UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA,

Plaintiff-Appellee,

v. No. 97-4523

SALIH M. ZAMZAM,

Defendant-Appellant.

Appeal from the United States District Court

for the Western District of Virginia, at Abingdon.

James P. Jones, District Judge.

(CR-96-44-A)

Argued: January 29, 1999

Decided: June 4, 1999

Before WIDENER, MURNAGHAN, and HAMILTON,

Circuit Judges.

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Affirmed by unpublished per curiam opinion.

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COUNSEL

ARGUED: William Ray Baldwin, III, HIRSCHLER, FLEISCHER,

WEINBERG, COX & ALLEN, Richmond, Virginia, for Appellant.

Rick A. Mountcastle, Assistant United States Attorney, Abingdon,

Virginia, for Appellee. ON BRIEF: Carl E. McAfee, MCAFEE,

BLEDSOE & ASSOCIATES, P.C., Norton, Virginia, for Appellant.

Robert P. Crouch, Jr., United States Attorney, Abingdon, Virginia, for

Appellee.

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Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c).

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OPINION

PER CURIAM:

Dr. Salih Zamzam, M.D., (Dr. Zamzam) challenges the sufficiency

of the evidence to support the willfulness element of his convictions

on five counts of willfully evading and defeating payment of individual federal income taxes, see 26 U.S.C.§ 7201, and three counts of

willfully making and subscribing under the penalties of perjury materially false federal income tax returns for his incorporated medical

practice, see 26 U.S.C § 7206(1). Dr. Zamzam also makes two evidentiary challenges. For reasons that follow, we affirm all of Dr.

Zamzam's convictions.

I.

Viewing the evidence at trial in the light most favorable to the government, as we must when reviewing a defendant's challenge to the

sufficiency of the evidence to support his convictions, see United

States v. Burgos, 94 F.3d 849, 862 (4th Cir. 1996), the following facts

are established. At all times relevant to this appeal, Dr. Zamzam was

a general medical practitioner and general surgeon in Grundy, Virginia. He practiced medicine through his incorporated medical practice (the Corporation). Dr. Zamzam was the sole shareholder of the

Corporation and a corporate employee.

Dr. Zamzam's wife, Mariam Zamzam (Mrs. Zamzam), was also an

employee of the Corporation. Although she held a nursing degree, she

functioned as the Corporation's office manager. As the office manager, she made the majority of the entries in the Corporation's daily

receipts journal and the majority of the deposits into the Corporation's

operating account at Grundy National Bank (the Corporate Account).

However, Dr. Zamzam himself made some of the entries into the

daily receipts journal and some of the deposits into the Corporate

Account.

Kermit Fuller (Fuller) served as the Corporation and the Zamzams'

personal accountant and income tax return preparer. As the Corpora-

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tion's accountant, Fuller, aided by his staff, prepared the Corporation's payroll, the requisite W-2 forms, and the year-end balance

sheets based upon information provided by the Zamzams.

In late 1992 or early 1993, the United States Internal Revenue Service (IRS) assigned IRS Agent Steve Baker (Agent Baker) to audit

the Corporation's federal income tax return for the year 1991. In early

1993, Agent Baker also began an audit of the Zamzams' joint individual federal income tax return for 1989. This audit was later expanded

to include their individual federal income tax returns for the years

1990 and 1991.

The audits and a later criminal investigation revealed that, during

the course of the calendar years 1990, 1991, 1992, 1993, and 1994,

a total of $668,569 of the Corporation's gross income had been withheld from deposit into the Corporate Account and diverted into the

Zamzams' personal money market account at Grundy National Bank

(the PMM Account). This total amount had been withheld by diverting small amounts on over 1200 separate occasions. The audits additionally revealed that, during the same years, $32,113 in rental

payments made to the Corporation by Tri-City Opticians and Dr.

Charles Owens had been withheld from deposit into the Corporate

Account and diverted into the PMM Account. The diversion scheme

avoided any record of the diverted corporate income in the daily

receipts journal and the Corporation's bank statements. Furthermore,

neither the Corporation's federal income tax returns for the years

1990, 1991, 1992, 1993, and 1994, nor the Zamzams' joint individual

federal income tax returns for the same years disclosed as income any

of the diverted corporate income.

