Case Name: UNITED STATES of America, Plaintiff-Appellee, v. Jimmy D. McGUIRE, Defendant-Appellant
Court: United States Court of Appeals for the Fifth Circuit
Jurisdiction: United States
Decision Date: 1996-03-26
Citations: 79 F.3d 1396
Docket Number: No. 94-60648
Parties: UNITED STATES of America, Plaintiff-Appellee, v. Jimmy D. McGUIRE, Defendant-Appellant.
Judges: Before SMITH, WIENER and DeMOSS, Circuit Judges.
Reporter: Federal Reporter 3d Series
Volume: 79
Pages: 1396–1414

Head Matter:
UNITED STATES of America, Plaintiff-Appellee, v. Jimmy D. McGUIRE, Defendant-Appellant.
No. 94-60648.
United States Court of Appeals, Fifth Circuit.
March 26, 1996.
Jennifer Parkinson, Burkes, Jackson, MS, William Liston, William Liston, III, Winona, MS for appellant.
Ruth Morgan, Victoria May, Asst. U.S. Attys., George Phillips, U.S. Atty., Biloxi, MS, James B. Tucker, Asst. U.S. Atty., Jackson, MS, for appellee.
Before SMITH, WIENER and DeMOSS, Circuit Judges.

Opinion:
DeMOSS, Circuit Judge:
Jimmy D. McGuire, a Mississippi attorney, was convicted by jury in the Southern District of Mississippi of filing a false IRS form 8300 in violation of 26 U.S.C. § 6050I(f)(1)(B) and 26 U.S.C. § 7206(1). McGuire was sentenced to 36 months incarceration to be followed by one-year supervised release. McGuire was also fined $50,000, ordered to pay $20,000 for cost of confinement and ordered to pay a $50 special assessment.
McGuire appeals his conviction, the district court's order denying his post-trial motions for acquittal or new trial and the sentencing order. On appeal McGuire claims that the jury instructions were deficient, the evidence was insufficient and that he was unduly prejudiced by the prosecutors' improper remarks in closing argument. During the pendency of this appeal, the Supreme Court decided United States v. Gaudin, - U.S. -, 115 S.Ct. 2310, 132 L.Ed.2d 444 (1995). We are persuaded that Gaudin renders the jury instructions given in this case reversible error. McGuire's conviction will be reversed and the case remanded for possible retrial.
BACKGROUND
Jimmy D. McGuire is an attorney licensed in the state of Mississippi. In February 1982, McGuire had a substantial criminal defense practice representing individuals charged with drug offenses, as well as other matters. Around that time, the IRS received information from a number of sources suggesting that McGuire routinely received and failed to report large amounts of cash in his practice, which he then laundered in various transactions for the purchase of expensive automobiles and real estate. As a result, McGuire became the target of an undercover "sting" operation. Three government agents were involved in the sting that resulted in McGuire's conviction: (1) agent Narciso Hernandez, posing as Hector Flores (Flores); (2) agent Henry Montes, posing as Hector Martinez (Martinez); and (3) agent David Bar-rientos, posing as David Bolivar (Bolivar).
Flores contacted McGuire by telephone on February 5, 1992, with the story that $280,-000 had been seized from Flores' car during a traffic stop by the Mississippi Highway Patrol. Flores requested McGuire's assistance in recovering the money and avoiding forfeiture. Later that day Flores and another agent, Martinez, met with McGuire in his Gulfport office. During the meeting, Flores explained that it would be hard to come up with a legitimate source for the $280,000, to which McGuire responded: "You don't have to be a genius. Ah, did you win the lottery in Florida? Did you, ah — did it belong to someone else?" Flores informed McGuire that he was a cocaine dealer, stating "I've just been selling a little bit of cocaine, that's about it." McGuire suggested that Flores could more successfully evade law enforcement by flying or by driving Highway 90 and Highway 26 as an alternative to Interstate 10, because "[t]hey don't patrol that area at all."
Flores said that he had told police that the money was from a sale of floor tile, but confessed to McGuire that this was not true. Nonetheless, when Martinez asked whether it would be a good idea to have a contractor claim to have received tile, McGuire replied that it would. McGuire advised Flores and Martinez that it would back up their claim if they filed a form with the IRS reporting that they had received the $280,000 from the sale of tile, but that it would be inadvisable to file the form if the money was illegal, because filing a false form is also a crime.
Martinez explained that he had not been present at the stop and seizure, but that he had a partial interest in the $280,000. McGuire agreed to represent both Flores and Martinez in their effort to recover the money and proposed a $20,000 retainer, plus an agreement for 30% of whatever was recovered. Martinez asked whether McGuire would have to file a form with the IRS if Martinez paid McGuire the $20,000 retainer in cash. Both Flores and Martinez expressed concern about having their name appear on any forms. The three men then discussed at length different methods for evading the filing requirement established by 26 U.S.C. § 6050I.
