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# United States Court of Appeals For the Seventh Circuit

No. 14-2069

U NI T E D S TAT E SOF A M E RI C A , Plaintiff-Appellee ,

v.

G E ORG E W. C UR

T I S , Defen dant-Appellant.
Appe al f ro m the Uni ted S tates Distri ct Co urt fo r the

Eastern Distri ct o f Wi sconsi n. No. 1: 13 -cr- 00 11 3- WCG— Will ia m C. Griesb ach , Chief Judge.

A RGU E D D E C E MB E R 3, 2014

— D E C I D E D M ARC H 31, 2015

Before M AN I O N

, R OVN E R

, and H AMI L T ON

, Circ uit Judges.

R OVN E R , Cir cui t Judge. Georg e W

. C ur tis w as convic ted of three mi sdemeanor counts of fai lur e to pay income taxe s, in
v io lation of 26 U.S.C. § 7203. On appeal, he contends tha t t he di stric t court abus ed i ts di screti on in admit tin g evidenc e of other wrongdo ing and in instructing the jury on the meaning of “wi llful ness .” W

e affi rm.2 No. 14-2069
I. Georg e W

. Curtis has been a lawy er for more than fi fty y ears. He w as running hi s suc cess ful law practic e as a sole propr i eto rshi p at the tim e of the ev ents relev ant to thi s appeal. Hi s tax di ffi culti es began in 1996 and 1997, when he fi led ret urns r e p o r t ing tax obli gations of $218,983 and $248,236, respecti v ely

, but made no payments tow ard those de bt s. Accordi ng to Curtis, aro und that tim e, a law partner wi thdrew money from the practic e and declared bankruptcy wi thout ev er repay ing the debt of nearly $600,000. Curtis also underw ent an expensi v e di v or ce during t his tim e period. In 1999, when the Inter nal Rev enue Ser vic e (“IRS”) notic ed that Curtis sti ll had not pai d the taxe s for 1996 and 1997 and had fai led to fi le a ret urn for 1998, th e agency assi gned Rev enue Offi cer P amela Pfeffer to address Curti s’s i ssu es. As a result, Curtis enter ed into
an installment agr eement wi th the IRS , maki ng mo nt hly payments tow ard hi s outstandi ng tax debt. Not surpri singly , the amount ow ed w as increased by intere st and penalti es. The IRS w arned Curtis that he w ould be required to make esti mated tax pay ments goin g for w ard.
In 2003, Rev enue Offi cer Pfeffer again w or ked wi th Cur t i s in an atte mpt to bri ng hi s t ax obli gation s current after he fi led

a ret urn for 2000 but fai led to pay more than $90,000 in t a x es
ow ed. He enter ed into a second installment agr eement t o p ay those taxe s as w ell as an amount remain ing from 1997. He w as again remin ded of hi s obli gation to make esti mated payments going forw ard. Notwiths tandi ng that remind er , shortly after agr eeing to the second installment plan, he file d a r eturn for 2003 reflectin g an unpai d tax li abi li ty of $176,802. Pfeffer again contacted hi m to di scu ss options for payin g the taxe s, inclu dingNo. 14-2069 3
reducing h i s personal expens es or selling as sets. Nev ert heless, he fi led a ret urn for 2004 reflectin g an unpai d tax li abi li ty of $61,000.
In F e br ua r y 2006, after Pfeffer ret i red from the IRS , the agency assi gned a second Rev enue Offi cer , Hans B i chler

, to
w or k wi th Curtis. Curtis fai led to make esti mated payments for that y ear and had stopped maki ng payments on the installment plan. At the tim e, Curtis had outstandi ng t a x o bli gations for 1997, 2000, 2003 and 2004. In 2006, Curtis made some prog ress in payin g off hi s pending tax debts. He pai d $65,000 tow ard hi s 2005 li abi l it ie s, and another $42,000 to finally sati sfy the 1997 debt. In 2007, Curtis sold some real estate and Rev enue Offi cer Bi chler appli ed $167,000 fr om the sale to resolv e Curtis’s 2000 tax debt

