FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA, 

Plaintiff-Appellee, No. 03-10548

v.  D.C. No.

DAVID L. SMITH, CR-00-00229-MCE

Defendant-Appellant. 

UNITED STATES OF AMERICA, 

No. 03-10604 Plaintiff-Appellee,

D.C. No.

v.  CR-00-00229-MCE

HERBERT A. BATES,

OPINION Defendant-Appellant. 

Appeals from the United States District Court

for the Eastern District of California

Morrison C. England, District Judge, Presiding

Argued and Submitted

May 9, 2005—San Francisco, California

Submission Vacated May 31, 2005

Resubmitted September 2, 2005

Filed September 13, 2005

Before: Andrew J. Kleinfeld, Michael Daly Hawkins, and

Susan P. Graber, Circuit Judges.

Opinion by Judge Hawkins

13069
COUNSEL

John Balazs, Sacramento, California, for defendant-appellant

Smith. 

13074 UNITED STATES v. SMITH
Victor S. Haltom, Sacramento, California, for defendantappellant Bates. 

Samantha S. Spangler, Assistant United States Attorney, Sacramento, California, for the plaintiff-appellee. 

OPINION

HAWKINS, Circuit Judge: 

Defendants David Larry Smith (“Smith”) and Herbert

Arthur Bates (“Bates”) appeal their convictions on multiple

counts of tax fraud, mail and wire fraud, money laundering,

and conspiracy, as well as their sentences. Defendants challenge: (1) arraignment by a magistrate judge, (2) multiplicity

of the indictment resulting in a multiplicitous sentence on the

three conspiracy counts, (3) an indictment passed on by grand

jurors not questioned about their feeling towards the IRS, (4)

denial of a suppression motion based on alleged defects in the

arrest and search warrants, (5) sufficiency of the evidence on

the tax counts, (6) denial of a motion for a new trial based on

alleged petit juror bias, and (7) denial of a multiple conspiracy

instruction. In addition to disputing the district court’s application of various sentencing guidelines, Smith and Bates

make a United States v. Booker, 125 S. Ct. 738 (2005), challenge to sentencing based on facts not found by a jury, and an

ex post facto challenge to application of an advisory guideline

system to their sentences. We have jurisdiction under 28

U.S.C. § 1291 and affirm the convictions in all respects and

remand on sentencing pursuant to United States v. Ameline,

409 F.3d 1073 (9th Cir. 2005) (en banc). 

FACTS AND PROCEDURAL HISTORY

The government brought Smith and Bates1 to trial for

1Smith and Bates were tried as co-defendants with another alleged participant in the conspiracy, Charlotte Wadsworth. Wadsworth was acquitted

by the jury. 

UNITED STATES v. SMITH 13075
enlisting hundreds of clients to set up trusts known as Unincorporated Business Organizations, or “UBOs,” which purportedly avoided taxes on income streamed into them; the

defendants charged their clients to set up and conduct transactions for the UBOs, only to later steal their clients’ money. 

The defendants advised their clients to transfer all of their

income and assets — including their businesses, homes, relative’s homes, furniture, jewelry, cars, and even pets — into

the UBO. Defendants also advised clients to ask their employers to issue pay checks, commission checks, or other income

sources in the names of their UBOs instead of in their names.

Moreover, the defendants assured clients that they could

use the UBOs to pay a variety of expenses, to be deducted as

“business expenses” from the UBO’s income. These business

expenses included everything from mortgage and utility payments to business equipment to haircuts, pet needs, laundry,

clothes, and lawn care. As one client testified, “practically

everything we did could be seen as a legitimate deduction.”

Another client echoed that “pretty much everything could be

deducted or be used as legitimate business expenses. . . .

Probably certain personal items were not exempt, so to speak.

Like toothpaste.” 

Numerous clients testified at trial how defendants (usually

Smith2) advised them that they did not have to pay taxes once

they paid the defendants to establish a UBO. For example,

Phyllis Ellen Denby testified that Bates advised her to establish a UBO to distribute stock profits in a way the IRS would

not be aware of them. Bates told Denby and her husband that

no taxes need be paid on “any money” that was in the UBO.

Charles Michael Stoker testified that Smith told him and his

wife that by placing their home into the UBO, the home could

be sold and yet he could withhold the proceeds from tax fil2Bates told clients that he took care of dealings with the IRS and legal

advice, while Smith provided investment advice. 

13076 UNITED STATES v. SMITH
ing. David Vette testified that Smith informed him that “as

long as the UBO did not have a profit at the end of the year,

there was no taxable consequence. I did not have to file a tax

return.” Ronald J. Herrema testified that Smith told him that

UBOs are never audited and do not have any filing requirements. Smith strongly recommended that Herrema “get rid of

any cash” in the UBO at the end of the year to “not raise a

flag to the Internal Revenue Service,” and thus “never [be]

subject to filing requirements or IRS audit inspections.” And,

Smith “highly suggested” that he and his wife kept their

income below $10,500, the ceiling below which married couples were not required to file tax returns. 

Similarly, James Allen Herrema testified that Smith told

him that the benefit of the UBO receiving his income is that

he “would not have to file personal income tax on that

income.” Smith plainly stated that income into the UBO “fell

into a category of not being taxable.” When Herrema specifically asked whether he had to continue filing personal tax

returns, Smith said “it was not necessary.” Sharon Ludders

testified that she was told that everything she owned could be

transferred into the UBO, and that the trust would “take care”

of her obligations to pay personal income taxes. Judith Reitz

testified that Smith told her that “it wasn’t necessary” for her

UBO to file a tax return; “[i]n fact, it was really not desirable.” When Ms. Reitz said she planned to continue filing personal income tax returns, Smith explicitly told her not to file.

Michael Joseph Young was told by Smith that trust

expenses would be deducted from the income into the trust,

to achieve a zero balance at the end of the year. “You didn’t

have to worry about filing a return or anything like that on it.”

Young understood from Smith that the money that went into

the UBO did not need to be reflected on his personal income

tax return, either. Lawrence Newton Craig testified that Smith

said that UBOs did not have to file any tax returns. Smith said

UBOs were “basically a tax shelter.” 

UNITED STATES v. SMITH 13077
In addition to the above advice, Smith had a “particular

way” at “particular bank[s]” to set up the UBO accounts,

which he did in person. Smith established non-interestbearing accounts for the UBOs, which the government argued

kept the banks from filing with the IRS to report interest

income. 

Smith told clients not to discuss their UBOs with qualified

accountants or attorneys. Bates told one set of clients to not

even tell their closest relatives about their UBO. Smith told

another client that she did not have the authority to provide

UBO-related documents to the IRS because a vote of the

trustees was needed. Bates and Smith also insisted on handling correspondence with the IRS. For example, Bates would

write the IRS requesting legal authority for reporting certain

income to the IRS, as well as asking the IRS to review certain

portions of the Constitution regarding the power to collect

taxes. The letters attempted to avoid paying taxes. Indeed,

with or without such letters, most of the defendants’ clients

did not file tax returns and/or filed tax returns that omitted

substantial income. 

In order to make the UBO scheme work, many clients were

told that they had to make “distributions” out of their UBOs

to avoid filing taxable income within them. As one client put

it, “if there was a [UBO] profit, we would do a distribution,

and that would eliminate any of the profit, and there would be

no taxable occurrence.” Clients were told that their “distribution” was “going offshore into an investment program . . . and

it would earn a profit . . . and [they] would have access to it

down the road.” Smith offered several ways to get the distribution money back, including an out-of-country credit card

account or a direct payment to Smith to move the money offshore for an eleven percent charge. Although clients could

access their distribution or investment money for a while,

Smith eventually transferred the money to another bank, and

the clients could no longer access their money. Client losses

ranged from $20,000 to $400,000. 

13078 UNITED STATES v. SMITH
Agent Bridgette O’Keeffe (“Agent O’Keeffe”), the government’s summary witness, testified, among other things,

regarding (1) each of the tax returns charged in the counts

pertaining to aiding and assisting false or fraudulent returns,

and (2) the numerous mail fraud and wire fraud counts,

explaining the monies she traced that clients had invested

with the defendants that ended up in Cayman Islands

accounts. 

The jury found Bates guilty of: (1) conspiracy to defraud

the United States in the ascertainment, computation, or assessment of taxes, in violation of 18 U.S.C. § 371; (2) multiple

counts of aiding and assisting in the preparation and presentation of false and fraudulent tax returns, in violation of 26

U.S.C. § 7206(2); (3) conspiracy to engage in mail or wire

fraud, in violation of 18 U.S.C. § 371; and (4) conspiracy to

launder money, in violation of 18 U.S.C. § 371. The jury also

found Smith guilty of the above charges, as well as multiple

counts of each of the following: (1) mail fraud, in violation of

18 U.S.C. § 1341; (2) wire fraud, in violation of 18 U.S.C.

§ 1343; (3) money laundering, in violation of 18 U.S.C.