The record established that the Zamzams took many steps to conceal their diversion scheme from the IRS. On July 10, 1991, Dr. and

Mrs. Zamzam transferred $1,100,000 from their personal checking

account at Grundy National Bank (the PC Account) to a foreign bank

account by writing a check on the PC Account in the amount of

$1,100,000 made payable to the British Bank of the Middle East. The

PC Account was funded with money from the PMM Account. Also,

during 1990 and 1991, Mrs. Zamzam transferred a total of $800,000

from the PC Account to several foreign banks ($100,000 to the Swiss

Bank Corporation on July 23, 1990; $300,000 to the Union Bank of

Switzerland on July 25, 1990; and $400,000 to the British Bank of the

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Middle East on November 18, 1991) by the same method. The evidence established that this arrangement resulted in a portion of the

funds sent to these foreign banks consisting of diverted corporate

income.

On December 14, 1992, during the audit of the Corporation's 1991

return, Mrs. Zamzam falsely represented to Agent Baker that all of

the Corporation's income was recorded in the daily receipts journal

and deposited into the Corporate Account. She also failed to disclose

that some of the Corporation's income was deposited into the PMM

Account. On May 7, 1993, during the audit of the individual returns,

the Zamzams falsely represented to Agent Baker that all of the deposits made to the PMM Account that were not reported as taxable

income were either derived from certificates of deposit that were

cashed when maturing, the proceeds of tax-free bonds, or money that

was withdrawn and redeposited.

On July 23, 1993, Dr. Zamzam sent Agent Baker a letter falsely

asserting that all of the funds deposited into the PMM Account had

already been taxed. Dr. Zamzam again failed to disclose that a large

portion of the deposits into the PMM Account consisted of diverted

corporate income.

At some point, the IRS instituted a criminal investigation of the

Zamzams, headed by IRS Special Agent David Gannaway (Special

Agent Gannaway). During an interview by Special Agent Gannaway

of Dr. Zamzam on June 29, 1994, Dr. Zamzam admitted that he made

some of the entries in the daily receipts journal and some of the corporate deposits himself. Dr. Zamzam also falsely represented that all

corporate income was recorded in the daily receipts journal and

directly deposited into the Corporate Account. Dr. Zamzam also

falsely denied that some of the corporate income was deposited into

the PMM Account.

Special Agent Gannaway then interviewed the Zamzams on May

3, 1995. The day following this interview, Dr. Zamzam spoke with

one of his stock brokers, Peter Cholerton (Cholerton), to determine

the value of an investment account held solely in Mrs. Zamzam's

name. Shortly thereafter, Dr. Zamzam directed Cholerton to wire

$364,000 from the account to a foreign account the couple had at the

Swiss Bank Corporation. The Zamzams held a second investment

account in Mrs. Zamzam's name that was managed by another stock

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broker, Edward Gerace (Gerace). During the same time period that

Dr. Zamzam was directing Cholerton to wire the $364,000 to the couple's account at the Swiss Bank Corporation, Dr. Zamzam directed

Gerace to wire $474,000 to the same account at the Swiss Bank Corporation.

On October 10, 1996, a federal grand jury sitting in the Western

District of Virginia indicted the Zamzams on various criminal tax

counts. Counts one through five charged the Zamzams with willfully

evading and defeating a large part of their individual federal income

taxes for the years 1990, 1991, 1992, 1993, and 1994 by filing false

individual income tax returns that omitted substantial amounts of taxable income in violation of 26 U.S.C. § 7201. Counts six through ten

charged Mrs. Zamzam alone with willfully aiding and assisting the

preparation and presentation of materially false and fraudulent federal

income tax returns for the Corporation for the years 1990, 1991, 1992,

1993, and 1994 in violation of 26 U.S.C. § 7206(2). Finally, Counts

eleven through thirteen charged Dr. Zamzam alone with willfully

making and subscribing under the penalties of perjury materially false

federal income tax returns for the Corporation for the years 1991,

1992, and 1994 in violation of 26 U.S.C. § 7206(1).

A jury trial was subsequently held on all counts. The government's

theory at trial was that the Zamzams had diverted $668,569 of corporate income into the PMM account by failing to record varying

amounts of corporate income in the Corporation's daily receipts journal and then depositing those amounts into the PMM account rather

than the Corporate Account without reporting the diverted amounts as

income on either the Corporation's federal income tax returns or the

couple's individual federal income tax returns. By this method of

diversion, the Corporation's daily receipts journal coincided with the

amounts deposited into the Corporate Account, thus making the discovery of the diversion scheme more difficult. The government also

theorized at trial that the Zamzams had diverted $32,113 in corporate

rental income from Tri-City Opticians and Dr. Charles Owens to their

PMM account by depositing the rental income received directly into

the PMM account, failing to record the payments in the Corporation's

daily receipts journal, and failing to report the diverted amounts as

income on either the Corporation's federal income tax returns or their

individual federal income tax returns.

