Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-14-02460/USCOURTS-ca8-14-02460-0/pdf.json

Parties Involved:
Kimberly Johnson
Appellant
United States of America
Appellee

Document Text:

United States Court of Appeals

For the Eighth Circuit

___________________________

No. 14-2460

___________________________

United States of America,

lllllllllllllllllllll Plaintiff - Appellee,

v.

Kimberly Johnson,

lllllllllllllllllllll Defendant - Appellant.

___________________________

No. 14-2603

___________________________

United States of America,

lllllllllllllllllllll Plaintiff - Appellee,

v.

Nkosi Gray,

lllllllllllllllllllll Defendant - Appellant.

____________

Appeals from United States District Court 

for the Western District of Missouri - Kansas City

____________

Appellate Case: 14-2460 Page: 1 Date Filed: 07/31/2015 Entry ID: 4301338 
 Submitted: April 13, 2015

 Filed: July 31, 2015

____________

Before MURPHY, COLLOTON, and KELLY, Circuit Judges.

____________

COLLOTON, Circuit Judge.

Following a jury trial, Kimberly Johnson and Nkosi Gray were each convicted

of one count of making a false claim for a tax refund, in violation of 18 U.S.C. § 287. 

The district court sentenced Johnson to 48 months’ imprisonment and Gray to 60 1

months’ imprisonment. Johnson appeals, challenging the sufficiency of the evidence

supporting her conviction. Gray appeals his sentence, arguing that the district court

erred under the advisory sentencing guidelines in calculating the intended amount of

loss and in applying an increase for an offense that involvessophisticated means. We

affirm.

I.

Johnson and Gray were convicted in relation to a tax fraud scheme run by

Gerald Poynter. Poynter’s scheme was known as an Original Issue Discount scheme. 

Original Issue Discount forms (“OID” forms, for short) are tax forms designed to

report an individual’s interest income derived from investments such as municipal

bonds and certificates of deposit. In an OID scheme, filers falsely list large amounts

of OID income and corresponding large amounts of withholding. Instead of listing

actual OID income, the filers list debt, including credit card debts and mortgages. 

The Honorable Brian C. Wimes, United States District Judge for the Western 1

District of Missouri.

-2-

Appellate Case: 14-2460 Page: 2 Date Filed: 07/31/2015 Entry ID: 4301338 
The filers also falsely represent that a large amount of their OID income was

withheld, and they thus claim that they are entitled to large tax refunds.

Poynter promoted the scheme through conference calls and seminars that he

held across the country. In December 2008, Johnson attended one of these seminars

at a hotel in Atlanta, Georgia, where Poynter gave a presentation outlining the OID

process. On February 10, 2009, Johnson signed a contract with Poynter, in which she

agreed to serve as one of his “branch managers” or “affiliates.” As a branch manager,

Johnson was tasked with recruiting clients who were interested in Poynter’s tax

services.

Johnson’s contract with Poynter gave her the right to set her fee with each

client, but she was required to pay him fifty percent of that fee. The contract also

included several disclaimers, including a statement that the material provided by

Poynter was not legal or tax advice, but instead was intended for educational and

informational purposes. By signing the contract, Johnson agreed that she was not an

agent of any government agency, including the IRS. 

One of the clients whom Johnson recruited while working as a branch manager

for Poynter was Marian Fine-Kennedy. In March 2009, Fine-Kennedy sent Johnson

a $500 money order to start the process. Before providing her services, Johnson

required Fine-Kennedy to sign a contract that contained a non-disclosure provision

and listed a $20 million penalty for disclosure. The agreement also required FineKennedy to certify that she was not affiliated with any government agency.

Fine-Kennedy sentJohnson her financial information, and Johnson completed

Fine-Kennedy’s return for the 2008 tax year. On Fine-Kennedy’s 2008 return,

Johnson stated that the taxpayer had earned $89,605 in OID income, that $87,492 was

withheld, and that Fine-Kennedy was entitled to a $61,959 refund. In reality,

however, Fine-Kennedy was unemployed in 2008 and received only disability income

-3-

Appellate Case: 14-2460 Page: 3 Date Filed: 07/31/2015 Entry ID: 4301338 
in the amount of $22,500, none of which was withheld in taxes. Johnson sent part of

Fine-Kennedy’s prepared tax return to Fine-Kennedy, who mailed it to the IRS. The

remaining portion of Fine-Kennedy’s return was submitted to the government either

by Johnson or by another one of Poynter’s associates. The IRS issued Fine-Kennedy

a refund in the amount of $61,959. Fine-Kennedy paid Johnson $4117 for her

services by depositing the payment in a third party’s bank account.

