Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-07-03207/USCOURTS-ca10-07-03207-0/pdf.json

Parties Involved:
Ivan G. Carney
Appellant
United States of America
Appellee

Document Text:

*

 This order and judgment is not binding precedent, except under the

doctrines of law of the case, res judicata, and collateral estoppel. It may be cited,

however, for its persuasive value consistent with Fed. R. App. P.32.1 and 10th

Cir. R. 32.1.

FILED

United States Court of Appeals

Tenth Circuit

March 24, 2008

Elisabeth A. Shumaker

Clerk of Court

UNITED STATES COURT OF APPEALS

TENTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff - Appellee,

v.

IVAN G. CARNEY,

Defendant - Appellant.

No. 07-3207

(D.C. No. 04-CR-10023-MLB)

(District of Kansas)

ORDER AND JUDGMENT*

Before LUCERO, HOLLOWAY and GORSUCH, Circuit Judges.

This appeal is from an order revoking defendant’s supervised release and

ordering him imprisoned for an additional nine months. 

I

Ivan G. Carney had been convicted on two counts of tax evasion and had

served approximately 20 months of his 21-month term of imprisonment, when he was

placed on supervised release on August 23, 2006. His sentence had included a fine

Appellate Case: 07-3207 Document: 0101150859 Date Filed: 03/24/2008 Page: 1 
-2-

of $50,000, which was to be paid within 60 days of his release from imprisonment.

In addition to the standard conditions applicable to all persons on supervised release,

Mr. Carney was subject to some special conditions. He was required to file truthful

federal income tax returns for the years 2000 through 2005 and to cooperate with the

IRS in determining his tax liability. Upon Carney’s release, a probation officer had

mistakenly told him that he could pay his fine in installments of $100 per month. In

January 2007, the probation officer told Carney that he had exceeded his authority

in approving the installment payment plan and that Carney was required to pay the

fine in full.

On March 6, 2007, the probation officer initiated the proceedings that led to

the revocation order by filing a petition in the district court. The probation officer

alleged two violations of the conditions of supervised release: that Carney had failed

to appear for a scheduled interview with an IRS agent in violation of the condition

that he cooperate with the IRS, and that he had failed to pay the fine of $50,000,

having reduced the balance only to $49,125.

The district court held three revocation hearings. The first was held on April

30, 2007. 

IRS revenue officer Joanie Broadbent was assigned Mr. Carney’s case. About

two months after his release from prison, on October 26, 2006, she had sent him a

letter requesting that he contact her to set up a meeting regarding his unfiled returns.

Appellate Case: 07-3207 Document: 0101150859 Date Filed: 03/24/2008 Page: 2 
1

Mr. Carney testified that he kept his business records at his office, not at

the home that was burned.

-3-

This letter listed specific documents that Mr. Carney needed to bring to the meeting.

Eventually (after six or seven weeks) a meeting was held, but Carney did not have

the requested records. Mr. Carney told Broadbent that the records had been

destroyed in a fire at his home that had occurred in July 2004. Carney did not

provide any records for the more than two years after the fire.1

 

Ms. Broadbent served a formal summons on Carney requiring him to produce

records on January 22, 2007. Carney failed to appear. In an earlier telephone

conversation, he had told Ms. Broadbent that he had retained Gloria Edwards to

represent him under a power of attorney. But Carney never provided records to Ms.

Edwards to enable her to assist with his taxes. 

Ms. Broadbent began an investigation of Carney’s finances. She discovered

a UCC financing statement filed April 11, 2006, which identified eleven vehicles

(including five limousines and three classic sports cars) in which Carney claimed an

ownership interest. At the revocation hearing, Carney denied present ownership of

these cars. The IRS also obtained pictures of several automobiles, boats, engines and

tools. At the hearing, Carney admitted he had owned these assets at one time but

said he did not know what had happened to them. The government also proffered

evidence that Carney had received $133,000 in insurance proceeds for the fire loss

Appellate Case: 07-3207 Document: 0101150859 Date Filed: 03/24/2008 Page: 3 
-4-

to his home and that at his request the check was re-issued in the name of Barbara

Evans instead of in his name.

At the conclusion of the first hearing, the judge set a second hearing for June

4, 2007, and instructed Carney to “make a lot more progress dealing with the IRS,”

to locate copies of records he claimed had been destroyed by fire, and to pay the

fine. Carney later asked for the second hearing to be postponed to July 2 so that he

could retain counsel, and the court agreed.

At the July 2 hearing, Carney had not filed the tax returns and had not paid the

fine. The judge gave him two more weeks. The final hearing was held July 16,

2007. At this hearing, Carney requested more time to pursue litigation in the Tax

Court. Carney also said that he had filed his 2006 tax return, that he did not have the

money to pay the fine and that he was still trying to raise the funds.

The district court found that Carney had failed to show that was unable to pay

the fine because he had not explained what had happened to his assets; that he had

knowingly failed to pay his fine; that due to Carney’s failure to make a bona fide

effort to pay the fine, as well as the nature of the offense and Carney’s

characteristics, there was no alternative to further imprisonment; and that Carney had

not taken steps to comply with the order to file his past due tax returns and to

cooperate with the IRS.

Appellate Case: 07-3207 Document: 0101150859 Date Filed: 03/24/2008 Page: 4 
-5-

II

Mr. Carney filed a timely notice of appeal from the district court’s revocation

order. We therefore have jurisdiction under 28 U.S.C. § 1291. We review the order

of revocation of supervised release for abuse of discretion. See United States v.

