Opinion ID: 3022378
Heading Depth: 2
Heading Rank: 1

Heading: Variations Between Indictment and Proofs

Text: There are two types of variations between the charges in an indictment and the evidence at trial: (1) amendments of the indictment when its charging terms are altered; and (2) variances, where the charging terms of the indictment are not changed but when 8 the evidence at the trial proves facts materially different from those alleged in the indictment. United States v. Castro, 776 F.2d 1118, 1121 (3d Cir. 1985). Daraio argues that the evidence adduced at trial coupled with the jury instructions constructively amended the indictment. In this regard Daraio argues that the prosecutor improperly introduced evidence of her repeated failure to withhold payroll taxes, which prejudiced her substantial rights, and suggested that her failure to withhold the proper amounts was a charged crime. Thus, Daraio asserts that the government “tried her not for the indicted crime of interfering with levies, but rather the crime of failing to pay the payroll taxes in the first place, as well as a variety of other wrongs.” Appellant’s br. at 13. In the alternative, Daraio argues that the proofs adduced at trial varied from the allegations in the indictment to such a degree that they constituted a prejudicial variance from the indictment. Specifically, she argues that “[w]here the language of the indictment limits the crime charged to diversion of receivables in an effort to defeat IRS levies, trial on the issue of willful failure to withhold the proper amount in the first instance created a prejudicial variance between indictment and proof.” Appellant’s br. at 24-25 (footnote omitted).
An indictment is constructively amended when, in the absence of a formal amendment, the evidence and jury instructions at trial modify essential terms of the charged offense in such a way that there is a substantial likelihood that the jury may have convicted the defendant for an offense differing from the offense the indictment returned by the grand jury actually charged.8 See United States v. Miller, 471 U.S. 130, 140, 105 S.Ct. 1811, 1817 (1985) (constructive amendment occurs when defendant is deprived of “substantial right to be tried only on charges presented in an indictment returned by a grand jury”) (quoting Stirone v. United States, 361 U.S. 212, 217, 80 S.Ct. 270, 273 (1960)); see also United States v. Floresca, 38 F.3d 706, 710 (4th Cir. 1994) (There is “[a] constructive amendment to an indictment . . . when either the government (usually during its 8 We are not concerned here with a claim that there was an actual amendment of the indictment by a literal change of its terms. 9 presentation of evidence and/or its argument), the court (usually through its instructions to the jury), or both, broadens the possible bases for conviction beyond those presented by the grand jury.”). Thus, “a court cannot permit a defendant to be tried on charges that are not made in the indictment against him.” Stirone, 361 U.S. at 217, 80 S.Ct. at 273. “The key inquiry is whether the defendant was convicted of the same conduct for which he was indicted.” United States v. Robles-Vertiz, 155 F.3d 725, 729 (5th Cir. 1998). Constructive amendments “are per se reversible under harmless error review, [and] are presumptively prejudicial under plain error review.” Syme, 276 F.3d at 136. In Stirone, the indictment alleged that the defendant through extortion unlawfully interfered with interstate commerce in the importing of sand into Pennsylvania. Nevertheless, the evidence showed not only importation of sand, but also exportation of steel from Pennsylvania. Moreover, the district court charged the jury that the defendant’s guilt could rest on the effect of his conduct on interstate commerce with respect to either sand or steel. 361 U.S. at 214, 80 S.Ct. at 272. The Supreme Court held that this charge coupled with the evidence adduced at trial created an unconstitutional variance between the indictment and the proof, which “destroyed the defendant’s substantial right to be tried only on charges presented in an indictment returned by a grand jury.” Id. at 217, 80 S.Ct. at 273; see also United States v. Wozniak, 126 F.3d 105, 110-11 (2d Cir. 1997) (constructive amendment when district court charged jury on evidence relating to marijuana transactions but indictment alleged only cocaine and methamphetamine transactions). In this case, the indictment specifically charged that Daraio “knowingly and willfully attempt[ed] to evade and defeat the payment of . . . the payroll taxes due . . . by directing clients of Eagle Security, Inc. to pay their unpaid balances that they owed to Eagles Security, Inc. to E.S.S. Co.” J.A. at 598. Although we agree with Daraio that the government presented a significant amount of evidence concerning her prior tax non-compliance beyond that charged in the indictment, the district court’s instructions ensured that the jury would convict her, if at all, for a crime based on conduct charged in the indictment. In reaching our conclusion we rely on our case law recognizing that “it is a basic tenet of our jurisprudence that a jury is presumed to have followed the instructions the court gave it.” Givan, 10 320 F.3d at 462 (citing United States v. Gilsenan, 949 F.2d 90, 96 (3d Cir. 1991)). In this case, the district court thoroughly and accurately instructed the jury on the basic elements of tax evasion and focused the jury’s attention on the conduct that the indictment charged. For example, the