Source: https://law.justia.com/cases/federal/appellate-courts/F3/121/327/481282/
Timestamp: 2019-11-12 19:34:48
Document Index: 476783338

Matched Legal Cases: ['§ 7212', '§ 7212', '§ 2', '§ 2', '§ 2', '§ 1', '§ 1', '§ 1']

United States of America, Plaintiff-appellee, Cross-appellant, v. Raymond A. Valenti, Defendant-appellant, Cross-appellee, 121 F.3d 327 (7th Cir. 1997) :: Justia
Justia › US Law › Case Law › Federal Courts › Courts of Appeals › Seventh Circuit › 1997 › United States of America, Plaintiff-appellee, Cross-appellant, v. Raymond A. Valenti, Defendant-appe...
United States of America, Plaintiff-appellee, Cross-appellant, v. Raymond A. Valenti, Defendant-appellant, Cross-appellee, 121 F.3d 327 (7th Cir. 1997)
US Court of Appeals for the Seventh Circuit - 121 F.3d 327 (7th Cir. 1997) Argued April 2, 1997. Decided Aug. 14, 1997
After consulting with the attorneys, the district court, relying on United States v. Popkin, 943 F.2d 1535 (11th Cir. 1991), and United States v. Reeves, 752 F.2d 995 (5th Cir. 1985), gave this response:
We review the district court's construction of the relevant statute de novo. United States v. Montoya, 827 F.2d 143, 146-47 (7th Cir. 1987). However, we review a sufficiency of the evidence argument in the light most favorable to the government to determine whether "any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." United States v. Theodosopoulos, 48 F.3d 1438, 1449 (7th Cir. 1995) (quoting Jackson v. Virginia, 443 U.S. 307, 319, 99 S. Ct. 2781, 2789, 61 L. Ed. 2d 560 (1979)). "A jury conviction should be taken away 'only when the record contains no evidence, regardless of how it is weighed, from which the jury could find guilt beyond a reasonable doubt.' " Theodosopoulos, 48 F.3d at 1449 (quoting United States v. Rosalez-Cortez, 19 F.3d 1210, 1215 (7th Cir. 1994)).
After examining the indictment and the evidence presented to prove Count 11, we conclude that the district court, though not without some reasons, was nevertheless incorrect in holding that the evidence proved something different than what the indictment alleged. Count 11 charged that Valenti violated § 7212(a) by "causing and attempting to cause others not to talk to or cooperate with" the IRS, and that he did this "corruptly." The government conclusively proved that Valenti's actions were designed to cause his ex-employees and ex-wife not to talk to or cooperate with the IRS. There are no details in the indictment to which the proof did not conform. See United States v. Willoughby, 27 F.3d 263, 265-66 (7th Cir. 1994). The more difficult issues are whether Valenti attempted to cause the witnesses not to testify "corruptly" or with threats of force, and whether "corruptly" can include "threats of force" within its definition.
That Valenti tried to secure an unlawful benefit for himself partly through the use of threats does not diminish the fact that his actions were also corrupt within the definition given by the court. "Corruptly" refers to the mental state with which the actions are performed, see United States v. Hanson, 2 F.3d 942, 946-47 (9th Cir. 1993), and the wording of § 7212(a) certainly does not preclude the government from proving that mental state with evidence of threats, even if the government has not specifically charged the defendant with making threats in the indictment. The jury reasonably concluded that Valenti's acts were corrupt: his statements, whether threats or not, were designed to convince Childress, DeVlieger and Ricker not to testify, and so to unlawfully secure a benefit for himself. We find the evidence was clearly sufficient to sustain the jury's verdict of guilty on Count 11.