Gray was also one of Poynter’s clients. On October 3, 2008, Poynter submitted

Gray’s 2007 personal tax return, listing income of $401,068 and withholding of

$401,067, and requesting a refund of $283,888. Two weeks later, the IRS deposited

a $278,874 refund in Gray’s bank account, and Gray paid Poynter a fee of $15,000. 

Gray then proceeded to file additional fraudulent tax returns for other tax years

seeking more refunds.

In September 2011, after Poynter’s scheme was uncovered, fourteen

defendants, including Johnson and Gray, were indicted by a grand jury for their

activities related to Poynter’s scheme. Johnson was charged with one count of

conspiracy to commit tax fraud and nine counts of making, and aiding and abetting

the making of, a false claim upon the United States. Gray was charged with one

count of conspiracy to commit tax fraud, based on the 2007 tax return, and one count

of making a false claim to the United States and aiding and abetting the same. 

Johnson and Gray proceeded to trial. 

At trial, Johnson admitted that while working as a branch manager for Poynter,

she prepared her clients’ OID returns, including Fine-Kennedy’s 2008 tax return. But

Johnson also testified thatshe believed that Poynter’s method offiling tax returns was

a valid process.

Gray did not testify at trial, but in an August 2010 interview with an IRS agent,

Gray admitted that he continued filing additional OID tax returns, even after he was

-4-

Appellate Case: 14-2460 Page: 4 Date Filed: 07/31/2015 Entry ID: 4301338 
“bombarded” with frivolous-filing letters from the IRS. The government also

produced evidence that on March 6, 2009, Gray forwarded Poynter an e-mail warning

him that the Department of Justice was aware of the OID scheme. Gray continued to

file false returns after sending Poynter the warning e-mail.

At the close of the government’s case, the district court dismissed four of the

nine substantive counts against Johnson on the government’s motion, but denied

Johnson’s motion for judgment of acquittal as to the others. The jury convicted Gray

of one count of making a false claim, and found him not guilty of conspiracy to

commit tax fraud. The jury convicted Johnson on one count of making a false claim,

and acquitted her on four other substantive counts and on conspiracy to commit tax

fraud. After sentencing and judgment, both Johnson and Gray appeal.

II.

Johnson argues that the evidence was insufficient to support her conviction. 

We review Johnson’s challenge de novo, construing the evidence in the light most

favorable to the verdict. We will reverse Johnson’s conviction only if no rational jury

could find her guilty beyond a reasonable doubt. United States v. Jirak, 728 F.3d

806, 811 (8th Cir. 2013).

Johnson first argues that the evidence wasinsufficient to show thatshe wasthe

but-for cause of submitting the fraudulent return to the government. Because FineKennedy reviewed the return, signed it, and mailed it to the IRS, knowing that her

claim was fraudulent, Johnson contends that Fine-Kennedy—not Johnson—was the

but-for cause of the filing of the fraudulent return.

The government prosecuted Johnson on a theory thatshe caused Fine-Kennedy

to take an act that would have been an offense if performed by Johnson herself. See

18 U.S.C. § 2(b). The offense of making a false claim upon the United States

-5-

Appellate Case: 14-2460 Page: 5 Date Filed: 07/31/2015 Entry ID: 4301338 
required proof that a person made or presented a claim to the Internal Revenue

Service, knowing that the claim was false, fictitious, or fraudulent. 18 U.S.C. § 287;

see United States v. Miller, 728 F.3d 768, 774 (8th Cir. 2013). In this case, the jury

was instructed that the government must prove that “Johnson caused to be made to

the Internal Revenue Service a claim for a tax refund.” The instructions explained

that “[a] person makes a claim against the Internal Revenue Service when she files

or submits, or causes to be filed or submitted, a tax return requesting a refund of

withheld income tax, either for herself or for other persons.”

That Fine-Kennedy physically mailed the return and also knew about the

fraudulent scheme does not preclude a finding that Johnson caused the filing. 

Johnson admitted that Fine-Kennedy was her client and that she prepared FineKennedy’s fraudulent tax return. Johnson accepted payment from Fine-Kennedy for

the completion of her fraudulent tax return. Johnson knew that Fine-Kennedy would

submit the return to the government for a refund. Even though Fine-Kennedy

ultimately submitted the false return to the IRS, the jury could still find that Johnson

caused the submission of a false statement through an intermediary. United States v.

