Opinion ID: 2975005
Heading Depth: 1
Heading Rank: 6

Heading: sufficiency of the evidence

Text: “The standard of review for [a] challenge as to the sufficiency of the evidence is ‘whether, after viewing the evidence in the light most favorable to the prosecution, any rational trier of fact - 11 - Nos. 05-5622, 05-5625, 05-5825, 05-5826 United States v. Madison could have found the essential elements of the crime beyond a reasonable doubt.’” United States v. Davis, 473 F.3d 680, 681 (6th Cir. 2007) (quoting United States v. Woods, 877 F.2d 477, 479 (6th Cir. 1989)). Mrs. Madison first contends that the government failed to prove attempted tax evasion under 26 U.S.C. § 7201, because there was not sufficient evidence of willfulness or of the commission of an affirmative act. “A jury may, of course, find the requisite knowledge on defendant’s part by drawing reasonable inferences from the evidence of defendant’s conduct”; that is, willfulness can be proved by circumstantial evidence. Ratzlaf v. United States, 510 U.S. 135, 149 n.19 (1994); see also United States v. Bank of New England, N.A., 821 F.2d 844, 854 (2d Cir. 1987). The fact that a defendant filed a false tax return, without more, may constitute an affirmative act. United States v. Garavaglia, 566 F.2d 1056, 1058 (6th Cir. 1977). If the return was prepared by someone other than the defendant, more is required. In United States v. Cor-Bon Custom Bullet Co., 287 F.3d 576 (6th Cir. 2002), this court held where a third party prepares a return, an affirmative act of evasion includes, but is not limited to, “conduct such as keeping a double set of books, making false entries or alterations, or false invoices or documents, destruction of books or records, concealment of assets or covering up sources of income . . . [or] any conduct, the likely effect of which would be to mislead or to conceal.” 287 F.3d at 579 (quoting Spies v. United States, 317 U.S. 492, 499 (1943)). In this case, Mrs. Madison was convicted of evading tax in 1996, 1997, 1998, and 1999. Among the inaccuracies in reporting was her listing of only half the rent received for the Cherry Center property through 1998, and approximately 10% of the rent in 1999. There were four different leases between Mrs. Madison and Cherokee for the Cherry Center property covering overlapping - 12 - Nos. 05-5622, 05-5625, 05-5825, 05-5826 United States v. Madison time periods; the four leases showed three different monthly rent rates between them, none of which was the $3000 per month Mrs. Madison reported from 1996 to 1998. Thus, Mrs. Madison was keeping a triple or quadruple set of records, which was an affirmative act concealing her real income. Moreover, from Mrs. Madison’s conduct as a whole, including her extensive misappropriation of Cherokee funds for her own purposes and elaborate concealment of her activities from Cherokee, its auditors, and the government, the jury could certainly conclude that her under-reporting of income was willfully calculated to enhance her own holdings and defraud the federal government. Mr. Madison likewise argues that there was not sufficient evidence to convict him of attempted tax evasion in 1996, 1997, 1998, and 1999. In addition to the rental income from the Cherry Center property discussed above, Mr. Madison failed to report his accounting income from Cherokee Children and Nutrition, Creative Learning Center, and Little People’s. In 1996, 1997, and 1998, he prepared the defendants’ joint returns. As stated above, this constitutes an affirmative act. In 1999, the defendants’ return was prepared by a law firm. However, Mr. Madison engaged in affirmative acts of evasion in that year as well. Although he prepared 1099 forms indicating the income of other Cherokee independent contractors, he failed to prepare any 1099 for himself as Cherokee’s accountant. This failure entails “concealment of assets or covering up sources of income” and certainly as “conduct, the likely effect of which would be to mislead or to conceal.” Thus, Mr. Madison engaged in affirmative acts to evade the payment of income taxes. Mrs. Madison also contests her conviction for Making False Statements on Tax Documents in violation of 26 U.S.C. § 7206(1). This charge was based on the fact that she signed Cherokee’s - 13 - Nos. 05-5622, 05-5625, 05-5825, 05-5826 United States v. Madison form 990 for 1999, which stated that Cherokee was not involved in any related-party real estate transactions, although Mrs. Madison knew that she was the lessor of Cherokee’s office