Source: https://law.justia.com/cases/federal/appellate-courts/F2/744/574/459768/
Timestamp: 2020-08-04 09:53:59
Document Index: 74004136

Matched Legal Cases: ['§ 7206', '§ 371', '§ 7206', '§ 7206', '§ 371', '§ 3121', '§ 7206', '§ 3121', '§ 3121', '§ 371', '§ 7206', '§ 876', '§ 371']

United States of America, Plaintiff-appellee, v. Albert Isaksson, Defendant-appellant, 744 F.2d 574 (7th Cir. 1984) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Seventh Circuit › 1984 › United States of America, Plaintiff-appellee, v. Albert Isaksson, Defendant-appellant
United States of America, Plaintiff-appellee, v. Albert Isaksson, Defendant-appellant, 744 F.2d 574 (7th Cir. 1984)
U.S. Court of Appeals for the Seventh Circuit - 744 F.2d 574 (7th Cir. 1984) Argued June 8, 1984. Decided Sept. 17, 1984
Defendant Albert Isaksson appeals from his convictions of Counts 10 and 11 of an indictment for aiding and assisting in the preparation of 1978 and 1979 false income tax returns in violation of 26 U.S.C. § 7206(2), and his conviction of Count 1 for conspiring to commit the above substantive offense in violation of 18 U.S.C. § 371. Defendant argues that the government introduced insufficient evidence to establish that income was under-reported on the two returns in issue, and that the conspiracy conviction is inconsistent with the jury finding of acquittal on Counts 4 and 5 also alleging violations of 26 U.S.C. § 7206(2).1 For the reasons provided herein we reject defendant's arguments and affirm defendant's convictions under Counts 1, 10 and 11.I
On April 13, 1983, a twelve-count indictment was filed against defendant Albert Isaksson.2 Counts 2 through 12 charged him with aiding and assisting each of seven named individuals in the preparation of a federal income tax return that was false as to a material matter in contravention of 26 U.S.C. § 7206(2). Count 1 charged him with conspiring to defraud the federal government by aiding and assisting in the preparation of the false returns through understated W-2 forms in violation of 18 U.S.C. § 371. The case was tried before a jury, the government's principal witnesses being employees Louis Belanger and bookkeeper Carla Collins, who both testified as to the scheme. After all evidence was introduced, defendant's counsel moved for judgment of acquittal on all counts. The court ruled that the government in making its prima facie case had not introduced evidence that five of the seven individuals named in Counts 2 through 12 were employees as opposed to independent contractors.3 The distinction is critical in this case because payments made to independent contractors are not considered wages and therefore are not subject to withholding, nor must they be reported on form W-2. See 26 U.S.C. § 3121(d) (3) infra. Judge Crabb granted the motion on Counts 2, 3, 6, 7, 8, 9, and 12, and denied the motion with respect to Counts 4, 5, 10, and 11. Counts 4 and 5 relate to the W-2 forms and income tax returns of Carla Collins for 1978 and 1979, respectively; Counts 10 and 11 relate to the W-2 forms and income tax returns of Louis Belanger for the same years.
This Court must address two preliminary matters which call into question defendant's framing of the issues. First, defendant assumes that if Louis Belanger did in fact take independent contractor pay from the wages account in the amount of under-reporting, then defendant did not violate 26 U.S.C. § 7206(2)5 because the returns would not be false as to a material matter. However, this position overlooks the fact that if the offset did occur, it did so only by virtue of the inadvertent conduct of nondefendant Belanger, which does not mitigate defendant's willful assistance in evading the federal tax laws. As the testimony at trial established, whether Belanger drew a particular payment on the wages account or the pulpwood and logs account was a matter within Belanger's discretion, this practice being allowed by defendant. Moreover, the source of one's income is a material matter, the false statement of which can be prosecuted under Section 7206. United States v. DiVarco, 343 F. Supp. 101 (N.D. Ill. 1972). Therefore Isaksson's purported defense, if established, would not negate the evidence that he willfully aided in the fraudulent scheme.