Hebeka, 89 F.3d 279, 283-84 (6th Cir. 1996); United States v. Blecker, 657 F.2d 629,

631-34 (4th Cir. 1981). Fine-Kennedy’s act of submitting the return to the

government “was clearly understood and foreseen” by Johnson when she prepared the

false return, and a reasonable jury thus could find that Johnson “caused” the return

to be presented within the meaning of § 2(b). See United States v. Murph, 707 F.2d

895, 896 (6th Cir. 1983) (per curiam).

Johnson also argues that the government failed to prove that she knew the tax

return she prepared for Fine-Kennedy contained false information. Johnson testified

at trial that she did not fully understand Poynter’s tax refund process, but that she

trusted Poynter because she believed he had lawyers and accountants advising him

and ensuring that the process was legitimate. One of Johnson’s former clients also

testified that he thought Johnson was unaware of the illegality of Poynter’s scheme:

-6-

Appellate Case: 14-2460 Page: 6 Date Filed: 07/31/2015 Entry ID: 4301338 
“I totally think that [Johnson] was, you know, she didn’t realize this was a[n] illegal

process in my opinion. I think she was victimized just like we were. . . . I mean, she

believed it with all of her heart, I believe.” Johnson argues that this testimony shows

she did not have the requisite knowledge to be convicted.

Knowledge may be proved by circumstantial evidence, and we believe a

reasonable jury could have found that Johnson acted knowingly. Johnson admitted

knowing, when she prepared tax returns for clients, that the information entered was

debt information, rather than income information. Johnson listed the debt

information in a space identified as “taxable interest,” and she also falsely stated that

substantial portions of the false income had been withheld. Although financial

information that Fine-Kennedy gave Johnson for 2008 showed income of only

$22,500 from disability payments and no withholding, Johnson prepared a tax return

claiming $89,605 in interest income, $87,492 in withholding, and entitlement to a

refund of $61,959.

None of the information or documentation that Fine-Kennedy provided to

Johnson could have supported the amounts thatJohnson claimed on Fine-Kennedy’s

tax return. A reasonable jury could have inferred from this fact that Johnson knew

that the information she entered into the return was false. See Miller, 728 F.3d at

774-75; United States v. Clark, 577 F.3d 273, 286 (5th Cir. 2009). Johnson claimed

that she acted out of a genuine belief that her actions were legal, but the jury heard

her testimony and apparently did not believe it. A reasonable jury could have

disbelieved Johnson or concluded that her belief was so unreasonable that it did not

constitute a justifiable excuse for her conduct. See United States v. Rifen, 577 F.2d

1111, 1113 (8th Cir. 1978) (per curiam). We therefore conclude that the evidence

was sufficient to sustain the verdict.

-7-

Appellate Case: 14-2460 Page: 7 Date Filed: 07/31/2015 Entry ID: 4301338 
 III.

Gray challenges the sentence imposed by the district court on the ground that

the district court erred in calculating the total intended tax loss. We review a district

court’s factual findings at sentencing for clear error, and we will affirm the district

court’s loss calculation “unlessit is not supported by substantial evidence, was based

on an erroneous view of the law, or the appellate court has a firm conviction that

there was a mistake after reviewing the entire record.” United States v. Theimer, 557

F.3d 576, 578 (8th Cir. 2009). 

“[L]oss” is defined as “the greater of actual loss or intended loss.” USSG

§ 2B1.1, comment. (n.3(A)). “‘Actual loss’ means the reasonably foreseeable

pecuniary harm that resulted from the offense.” Id. § 2B1.1, comment. (n.3(A)(i)). 

“‘Intended loss’ . . . means the pecuniary harm that was intended to result from the

offense,” including “pecuniary harm that would have been impossible or unlikely to

occur.” Id. § 2B1.1, comment. (n.3(A)(ii)). Under USSG § 2T1.1(c)(4), “[i]f the

offense involved improperly claiming a refund to which the claimant was not entitled,

the tax loss is the amount of the claimed refund to which the claimant was not

entitled.” If the offense involved a fraudulent or false return, “the tax loss is the total

amount of loss that was the object of the offense (i.e., the loss that would have

resulted had the offense been successfully completed).” Id. § 2T1.1(c)(1).

At trial, the government presented evidence that Gray submitted eleven false

filings to the IRS claiming refunds for the tax years 2005 through 2008. He filed an

original return and an amended return for 2005, an original return and two identical

amended returns—sent to different IRS processing centers—for 2006, and an original

return and two amended returns filed on different dates for 2008. The probation

office calculated the intended lossfromGray’s offenses by adding together the refund

amounts that Gray claimed on each of these eleven filings. The report calculated an

intended loss of $1,537,897 and an actual loss of $278,874. Because the intended

-8-

Appellate Case: 14-2460 Page: 8 Date Filed: 07/31/2015 Entry ID: 4301338 
loss was greater than the actual loss, the probation office recommended a loss of

$1,537,897, which corresponded to a base offense level of 22. See USSG § 2T4.1(I).

