Opinion ID: 532811
Heading Depth: 2
Heading Rank: 2

Heading: The Tax Fraud Conspiracy

Text: 31 Marren challenges the sufficiency of the evidence for his conviction for conspiring to defraud the Internal Revenue Service of income taxes due to be paid by Michael's Magic Touch in violation of 18 U.S.C. Sec. 371. Marren does not challenge the adequacy of the proof that a conspiracy existed or that at least one overt act was committed by a co-conspirator in furtherance of the conspiracy. Instead, his contention focuses on the adequacy of the proof of his knowledge of a tax-related conspiracy as he claims that the evidence failed to prove beyond a reasonable doubt that he knew that the goal of the RICO conspiracy was the avoidance of federal tax liability. Marren argues that the evidence established only that he was employed at a prostitution shop from which he stole credit card slips which he sold for cash to an undercover FBI agent and not that he was a knowing participant in the tax fraud scheme. 32 The crime of conspiring to defraud the United States is set out in Sec. 371, which provides in pertinent part: 33 If two or more persons conspire either to commit any offense against the United States, or to defraud the United States, or any agency thereof in any manner or for any purpose, and one or more of such persons do any act to effect the object of the conspiracy, each shall be fined not more than $10,000 or imprisoned not more than five years, or both. 34 18 U.S.C. Sec. 371. 35 In order to convict Marren of conspiracy under Sec. 371, the government needed to prove at trial: (1) an agreement to accomplish an illegal objective against the United States; (2) one or more overt acts in furtherance of the illegal purpose; and (3) the intent to commit the substantive offense. United States v. Hooks, 848 F.2d 785 (7th Cir.1988); United States v. Gaddis, 877 F.2d 605 (7th Cir.1989). In Ingram v. United States, 360 U.S. 672, 678, 79 S.Ct. 1314, 1319, 3 L.Ed.2d 1503 (1959), the Supreme Court interpreted the third element of a Sec. 371 offense. In evaluating a Sec. 371 conspiracy to evade taxes, the Court found that the government need not prove that the conspirators were aware of the criminality of their objectives but it must show that they knew of the liability for federal taxes. [C]onspiracy to commit a particular substantive offense cannot exist without at least the degree of criminal intent necessary for the substantive offense itself. Id. (footnote omitted). 36 As we noted in Hooks, because a conspiracy is by its nature secret, its existence and common purpose must often be proved by circumstantial evidence. The government need not establish that there existed a formal agreement to conspire; circumstantial evidence and reasonable inferences drawn therefrom concerning the relationship of the parties, their overt acts, and the totality of their conduct may serve as proof. Hooks, 848 F.2d at 792; See also United States v. Redwine, 715 F.2d 315, 320 (7th Cir.1983), cert. denied, 467 U.S. 1216, 104 S.Ct. 2661, 81 L.Ed.2d 367 (1984). Once the government proves the existence of the conspiracy, it need only offer 'slight evidence' to prove that an individual was a member of the conspiracy. United States v. Whaley, 830 F.2d 1469, 1473 (7th Cir.1987) (quoting United States v. Castillo, 814 F.2d 351, 353 (7th Cir.1987)). 37 As discussed earlier, our standard of review for a claim of insufficiency of the evidence is well established. We must examine the evidence in the light most favorable to the government, giving it the benefit of all reasonable inferences, and can reverse only if we find that a reasonable fact-finder could not have found the essential elements of the offense beyond a reasonable doubt. United States v. Colonia, 870 F.2d 1319 (7th Cir.1989); United States v. Rollins, 862 F.2d 1282, 1287 (7th Cir.1988). We can reverse a jury's verdict of conviction only if the defendant can establish that 'the record contains no evidence, regardless of how it is weighed, from which the jury could find guilt beyond a reasonable doubt.'  Id. (quoting United States v. Goudy, 792 F.2d 664, 674 (7th Cir.1986)). 38 Marren's contention that the government failed to establish at trial that he was a knowing participant in the tax fraud scheme finds no support in the evidence. The record is replete with evidence from which a reasonable jury could find his knowing involvement in the conspiracy. The government proved at trial that Marren instituted the process of accepting credit cards at Michael's Magic Touch and was present when the procedure was initially explained. Marren often accepted payments in cash or credit cards from the waitresses and doormen and then placed those payments in the club's office rather than in the cash register from which the income reflected in the daily reported receipts was derived. The government also provided evidence that he received a portion of the credit card income at the outset as he complained loudly and frequently to Agent Damron when his commissions came to an end. The fact that he at one time received a portion of the proceeds could lead the jury to reasonably infer that he had a stake in the successful outcome of the scheme. See Hooks, 848 F.2d at 793; United States v. Collazo, 815 F.2d 1138, 1143 (7th Cir.1987). Marren also knew that Damron was making weekly collections and that upon the week's take of credit card slips, Damron customarily gave one of the Russos a check made payable to cash. Finally, Marren asked Damron to explain to Russo a money laundering process which would aid in the evasion of taxes that Damron had evidently previously mentioned to Marren. We believe that the jury could reasonably infer from this evidence that Marren was knowingly involved in the tax conspiracy. 39 In sum, the government proved the existence of a conspiracy to defraud the federal government of tax revenues. Proof of Marren's knowledge of and participation in that conspiracy was certainly more than slight. Viewing the evidence in the light most favorable to the government, we find that a jury could reasonably find that Marren conspired to defraud the federal government of tax income.