McGuire proposed that Flores and Martinez bring in a third party, who could hand the money to McGuire. McGuire said he could then set up a dummy file for representation of that third party and, if anyone asked, McGuire could say that the arrangement for representation of Flores and Martinez was strictly on a contingent fee basis. McGuire explained, "you will be my client, but that money won't be connected to it."
The next morning, February 6, Flores telephoned McGuire, explaining that he was trying to secure money for McGuire's retainer. Later that day, Flores and Martinez went back to McGuire's office, this time with a third agent who posed as David Bolivar. McGuire again agreed to represent Flores and Martinez in the forfeiture action. Flores "agreed to pay McGuire $20,000 as partial payment of the fee." Then the following exchange occurred:
Flores: We thought about what you said yesterday. We'll just go ahead and give you the 20,000.
McGuire: Okay.
Flores: And, then, if you need to put somebody's name or something, you can put his name on it.
McGuire: Okay.
McGuire inquired whether Bolivar had the money, to which Flores replied, "I got it here." McGuire admonished Flores to "[p]ut that away. It should not come from you." Sounding exasperated, McGuire added "I'm gonna walk out of the room for just a second, okay?" As McGuire left, Flores directed McGuire's attention to Bolivar and said "[j]ust give it to him?" McGuire responded by throwing up his hands and leaving the room.
When McGuire returned, Bolivar gave McGuire $20,000 in cash. Both Bolivar and Flores requested a receipt. Bolivar told McGuire he would say that they had a percentage fee arrangement, if anyone asked. McGuire confirmed the arrangement and agreed that they did not have to tell anyone about the $20,000. Flores informed McGuire that the bills were all in hundreds, and that the money was packaged one thousand dollars to a bundle. Martinez again expressed concern about whether his name would appear on any documents, but instructed McGuire to "get what we want."
The following day, February 7, McGuire prepared IRS form 8300, reporting the receipt of $20,000 cash. Part I of the form identified David Bolivar as the "individual from whom cash was received." Part II, which required the identity of the "person . on whose behalf this transaction was conducted," was left blank. Ten days later, on February 17, McGuire filed an amended form 8300. Part I of the amended form again listed Bolivar as the payor, but disclosed in Part II that Hector Flores was the person on whose behalf David Bolivar paid the $20,000. Neither form disclosed Martinez' identity.
McGuire was indicted in two separate indictments on charges of conspiracy, money laundering, filing a false income tax return and filing a false IRS form 8300. He was acquitted on all counts except count four, the count relating to the 8300 forms filed after the sting operation. With the regard to the first 8300 form, the indictment alleged McGuire "falsely stated the identity of the individual from whom the cash was actually received and failed to disclose the person on whose behalf the transaction was conducted." With regard to the second 8300 form, the indictment alleged McGuire "falsely stated the identity of the individual from whom the cash was actually received." McGuire appeals his conviction on count four, the district court's order denying his post-trial motion for acquittal or new trial and the district court's sentencing order.
JURY INSTRUCTIONS
McGuire was convicted of violating 26 U.S.C. § 6050I(f)(1)(B) in conjunction with 26 U.S.C. § 7206(1). Title 26 § 6050I(f)(1)(B) requires proof that a defendant (1) for the purpose of evading the § 60501 reporting requirement; (2) caused or attempted to cause a trade or business to file a § 60501 return; (3) containing a material omission or misstatement of fact. 26 U.S.C. § 6050I (Supp.1995) (emphasis added). Title 26 U.S.C. § 7206(1) requires proof that a defendant: (1) willfully; (2) made and subscribed a return, statement or other document; (3) containing or verified by a written declaration that it was made under penalties of perjury; and (4) that the defendant did not believe that document to be true and correct as to every material matter (emphasis added). United States v. McCord, 33 F.3d 1434, 1450 (5th Cir.1994), cert. denied sub nom., Haley v. United States, - U.S. -, 115 S.Ct. 2558, 132 L.Ed.2d 812 (1995).
McGuire's jury received 38 separate instructions. Many of those instructions applied generally to all counts, while others were specific to the counts charged. Instruction 36, the only instruction specific to the count of conviction, required that the jury find that: (1) McGuire knew that the law practice had a duty to report currency transactions in excess of $10,000; (2) McGuire knowingly and willfully caused or attempted to cause the filing of a form 8300 containing a material omission or misstatement of fact; and that McGuire so acted (3) for the purpose of evading the reporting requirement. Instruction 20, which was specific to a separate § 7206(1) violation involving conduct unrelated to the sting operation, instructed the jury, in relevant part, as follows:
If you find that the government has proved these things, you need not consider whether the false statement was a material false statement, even though that language is used in the indictment. This is not a question for the jury to decide.