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The Zamzams' theory at trial was that Fuller had instructed Mrs.

Zamzam to withhold amounts from the Corporate Account for deposit

into the PMM account in order to avoid the burden of double taxation,

and she innocently followed his instructions without Dr. Zamzam

ever knowing how their individual or the Corporation's federal

income taxes were computed. Notably, however, during the government's cross examination of Mrs. Zamzam, she admitted that she did

not keep her diversionary activities a secret from anyone, including

Dr. Zamzam.

The jury convicted the Zamzams on all counts. The district court

sentenced Dr. Zamzam to a twenty-four month term of imprisonment

followed by two years of supervised release and Mrs. Zamzam to a

thirty month term of imprisonment followed by two years of supervised release. The district court also ordered each to pay a $10,000

fine and $2,940.27 to reimburse the government for the costs of its

prosecutions. Dr. Zamzam noted a timely appeal. 1

II.

As previously stated, Dr. Zamzam challenges the sufficiency of the

evidence to support the willfulness element of each count on which

he was convicted. In support, Dr. Zamzam argues that he could not

possibly have acted willfully with respect to the conduct for which he

was convicted, because his wife was solely responsible for all of the

couple's and the Corporation's financial matters.

We must sustain Dr. Zamzam's convictions if there is substantial

evidence to support the willfulness element of each conviction when

the evidence and reasonable inferences to be drawn therefrom are

viewed in the light most favorable to the government. See Burgos, 94

F.3d at 862. "[I]n the context of a criminal action, substantial evidence is evidence that a reasonable finder of fact could accept as adequate and sufficient to support a conclusion of a defendant's guilt

beyond a reasonable doubt." Id. When reviewing the sufficiency of

the evidence, we must remember that it is "[t]he jury, not the review-

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1 Mrs. Zamzam also noted a timely appeal. Her appeal was later voluntarily dismissed, however, pursuant to Federal Rule of Appellate Procedure 42(b).

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ing court, [that] weighs the credibility of the evidence and resolves

any conflicts in the evidence presented, and if the evidence supports

different, reasonable interpretations, the jury decides which interpretation to believe." United States v. Murphy , 35 F.3d 143, 148 (4th Cir.

1994) (citations omitted).

In order to establish a violation of 26 U.S.C. § 7201, the government must prove and the finder of fact must find that the defendant

(1) willfully (2) committed an affirmative act constituting an

attempted evasion of tax payments, and (3) a substantial tax deficiency existed. See United States v. Wilson, 118 F.3d 228, 236 (4th

Cir. 1997). In order to establish a violation of 26 U.S.C. § 7206(1),

the government must prove and the finder of fact must find that the

defendant (1) willfully (2) made and subscribed to a tax return containing a written declaration, (3) under penalties of perjury, and (4)

did not believe the return to be true and correct as to every material

matter. See United States v. Aramony, 88 F.3d 1369, 1382 (4th Cir.

1996).

The willfulness element in both of these criminal tax offenses is

defined as the "`voluntary, intentional violation of a known legal

duty.'" Cheek v. United States, 498 U.S. 192, 201 (1991). A jury may

infer willfulness with respect to the criminal tax offenses of which Dr.

Zamzam was convicted from any conduct having the likely effect of

misleading or concealing. See Wilson, 118 F.3d at 236. For example,

willfulness can be inferred from a defendant's false statement to the

IRS for the purpose of concealing income, see id., and the "handling

of one's affairs to avoid making the record usual in transactions of the

kind," United States v. Callanan, 450 F.2d 145, 148 (4th Cir. 1971)

(internal quotation marks omitted). We conclude that the evidence

before the jury, when viewed in the light most favorable to the government, is more than sufficient to support the jury's finding of willfulness on the part of Dr. Zamzam on all counts.

