2003 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

1-3-2003

USA v. Gambone

Precedential or Non-Precedential: Precedential

Docket 01-4424

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Recommended Citation

"USA v. Gambone" (2003). 2003 Decisions. Paper 830.

http://digitalcommons.law.villanova.edu/thirdcircuit_2003/830
PRECEDENTIAL 

 Filed January 3, 2003 

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT 

Nos. 01-4424 and 01-4427 

UNITED STATES OF AMERICA 

v. 

JOHN A. GAMBONE, SR. 

a/k/a JACK 

John A. Gambone, Sr., 

 Appellant in No. 01-4424 

UNITED STATES OF AMERICA 

v. 

ANTHONY GAMBONE 

a/k/a TONY 

Anthony Gambone, 

 Appellant in No. 01-4427 

On Appeal from the United States District Court 

for the Eastern District of Pennsylvania 

(D.C. Crim. Nos. 00-00176-1 and 00-00176-2) 

District Judge: Honorable John R. Padova 

Argued October 17, 2002 

Before: ROTH and GREENBERG, Circuit Judges, 

and WARD, District Judge* 

_________________________________________________________________ 

* Honorable Robert J. Ward, Senior Judge of the United States District 

Court for the Southern District of New York, sitting by designation. 

 

(Filed: January 3, 2003) 

 Patrick L. Meehan 

 United States Attorney 

 Robert M. Falin (argued) 

 Assistant United States Attorney 

 Laurie Magid 

 Deputy United States Attorney for 

 Policy and Appeals 

 Robert A. Zauzmer 

 Assistant United States Attorney 

 Senior Appellate Counsel 

 Kristin R. Hays 

 Assistant United States Attorney 
 615 Chestnut Street, Suite 1250 

 Philadelphia, PA 19106 

 Attorneys for Appellee 

 Donald J. Goldberg (argued) 

 Eric W. Sitarchuk 

 Meredith S. Auten 

 Ballard, Spahr, Andrews & Ingersoll 

 1735 Market Street, 51st Floor 

 Philadelphia, PA 19103 

 Attorneys for Appellant John A. 

 Gambone, Sr. 

 Thomas A. Bergstrom 

 138 Davis Road 

 Malvern, PA 19355 

 Attorney for Appellant Anthony 

 Gambone 

OPINION OF THE COURT 

GREENBERG, Circuit Judge. 

I. FACTUAL AND PROCEDURAL HISTORY 

This matter comes on before this court on appeals from 

judgments of conviction and sentence entered in the district 

 2 

 

court on December 13, 2001. Defendants-appellants, John 

A. Gambone, Sr. ("Jack") and Anthony Gambone ("Tony"), 

are brothers who owned and operated a construction 

business, known since 1983 as Gambone Brothers 

Organization, Inc. ("Gambone Brothers"). The indictment 

accused them of engaging in a three-part scheme over the 

course of 20 years, the purpose of which was to file false 

personal income tax returns and to aid and assist certain 

of their employees and subcontractors in doing the same. 

Although there are other Gambone defendants in this case, 

we sometimes refer to Jack and Tony exclusively as the 

Gambones as they are the only appellants. 

The first prong of the conspiracy, called the "cashskimming" prong in the indictment, involved a systematic 

plan to receive payment from home purchasers for certain 

"extras" in cash, not to record those payments on Gambone 

Brothers’ books, and to hide this additional income from 

the IRS by buying United States savings bonds or simply by 

holding the cash in a safe or a nightstand.1 

Prong two of the conspiracy, called the "overtime/expense 

reimbursement/ ‘off-payroll’ fraud" prong in the indictment, 

charged that the Gambones used three methods to avoid 

reporting to the IRS significant wages paid to their 

employees with the intention that the employees would do 
the same. The first and most common method was to pay 

the employees "straight time" rather than time and one-half 

for all work beyond 40 hours per week and to pay the 

employees with two separate checks, one for 40 hours paid 

from a payroll account and a second for overtime paid from 

a nonpayroll account.2 The purpose of this scheme was to 

avoid the requirements of the Fair Labor Standards Act and 

to avoid paying the employer’s share of Social Security and 

Medicare ("FICA") taxes by not reporting the overtime wages 

to the IRS and by not withholding income or FICA taxes. 

_________________________________________________________________ 

1. We point out that even though it might seem strange that a person 

would buy United States savings bonds with unreported income, the 

Gambones did so as the income from such bonds need not be reported 

to the IRS until they are cashed or mature. 

2. At least at certain times Gambone Brothers used an outside payroll 

service to pay straight time wages. 

 3 

 

The indictment also alleged that the Gambones, either 

themselves or through their personnel employees, informed 

new employees that Gambone Brothers would not report 

overtime wages and encouraged those employees to do the 

same. The second method used to avoid reporting wages 

involved disguising certain employees’ raises as expense 

reimbursements, which are not reported as income. The 

third method involved paying some employees partially or 

completely "off-payroll," that is, paying them from 

nonpayroll, operating accounts rather than from payroll 

accounts. 

To conceal all three types of payments the Gambones had 

their finance department prepare and file numerous 

fraudulent tax documents, including false W-2 forms to be 

attached to employees’ personal income tax returns 

reporting regular wages but failing to report overtime 

wages, expense reimbursements, and off-payroll wages. The 

government estimated that the Gambones aided and 

assisted their employees in failing to report at least $4.5 

million in overtime wages and hundreds of thousands of 

dollars in wages disguised as expense reimbursement and 

off-payroll payments. 

The third prong of the conspiracy, called the "unreported 

subcontractor payments" prong in the indictment, charged 

that the Gambones failed to issue and file IRS forms 1099 

for millions of dollars worth of services rendered by 

subcontractors. In doing so, the Gambones aided and 

assisted some subcontractors in failing to report 

substantial income. 

A grand jury returned a 67-count indictment against the 

Gambones and their co-defendants, Sandra Lee Gambone 

("Sandy"), William Murdock, John Gambone, Jr. ("Johnny"), 

and Robert Carl Meixner on April 6, 2000. In particular 

Count One charged all defendants with the conspiracy to 
defraud the United States as outlined above, in violation of 

18 U.S.C. S 371. Murdock and Meixner were implicated, 

however, only in the second prong of the conspiracy. Count 

Two charged Jack and Sandy, who are married, with the 

substantive offense of subscribing to their own false 1994 

tax return, in violation of 26 U.S.C. S 7206(1). Count Three 

against Tony, Count Four against Murdock, Count Five 

 4 

 

against Johnny, and Count Six against Meixner similarly 

charged each individual with subscribing to a false personal 

tax return for either the 1993 calendar year (Johnny, 

Murdock, and Meixner) or the 1994 calendar year (Tony). 

Counts Seven through Sixty-Seven charged Jack and Tony 

with aiding and assisting in the preparation of false 

individual income tax returns for 61 employees, in violation 

of 26 U.S.C. S 7206(2). 

After the district court granted Sandy and Johnny a 

severance, the case was tried against the other four 

defendants.3 At the trial each of the defendants moved for 

a judgment of acquittal on all counts against them 

pursuant to Fed. R. Crim. P. 29(a) but the district court 

reserved judgment on these motions pursuant to Fed. R. 

