Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-08-03425/USCOURTS-ca8-08-03425-0/pdf.json

Parties Involved:
Kevin J. Morse
Appellant
United States of America
Appellee

Document Text:

1

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

of Minnesota.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 08-3425

___________

United States of America, *

*

Plaintiff - Appellee, *

* Appeal from the United States

v. * District Court for the 

* District of Minnesota.

Kevin J. Morse, *

*

Defendant - Appellant. *

___________

Submitted: June 10, 2009

Filed: July 23, 2010

___________

Before COLLOTON, JOHN R. GIBSON, and BEAM, Circuit Judges.

___________

JOHN R. GIBSON, Circuit Judge.

Kevin J. Morse was indicted on five counts of filing false tax documents

pursuant to 26 U.S.C. § 7206(1), and a jury returned guilty verdicts on each count.

Morse appeals his convictions on several grounds. He first argues that the district

court1

 erred by failing to dismiss the indictment based on theories of estoppel and a

due process violation. He also alleges that the court violated his constitutional rights

by refusing to provide him with a copy of the signed indictment. In addition, he

argues that insufficient evidence was introduced at trial to convict him and that the

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court abused its discretion by improperly excluding evidence. Finally, he asserts that

the district court did not use the correct loss calculations in sentencing him under the

Guidelines. We affirm. 

I.

Kevin J. Morse is a farmer. In 1999, he was convicted of four counts of filing

false tax returns for the years 1991 through 1994 and sentenced to eighteen months’

imprisonment and a year of supervised release. Despite these convictions, Morse did

not timely file the tax returns for the years 1996 through 2000, the years at issue in

this case. 

In 2001, Morse hired Ron Urbanski, a former Internal Revenue Service (IRS)

criminal investigator and revenue agent, to prepare his tax returns for the years 1996

through 2000. Morse’s income consisted of profit on grain sales, the proceeds from

renting land to other farmers, rental income from a house, and government agriculture

subsidies. Urbanski listed Morse’s income on lines 17 and 18 of each year’s federal

form to show net real estate rental and farming income, respectively. On the return

for 2000, Urbanski also listed interest and dividend income. He did not list wages on

any of the 1040 forms because Morse did not identify having received any.

Urbanski’s analysis concluded that Morse’s taxable income during this period was

$448,039 and that Morse owed $142,827 in taxes. During the time he was working

on his tax forms with Urbanski, Morse tried to discuss some theories with Urbanski

about reducing or avoiding tax liability, but Urbanksi “didn’t want to hear about it.”

Morse did not file the returns that Urbanksi prepared. 

Morse next contacted Joseph Saladino, the head of an organization called the

Freedom and Privacy Committee, to “assist him with his tax liability.” The Freedom

and Privacy Committee performed the calculations and prepared income tax returns

for the years 1996 through 2000, and Morse signed and mailed them to the IRS.

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Unlike on the returns that Urbanski prepared, Morse did not report his farming and

rental income on lines 17 and 18 as his principal sources of income on these returns.

Morse instead reported his income on line 7, as “wages, salaries, tips, etc.” Morse

then deducted all the “wages” as “AN UNRESTRICTED CLAIM OF CLAIM FOR

COMPENSATION FOR PERSONAL LABOR FOUNDED ON 26 USC SECTION

1341.” In affidavits attached to each return, Morse stated that “[t]he amount being

claimed [as a deduction] is compensation for personal labor that was received as

repayment of a debt that was owed to Affiant.” Morse reported no income tax due for

four of the five years and only $968 for tax year 2000. Morse also claimed he was

entitled to an aggregate net refund of $6410.

