Opinion ID: 173675
Heading Depth: 2
Heading Rank: 2

Heading: Failure to Give the Requested Good Faith Reliance Jury Instruction

Text: Kottwitz and the Marchellettas argue that the district court erred by failing to give their proposed jury instruction regarding good faith reliance on Schwartz's accounting advice and his failure to exercise due care in his audit of Circle. They maintain that the district court misapprehended the law regarding what the jury needed to decide in order for a defendant to succeed as opposed to when they should be instructed for their ultimate determinations as to guilt or innocence. They contend that there was overwhelming evidence that Schwartz failed to exercise due care of diligence in discharging his duties. The government responds that Kottwitz and the Marchellettas were not entitled to a good faith reliance instruction because Schwartz never advised them how to record and report the personal expenditures on their tax returns, they never told Schwartz about the payments, and they gave him false books that disguised the payments. It maintains that the charge would have confused the jury and was unnecessary because the court provided an instruction regarding the high standard of criminal intent and that good faith is a complete defense. Finally, it asserts that we should review this issue for only plain error because Junior never articulated any specific evidentiary grounds in support of the charge and did not object to its omission until after the jury had retired. We review de novo the issue of whether a requested jury instruction is supported by sufficient evidence, United States v. Calderon, 127 F.3d 1314, 1329 (11th Cir.1997), and review the district court's refusal to give such an instruction for abuse of discretion, United States v. Morris, 20 F.3d 1111, 1114 (11th Cir.1994). A district court abuses its discretion in denying a requested jury instruction if: (1) the instruction is correct; (2) the instruction was not substantially covered by the given charge; and (3) the defendant's ability to present an effective defense was seriously impaired by the failure to give the instruction. United States v. Sirang, 70 F.3d 588, 593 (11th Cir.1995). The district court has broad discretion in formulating jury instructions as long as those instructions are a correct statement of the law. United States v. Garcia, 405 F.3d 1260, 1273 (11th Cir.2005) (per curiam). Further, because [a] confused jury can give as improper a verdict as one which has failed to receive some significant instruction,. . . the charge should be direct and focus the jury's attention on the evidence given at trial. United States v. Blair, 456 F.2d 514, 520 (3d Cir.1972). In objecting to a district court's failure to provide a requested jury instruction, the objecting party must advise the court before the jury retires to deliberate of its specific objection and the evidentiary grounds upon which the objection was based. Fed. R. of Crim. Proc. 30(d). The objection must be specific and timely, United States v. Wright, 392 F.3d 1269, 1277 (11th Cir.2004), as a general objection . . . will not suffice, United States v. Gallo-Chamorro, 48 F.3d 502, 507 (11th Cir.1995). An objection is timely even if made after the jury has been excused as long as the jury was told not to begin deliberations until further notice. See United States v. Eiland, 741 F.2d 738, 742 (5th Cir.1984). Although we do not insist on an extremely technical reading of Rule 30, the objection should be sufficient to give the district court the chance to correct errors before the case goes to the jury. Sirang, 70 F.3d at 594 (citations omitted). Objections to the district court's erroneous belief that the requested instruction was an incorrect statement of the law, United States v. Yeager, 331 F.3d 1216, 1223 (11th Cir.2003), objections as a matter of form to the denial of all of the requested instructions, United States v. Flynt, 15 F.3d 1002, 1006 (11th Cir.1994) (per curiam) (quotation marks omitted), and objections that do not address the district court's explanation for its denial of the instruction because it was not tailored to the evidence, are inadequate to preserve the issue on appeal, Sirang, 70 F.3d at 594 (quotation marks omitted). A non-preserved objection to a court's failure to give a requested jury instruction is reviewed under the more stringent standard of plain error. Fed.R.Crim.P. 52(b). As we have explained, a plain error is one that is clear, is obvious under current law, and that affects substantial rights. United States v. Eckhardt, 466 F.3d 938, 948 (11th Cir.2006). A trial court is not free to determine the existence of the defendant's theory of defense as a matter of law; it is established by the defendant's presentation of an evidentiary and legal foundation and, once established, the defendant is entitled to jury instructions on that defense theory. United States v. Ruiz, 59 F.3d 1151, 1154 (11th Cir.1995); United States v. Williams, 728 F.2d 1402, 1404 (11th Cir.1984). The requested jury instruction should precisely and specifically, rather than merely generally or abstractly, point [] to the theory of . . . defense. Morris, 20 F.3d at 1117 (quotation marks and citations omitted). The law is clear that the defendant's burden is light as  any foundation in the evidence is sufficient even if that evidence is of doubtful credibility, frivolous, imprudent, inconsistent, insufficient, unbelievable, or weak. United States v. Opdahl, 930 F.2d 1530, 1535 (11th Cir.1991) (citation omitted); United States v. Middleton, 690 F.2d 820, 826 (11th Cir. 1982); Strauss v. United States, 376 F.2d 416, 419 (5th Cir.1967). [I]t is reversible error to refuse to charge on a defense theory for which there is an evidentiary foundation and which, if believed by the jury, would be legally sufficient to render the accused innocent. United States