. But that w as not the end of Curtis’s tax w oes. He tim ely fi led

r e t ur ns for 2007, 2008 and 2009, y ears for whi ch he ow ed $151,906, $113,354, and $112,973, respecti v ely , but he had paid nothin g tow ard these li abi li ties at the tim e of fi ling. By thi s tim e, Rev enue Offi cer Bi chler had also ret i re d from the IRS , and no
new agent w as assi gned to address Curtis ’s li abi li ties . Instead, the IRS refer red the m a tt e r for c ri minal inv esti gation, and Curtis

w as charged wi th three mi sdemeanor counts of wi llful ly fai ling to pay the taxe s he ow ed for 2007, 2008 and 2009, in violati on of 26 U.S.C. § 7203. Pri or to tr i al, the government indi cated i ts intention to offer evid e nce under Rule 404(b) , inclu ding evidenc e of Curtis’s hi stor y of fai ling to pay hi s taxe s, hi s past dealings wi th the IRS and i ts effort s t o co llect back taxe s, and hi s wi thdraw als of money from his law practic e to pay personal expenses. Curtis4 No. 14-2069
di d not object to any of this e v ide nce, conceding that i t w as relev ant to hi s intent and knowledge duri ng the charged y ears. But he di d object to the government’s p r oposed evidenc e that he fai led to pay payro ll taxes for hi s law fi rms’s employ ees for the thi rd and fourth quarte rs of 2013. The gov ernment ar gued that thi s evidenc e w as relev ant to Curtis’s intent and especi ally relev ant to rebut hi s antici pated defense that he act e d in g ood fai th. Curt i s objected thatany violationsof the tax lawssub sequen t t o t he charged y ears di d not bear on hi s state of mind duri ng the tim e of the charged offenses

. Instead, he maintai ned, the government’s use of thi s evidenc e demonstra t e d nothin g other than propensi ty to commi t the cr i me, a forbid den use of

such evidenc e
. Curtis also arg ued that the evidenc e w as not relev ant to hi s intent becau se payro ll taxe s are di fferent in kin d from income taxe s, payro l l taxe s are often pai d by offi ce admini strat or s, and the fai lure to pay those taxe s post-dated the offense conduc t by sev eral y ears. The evidenc e w ould also

caus e undu e prej udi ce, Curtis arg ued, bec ause i t w ould i mply that he w as harming hi s employ ees as w ell as the gov ernment. In short, he contended that the payro l l t ax evidenc e di d not meet the standards for a d m i s s i on u n der Rule 404(b)

. The di stric t court agr eed that the evidenc e demonstrate d propensi ty , and tentat i v ely gr anted C ur tis ’s motion to exclude the payro ll tax evidenc e from the t rial. The court later rev ersed course and a l low ed the government to bri ng in thi s evidenc e after Curtis testifi ed duri ng the defense

case- in-chi ef that he w as current on hi s tax obli gations for 2010, 2 011 and 2012. Curtis declined the court’s offer of a li mit ing instructi on on thi s Rule 404(b) e v ide nce. As w e wi ll di scu ss belo w , Curtis asked the court to instruct the jury that wi l l fu l

-No. 14-2069 5

ness required proo f of a bad motiv e. He also asked the court to g iv e an instructi on on goo d fai th. Although the court gav e Curtis’s propo sed instructi on on goo d fai th, i t declined to modi fy the patter n instructi on to inclu de a requirement for bad

mo tiv e, instead using the patter n instructi on on wi llful ness
. The jury convic ted on all thr ee counts, and Curti s appeals

. II. On appeal, Curtis fi rst contends that the court err ed when i t allow ed the government to admi t evidenc e that he had not pai d payro ll taxe s for tw o quarter s in 2013. He also maintai ns that the court abused i ts di screti on when i t declined to giv e the wi llful ne ss instructi on he requested and instead gav e the patter n instr uc t io n. W

e rev i ew the di stric t court's deci si on to admi t ev i dence un der Rule 404(b) for abuse of di screti on only

. United States v
. Johnson , 584 F .3d 731, 736 (7th Ci r
. 2009). “W e
rev i ew jury in s tructi ons de novo , but w e wi ll rev erse a convic tion only i f the instruct i ons as a whole mi sled the jury as to the appli cable law