We turn now to Valenti's appeals. First, Valenti claims the evidence presented at trial was insufficient to support his convictions for tax evasion and failure to file tax returns. When evaluating a sufficiency of the evidence claim, we must determine "whether after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact could have found the essential elements of the crime beyond a reasonable doubt." Jackson, 443 U.S. at 319, 99 S. Ct. at 2789 (emphasis in original). Furthermore, " [o]nly when the record contains no evidence, regardless of how it is weighed, from which the [trier of fact] could find guilt beyond a reasonable doubt, may an appellate court overturn the verdict." United States v. Marren, 890 F.2d 924, 933 (7th Cir. 1989). Valenti argues that he has met this substantial burden on two fronts: the evidence did not prove that he acted willfully, nor did it prove he made an affirmative act constituting an evasion or attempted evasion of tax.
"Willfulness" is defined for the purposes of the crimes of tax evasion and the failure to file tax returns as "a voluntary, intentional violation of a known legal duty." Cheek v. United States, 498 U.S. 192, 201, 111 S. Ct. 604, 610, 112 L. Ed. 2d 617 (1991) (citing United States v. Bishop, 412 U.S. 346, 93 S. Ct. 2008, 36 L. Ed. 2d 941 (1973) and United States v. Pomponio, 429 U.S. 10, 97 S. Ct. 22, 50 L. Ed. 2d 12 (1976)). To prove that Valenti acted willfully, the government had to prove that the law imposed a duty on him, that he knew of the duty, and that he voluntarily and intentionally violated that duty. Cheek, 498 U.S. at 201, 111 S. Ct. at 610.
Valenti next claims that the evidence was insufficient to prove he acted affirmatively in evading tax. A key part of proving tax evasion is demonstrating that the defendant committed an affirmative act constituting an evasion or an attempted evasion of tax. Sansone v. United States, 380 U.S. 343, 351, 85 S. Ct. 1004, 1010, 13 L. Ed. 2d 882 (1965). The government must prove more than merely that the defendant willfully failed to file a tax return. Spies v. United States, 317 U.S. 492, 499, 63 S. Ct. 364, 368, 87 L. Ed. 418 (1943). However, any conduct that is likely to have a misleading or concealing effect can constitute an affirmative act. Id. An act, "even though a lawful activity in-and-of-itself, can serve as an 'affirmative act' ... if it is done with the intent to evade income tax." United States v. Jungles, 903 F.2d 468, 474 (7th Cir. 1990). Many such acts were proven here.
First, the government clearly established Valenti's penchant for using cash. He paid for everything in cash. As we have already stated, part of the reason he used cash all the time was that he did not have a bank account, and he didn't have a bank account because he wanted to conceal his financial condition. He directed his friend, Eugene Ray, to deposit Valenti's checks into Ray's bank account and then withdraw the money in cash and give it to Valenti. When done with the intent to evade, the extensive use of cash can be an affirmative act, even though the use of cash alone is far from being criminal. See id.; United States v. Holovachka, 314 F.2d 345, 358 (7th Cir. 1963). Valenti's extensive use of cash was not innocuous; rather, it was an integral part of his plans to avoid paying taxes. The jury also could have considered Valenti's method of running his business to be an affirmative act. He refused to keep records of any kind, whether relating to his income, his expenses, or his employees. Valenti paid his employees in cash and deliberately did not report their wages to the IRS; he advised them that they also did not have to pay their income taxes. Because an affirmative act can be the "handling of one's affairs to avoid making records usual in transactions of the kind," Spies, 317 U.S. at 499, 63 S. Ct. at 368, and because that is what Valenti was doing, we hold the evidence was clearly sufficient to establish that Valenti committed an affirmative act constituting an evasion or attempted evasion of tax.
Next, Valenti argues that the district court erred when it calculated the total tax loss for which Valenti was responsible, because it refused to give weight to Valenti's testimony that he was entitled to certain deductions and exemptions from income during tax years 1988 to 1993. We review a district court's factual findings under the Sentencing Guidelines for clear error, United States v. Jackson, 95 F.3d 500, 505 (7th Cir.), cert. denied, --- U.S. ----, 117 S. Ct. 404, 136 L. Ed. 2d 318 (1996); United States v. Benitez, 92 F.3d 528, 536 (7th Cir. 1996), and we will not reverse unless, after reviewing the record, we are firmly convinced that the district court has made a mistake. See United States v. Carmack, 100 F.3d 1271, 1276 (7th Cir. 1996).
