Opinion ID: 655983
Heading Depth: 2
Heading Rank: 1

Heading: The Tax Convictions

Text: 5 Title 26 U.S.C. § 7206(2) prohibits willfully assisting or counseling another in the preparation of a false tax return. To establish a violation of this section, the government must prove beyond a reasonable doubt that  the defendant aided, assisted, procured, counseled, advised, or caused the preparation and presentation of a return; that the return was fraudulent or false as to a material matter, and that the act of the defendant was willful. United States v. Crooks, 804 F.2d 1441, 1448 (1986), modified on other grounds, 826 F.2d 4 (9th Cir.1987). 6 Willfulness, in the context of a criminal tax prosecution, means either (1) that the defendant acted with a bad purpose or evil motive, or (2) that the defendant voluntarily, intentionally violated a known legal duty. United States v. Kellogg, 955 F.2d 1244, 1248 (9th Cir.1992) (internal quotation marks and citation omitted). 7 To show a defendant violated a known legal duty, the government must  'negativ[e] 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.'  Id. (quoting Cheek v. United States, 498 U.S. 192, 202 (1991)). 8 Turning to the first of the three section 7206(2) elements, there is no question that Rogers aided, assisted, counselled, and advised investors in completing their tax returns. Rogers cannot and does not dispute the government's extensive catalog of evidence on this point. 9 The other two elements are the material falsity of the returns and Rogers' willfulness. For the most part, rather than demonstrating (or even arguing) insufficiency of the evidence on these issues, Rogers makes irrelevant assertions. 1 Some arguments do merit further attention, however, because they arguably relate to the falsity of the tax returns or Rogers' willfulness. None of these, however, establishes that in the light most favorable to the prosecution, the evidence could not have convinced a rational factfinder. 10 (a) Falsity. First, Rogers points to evidence apparently intended to show his tax programs were not false. He asserts that the government's expert tax witness, Dr. Karlinski, testified that the tax shelters were viable and would have been upheld by the I.R.S. 11 This is misleading. What Dr. Karlinski said was that the tax shelter appeared viable on paper, that is, the form of the shelter was not necessarily improper, assuming the underlying facts were as Rogers claimed them to be. But Dr. Karlinski then testified that the facts were not as Rogers claimed them to be. For example, he testified that the films were not in the can and ready to be shown, and that the films had not generated income by the end of 1975. 12 It cannot be said that no rational factfinder could accept this testimony by Dr. Karlinski, a Ph.D. and professor of tax accounting who had substantial experience in motion picture tax shelters. 13 Further, while Rogers alleges that his own expert appraised Rogers' films in the millions of dollars, a government expert testified that the films were worthless. Rogers does not show why no rational factfinder could have believed this latter valuation over Rogers' expert's. 14 Rogers has failed to show the evidence was insufficient to establish falsity of the returns. 15 (b) Willfulness. Rogers also highlights evidence apparently intended to demonstrate his lack of willfulness. But it is not incontrovertible evidence of Rogers' good faith that Theodore Hamlet, one of Rogers' own former employees, testified that he, Hamlet, did not consider the program to be a fraud and that there was never a time when he caught appellant in a lie and that, at one point, appellant expressly stated that he was trying to avoid committing any fraud with investors['] funds. 16 Nor is Rogers' own testimony that tax attorney Ira Miller approved the scheme sufficient to establish, beyond rational dispute, that Rogers lacked willfulness. Whether or not Miller approved the plan--a disputed allegation--Rogers cannot get around the abundant evidence that he lied to investors about the state of completion of the films. 17 In providing information he knew to be false to taxpayers, Rogers acted willfully within the meaning of section 7206(2). See Kellogg, 955 F.2d at 1248 (defendant's creation of fictitious deductions was sufficient to show willfulness under section 7206(2), because defendant knew of his duty not to defraud the IRS). 18 The evidence was not insufficient to support the district court's finding of willfulness.