Opinion ID: 2802975
Heading Depth: 2
Heading Rank: 2

Heading: Jury Instruction on Tax Counts

Text: The defendants contend that the district court’s instruction on the tax counts was generally erroneous and, specifically, that the charge improperly instructed that good faith was not a defense. The district court provided the jury with the following “willfulness” instruction on the tax counts: The fourth and final element that the government must prove beyond a reasonable doubt is that the defendant under consideration acted willfully. I have already defined the term ‘willfully’ for you. In short, the government must establish that the defendant under consideration acted voluntarily and intentionally with the specific intent to make a false statement on the tax return involved in the count under consideration, despite knowing that it was his legal duty to answer truthfully. Smith App’x 495. The court had previously defined the term willfully as when a person acts “purposely and with an intent to do something unlawful.” Gov’t App’x 736. Smith argues, citing United States v. Pirro, 212 F.3d 86, 90-91 (2d Cir. 2000), that this instruction was not sufficiently specific as to defendants’ willfulness. We do not believe that Pirro is apposite, but, more to the point, Smith has no basis for complaint because he requested virtually identical language in his proposed jury instruction. Moreover, the legal sufficiency of the instruction delivered on this point by the district court is well settled. See United States v. Pomponio, 429 U.S. 10, 11 (1976) (finding that similar instruction given by the trial court was appropriate). 13 No. 13-3164-cr Before issuing the general instruction on the tax counts, the court, without objection from the defendants, told the jury that “the defense of good faith is not applicable to the filing of false tax returns charges.” See Gov’t App’x 738. The government concedes that this statement was incorrect. The Supreme Court has held that, in criminal tax cases, the prosecutor must prove “actual knowledge of the pertinent legal duty,” which “requires negating a defendant’s claim of ignorance of the law or a claim that because of a misunderstanding of the law, he had a good faith belief that he was not violating any of the provisions of the tax laws.” Cheek v. United States, 498 U.S. 192, 202-03 (1991). But just before this mistaken instruction, the court instructed the jury that to act willfully “means to act purposely and with an intent to do something unlawful.” Gov’t App’x 736. The government argues that any fair understanding of this definition is that the jury could not convict the defendants if it found that they had acted in good faith. We have stated that while “the existence vel non of culpable intent or lack of good faith is a crucially important issue” for tax fraud, United States v. Regan, 937 F.2d 823, 827 (2d Cir. 1991), a standard jury instruction on the willfulness element of tax evasion generally encompasses a good faith defense, United States v. Evangelista, 122 F.3d 112, 118 n.5 (2d Cir. 1997). Defendants nonetheless argue that this mistaken reference to the inapplicability of the good faith defense tainted the entire instruction and requires vacatur of their convictions on the tax charges. “A jury instruction is erroneous if it misleads the jury as to the correct legal standard or does not adequately inform the jury on the law.” United States v. Dinome, 86 F.3d 277, 282 (2d Cir. 1996) (quotations marks omitted). If, as here, a defendant does not object to a charge we review for plain error. See United States v. Kopstein, 759 F.3d 168, 180 n.6 (2d Cir. 2014); see also Fed. R. Crim. P. 30(d), 52(b). 14 No. 13-3164-cr Plain error requires an appellant to show that the error is clear or obvious, that it affected his substantial rights, which ordinarily means it affected the outcome of the district court proceedings, and “seriously affect[ed] the fairness, integrity or public reputation of the judicial proceedings.” United States v. Vilar, 729 F.3d 62, 70 (2d Cir. 2013) (quotation marks omitted). We agree with the government that, when examined in the context of the instructions as a whole, the court’s erroneous statement does not rise to the level of plain error. “In determining whether the district court properly instructed the jury, we must not judge any instruction in isolation but must instead view the charge as a whole. . . . [W]e will not make our determination on the basis of excerpts taken out of context.” United States v. Josephberg, 562 F.3d 478, 500 (2d Cir. 2009) (quotation marks and citations omitted). The district court properly instructed the jury on the government’s burden of proof, that the jury had to find that the defendants knew that the payments they received were not legitimate loans because they lacked a bona fide intent to repay the money in question, and that the defendants knew that the declarations on their tax returns were not truthful because they did not include these payments. The jury instruction thus conveyed that the defendants’ good faith belief that the payments were legitimate loans would preclude conviction. Under plain error review, the district court’s mistaken reference, when taken in context, did not eviscerate the rest of the instruction. This is especially so in light of the overwhelming evidence that the defendants knew their returns were false when they filed them. Accordingly, we affirm the defendants’ convictions for filing false tax returns.