I. Failure to Instruct on Materiality
"The Constitution gives a criminal defendant the right to demand that a jury find him guilty of all the elements of the crime with which he is charged." United States v. Gaudin, - U.S. -, -, 115 S.Ct. 2310, 2314, 132 L.Ed.2d 444 (1995). McGuire first contends that he was deprived of this right because the district court removed the issue of materiality, an essential element of both the § 6050I reporting requirement and the § 7206(1) criminal enforcement provision, from the jury's consideration. We agree.
McGuire was convicted in May 1994. In May 1994, the well-settled law in the overwhelming majority of our federal circuits, including our own, considered the materiality of false statements made the subject of criminal prosecution to be a question of law for the court. United States v. Daily, 921 F.2d 994, 1004 (10th Cir.1990), cert. denied, 502 U.S. 952, 112 S.Ct. 405, 116 L.Ed.2d 354 (1991); United States v. Corsino, 812 F.2d 26, 31 n. 3 (1st Cir.1987); United States v. Brantley, 786 F.2d 1322, 1327 & n. 2 (7th Cir.), cert. denied, 477 U.S. 908, 106 S.Ct. 3284, 91 L.Ed.2d 572 (1986); United States v. Hansen, 772 F.2d 940, 950 (D.C.Cir.1985), cert. denied, 475 U.S. 1045, 106 S.Ct. 1262, 89 L.Ed.2d 571 (1986); United States v. Greber, 760 F.2d 68, 73 (3d Cir.), cert. denied, 474 U.S. 988, 106 S.Ct. 396, 88 L.Ed.2d 348 (1985); Nilson Van & Storage Co. v. Marsh, 755 F.2d 362, 367 (4th Cir.), cert. denied, 474 U.S. 818, 106 S.Ct. 65, 88 L.Ed.2d 53 (1985); United States v. Swaim, 757 F.2d 1530, 1534 (5th Cir.), cert. denied, 474 U.S. 825, 106 S.Ct. 81, 88 L.Ed.2d 66 (1985); United States v. Chandler, 752 F.2d 1148, 1150-51 (6th Cir.1985); United States v. Elkin, 731 F.2d 1005, 1009 (2d Cir.), cert. denied, 469 U.S. 822, 105 S.Ct. 97, 83 L.Ed.2d 43 (1984); United States v. Lopez, 728 F.2d 1359, 1362 n. 4 (11th Cir.), cert. denied, 469 U.S. 828, 105 S.Ct. 112, 83 L.Ed.2d 56 (1984); United States v. Hicks, 619 F.2d 752, 758 (8th Cir.1980). The Ninth Circuit considered the issue of materiality to be a question of law for most purposes, but recognized an exception for prosecutions involving 18 U.S.C. § 1001. See United States v. Flake, 746 F.2d 535, 537-38 (9th Cir.1984), cert. denied, 469 U.S. 1225, 105 S.Ct. 1220, 84 L.Ed.2d 360 (1985); United States v. Valdez, 594 F.2d 725, 728-29 (9th Cir.1979); see also United States v. Gaudin, 28 F.3d 943, 946 (9th Cir.1994) (en banc), aff'd., - U.S. -, 115 S.Ct. 2310, 132 L.Ed.2d 444 (1995).
Shortly after McGuire's conviction, the Ninth Circuit, sitting en banc in Gaudin, turned the exception into the rule. Id. Gau-din was convicted on 43 counts of making false statements on loan documents in violation of 18 U.S.C. § 1001. Id. at 944. The Ninth Circuit reversed Gaudin's conviction based on the district court's failure to submit the issue of materiality to the jury. Id. On subsequent rehearing en banc, the Ninth Circuit affirmed the panel decision, holding broadly that materiality is "in most situations . a mixed question of law and fact," that must be submitted to the jury. Id. at 948-49 ("Only if it can be said that there is no factual component to the determination of materiality and thus, thát it is a pure question of law, would the Sixth Amendment constraint not apply.").
The Ninth Circuit's decision in Gaudin was quickly affirmed by the Supreme Court. - U.S. -, 115 S.Ct. 2310, 132 L.Ed.2d 444 (1995). When materiality is an essential element in a criminal prosecution, the defendant has a constitutional right to have that issue submitted to the jury. Id. at -, -, 115 S.Ct. at 2314, 2320. There is no historical, logical or precedential exception to the Sixth Amendment jury right for criminal prosecutions for false statement or perjury. Id. at - - -, 115 S.Ct. at 2316-19. Gaudin's requirement that materiality be submitted to the jury has been applied to require submission of that element in prosecutions involving other federal statutes. E.g., United States v. Keys, 67 F.3d 801 (9th Cir.1995) (18 U.S.C. § 1623); United States v. DiRico, No. 94-1471, 1995 WL 646259 (1st Cir. Nov. 3, 1995) (unpublished) (26 U.S.C. § 7206(1)); United States v. Wells, 63 F.3d 745 (8th Cir.1995) (18 U.S.C. § 1014).