Crim. P. 29(b). On November 17, 2000, the jury returned 

guilty verdicts on all counts against the Gambones except 

for counts Forty-Three and Fifty-Seven. In addition, it 

found Murdock guilty on Counts One and Four and 

Meixner guilty on Counts One and Six. Thus, the jury 

found all defendants guilty on all counts except that it 

found the Gambones not guilty of aiding and assisting two 

of the 61 employees in preparing false individual returns. 

Following the jury verdicts, each defendant renewed his 

motion for a judgment of acquittal and, in the alternative, 

moved for a new trial. On September 4, 2001, the district 

court granted Jack’s motion for judgment of acquittal on 

Count Two, Tony’s motion for judgment of acquittal on 

Count Three, Murdock’s motion for judgment of acquittal 

on Count Four, and Meixner’s Motion for Judgment of 

Acquittal on Count One.4 The court denied all the 

defendants’ motions on all other counts. See United States 

v. Gambone, 167 F. Supp. 2d 803 (E.D. Pa. 2001). All 

defendants except Meixner therefore were acquitted of the 

_________________________________________________________________ 

3. The district court denied the defendants’ pretrial motion to dismiss 

count one of the indictment. See United States v. Gambone, 125 F. Supp. 

2d 128 (E.D. Pa. 2000). 

4. Although the September 4 order accompanying the court’s opinion 

mistakenly granted Murdock’s motion as to Count Three, in which he 

was not charged, that error was corrected by order of September 6, 

2001. 

 5 

 
substantive offense of filing a false individual tax return in 

either 1993 or 1994 but the court did not disturb any of 

the convictions on the conspiracy count except Meixner’s 

and did not disturb the Gambones’ convictions on 59 

counts of aiding and assisting in the preparation of false 

individual tax returns. Moreover, the court denied the 

defendants’ motions for a new trial. The court subsequently 

sentenced the Gambones to custodial terms of 37 months 

on Count One and custodial terms of 36 months on all 

other counts, all terms to run concurrently, ordered them 

to pay fines of $75,000 and to pay the IRS $3,000,000. In 

addition, the court imposed terms of supervised release 

upon the Gambones’ completion of their custodial terms 

and ordered them to pay certain costs of the prosecution. 

They then appealed.5 We have jurisdiction under 28 U.S.C. 

S 1291. 

II. DISCUSSION 

A. Sufficiency of the Evidence 

1. Standard of Review 

We review the "sufficiency of the evidence . . . in a light 

most favorable to the Government following a jury verdict in 

its favor." United States v. Antico, 275 F.3d 245, 260 (3d 

Cir. 2001) (citing Glasser v. United States, 315 U.S. 60, 80, 

62 S.Ct. 457, 469 (1942)). "We must sustain the verdict if 

there is substantial evidence, viewed in the light most 

favorable to the government, to uphold the jury’s decision. 

. . . We do not weigh evidence or determine the credibility 

of witnesses in making this determination." United States v. 

Beckett, 208 F.3d 140, 151 (3d Cir. 2000) (citations 

omitted). In making our review we examine the totality of 

the evidence, both direct and circumstantial. See Antico, 

275 F.3d at 260. We must credit all available inferences in 

favor of the government. See United States v. Riddick, 156 

_________________________________________________________________ 

5. According to the Gambones’ brief, Murdock and Meixner did not 

appeal and, as of the time of the filing of the Gambones’ brief on this 

appeal, the case against Sandy and Johnny had not been tried. The 

Gambones challenge only their convictions and not their sentences on 

this appeal. 

 6 

 

F.3d 505, 509 (3d Cir. 1998). Our review of the district 

court’s interpretation of a statute is plenary. See United 

States v. DeJulius, 121 F.3d 891, 893 (3d Cir. 1997). 

2. Aiding and Assisting Convictions 

We first address the Gambones’ convictions for aiding 

and assisting their employees in the preparation of false 

individual income tax returns in violation of I.R.C. 

S 7206(2). Section 7206(2) provides: 

 Any person who 
 . . . 

 (1) [w]illfully aids or assists 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 required to present such return, affidavit, claim, or 

 document . . . 

 shall be guilty of a felony and, upon conviction thereof, 

 shall be fined not more than $100,000 ($500,000 in 

 the case of a corporation), or imprisoned not more than 

 3 years, or both, together with the costs of prosecution. 

The Gambones advance a two-part argument challenging 

their convictions under section 7206(2). The first step in 

their reasoning raises a purely legal question. Casting their 

conduct as, at most, a scheme to provide false W-2s, they 

argue that the Internal Revenue Code allowed the 

government to prosecute them only under I.R.C. S 7204. 

Section 7204 sets forth a misdemeanor offense for willful 

furnishing of a false W-2 to an employee as follows: 

 In lieu of any other penalty provided by law (except the 

 penalty provided by section 6674) any person required 

 under the provisions of section 6051 [governing an 

 employer’s obligation to issue, inter alia, W-2 forms to 

 employees] to furnish a statement who willfully 

 furnishes a false or fraudulent statement or who 

 willfully fails to furnish a statement in the manner, at 

 7 

 

 the time, and showing the information required under 

 section 6051, or regulations prescribed thereunder, 

 shall, for each such offense, upon conviction thereof, 

 be fined not more than $1,000, or imprisoned not more 

 than 1 year, or both. 

The Gambones argue that this provision’s "in lieu of" 

language indicates that section 7204 provides the exclusive 

penalty for willfully furnishing a false W-2 to an employee. 

They further note that the three-year statute of limitations 

for prosecutions under section 7204 had expired by the 

time the government initiated its case under section 

7206(2). 

The Gambones then argue that inasmuch as the 

government may prosecute a defendant for the willful 

furnishing of a false W-2 to an employee only under section 

7204, the evidence was insufficient to sustain a conviction 

under section 7206(2) as that section requires proof of 

conduct beyond the mere furnishing of false W-2s. They 

contend that they did not take affirmative action with 

respect to their employees’ false tax returns beyond 
furnishing the false W-2s, and that the jury could not 

appropriately consider the furnishing of those W-2s or 

other conduct facilitating it, such as paying money off 

payroll and underreporting on employee time cards, in 

connection with the section 7206(2) charges. The 

Gambones argue that if we remove this evidence from the 

equation there will not be an evidentiary basis for their 

section 7206(2) convictions. 

 a. Exclusivity of section 7204 

As the district court noted, this case presents an issue of 

first impression in this court as we have not interpreted 

explicitly the "in lieu of" language of section 7204, and we 

have not had the occasion to discuss the relationship 

between sections 7204 and 7206(2). See Gambone , 167 F. 

Supp. 2d at 820. The district court, relying primarily on 

United States v. Hughes, Crim. A. No. CR 86-98, 1987 WL 

33806 (N.D. Ohio Nov. 13, 1987), held that "conduct which 

involves, but is not exclusively limited to, the provision of 

false W-2s can be sufficient for a S 7206(2) violation. Thus, 

 8 

 

the mere fact that the provision of false W-2s was a part of 

the case does not mean that a S 7206(2) violation is not 

possible." Gambone 167 F. Supp. 2d at 820. The court thus 

rejected the Gambones’ contention that it should disregard 

entirely the furnishing of the W-2s in assessing the 

sufficiency of the evidence supporting the section 7206(2) 

convictions. Nonetheless, when moving on to examine the 

sufficiency of the evidence, the court found that the 

evidence was sufficient to sustain the section 7206(2) 

verdicts "even excluding consideration of the W-2s 

themselves." Id. at 821. 