.” United States v
. Simon , 727 F .3 d 6 8 2 , 698 (7th Ci r
. 2013); United States v
. Joshua, 648 F .3d 547, 554 (7th Ci r
. 2011). A. Curtis faced three counts of wi llful fai lur e to pay tax, in violati on of 26 U.S.C. § 7203. T o sus tain a convict io n under sect io n 7203, the government w as required to prove: (1) that Curtis w as required to pay taxe s; (2) that Curtis fai led to pay the taxe s; and (3) that Curtis acted wi llful ly in fai ling to pay
. United States v
. Hassebrock

, 663 F .3d 906, 919 (7th Ci r
. 2 0 11); United States v
. Beall, 970 F .2d 343, 347 (7th Ci r
. 1992). Curtis conceded that he w as required to pay tax e s fo r t he three charged y ears6 No. 14-2069
and t ha t he fai led to pay them. At tr i al, he contested only the element of wi llfulness . Failu re to pay taxe s un der secti on 7203 i s a speci fi c int e nt cri me. United States v
. Birkenstock , 823 F .2d 1026, 1028 (7th C ir

. 1987). In cri minal tax cases, wi llful ness “requires the Gov ernment to prove that the law i mposed a duty

on the defendant, that the defendant knew of thi s duty , and that he v oluntarily and intentionally violated that dut y .” Cheek v
. United States , 498 U.S. 192, 20 1 (1 9 9 1 ). See also United States v
. Pomponio , 429 U.S. 10, 12 (1976) (the w or d “wi llful ly” in the tax statutes “gener ally connotes a v oluntary , intentional violati on of a known legal duty”); Birkenstock , 823 F .2d a t 1 0 2 8 (the wi llful ness element in secti on 7203 requ ir e s p r oof of an intentional vi olation of a known legal duty). As w e noted abov e, the di stric t court tentat i v ely conclu ded before tr i al t hat the government could not intro duce ev i dence of Curtis’s fai lure to pay payro ll taxe s for hi s law bus iness in the thi rd and fourth quarter s of 2013. Althou g h the government sought to intro duce the evidenc e to demonstrate Curtis’s wi llful ness in fai ling to pay hi s taxes, the courtconclu ded that the evidenc e appeared to prove that p o int only by w ay of a propensi ty inference, in violati on of Rule 404(b)

. The court also opin ed that the potent i al for unfai r prej udi ce outw ei ghed the probat i v e v alue of the evidenc e. See Fed. R. Ev i d. 403. But the co ur t rev ersed course duri ng the defense case- inchi ef after Curtis’s couns el posed sev eral questi ons to Curtis

r egar ding a sum mary exhib i t for tax y ears 1996 thro ug h 2 0 1 2

. For each of those y ears, Exhibi t 1000 li sted, among other thi ngs, the amount of taxe s ow ed, penalti es and intere st accrued, taxe s pai d tow ard the y ear’s li abi li ties, the y ear pai d, and whether theNo. 14-2069 7

taxe s for a giv en y ear w ere fully sati sfi ed. For example, the fi rst
ro w , repr esenting 1996, show ed $555,320.00 in taxable income; $218,983.00 in taxe s o w ed; $112,080.74 in penalti es; $71,618.79 in intere st; $402,682.53 as the tot al ow ed and the tot al pai d; 2001
as the y ear the a mount w as pai d in full; and $0 as the amount pai d duri ng the y ear the taxe s w ere due. The chart also showed that t ax y ears 2003, 2004, 2007, 2008 and 2009 w ere no t pai d in full as of the tim e of tr i al, and in fact, Curtis had made no payments tow ard the obli gations for the charged y ears of 2007 thro ugh 2009. F inally

, the chart indi cated that Curtis pai d hi s taxe s in full for tax years 2010, 2011 and 2012, completing each y ear’s payments during the subs equent y ear
. Wi th thi s ex hibi t before the jury