Because Gaudin was decided while McGuire's direct appeal was pending, he is entitled to invoke the rule of that case as controlling. Griffith v. Kentucky, 479 U.S. 314, 327-28, 107 S.Ct. 708, 716, 93 L.Ed.2d 649 (1987); United States v. Oreira, 29 F.3d 185, 188 (5th Cir.1994). McGuire's jury was instructed that it must find that the form 8300 contained a material omission or misstatement of fact (instruction 36), but the jury was further instructed that, even though the indictment required materiality, the issue was "not a question for the jury to decide" (instruction 20). Gaudin's jury was likewise instructed that, while the offense required the false statements to be material, materiality was not a question for the jury. Gaudin, - U.S. at -, 115 S.Ct. at 2313. Gaudin makes it error for the district court to fail to submit the issue of materiality to the jury. See Oreira, 29 F.3d at 188.
Not surprisingly, McGuire failed to object at trial to the district court's instruction which removed the issue of materiality from the jury. Indeed, to have done so would have required prescience on McGuire's part and would have been futile in light of well-established precedent, not only in this Circuit, but in every other federal circuit that had examined the issue, including the Ninth. Nonetheless, McGuire's failure to preserve error at trial requires that we review his claim for plain error only. Fed.R.Crim.P. 52(b).
II. Plain Error Analysis
We are convinced that the error in McGuire's case meets even the lofty plain error standard. Under Federal Rule of Criminal Procedure 52(b), the court may review "[pjlain errors and defects affecting substantial rights . although they were not brought to the attention of the court." In United States v. Olano, 507 U.S. 725, 113 S.Ct. 1770, 123 L.Ed.2d 508 (1993), the Supreme Court construed rule 52(b) to require a showing that (1) there was error and no waiver; (2) the error was plain; and (3) that the error affected the defendant's substantial rights. Id. at 730-31, 113 S.Ct. at 1776. Provided the three elements are satisfied, the reviewing court has discretion to correct the otherwise forfeited error when the error "seriously affects the fairness, integrity, or public reputation of judicial proceedings." Id. (internal quotations omitted).
A. Plainness and Gaudin's Change in the Law
No one disputes that, in light of Gaudin, the jury instructions were in error. See United States v. Calverley, 37 F.3d 160, 162- 63 (5th Cir.1994) (en banc), cert. denied, - U.S. -, 115 S.Ct. 1266, 131 L.Ed.2d 145 (1995); Oreira, 29 F.3d at 188. Plain errors are those that are clear and obvious under current law. Olano, 507 U.S. at 732-34, 113 S.Ct. at 1777. When McGuire was tried, existing precedent dictated that materiality was a question of law for the court. At that time, any error in the jury instructions, which affirmatively removed that issue from the jury's consideration, was neither clear nor obvious. Now, of course, Gaudin makes that error patently clear and obvious.
The issue then becomes whether "plainness" is measured at the time of trial or at the time of appeal. We conclude that, when there is no error under existing law at the time of trial, but plain error under existing law when the appeal is decided, the plainness prong of Rule 52(b) is satisfied. Olano expressly declined to decide this issue, but the Supreme Court tipped its hand by stating that "[at] a minimum, the Court of Appeals cannot correct error pursuant to Rule 52(b) unless the error is clear under current law." Id. Our recent en banc decision in Calverley, which did not involve any change in the nature of error from the time of trial to the time of appeal, is not to the contrary. Calverley omitted language tying "current law" to the "Court of Appeals" disposition, stating that Rule 52(b) "'[a]t a minimum' contemplates an error which was 'clear under current law' at the time of trial." The Court went on to footnote Olano's failure to decide the special case presented when there is a change in the law between the time of trial and the time of appeal. See Calverley, 37 F.3d at 162-63 & n. 18.
Any other construction would compromise the well-settled principle that criminal defendants are entitled to the benefit of changes in the law announced while their cases are pending on direct review. See, e.g., Griffith v. Kentucky, 479 U.S. 314, 107 S.Ct. 708, 93 L.Ed.2d 649 (1987); Oreira, 29 F.3d at 188. To deny a criminal defendant the benefit of a rule that clearly departed from well-settled law to the contrary, merely on the basis that he failed to make a futile and probably frivolous objection, does not accord with basic fairness. We do not decide whether error that was merely undecided or unclear at the time of trial, and subsequently becomes clear on appeal, is subject to review for plain error. See, e.g., United States v. Hurley, 63 F.3d 1, 14 (1st Cir.1995) ("[t]his case does not present the conundrum of a failure to object followed by a wholly unexpected change in law"). That issue will be left for another day.