v. Edwards, 968 F.2d 1148, 1153 (11th Cir. 1992) (quotation marks and citation omitted). The defense of good faith reliance on expert advice is designed to refute the government's proof that the defendant intended to commit the offense. United States v. Johnson, 730 F.2d 683, 686 (11th Cir.1984) (internal quotation marks omitted). Such a defense is successful when the defendants establish that they (1) fully disclosed all relevant facts to the expert and (2) relied in good faith on the expert's advice. [41] Id. Once the defendant charged with willful income tax evasion presents evidence that he disclosed all of the relevant facts to a competent tax advisor and relied on the advisor's advice based on his disclosures, he is entitled to a jury instruction on the defense of good faith reliance on the advice of his advisor. United States v. Eisenstein, 731 F.2d 1540, 1543-44 (11th Cir.1984) (citing Bursten v. United States, 395 F.2d 976, 981-82 (5th Cir. 1968)). If the expert provides no advice or acts as a co-conspirator and not as an expert, good faith reliance is not established. Johnson, 730 F.2d at 686; United States v. Miles, 290 F.3d 1341, 1354 (11th Cir.2002) (per curiam). A reliance instruction is also not required if the defendant failed to disclose material facts related to [the defendant's] misrepresentations. [42] United States v. Condon, 132 F.3d 653, 657 (11th Cir.1998) (per curiam). The defendant bears an extremely low threshold to justify the good faith reliance instruction and does not need to prove good faith. Ruiz, 59 F.3d at 1154; see also Morris, 20 F.3d at 1114 n. 2. Whether the defendant fully disclosed the relevant facts, failed to disclose all relevant facts, or concealed information from his advisor, and relied in good faith on his advisor are matters for the jury and not the courtto determine, under proper instruction. [43] See United States v. Baldwin, 307 F.2d 577, 579 (7th Cir.1962); United States v. Walters, 913 F.2d 388, 392 (7th Cir.1990). A jury is entitled to the opportunity to believe or disbelieve even fragile evidence in support of a defense. Strauss, 376 F.2d at 419; Eisenstein, 731 F.2d at 1545. Defendants are entitled to the good faith defense instruction if it (1) was correct, (2) was not substantially covered by the court's charge to the jury, and (3) dealt with some point in the trial so important that failure to give the requested instruction seriously impaired the defendant's ability to conduct his defense[,] and where there is any evidence, regardless of how dubious, inconsistent or weak it may have been, to support their good faith claim. Morris, 20 F.3d at 1116 (punctuation and citation omitted). The instruction is appropriate even where the evidence might lead the jury to conclusions that would not benefit the defendant because refusing the charge withdraws the point from the jury's consideration and a jury should be given the opportunity to resolve all questions of fact. United States v. Platt, 435 F.2d 789, 792-93 (2nd Cir.1970). Such an instruction was proper where the defendants' books were kept internally and reviewed by outside accountants, and their tax returns were prepared by outside accountants, [44] see Morris, 20 F.3d at 1114, where the only evidence in support of the instruction is the defendant's own testimony, see Strauss, 376 F.2d at 419 (citing Tatum v. United States, 190 F.2d 612, 617 (D.C.Cir.1951)), and where the defendant failed to testify, see Lindo, 18 F.3d at 356. The reliance instruction is also proper even if the outside accountant was a co-defendant. United States v. Duncan, 850 F.2d 1104, 1105, 1117 (6th Cir.1988), overruled on other grounds, Schad v. Arizona, 501 U.S. 624, 111 S.Ct. 2491, 115 L.Ed.2d 555 (1991). The denial of the instruction may prejudice the defendants where they have contested that they lacked the specific intent to commit tax fraud; such prejudice is amplified when the evidence against them was circumstantial and limited, and the evidence in their favor was substantial. [45] Morris, 20 F.3d at 1118. The instruction may be properly denied, however, if: (1) there is evidence that the defendant personally failed to record receipts, provide his accountant with the underlying records, or inform his accountants of additional income, see United States v. Garavaglia, 566 F.2d 1056, 1059-60 (6th Cir.1977); (2) there is no evidence that the defendant sought, received, or followed the advice of an advisor in good faith or informed the advisor of all of the facts, see United States v. Brimberry, 961 F.2d 1286, 1290 (7th Cir.1992); United States v. Durnin, 632 F.2d 1297, 1301 (5th Cir.1980); (3) such theory of defense is based merely upon speculation, see Condon, 132 F.3d at 656; or (4) the issue of the defendant's reliance on advice for given conduct is not before the jury on the charges of conviction, United States v. Snipes, 611 F.3d 855, 2010 WL 2794190 at  (11th Cir. July 16, 2010). The reliance instruction is also not necessary where the district court's instructions regarding the defendant's honest, good faith belief that his actions were legitimate negates the specific intent required for conviction, United States v. Tannehill, 49 F.3d 1049, 1058 (5th Cir. 1995), adequately covered the substance of the defendant's theory of defense and permitted defense counsel to present adequate argument on the defendant's good faith misunderstanding of the law, Snipes, 611 F.3d 855, 2010 WL 2794190 at ; United States v. Kouba, 822 F.2d 768, 771 (8th Cir.1987), or required that the jury rule out good faith in order to convict the defendant. United States v. Martinelli, 454 F.3d 1300, 1316 (11th Cir.2006). The requested good faith reliance jury instruction was based on our pattern jury instructions and was, therefore, a correct statement of the law. [46] We must first determine whether Kottwitz and the Marchellettas preserved the issue of