, defense couns el engaged in t he following exchange wi th Curt i s: Q: And as Exhibi t No. 1000 indi cates—And do y ou hav e that in fro nt of y ou? A: I do. Q: Y our tax obli gations for the y ears 2010, 2011, and 2012 are fully pai d; i s that corr ect? A: That’s wh at the r ecord shows. Q: And—and do y ou st i ll hav e si gni fi cant obli gations wi th respect to the charged y ears here and

s ome obli gation wi th respect to the—a couple of y ears earlier than that? Is thatalso true? A: That’s wh at the r ecord shows. Q: And duri ng the period of tim e for the y ears that

are reflected in Exhi

bi t No. 1000 y ou agr ee wi th the fact that y ou p a id almost $2 mi lli on to the8 No. 14-2069
IRS and y our tax obli gations for th a t same period of t ime w ere something just short of $1,900,000? A: That’s ri ght. I —I pai d 1.917,807. Q: Can y ou tell the court and jury wh e ther or not y ou beli ev ed that y ou w ould hav e the capac i ty thro ugh one met ho d or another of adjusti ng y ou r l iv ing style whi ch may ev en mean li qui

datin g assets, that y ou w ere going to li quida t e all of the tax li abi li ties that w ere reflected on y our tax ret urns for the y ear s 2 0 07, 2008, 2009, and any other y ears for whi ch there remain ed a delinquency? A: Absolutely

. That w as di scu ssed wi th Mr

. Bi chler. And I beli ev e that the 167 gr a nd t ha t I engin eered in selling those tw o proper ties

w ould certainly take care of more than o ne o f those y ears and that David had already made

an agr eement to buy an addi tional chu nk of land for a quarte r mi lli on dollars. Q: W as there ev er a tim e duri ng the period of y our dealing with the collecti on agents when y ou beli ev e[d] that y our tar diness in maki ng your tax payment w ould bri ng y ou t o court as a defendant in a cri minal cas e? A: Absolutely not. I felt I had a v ery posi tiv e understanding relat i onshi p wi th both P am and Hans, who w ere so meti mes compli mentaryNo. 14-2069 9
about my efforts. I just candi dly di scu ssed how thi ngs w ere going

. I had li sted our proper ties wi th three di fferent Realto rs, repo rt ed to them the snags, and they encouraged me. R. 51, T r . at 529-31. Follo wing t his exchange, the government again mov ed to admi t evidenc e that C ur tis had fai led to pay payro ll taxe s for hi s law fi rm’s employ ees in the last tw o quarter s of 2013. The government arg ued that Curtis’s propo sed jury instruct ions
su g g ested that he w ould clai m a defense of mi stake, and t ha t the evidenc e that he had recently fai led to pay taxe s w as relev ant to show that hi s earlier fai lure to pay w as not due to a mi stake. The government also contended that Curtis’s t e sti

mony that he had fully pai d hi s 2010, 2011 and 2 0 1 2 taxe s i mpli ed to the jury that he w as current wi th hi s recent tax obli gations when he in fac t w as not; he had failed to turn ov er to the IRS the payro ll taxe s that he had wi thheld from employees in the last t w o quarter s of 2013. Curtis countered that income taxe s and payro ll taxe s are di fferent in kin d, that the charged conduc t w as too remot e in tim e from th e p a y ro ll tax evidenc e, and that thi s evidence w a s in actuali ty propensi ty evidenc e. The court ulti mately ruled that Curtis opened the door to admi ssi on of the evidenc e by suggesting to the jury that he had pai d in full hi s recent tax obli gations. The government then questi oned Curtis abou t hi s fai lure to pay the payro ll taxe s. R

. 5 1 , T r
. at 568-72. Speci fi cally , the government questi oned Curtis reg ardin g how he sp ent money that he wi thdrew from hi s law fi rm and ho w he d eci ded whi ch bi lls to pay
. The focus of the questi oning w as that Curtis chose repeat edly to pay other obli gations instead of payin g taxe s, inclu ding the payro ll taxe s.10 No. 14-2069
The government made no further menti on of Curtis’s fai lure to pay the pay ro ll taxes intw o quart ers of 2013. After the tr i al, w e clari fi ed the law governing Rule 404(b) evidenc e in an en banc opin i on in United States v
. Gomez, 763 F .3d 845 (7th Ci r . 2014): In sum, to ov ercome an o pponent's objection to the intro ducti on of other- act evidenc e, the proponent of the evidenc e mus t fi rst establi sh that the other act is relev ant to a speci fi c purpose other than the person's cha racter or propensi ty to behav e in a certain w ay
. See F e d

. R.Evid. 401, 402, 404(b)