We take comfort in the fact that many of our sister circuits have similarly concluded that when there has been a change in the law, provisions must be made such that whether the error is plain can be determined with reference to the law existing at the time of appeal. United States v. Walker, 59 F.3d 1196, 1198 (11th Cir.1995), cert. denied, - U.S. -, 116 S.Ct. 547, 133 L.Ed.2d 450 (1995); United States v. Keys, 67 F.3d 801, 809-10 (9th Cir.1995); United States v. Retos, 25 F.3d 1220, 1230 (3d Cir.1994); United States v. Viola, 35 F.3d 37, 41-42 (2d Cir.1994), cert. denied, - U.S. -, 115 S.Ct. 1270, 131 L.Ed.2d 148 (1995); United States v. Jones, 21 F.3d 165, 172 (7th Cir.1994); United States v. Washington, 12 F.3d 1128, 1138 (D.C.Cir.), cert. denied, - U.S. -, 115 S.Ct. 98, 130 L.Ed.2d 47 (1994). Al though the district court faithfully followed existing precedent and the jury instructions were not clearly in error when given, it is now obvious on the basis of Gaudin that the instructions unconstitutionally precluded the jury from considering an essential element of the offense. That error is plain for purposes of Rule 52(b).
B. McGuire's Substantial Rights
Finally, forfeited plain error is not reviewable under Rule 52(b) unless it affected the defendant's substantial rights. "Normally, although perhaps not in every case, the defendant must make a specific showing of prejudice to satisfy the 'affecting substantial rights' prong of Rule 52(b)." Olano, 507 U.S. at 734-36, 113 S.Ct. at 1778. The inquiry is much the same when the court reviews error preserved at trial, under the familiar harmless error analysis, except that in those cases, it is the government that bears the burden of demonstrating beyond a reasonable doubt that the error was harmless. Fed.R.Civ.P. 52(a); Id. at 734-36, 113 S.Ct. at 1778. Although many constitutional errors can be harmless, "structural" errors that affect the framework within which the trial proceeds are not subject to that analysis. Arizona v. Fulminante, 499 U.S. 279, 307-09, 111 S.Ct. 1246, 1264, 113 L.Ed.2d 302 (1991). Olano explicitly left open the issue of whether Rule 52(b) requires that a defendant demonstrate prejudice when the error at issue is structural. Olano, 507 U.S. at 734-36, 113 S.Ct. at 1778.
Harmless error analysis focuses on the effect of the alleged error on the verdict actually returned by the jury. Sullivan v. Louisiana, 508 U.S. 275, 278-79, 113 S.Ct. 2078, 2081, 124 L.Ed.2d 182 (1993). When, as in this case, the jury was not instructed on an essential element of the offense, it is questionable whether there has been any constitutionally obtained verdict for harmless error analysis to act upon. See Sullivan v. Louisiana, 508 U.S. 275, 278-81, 113 S.Ct. 2078, 2081-82, 124 L.Ed.2d 182 (1993) ("to hypothesize a guilty verdict that was never in fact rendered — no matter how inescapable the findings to support that verdict might be — would violate the jury right"). Our own Court has spoken with a divided voice on the issue of whether failure to instruct on every essential element of the offense is plain error, structural error or error amenable to harmless error analysis. See United States v. Oreira, 29 F.3d 185, 188 n. 6 (discussing conflict and applying harmless error analysis); United States v. Garza, 42 F.3d 251, 253 (5th Cir.1994) (agreeing that, as the government conceded, a post-trial change in the law rendered failure to instruct on an essential element plain error); United States v. Ortega, 859 F.2d 327, 333 (5th Cir.1988) ("It is plain error for a judge to fail to instruct the jury on all essential elements of a crime, even though such an instruction is not requested"), cert. denied, 489 U.S. 1027, 109 S.Ct. 1157, 103 L.Ed.2d 216 (1989); United States v. Brown, 616 F.2d 844, 846 (5th Cir.1980) ("we divine from precedent in this Circuit no rule that failure to specifically instruct on any single essential element of a crime per se constitutes plain error"); United States v. Bosch, 505 F.2d 78, 82-83 (5th Cir.1974) (failure to instruct on an essential element is not plain error when it is clear that the error was harmless). Even Supreme Court authority on the point appears to be conflicting. Compare Pope v. Illinois, 481 U.S. 497, 503 n. 7, 107 S.Ct. 1918, 1922 n. 7, 95 L.Ed.2d 439 (1987) ("to the extent that cases prior to Rose may indicate that a conviction can never stand if the instructions provided the jury do not require it to find each element of the crime under the proper standard of proof . they are no longer good authority"), with Sullivan v. Louisiana, 508 U.S. 275, 278-81, 113 S.Ct. 2078, 2081-82, 124 L.Ed.2d 182 (1993) (harmless error analysis inapplicable when jury verdict secured in violation of In re Winship, 397 U.S. 358, 364, 90 S.Ct. 1068, 1072-73, 25 L.Ed.2d 368 (1970), which requires conviction on the basis of every essential element of the offense). Gaudin itself did not resolve the issue because the government failed to challenge the Ninth Circuit's determination that the error identified was both plain and structural, and therefore not amenable to harmless error analysis. Gaudin, - U.S. at -, -, 115 S.Ct. at 2320, 2321 (Rehnquist, J. concurring).