In Hughes, the district court concluded that"the simple 

fact of providing, or helping to provide, an individual with 

a fraudulent W-2 is not punishable under S 7206(2) 

because of S 7204’s ‘in lieu of’ provisions." Hughes, 1987 

WL 33806, at *4. The court found, however, that"[a]s long 

as there are other actions violative of S 7206, the fact that 

the defendant may also have provided an individual with a 

false W-2 does not prevent a S 7206 conviction." Id. (citing 

United States v. MacKenzie, 777 F.2d 811 (2d Cir. 1985); 

United States v. Isaksson, 744 F.2d 574 (7th Cir. 1984); 

United States v. Barnes, 313 F.2d 325 (6th Cir. 1963)). 

Having so concluded, the court denied the defendant’s 

motion for judgment of acquittal or for a new trial, finding 

that, "[b]ased on the evidence presented, the jury could 

have found beyond a reasonable doubt that [the defendant] 

additionally counseled [an employee] to understate her 

income on her income tax return, by reporting as income 

only that amount shown on the W-2 and not the additional 

income which she received as ‘expenses.’ " Id. In other 

words, the defendant violated section 7206(2) by going 

beyond merely providing false W-2s and, in fact, counseling 

an employee to understate income. 
The defendant appealed and the Court of Appeals for the 

Sixth Circuit reversed even though it did not find that the 

district court erred in its legal analysis. Rather, the court of 

appeals held that there was insufficient evidence that the 

defendant counseled the employee to understate her 

income, noting that the employee had denied receiving such 

advice. Hughes v. United States, 899 F.2d 1495, 1500-01 

(6th Cir. 1990). The court of appeals did not clarify whether 

 9 

 

section 7206(2) requires proof of actual counseling or 

whether something more than furnishing false W-2s but 

less than actual counseling would support a conviction.6 

Our cases have not been more helpful with respect to the 

issue here than that of the court of appeals in Hughes. In 

a case not involving furnishing of false W-2s, we held that 

"[t]o establish aiding and abetting the filing of a false tax 

return ‘there must exist some affirmative participation 

which at least encourages the perpetrator.’ " United States 

v. Graham, 758 F.2d 879, 885 (3d Cir. 1985) (quoting 

United States v. Buttorff, 572 F.2d 619, 623 (8th Cir. 1978) 

(internal quotation omitted)). In Graham, we held that there 

was sufficient evidence to affirm a defendant’s conviction 

where the defendant, who was a member of a group that 

opposed taxation, set up a Swiss bank account for another 

member and advised him not to pay taxes on the interest 

earned on that account "because the U.S. had no 

jurisdiction over it." Id. Likewise, where a defendant had 

provided false invoices to certain taxpayers as 

documentation of business expenses and advised those 

taxpayers to use those expenses as tax deductions 

improperly, we found sufficient evidence to sustain his 

conviction under section 7206(2). United States v. McCrane, 

527 F.2d 906, 913 (3d Cir. 1975), vacated on other grounds, 

427 U.S. 909, 96 S.Ct. 3197 (1976). 

Finally, other courts of appeals, in cases involving similar 

factual scenarios where defendant employers disguised 

certain wages by issuing paychecks from nonpayroll 

accounts, have affirmed convictions under section 7206(2) 

where the defendants’ conduct included, but apparently 

was not limited to, furnishing false W-2s. See, e.g., 

MacKenzie, 777 F.2d at 820; Isaksson, 744 F.2d at 577-78. 

These courts, however, did not address specifically the 

relationship between sections 7204 and 7206(2). 

The legislative history of section 7204, cited by both 

sides, clearly establishes that Congress intended the "in 

lieu of" language to ensure that the section 7204 penalties 

displaced the more severe penalties in other provisions of 

_________________________________________________________________ 

6. The court of appeals affirmed in part and reversed in part on other 

aspects of the appeal that we need not describe. 

 10 

 
the Internal Revenue Code setting out both felonies and 

misdemeanors. H.R. Rep. No. 2333, 77th Cong., 2d Sess. at 

132 (1942); S. Rep. No. 1631, 77th Cong., 2d Sess. at 172 

(1942) ("These penalties are prescribed in lieu of the penalty 

imposed by S 145 of the Code, and are much less severe 

than those displaced."). Beyond this point, which, in any 

event, the "in lieu of" phrasing of section 7204 itself 

adequately captures, the parties’ citations to section 7204’s 

legislative history are largely inconclusive, inasmuch as 

that history fails to address its relationship to section 

7206(2). 

On the other hand, the timeline of amendments to the 

Code does lend some support to the government’s position 

that evidence of the Gambones’ furnishing of false W-2s can 

be used to support the section 7206(2) convictions. 

Congress enacted section 7204 as I.R.C. S 470(a) in 1942. 

Revenue Act of 1942, Pub. L. No. 77-753, 56 Stat. 798, 892.7 

At that time section 7206(2) already was in place in the 

form of I.R.C. S 3793(b) in the Internal Revenue Code of 

1939, Congress having enacted it in 1924. See Revenue Act 

of 1924, 26 U.S.C. S 1267 (1926). Conduct designed to 

assist an employee in filing a false return therefore already 

was punishable under section 3793(b), while failing to 

furnish a statement required under the Code (although not 

specifically applicable to the W-2 context, inasmuch as 

employers were not yet required to withhold) was 

punishable under I.R.C. S 145(a). Taking the legislative 

history at its word, section 470(a), enacted as part of the 

new withholding regime, was intended to displace the 

penalties under section 145, which set out misdemeanors 

in subsection (a), including for failing to furnish a 

statement, and felonies in subsection (b). There is no 

_________________________________________________________________ 

7. Congress first required employers to withhold employees’ income taxes 

in 1942; the 5% World War II "Victory Tax" on most employees’ gross 

wages was the first vehicle for doing so. Carolyn C. Jones, Class Tax to 

Mass Tax: The Role of Propaganda in the Expansion of the Income Tax 

During World War II, 37 Buff. L. Rev. 685, 694-99 (1989); Peter W. Colby, 

Comment, Federal Withholding on Employee Fringe Benefits for Income 

and Social Security Taxes, 70 Cal. L. Rev. 178, 180-81 & n.19 (1982). 

The following year, Congress amended the Code to make withholding 

applicable to all income tax. Id. 

 11 

 

indication, however, that Congress intended section 470(a), 

now section 7204, to displace the penalty under section 

3793(b). The legislative history therefore lends some 

support to the government’s argument that Congress did 

not intend section 7204 to preclude felony prosecutions of 

conduct involving, but not limited to, furnishing false 

statements. 

Moreover, nothing in the language of either section 7204 

or section 7206(2) or in the relevant legislative history, 

suggests that a jury may not consider the furnishing of 
false W-2s in deciding whether a defendant committed an 

offense under section 7206(2). Read together, these 

provisions stand for the less than remarkable proposition 

that a person who merely furnishes false W-2s is only 

culpable enough to deserve a misdemeanor conviction, 

while a person who goes further and willfully causes a false 

return to be filed is more culpable and is guilty of a felony. 