In cases involving tax evasion and failure to file tax returns, the sentencing court may use the government's evidence of the total tax loss to determine a defendant's base offense level. U.S.S.G. § 2T1.1(a) (1). For tax years 1988 through 1991, the years for which Valenti was convicted of tax evasion, the district court used the tax loss amounts that the government proved at trial. For tax years 1986, 1987, 1992 and 1993, however, the court used U.S.S.G. § 2T1.1(c) (2) to measure the tax loss at twenty percent of Valenti's gross income. The total tax loss came to $103,210, resulting in a base offense level of 14.
Valenti claims the court's use of § 2T1.1(c) (2) was in error; he argues this was not the most accurate way of determining total tax loss, and that instead, the court should have credited his testimony and exhibits which demonstrated certain business and personal deductions. He claims the government measured his annual gross income for the years 1988 through 1993 at over $600,000 without giving him any credit for legitimate business expenses such as the purchase of tools, scaffolding, gasoline, ladders, etc. Using the exhibits he presented demonstrating these expenses, he asserts, would have offered a more reasonable and credible way of estimating his gross income for those tax years.
The district court, however, rejected Valenti's testimony as speculative and incredible, and noted that by contrast, the government had tried to accurately measure his expenses. The court also noted that Valenti likely got off easy under the government's method because additional unreported income probably existed. Because the district court was in the best position to judge Valenti's credibility, and because a fact-finder's choice between two permissible options cannot be clearly erroneous, United States v. Yusuff, 96 F.3d 982, 989 (7th Cir. 1996), cert. denied, --- U.S. ----, 117 S. Ct. 999, 136 L. Ed. 2d 878 (1997), we affirm the court's decision to use the Guideline method of determining tax loss instead of Valenti's method.
It is well established that in determining a defendant's sentence a court may consider a broad range of information, including uncharged crimes, crimes where charges have been dismissed, and crimes for which the defendant has been acquitted. See United States v. Ritsema, 31 F.3d 559, 567 (7th Cir. 1994); United States v. Tucker, 20 F.3d 242, 245 (7th Cir. 1994); United States v. Smith, 5 F.3d 259, 262 (7th Cir. 1993); United States v. Smith, 953 F.2d 1060, 1066 (7th Cir. 1992); U.S.S.G. § 1B1.3(a) (2). The Application Notes to § 1B1.3 "illustrate that relevant conduct does not focus on acts for which the defendant is criminally accountable." United States v. Matthews, 116 F.3d 305, 307 (7th Cir. 1997), citing U.S.S.G. § 1B1.3, n. 1.
This court has recently joined six other circuits in holding that the statute of limitations does not limit what actions a court may consider as relevant conduct when sentencing a defendant. Matthews, 116 F.3d at 307; see also United States v. Behr, 93 F.3d 764 (11th Cir. 1996); United States v. Silkowski, 32 F.3d 682, 687 (2d Cir. 1994); United States v. Pierce, 17 F.3d 146, 150 (6th Cir. 1994); United States v. Neighbors, 23 F.3d 306, 310-11 (10th Cir. 1994); United States v. Wishnefsky, 7 F.3d 254, 256-57 (D.C. Cir. 1993); United States v. Lokey, 945 F.2d 825, 840 (5th Cir. 1991). A criminal defendant is entitled to due process at sentencing; it is clear, however, that due process does not extend so far as to grant him full trial rights with regard to other crimes he has committed. United States v. Radix Labs., Inc., 963 F.2d 1034, 1039 (7th Cir. 1992). Due process at sentencing requires only that Valenti be given a fair sentencing hearing and that his sentence be based on fair and accurate information. Id. Valenti has contested neither the procedural fairness of the hearing nor the accuracy of the district court's determination of his gross income for tax years 1986 and 1987. The district court properly considered that income as relevant conduct when calculating Valenti's sentence.