space. Mrs. Madison argues that the false statement was not material. “A matter is ‘material’ if it has a natural tendency to influence, or is capable of influencing or affecting, the ability of the IRS to audit or verify the accuracy of a tax return.” See United States v. Tarwater, 308 F.3d 494, 505 (6th Cir. 2002) (citing Neder v. United States, 527 U.S. 1, 16 (1999)). A revenue agent for the IRS Tax Exempted Government Entities Division testified that if an entity reported that it engaged in relatedparty transactions, the IRS would ask seek documentation of such transactions during the audit interview, but would not do so if no such transactions were reported. Thus, a false answer to the question is capable of affecting and actually affects the ability of the IRS to perform an audit. Mr. Madison contends that his conviction for aiding in the preparation of false tax documents in violation of 26 U.S.C. § 7206(2) was also invalid. The charges were based on his preparation of Cherokee’s form 990 submissions for 1996-1999, which denied that Cherokee engaged in relatedparty transactions. He argues that because Mrs. Madison was acquitted of making false statements on tax documents for 1996, 1997, and 1998, he should not have been convicted for aiding in making false statements for those years. However, “‘there is no . . . bar to prosecuting someone as an aider and abettor after an alleged de facto principal is acquitted.’” United States v. Stewart, 306 F.3d 295, 307 (6th Cir. 2002) (quoting United States v. Yost, 24 F.3d 99 (10th Cir. 1994)). Mrs. Madison also contests her conviction for Making False Statements on a Matter within the Jurisdiction of the Federal Government in violation of 18 U.S.C. § 1001. She argues that her false statement regarding the square footage of the Cherry Center property was not willful, see - 14 - Nos. 05-5622, 05-5625, 05-5825, 05-5826 United States v. Madison United States v. Rogers, 117 F.3d 466, 470 (6th Cir. 1997) (quoting United States v. Steele, 933 F.2d 1313, 1318-19 (6th Cir. 1991) (en banc)), because she did not know that the number she gave was false, and that her statement that she was “not involved in the day-to-day operations” of the Little People’s day care centers was actually true. The word “willfully” has the same meaning in 26 U.S.C. § 7206(1), (2) as it does in § 7201. United States v. Bishop, 412 U.S. 346, 359-60 (1973). Thus, it seems reasonable to conclude that willfulness for purposes of § 7206(1) can be “established by drawing reasonable inferences from the available facts,” as it can for purposes of § 7201. See Bank of New England, 821 F.2d at 854. Here, the government presented evidence that the square footage of the Cherry Center property had been discussed with Mrs. Madison. The evidence also showed that she was knowledgeable regarding real property transactions. This evidence, in conjunction with Mrs. Madison’s broad practice of dishonest reporting and false rent charges, permitted a rational trier of fact to find that she was aware of the real square footage of the property, and misstated it deliberately. Mrs. Madison’s argument that the jury was required to find that her claim not to be involved in the day-to-day operations of Little People’s was truthful is without merit. The government presented evidence that she made hiring decisions, set salaries and the fees clients were charged, approved time cards, and authorized purchases. The director of Little People’s discussed the day care’s business with Mrs. Madison two or three times a week. It was the province of the jury to determine whether the statement in the letter was true, and given the evidence they were eminently rational in finding it to be false. - 15 - Nos. 05-5622, 05-5625, 05-5825, 05-5826 United States v. Madison Mrs. Madison argues that her conviction for Theft from a Program Receiving Federal Benefits in violation of 18 U.S.C. § 666(a)(1) was based on insufficient evidence because the government did not establish that she committed the offense willfully. The statute applies to one who “without authority knowingly converts” or “intentionally misapplies” the funds of an organization receiving federal benefits. 