§§ 1956(a)(1)(A) 1956(a)(1)(B); and (4) engaging in financial

proceeds of unlawful activity, in violation of 18 U.S.C.

§ 1957. 

Bates and Smith moved for a new trial based on the alleged

lack of impartiality of Jurors #9 and #1. Juror #9 wrote Agent

O’Keeffe after the trial suggesting they “get acquainted.”

Juror #9 did not converse with Agent O’Keeffe during the

trial, at most exchanging a smile across elevators. The district

court considered allegations of Juror #9’s bias, and found “absolutely no tangible evidence that there was any extraneous

information or extraneous influence on this juror by anyone.”

During deliberations, Juror #1 wrote that she was criticized

by the foreperson and felt intimidated. The district court questioned Juror #1 outside the presence of other jurors, whereupon Juror #1 told the court she felt able to return to

UNITED STATES v. SMITH 13079
deliberations and make future decisions based on her own

conscience and belief. After considering the evidence as to

Jurors #1 and #9, the district court denied the motion for a

new trial. 

At the close of the evidence, Smith moved for judgment of

acquittal on the counts charging him with aiding and assisting

in the preparation and presentation of false tax returns and

conspiracy to commit tax fraud. The district court denied the

motion as to both Smith and Bates, and denied the renewed

motion after the verdict as to all defendants. 

Smith was sentenced to 151 months’ imprisonment; Bates

to 136 months’ imprisonment. The district court also ordered

three defendants, including Smith and Bates, to forfeit $1 million, pursuant to the parties’ stipulation. 

DISCUSSION

I. Magistrate Judge’s Authority to Conduct Arraignment

Magistrate Judge John F. Moulds presided over Smith’s

hearing for the entry of a plea. The magistrate judge asked

Smith’s counsel, Scott Tedmon, for the entry of the plea to the

indictment. Smith’s counsel had no objection and stated that

his client was prepared to enter a plea of not guilty and

requested a jury trial. The magistrate judge then scheduled a

status conference before District Judge Lawrence Karlton. 

Smith now argues that the magistrate judge had no authority to arraign Smith under Rules 5 and 10 of Criminal Procedure, and that Judge Karlton erroneously denied his motion to

dismiss the indictment on this ground. We review de novo the

district court’s refusal to dismiss an indictment for lack of

jurisdiction. United States v. Phillips, 367 F.3d 846, 854 (9th

Cir.), cert. denied, 125 S. Ct. 479 (2004). 

Rule 5 pertains to initial appearances before a magistrate

judge for “arrest[s] under a warrant issued upon a complaint

13080 UNITED STATES v. SMITH
or any person making an arrest without a warrant.” Fed. R.

Crim. P. 5(a) (2000). Thus, Rule 5(c)’s provision that a magistrate judge may not accept a plea in a felony case is inapposite. 

Nor does Smith cite any violations of Rule 10 (stating the

requirements for an arraignment in open court) either, except

to say that magistrate judges are not authorized to conduct a

Rule 10 arraignment. Smith is mistaken. Rule 72-302(b)(1) of

the Local Rules of the United States District Court for the

Eastern District of California grants authority to magistrate

judges to handle pretrial matters in felony cases, and does not

exclude the arraignment process for a not guilty plea. Thus,

the magistrate judge had authority to arraign Smith. 

II. Multiplicity of Conspiracy Counts & Plain Error

The three conspiracy counts are: (1) conspiracy to defraud

the United States in the ascertainment, computation, or assessment of taxes, in violation of 18 U.S.C. § 371; (2) conspiracy

to engage in mail or wire fraud, in violation of 18 U.S.C.

§ 371; and (3) conspiracy to launder money, in violation of 18

U.S.C. §§ 371 and 1956(h). Bates and Smith3 argue that these

three conspiracy counts are multiplicitous because there was

only one combined scheme, i.e., one conspiracy. Bates asserts

that the convictions and consecutive sentences on these counts

violate the Double Jeopardy Clause and separation of powers

principles. Bates bases these claims not on the multiplicity of

the indictment, but rather the multiplicity of sentences

imposed by the district court. 

Typically, whether a defendant’s double jeopardy rights

have been violated is reviewed de novo. United States v. Stoddard, 111 F.3d 1450, 1454 (9th Cir. 1997). However, Bates

3

It appears from the joint reply brief that Smith joins Bates in this argument. (“[A]ppellants’ consecutive sentences on the three conspiracy

counts in this case are multiplicitous and constitutionally infirm.”) 

UNITED STATES v. SMITH 13081
did not clearly raise the multiplicity of sentences issue below.

Though Bates claims that he raised the issue when his counsel

argued at the sentencing hearing that “the Government’s case

against [Bates] was one set of acts done for a common purpose, and that he, therefore, should be sentenced accordingly

rather than for multiple reasons,” this one sentence is insufficient to raise a double jeopardy objection with respect to the

three conspiracy counts. 

Nevertheless, a multiplicious sentence cannot be waived.4

See Launius v. United States, 575 F.2d 770, 772 (9th Cir.

1978) (per curiam) (“[I]f sentences are imposed on each count

of [a] multiplicious indictment the defendant is not forced to

serve the erroneous sentence because of any waiver.”) (internal quotations and citation omitted). Because Bates failed to

raise this issue before the district court, plain error review

applies. See United States v. Freeman, 6 F.3d 586, 600-01

(9th Cir. 1993) (consecutive sentences for duplicitous charges

subject to plain error review); United States v. HernandezGuardado, 228 F.3d 1017, 1028-29 (9th Cir. 2000) (failure to

raise double jeopardy claim based on a second trial not

waived absent evidence of a voluntary and knowing relinquishment of right against double jeopardy). 

For Bates to prevail under plain error review, he must show

(1) an error, (2) that is plain, (3) that affects substantial rights,

and (4) that seriously affects the fairness, integrity, or public

reputation of judicial proceedings. Johnson v. United States,

520 U.S. 461, 467 (1997). 

[1] “The Double Jeopardy Clause prohibits subdivision of

a single criminal conspiracy into multiple violations of one

conspiracy statute.” United States v. Montgomery, 150 F.3d

983, 989 (9th Cir. 1998) (internal quotations and citation

4Multiplicity of sentences is unlike the issue of the multiplicity of an

indictment, which can be waived if not raised below. United States v.

Klinger, 128 F.3d 705, 708 (9th Cir. 1997). 

13082 UNITED STATES v. SMITH
omitted). Because all three conspiracy counts in this case violate the same statute—18 U.S.C. § 3715

 —this court uses the

five-factor test adopted in Arnold v. United States, 336 F.2d

347, 350 (9th Cir. 1964), rather than the test articulated in

Blockburger v. United States, 284 U.S. 299, 304 (1932). See

United States v. Luong, 393 F.3d 913, 916 (9th Cir. 2004),

cert. denied, 125 S. Ct. 1953 and 1963 (2005); Montgomery,

150 F.3d at 990. 

[2] The Arnold analysis has been summarized by Stoddard:

To determine whether two conspiracy counts charge

the same offense and so place the defendant in double jeopardy, we consider five factors: (1) the differences in the periods of time covered by the alleged

conspiracies; (2) the places where the conspiracies

were alleged to occur; (3) the persons charged as

coconspirators; (4) the overt acts alleged to have

been committed; and (5) the statutes alleged to have

been violated. 

111 F.3d at 1454 (internal quotations and citation omitted).

Rather than focus on any one factor, the court considers all

the factors together to determine if there was more than one

agreement. “ ‘The fact that there is some interrelationship

between conspiracies does not necessarily make them the

same criminal enterprise,’ where one conspiracy involves

unlawful transactions ‘quite distinct in their means of execution and their objects.’ ” United States v. Guzman, 852 F.2d

1117, 1121 (9th Cir. 1988) (quoting United States v. Ingman,

541 F.2d 1329, 1331 (9th Cir. 1976) (per curiam). 

5Title 18 U.S.C. § 371 states, in part: 

If two or more persons conspire either to commit any offense

against the United States, or to defraud the United States, or any

agency thereof in any manner or for any purpose, and one or

more of such persons do any act to effect the object of the conspiracy, each shall be fined under this title or imprisoned not

more than five years, or both. 

