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. e du/thir dc ir c uit_1998/152Filed July 9, 1998

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 96-3632

UNITED STATES OF AMERICA

v.

JOSEPH P. MOSES Appellant

ON APPEAL FROM THE

UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA (D.C. Crim. No. 95-00067-1)

Argued: January 26, 1998

Before: MANSMANN, COWEN, and ALITO, Circuit Judges

(Opinion Filed: July 9, 1998)

J. ALAN JOHNSON (Argued) 1550 Koppers Building

436 Seventh Avenue Pittsburgh, PA 15219

Counsel for Appellant

LINDA L. KELLY United States Attorney

JAMES Y. GARRETT (Argued) Assistant U.S. Attorney
633 U.S. Post Office & Courthouse Pittsburgh, PA 15219

Counsel for AppelleeOPINION OF THE COURT

ALITO, Circuit Judge:

Joseph Moses appeals his criminal convictions for willfully failing to file corporate tax returns, wi llfully filing false personal tax returns, and conspiring to defra ud the United States by obstructing the lawful functions o f the Internal Revenue Service (IRS). Moses assigns as er ror the district court's denial of his post-trial motion fo r a judgment of acquittal, as well as its admission of certain hearsay statements. We affirm.

I

While Director of the Allegheny County Maintenance Department, Joseph Moses accepted kickbacks from Edmond Gaudelli, a commercial vendor who did busine ss with the County. These kickbacks were routed throug h Catherine Jean Ronschke, an employee of the Departm ent, to conceal the source and nature of the payments. W ith the aid of the kickbacks from Gaudelli, Moses was able to meet the financial obligations of Sadies Place, Inc., a private corporation he had formed in 1985. Between 1985 and 1993, Moses failed to file several corporate tax re turns for Sadies Place and failed to report his kickback inco me on his personal tax returns. Meanwhile, Gaudelli deduc ted the kickbacks as business expenses on his returns. When called before a grand jury in May 1994 to discuss t hese matters, Gaudelli and Ronschke both made false statements regarding their financial dealings with Moses.

Based on these and other events, Moses, Gaudelli an d Ronschke were indicted for conspiring to defraud th e United States by obstructing the lawful functions o f the IRS. See 18 U.S.C. S 371. In addition, Moses was in dicted for willfully filing a false personal income tax re turn, in violation of 26 U.S.C. S 7206(1), and willfully fai ling to file four corporate tax returns for Sadies Place, in vio lation of

26 U.S.C. S 7203.

2At trial, Moses objected to the admission of severa l

hearsay statements made by Gaudelli and Ronschke. T he district court overruled these objections, concludi ng that some of the statements were admissible because they were against the declarant's penal interest, see Fed. Ru le Evid. 804(b)(3), and others were admissible because they were made in furtherance of the conspiracy. See Fed. Rul e Evid. 801(d)(2)(E). After the jury convicted Moses on all counts, he moved for a judgment of acquittal on the ground that
there was insufficient evidence to convict him of w illfully failing to file the Sadies Place returns. The distr ict court denied the motion, and Moses brought this appeal.

II

A

Moses's primary contention on appeal is that the di strict court erroneously admitted out-of-court statements made by Edmond Gaudelli. Gaudelli's statements, which implicated Moses in the kickback scheme, were prese nted through the testimony of Michael Tutro, a governmen t witness who had been a friend and colleague of Gaud elli's. According to Tutro, Gaudelli said on several occasi ons that he was "tak[ing] care" of Moses "moneywise." App. 4 34-37.
Tutro further testified that Gaudelli would tell hi m where he was meeting with Moses to make these payments. T he
district court concluded that Gaudelli's statements were admissible under Federal Rule of Evidence 804(b)(3) as statements against penal interest, and further held that
admission of Gaudelli's statements would not violat e the Confrontation Clause. Moses challenges both of thes e rulings on appeal.

A hearsay statement made by an unavailable declaran t can be admitted pursuant to Rule 804(b)(3) if, at t he time of its making, "it so far tended to subject the dec larant to civil or criminal liability . . . that a reasonable person in the declarant's position would not have made the statem ent unless believing it to be true." Since there is no dispute over Gaudelli's unavailability, the only question u nder Rule 804(b)(3) is whether the admitted statements were

3sufficiently against Gaudelli's interest so as to b e deemed

reliable. This determination must be made "by viewi ng [the statement] in context" and "in light of all the sur rounding circumstances." Williamson v. United States, 512 U. S. 594, 603-604 (1994).