Thus, although the "in lieu of" language suggests that proof 

of the mere furnishing of false W-2s is insufficient as a 

matter of law to support a section 7206(2) conviction,8 such 

evidence plus any other evidence suggesting a defendant’s 

intent to cause a false return to be filed form a proper 

evidentiary basis for such a conviction. Indeed, MacKenzie 

and Isaksson implicitly applied this principle. 

Thus, the government may prosecute conduct involving, 

but not limited to, furnishing false W-2s to employees 

under section 7206(2). Under Graham, the relevant inquiry 

is whether the defendant engages in "some affirmative 

participation which at least encourages" the employee to 

prepare or present a false return. Graham, 758 F.2d at 885. 

Evidence of such affirmative participation that includes, but 

is not limited to, furnishing false W-2s is sufficient to 

sustain a conviction under that provision.9 Finally, such 

_________________________________________________________________ 

8. Allowing the jury to infer intent to aid and assist from the mere 

furnishing of false W-2s would subject a defendant who had engaged in 

precisely the conduct prohibited by section 7204--no more and no less-- 

to a punishment other than that prescribed by that section, thus 

ignoring the "in lieu of" language. 

9. The Gambones also argue that other conduct ancillary to furnishing 

false W-2s--details such as the preparation of employee time cards, the 

 12 

 

affirmative participation need not rise to the level of actual 

counseling, as the Gambones sometimes seem to suggest, 

as long as it "at least encourages" the preparation or 

presentation of a false return. 

 b. Sufficiency of the Evidence 

Given the foregoing framework, the government presented 

sufficient evidence to sustain the 59 section 7206(2) aiding 

and assisting convictions. To be sure, there was no direct 

evidence that either of the Gambones explicitly counseled 

any of the 59 employees to underreport their income. There 

was, however, ample circumstantial evidence to allow the 

jury to conclude that the Gambones aided and assisted 

them in doing so by encouraging exactly that behavior. 

The essential elements of an offense under section 

7206(2) are (1) that defendant aided, assisted, procured, 

counseled, advised or caused the preparation and 

presentation of a return; (2) that the return was fraudulent 

or false as to a material matter; and (3) that the act of the 

defendant was willful. I.R.C. S 7206(2). See United States v. 
La Haye, 548 F.2d 474, 475 (3d Cir. 1977); see also United 

States v. Hooks, 848 F.2d 785, 788-89 (7th Cir. 1988). 

_________________________________________________________________ 

use of separate, nonpayroll checks for overtime wages, and the extra 

accounting necessary to accommodate a false W-2 scheme--should in 

effect merge with the furnishing of false W-2s, so that evidence of such 

conduct likewise would be insufficient on its own to sustain a section 

7206(2) conviction. Because this position lacks any support in the 

statutory text, legislative history, and applicable caselaw, we reject it. If 

a defendant goes beyond merely furnishing false W-2s, and if the jury 

finds his conduct to constitute affirmative participation that encourages 

employees to file false returns, it may convict him of a felony under 

section 7206(2). The Gambones suggest that, because"every 

fraudulently understated W-2 opens the possibility" of such ancillary 

conduct, in every section 7204 case the facts also would support a 

section 7206(2) conviction. Joint Br. of Appellants at 26. Nevertheless we 

are satisfied that persons who furnish false W-2s may avoid felony 

convictions so long as they either eschew such ancillary conduct 

altogether, or at least engage in such conduct in such a way that a jury 

does not believe to constitute affirmative participation that willfully 

encourages employees to file false returns. 

 13 

 

There appears to be no dispute as to the falsity of the 

employees’ returns and as to the materiality of the false 

statements. The Gambones challenge the sufficiency of the 

evidence only on the issue of whether they aided or assisted 

the filing of those returns and whether their actions were 

willful. Through the testimony of two controllers of 

Gambone Brothers, Frank Ruser, who worked in that 

position from 1972 to 1981, and Thomas Gaasche, who was 

controller from 1985 until April 2000, the government 

established that there was a scheme to pay employees’ 

overtime wages from nonpayroll accounts, paying"straight 

time," and failing to withhold tax from the overtime wages 

and to disclose those wages to the IRS. Thus, when Ruser 

expressed his concerns about how overtime was paid, Tony 

Gambone responded, "It’s my business, stay out of it." Id. 

at 662. Similarly, Gaasche testified: 

 I was probably only working there, you know, six to ten 

 weeks when I--you know, looking at payroll, and I 

 realized at that point everything going through payroll 

 was just a flat 40 hours. And, you know, I thought it-- 

 I don’t like this, this seemed improper to me. And I 

 went to Jack Gambone and I went in his office and I 

 said, Jack, I don’t--I don’t think we’re handling payroll 

 right, I don’t know why we’re doing this, why is it only 

 showing 40 hours and then the other is on a separate 

 check? And I don’t recall verbatim what he said, but 

 basically he said, well, this is their mad money, you 

 know, they take one check home and the old lady don’t 

 have to know about the other one. And I said--at that 

 time I said, well, I don’t know why you’d stick your 

 neck out for them and help them hide money from 

 their wives. I said, you know, if it gets audited you’re 

 probably going to wind up paying both your share and 
 their share of the social security and Medicare taxes. 

Id. at 1731-32. 

Notwithstanding the controllers’ concerns the practice 

persisted. In 1995 the IRS audited Gambone Brothers 

which then for a short time began paying overtime through 

payroll. After some time, however, Gaasche confronted Tony 

Gambone about what he suspected was a false expense 

reimbursement, and Gambone responded, "[I]t’s my 

 14 

 

company. I can pay whoever I want however I want and as 

much as I want." Id. at 1828. The government also 

produced the testimony of four employees who worked 

under the controllers in the accounting department, a 

receptionist who worked at Gambone Brothers for over 20 

years, and 20 field workers and supervisors, all of whom 

testified that they received overtime wages off payroll. 

Moreover, the witnesses were aware that Gambone Brothers 

neither withheld tax from nor reported those wages, and 

they understood that they should not report those wages to 

the IRS either. Many witnesses also testified that Gambone 

Brothers gave employees who were to receive raises the 

option of having the money paid on or off payroll. 

The Gambones suggest that the testimony of these 25 

employees is insufficient to prove that they willfully aided or 

assisted the preparation of false returns because none of 

the employees testified that the Gambones directly 

counseled them to do so. As we discussed above, however, 

the government did not have to prove that the Gambones 

directly counseled employees to file false returns. Rather, it 

was sufficient for the government to demonstrate that they 

engaged in some affirmative conduct that at least 

encouraged them to do so. The Gambones contend that 

their role was limited to providing false W-2s and that they 

had no interest in whether or not the employees reported 

their overtime wages. The overwhelming weight of the 

evidence, however, establishes that this is not an accurate 

characterization of the Gambones’ conduct. Given the 

testimony of all of the witnesses just mentioned, there 

plainly was sufficient circumstantial evidence to support a 

finding that the Gambones engaged in a long-running 

scheme to encourage their employees to file false returns. 