UNITED STATES v. SMITH 13083
On appeal, the defendant has the burden of showing that

the multiple conspiracies charged are based on a single agreement, i.e., that the conspiracies are “indistinguishable in law

and in fact.” Montgomery, 150 F.3d at 990 (citing Guzman,

852 F.2d at 1119-20). This issue is based on sufficiency of the

evidence, examining the evidence “in the light most favorable

to the prosecution to determine if any rational trier of fact

could have found that more than one conspiracy existed.” Id.

A. Time Frame 

[3] The government alleged that the Count 1 conspiracy

spanned from August 14, 1981 to June 13, 1997, the Count 25

conspiracy from August 14, 1981 to February 1, 1998, and the

Count 64 conspiracy from January 1, 1987 to June 13, 1997.

Thus, there is substantial overlap in timing. It is worth noting

here that the government argued that “from the very beginning” of the Count 1 agreement, there was a plan to steal the

clients’ money, which would involve mail and wire fraud

(Count 25) and money laundering (Count 64). (“From the

very beginning of the agreement between the parties, the

agreement was to engage in tax crimes together with mail and

wire fraud crimes together with money laundering crimes.”)

B. Geographic Locations 

[4] Bates contends that the vast majority of activities relevant to all three counts occurred in Sacramento, California,

and the Cayman Islands. The government does not dispute

this contention. The indictment and the evidence at trial support Bates’s contention that the overt acts for all three counts

occurred in the same geographic locations. 

C. Participants

All four defendants were charged in Count 1, and all defendants except Charlotte Wadsworth were charged in Counts 25

and 64. However, the third factor depends not only on overlap

13084 UNITED STATES v. SMITH
in membership, but also the roles of the overlapping members. Stoddard, 111 F.3d at 1455. Bates contends that the

roles were the same in all three counts. 

[5] The government argued at trial that the defendants each

played different roles in the various schemes. However, that

many overt acts are incorporated by reference between the

conspiracy counts supports the defendants’ argument that the

(different) role of each defendant was similar across the three

alleged conspiracies. 

D. Overt Acts 

[6] Although the overt acts for three counts are not identical, they substantially overlap. For Count 1, the government

alleged 166 overt acts; for Count 25, 151 of the 166 overt acts

are incorporated by reference, and 23 new overt acts are

added; for Count 64, overt acts are incorporated by reference

from Counts 1 and 25. 

The overt acts in Count 1 generally relate to defendants: (1)

forming various UBOs, (2) accepting fees (in the form of

checks or wire transfers) for the UBOs, (3) depositing fees,

(4) serving as agents or trustees for the UBOs, (5) advising

clients they need not file taxes, (6) writing letters to clients

and the IRS, (7) forming corporations and bank accounts in

the Cayman Islands, (8) opening bank accounts in California,

and (9) authorizing wire transfers between various accounts.

Count 25 adds overt acts pertaining to specific fraudulent

investments defendants persuaded the UBO clients to pursue.

E. Statutes Violated

[7] The three conspiracy counts allege a violation of the

same statute — 18 U.S.C. § 371 — although Count 64 also

alleges a violation of 18 U.S.C. § 1956(h). However, the fifth

factor considers not only the violation of the same statute, but

UNITED STATES v. SMITH 13085
also whether the goals of the conspiracies were similar. Stoddard, 111 F.3d at 1456. 

The government specifically addressed in closing argument

how 18 U.S.C. § 371 can relate to three separate crimes. In

arguing that “the conspiracy counts are very different,” the

government first pointed to the two distinct types of crimes

covered by § 371: (1) conspiracy to defraud the United States

in the exercise of its lawful governmental functions, and (2)

conspiracy to violate a specific section of the United States

Code. The government further explained that Count 1, the

first type of conspiracy, related to defrauding the IRS in the

assessment of taxes, whereas Counts 25 and 64 related to violations of different code sections (mail or wire fraud sections,

and money laundering sections, respectively). 

However, the government argued to the jury that the goals

of defrauding the government, and engaging in mail and wire

fraud and money laundering, were all inter-related:

This case is a situation where the defendants had

a single unified plan from the very beginning. This

is not a situation where the defendants that engaged

in one type of activity and then did that for a while

and then decided to get into some other type of activity which might be fraudulent and then to launder

money at the end of day. 

The defendants had a single, unified plan from, as

I say, the very get-go in this case. From the very

beginning of the agreement between the parties, the

agreement was to engage in tax crimes together with

mail and wire fraud crimes together with money

laundering crimes. That’s the only way the defendants’ actions and their activities make any sense at

all is to look at all the actions as pieces of a bigger

essentially three-dimension, circular-type of a

scheme. 

13086 UNITED STATES v. SMITH
The tax scheme was set up in a certain way specifically for the purpose to create the ability to engage

in mail and wire fraud. . . . And the defendants could

not engage in mail and wire fraud if they did not

launder money. . . . So from the very beginning, the

defendants had it in their mind the aspect of stealing

— effectively stealing, to use a generic term, money

from the investors and use the promotion of the tax

vehicle as a way to accomplish that fraud. 

The government concluded closing arguments with the point

that all the counts were fraud crimes to enrich the defendants

— with respect to the tax crimes, to collect fees on the UBOs;

with respect to money laundering, “to move the money

around and get what [defendants] need without being caught”;

and with respect to mail and wire fraud, more monetary

motives. 

[8] Given the government’s contention that the goal for all

three conspiracies was one and the same — to steal money —

it appears under Stoddard that they should be treated as one

conspiracy, at least for the purpose of sentencing. Considering

all five Arnold factors, it was arguably error for Bates and

Smith to be sentenced to consecutive terms on the three conspiracy counts. 

[9] However, an error is not plain unless it is “clear” or

“obvious.” United States v. Olano, 507 U.S. 725, 734 (1993).

Plain error “is so clear-cut, so obvious, a competent district

judge should be able to avoid it without benefit of objection.”

United States v. Turman, 122 F.3d 1167, 1170 (9th Cir. 1997)

(citing United States v. Frady, 456 U.S. 152, 163 (1982)). In

this complex case, with hundreds of overt acts, multiple

defendants, and weeks of trial, it was not plain or obvious that

only one conspiracy transpired. Indeed, the government convinced the jury that the defendants engaged in three separate

conspiracies. 

UNITED STATES v. SMITH 13087
[10] To muddle the multiplicity issue further, defendants

did not merely fail to argue that there was one overarching

conspiracy for double jeopardy purposes; they argued the

opposite position: that each of the three conspiracy counts

were themselves duplicitous, encompassing multiple agreements and conspiracies in each one. That is, they asserted that

there were even more conspiracies. As to Count 1, Smith disputed one overarching conspiracy to defraud the United States

because the overt acts covered six alleged UBOs, with differing (1) time periods, (2) identity of defendants involved, (3)

identity of taxpayers involved, and (4) specific transactional

facts. Smith posed the “same argument and analysis” from

Count 1 to Counts 25 and 64. Thus, it was not clear or obvious that the three conspiracies were multiplicitous, even at the

sentencing stage. The defendants have failed to show plain

error. 

III. Dismissal of Indictment Based on Potentially Biased

Grand Jury 

Smith argues that the district court erred in denying his

motion to dismiss the indictment because the grand jurors

were not questioned about their contacts with the IRS to

ensure that they could serve as impartial jurors. 

We review de novo the district court’s denial of a motion

to dismiss an indictment. United States v. Rivera-Sillas, 376

F.3d 887, 889 (9th Cir. 2004). A district court may not dismiss an indictment for error in a grand jury proceeding unless

the error prejudiced the defendant. Bank of N.S. v. United

States, 487 U.S. 250, 254 (1988). “Substantial proof of grand

jury bias is required to overturn an indictment.” United States

v. Miller, 105 F.3d 552, 555 (9th Cir. 1997). 

[11] Smith bases his grand juror (potential) bias claim on

28 U.S.C. § 1866(c)(2), which states in part that “no person

or class of persons shall be disqualified, excluded, excused, or

exempt from service as jurors: Provided, That any person

13088 UNITED STATES v. SMITH
summoned for jury service may be . . . (2) excluded by the

court on the ground that such person may be unable to render

impartial jury service.” Not surprisingly, neither § 1866(c)(2)

nor any Ninth Circuit case6 requires probing the grand jurors

with questions about their feelings toward the IRS. 

[12] Given that Smith makes no factual allegation of actual

bias on the part of any grand juror in his case, he has not

shown “[s]ubstantial proof of grand jury bias,” see Miller, 105

F.3d at 555, let alone prejudice, see Bank of N.S., 487 U.S. at

254. Thus, the district court did not err in denying dismissal

of the indictment on this ground. 