court told the jury that, although it “heard evidence of actions which relate to the failure to comply with law involving the payment of taxes or the filing of tax returns, [these acts] are not charged in the indictment.” J.A. at 551. The district court also told the jury that “the [g]overnment must show more than the mere failure to do something, such as the failure to pay taxes which are due and owing.” J.A. at 548. Moreover, the court supplied the jury with a copy of the indictment for its use during its deliberations. Therefore, the district court obviated the possibility of the indictment being constructively amended by issuing accurate and thorough jury instructions precluding the jury from convicting Daraio for any conduct other than that which the indictment charged. We also reject Daraio’s argument that “the possibility of [a conviction based on] multiple affirmative acts permeated the trial court’s instructions.” Reply br. at 10. We do not find that the district court’s reference to Daraio’s “affirmative acts” in a plural sense somehow constructively amended the indictment. Indeed, it was appropriate for the district court to refer to multiple affirmative acts to reflect the charge that Daraio directed “clients” to pay moneys due to Eagle Security to E.S.S. Co. Overall we are satisfied from our examination of the jury instructions as a whole that the district court properly focused the jury on Daraio’s conduct as charged in the indictment by repeatedly instructing the jury to confine its consideration of the Rule 404(b) evidence to its proper purpose. Accordingly, we hold that the government’s proofs coupled with the district court’s instructions did not constructively amend the indictment.9 9 In its brief the government indicates that Daraio’s “constructive amendment argument might also be read as an assertion that the Government’s remarks prejudiced her ability to receive a fair trial.” Appellee’s br. at 22. We note, however, that Daraio’s brief does not have a separate section dealing with a possible unfair argument issue and thus we regard her comments about the government’s arguments as being subsumed in her constructive amendment and variance arguments. 11
We similarly conclude that the government’s proofs and the district court’s instructions did not create a prejudicial variance prejudicing Daraio’s substantial rights. Initially on the variance point we recognize that “[t]he line between a constructive amendment and a variance is at times difficult to draw.” United States v. Adamson, 291 F.3d 606, 615 (9th Cir. 2002). There is a variance “where the charging terms [of the indictment] are unchanged, but the evidence at trial proves facts materially different from those alleged in the indictment.” Castro, 776 F.2d at 1121. When there has not been a constructive amendment of the indictment but rather there only has been a variance between the facts alleged in the indictment and the evidence offered at trial, the proceedings at the trial will not have usurped the constitutionally guaranteed role of the grand jury. Instead, the concerns raised by a variance argument are the fairness of the trial and the protection of the defendant’s right to notice of the charges against her and her opportunity to be heard. See, e.g., Kotteakos v. United States, 328 U.S. 750, 757-58, 66 S.Ct. 1239, 1244 (1946); Berger v. United States, 295 U.S. 78, 81-82, 55 S. Ct. 629, 630 (1935). Accordingly, we have recognized that “[t]he variance rule, to the extent that it is constitutionally required, is more of a due process rule than is the flat fifth amendment prohibition against being tried on an indictment which a grand jury never returned.” United States v. Crocker, 568 F.2d 1049, 1059 (3d Cir. 1977). Unlike a constructive amendment, a variance can result in a reversible error only if it is likely to have surprised or otherwise has prejudiced the defense. United States v. Schurr, 775 F.2d 549, 553-54 (3d Cir. 1985). To demonstrate prejudice from a variance, a defendant “must show (1) that there was a variance between the indictment and the proof adduced at trial and (2) that the variance prejudiced some substantial right.” United States v. Balter, 91 F.3d 427, 441 (3d Cir. 1996). “A variance does not prejudice a defendant’s substantial rights (1) if the indictment sufficiently informs the defendant of the charges against him so that he may prepare his defense and not be misled or surprised at trial, [or] (2) if the variance is not such that it will present a danger that the defendant may be prosecuted a second time for the same offense.” United States v. Schoenhut, 576 F.2d 1010, 1021-22 (3d Cir. 1978). 12 In this case there was not a prejudicial variance between the government’s proofs and the terms of the indictment. First, the indictment sufficiently informed Daraio of the charges against her so as to put her on notice to prepare her defense. Indeed, the government’s proofs concerning her failure to pay over to the government the full amount of the payroll taxes owed to the United States did not vary from the terms of the indictment.10 Certainly the evidence of which Daraio complains, i.e., that she failed to withhold payroll taxes, is consistent with the allegation in the indictment that “[f]rom in or about April 1994 through in or about April 1998, defendant . . . failed to pay over the full amount of payroll taxes owed to the United States on behalf of Eagle Security and its employees totaling approximately $222,607.40.” (emphasis added). After all, if 