18 U.S.C. § 666(a)(1)(A) (emphasis added). Mrs. Madison’s argument is, in essence, that her conversion of Cherokee’s property was not knowing or intentional. This argument is not even facially meritorious. To violate the statute, she needed only to misapply intentionally funds which she knew not to be hers. As discussed above, the government presented evidence of her elaborate scheme to convert Cherokee’s funds to pay for the Colony Park properties; her habitual use of the Cherokee American Express card for her personal expenses; and her efforts to conceal her conversion of Cherokee funds. The jury could rationally have concluded based on this evidence that Mrs. Madison knew Cherokee’s property was not hers and that she intentionally converted it to her use despite this fact. In addition, because there was sufficient evidence to convict Mrs. Madison of theft under § 666(a)(1)(A), she was also properly convicted of Engaging in Monetary Transactions Involving Property Derived from Unlawful Activity in violation of 18 U.S.C. § 1957. Finally, Mrs. Madison claims that the evidence was insufficient to convict her of Making False Claims Against a Department of the United States in violation of 18 U.S.C. § 287. However, she provides no hint as to what about the evidence was insufficient. Therefore, the panel need not address this assignment of error. See United States v. Lanzotti, 205 F.3d 951, 957 (7th Cir. 2000) (“It is not this court’s responsibility to research and construct the parties’ arguments.”); see also - 16 - Nos. 05-5622, 05-5625, 05-5825, 05-5826 United States v. Madison Figueroa-Rubio v. INS, 108 F.3d 110, 112 (6th Cir. 1997). In sum, there was sufficient evidence for a rational trier of fact to conclude that both Mr. and Mrs. Madison were guilty of every offense of which they were convicted. VI. CONSTITUTIONALITY OF 18 U.S.C. § 666 AS APPLIED A “challenge to the constitutionality of the application of § 666 involves questions of law,” and is therefore reviewed de novo. United States v. Suarez, 263 F.3d 468, 476 (6th Cir. 2001). As a jurisdictional requirement for conviction under § 666, “the [victim] organization, government, or agency [must] receive[], in any one year period, benefits in excess of $10,000 under a Federal program.” 18 U.S.C. § 666(b); see also Suarez, 263 F.3d at 484. Mrs. Madison argues that § 666 was unconstitutional as applied to her because she did not convert Cherokee’s federal benefits themselves, but rather the fee the federal government paid Cherokee to administer those benefits. Her argument has been rejected by this court. “A defendant under 18 U.S.C. § 666 need not be shown to have actually stolen any of the federal funds given to the ‘federal recipient’ or even that his malfeasance affected those federal funds.” Suarez, 263 F.3d at 484 (citing United States v. Salinas, 522 U.S. 52, 55-58 (1997)). To determine whether the conversion of the assets of a funded program falls under § 666, the Supreme Court in Fischer v. United States, 529 U.S. 667 (2000), recommend[ed] a fact-based inquiry into the “program’s structure, operation, and purpose” to determine whether the criminal conduct posed a threat to the integrity of the federal program. If it does pose such a threat (as was found with defendant Fischer’s conduct), then the statute may be applied constitutionally, regardless of whether the federal funds are affected directly. - 17 - Nos. 05-5622, 05-5625, 05-5825, 05-5826 United States v. Madison Suarez, 263 F.3d at 486 (quoting Fischer, 529 U.S. at 681-82) (citation omitted) (emphasis added). Cherokee’s purpose was to disburse federal and state funds appropriated to help low-income families pay for day care, and the evidence showed that Mrs. Madison’s continual self-dealing endangered Cherokee’s non-profit status. The loss of that status, and the resulting significant tax liability, would certainly have threatened the integrity of Cherokee’s program. Therefore, under the standard in Suarez and Fischer, § 666 was constitutional as applied to Mrs. Madison. VII. CONSTITUTIONALITY OF FACTFINDING BY SENTENCING JUDGE Defendants assert that their sentences violated the Sixth Amendment as interpreted in United States v. Booker, 543 U.S. 220 (2005), because their guidelines ranges were based on facts found by the judge rather than the jury. In fact, Booker explained that the remedy for the Sixth Amendment violation inherent in the guidelines sentencing scheme was not that all sentencing facts be found by a jury, but that sentencing courts apply the guidelines as advisory. Id. at 259-60. The district court here did so. The defendants’ argument is therefore meritless, and in fact has already been rejected by this court. United States v. Davis, 397 F.3d 340, 352 (6th Cir. 2005) (Cook, J., concurring); see also United States v. Wood, 188 F. App’x 353, 354-55 (6th Cir. 2006).