On January 24, 2003, after Morse filed his 1996-2000 tax returns, he filed a

prose petition for a writ of habeas corpus in federal district court, seeking a declaration

that his wages were not taxable. Saladino prepared the petition as part of the services

for which Morse paid him. The government opposed the petition and filed a

declaration of Susan Gudde, a paralegal at the IRS. She indicated that, according to

IRS records, Morse had not filed income tax returns for the years at issue. The case

was dismissed without prejudice for lack of subject matter jurisdiction. The district

court sustained the government’s objection to Morse’s attempts to introduce any of

the filings or orders from that civil action during Morse’s criminal jury trial. 

In September 2003, IRS Agent Bosshart sent a letter to notify Morse that she

was going to conduct an examination of his returns. She also tried to schedule an

appointment with him. In response, Morse sent Agent Bosshart a fax requesting an

extension until November because, as Morse testified, it was harvest time. Morse also

granted Saladino a power of attorney so that Saladino could speak with Agent

Bosshart, but he was denied. Agent Bosshart explained at trial that the IRS does not

typically grant extensions to begin an audit for the length of time that Morse had

requested. Agent Bosshart attempted to contact Morse by telephone and by letter to

schedule a mutually agreed upon time. She never heard from Morse again.

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Ultimately, Agent Bosshart conducted an investigation without Morse’s assistance,

by contacting Morse’s bank and individuals who had paid him. 

Following its investigation, the IRS calculated that Morse owed a total of

$205,237. On June 27, 2007, a grand jury issued a five-count indictment against

Morse. The indictment charged that Morse willfully made and subscribed to federal

income tax returns that he did not believe to be true and correct as to every material

matter for five years.

On September 24, 2007, Morse filed various pretrial motions, including a

Motion to Dismiss Based on Estoppel and Due Process, and a Motion to Dismiss Due

to an Unsigned Indictment. After a hearing, Magistrate Judge Jeanne J. Graham filed

an order denying Morse’s motion for disclosure of the signed indictment and ruling

on the remaining pretrial matters. She concommitantly filed a Report and

Recommendation recommending denial of all of Morse’s dispositive motions. On

appeal, Judge Paul A. Magnuson affirmed the Magistrate Judge’s order and adopted

her recommendations. 

On December 18, 2007, a superceding five-count indictment was handed up.

On February 6, 2008, Morse filed another motion requesting disclosure of the signed

superceding indictment, which the district court denied. 

At trial, Morse argued that he held a good faith belief that he properly filed his

tax documents. In essence, he argued that the government failed to prove that he acted

willfully in making false statements to the IRS. The jury convicted him on all five

counts. The district court then found that the applicable amount of potential tax loss

attributable to Morse’s conduct was less than $200,000 but more than $80,000. The

district court sentenced him to concurrent thirty month sentences on each count, one

year of supervised release on each count to run concurrently, and a special assessment

of $500. Morse appeals. 

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II.

A.

Morse first challenges the district court’s ruling to deny his motion to dismiss

the indictment based on the doctrine of estoppel. He argues that in his 2003 civil

action prepared by Saladino, the government claimed that Morse had not filed tax

returns and therefore should not be allowed to change its position in this case to allege

that Morse filed false tax returns. “We have not previously articulated the proper

standard of review when reviewing a district court’s application of the judicial

estoppel doctrine. A majority of our sister circuits that have addressed the issue apply

the abuse of discretion standard.” Stallings v. Hussmann Corp., 447 F.3d 1041, 1046

(8th Cir. 2006) (citations omitted). 

The doctrine of judicial estoppel “prohibits a party from taking inconsistent

positions in the same or related litigation.” United States v. Grap, 368 F.3d 824, 830

(8th Cir. 2004) (internal quotations and citations omitted). The Supreme Court has

recognized three considerations that “typically inform the decision whether to apply

the doctrine in a particular case”: 1) “a party’s later position must be clearly

inconsistent with its earlier position”; 2) whether the party “succeeded in persuading

a court to accept that party’s earlier position, so that judicial acceptance of an

inconsistent position in a later proceeding would create the perception that either the

first or the second court was misled”; and 3) “whether the party seeking to assert an

inconsistent position would derive an unfair advantage or impose an unfair detriment

on the opposing party if not estopped.” New Hampshire v. Maine, 532 U.S. 742, 750-

51 (2001) (internal quotations and citations omitted). 