The Gambones not only furnished false W-2s to scores of 

employees, but also created false employee time cards, 

engaged in intricate and deceptive bookkeeping intended to 

mask underreported income, and issued checks to 

employees from nonpayroll accounts for unreported 

overtime wages. 

The parade of employees testifying that they understood 

the Gambones’ actions as a sign that they should not 

report their overtime wages is evidence in itself that the 

 15 

 
Gambones, through this pervasive, ongoing scheme, took 

affirmative steps to encourage the employees to file false 

returns.10 Furthermore, some witnesses testified that agents 

of the Gambones, including John Zangari, a superintendent 

involved in hiring new employees, and certain foremen 

informed them more specifically that Gambone Brothers’ 

"straight-time" policy meant that they should not worry 

about reporting overtime income. When pressed further, 

Zangari told these employees that Gambone Brothers would 

take care of any problems that might arise out of 

employees’ failure to report overtime income. One employee 

testified Zangari told him that he should quit if he did not 

want to be paid under the "straight-time" system, and 

Zangari testified that when he told Jack and Tony Gambone 

about another employee’s request that taxes be withheld 

from all of his pay, the Gambones told him the employee’s 

only options were to receive a "straight-time" check, not to 

work overtime at all, or to quit. Finally, Zangari, who, from 

1989 to 1993, was the company’s "overall superintendent," 

overseeing all jobs performed during that time period, 

testified that he informed all newly hired employees upfront of the "straight-time" policy, and that he spoke daily 

with Tony Gambone, mentioning in their discussions every 

new employee hired. 

Cumulatively, this evidence supports an inference that 

the Gambones, either themselves or through their agents, 

encouraged employees not to report overtime income. 

Employees were informed that Gambone Brothers would 

pay straight time for overtime, not report overtime income, 

and take care of any problems that might arise. As a result, 

some employees testified that they felt obligated not to 

report overtime income for fear of blowing the whistle on 

Gambone Brothers or on their fellow employees. The 

evidence supports the inference that the Gambones 

intended exactly that result, inasmuch as inconsistent 

reporting would have pointed to their own underreporting, 

_________________________________________________________________ 

10. Curiously, the Gambones appear to concede that there was evidence 

supporting this inference. Joint Br. of Appellants at 26 ("There was also 

evidence enough to conclude that the Gambones intended to make it 

possible for their employees not to report all of their wage income by 

issuing false W-2s, and that some employees so understood it."). 

 16 

 

which they had taken great pains to hide by creating false 

employee time cards and manipulating the company’s 

books. In any event, although there was little evidence 

suggesting that the Gambones explicitly advised employees 

to file false returns, there is ample circumstantial evidence 

showing that they took affirmative steps to encourage them 

to do so. Accordingly, a reasonable jury could have 

concluded that the Gambones knowingly aided and assisted 

in the preparation of tax returns of 59 employees that 

contained materially false statements and, thus, the 

evidence supported the convictions for violations of section 
7206(2). 

3. Conspiracy Convictions 

To sustain its burden of proof on the crime of conspiracy 

to defraud the United States, the government had to prove: 

(1) the existence of an agreement; (2) an overt act by one of 

the conspirators in furtherance of the objective; and (3) an 

intent on the part of the conspirators to agree as well as to 

defraud the United States. See United States v. Rankin, 870 

F.2d 109, 113 (3d Cir. 1989) (citing United States v. Shoup, 

608 F.2d 950, 956 (3d Cir. 1979)). The indictment 

described three ways in which the Gambones conspired to 

defraud the United States by: skimming cash from 

Gambone Brothers and failing to report it as income on 

their own personal returns; paying and not reporting 

employee income from overtime wages and aiding and 

assisting those employees in filing false returns; and not 

reporting payments to subcontractors and therefore aiding 

and assisting those subcontractors in their failure to report 

that income. 

We will affirm the convictions as long as we find that 

there was sufficient evidence with respect to one of the 

three alleged prongs of the conspiracy. See United States v. 

Syme, 276 F.3d 131, 144 (3d Cir. 2002) (citing Griffin v. 

United States, 502 U.S. 46, 49-50, 112 S.Ct. 466, 469-70 

(1991)). The evidence discussed above with respect to the 

substantive convictions under section 7206(2) also 

supports convictions under the second prong of the 

conspiracy count. In particular, that evidence allowed a 

jury to conclude that the Gambones (1) had an agreement, 

the purposes of which were to avoid paying their share of 

 17 

 

social security and Medicare taxes and to encourage 

employees to go along with the scheme by filing false tax 

returns, (2) committed a number of overt acts in 

furtherance of those objectives by furnishing false W-2s, 

falsifying employee timecards, paying overtime wages offpayroll, and engaging in deceptive bookkeeping, and (3) 

intended both to agree to defraud and to defraud the United 

States. There was therefore sufficient evidence to sustain 

the conspiracy convictions. 

The evidence was sufficient to sustain convictions for the 

cash skimming conspiracy as well. Gaasche testified that 

Gambone Brothers received payments predominantly by 

check, and that the largest of the infrequent cash payments 

he recalled seeing when he was controller was 

approximately $3300. Three home purchasers testified that 

they delivered cash in payment for extras--respectively 

$10,750 in 1995, $50,000 in 1994, and a total of $105,805 

in 1994 and 1995. None of these cash payments were 

recorded on Gambone Brothers’ books. Furthermore, 

Robert Sylvester, Jack Gambone’s brother-in-law, testified 

that he resided with the Gambones for 20 years and that he 

frequently observed Jack Gambone in possession of sums 
of cash. He testified that Jack would tell his wife, Sandra, 

to hide the cash until she could use it to buy savings 

bonds, which, Jack told Sylvester, were a good vehicle for 

hiding cash inasmuch as the income from the bonds is not 

reported to the IRS until they are cashed. 

Sylvester also testified that he once saw Jack in 

possession of $30,000 in cash, and that on another 

occasion he accompanied Sandra to the bank, where she 

purchased $60,000-70,000 in savings bonds. When 

Pennsylvania state police officers executed a search warrant 

at Jack’s house on August 25, 1994, they located $60,000 

in a safe and $12,000 in Jack’s nightstand. When a federal 

search warrant was executed on December 6, 1995, 

$65,815 was seized from the safe, of which $30,000 

belonged to Sylvester. Bank records revealed that Sandra 

paid a total of $62,750 in cash to purchase savings bonds 

between June 24, 1994, and July 21, 1995. Moreover, 

Gaasche testified that in 1995 Jack told him that the FBI 

had been "snooping around," and that he should record 

 18 

 

$150,000, which Jack had received and split with Tony, on 

the company’s records. Taken together, this evidence is 

sufficient to sustain a finding by the jury that Jack and 

Tony Gambone conspired to defraud the United States by 

skimming cash from Gambone Brothers and failing to 

report that cash on their personal income tax returns. 

By discussing the evidence only on the first two prongs of 

the conspiracy indictment we do not imply that the 

evidence did not support a conviction on the basis of the 

third prong. Rather, we do not find it necessary to discuss 

that evidence. We do note, however, that there was 

substantial evidence to support it. 