Moses contends that Gaudelli's statements are not admissible under Rule 804(b)(3) because "statements implicating another person in misconduct are not ag ainst the interest of the declarant." Reply Br. at 1. Whi le this proposition holds true in many cases, it is not a p er se rule. As the Supreme Court explained in Williamson:

There are many circumstances in which Rule 8 04(b)(3)
does allow the admission of statements that inculpate
a criminal defendant. Even the confessions o f arrested accomplices may be admissible if they are tr uly self- inculpatory, rather than merely attempts to shift blame or curry favor.

512 U.S. at 603.

Under Williamson, the proper approach in cases invo lving out-of-court statements implicating other people is to
examine the circumstances in which the statements a remade in order to determine whether they are selfinculpatory or self-serving. In Williamson, where t he declarant implicated another person while in police custody and after already having confessed to the crime, th e Court concluded that the naming of the defendant did litt le to further implicate the declarant and may have been a n effort to secure a lesser punishment through cooperation. See 512 U.S. at 604 (opinion of O'Connor, J., in which Scalia, J. joined); id. at 607-08 (opinion of Ginsburg, J., in which Blackmun, Stevens, and Souter, J.J., joined). See a lso United States v. Boyce, 849 F.2d 833, 836 (3d Cir. 1988) (statement given in custody not reliable because circumstances indicated that it may have been "moti vated by a desire to curry favor"). In the instant case, by contrast, Gaudelli made his statements to a friend during lun ch conversations that took place long before Gaudelli was arrested. Under these circumstances, there is no re ason to believe that Gaudelli was trying to avoid criminal consequences by passing blame to Moses.1 Moreover, by

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1. This conclusion is supported by the Notes of Adv isory Committee to Rule 804(b)(3):

4naming Moses, as well as the place where he was mee ting

Moses to make payments, Gaudelli provided selfinculpatory information that might have enabled the authorities to better investigate his wrongdoing. S ee Williamson, 512 U.S. at 603 (explaining that a decl arant'sstatement as to where he hid a gun would be selfinculpatory "if it is likely to help the police fin d the murder weapon"). Given the context and content of Gaudelli 's statements to Tutro, we agree with the district cou rt that they were sufficiently self-inculpatory so as to sa tisfy the requirements of Rule 804(b)(3).

Moses's Confrontation Clause argument presents a mo re complicated question. The Supreme Court has held th at an out-of-court statement may be barred by the Confron tation Clause even if it fits a hearsay exception. Idaho v . Wright, 497 U.S. 805, 814 (1990). The Wright Court explaine d that, to be admissible under the Sixth Amendment, a hears ay statement must either fall within a "firmly rooted" hearsay exception or be "supported by a showing of particul arized guarantees of trustworthiness." Id. at 816-17 (cita tion omitted). While the district court concluded that t he "statement against penal interest" exception is fir mly rooted, we decline to address that issue because we believe that a hearsay statement that meets the requirement s of

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[A] statement admitting guilt and implicatin g another person, while made in custody, may well be motivated by a desire to curry favor with the authorities and hence fail to quali fy as against interest.

. . . On the other hand, the same words spoken und er different circumstances, e.g., to an acquaintance, wou ld have no difficulty

in qualifying.

28 U.S.C.A. Rule 804, p. 449 (1984). While the Supr eme Court in Williamson concluded that the Advisory Notes are"no t particularly clear" as to the admissibility of non-self-inculpatory sta tements that are collateral to self-inculpatory statements, see 512 U.S. at 601-02, the Notes are perfectly clear as to the difference betw een custodial and noncustodial circumstances for purposes of determining whether a statement is self-inculpatory in the first place.