While we have recognized that estoppel defenses may, at times, be asserted

against the government, we have not used estoppel to bar a criminal prosecution. See

Grap, 368 F.3d at 830. The Supreme Court has recognized that “the Government may

not be estopped on the same terms as any other litigant” because “[w]hen the

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Government is unable to enforce the law because the conduct of its agents has given

rise to an estoppel, the interest of the citizenry as a whole in obedience to the rule of

law is undermined.” Id. at 830-31 (quoting Heckler v. Cmty. Health Servs. of

Crawford County, Inc., 467 U.S. 51, 60 (1984)). The Supreme Court has “repeatedly

indicated that an estoppel will rarely work against the government . . ., and we

recently stated that a private party trying to estop the government has a heavy burden

to carry.” Id. at 831 (internal citations omitted).

Morse has not met this heavy burden. Recognizing the traditional reluctance

to allow criminal defendants to estop the government based on the conduct of its

agents, we are convinced that the district court did not err in denying Morse’s motion

to dismiss the indictment based on the doctrine of judicial estoppel. See id. at 830-31.

It is true that in response to Morse’s 2003 civil action prepared by Saladino, the

government claimed that Morse had not filed tax returns, and the government is now

alleging instead that Morse filed false tax returns. However, we do not believe that

the government’s statement in the 2003 litigation was an effort to manipulate the

court. The government provided a reasonable explanation for its position: Morse’s

tax returns were filed at the end of 2002 and had not been entered into the IRS

computer system at the time the jurisdictional issue was litigated. This is not a case

in which the difference is in the position a party takes in a lawsuit; the difference is

the result of changing facts. Accordingly, the district court did not err in denying

Morse’s motion to dismiss the indictment based on the doctrine of judicial estoppel.

B.

Morse next recasts the above judicial estoppel argument as a violation of due

process. He argues that submitting Susan Gudde’s declaration of the unfiled tax

returns and then indicting him for filing false tax returns for those same years is

“outrageous and contrary to basic principles of fairness and governmental integrity.”

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“Outrageous government conduct that shocks the conscience can require

dismissal of a criminal charge, but only if it falls within the narrow band of the most

intolerable government conduct.” United States v. Boone, 437 F.3d 829, 841 (8th Cir.

2006) (internal quotations omitted). “Whether particular government conduct was

sufficiently outrageous to meet this standard is a question of law which we review de

novo.” Id. (citations omitted). 

Morse cites Smith v. Groose, 205 F.3d 1045 (8th Cir. 2000), to support his

argument. In Smith, we granted habeas relief to a petitioner because the prosecutor

had relied upon factually inconsistent theories to obtain murder convictions in

separate trials to convict two different people for the same murder. Id. at 1052-53.

The appellate court found that the contradictory prosecution violated the criminal

defendants’ due process rights. Smith, 205 F.3d at 1052. 

Morse’s reliance on Smith misses the mark. Unlike Smith, this case does not

involve two or more defendants being prosecuted for the same offense. See Smith,

205 F.3d at 1052. Next, Susan Gudde’s declaration can be reasonably explained.

Morse filed his tax returns in late 2002. Gudde’s March 2003 declaration stated that

the IRS database did not show that Morse had filed his returns. His returns indicate

that they were routed to the agency’s “Accounts Management,” “Frivolous Returns”

or “Exam” departments based on correspondence or controversial arguments. The

government submitted an affidavit of an IRS special agent who testified that, unlike

most returns, returns routed in this manner may not be processed completely. The

inconsistent positions of which Morse complains can be reasonably explained and are

not “outrageous” or “contrary to basic principles of fairness.” See id. Accordingly,

Morse’s due process rights were not violated because he was not subject to

contradictory prosecution.

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C.