IV. Search and Arrest Warrants

Smith argues that the district court erred by denying his

motion to suppress evidence based on defects in the search

and arrest warrants, alleging that: (1) the search warrant

lacked particularity and was facially overbroad, (2) the government agents flagrantly seized items outside the scope of

the warrant, (3) the agents failed to provide a complete copy

of the warrant at the outset of the search, and (4) the search

and arrest warrants were invalid because they lacked a court

seal and the magistrate judge did not sign the arrest warrant.

6Smith mischaracterizes United States v. Hashimoto, 878 F.2d 1126,

1134 n.9 (9th Cir. 1989), as determining that “general questions that did

not delve into a juror’s attitudes and dealings with the IRS are inadequate

to expose bias of petit jurors in criminal tax cases.” In Hashimoto, the trial

court refused defendant’s request for a jury panel list to investigate

whether the jurors had been audited by the IRS, as he was entitled to do

under 26 U.S.C. § 6103(h)(5). 878 F.2d at 1129-33. Because of the specificity of the § 6103(h)(5) inquiry, general questions on juror impartiality

did not overcome the presumption of prejudice from the denial of the list.

Id. at 1134 n.9. However, the court found that the presumption of prejudice could be overcome by juror voire dire on past audits and attitudes

toward the IRS. Id. at 1134. Hashimoto does not hold that grand jurors in

tax cases must be asked such questions. 

UNITED STATES v. SMITH 13089
We review de novo the district court’s denial of a motion

to suppress, and the factual findings supporting the denial for

clear error. United States v. Mann, 389 F.3d 869, 874 (9th Cir.

2004), cert. denied, 125 S. Ct. 1719 (2005). 

A. Particularity and Overbreadth 

[13] “The Fourth Amendment requires that a warrant particularly describe both the place to be searched and the person

or things to be seized.” United States v. Spilotro, 800 F.2d

959, 963 (9th Cir. 1986). As Spilotro explained, “[t]he

description must be specific enough to enable the person conducting the search reasonably to identify the things authorized

to be seized.” Id. The purpose of the breadth requirement is

to limit the scope of the warrant “by the probable cause on

which the warrant is based.” In re Grand Jury Subpoenas, 926

F.2d 847, 856-57 (9th Cir. 1991). Both the particularity and

breadth requirements prevent “general, exploratory rummaging in a person’s belongings.” Id. at 857 (quotation marks and

citations omitted). 

Smith argues the warrant in this case “failed to restrict government agents in any meaningful way, converting the warrant into the type of general, overbroad warrant prohibited by

the Fourth Amendment.” Specifically, Smith argues that paragraphs 1 through 11 of the search warrant’s Attachment B

“authorized the seizure of virtually all of Smith’s personal and

business records, electronic documents, photographs, films,

and videotapes . . . ‘for the period of January 1990 through

the current date.’ ” 

Attachment B describes the items to be seized as follows:

For the period January 1990 through the current

date: 

1) The following documents relating to the promotion of UBOs: seminar tapes, presentation docu13090 UNITED STATES v. SMITH
ments, video tapes, literature, flyers, advertising, and

business cards. 

2) UBO client files to include UBO names, individuals names, addresses, telephone numbers, and other

identifying information; contracts of “UBO Organization”; copies of minutes; domestic and foreign

bank account statements; wire transfer documents;

canceled checks; deposit slips; copies of money

orders; copies of cashier’s checks; correspondence

to, from, and on behalf of UBO clients including

correspondence with the IRS; copies of Forms SS-4,

Request for Employer Identification Number;

records of payments from and to UBO clients

reflecting dates and purpose of such payments;

invoices; receipts; memoranda; copies of tax returns,

and any documents used in the preparation of tax

returns. 

3) All documents relating to any alleged defense

contractor loan investment program including literature, contracts, agreements, notes, financial statements and records, correspondence, memoranda,

receipts, advertising, and other records; copies of letters and invoices or monthly statements to investors.

4) All documents pertaining to the purchase, and/or

sale, and/or transfer of real property including

escrow statements, deeds, deeds of trust, mortgages,

notes, correspondence, closing statements, mortgage

payments and down payments including documents

reflecting the form, amount, and date of such payments. Documents pertaining to the purchase/sale of

personal property including vehicles, furniture, and

other items to include receipts, contracts, agreements, financial statements, purchase agreements,

and correspondence. 

UNITED STATES v. SMITH 13091
5) All books and records of UBO businesses,

including general journals, general ledgers, financial

statements, balance sheets, income statements, cash

receipts and disbursements journals[.] 

6) All documents relating to the receipt and disbursement of income, by or from any UBO, including credit card receipts and statements, receipts,

invoices, statements of accounts at domestic and foreign banks, check registers, cancelled check, money

orders, cashier’s checks, wire transfer documents,

bank drafts, safety deposit box records, stocks,

bonds, and other securities, investment records, loan

applications, and other financial statements, promissory notes, telephone toll records and bills, personal

calendars, address and telephone books, rolodex

indices, records relating to domestic and international travel including tickets, reservations, hotel

receipts, travel logs, itineraries, and receipts, Forms

1099 and other tax documents; any other records

used to reconstruct income and expenses; records

relating to safe deposit box rental. 

7) All documents reflecting current ownership,

occupancy, and use of premises including utility

bills, receipts, correspondence, monthly statements,

photographs, film, and video tapes. 

8) All information and/or data stored in the form of

magnetic or electronic coding on computer media or

on media capable of being read by a computer or

with the aid of computer-related equipment. This

media includes, but is not limited to, floppy diskettes, fixed hard disks, removable hard disk cartridges,

laser disks, video cassettes, and any other media

which is capable of storing magnetic coding. 

9) All electronic devices which are capable of analyzing, creating, displaying, converting, or transmit13092 UNITED STATES v. SMITH
ting electronic or magnetic computer impulses or

data. These devices include, but are not limited to,

computers, computer components, computer peripherals, word processing equipment, modems, monitors, printers, plotters, encryption circuit boards,

optical scanners, external hard drives, and other

computer related electronic devices. 

10) All instructions or programs stored in the form

of electronic or magnetic media which are capable of

being interpreted by a computer or related components. The items to be seized include, but are not

limited to, operating systems, application software,

utility programs, compilers, interpreters, and any

other programs or software used to communicate

with computer hardware or peripherals either

directly or indirectly via telephone lines, radio, or

other means of transmission. 

11) All written or printed material which provides

instructions or examples concerning the operation of

a computer system, computer software, and/or any

related device which is present at the scene. 

[14] The warrant’s Attachment B describes with sufficient

specificity the types of documents and property sought.

Potentially problematic is its breadth: though limited in time

period and subject matter (UBO businesses and loan investment program since 1990), the warrant is quite broad as it

relates to those enterprises. However, even an “extraordinarily

broad” warrant authorizing the seizure of essentially all business records may be justified when there is “probable cause

to believe that fraud permeated the entire business operation.”

United States v. Offices Known as 50 State Distrib. Co., 708

F.2d 1371, 1374 (9th Cir. 1983). This is just such a case. The

magistrate judge reviewed Agent O’Keeffe’s affidavit in support of the application for the search warrant, which detailed

her comprehensive investigation of the UBO scheme. The

UNITED STATES v. SMITH 13093
affidavit concluded that “the entirety of the businesses operated by Bates, Smith and their associates are criminal in

nature.” Agent O’Keeffe’s affidavit provided ample probable

cause to meet the “permeated-with-fraud” exception to the

particularity and breadth requirements. 

B. Seizure Outside the Scope of Warrant

Smith claims that federal agents flagrantly seized innocuous personal items outside the scope of the warrant, such as

Christmas gifts, computer monitors, and computer games.

However, computer monitors and computer games (to the

extent they were on computer diskettes) were within the scope

of the warrant. The alleged Christmas gifts remain unidentified in the record. Thus, there is no evidence that there was

any evidence seized outside the scope of the warrant. 

C. Defects in Providing Warrant to the Smiths

The district court held that the warrant “was provided to the

Smiths on a prompt basis.” The district court further held that,

although Agent O’Keeffe’s affidavit was not attached to the

warrant, the warrant was valid and served the purpose of providing notice to the Smiths that the officers were executing a

search under the color of law. Smith argues that the search of

his home violated Federal Rule of Criminal Procedure 41(d)

(1997)7 because (1) agents failed to provide a copy of the

search warrant at the outset of the search, and (2) the warrant

was incomplete without the affidavit that was incorporated by

reference into the warrant. 

7Rule 41(d) stated, in relevant part: “The officer taking property under

the warrant shall give to the person from whom or from whose premises

the property was taken a copy of the warrant and a receipt for the property

taken or shall leave the copy and receipt at the place from which the property was taken.” 