5Rule 804(b)(3) by definition possesses "particulari zed

guarantees of trustworthiness."2

Rule 804(b)(3) does not allow the admission of all statements that could be interpreted as against the declarant's penal interest. Rather, the rule permit s the use of a statement only if it "so far tended" to subjec t the declarant to criminal liability "that a reasonable man in his position would not have made the statement unless h e believed it to be true." Fed. Rule Evid. 804(b)(3). As discussed above, this language requires courts to e xamine "all the surrounding circumstances" in order to det ermine whether a statement is "truly self-inculpatory." Wi lliamson, 512 U.S. at 603-04. This examination parallels the inquiry required under the Confrontation Clause. See Wright , 497 U.S. at 820 (courts must examine "the totality of circumstances that surround the making of the state ment"
to determine whether the declarant's statement is "particularly worthy of belief ").3 Accordingly, we conclude that a statement that meets the requirements of Rul e 804(b)(3) also meets the requirements imposed by th e Confrontation Clause. Accord Williamson, 512 U.S. a t 605 (opinion of O'Connor, J., in which Scalia, J., join ed). Since
Gaudelli's statements were made under circumstances that render them particularly worthy of belief for purpo ses of Rule 804(b)(3), we affirm the district court's ruli ng that the statements are not barred by the Confrontation Clau se.

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2. We note that there is disagreement among the cir cuits as to whether the "statement against penal interest" exception is firmly rooted. Compare United States v. Flores, 985 F.2d 770, 775- 776 (5th Cir. 1993) (not firmly rooted) with United States v. Saccoccia , 58 F.3d 754, 779 (1st Cir. 1995) (firmly rooted); United States v. York, 933 F.2d 1343, 1363 (7th Cir. 1991) (same); United States v. Seeley, 89 2 F.2d 1, 2 (1st Cir. 1989) ("[T]he exception for declarations against pe nal interest would seem to be `firmly rooted.' ").

3. In examining the totality of the circumstances, courts cannot rely on corroborating evidence to conclude that a hearsay s tatement is trustworthy for purposes of the Confrontation Claus e. Wright, 497 U.S. at 822-823. Moses correctly points out that the dis trict court erred by relying on corroborating evidence in the instant ca se. See App. at 425. This error was harmless, however, given that the ci rcumstances surrounding the making of Gaudelli's statements are alone sufficient to render them trustworthy.

6B

Moses's next contention is that the district court erroneously admitted the grand jury testimony of Je an Ronschke and Edmond Gaudelli as non-hearsay under Federal Rule of Evidence 801(d)(2)(E).4 That rule provides:

A statement is not hearsay if . . . [t]he st atement is offered against a party and is . . . a state ment by a coconspirator of a party during the course a nd in furtherance of the conspiracy.

Moses argues that the statements made by Ronschke a nd Gaudelli are not admissible under Rule 801(d)(2)(E) because they were made after the object of the charged cons piracy had been accomplished and, thus, were not statement s in furtherance of the conspiracy. In making this argum ent, Moses relies on the Supreme Court's instruction tha t "after the central criminal purposes of a conspiracy have been attained, a subsidiary conspiracy to conceal may no t be implied from circumstantial evidence showing merely that the conspiracy was kept a secret and that the consp irators took care to cover up their crime in order to escap e detention and punishment." Grunewald v. United Stat es, 353 U.S. 391, 401-02 (1957). Moses contends that th e central purpose of the instant conspiracy was to "a void declaring . . . additional income for the years 198 5-88." Appellant's Br. at 31. Since Gaudelli and Ronschke did not provide their testimony until 1994, Moses argues th at, under Grunewald, it was improper to admit their statements as being in furtherance of the original conspiracy. However, contrary to Moses's characteri zation, the conspiracy charged in the indictment was not li mited to the years 1985-1988. Rather, the indictment explici tly charged a conspiracy to defraud the IRS lasting unt il June 30, 1994, App. at 26, and it alleged that the consp irators engaged in more than 50 overt acts in furtherance o f the

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4. A review of the district court's order reveals t hat much of the grand jury testimony was admitted because it did not meet the definition of hearsay. See Supp. App. at 1-5 (holding that"some o f the testimony is not being offered to prove the truth of the matter asserted, and therefore is not hearsay"). Moses has not appealed this porti on of the district court's ruling.

7conspiracy between 1989 and 1994. App. at 37-43. Th us,

this case is wholly distinguishable from Grunewald, where the main objective of the conspiracy was to obtain "no prosecution" letters from the IRS in 1948 and 1949, but the government sought to imply a subsidiary conspiracy to
conceal in the 1950s. 353 U.S. at 398.