Gray objected to the inclusion of multiple returnsfor any given year in the loss

calculation. According to Gray, an individual who files an amended return is not

intending to receive double refunds because the amended return is intended to take

the place of the original return. He therefore argued that only the most recent return

that he filed for any given year should be included in the intended loss calculation. 

Gray also objected to the inclusion of two amended returns that he submitted to

different IRS locations for the 2006 tax year. Gray argued that he filed duplicate

returns because he was unsure of where to send them, and that only one of these

amended returns should be counted in the district court’s loss calculation. The

district court overruled Gray’s objections and adopted the probation office’s

recommendation.

On appeal, Gray raises the same objections to the district court’s calculation

of intended loss. He acknowledges intended loss of $753,205, which corresponds to

base offense level 20, but argues that the district court clearly erred by counting

multiple returns for certain tax years and increasing the base offense level to 22.

The district court did not make an express finding that Gray intended to obtain

multiple refunds for tax years 2005, 2006, and 2008, but we infer from the record that

the court made the requisite subsidiary finding that Gray intended to receive the

refunds claimed in all eleven filings. See United States v. Patterson, 946 F.2d 1371,

1372 (8th Cir. 1991). We do not believe that the finding is clearly erroneous. Gray

intended to obtain fraudulent refunds from the government, and it was reasonable to

infer that he intended to maximize the amount procured. That Gray sent different

amended returnsto different locationsfor tax year 2006 supports an inference that he

hoped the government would mistakenly pay twice. Although the IRS, of course,

does not pay more than one refund per year as a matter of policy, Gray’s purpose was

-9-

Appellate Case: 14-2460 Page: 9 Date Filed: 07/31/2015 Entry ID: 4301338 
to commit fraud, and his intent was not constrained by IRS practice in dealing with

an honest taxpayer. Whether or not Gray was likely to succeed in obtaining refunds

based on multiple returns filed for a single tax year, he is still responsible for any

false return he submitted to the IRS with the intent to obtain the amount requested in

that return.

Gray also challenges the district court’s application of a two-level specific

offense characteristic under USSG § 2T1.1(b)(2) for an offense that “involved

sophisticated means.” In explaining its application of the adjustment, the district

court found that Gray “participated in the scheme and the concealment of the offense,

and that it was complex and intricate.”

Gray argues the finding is clearly erroneous because he used his real name and

address on his tax returns, filed numerous returns with the IRS, regularly

corresponded with the IRS via e-mail and letters, and in no way attempted to shield

his identity. Gray also argues that his acquittal on the conspiracy charge shows that

the jury did not credit him with any sophistication or participation in the larger

scheme of which his substantive offense was a part. 

The sophisticated means enhancement applies to “especially complex or

especially intricate offense conduct pertaining to the execution or concealment of an

offense.” USSG 2T1.1, comment. (n.5). It is designed for a defendant whose conduct

was more intricate than that ofthe “garden-variety” offender. United States v. Hance,

501 F.3d 900, 909 (8th Cir. 2007); see United States v. Fiorito, 640 F.3d 338, 351

(8th Cir. 2011). “Even if any single step is not complicated, repetitive and

coordinated conduct can amount to a sophisticated scheme.” United States v. Bistrup,

449 F.3d 873, 882 (8th Cir. 2006). 

Gray submitted eleven false filingsto the IRS. He submitted false background

documentsto the IRS to bolster his claims for tax refunds, and he warned Poynter via

-10-

Appellate Case: 14-2460 Page: 10 Date Filed: 07/31/2015 Entry ID: 4301338 
e-mail to alert him that the Department of Justice was aware of the OID tax fraud

scheme. The record supports a finding, by a preponderance of the evidence, that

Gray’s conduct was repetitive and more intricate than that of a garden-variety tax

offender. That Gray was acquitted on the conspiracy charge did not preclude the

district court fromconsidering conduct beyond the single count of conviction, aslong

as it was proved by a preponderance of the evidence. United States v. Whatley, 133

F.3d 601, 606 (8th Cir. 1998). We therefore conclude that the district court did not

clearly err in applying § 2T1.1(b)(2).

* * *

For the foregoing reasons, the judgments of the district court are affirmed.

______________________________

-11-

Appellate Case: 14-2460 Page: 11 Date Filed: 07/31/2015 Entry ID: 4301338