13094 UNITED STATES v. SMITH
1. Failure to Provide Search Warrant at Outset of

Search 

At the evidentiary hearing, there was some discrepancy as

to the length of time after the search began before Smith and

his wife received a copy of the warrant. It is clear that the

search did not start as soon as the agents entered the home,

as they initially conducted a safety sweep for approximately

fifteen minutes. The district court established that a delay of

thirty to forty-five minutes occurred before the Smiths

received the warrant. 

[15] Under United States v. Gantt, 194 F.3d 987, 1001 (9th

Cir. 1999), “[a]bsent exigent circumstances, Rule 41(d)

requires service of the warrant at the outset of the search on

persons present at the search of their premises.” While the

court recognized that “ ‘technical’ violations of Rule 41(d)

require suppression only if there was a ‘deliberate disregard

of the rule’ or if the defendant was prejudiced,” it held that

suppression was justified due to the deliberate violation in

Gantt’s case. Id. at 1005. Gantt was not served with the search

warrant until after she was arrested, hours after the search and

hours after she requested to see the warrant. Id. at 1000. 

[16] In Smith’s case, there is neither deliberate disregard of

Rule 41(d) nor any prejudice. Gantt’s interpretation of Rule

41(d) to require service of the warrant at the outset of the

search was issued in 1999, whereas the search of Smith’s

home took place in 1997. Agent Adams’s testimony reveals

he did not know of an obligation to show the warrant at the

outset of the search — Adams “never” before had presented

a warrant at the time of entry. Instead, his team typically did

a safety sweep first, as was done in the Smith home. 

Furthermore, unlike in Gantt, after Mrs. Smith asked for

the warrant, she got one. The timing may be disputed — ten

minutes after the request or half an hour later — but regardless, she and her husband received the warrant near the outset

UNITED STATES v. SMITH 13095
of the search. As the district court found, the delay was not

unreasonable. 

[17] Nor was the delay prejudicial. Upon receiving the warrant, Mrs. Smith “just kind of glanced at it” and believes that

her husband “might have looked at it” more than she did. She

admits that she chose not to review the warrant. Neither of the

Smiths disputed the warrant after having access to it, and the

search went on for another several hours. Thus, under Gantt,

there was only a technical violation of Rule 41(d), which does

not require suppression. 

2. Warrant Missing Affidavit

[18] That the Smiths were given the search warrant without

the affidavit of Agent O’Keeffe, though incorporated by reference in the warrant, does not require suppression. Smith

argues that Gantt held that “when a warrant incorporates by

reference the supporting affidavit, the affidavit comprises part

of the warrant itself and must be provided with the rest of the

warrant. 194 F.3d 987, 1001 n.7.” The cited footnote 7 states:

“Showing Gantt the face of the warrant without Attachment

A certainly did not satisfy Rule 41(d). Without Attachment A,

the warrant violated the Fourth Amendment’s particularity

requirement and for purposes of Rule 41(d) was not a valid

warrant.” 

What Smith leaves out is the content of Attachment A in

Gantt’s case, which is substantively different from the

O’Keeffe affidavit. In Gantt, “[i]nstead of describing the

items to be seized, the warrant stated ‘see Attachment A.’

Attachment A was a two-page, typed list of items to be

seized.” Id. at 996. In Smith’s warrant, Attachment B, which

described the items to be seized, was attached. It was Agent

O’Keeffe’s affidavit, admittedly important in the magistrate

judge’s probable cause determination, that was missing.

Agent O’Keeffe’s affidavit was not related to the particularity

requirement, which was satisfied by Attachment B. 

13096 UNITED STATES v. SMITH
Smith confuses the “well-settled principle that a warrant’s

overbreadth can be cured by an accompanying affidavit that

more particularly describes the items to be seized,” United

States v. Luk, 859 F.2d 667, 676 (9th Cir. 1988), with the contention, unsupported by case law, that an affidavit incorporated by reference must always be attached for the search

warrant to be valid — even if the warrant is not overbroad

without the attachment. For example, in United States v.

Hayes, 794 F.2d 1348, 1355 (9th Cir. 1986), the court held

that the affidavit could not be considered because it did not

accompany the warrant; nevertheless, the court went on to

examine the warrant “on its face” for overbreadth, determining it met the breadth requirement and did not require suppression, id. at 1355-56. 

[19] Thus, here, the warrant without the affidavit was

facially valid standing alone. The failure to attach the affidavit

does not require suppression. 

D. No Court Seal on Search and Arrest Warrants; No

Magistrate Judge’s Signature on Arrest Warrant

Smith argues that the search and arrest warrants are void

because (1) the arrest warrant was initialed only by the court

clerk, but not signed by the magistrate, in violation of Rule

4(c)(1) of Criminal Procedure, and (2) neither warrant contained the seal of the court. The district court found that neither alleged defect invalidated the warrants. 

First, Rule 9, rather than Rule 4(c)(1), governs arrest warrants on an indictment. Rule 9(b)(1), pertaining to the form of

the warrant, states it must be signed “by the clerk,” not the

magistrate judge. 

Smith’s second argument that the court seal must be affixed

to both the search and arrest warrants also fails. The argument

relies on 28 U.S.C. § 1691, which states: “All writs and process issuing from a court of the United States shall be under

UNITED STATES v. SMITH 13097
the seal of the court and signed by the clerk thereof.” However, the Federal Rules of Criminal Procedure for arrest warrants on an indictment (Rule 9) and search warrants (Rule 41)

make no mention of the requirement for a court seal. The

arrest warrant and search warrant follow the stated dictates of

Rules 9 and 41, respectively. The magistrate judge unquestionably issued a bench warrant without bail on Smith, and a

deputy clerk signed an arrest warrant, as required by Rule 9.

The search warrant was issued and signed by a magistrate

judge on January 3, 1997. 

[20] Thus, there appears to be only a technical violation of

28 U.S.C. § 1691. None of this circuit’s cases has suppressed

evidence for lack of a court seal. Cf. Ystrom v. Handel, 252

Cal. Rptr. 110, 114 (Ct. App. 1988) (lack of court’s seal “is

a mere technicality and does not render [a summons] ‘substantially defective’ ”). 

[21] We have refused to suppress evidence or reverse convictions based on technical rule violations. In a similar context, “ ‘technical’ violations of Rule 41(d) require suppression

only if there was a ‘deliberate disregard of the rule’ or if the

defendant was prejudiced.” Gantt, 194 F.3d at 1005. Here,

there is no evidence in the record that officers executing either

warrant relied in bad faith on them because they lacked the

court seal, and certainly no evidence of deliberate disregard

of 28 U.S.C. § 1691. Neither is there a scintilla of prejudice

to the defendant: if the warrants did have the court seal,

Smith’s home would still have been searched, and his person

still arrested. Thus, neither suppression nor reversal of

Smith’s conviction is warranted by this technical violation of

28 U.S.C. § 1691. 

V. Sufficiency of the Evidence

Smith and Bates argue that the evidence is insufficient to

sustain their convictions for: (1) multiple counts of aiding and

assisting in the preparation and presentation of false tax

13098 UNITED STATES v. SMITH
returns, under 26 U.S.C. § 7206(2); and (2) conspiracy to

defraud the United States in the ascertainment, computation,

or assessment of taxes, under 18 U.S.C. § 371. 

After the jury verdict, the district judge denied a Federal

Rules of Criminal Procedure 29 motion for judgment of

acquittal as to all defendants. We review de novo the district

court’s ruling on a motion for acquittal. United States v. Johnson, 357 F.3d 980, 983 (9th Cir. 2004). The evidence is

reviewed in the light most favorable to the prosecution to

determine “whether any rational trier of fact could have found

the essential elements of the crime beyond a reasonable

doubt.” Id. (internal quotations and citations omitted). 

Section 7206(2) pertains to any person who: 

Willfully 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[.] 

[22] Under § 7206(2), the government must prove that “(1)

the defendant aided, assisted, or otherwise caused the preparation and presentation of a return; (2) that the return was fraudulent or false as to a material matter; and (3) the act of the

defendant was willful.” United States v. Salerno, 902 F.2d

1429, 1432 (9th Cir. 1990). Defendants argue that the government presented insufficient evidence on all three elements. 

A. Aid, Assist In, Procure, Counsel, or Advise

[23] Although Smith and Bates did not actually prepare

their clients’ tax returns, the plain language of § 7206(2) is

UNITED STATES v. SMITH 13099
satisfied by aid, assistance, procurement, counsel, or advice in

the preparation or presentation of a false or fraudulent return

— there need not be actual preparation of the return at issue.