B. Improper Remarks During Rebuttal 

1. Standard of Review 

The Gambones argue that they are entitled to new trials 

by reason of the prosecutor’s improper statements in her 

rebuttal closing argument. We make a harmless error 

analysis when deciding whether a new trial is warranted 

because of improper remarks made by the prosecutor 

during closing arguments. See United States v. Zehrbach, 

47 F.3d 1252, 1265 (3d Cir. 1995) (en banc). "The harmless 

error doctrine requires that the court consider an error in 

light of the record as a whole, but the standard of review 

depends on whether the error was constitutional or nonconstitutional. . . . [N]on-constitutional error is harmless 

when ‘it is highly probable that the error did not contribute 

to the judgment.’ . . . ‘High probability’ requires that the 

court possess a ‘sure conviction that the error did not 

prejudice’ the defendant." Id. (citations omitted). If the error 

was constitutional, the court may affirm "only if the error is 

harmless beyond a reasonable doubt." United States v. 

Molina-Guevara, 96 F.3d 698, 703 (3d Cir. 1996). 
2. Analysis 

In opening statements, the prosecutor set forth the 

evidence the government planned to introduce to 

corroborate Sylvester’s testimony regarding the Gambones’ 

plot to skim cash from the company and to hide that cash 

by purchasing savings bonds: 

 19 

 

 And later, based on . . . information [provided by 

 Sylvester], search warrants were executed, . . . and 

 guess what, they corroborated what Mr. Sylvester said. 

 A year later in ‘95 . . . over $65,000 cash and almost 

 a million dollars face value savings bonds were found 

 in a safe in Jack Gambone’s house. And you’ll hear 

 how many of those savings bonds were purchased with 

 cash from a bank representative. 

J.A. at 184. Later in the trial, however, the court excluded 

evidence of the bonds because the government was unable 

to lay a foundation for admission of any but a small 

fraction of the bonds ($62,750, as discussed above) by 

showing that they were purchased with cash. 

In his closing, Thomas A. Bergstrom, counsel for Tony 

Gambone, after reviewing impeachment evidence 

concerning Sylvester’s incentive to lie to obtain a lesser 

sentence for a drug conviction, raised the bond issue: 

 And I’m going to tell you this because part of me says 

 stay away from it, Bergstrom, but part of me says 

 you’ve got to know, because you heard it in the 

 Government’s opening argument. They came in front of 

 you and argued to you, three and a half weeks ago, 

 that there’s a million dollars in bonds. Well, guess 

 what? There isn’t a million dollars in bonds. They 

 didn’t show you a million dollars in bonds at all. They 

 showed you some bonds that were purchased between 

 June of ‘94 and July of ‘95. My recollection tells me 

 those bonds totaled about $65,000. . . . So, you know, 

 the Government had their moment here. They . . . 

 opened with, the million dollars in bonds that they 

 opened with, and that they haven’t been able to prove 

 . . . . 

Id. at 3143-44. In rebuttal, the prosecutor, discussing the 

cash-skimming allegation, responded: 

 It’s all the money over all those other years. And again, 

 they want to hide behind the fact that there’s not a 

 paper trail of cash. And they want to point their finger 

 at Mr. Sylvester and they want to bring up that whole 

 thing about the bonds. Well, you know, ladies and 

 gentlemen, Judge Padova told you before Ms. Winters’ 

 20 

 
 opening that openings were about what the 

 Government expected the evidence to show. And you 

 saw that throughout this trial, various objections were 

 made and Judge Padova would rule on them as he saw 

 fit and you saw that evidence was excluded. So, if 

 there’s things we’ve said we were going to prove that we 

 didn’t, don’t hold it against us. You heard the 

 objections they made. 

Id. at 3163-64. 

At that point, Bergstrom objected. The court overruled 

the objection, stating that he would charge the jury"on 

that subject." The jury instructions, however, included only 

general statements as to the burden of proof, the fact that 

the defendants need not produce any evidence, the manner 

of ruling on objections according to the rules of evidence, 

and the fact that statements and arguments of counsel are 

not evidence. The court did not give a specific curative 

instruction with respect to the prosecutor’s remarks. 

The parties do not dispute that the prosecutor’s remarks 

were improper.11 In United States v. Mastrangelo, we 

outlined three factors to consider in determining whether 

improper comments are prejudicial: the scope of the 

comments within the context of the entire trial, the effect of 

any curative instructions given, and the strength of the 

evidence against the defendant. 172 F.3d 288, 297 (3d Cir. 

1999); see also United States v. Zehrbach, 47 F.3d at 1265. 

_________________________________________________________________ 

11. The government appears to have abandoned an argument it raised in 

the district court, that the "invited error" doctrine should apply. That 

doctrine "teaches that where a prosecutorial argument has been made in 

reasonable response to improper attacks by defense counsel, the unfair 

prejudice flowing from the two arguments may balance each other out, 

thus obviating the need for a new trial." United States v. Pungitore, 910 

F.2d 1084, 1126 (3d Cir. 1990) (citing United States v. Young, 470 U.S. 

1, 12-13, 105 S.Ct. 1038, 1045 (1985)). The doctrine does not apply, 

however, where defense counsel’s attacks are proper,"vigorous 

advocacy." Molina-Guevara, 96 F.3d at 705. As the district court found, 

defense counsel did nothing improper by pointing out that the 

government did not prove every fact alleged in the indictment or raised 

in opening statements. The government has not advanced the invited 

error theory on appeal. 

 21 

 

The third factor, the strength of the evidence against the 

Gambones, weighs in favor of the government. It should be 

noted at the outset that the substance of the prosecutor’s 

remarks establishes at most the purchase of bonds, not 

illegal bond acquisition. Nevertheless, any prejudicial effect 

from the prosecutor’s remarks would go to evidence of 

cash-skimming, the first prong of the conspiracy count. The 

government needed to prove only one prong in order to 

establish a conspiracy, and the district court found that 

two other prongs were proven. Further, the jury had the 
witness testimony of Robert Sylvester upon which to base 

a prong one verdict, and we have held that probative 

evidence on the same issue as improper remarks may 

mitigate prejudice stemming from those remarks. Gambone, 

167 F. Supp.2d at 827; see United States v. Helbling, 209 

F.3d 226, 242 (3d Cir. 2000) ("[A]lthough the prosecutor’s 

comments may have been a pointed assertion of Helbling’s 

guilt, the characterizations were related to the charges 

contained in the indictment which the evidence presented 

later did in fact establish. Accordingly, we find prejudice to 

be lacking."). 

Similarly, the first factor, the scope of the improper 

comments within the context of the whole trial, weighs in 

favor of the government. Not only was the Sylvester 

testimony presented as evidence of cash-skimming, the 

government successfully introduced evidence concerning 

approximately $65,000 in bonds to corroborate Sylvester’s 

testimony.12 Although this amount falls short of a million, 

_________________________________________________________________ 

12. The Gambones argue that the effects of the prosecutor’s comments 

seeped well beyond the confines of the cash-skimming prong, infecting 

the entire trial with unsupported, "jury-arousing" allegations. They argue 

that the prosecutor’s use of the word "objections" was meant to refer to 

the over 200 defense objections sustained during the trial: "[T]he jury 

simply could not have understood the government’s egregious remarks 

as restricted to the prong 1 conspiracy. The explicit references to other 

excluded evidence could only lead the jury to conclude that there was all 

sorts of evidence of the defendant’s guilt which was being kept from 

them by the defense objections." Joint Br. of Appellants at 42-43. We 

reject this argument, which makes ambitious use of the prosecutor’s 

pluralization of the word "objection" when we consider it in the context 

of the rebuttal argument as a whole. Defense counsel only mentioned the 

bonds when discussing Sylvester’s credibility and testimony concerning 

the cash-skimming scheme, and the government only referred to defense 

"objections" while discussing this same point. 

