Opinion ID: 203465
Heading Depth: 4
Heading Rank: 2

Heading: Literal Truth Instruction

Text: Schussel also claims error concerning the rejection by the district court of Schussel’s proposed instruction telling the jury it could not consider as “false” any statement Schussel made responding to the IRS if that statement were “literally” true – even if the statement was found by the jury to be incomplete or misleading. The court below found that this instruction only applied to perjury cases and not to actions taken with the “intent to mislead or conceal” as stated in the tax evasion statutes. - 29 - Schussel’s requested instruction5 informed the jury that DeFranceschi had told the IRS the “literal truth” in answering its inquiries, such as informing the IRS that Schussel “is” not an officer or employee of DCIL and that payments made to DCIL by DCI were pursuant to a “contract,” even though DeFranceschi knew that DCIL was a shell company to which Schussel had diverted funds. Specifically, Schussel argues that DeFranceschi knew that the answers in the March 11, 1998, letter to the IRS were misleading, but they were in keeping with the general practice whereby attorneys recommend that their clients narrowly answer questions without volunteering information. Schussel’s request that the jury be told specifically that they must consider whether the answers given to the IRS in the March 11, 1998, letter were “literally true” does not reflect a correct 5 The requested instruction reads in relevant part: Instruction No. 10 False Statments Counts Two and Three charge defendant Schussel with wilfully attempting to evade and defeat a part of the income tax due and owing by DCI and by himself personally by making false statements to an IRS revenue officer or by causing false statements to be made to an IRS revenue officer. In determining whether defendant Schussel is guilty of the offense charged in Counts Two and Three, you may not consider as false statements any statements which were made in response to questions asked by Revenue Agent Kelly McGovern Jordan and which were literally true, even if those statements are determined by you to have been incomplete or even misleading. - 30 - statement of the law. A “literal truth” instruction does not take into account the language of 26 U.S.C. § 7201, the tax evasion statute, which prohibits “any conduct, the likely effect of which would be to mislead or conceal.” (Emphasis added.) As the statute prohibits conduct that misleads or conceals, the “literal truth” may still violate the tax statute. The plain language of the statute covers a broader range of conduct than Schussel’s proposed instruction would reflect. The cases that Schussel relies on for the correctness of his “literal truth” instruction all concern perjury, false statements and obstruction of justice charges, not the broader conduct prohibited by the tax evasion statute. In addition, the instruction the district court gave to the jury about the March 11 letter asked the jury to consider whether Schussel had made or caused to be made “false statements to the revenue agent.” There is nothing in that instruction that prohibits the jury from considering the “literal truth” of Schussel’s answers and Schussel did in fact make that argument to the jury. In sum, what Schussel was trying to accomplish by his requested instructions was to inform the jury, incorrectly, that when a taxpayer hires professionals to perform legal services for him, the taxpayer may rely on those services to such an extent that the taxpayer does not act “willfully” under the tax evasion statute if he retains counsel for an audit. The district court was correct to - 31 - reject the changes to the tax evasion instructions requested by Schussel. 3. Supplemental Instruction on DeFranceschi’s Role The indictment in this case, which came down on February 26, 2004, alleged that the conspiracy involved “others known and unknown to the Grand Jury.” This language permitted the jury to convict Schussel based on a conspiracy with persons not named in the indictment and, in fact, the coconspirators are all unnamed. When describing the overt acts in furtherance of the conspiracy, the indictment refers to DCI controller Diane Reed as “D.R.” and minority shareholder Ronald Gomes as R.G. Stacey and Michael Griffin, Schussel’s daughter and son-in-law, are also unindicted coconspirators. Attorney Edward DeFranceschi is not mentioned in the conspiracy count in any way. The statute of limitations for the conspiracy is six years, so the government was required to prove an ongoing conspiracy among Schussel and his coconspirators as of February 26, 1998, during the time frame when DeFranceschi was representing Schussel in connection with the 1997-98 audit concerning the 1995 tax year. Schussel claims on appeal that the government wanted the jury to believe that DeFranceschi was part of the conspiracy because it was easier for the government to prove the existence of a conspiracy as of February 26, 1998, between Schussel and DeFranceschi than trying to prove that Reed, Gomes and others were still part of the conspiracy as of - 32 - that date. Schussel’s interaction with DeFranceschi during this time period was very clear and Schussel maintains that the others in the conspiracy, such as Gomes and Reed, had withdrawn from the conspiracy, as argued by Schussel in his challenge to the sufficiency of the evidence for the conspiracy count, which is addressed infra. In an effort to counter what Schussel calls a “change in course” by the government to have the jury believe that DeFranceschi was part of the conspiracy, Schussel requested a specific instruction that “the government does not allege that DeFranceschi was a coconspirator.” The district court refused to give the jury the supplemental language and gave a standard instruction concerning the conspiracy: You are not being asked whether any other person is guilty or not guilty of those offenses or should have been charged with a crime. Your verdict should be based solely upon the evidence or lack of evidence as to Dr. Schussel in accordance with my instructions. The instruction is not confusing, as argued by Schussel. It told the jury not to take into consideration the question of whether some other person should or should not have been charged. The instruction does not suggest, as Schussel argues, that DeFranceschi should have been charged as a coconspirator. Moreover, the United States did not imply or suggest during the trial that DeFranceschi was or should have been charged as a coconspirator. Indeed, the United States told the jury that the evidence did not support the - 33 - inference that Schussel had acted in good faith with DeFranceschi and instead suggested that Schussel used him as a “scapegoat.” The government stated that the evidence showed that DeFranceschi believed that the contract between DCI and DCIL was a true and valid contract when he turned it over to the IRS. Therefore, contrary to Schussel’s allegations that the government tried to portray DeFranceschi as a coconspirator, the United States made clear to the jury that Schussel “use[d] the lawyer as a conduit to give false information to the IRS.”