McAfee, 998 F.2d 835, 837 (10th Cir. 1993). Of course we review underlying

findings of fact only for clear error, deferring to the district court’s resolution of

questions of credibility. 

Mr. Carney first argues that the evidence was insufficient to prove that he had

willfully violated the conditions of his supervised release. As for the first ground

for revocation, we begin with the proposition that, as Mr. Carney conceded at oral

argument, the burden of proof was on him to show that he was unable to pay the fine.

See United States v. Bullard, 16 F.3d 1110, 1114 (10th Cir. 1994); USSG § 5E1.2(a).

Mr. Carney did not challenge the imposition of the fine based on inability to pay on

direct appeal. But the district court did not indicate that Mr. Carney was precluded

by res judicata from showing inability to pay. Instead, the judge found that Carney

had assets available and that he had not made a bona fide effort to pay the fine. We

see no error in these findings.

As recited supra, the evidence showed that defendant had substantial assets

in the recent past, if not at the time of the hearing. The government was unable to

show what had happened to the assets, but the evidence was clearly sufficient to

Appellate Case: 07-3207 Document: 0101150859 Date Filed: 03/24/2008 Page: 5 
-6-

support the inference that defendant had concealed or transferred the assets to avoid

their application to the fine. The district court found Carney’s professed complete

inability to explain what had happened to the assets to be utterly incredible.

Similarly, we find no error in the district judge’s finding that Carney had

failed to file his past-due income tax returns and had failed to cooperate with the

IRS. It is undisputed that the returns had not been filed. Carney asserts that he had

made efforts to retrieve records to enable him to prepare his returns, but the judge

clearly viewed his efforts as woefully inadequate. Not only had Carney apparently

delayed unreasonably in trying to replace or reconstruct records allegedly lost in the

2004 fire at his home, he had provided no records for periods after the fire, nor had

he offered any explanation for his failure to produce records that had been kept at his

office.

Thus, we conclude that the district judge did not err in finding that Mr. Carney

had willfully violated the conditions of his supervised release.

B

Mr. Carney’s second contention on appeal is that the district judge failed to

give adequate consideration to alternatives to incarceration. The district court was

specifically granted the authority to revoke Mr. Carney’s supervised release by

statute, which provides that when a person fails to comply with the conditions of his

supervised release, the court may

Appellate Case: 07-3207 Document: 0101150859 Date Filed: 03/24/2008 Page: 6 
-7-

(3) revoke a term of supervised release, and require the defendant to

serve in prison all or part of the term of supervised release authorized

by statute for the offense that resulted in such term of supervised

release without credit for time previously served on postrelease

supervision, if the court, pursuant to the Federal Rules of Criminal

Procedure applicable to revocation of probation or supervised release,

finds by a preponderance of the evidence that the defendant violated a

condition of supervised release, . . . .

18 U.S.C. § 3583(e)(3).

Another statute, which addresses failures to pay fine or restitution generally,

also provides authority for the district court’s revocation order:

(a)(1) Upon a finding that the defendant is in default on a payment of

a fine or restitution, the court may, pursuant to section 3565, revoke

probation or a term of supervised release, modify the terms or

conditions of probation or a term of supervised release, resentence a

defendant pursuant to section 3614, hold the defendant in contempt of

court, enter a restraining order or injunction, order the sale of property

of the defendant, accept a performance bond, enter or adjust a payment

schedule, or take any other action necessary to obtain compliance with

the order of a fine or restitution.

(2) In determining what action to take, the court shall consider the

defendant's employment status, earning ability, financial resources, the

willfulness in failing to comply with the fine or restitution order, and

any other circumstances that may have a bearing on the defendant's

ability or failure to comply with the order of a fine or restitution.

18 U.S.C. § 3613A(a) (emphasis added).

The record makes it amply clear that the district court exercised patience and

attempted to avoid sending Carney back to prison. But based on his finding, which

we have found to be supported by the evidence, that Carney had the means to pay his

Appellate Case: 07-3207 Document: 0101150859 Date Filed: 03/24/2008 Page: 7 
-8-

fine (or at least a substantial part thereof), the judge was forced to the conclusion

that Carney simply refused to pay the fine, notwithstanding his professions to the

contrary. The court quite obviously concluded that alternatives were simply not

going to be effective, and we see no error in that conclusion.

Similarly, Carney’s prolonged failure to produce any documents to assist the

IRS in determining his income tax liability was an easily adequate basis for the judge

to conclude that no other option was likely to induce compliance with that condition

of his supervised release. More than seven months after the IRS had served him with

a summons for production of documents, he had produced nothing. Mr. Carney’s

only proposed solutions involved giving him still more time, in spite of the paucity

of his efforts in the substantial amount of time that had already passed since his

release.

In short, we conclude that the district court did not abuse its discretion. To

the contrary, the court fully considered alternatives to incarceration and found them

unlikely to be successful in achieving Mr. Carney’s compliance. That decision was

amply supported and justified.

Appellate Case: 07-3207 Document: 0101150859 Date Filed: 03/24/2008 Page: 8 
-9-

Conclusion

The judgment of the district court is AFFIRMED.

Entered for the Court

William J. Holloway, Jr.

Circuit Judge

Appellate Case: 07-3207 Document: 0101150859 Date Filed: 03/24/2008 Page: 9