A. False Statements to the IRS.

Dr. Zamzam made several false statements to the IRS for the purpose of concealing corporate and personal income. Even if the jury

credited Mrs. Zamzam's testimony at trial that she primarily handled

the Corporation's and their personal financial affairs, at a minimum,

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the jury could have reasonably inferred that Dr. Zamzam had knowledge of Mrs. Zamzam's diversionary activities from her testimony

that she never kept her diversionary activities a secret from her husband and from Dr. Zamzam's admission to Special Agent Gannaway

that he personally made some of the entries in the Corporation's cash

receipts journal and some of the deposits into the Corporate Account.

Therefore, the jury could have reasonably inferred that when Dr.

Zamzam stated to Agent Baker on May 7, 1993, that all of the deposits to the PMM Account that were not reported as taxable income

were either derived from certificates of deposit that were cashed upon

maturity, the proceeds of tax-free bonds, or money that was withdrawn and then redeposited, he did so with knowledge of the statement's falsity and with intent to conceal the Corporation's and his

unreported taxable income. Likewise, the jury could have reasonably

inferred that when Dr. Zamzam stated in a letter dated July 23, 1993

to Agent Baker that all of the funds deposited into the PMM Account

had already been taxed, he did so with knowledge of the statement's

falsity and with intent to conceal the diverted corporate income from

the IRS. Finally, the jury could have reasonably inferred that on June

29, 1994, when Dr. Zamzam stated to Special Agent Gannaway that

all corporate income was recorded in the daily receipts journal and

directly deposited into the Corporate Account, he made the statement

with knowledge of its falsity and with intent to conceal the diverted

corporate income from the IRS.

B. The Handling Of The Corporation's Affairs To Avoid Making

The Records Usual In Transactions Of The Kind.

The evidence before the jury firmly established that the diversionary scheme avoided recording the diverted corporate income in the

Corporation's daily receipts journal and on the Corporation's bank

statements. Thus, the diversionary scheme avoided making the usual

records that would have easily revealed the Corporation's receipt of

the diverted income. Because the evidence supports the inference that

Dr. Zamzam was aware of the diversionary scheme, this is circumstantial evidence of his willfulness on all counts.

C. The Transfers Of Assets To Foreign Banks. 

The jury was entitled to infer from Dr. Zamzam's transfer of

$1,100,000 from the PC Account containing diverted corporate

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income to a foreign bank account in 1991 that Dr. Zamzam was

attempting to conceal such income from the IRS. Furthermore, the

jury was entitled to infer that Dr. Zamzam was attempting to conceal

diverted corporate income from the IRS from Dr. Zamzam's actions

the day after he met with Special Agent Gannaway on May 3, 1995

and for the next few weeks in directing his stockbrokers to wire more

than $800,000 to a Swiss bank account. All of this conduct by Dr.

Zamzam is circumstantial evidence of his willfulness on all counts.

In sum, the evidence establishing Dr. Zamzam's false statements to

the IRS for the purpose of concealing the diverted corporate income

from the IRS, his knowledge that the diversionary scheme avoided

making the records usual in transactions of the kind, and his transfers

of large amounts of financial assets to foreign banks during the years

relevant to the counts of conviction is more than sufficient to support

the jury's finding of willfulness on all counts for which Dr. Zamzam

was convicted. Accordingly, we affirm all of Dr. Zamzam's

convictions.2

AFFIRMED

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2 Dr. Zamzam makes two other arguments in support of his challenge

to all of his convictions. First, he contends that the documentary evidence gathered by Agent Baker should have been suppressed as gathered

in violation of his due process rights under the Fifth Amendment,

because Agent Baker did not obtain an IRS Form 2848 from Fuller,

which is a power of attorney, as mandated by the Internal Revenue Manual. We hold Dr. Zamzam waived his right to challenge the admission

of this evidence on appeal by failing to move for its suppression below

without just cause to excuse his failure. See Fed. R. Crim. P. 12(b)(3);

12(f); United States v. Ricco, 52 F.3d 58, 62 (4th Cir. 1995) (relying on

Federal Rule of Criminal Procedure 12(b)(3) and 12(f) to hold (1) defendant waives right to assert claim that evidence was obtained in violation

of his rights under the Fourth and Fifth Amendments by failing to file a

motion to suppress the evidence before trial without just cause to excuse

such failure, and (2) defendant's objection at trial could not suffice to

preserve his constitutional objections). Second, he argues that the district

court abused its discretion by admitting the evidence establishing the

transfers in 1990 and 1991 to foreign bank accounts. We hold this argument is without merit.

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