Unsurprisingly, we do not require defendants engaged in tax

schemes to physically “prepare” the tax returns to be found

guilty of § 7206(2). See, e.g., United States v. Crum, 529 F.2d

1380, 1382 (9th Cir. 1976) ( “[T]he reach of Section 7206(2)

is clearly not limited to acts of tax return ‘preparers[.]’ ”). 

[24] A review of the record reveals ample evidence of aid,

assistance and advice in the preparation of the defendants’ clients’ false tax returns. To promote their tax shelter scheme,

the defendants explicitly advised their clients to transfer all of

their income and assets to the UBO, and then not to file any

tax returns (for the business trust, personal income, or otherwise). Smith advised UBO clients to have their employers

issue pay checks, commission checks, or other income

sources in the name of the UBO instead of the clients’ names.

Further, defendants established mechanisms for the UBO

income to go undetected by the IRS, such as keeping end-ofthe-year income below a certain threshold through “distributions,” false “business deductions,” and non-interest-bearing

accounts. These actions directly caused clients to file false

and fraudulent returns.8

8Defendants mistakenly argue that this case is “indistinguishable” from

United States v. Dahlstrom, 713 F.2d 1423, 1429 (9th Cir. 1983), which

held that “[p]rosecution for advocacy of a tax shelter program in the

absence of any evidence of a specific intent to violate the law is offensive

to the first and fifth amendments of the United States Constitution.” Dahlstrom’s holding is limited to pure advocacy or speech cases. See United

States v. Schulman, 817 F.2d 1355, 1359 (9th Cir. 1987) (Dahlstrom is

properly read as an advocacy case); United States v. Russell, 804 F.2d 571,

576 (9th Cir. 1986) (Ferguson, J., concurring) (as a member of the Dahlstrom panel, describing the case as “primarily a First Amendment case

involving pure advocacy”). 

13100 UNITED STATES v. SMITH
B. Fraudulent or False Return

Smith argues that the particular 1040 personal returns or

1065 partnership tax returns were not false for omitting

income or revenue that should have been reported on a separate 1041 trust return. However, IRS Agent Brown testified

that although revenue in a business trust such as a UBO

would typically be reported on a form 1041, as a default the

income could also be reported on a 1040 personal income tax

return. In any event, the income had to be reported on some

IRS form. Thus, the under-reporting of income on the clients’

personal returns, that could have been but was not reported

elsewhere, made the personal returns “false” or “fraudulent.”

[25] Agent O’Keeffe methodically went through each

allegedly false or fraudulent return, and testified to the substantial understatement of income on each one. Viewing the

evidence in the light most favorable to the prosecution, there

is sufficient evidence from which a rational juror could find

that the returns were false or fraudulent. 

C. Willfulness

Smith argues that the evidence was insufficient to show

that he acted willfully “with specific intent to defraud the government in the enforcement of its tax laws.” Salerno, 902 F.2d

at 1432. While there is nothing “inherently unlawful with an

UBO,” and the government told the jury during closing argument to assume UBOs are “legitimate,” the government provided ample evidence that Smith gave advice to unlawfully

use UBOs to file false or fraudulent tax returns (or not to file

at all). 

Smith further argues that there was no evidence presented

that Smith was advised by the IRS that UBOs must file a tax

return or that his actions were illegal. However, Smith worked

in concert with Bates, who kept busy drafting “response” letUNITED STATES v. SMITH 13101
ters to the IRS disputing the IRS’s contention that taxes

needed to be paid. 

Finally, Smith argues that “even under the government’s

own theory, Smith’s purpose was to steal money or defraud

the persons who purchased UBOs from him; he did not have

the specific intent to defraud the government in the enforcement of its tax laws.” Smith ignores that stealing from clients

and defrauding the government are not mutually exclusive —

and that the evidence is sufficient to establish both purposes.

Smith argues that this case is analogous to Salerno, where

this court reversed the defendants’ § 7206(2) convictions

because, although they were guilty for implementing a

scheme to embezzle millions from the casino, “the government failed to prove the scheme had as a purpose the violation

of the federal tax laws.” 902 F.2d at 1430. The government

had to show that the defendants engaged in the scheme “not

merely for their own benefit but with a specific intent to cause

the casino to file false tax returns.” Id. at 1432. However,

there was neither evidence that the defendants had anything

to do with preparation of tax returns, nor “evidence that the

defendants had any motive for conducting a scheme to

defraud the government, [n]or that they ever mentioned their

own taxes, much less the tax returns of the casino.” Id. 

Unlike in Salerno, Smith and Bates had as “a purpose,”

although not their sole purpose, the violation of tax laws.

They specifically advised clients that the UBO income need

not be reported on any kind of tax return, and told them not

to consult friends, family, or accountants about their UBOs.

The evidence was sufficient to prove that the defendants had

a “specific intent to cause” their clients to file false returns.

[26] Further unlike Salerno, Smith and Bates had a “motive” for conducting a scheme to defraud the government: to

hook the clients into giving them control over the clients’

money so they could steal it. Finally, unlike in Salerno, here

13102 UNITED STATES v. SMITH
there was ample mention of the clients’ tax returns within the

scheme. Thus, there was sufficient evidence, viewing the evidence in the light most favorable to the prosecution, to find

that the defendants willfully intended to cause false or fraudulent returns to be filed. 

D. Conspiracy Count 1

Smith argues that the reasons for the insufficiency of the

§ 7206(2) counts apply to invalidate the Count 1 conspiracy

conviction. Because his arguments with respect to the

§ 7206(2) counts fail, they fail equally with respect to the conspiracy count. 

VI. Alleged Juror Bias & Misconduct 

Smith and Bates argue that they are entitled to a new trial

because of two instances of alleged juror misconduct and bias.

We review a district court’s denial of a post-verdict evidentiary hearing for an abuse of discretion, United States v. Saya,

247 F.3d 929, 934 (9th Cir. 2001), and its denial of a new trial

on the assertion of juror misconduct or bias for abuse of discretion as well, United States v. Hanley, 190 F.3d 1017, 1031

(9th Cir. 1999). “Because of the trial judge’s unique opportunity to observe the jurors during trial, to hear the defenses

asserted, and to hear the evidence, the judge’s conclusion

about the effect of the alleged misconduct deserves substantial

weight.” Saya, 247 F.3d at 937 (quotations and citations omitted). 

A. Juror #9’s Alleged Bias 

[27] “The Sixth Amendment guarantees criminal defendants a verdict by impartial, indifferent jurors.” Dyer v. Calderon, 151 F.3d 970, 973 (9th Cir. 1998) (en banc). “A court

confronted with a colorable claim of juror bias must undertake an investigation of the relevant facts and circumstances.”

Id. at 974. However, “[a]n evidentiary hearing is not manUNITED STATES v. SMITH 13103
dated every time there is an allegation of jury misconduct or

bias. Rather, in determining whether a hearing must be held,

the court must consider the content of the allegations, the seriousness of the alleged misconduct or bias, and the credibility

of the source.” Hanley, 190 F.3d at 1031 (quotations and citation omitted). An evidentiary hearing is not necessary where

the court knows “the exact scope and nature” of the bias allegation. Saya, 247 F.3d at 935 (internal quotations and citations omitted). 

About a month after the jury returned the verdicts in this

case, Juror #9 wrote the following letter to Agent O’Keeffe:

Dear Bridget, 

My name is Brandt Mayer and I was juror #9 in

the Bates/Smith/Wadsworth trial in Sacramento

recently. As a sworn in juror as you know, we were

not allowed to converse with anyone on the case. 

Now that it’s over and forgotten by me (thank

god) I would like the opportunity to be able to talk

with you. Not about the case of course, or your profession or mine, but in a casual way. 

I was deprived not being allowed to just walk up

and start a conversation with you, which normally

for me is completilly [sic] out of character, as I am

a bit timid. 

After listening to you on the stand [you] showed

a very “kind” aura about you. You’re [sic] sofistication [sic] also impressed me. You’re [sic] introduction led me to believe that you are a single woman

and has given me the comfort and insentive [sic] to

write you. 

I am hoping that you remember who I was: You

were getting off the elevator one day on the 10th

13104 UNITED STATES v. SMITH
floor and I leaned out of the elevator accross [sic]

from you as we (the jurors) were heading down. I

purposly [sic] gave you a smile. It appeared that you

returned a smile back to me. In fact the jurors teased

me about that for days afterward, but that’s ok, I told

them that the smile was for me and not them. 

Could it be possable [sic] to send an e-mail to me?

A “get aquianted” [sic] type. I will surely respond.