We agree with the district court that this case is controlled by Forman v. United States, 361 U.S. 416 (1960), overruled in part on other grounds by Burks v. Unit ed States, 437 U.S. 1, 18 (1978). In Forman, the defen dant was charged with conspiracy to evade income taxes t hat were owed for the period of 1942-45. Id. at 417-19. Although the last false income tax form was filed i n 1946, the government contended that the conspiracy embrac ed "subsequent efforts . . . to evade those taxes." Id . at 420. The Supreme Court agreed, noting that "the indictme nt specifically alleged that the conspiracy extended f rom 1942 to 1953" and charged overt acts "committed as late as 1953." Id. at 423. The Court continued:

The correct theory, we believe, was indicate d by the indictment, i.e., that the conspiracy was a continuing one extending from 1942 to 1953 and its prin cipal object was to evade the taxes of [the defend ant] and his wife for 1942-1945, inclusive, by concealing their `holdout' income. This object was not attain ed when the tax returns for 1945 concealing the `holdout ' income
were filed. . . . The concealment of the`hol dout' income
must continue if the evasion is to succeed. It must
continue until the action is barred and the evasion permanently effected.

Id. at 423-24. Like the indictment in Forman, the indictment in this case specifically alleges a cont inuing conspiracy to evade taxes that included overt acts of

concealment after the taxes were due. In order for this conspiracy to succeed, Moses and his co-conspirator s had to conceal his failure to pay taxes until any actio n was barred and the evasion was "permanently effected." Id. at 424. Since this object had not yet been achieved wh en Gaudelli and Ronschke testified before the grand-ju ry,5 the

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5. We take as accurate the government's statement t hat "Moses' liability for taxes owed on unreported kickbacks . . . remain ed open" at the time of the grand jury testimony. Appellee's Br. at 41. Moses did not dispute
this factual assertion.

8district court was entitled to conclude that Gaudel li and

Ronschke made their statements in furtherance of th e conspiracy. Accordingly, we affirm the order of the district court admitting the statements of Edmond Gaudelli a nd Jean Ronschke under Rule 801(d)(2)(E).

C

Moses's final contention is that the government pre sented
insufficient evidence to demonstrate that he willfu lly failed
to file tax returns for the Sadies Place business i n violation of 26 U.S.C. S 7203. To prove willfulness in a crim inal tax case, the government must show "that the law impose d a duty on the defendant, that the defendant knew of t his duty, and that he voluntarily and intentionally vio lated that duty." Cheek v. United States, 498 U.S. 192, 201 (1 991). Viewing the evidence in the light most favorable to the government, we agree with the district court that a reasonable juror could have concluded that Moses ac ted willfully.

The evidence presented at trial revealed that Moses was the sole owner of the Sadies Place business and exe rcised complete control over the business. The evidence al so revealed that Moses was aware of his obligation tof ile tax forms for Sadies Place as he hired an accountant, J oseph Jacobs, to complete tax forms for Sadies Place and submit them to a lending institution. Nevertheless, Moses never signed any of the Sadies Place tax forms during the years in question and did not cause the forms to be submi tted to the IRS until after he was indicted. Moreover, the government demonstrated that Moses had a motive to
withhold the Sadies Place tax forms from the IRS. A t the time the Sadies Place forms were due, Moses was try ing to settle a previous liability to the IRS on favorable terms. This effort might have been jeopardized, however, had th e IRS learned from the Sadies Place returns that Moses po ssessed additional assets. Under these circumstances, a rea sonable juror could conclude that Moses knew of his duty to file the Sadies Place returns and intentionally refrained fr om doing

so.

Notwithstanding this strong circumstantial evidence
, Moses contends that his conviction was unreasonable in

9light of Jacobs' testimony. Jacobs, who appeared as a

government witness, testified that Moses insisted t he Sadies Place returns be filed. After reviewing the record, we agree with the district court that "the jury was no t obligated to accept Jacobs' testimony . . . and in light of J acobs'
demeanor as a witness and his close association wit h Moses personally, professionally and in the crimina l scheme, obviously had abundant reason to disregard it." Supp. App. at 25. Accordingly, we affirm the distri ct court's denial of Moses's motion for acquittal on Counts Fi ve, Six, Seven and Eight of the indictment.

A True Copy:

Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

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