The conflict within our own Circuit makes it inadvisable, and perhaps impermissible, to conclusively resolve in this ease the proper scope of appellate review when the district court fails to instruct the jury on an essential element of a criminal offense. Regardless of whether such an error is structural, McGuire made a specific factual showing such that, in the circumstances of this case, the district court's failure to instruct on the issue of materiality was plain error which did affect his substantial rights.
Materiality was critical to Mcguire's defense at trial. As to the first form 8300, the government alleged that McGuire "falsely stated the identity of the individual from whom the cash was actually received and failed to disclose the person on whose behalf the transaction was conducted." As to the second form, the government alleged only that McGuire "falsely stated the identity of the individual from whom the cash was actually received." McGuire argued at trial: (1) that he subjectively believed the money was being delivered to him by Bolivar rather than Flores; and (2) that once he disclosed Flores' name in the second form 8300, the internal revenue service would not be misled by the information provided in that form. See Gaudin, - U.S. at -, 115 S.Ct. at 2313 (a statement is material if it has a natural tendency to influence the decision of the decision-making body to which it is addressed). Therefore, an essential premise in McGuire's defense was that any misidentification of Bolivar was not material because the identity of the client was also disclosed on the form. McGuire elicited testimony relevant to this issue from his expert, who had significant experience in the criminal investigation division of the Internal Revenue Service. On the basis of the present record, the district court's denial of McGuire's Fifth and Sixth Amendment right to a jury determination on every essential element of the charged offense was not harmless. The district court's instruction that materiality was not an issue for the jury, although a correct statement of the law when given, constituted plain error affecting McGuire's substantial rights. Therefore, this court has authority pursuant to Rule 52(b), to correct that error. Olano, 507 U.S. at 734-36, 113 S.Ct. at 1778.
C. Remedial Discretion
"Rule 52(b) is permissive, not mandatory." Olano, 507 U.S. at 734-36, 113 S.Ct. at 1778 (when the life or liberty of a criminal defendant is at stake, the courts of appeal have the authority to correct otherwise forfeited error when it is plain and affects the defendant's substantial rights). Whether plain error should be corrected lies within the sound discretion of the appellate courts. Id. at 734-37, 113 S.Ct. at 1778-79. The Supreme Court instructs that remedial discretion under Rule 52(b) should be exercised only when the error " 'seriously affects the fairness, integrity or public reputation of judicial proceedings.' " Id. at 736-37, 113 S.Ct. at 1779 (quoting United States v. Atkinson, 297 U.S. 157, 56 S.Ct. 391, 80 L.Ed. 555 (1936)). Whether our remedial discretion should be exercised is a particularized inquiry that necessarily depends upon the facts of the specific case as well as the extent of legal prejudice imposed upon the defendant. See Calverley, 37 F.3d at 164. Moreover, an error may affect the substantial rights of the defendant without also rising to the level that it "seriously affects the fairness, integrity or public reputation of judicial proceedings." Id.
We are convinced that the circumstances of this case merit exercise of our remedial discretion. First, the statutes of conviction, § 6050I and § 7206(1), both expressly require that the statements at issue be material. Compare, United States v. Taylor, 66 F.3d 254 (9th Cir.1995) (distinguishing Gau-din on the basis that materiality is neither an express nor an implicit element of 18 U.S.C. § 287). Second, the materiality of McGuire's statements identifying Bolivar as the payor was a critical part of McGuire's defense to the count of conviction, and the subject of conflicting testimony at trial. Considered as a whole, the record presents a serious factual question regarding the materiality of McGuire's statements. United States v. Keys, 67 F.3d 801, 811-12 (9th Cir.1995). Third, refusing to exercise our remedial discretion to correct the plain error identified in this case would result, not only in the denial of McGuire's Fifth and Sixth Amendment rights, but in an abdication of the principle that we adjudicate cases pending before this Court on direct review "in fight of our best understanding of governing constitutional principles." Griffith v. Kentucky, 479 U.S. 314, 323, 107 S.Ct. 708, 713, 93 L.Ed.2d 649 (1987). Given the circumstances of this case, we conclude that the district court's failure to instruct on materiality seriously affected the fairness and integrity of McGuire's trial and, potentially, the public reputation of judicial proceedings. See Griffith, 479 U.S. at 322, 107 S.Ct. at 713 ("failure to apply a newly declared constitutional rule to criminal cases pending on direct review violates basic norms of constitutional adjudication"). We will exercise our discretion so as to not let the error stand. McGuire's conviction is reversed and the case remanded for further proceedings consistent with this opinion.