The second preliminary matter is whether, as defendant assumes, Belanger's work outside the sawmill i.e., the cutting, skidding, slashing, and truck driving, is characterizable as independent contractor work. 26 U.S.C. § 3121(d) (3) defines employee for employment tax purposes as one who:
Under this test it is a plausible conclusion that Belanger's work as a tree cutter, slasher, skidder, and hauler was derived from an employment relationship with the Company rather than from an independent contractor arrangement. As Belanger testified, the Company owned the cutting, skidding, slashing, and hauling equipment (although he did own and use his own chain saw). Albert Isaksson selected the areas for the tree-cutting operations and purchased the timber from the land owners. Unlike many of the other loggers, Belanger also worked in the sawmill on the Company's premises; moreover, his logging services provided during the years in question can be said under 26 U.S.C. § 3121(d) (3) to be "part of a continuing relationship with the person for whom the services are performed," i.e., Isaksson. See Rev.Rul. 71-273, 1971-1 C.B. 286 (logging company that retains right to control and direct skidders' services and manner of performance employs skidders). Compare Jones v. United States, 43 A.F.T.R.2d (P-H) 79,521 (E.D. Tex. 1978) (tree cutter was independent contractor where cutter provided his own tools and equipment and bore both the opportunity for profit and risk of loss), reversed and remanded on other grounds, 613 F.2d 1311 (5th Cir. 1980).
Nonetheless, reviewing the evidence in the light most favorable to the government, United States v. Beck, 615 F.2d 441, 448 (7th Cir. 1980), the government proffered sufficient evidence for a rational jury to conclude beyond a reasonable doubt that Belanger's income tax returns understated wages. At trial he could not recall a specific instance of drawing checks from the wages account for his services as a slasher, which comprised a substantial portion of his purported independent contractor services (Belanger, test., p. 12). Nor did he testify that he ever asked for or received wages checks for other work he performed as an independent contractor.
The government need not establish the exact amount of understated income in order to establish tax evasion. See United States v. Marcus, 401 F.2d 563, 565 (2d Cir. 1968) certiorari denied, 393 U.S. 1023, 89 S. Ct. 633, 21 L. Ed. 2d 567; Clark v. United States, 211 F.2d 100, 103 (8th Cir. 1954). In sum, the evidence viewed in the light most favorable to the government was sufficient to permit a reasonable jury to find beyond a reasonable doubt that Belanger's income tax returns for 1978 and 1979 understated wages.
The second principal issue raised by defendant is whether the conspiracy conviction (18 U.S.C. § 371) can be sustained on the basis of overt acts 4 and 5 contained in Count 1 of the indictment and the jury finding in regard to these overt acts. After amendment and deletions by the district court, the two pertinent overt acts state essentially6 that in January 1979 and January 1980, defendant authorized W-2 forms falsely understating wages, prepared by bookkeeper Carla Collins and given to Louis Belanger and Carla Collins. These alleged overt acts are the same overt acts alleged in Counts 4 and 5 and 10 and 11 of willful assistance of Collins and Belanger respectively in the preparation and filing of their 1978 and 1979 false tax returns based on the understated W-2 forms (26 U.S.C. § 7206(2)). As noted earlier, the jury convicted defendant of willfully assisting Belanger in the preparation and filing of false returns for the years 1978 and 1979 (Counts 10 and 11), and acquitted defendant of willfully assisting Carla Collins in similar fashion (Counts 4 and 5).
This Court has held that in prosecutions involving aiding and abetting as well as conspiracy, the government is required to prove an overt act designed to aid in the commission of the offense. See, e.g., United States v. Beck, 615 F.2d 441, 449 (7th Cir. 1980). To the jury's satisfaction the government proved Count 1 overt acts 4 and 5 of providing false form W-2 assistance to Louis Belanger; consequently, without more, the conspiracy conviction is sustainable, for the "government [is] not required to prove all overt acts charged: proof of one can suffice." United States v. Cassell, 452 F.2d 533, 536 (7th Cir. 1971); see also Robinson v. United States, 210 F.2d 29, 32 (D.C. Cir. 1954).
