Opinion ID: 4537244
Heading Depth: 3
Heading Rank: 1

Heading: Charges related to Lee’s and JLPA’s tax returns

Text: The elements of a conspiracy under 18 U.S.C. § 371 are “(1) an agreement between two or more persons to pursue an unlawful objective; (2) the defendant’s knowledge of the unlawful objective and voluntary agreement to join the conspiracy; and (3) an overt act by one or more of the members of the conspiracy in furtherance of the objective of the conspiracy.” Tinghui Xie, 942 F.3d at 240. The elements of aiding and assisting in filing a false tax return under 26 U.S.C. § 7206(2) are (1) the “defendant aided, assisted, counseled, or advised another in the preparation of the tax return in 13 Case: 19-60365 Document: 00515431288 Page: 14 Date Filed: 05/28/2020 No. 19-60365 question; (2) the tax return contained a statement falsely claiming income, deductions, or tax credits; (3) the defendant knew that the statement was false; (4) the false statement was material; and (5) the defendant acted willfully.” United States v. Morrison, 833 F.3d 491, 500 (5th Cir. 2016). Under Section 7206(2), a defendant does not have to sign or personally prepare the return to be subject to conviction. See id. at 501. Nicholson argues the Government failed to establish these elements because (1) Lee testified that JLPA’s $66,000 in payments to Nicholson were for accounting services, so they were not “false”; and (2) other Nicholson & Co. employees, not Nicholson himself, prepared Lee’s and JLPA’s tax returns, so Nicholson did not “know” of any alleged falsity. First, to recap, there was evidence showing the payments from JLPA to Nicholson were not in fact for accounting services. Lee and McWhorter both testified that they understood JLPA did not owe Nicholson & Co. for accounting services. Despite this, Lee wrote checks from JLPA to “Carl Nicholson,” while insisting that Nicholson & Co. record the payments as “accounting expenses.” Nevertheless, Nicholson deposited a large portion of these payments into his personal bank account. Nicholson & Co. did not receive any of those payments. Further, JLPA’s 2012, 2013, and 2014 tax returns indicated that payments to Jackson were for “legal fees” when in fact they were for Lee’s family trust. A rational jury could have found beyond a reasonable doubt that JLPA’s 2012, 2013, and 2014 tax returns were indeed false. The same applies to Lee’s individual income tax returns, which did not indicate the payments from JLPA to the Lee family trusts as income to Lee. This was sufficient to show Lee’s individual income tax returns contained false statements. Second, Nicholson instructed Jones to categorize the payments from JLPA to the Lee family trusts as “legal fees per John Lee.” An audio recording was played for the jury in which Nicholson stated that Lee “wrote that off as 14 Case: 19-60365 Document: 00515431288 Page: 15 Date Filed: 05/28/2020 No. 19-60365 legal fees, knowing that it wasn’t legal fees,” and that Lee took deductions “[f]or legal fees, which is false.” This and the deposit of the JLPA payments into Nicholson’s personal bank account were enough for a rational jury to find beyond a reasonable doubt that Nicholson had knowledge of the falsehoods contained in Lee’s and JLPA’s tax returns. The fact that Nicholson was not the signed preparer on the tax returns does not mean Nicholson had no knowledge of the falsehoods contained in them. See Morrison, 833 F.3d at 501. The evidence was sufficient to sustain Nicholson’s convictions on the charges related to Lee’s and JLPA’s tax returns. B. Charges related to Nicholson’s individual income tax returns The elements of filing a false tax return under 26 U.S.C. § 7206(1) are that a defendant “(1) made and signed a materially false federal income tax return; (2) submitted a written declaration stating under penalties of perjury that the return was true and correct; (3) did not believe that the return was true and correct when he signed it; and (4) signed it willfully and with the specific intent to violate the law.” United States v. Boyd, 773 F.3d 637, 644 (5th Cir. 2014) (citing § 7206(1)). Nicholson’s individual income tax return documents and Wright’s and McWhorter’s testimony were sufficient to support a finding that Nicholson falsely stated in his 2012 to 2015 individual income tax returns that the FGH income was an offsetting expense because it had been received by Nicholson & Co. Nicholson & Co. did not receive any FGH payments and did not record them as income on Nicholson & Co.’s tax returns. Further, Nicholson’s 2014 individual income tax return did not indicate the portions of JLPA’s $66,000 in payments which Nicholson had deposited into a personal bank account, and Nicholson’s individual income tax return documents and Amex statements and McWhorter’s testimony support a finding that Nicholson did not report reimbursement payments as income in his 2013 to 2015 individual income tax 15 Case: 19-60365 Document: 00515431288 Page: 16 Date Filed: 05/28/2020 No. 19-60365 returns which should have been reported as such. Finally, a rational jury could find that the evidence of Nicholson’s individual income tax return documents and Wright’s and McWhorter’s testimony regarding Nicholson’s adjusted basis in Nicholson & Co. showed beyond a reasonable doubt that Nicholson knowingly stated a false adjusted basis in his 2015 tax return. The evidence was sufficient to sustain a conviction on every count.