. Other- act evidenc e need not be excluded whenev er a propensi ty inf e r ence can be drawn. But i ts r elev ance to “another purpose” mus t be establish ed thro ugh a chain of reasonin g that does not rely on the forbid den infer

ence that the person has a certain character and acted in accordance wi th that char a cter on the occasi on charg e d in the case. If the propo nent can make thi s ini tial showing, the di stric t court mus t in e v ery case
asses s whether the p r o bat i v e v alue of the other- act
e v idence i s sub stanti ally outw ei ghed by the ris k o f unfai r prej udi ce and may exclud e the evidenc e under Rule 403 i f the ris k is too gr eat. The court’ s Rule 403 balanc ing should take accoun t of the ext ent to whi ch the non-propensi ty fact for whi ch the evidenc e i s offered actually is at is sue in the case. Gomez, 763 F .3d at 860. The government offe re d two re a s on s in supp or t of admi tting the payro ll tax evidenc e, nei ther of whi ch relied on a forbid denNo. 14-2069 11
inference that Curtis had a certain chara ct e r a nd acted in accordance with that character duri ng the three charged counts. First, t he evidenc e w as relev ant to rebut the i mpli cati on that Curtis h ad fully pai d hi s r ecent tax obli gations. As hi s coun sel conceded at or al arg ument, hi s testim ony that he had fully pai d hi s 2010, 2011 and 2012 taxe s w as not gener ally relev ant to hi s intent for the charged y ears. In essenc e, though, that testim ony i mpli ed that hi s recent compli ance demonstrate d g o od fai th. Wi th Curtis havin g opened the door to the relev ance of hi s taxpayin g behavi or after the ch a rged conduc t, the di stric t court di d not abus e i ts di screti on when i t ruled that the government w as free to w alk thr ough thatdoor

. See Un ited States v. Schm itt , 770 F .3d 524, 536 (7th Ci r
. 2014), cert. denied, — U

. S

. — ; 2 015 WL 99865 8 (Mar

. 9, 2015) (a defendant “opens the door ” to otherwi se inadmis si

ble evidenc e when he affi rmativ ely and genuinely places at iss ue t he speci fi c matter that the evidenc e i s being offer e d t o establi sh)

. And the government used that evidenc e in a manner that di d not rais e the wrongful propensi ty inference. Instead, the gov e rnm e n t s i m p l y n oted that Curtis had used hi s earnin gs from h i s lawfi rm to pay other expenses and had neglected to pay the p a y ro ll taxe s. When Curtis i mpli ed that he w as up-to-date wi th hi s tax obli gations in 2010, 2011 and 2012 (some of whi ch he pai d in 2013), he placed at i ssu e hi s nonpayment of ot her tax es in that same ti me frame. The payro ll tax evidence w as also relev ant to Curtis’s anti ci pated defen se t ha t he acted wi th a goo d fai th mi sun derstanding when he fai led to pay hi s taxe s in the char g e d y ears. Curtis contended in hi s defense that he mi stakenly beli ev ed he

w as in compli ance becau se IRS agents all ow ed hi m repeat edly to negot i ate late payments thro ugh installment plans. See R. 51,12 No. 14-2069
T r
. a t 6 4 8 (wh ere defense counsel ar gued in closin g: “And i t i s the defense in thi s case that Georg e Cur t is, by reason of hi s exper i ence wi th the Inter nal Rev enue Ser vic e, had a goo d fai th understanding that hi s payin g hi s taxe s in an unti mely fash i on
w as okay

. It w as not a cri me.”). Had he known that he w as violati ng a cri minal l a w , he i mpli ed, he w ould hav e pai d hi s taxe s. That theor y w as refuted by evidenc e that he fai led to pay hi s payro ll taxe s ev en after he had been charged wit h a cri me for failing to pay income taxe s, at a tim e when he could no longer clai m a goo d fai th beli ef t hat late payments consti tuted compli ance wi th cri minal laws