III. Refusal to Deliver Ratzlaf Willfulness Instruction
Having concluded that the case must be retried, it is appropriate to address at least one issue that relates to the count of conviction and is likely to recur on remand. McGuire was convicted for violation of 26 U.S.C. § 6050I(f)(1)(B), in combination with 26 U.S.C. § 7206(1), which requires a showing of willfulness. McGuire contends that the district court erred by refusing to give his requested instruction on willfulness, which was based on the Supreme Court's holding in Ratzlaf v. United States, - U.S. -, 114 S.Ct. 655, 126 L.Ed.2d 615 (1994). At issue in Ratzlaf were provisions of the Bank Secrecy Act which impose on financial institutions a reporting obligation similar to that imposed by § 60501. Title 31 U.S.C. § 5324 states an offense for structuring a transaction to evade the reporting requirement, while § 5322 specifies criminal penalties for -willful violation of § 5324. Like McGuire, Ratzlaf was charged both with the offense of purposefully evading the obligation and with the penalty provision, which required a showing of wilfulness. Ratzlaf, - U.S. at -, 114 S.Ct. at 657. Ratzlaf held that the statutory formulation of the offense (§ 5322 and § 5324) required both government proof and a jury instruction on the issue of whether Ratzlaf willfully, i.e. with knowledge that his conduct was unlawful, violated § 5324. Id. at -, 114 S.Ct. at 663.
Ratzlaf does not provide the controlling definition of willfulness for prosecutions under 26 U.S.C. § 7206(1). Willfulness, for the purpose of that section, is defined as the intentional violation of a known legal duty. United States v. Pomponio, 429 U.S. 10, 11-13, 97 S.Ct. 22, 23-24, 50 L.Ed.2d 12 (1976); United States v. Charroux, 3 F.3d 827, 831 (5th Cir.1993). Although the jury was not given that precise definition, the jury was adequately instructed on the issue of willfulness. Instruction 17, an instruction that applied to all counts, charged the jury on the issue of specific intent:
The crimes charged in this case are serious crimes which require proof of specific intent before the defendant can be convicted. Specific intent, as the term implies, means more than the general intent to commit the act. To establish specific intent the government must prove that the defendant knowingly did an act which the law forbids, purposely intending to disobey or disregard the law.
And in Instruction 21, the jury was charged:
The word "willfully" in these instrue-tions[ ] means that the act was committed voluntarily and purposely, with the specific intent to do something the law forbids; that is to say, with bad purpose either to disobey or disregard the law. Mere negligence, even gross negligence, is not sufficient to establish willfulness.
If a person in good faith believes that an income tax return, as prepared by him, truthfully reports the taxable income and allowable deductions of the taxpayer under the internal revenue laws, he cannot be guilty of "willfully" making or subscribing a false or fraudulent return.
The district court did not abuse its discretion by refusing McGuire's requested instruction on the issue of willfulness.
We note also that Instruction 36, relating to the count of conviction, neither identifies nor requires specific findings on the essential elements required for conviction under § 7206(1). On remand, if the case is retried, the jury must be required to find all of' the essential elements set forth in § 6050I(f)(1)(B) and § 7206(1).
Finally, McGuire also claims on appeal that the evidence was insufficient to support his conviction and that he was unduly prejudiced by the prosecutor's improper closing remarks. Having reviewed those claims under the applicable standards of review, we find no reversible error. There are, therefore, no double jeopardy barriers to McGuire's retrial on remand. Our conclusions as to these issues are necessarily limited by what appears in the present, rather voluminous, record. Consideration was not limited to the testimony of the undercover agents and the transcripts of their conversations with McGuire. This panel's disposition of McGuire's sufficiency claim will obviously be of no binding effect on any subsequent appeal should McGuire be retried. We have likewise reviewed for plain error McGuire's claims on appeal that the jury instructions impermissibly allowed conviction on the basis of either form 8300 and that the jury instructions directed a verdict of guilty. Having considered the arguments and the entire record, we are persuaded that failure to review those claims on appeal does not "seriously affect the fairness, integrity or public reputation of judicial proceedings."