Morse next contends that the court erred in denying his motion to dismiss the

indictment, arguing that the failure to give him a signed copy of the indictment

violated his due process rights. Morse had asked the government to produce a duly

executed copy of the indictment for his inspection so that he could “see and personally

confirm the existence of the actual charging instrument against him.” The Fifth

Amendment provides that “[n]o person shall be held to answer for a capital, or

otherwise infamous crime, unless on a presentment or indictment of a Grand Jury . .

..” U.S. CONST. amend. V. Morse argues that this clause would be rendered

meaningless if an accused cannot see and personally confirm the existence of the

actual charging instrument against him. 

The Federal Rules of Criminal Procedure state that indictments are to be signed

by both the foreperson of the grand jury and by an attorney for the government. See

Fed. R. Crim. P. 6(c) (“The foreperson . . . will sign all indictments.”); Fed. R. Crim.

P. 7(c)(1) (“The indictment . . . must be signed by an attorney for the government.”).

When considering a district court’s ruling regarding a rule of criminal procedure, “we

review the district court’s legal conclusions de novo.” United States v. Shepard, 462

F.3d 847, 861 (8th Cir. 2006) (citation omitted). The signatures on the indictment,

however, are a formality, and even the lack of signatures would not render an

indictment invalid. United States v. Willaman, 437 F.3d 354, 360 (3d Cir. 2006)

(terming lack of signature as a technical deficiency); United States v. Irorere, 228 F.3d

816, 830-31 (7th Cir. 2000) (same). 

Here, the Magistrate Judge inspected the superseding indictment filed under

seal and was satisfied that it was properly signed by the foreperson and by the

prosecuting attorney. The Magistrate Judge found that there was “good cause to keep

the original, signed indictment sealed.” The court had received documents threatening

judicial officials and law enforcement personnel involved in the case. The documents

referred to the judges as “BAR TERRORIST[S]” and also suggested “eye for an eye”

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punishment. In another communication in September 2007, Morse reiterated the

threats, confirmed his involvement in the earlier filing, and identified judicial officers

in his case as guilty of sedition and treason. Thus, good cause existed to keep the

indictment sealed, and the district court did not err in denying Morse’s motion.

D.

Morse next contends that the government did not prove that his conduct was

willful because there was evidence of his good faith belief that he was not violating

the tax laws. We review the sufficiency of the evidence to sustain a conviction de

novo. United States v. Grimaldo, 214 F.3d 967, 975 (8th Cir. 2000). The standard of

review concerning sufficiency of the evidence “is very strict, and a jury verdict will

not be overturned lightly.” United States v. Ellefson, 419 F.3d 859, 862 (8th Cir.

2005). We view the evidence in the light most favorable to the verdict, “giving the

government the benefit of all reasonable inferences that may logically be drawn from

the evidence.” United States v. Suppenbach, 1 F.3d 679, 681-82 (8th Cir. 1993).

Evidence is sufficient “if any rational trier of fact could have found the essential

elements of the crime beyond a reasonable doubt.” United States v. Boesen, 491 F.3d

852, 856 (8th Cir. 2007) (citation omitted). 

Morse was charged with filing false tax returns under 26 U.S.C. § 7206(1),

which provides that any person who “[w]illfully makes and subscribes any return,

statement, or other document, which contains or is verified by a written declaration

that is made under the penalties of perjury, and which he does not believe to be true

and correct as to every material matter” is guilty of a felony. Willfulness requires

proof of a voluntary, intentional violation of a known legal duty. Cheek v. United

States, 498 U.S. 192, 201 (1991). “The issue is whether, based on all the evidence,

the [g]overnment has proved that [Morse] was aware of the duty at issue, which

cannot be true if the jury credits a good-faith misunderstanding and belief submission,

whether or not the claimed belief or misunderstanding is objectively reasonable.” Id.

at 202. 