But if you are finding this type of approach odd,

tastless [sic], or in anyway [sic] out of line, or that

you’re simply not interested, I will surely understand

and appollogize [sic]. I couldn’t think of any other

way to give it a try and I thought it couldn’t hurt.

Take care. 

Agent O’Keeffe promptly reported the letter to prosecutors

who in turn reported the letter to the court and opposing counsel. Thereafter, Smith and Bates moved for a new trial based

on Juror #9’s claimed bias; Bates also requested an evidentiary hearing. Both sides submitted briefs on the issue and

argued the motion before the district court ruled. After considering the evidence, the district court denied the motion without conducting an evidentiary hearing. 

With Juror #9’s letter in hand, the district court understood

the exact nature and scope of the bias allegation. Cf. Saya,

247 F.3d at 935. The district court examined the content of

the allegations from the letter and never doubted the credibility of the source to which defendants pointed — Juror #9 himself. Cf. Hanley, 190 F.3d at 1031. In analyzing the

seriousness of the allegations, the district court took into

account that (1) Agent O’Keeffe was one of the last witnesses

to take the stand after six weeks of trial (thereby limiting her

influence on Juror #9), (2) Agent O’Keeffe was a summary

witness who presented no new evidence, (3) other than the

“kind aura” statement, there was “absolutely no tangible eviUNITED STATES v. SMITH 13105
dence that there was any extraneous information or extraneous influence on this juror by anyone,” (4) there was

“absolutely no evidence that Juror Number 9 did anything

inappropriate during the trial” (noting at most a smile was

exchanged), and (5) there was no evidence filed by defendants

or declarations from any of the jurors that there was extraneous information or influence. 

The district court logically reasoned it was unlikely that

this juror was attempting to impress Agent O’Keeffe by finding defendants guilty, since he voted to acquit Charlotte Wadsworth, to acquit Bates of 88 out of 111 counts against him,

and to acquit Smith on three counts. Furthermore, Juror #9

explicitly wrote Agent O’Keeffe that he had no desire to discuss the case with her, making the argument that he was trying to impress her with guilty verdicts even more attenuated.

An evidentiary hearing to listen to Juror #9’s testimony

regarding the trial would likely not have produced any valuable information. When inquiring into the validity of a verdict, pursuant to Federal Rule of Evidence 606(b), 

a juror may not testify as to any matter or statement

occurring during the course of the jury’s deliberations or to the effect of anything upon that or any

other juror’s mind or emotions as influencing the

juror to assent to or dissent from the verdict or

indictment or concerning the juror’s mental processes in connection therewith, except that a juror

may testify on the question whether extraneous prejudicial information was improperly brought to the

jury’s attention or whether any outside influence was

improperly brought to bear upon any juror. 

(emphasis added). Thus, even if the juror’s thought process

was biased with his alleged “infatuation” with Agent

O’Keeffe, the court was not free to hear evidence in this

regard. Further, it was clear from Juror #9’s letter that there

13106 UNITED STATES v. SMITH
was neither extraneous prejudicial information from Agent

O’Keeffe (a smile can hardly be so deemed), nor “outside

influence [that] was improperly brought to bear.” 

[28] The district court did not abuse its discretion in denying the evidentiary hearing and a new trial. Even if this juror

had something of a crush on Agent O’Keeffe, his letter made

clear that he diligently performed his duty as a juror, never

speaking to Agent O’Keeffe during the trial, and at most

exchanging a smile with her. It is unlikely that any trial goes

by without one juror finding one witness nice or attractive.

The only unusual thing about this case is that Juror #9 put his

feelings in writing. The district court was well within its discretion in finding no evidence of juror misconduct and no

extraneous influences on the juror, such that an evidentiary

hearing was not required. 

B. Juror #1’s Alleged Intimidation 

The district court also denied defendants’ motion for a new

trial based on the alleged intimidation of Juror #1. During the

trial, Juror #1 wrote an e-mail explaining her disagreement

with the foreperson regarding her approach to analyzing the

mail and wire fraud counts without first considering the basis

of the conspiracy charges. She explained: 

I have been criticized by the foreperson and consequently have felt intimidated into proceeding on a

ruling on more than two dozen counts without having first established the underlying business relationship of the defendants. She criticized me for wanting

to review my notes; she criticized me for wanting to

look at the evidence, and specifically she criticized

me for wanting to look at evidence relative to count

one. At one point she accused me of having already

made up my mind because I suggested that we consider the prosecution’s foundation for the case. The

foreperson then threatened to throw me off the jury.

UNITED STATES v. SMITH 13107
The district court questioned Juror #1 outside the presence

of the other jurors about her feelings of intimidation. After the

juror reiterated her concerns from the e-mail, the judge told

her:

Each of you [jurors] must decide the case for yourself, but you should do so only after you have considered all the evidence, discussed it fully with the

other jurors, and listened to the views of your fellow

jurors. 

Do not be afraid to change your opinion if the discussion persuades you that you should. But do not

come to a decision simply because other jurors think

it is right. It is important that you attempt to reach a

unanimous verdict, but, of course, only if each of

you can do so after having made your own conscientious decision. Do not change an honest belief about

the weight and effect of the evidence simply to reach

a verdict. 

Although Juror #1 told the judge that she did not believe her

decisions were made based upon her own beliefs up to that

point, after hearing the above instruction, she felt able to

return to deliberations and make future decisions (including

those on verdicts that may have been rendered previously)

based on her own conscience and belief. 

The attorneys for defendants and the government then had

a long discussion about whether the jury should be instructed

to start deliberations anew or be instructed again on their role

as jurors, and whether to keep Juror #1 on the jury. The court

then brought Juror #1 back in, and asked more questions

regarding whether she still felt intimidated, to which she

answered she did not. The court was convinced that Juror #1

made “very clear that she is not intimidated at this point, that

she understands her duty as a juror, and that she is ready to

continue her deliberations in this case after the entire jury is

13108 UNITED STATES v. SMITH
reinstructed as to 34 and 39” (which had been reread to Juror

#1). 

[29] Smith argues that the foreperson’s bullying of Juror #1

“demonstrates that the jury was not impartial and that the jury

deliberation process was not functioning properly.” However,

if anything, the foreperson’s misconduct ran to the defendants’ favor by discounting the prosecution’s theories. This

alleged misconduct was thoroughly investigated by the district court, and its effect cured by ensuring that Juror #1 no

longer felt intimidated. The district court did not abuse its discretion in refusing a new trial on this ground. 

VII. Duplicity and Multiple Conspiracies Jury Instruction

Before trial, Smith moved to dismiss Counts 1, 25, and 64,

the three conspiracy charges of the indictment, arguing that

each one encompassed multiple conspiracies (and thus that

each one was duplicitous). Bates joined this motion. Defendants disputed that there was one overarching conspiracy

within any of these counts because the overt acts covered six

alleged UBOs, with differing: (1) time periods, (2) identity of

defendants involved, (3) identity of taxpayers involved, and

(4) specific transactional facts. 

The government opposed the motion, arguing that Counts

1, 25, and 64 each contained a singular conspiracy. As to

Count 1, the government asserted that defendants entered into

an agreement to impair and impede the IRS through the use

of UBOs “in a fashion which knowingly and intentionally

understated income and overstated legitimate deductible

expenses.” Although the UBOs were marketed to 249 or more

taxpayers, the government argued that the Count 1 conspiracy

was not “taxpayer specific”; it involved “one agreement,

regardless of the number of taxpayers whose income tax

return[s] were involved.” As to Count 25, the government

argued that there was one agreement to use the mail and interstate wire communications in furtherance of a scheme to

UNITED STATES v. SMITH 13109
defraud. Finally, Count 64, though involving different money

laundering sections (18 U.S.C. §§ 1956(a)(1)(A), 1956(a)

(1)(B), and 1957), encompassed only one agreement to

engage in money laundering. The government summarized its

argument as “[o]ne agreement; one count.” 

After considering the pre-trial briefs and supplemental

briefs of all the parties on this issue, the district court found

the indictment not duplicitous as to Counts 1, 25, and 64.

After the trial, during the jury instruction conference, Smith

renewed the motion to dismiss these counts, claiming that the

government had “not been able to show an overarching conspiracy but rather ha[d] shown individual conspiracies.” The

district court denied the motion, and sustained the government’s objection to a multiple conspiracy instruction. 

The district court’s ruling that there were no duplicitous

counts appears correct, and defendants do not dispute it on

appeal. Instead, defendants now argue that the district court

erred in denying the request for the multiple conspiracy

instruction. However, this argument is not based on any of the

pretrial briefing arguments or post-trial jury instruction conference arguments that each conspiracy count encompassed

multiple conspiracies. Rather, defendants argue (based on

their multiplicitous sentence argument) that three conspiracy

counts inherently require a multiple conspiracy instruction. 