the good faith reliance instruction through their objection in the district court. The good faith defense theory was presented throughout the trial. The theory was set out in the opening statements, during Schwartz's cross-examination, and in closing arguments that Kottwitz, Junior, and Senior, none of whom were trained or experienced in taxes, relied on Schwartz for his advice in classifying entries made in Circle's books and in preparing correct tax returns. They specifically requested the instruction and objected both orally and in writing to the district court's refusal to grant the instruction before jury deliberations commenced. We, therefore, review the district court's refusal to give the instruction for abuse of discretion. Whether it was necessary to provide the good faith reliance instruction depends on whether (1) a juror could find any evidence to conclude that Kottwitz and the Marchellettas provided all material facts to their accountant, and (2) a juror could find any evidence that Kottwitz and the Marchellettas relied in good faith on that accountant's advice and decisions. The evidence demonstrated that the Marchellettas hired Schwartz to prepare Circle's audited financial statements and tax returns, and that Kottwitz worked closely with him during his yearly audits. In a letter dated 21 August 2001, Junior confirmed to Schwartz that he had to the best of my knowledge and belief . . . made available to you all . . . [f]inancial records and related data [and] [m]inutes of the meetings of stockholders, directors . . . . Govt. Ex. 427.10. Schwartz explained that he conducted the audits but relied on Kottwitz for mostly everything because neither Junior nor Senior wanted to be involved or provided him with clear answers regarding the technicalities of the books and records. R22 at 185-86. He stated that Senior would walk through but did not participate and did not seem to care about the numbers. Id. at 185-87. Kottwitz did not limit Schwartz's audit in any manner, provided him with requested documentation, and relied on his accounting advice to insure the propriety of Circle's accounting. Schwartz testified that Kottwitz made her best efforts to assure that Circle's accounting was correct and to make appropriate changes. Logan and Diggs both testified that Schwartz was given access to Circle's books and records and to any other requested documents, and that he directed the correction of misclassified entries. Schwartz admitted that neither the time that he spent on the audit nor his access to the documents was limited, and made no changes to the time that he allocated after he found it difficult to perform the audit in two days. Schwartz not only reclassified the monies Circle received from Nastasi as a loan, but he failed to inform Senior of the reclassification or its effect on his previously filed tax return and took no steps to correct that tax return. Schwartz admitted reviewing the JM reports, which included the Crabapple and Newport Bay costs of, respectively, about $1 million and $800,000, and reflected no income. Based on this evidence, the Marchellettas were entitled to have the jury instructed on their good faith reliance on Schwartz's advice and on Schwartz's failure to exercise due care. The requested instruction properly placed the determination with the jury as to whether they acted in good faith in seeking advice, fully and completely reporting to their accountant, and acting strictly in accordance with the advice. The district court's refusal to deliver the requested instruction, which addressed the defense's theory of the case on Counts Three, Four, and Five was not substantially covered by other instructions seriously impaired Kottwitz and the Marchellettas' defense. The district court's refusal to deliver the requested instruction did not, however, impair Kottwitz and the Marchellettas' defense as to the conspiracy charge (Count One). The defense's theory of the case as to the conspiracy charge was fully encompassed by the good faith instruction given by the district court because the conspiracy was consummated before any reliance upon the advice of an accountant. Before we resolve this issue, however, we must look again to our review of the sufficiency of the evidence as the counts in question because [o]nly if the evidence is sufficient for a properly instructed jury to have convicted [the defendants of the charged offenses] do we have to determine whether the district court's erroneous jury instruction constituted . . . error requiring reversal and remand for a new trial. United States v. Mount, 161 F.3d 675, 678 (11th Cir.1998) (citation omitted). If the record does not contain sufficient evidence under which a properly instructed jury could have convicted [the defendants of the charged offenses], then double jeopardy principles mandate that we vacate the conviction and remand to the district court with directions to enter a judgment of acquittal on the count in question. Id. (quotation marks and citation omitted). Because we have determined that the evidence was sufficient to support Junior's and Senior's convictions for filing materially false personal income tax returns for 2000 (Counts Three and Four), and Senior's conviction for evading taxes (Count Five), we reverse their convictions on these counts and remand for a new trial. Because the evidence was, however, insufficient to support Kottwitz's, Junior's, and Senior's convictions for aiding and assisting in the filing of a materially false corporate return for 2001 (Count Six), we need not address whether the district court's instruction would have constituted plain error requiring a new trial if the evidence had been sufficient. See Mount, 161 F.3d at 680 n. 4. We reverse their convictions on this count and remand with directions to enter a judgment of acquittal on this count and for resentencing for Kottwitz. [47]