 22 

 

as a legal matter the value of the bonds is not a critical 

factor in determining whether there was an unlawful 

conspiracy. Further, the prosecutor’s objectionable 

comment amounts to less than half of a page out of over 

3200 pages of trial transcript prior to jury deliberations. It 

represented only a fleeting moment in a four-week trial, in 

which the court sustained more than 200 objections by the 

defendant. 

Thus, the district court was correct to distinguish this 

case from United States v. Mastrangelo, 172 F.3d 288, and 

Molina-Guevara. In Mastrangelo, the parties had stipulated 

that the defendant "had the chemical background to know 

the ingredients and equipment necessary to make 

methamphetamine," although the defendant had refused to 

stipulate that he knew how to make the drug. Id . at 295. In 

his closing, the prosecutor remarked both that the 

stipulation suggested that the defendant "knew . . . how to 

make methamphetamine" and that there was no evidence of 
anyone else in the conspiracy knowing how to make 

methamphetamine. Id. at 296. We held that these 

statements were improper because they mischaracterized 

the evidence in the record and impermissibly shifted the 

burden to the defendant to produce exculpatory evidence, 

influencing the case outcome. Id. at 296-97. 

The Gambones argue that the prosecutor’s statements 

impermissibly shifted the burden of proof by "telling the 

jury to hold any gaps in the evidence against the 

defendants." Joint Br. of Appellants at 41. We reject this 

argument as the court made clear in its charge that the 

burden of proof throughout the case remained with the 

government and, in any event, even without the court’s 

charge we are satisfied that the prosecutor’s statements 

would not have had the effect that the Gambones suggest. 

In this regard, we point out that Mastrangelo is 

distinguishable as the prosecutor’s remarks here at most 

explained the reason for the government’s failure of proof 

and thus did not imply that the Gambones had any 

obligation to produce exculpatory evidence. Moreover, there 

was substantial evidence to support all the prongs of the 

conspiracy count including witness testimony about cashskimming to which the prosecutor’s statements did not 

relate. 

 23 

 

Similarily, Molina-Guevara is distinguishable from this 

case. In Molina-Guevara the government called one customs 

agent to testify to the defendant’s involvement in a drug 

conspiracy but chose not to call a second agent who also 

had questioned the defendant. After counsel for the 

defendant challenged the witness’ credibility during his 

closing argument, the prosecutor suggested during rebuttal 

that counsel for the defendant did not call the second agent 

to testify because that agent would have corroborated the 

testimony of the first agent. 96 F.3d at 703. In MolinaGuevara, the prosecutor’s comments about the credibility of 

government agents was influential of case outcome, as it 

determined the crucial issue of whether defendant was 

involved in a drug conspiracy. Id. at 705. In this case, other 

evidence established the conspiracy. 

Thus, the first and third factors weigh very strongly in 

the government’s favor. As a result, even though no specific 

curative instruction was provided to the jury, we hold that 

the error was harmless beyond a reasonable doubt, and the 

Gambones are not entitled to a new trial by reason of the 

prosecutor’s comments. Accordingly, we need not determine 

whether the comments constituted constitutional or 

nonconstitutional error, as the higher standard is met. 

C. Prejudicial Spillover 

"Generally, invalidation of the convictions under one 

count does not lead to automatic reversal of the convictions 

on other counts." United States v. Pelullo , 14 F.3d 881, 897 

(3d Cir. 1994). "[P]rejudicial spillover analysis under Pelullo 
begins by asking whether any of the evidence used to prove 

the reversed count would have been inadmissible to prove 

the remaining count (i.e., whether there was any spillover of 

inadmissible evidence). If the answer is ‘no,’ then our 

analysis ends, as the reversed count cannot have 

prejudiced the defendant." United States v. Cross, 308 F.3d 

308, 318 (3d Cir. 2002). If there was any spillover, we must 

ask whether the error was harmless, that is, whether it is 

highly probable that the error did not prejudice the jury’s 

verdict on the remaining counts. Id. at 318-19. 

The Gambones’ arguments on this issue center on the 

assertion that they also advanced with respect to their 

 24 

 

insufficient evidence argument on the conspiracy count, 

that the government failed to prove that they "engaged in a 

colossal 20 year tax fraud scheme whereby enormous 

amount of cash were skimmed from their business and 

omitted from their tax returns each year from 1975 to 

1995." Joint Br. of Appellants at 49. They argue that the 

evidence of such a plot was "non-existent," a position belied 

by the evidence already summarized. The Gambones 

further suggest that any evidence that was admitted in 

support of the personal tax evasion counts (not only the 

conspiracy count, but also the substantive counts as to 

which the district court granted judgments of acquittal) 

amounted to nothing more than unsupported "juryarousing" accusations that portrayed the defendants as 

massive tax evaders who wished, in the words of the 

prosecutor, "to cheat the IRS in as many ways as they 

could." J.A. at 3050. The Gambones conclude that, because 

those characterizations were, in their eyes, proven to be 

inaccurate, the spillover effect of the jury-arousing 

statements tainted the entire trial, requiring that we reverse 

their convictions on the counts that survived the district 

court’s order partially granting their motions for judgments 

of acquittal. 

As we discussed above in detail, there was sufficient 

evidence to sustain the conspiracy conviction on 

either of the government’s first two theories, that is, 

on the cash-skimming prong and the "overtime / 

expense reimbursement / ‘off-payroll’ fraud" prong. The 

unsubstantiated counts are therefore Counts Two and 

Three charging the Gambones with the substantive offenses 

of subscribing to false personal tax returns for the year 

1994.13 The district court granted the Gambones’ motions 

_________________________________________________________________ 

13. We recognize that the jury found the Gambones not guilty on two of 

the 61 counts charging them with aiding and assisting in the 

preparation of their employees’ false individual income tax returns. It is 

clear, however, that inasmuch as the jury convicted the Gambones on 

the remaining 59 of these counts and the court denied their motions for 

acquittal on those counts, there could not possibly have been a spillover 

effect from the evidence on the two counts on which they were acquitted, 

and the Gambones do not contend otherwise. Rather, they contend that 
reversal of the remaining 59 counts "for insufficiency will also require 

[us] to assess the spillover effect of those invalidated counts." Joint Br. 

of Appellants at 50 n.9. Of course, inasmuch as we are affirming the 

convictions on these counts we need not make the analysis that the 

Gambones believe might be necessary. 

 25 

 

for judgment of acquittal on these charges because the 

government had not introduced evidence that would allow 

the jury accurately to pinpoint exactly when they received 

cash from the company that may have gone unreported. 