This argument was never made below, and thus was

waived. Even if it were not waived, the argument misconstrues the nature of a multiple conspiracy instruction, which

pertains to multiple conspiracies within a conspiracy count.

The district court correctly denied the multiple conspiracy

instruction. 

VIII. Application of Sentencing Guidelines

Smith and Bates argue that the district court erred in

enhancing their sentences under the Sentencing Guidelines.

13110 UNITED STATES v. SMITH
“Even though the Guidelines are no longer mandatory after

the Supreme Court’s decision earlier this year in United States

v. Booker, 125 S. Ct. 738 (2005), the district court should still

consult them for advice as to the appropriate sentence, id. at

767.” United States v. Kimbrew, 406 F.3d 1149, 1152 (9th

Cir. 2005). We review “the district court’s interpretation of

the Sentencing Guidelines de novo, the district court’s application of the Sentencing Guidelines to the facts of this case

for abuse of discretion, and the district court’s factual findings

for clear error.” Id. at 1151 (citation omitted). 

A. U.S.S.G. § 3D1.2 

[30] Smith and Bates argue the district court erred by

grouping the tax counts separately from the money laundering

and mail and wire fraud counts, which resulted in a two-point

increase in each of their offense levels. The Guidelines provide that “[a]ll counts involving substantially the same harm

shall be grouped together into a single Group.” U.S.S.G.

§ 3D1.2. In part, “same harm” means the counts involve the

“same victim.” Id. § 3D1.2(a), (b). 

The government argued at sentencing that the counts in

question encompassed different harms and different victims.

The Presentence Investigation Reports (“PSRs”) for Bates and

Smith both found that the victim as to the tax fraud counts is

the United States government, whereas the victims as to the

mail fraud and wire fraud counts “are the clients who had

their money stolen by the defendants.” The district court

adopted the PSRs’ findings and declined to group all counts

together. 

[31] The district court’s factual finding that multiple victims were involved is not clearly erroneous, and the district

court did not abuse its discretion in applying U.S.S.G.

§ 3D1.2. 

UNITED STATES v. SMITH 13111
B. U.S.S.G. § 3B1.1(c) 

The U.S.S.G. § 3B1.1(c) aggravating role two-level

enhancement applies “[i]f the defendant was an organizer,

leader, manager, or supervisor in any criminal activity”

involving less than five participants and that was not otherwise extensive. Smith’s PSR recommended this enhancement

because Smith managed the activities of Christopher Bates

and Charlotte Wadsworth. The district court’s adoption of this

factual finding was not clearly erroneous.

IX. Increasing Smith’s Sentence Based on Allocution

Near the end of Smith’s sentencing hearing, the district

court stated its intention “to depart somewhat from the Probation Officer’s recommendations and to sentence Mr. Smith to

the low end of [the] guideline range of 121 months imprisonment.” Defense counsel and the prosecution presented nothing

further. Then, the district court asked whether Smith wished

to address the court; Smith did. 

Smith made a lengthy speech, denying (1) the jurisdiction

of the district court, (2) that he had any connection to any

state or the United States, (3) the existence of the United

States, California, Sacramento, the district court, the prosecutor, defense counsel, Judge England, a list of UBOs, and even

himself, and (4) that he is a Fourteenth Amendment “person.”

Smith contested that the offenses he was charged with were

committed by anyone, and argued that the prosecution had

“failed to show any actual or threatened injury as a result of

the challenged conduct.” Smith demanded that the court “reconsider and withdraw the proposed sentence, reverse the

conviction, enter judgment of acquittal, vacate the charges

against [him], quash the indictment, dismiss the complaint

and otherwise . . . set [him] free.” 

The district court responded to Smith’s speech:

13112 UNITED STATES v. SMITH
The defendant’s statements to the Court that were

just read have made it abundantly clear to this Court

that Mr. Smith has absolutely no remorse for his

actions. And further, he has directly challenged this

Court and its ultimate authority. Accordingly, I find

that this defendant is appropriate to be sentenced not

at the lower end of the guideline range but at the

upper end. 

Mr. Smith apparently just simply does not get it.

He is a direct and continuing threat to the financial

safety of the public. And this Court has the belief,

well-founded belief that if he were to be released

from custody at any earlier time, he would immediately resume the criminal activity for which he was

on trial here in this court. 

The district court then sentenced Smith to 151 months instead

of 121 months. Smith’s counsel made no objection to the

increased sentence. 

[32] Smith argues that his First Amendment free speech

and Fifth Amendment due process rights were violated

because he was punished with a higher sentence for expressing his views on the district court’s lack of jurisdiction. But

the district court made it clear that it was increasing the sentence based on Smith’s lack of remorse, and his threat to the

financial safety of the public when released. These are legitimate sentencing factors under 18 U.S.C. § 3553(a), which

include considering the “characteristics of the defendant” and

the need for the sentence “to promote respect for the law,” “to

afford adequate deterrence to criminal conduct,” and “to protect the public from further crimes of the defendant.” 

[33] The district court may indicate a tentative sentence and

then hear from the defendant before making a final sentencing

determination. See United States v. Laverne, 963 F.2d 235,

236 (9th Cir. 1992). The district court here “was able to conUNITED STATES v. SMITH 13113
sider the defendant’s statement and was free to alter its view

of the sentence if the defendant offered a sufficient reason for

changing its view.” Id. at 237. That the district court considered Smith’s lack of remorse in sentencing him is by no

means a novel concept. See United States v. Malquist, 791

F.2d 1399, 1402-03 (9th Cir. 1986) (“inclusion of [defendant’s] lack of repentance in the court’s sentencing calculus

was permissible”). The district court did not err in taking

Smith’s statement into consideration for sentencing. The Sentencing Guidelines, in either their mandatory or advisory status, do not insulate a defendant from his or her own

foolishness. 

X. Reconsideration of Bates’s sentence 

At sentencing, the district court stated its tentative intention

to sentence Bates at the low end of the guideline range (121

months) because of Bates’s medical condition. The government made “another pitch for the mid-range of 136 months”

because “the defendant’s criminal history is actually substantially understated.” Although Bates was found not criminally

liable, he was found civilly liable for fraud in the amount of

$4,687,984.71. 

The district court sentenced Bates to 136 months, explaining: “I have reconsidered my initial decision, and I am going

to follow the recommendation of Probation for 136 months.”

The court further stated:

The Court wants to make it clear that the reconsideration of the sentencing is based upon not only the

words that Mr. Twiss [AUSA] stated here today in

open court, but also a further review of the Presentence Report and also the Court’s own recollection

of the magnitude of the scheme in which Mr. Bates

was involved, which led to the losses of substantial

sums of money, upwards of 1.8 million dollars, from

varying individuals and ages, some who have lost

13114 UNITED STATES v. SMITH
their entire retirement system under this scheme of

unincorporated business organizations. 

And I want the record to reflect that as being the

basis for the Court following the mid-term recommendation of 136 months. 

Thus, the district court relied at least in part on proper factors, such as the magnitude of the scheme and the loss

incurred by victims, in determining placement in the sentencing range. See 18 U.S.C. § 3553(a)(2)(A) (sentence “to reflect

the seriousness of the offense”). Furthermore, the Guidelines

state that the “history” of the defendant may be considered.

Id. § 3553(a)(1). A civil judgment against a defendant could

be a factor in the defendant’s history. Thus, it does not appear

that the district court relied on improper factors in sentencing

Bates to the middle of the Guidelines range. 

XI. Booker Issue 

[34] Both Smith and Bates argue that they must be resentenced under Booker because their sentences are based on

facts not found by a jury beyond a reasonable doubt. Because

the defendants did not challenge their sentences on Sixth

Amendment grounds in the district court, and because the

record in this case does not “provide a reliable answer to the

question of whether the judge would have imposed a different

sentence had the Guidelines been viewed as advisory,” we

grant a limited remand to the district court to answer this

question. United States v. Ameline, 409 F.3d 1073 (9th Cir.

2005) (en banc). 

XII. Ex Post Facto Issue

Smith and Bates argue that upon resentencing, their sentences must be capped by the maximum terms of imprisonment authorized by the unenhanced base offense levels, under

ex post facto principles. We have rejected that argument in

UNITED STATES v. SMITH 13115
United States v. Dupas, 2005 U.S. App. LEXIS 15938 (9th

Cir. 2005). 

CONCLUSION

For the foregoing reasons, the judgments of conviction are

affirmed and the cases are remanded pursuant to Ameline. 

13116 UNITED STATES v. SMITH