CONCLUSION
For the foregoing reasons, McGuire's conviction for violation of 26 U.S.C. § 6050I and 26 U.S.C. § 7206(1) is REVERSED and the case is REMANDED to the district court for further proceedings consistent with this opinion.
. Title 26 U.S.C. § 6050I requires that cash receipts of more than $10,000 per transaction (or set of related transactions) be reported. Section 6050I(f)(1)(B) provides in relevant part:
"No person shall for the purpose of evading the return requirements of this section . (B) cause or attempt to cause a trade or business to file a return required under this section that contains a material omission or misstatement of fact...."
The criminal penalties applicable for violation of § 6050I(f)(1) are the same as those provided for failing to file or filing a false return. 26 U.S.C. § 6050I(f)(2).
Title 26 U.S.C. § 7206(1) provides that any person who "willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter" can be fined up to $100,000 and sentenced to three years or both.
. The information generating the investigation was well-documented at trial. Several ex-clients testified that McGuire routinely required large cash payments in the tens of thousands of dollars and refused to give receipts. Other individuals offered testimony about large amounts of cash observed in McGuire's home and about large purchases made with cash.
. To avoid confusion, the opinion refers to the agents using their aliases.
. McGuire also suggested keeping the initial retainer just under the statutory $10,000 amount and structuring the transaction through different banks with cashiers' checks drawn for less than $10,000.
. Although instruction 20 related specifically to count 5, there is no other instruction on materi- ality in the charge. We evaluate the sufficiency of the jury instructions with reference to the entire charge. United States v. Welch, 810 F.2d 485, 487 (5th Cir.), cert. denied, 484 U.S. 955, 108 S.Ct. 350, 98 L.Ed.2d 376 (1987).
. At the time of McGuire's trial, the Ninth Circuit .exception for prosecutions involving 18 U.S.C. § 1001 was apparently limited to that statute. United States v. Flake, 746 F.2d 535, 537-38 (9th Cir.1984), cert. denied, 469 U.S. 1225, 105 S.Ct. 1220, 84 L.Ed.2d 360 (1985); see also Gaudin, 28 F.3d at 945.
. Calverley pled guilty as to both counts of his indictment. The critical issue in Calverley related to sentencing, not guilt or innocence.
. For example, the D.C. Circuit's "supervening decision doctrine" operates as an exception to the general requirement that review under Rule 52(b) requires an error that was plain at the time of trial. E.g., United States v. Baucum, 66 F.3d 362, 363 (D.C.Cir.1995); United States v. Washington, 12 F.3d 1128, 1138 (D.C.Cir.), cert. denied, - U.S. -, 115 S.Ct. 98, 130 L.Ed.2d 47 (1994). Some decisions of that Court review errors mrde plain by supervening changes in the law without clear reference to Rule 52(b) or plain error analysis, suggesting that a superven.ing change provides an independent basis for reviewing otherwise forfeited error. E.g., United States v. Rhodes, 62 F.3d 1449, 1452 (D.C.Cir.1995).
We are aware that the more traditional concerns addressed by rigorous review of forfeited error are not operative when a criminal defendant's failure to object is excusable. McGuire could not have foreseen the change in the law that occurred after his trial. Nonetheless, we conclude that the discretion allowed the Court of Appeals by Olano is the more appropriate vehicle for remedying such error. Accord United States v. Viola, 35 F.3d 37, 41-42 (2d Cir.) ("The better view is that Rule 52(b) is the sole source of our authority to correct errors not preserved by objection."), cert. denied, - U.S. -, 115 S.Ct. 1270, 131 L.Ed.2d 148 (1995); United States v. Retos, 25 F.3d 1220, 1228 (3d Cir.1994) (review of error made plain by supervening Supreme Court decision limited to Rule 52(b) plain error principles); United States v. Jones, 21 F.3d 165, 172 (7th Cir.1994) (although a supervening change in the law excuses the defendant's failure to object, the court's review is still subject to Rule 52(b)). Published cases in other circuits have uniformly applied Rule 52(b) analysis to Gaudin error, and even the D.C. Circuit has not explicitly held to the contrary.
We do not construct a legal fiction that the error was plain at the time of trial. Rather, we intend to construct an exception to that requirement for cases in which the law has clearly changed between the time of trial and direct appeal. In those rare cases, the plainness of the alleged error should be measured at the time of appeal.
. Less than six months after Ratzlaf was decided Congress amended the Bank Secrecy Act by incorporating the penalty provision previously codified as § 5322 into the reporting requirement of § 5324 and by redefining the elements of the offense to exclude any requirement of willfulness. See H.R.Conf.Rep. 103-652, 103d Cong., 2d Sess (1994), reprinted in, 1994 U.S.C.C.A.N.1977, 2024 (restoring the "clear Congressional intent" to require no more culpable conduct than a purpose to evade the reporting requirement).