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Testimony from IRS agents, a banker, farmers who rented farmland from

Morse, others in the farming industry, and Morse himself, combined with the tax

returns and Morse’s 1999 conviction of filing false tax returns, established that Morse

knowingly and significantly underreported his income on his tax returns. Importantly,

the jury heard evidence that Morse knew from his 1999 conviction that he had to be

truthful when he filed these five tax returns. See id. at 202. Viewing the evidence in

the light most favorable to the government, the evidence shows that Morse voluntarily

and intentionally violated this duty. Specifically, the jury learned that Morse was a

farmer with farm income who rented out some of his land for rental income. The

testimony of Morse and Urbanski provided sufficient evidence that Morse knew that

he received farm and rental income and that the returns he filed did not reflect this

income. The evidence showed that Urbanski prepared returns based on accurate

information and that these returns showed that Morse owed substantial taxes. Morse,

however, did not file these returns. Instead, he claimed to have been compensated

“for personal labor” in “repayment of a debt” owed to him when he had no wages, did

not work for anyone, and even was in prison in 2000 and could not have been

performing labor for compensation in that year. Further, Morse also agreed that the

consequence of his claim on our society would be that virtually everyone would be

free of taxes. Accordingly, any rational trier of fact could have found beyond a

reasonable doubt that Morse voluntarily and intentionally filed false tax returns. 

E.

Morse next challenges a number of the district court’s evidentiary rulings. He

argues that the district court improperly excluded the following evidence that he

asserts is probative because it showed his good faith that he was not violating the tax

laws: (1) documents relating to Morse’s civil declaratory judgment; (2) a note to

Agent Bosshart, which he asserts explained that he could not meet with her because

he was busy with the harvest; (3) an explanation by Patrick Lynch, a former tool and

die worker who worked for the Freedom and Privacy Committee, of the IRS

individual master file system; and (4) documentation of Saladino’s and the Freedom

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2

 Morse mentions in his brief that it was also error to exclude evidence of a

letter written to the U.S. Department of Justice by a lawyer on Morse’s behalf. But,

Morse does not cite to the transcript, and our review of the record does not reveal that

the letter was either offered into or excluded from evidence. 

-11-

Privacy Committee’s operations.2

 The district court excluded these documents as

either not relevant or lacking foundation. “We review evidentiary rulings for abuse

of discretion. Even when an evidentiary ruling is improper, we will reverse a

conviction on this basis only when the ruling affected substantial rights or had more

than a slight influence on the verdict.” United States v. Gustafson, 528 F.3d 587, 590-

91 (8th Cir. 2008) (citations omitted). 

It was proper for the district court “to exclude evidence having no relevance or

probative value with respect to willfulness.” Cheek v. United States, 498 U.S. 192,

203 (1991). To the extent that any of the excluded documents may have been

relevant, they were cumulative, and the district court did not abuse its discretion by

denying their admission. See Fed. R. Evid. 403; United States v. Willis, 277 F.3d

1026, 1033 (8th Cir. 2002). Morse “had been permitted to explain the source of his

beliefs and to introduce other exhibits on which he relied.” Id. Specifically, Morse

presented evidence that he corresponded with Saladino to assist him with his tax

liability. Morse testified that Saladino had filed the federal habeas action seeking “a

determination if the tax returns were acceptable or not.” He testified that the litigation

concluded without receiving a decision and that Saladino filed a second federal

lawsuit in an effort to get a ruling on his returns. 

Next, contrary to Morse’s assertion, the district court did not exclude from

evidence the letter he sent to Agent Bosshart about a potential meeting. The exhibit

was offered and received. The district court also acted within its discretion when it

refused to permit Lynch, a tool and diemaker, to interpret internal IRS records based

on a lack of foundation. The district court allowed Lynch to testify about

conversations he had with Saladino, Morse, and other members of the Freedom and

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Morse also argues that the district court did not deduct all legal expenses at

sentencing. This argument is without merit. The district court agreed that “the loss

amount attributable to [Morse] should be less than $200,000, to reflect the legitimate

legal fees [Morse] paid. The Court lowered [Morse’s] offense level to a level 16 as

a result of this determination.” This determination is consistent with the loss

calculation that Urbanski prepared on Morse’s behalf to give Morse full credit for

those expenses.

