's 

life. 

After weighing all the factors, sentences were imposed which 

will have the effect of five years imprisonment with five years 

probation to follow. 

In the total chemistry of pre-guidelines sentencing it is 

impossible to identify the effect of any single factor or 

circumstance. 

34 

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We find no basis in this record to challenge the sentences 

imposed. 

AFFIRMED. 

3 5 

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