Gambone, 167 F. Supp. 2d at 815-17. Nevertheless, the 

district court reasonably found that evidence was presented 

to suggest that the business received substantial amounts 

of cash and that the Gambones received distributions of 

this cash at some point, though it ultimately found that 

there was not evidence suggesting that the Gambones 

received the cash in 1994. Id. 

The evidence introduced to prove Counts Two and Three 

also would have been admissible at a trial limited to the 

remaining valid counts. That evidence, which focused on 

the allegedly false personal tax returns for the year 1994, 

was merely a subset of the evidence supporting the 

government’s allegation that the Gambones engaged in a 

long-running conspiracy to defraud the United States by 

skimming cash and failing to report that cash on their 

personal income tax returns. The Gambones seek to 

characterize that evidence of the false 1994 returns as juryarousing. If that evidence contributed to a picture of the 

Gambones as major tax evaders over the course of 25 

years, however, it is for good reason; that is exactly what 

was alleged in Count One, on which the jury convicted the 

Gambones. Thus, although the evidence introduced to 

support Counts Two and Three, according to the district 

court, would not have allowed a reasonable jury to pinpoint 

the exact year in which the Gambones skimmed cash that 

may have gone unreported, that evidence would have been 

admissible at a trial on the cash-skimming conspiracy 

charge. Our analysis need continue no further. 

Nonetheless, we also note that, inasmuch as there was very 

strong evidence to sustain a conviction under the second 

prong of the conspiracy count, i.e., the underreporting of 

employees’ wages, and to sustain the convictions on the 59 

counts of aiding and assisting in the preparation of 

employees’ false returns, even if there had been 

impermissible spillover, any error would have been 

harmless. Thus, we are satisfied that the Gambones are not 

entitled to new trials predicated on an adverse spillover 

effect from the counts on which they were acquitted. 

 26 

 

D. Jury Instructions 

1. Standard of Review 
The Gambones contend that they are entitled to reversals 

and new trials on the aiding and assisting counts because 

the court’s instructions on those counts were erroneous. 

Inasmuch as they did not object to the instructions at trial, 

we examine the charge for plain error. See United States v. 

Retos, 25 F.3d 1220, 1228 (3d Cir. 1994). Thus, for us to 

grant them relief "[t]here must be an ‘error’ that is ‘plain’ 

and that ‘affects substantial rights.’ Moreover,[Fed. R. 

Crim. P.] 52(b) leaves the decision to correct the forfeited 

error within the sound discretion of the Court of Appeals, 

and the court should not exercise that discretion unless the 

error ‘seriously affect[s] the fairness, integrity or public 

reputation of judicial proceedings.’ " Id. (quoting United 

States v. Olano, 507 U.S. 725, 732, 113 S.Ct. 1770, 1776 

(1993)). "[I]t is a rare case in which an improper instruction 

will justify reversal of a criminal conviction when no 

objection has been made in the trial court." United States v. 

Gordon, 290 F.3d 539, 545 (3d Cir. 2002) (internal 

quotation marks omitted). 

2. Analysis 

The Gambones challenge the portion of the jury charge 

relating to the aiding and assisting counts in which the 

district court stated: "I instruct you as a matter of law that 

if you find beyond a reasonable doubt that a defendant 

willfully furnished, prepared or caused to be prepared false 

and fraudulent documents which the defendant knew 

would be relied on in the preparation of income tax returns 

and would result in returns which were materially false 

. . . then the Government has met its burden of proof in 

this element . . . ." J.A. at 3257. 

When reviewing a jury instruction for plain error, the 

"analysis must focus initially on the specific language 

challenged, but must consider that language as part of a 

whole." Gordon, 290 F.3d at 544. We recognize that if taken 

in isolation the challenged instruction would be erroneous 

as a juror reasonably could interpret it as allowing a 

conviction even though the Gambones merely had provided 

employees with false W-2s without further encouraging 

 27 

 

them to file false tax returns. In context, however, the error 

is not plain. The instruction on this point began: 

 Okay. Now let’s focus on aiding and abetting. What is 

 it, what can it be? Where should your focus be with 

 respect to whether there has been aiding and abetting? 

 First let me state that it is not enough, it is not enough 

 for the Government to establish only that the individual 

 taxpayers listed in Count 7 through 67 received a Form 

 W-2 that did not include all of their income. That’s not 

 enough to make the charge. If that’s all there is, it’s not 

 enough to make the charge. 

 In order for the Government to establish that 
 Anthony Gambone or John Gambone aided and abetted 

 those individuals in filing a false return, you must find 

 first that the return they filed was indeed false. 

 Secondly, that the individual taxpayer in fact had 

 income from Gambone Brothers that was not reported 

 on this tax return; thirdly, that the failure to report was 

 the cause of the unlawful assistance of the defendant; 

 and fourthly, that besides giving the taxpayer an 

 incorrect Form W-2, Anthony or John Gambone did 

 something else to aid that particular taxpayer in filing 

 [a] false return, besides proving an incorrect Form W-2 

 or transmitting an incorrect W-2. 

 And as to each taxpayer, members of the jury, you 

 must affirmatively decide that the Government has 

 proven beyond a reasonable doubt that the defendant 

 did something to aid and assist that taxpayer besides 

 simply and only providing an incorrect W-2 form. And 

 you have heard all of the evidence with respect to 

 everything that was going on. You don’t have to 

 determine what was going on, and then determine 

 whether there was aiding and assisting under the 

 definition as I’ve just given it to you. 

J.A. at 3255-56 (emphasis added). After an additional 

paragraph the court gave the challenged portion of the 

charge. 

In the four paragraphs of the charge that we have 

quoted, the district court made abundantly clear that the 

 28 

 

jury could not convict the Gambones on the aiding and 

assisting counts unless the jury found that they engaged in 

conduct beyond simply providing false W-2s. Thus, even 

though the challenged portion of instruction in itself is not 

consistent with four paragraphs we have quoted, 14 and the 

court’s use of the phrase "as a matter of law," was 

erroneous, in the context of the charge as a whole this 

statement was not prejudicial. Indeed, it is probably for 

exactly that reason that the Gambones’ attorneys did not 

object to the charge at the trial. Furthermore, given the 

substantial evidence pointing to the Gambones’ guilt and 

the overall fairness of the proceedings, any error clearly did 

not affect substantial rights. See Retos, 25 F.3d at 1229 

(stating that, under plain error analysis, the court of 

appeals will exercise its discretion to order correction where 

the defendant is actually innocent or where the error 

seriously affects the fairness, integrity, or public reputation 

of judicial proceedings). The instruction was therefore not 

plainly erroneous and the Gambones are not entitled to 

new trials by reason of it. 

III. CONCLUSION 

For the foregoing reasons the district court properly 

denied the Gambones’ motions for new trials and acquittals 

and the judgments of convictions and sentence entered 
December 13, 2001, will be affirmed. 

A True Copy: 

Teste: 

 Clerk of the United States Court of Appeals 

 for the Third Circuit 

_________________________________________________________________ 

14. The contradiction, however, is not as flat as the Gambones suggest. 

The challenged instruction refers to "false and fraudulent documents" 

rather than specifically to W-2s, the only inappropriate document to 

consider without additional proof of encouragement. 

 29