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Privacy Committee. Further, Morse testified and explained how he learned about the

Freedom and Privacy Committee. He testified about phone calls with those associated

with the Freedom and Privacy Committee and about documents he obtained,

describing their theories and services. In describing one conversation he had with

people at the Freedom and Privacy Committee concerning his tax situation, Morse

said: 

Yeah, I told them where I got my income from. I told them I didn’t want

any problems, because I had a problem before, and I was kind of assured

that there wouldn’t be a problem. And if there was, they could handle the

litigation, if there was any. And that was that. 

Morse also described Saladino as the source of his “claim of right” tax returns,

although Saladino himself did not testify because he exercised his Fifth Amendment

right against self-incrimination. Lastly, as discussed above, the evidence of Morse’s

guilt was substantial, and we do not believe that the verdict would have been different

had the documents been admitted. Accordingly, the district court did not err in its

evidentiary rulings. 

F.

Lastly, Morse argues that the district court erred by failing to reduce tax loss

calculations to exclude tax losses already assessed against him in the sentence he

received in his earlier conviction. Morse argues that including the tax losses from

1996 and 1997 “punish[ed] Morse twice for the same conduct, thereby violating the

Fifth Amendment constitutional prohibition against double punishment.”3

 We review

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the application of the Guidelines to the facts de novo and factual findings underlying

the calculation of the Guidelines for clear error. United States v. Gomez, 271 F.3d

779, 781 (8th Cir. 2001). The ultimate sentence is reviewed for abuse of discretion.

United States v. Hayes, 518 F.3d 989, 995 (8th Cir. 2008). 

“Relevant conduct which has been considered in a prior sentencing can be a

basis for subsequent prosecution without violating the double jeopardy clause so long

as the earlier sentence was within the statutory or legislatively authorized punishment

range.” United States v. Abboud, 273 F.3d 763, 766 (8th Cir. 2001). As long as the

sentence previously imposed was within the authorized statutory limits for that earlier

crime, enhancing a sentence for a separate crime with the same conduct does not

constitute punishment for that conduct within the meaning of the Double Jeopardy

Clause. Witte v. United States, 515 U.S. 389, 398-99 (1995). 

 Here, the district court did not err. First, in Morse’s 1999 conviction, the

district court added to the 1991 through 1994 tax loss approximately $83,000 in

estimated unpaid taxes for the years 1996 and 1997, putting Morse at offense level 15

under the Guidelines then in effect. Morse’s 1999 sentence of eighteen months was

well within this range. IRS Agent Bosshart then computed a total tax loss of $205,237

for the years pertaining to this case. Using this figure, under § 2T4.1, the government

argued for offense level 18 and a range of 30 to 37 months given Morse’s previous

criminal history. U.S. SENTENCING GUIDELINES MANUAL § 2T4.1 (2009). Urbanski

prepared a tax loss analysis that Morse submitted at his sentencing. Urbanski

calculated the tax loss to be $179,840. Consistent with Urbanski’s analysis, the

district court found the tax loss to be less than $200,000 but greater than $80,000,

putting Morse at offense level 16 with a Guidelines range of 24 to 30 months. The

court sentenced Morse within this range. Punishment in this case for conduct that

was taken into account in Morse’s 1999 sentence cannot be a violation of the Fifth

Amendment because the earlier sentence was within the statutorily authorized

punishment range. See Witte, 515 U.S. at 398-99. Accordingly, the district court did

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not err in failing to reduce tax loss calculations to exclude tax losses already assessed

against Morse. 

III.

For the reasons set forth, we affirm the judgment of the district court. 

______________________________

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