Even if the acquittal of Counts 4 and 5 relating to the assisting of Carla Collins is construed to be inconsistent with the Counts 10 and 11 convictions of assisting Louis Belanger in the preparation and filing of false returns, such a conclusion does not, as defendant contends, mandate reversal of his convictions of either the underlying offense (Counts 10 and 11) or the conspiracy offense (Count 1). Appellate courts should seek to reconcile verdicts to avoid if possible a finding of inconsistency, see Stone v. City of Chicago, 738 F.2d 896 at 900-901 (7th Cir. July 20, 1984), and here the substantial evidence in the record linking defendant with Collins as well as Belanger in the fraudulent scheme creates an apparent inconsistency in view of defendant's acquittal of Collins Counts 4 and 5. Nonetheless, as the Supreme Court held in Dunn v. United States, 284 U.S. 390, 393, 52 S. Ct. 189, 190, 76 L. Ed. 356, "Consistency in the verdict is not necessary. Each count in an indictment is regarded as if it was a separate indictment." Accord: Hamling v. United States, 418 U.S. 87, 101, 94 S. Ct. 2887, 2899, 41 L. Ed. 2d 590. The policy consideration underlying this rule is that a jury may acquit on some counts and convict on others not because they are unconvinced of guilt, but because of compassion or compromise. United States v. Beck, 615 F.2d 441, 448 (7th Cir. 1980); United States v. Blasco, 581 F.2d 681, 685 n. 9 (7th Cir. 1978), certiorari denied, 439 U.S. 966, 99 S. Ct. 456, 58 L. Ed. 2d 425; United States v. Reicin, 497 F.2d 563, 567 (7th Cir. 1974), certiorari denied, 419 U.S. 996, 95 S. Ct. 309, 42 L. Ed. 2d 269. Further, as distinguished Professor Rollin Perkins has observed, where the jury acts out of lenity or similar motives in acquitting on some counts, it is unlikely that the jury intended the partial acquittal to prompt a reversal of the convictions on appeal. See R. Perkins, Dealing With The Inconsistent Verdict, 15 Crim.L.Bull. 405 (1979).
Although our research discloses no recent Seventh Circuit decisions directly on point, the applicability of the inconsistent verdict rule to the instant scenario was noted in Worthington v. United States, 1 F.2d 154 (7th Cir. 1924). There the conspiratorial overt acts specifically alleged were also the acts upon which the underlying offenses were predicated. The jury found defendant guilty of conspiracy and of one of the three substantive counts. We held that no ground for reversal existed as long as there was sufficient evidence to support the convictions, and that " [t]he apparent inconsistency of the verdict does not show, as claimed, confusion in the minds of the jury as to either the issues or proof." 1 F.2d at 155. In Worthington the Court remarked that the jury may have acquitted out of leniency for the defendant in that "it was sufficient to find defendant guilty upon the first two counts." Id. This rationale may have been operative in the instant case, or perhaps the jury simply did not find Carla Collins to be culpable in her own right as to Counts 4 and 5. Whatever the reason, an appellate court is not free to speculate. What is certain is that the jury intended to convict and did convict defendant on Counts 1, 10 and 11; to reverse solely on the basis of the acquittal on Counts 4 and 5 without some evidence of jury confusion would amount to an unwarranted intrusion into the province of the jury.
Defendant contends that United States v. Moloney, 200 F.2d 344 (7th Cir. 1952), dictates a contrary result. There defendant was charged with two counts of the use of interstate mail facilities with intent to extort (18 U.S.C. § 876) and conspiracy to commit extortion (18 U.S.C. § 371). The overt acts alleged in the conspiracy count were the acts comprising the alleged underlying offenses, along with two other overt acts that the government never attempted to prove at trial. The jury acquitted defendant on both substantive offenses but convicted on the conspiracy offense. Defendant challenged the conviction on appeal, and this Court reversed the conviction. Maloney, however, is distinguishable because the government introduced insufficient evidence to sustain the conspiracy conviction, 200 F.2d at 347. In the instant case there is ample evidence to sustain both the conspiracy conviction (Count 1) and the conviction for willfully aiding Louis Belanger in the preparation and filing of false income tax returns (Counts 10 and 11). Moreover, although not stated as the basis for the decision in Maloney, there the jury had acquitted defendant on all counts of the underlying offense; where this occurs, some courts have held that "a jury's acquittal on substantive counts operates as an acquittal on the underlying conspiracy count where the acquittal on the substantive counts constitutes a determination that no overt act in support of the conspiracy took place." United States v. Morales, 677 F.2d 1, 3 (1st Cir. 1982); see also Herman v. United States, 289 F.2d 362, 368 (5th Cir. 1961). In the trial below the jury convicted defendant on two counts (10 and 11) of willfully aiding the filing of false returns by Louis Belanger, these same acts constituting overt acts 4 and 5 specifically alleged as a basis of the Count 1 conspiracy. Therefore the narrow exception to the inconsistent verdict rule prescribed by Morales, even if it were to be accepted by this Court, is inapposite.