. Although income taxe s and payro ll taxe s are di fferent in kin d, as a sole propr i eto r of hi s law fi rm, Curtis w as per sonally responsible for p ayin g the payro ll taxe s in the same w ay he w as personally responsible for payin g his inc ome taxe s. And contrar y to hi s clai m that the inci dents

w ere too far apart in tim e to be relev ant, Curtis’s fai lure to pay the payro ll taxe s w as essenti ally contemporaneo us wi th late p a y me nt s he made on hi s 2012 income taxe s. Fin ally , thi s evidenc e w as hi ghly rel e v a nt to the sole i ssu e in the tr i al, Curtis’s intent. In short, the court di d not abus e i ts di screti on by allowing the ev i dence.
T rue, the di stric t court could hav e explain ed i ts reasonin g more fu lly on the r ecord. As w e sai d in Gomez, the c ourt mus t, in ev ery case, “asses s whethe r the probat i v e v alue of the ot he r-a ct evidenc e i s sub stanti ally outw ei ghed by the ris k of unfai r prej udi ce and may exclude the evidenc e under Rule 403 i f the ris k i s too gr eat.” 763 F .3d at 860. Gomez w as deci ded after Curtis’s tr i al and so the di stric t court di d not hav e the benefi t of i ts reasonin g. The court di d not expr essly engage in that analysi s on the recor d here, but any err or w as harmless. SeeNo. 14-2069 13
Fed. R. Crim. P

. 52(a); Gomez, 763 F .3d at 863 (evid entiary err or s
are subject to rev i ew for harmlessn ess)

. The test for harml ess
err or i s whether

, in the m ind of the av erag e juro r , the prosecu

ti on 's c a s e w ould hav e been si gni fi cantly less persuasi v e had the i mproper evidenc e been excluded. Simon , 72 7 F

. 3 d a t 6 97; United S ta tes v
. Klebig, 600 F .3d 700, 722 (7th Ci r
. 2009). The government produced sub stanti al evidenc e that C ur t i s knew he w as obli gate d to pay hi s taxe s, had the money to do so, and chose to
use that money to pay for other thi ngs instead. The payro ll tax evidenc e w as l o st in a sea of far more damning evidenc e demonstrating Curtis’s intent. For ex a mple, duri ng the three charged y ears, Curt i s had adjus ted gr oss income of more than $1.4 mi lli on but pai d none of i t tow ard hi s corr esponding t a x li abi li ties of approx i mately $378,000 for that same tim e period. Instead, he spent more t han $1.1 mil li on on per sonal expenses that inclu ded $14 2 , 9 1 6 in life in surance premiu ms; $43,266 for

a new Lincoln Navigator luxury SUV; $17,730 w o r t h of wine; $32,775 in donations and poli tic al cont rib uti ons; $6,945 on jew elry ; and $10,891 on hi s pets. Presented wi th these expendi

tur e s and a li st that also inclu ded gifts, fi rear ms, restaurant s, department stor es, and othe r purely di screti onary spending, any jury w ould conclu de that Curtis had the m oney to pay hi s taxe s (at least in part) and si mply chose not to. The g o ver nment ’s case w ould hav e been equally persuasi v e wi thout t he payro ll tax ev i dence. Any err or w as therefor e harmless. B. W e can di spens e wi th C ur tis ’s remain ing i ssu e in short

or der

. He asked the court to modi fy the patter n jury instructi on for wi llful ness to inclu de a r e q uir e ment that the government prove that he acted wi th a bad mo t ive or purpose. He also14 No. 14-2069
asked for an instructi on reg ardin g hi s defense of goo d fai th. The court gav e the requested goo d fai th instructi on but declined to modi fy the patter n instructi on. And the court w as corr ect to do

so. The Supreme Court has expr essly rej ected a formulation of the wi l l fuln ess instructi on that requires anythin g more than proo f of a v oluntary

, int e nti onal violati on of a known legal duty

. Pomponio , 429 U.S. at 12. The Court in fact rej ected a court of appeals holding that the cri minal tax statute re q uired “a finding o f a bad purpose or evil motiv e.” 429 U.S. at 11. Mor e recently , in Cheek , the Supreme Court again stated a formulation of the meaning of “wi llful ness ” that required “the Gov ernment to prove that the law i mposed a duty on the defendant, that the defendan t k ne w of thi s duty , and that he v oluntarily and intentionally violated that duty .” Cheek , 498 U.S. at 201. It i s not
necess ary for t he government t o prove mor e than thi s and the di stric t court w as corr ect to rej ect Curtis’s propo sed instructi on. In any case, the court’s goo d fai th i nstructi on w as su ffi ci ent to address hi s asserted defense. As the instr ucti ons giv en were a
corr ect statement of the law , t he court di d not err
. Simon , 727 F .3d at 698; Joshua, 648 F .3d at 554. AFF IRM ED.