10 Daraio’s characterization of the government’s proofs is seemingly inconsistent. She argues that she was tried for failure to withhold payroll taxes, but in doing so she relies on portions of the trial transcript in which the prosecutor presented evidence of Daraio’s failure to pay–not her failure to withhold. See, e.g., J.A. at 483 (prosecutor discussing evidence of Daraio’s “willful failure to pay over”); Supp. App. at 163-64 (Daraio testifying that she failed to make payments to IRS towards existing payroll tax liability). Indeed, at one point in her brief in this court, Daraio asserts that she was tried for “failing to pay the payroll taxes.” See Appellant’s br. at 13 (emphasis added). Moreover, she makes the following puzzling statement in her brief: “The government’s theory, in other words, is that [Daraio] willfully failed to withhold payroll taxes so that she could spend the money for personal wants at the time of the failure to withhold.” Appellant’s br. at 23 (emphasis in original). We are at a loss to understand this comment because a failure to withhold would mean that the employees would receive additional funds over and above what was due them and thus the employer would not retain the funds. Accordingly, the sentence we quote makes sense only if it is referring to a failure to pay over. Nonetheless, we believe that Daraio intended to use the language as it appears throughout her briefs submitted to this court, and thus intended to argue that the government improperly tried her for “failure to withhold.” In any event, we would have rejected her argument if she had contended that there had been a constructive amendment or prejudicial variance on the basis of the government improperly having tried her for “failure to pay” the payroll taxes. Notably, the indictment expressly alleged that “Daraio failed to pay over the full amount of payroll taxes[.]” J.A. at 597 (emphasis added). 13 an employer has not withheld payroll taxes, it hardly would be expected that she nevertheless would pay them to the government. The prosecutor filed a pre-trial notice to justify the admission of evidence concerning prior non-compliance for time periods not included in the indictment and acts not charged in the indictment. Therefore, the admission of such evidence did not deprive Daraio of the opportunity to prepare her defense. Moreover, as we shall explain, the court properly admitted the evidence under Rule 404(b). See infra Part IV.B (discussing propriety of admission of the Rule 404(b) evidence). Furthermore, the district court repeatedly admonished the jury to limit its consideration of the Rule 404(b) evidence to its appropriate role. Finally, it is clear that even though there was substantial reference at the trial to conduct not within the scope of the indictment, the government proved the material facts of the indictment at the trial and Daraio does not challenge the sufficiency of the evidence. Accordingly, the evidence adduced at trial constituted neither a constructive amendment of the terms of the indictment, nor a prejudicial variance from the allegations in the indictment and we therefore will not reverse Daraio’s conviction on either of these two bases. B. Evidence of Prior Non-Compliance Under Rule 404(b) We also reject Daraio’s argument that the district court erred in admitting evidence of her prior tax non-compliance in violation of Rule 404(b). Daraio argues that Rule 404(b) prohibited the admissibility of the prior non-compliance because “[t]he only issue in the case was whether [she] was the person who committed [the crime charged].” Appellant’s br. at 30. She asserts that “criminal intent was never in issue at trial,” Appellant’s br. at 29, and the intent-serving purpose set forth in Rule 404(b) must be more specific and not merely speak to a general criminal intent. Daraio further argues that the evidence lacked probative value, and “was plainly intended to prejudice (and did prejudice) [her.]” Appellant’s br. at 36. Rule 404(b) governs the admissibility of evidence of “other crimes, wrongs, or acts.” It provides, in relevant part, that “[e]vidence of other crimes, wrongs or acts is not admissible to prove the character of a person in order to show action in conformity therewith. It may, however, be admissible for other purposes, such as proof of 14 motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident.” We have recognized that “Rule 404(b) is a rule of inclusion rather than exclusion.” Givan, 320 F.3d at 460 (citing United States v. Jemal, 26 F.3d 1267, 1272 (3d Cir. 1994)). In general, we favor the admission of Rule 404(b) evidence when it is relevant for any other purpose than to show the defendant’s propensity to commit the charged offense. Givan, 320 F.3d at 460 (citing United States v. Long, 574 F.2d 761, 764 (3d Cir. 1978)). To demonstrate a proper purpose, the government must “proffer a logical chain of inference consistent with its theory of the case.” United States v. Sampson, 980 F.2d 883, 888 (3d Cir. 1992). After the government has specified such a purpose, unless the reason that the evidence is proper is plainly obvious, the district court must “articulate reasons why the evidence also goes to show something other than character” by putting this “chain of inferences into the record.” Id. Furthermore, “[w]here such other purposes do exist, protections against improper admission nevertheless remain in Rule 104 relevancy standards and in Rule 403's requirement that probative value yet be balanced against the risk of ‘unfair prejudice.’”11 United States v. Martin, 773 F.2d 579, 582 (4th Cir. 1985); see also Government of Virgin Islands v. Pinney, 967 F.2d 912, 914 (3d Cir. 1992) (“Such evidence is subject only to the limitations imposed by Federal Rules of Evidence 402 and 403.”). Thus, we apply a four-part test to determine the admissibility of Rule 404(b) evidence: “(1) the evidence must have a proper purpose; (2) it must be relevant; (3) its probative value must outweigh its potential for unfair prejudice; and (4) the court must charge the jury to consider the evidence only for the limited purposes for which it is admitted.” Givan, 320 F.3d at 460. In cases involving violations of federal tax laws such as tax evasion, “[a] defendant’s past taxpaying record is admissible to prove 11 Federal Rule of Evidence 403 provides: Although relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence. 15 willfulness circumstantially.” United States v. Ringwalt, 213 F. Supp. 2d 499, 506 (E.D. Pa. 2002) (quoting United States v. Bok, 156 F.3d 157, 165 (2d Cir. 1998)), aff’d, 66 Fed. Appx. 446 (3d Cir. 2003); see also United States v. Johnson, 893 F.2d 451, 453 (1st Cir. 1990) (unindicted acts of tax fraud that occurred subsequent to the indicted acts admissible in tax evasion prosecution to show intent and absence of mistake when defense based on defendant’s reliance on advice of friend); United States v. Upton, 799 F.2d 432, 433 (8th Cir. 1986) (“Evidence of [defendant’s] questionable compliance with tax laws, both in the years prior to and subsequent to [the years of the charged conduct] is probative of willfulness in the present context.”). For example, in United States v. Ringwalt, the district court admitted defendant’s tax returns from previous years, which did not pertain to the charged offense. The court held that, “in light of the defendant’s theory that the inaccuracies in the 1994 and 1995 returns were the result of mistake or the fault of the accountants, the tax returns from the earlier years were probative on the issues of common scheme or plan as well as willfulness.” 213 F. Supp. 2d at 509. The court noted that the defendant’s tax returns for the earlier years “showed the existence in those prior years of the identical scheme and plan to evade income taxes that was used by defendant in 1994 and 1995[.]” Id. Similarly, in United States v. Bok the defendant was charged and convicted for attempted tax evasion in violation of 26 U.S.C. § 7201 and making false statements on corporate income tax returns in violation of 26 U.S.C. § 7206(1). The Court of Appeals for the Second Circuit upheld the district court’s decision to admit evidence such as the defendant’s failure to file a state personal tax return as well as the failure of the defendant’s corporation to file federal and state corporate returns for the years during and after those involved in the indictment. 156 F.3d at 165. The court held that “a defendant’s past taxpaying record is admissible to prove willfulness circumstantially” because such evidence is “indicative of an intent to evade the tax system.” Id. at 165-66; see also United States v. Ebner, 782 F.2d 1120, 1126 n.7 (2d Cir. 1986) (“The jury may consider evidence of intent to evade taxes in one year as evidence of intent to evade payment in prior or subsequent years.”). Inasmuch as it was essential for the government to make a showing of intent or willfulness to meet its burden of proof in this case, the district court properly admitted evidence of Daraio’s prior 16 tax non-compliance under Rule 404(b). Evidence that she committed similar offenses and had a history of non-compliance with the IRS was admissible and relevant to prove willfulness. See Bok, 156 F.3d at 165-66. Furthermore, the district court’s limiting instructions were adequate to prevent any unfair prejudice to her from the evidence. As in United States v. Givan, the district court in this case repeatedly issued limiting instructions regarding the Rule 404(b) evidence in which the court emphasized the limited purpose for which the evidence was admissible, thereby minimizing any prejudicial effect. See 320 F.3d at 461-62. Daraio argues, however, that she did not base her defense on lack of intent or motive, and thus the district court improperly admitted the evidence of her prior tax non-compliance under Rule 404(b). In an abstract sense this argument could be sound because “district courts should generally deem prior bad acts evidence inadmissible to prove an issue that the defendant makes clear he is not contesting. The relevance of the prior bad acts evidence will be minimal in most such cases, since the evidence will not bear on the issues being contested.” Jemal, 26 F.3d at 1274; see also United States v. Colon, 880 F.2d 650, 656 (2d Cir. 1989) (“[I]n some circumstances, the nature of a defense put forth by the defendant may reveal that knowledge and intent, while technically at issue, are not really in dispute.”) (citation and internal quotation marks omitted). Thus, “the government can not create an issue where none exists and then rely upon Rule 404(b) to argue that prior misconduct is relevant to the manufactured issue.” United States v. Morley, 199 F.3d 129, 136 (3d Cir. 1999). Accordingly, in considering Rule 404(b) evidence we have agreed with the Court of Appeals for the Fourth Circuit that “the use of prior bad acts evidence must be examined meticulously in each case and . . . the probative value of prior bad acts evidence is significantly less when the defense is that the defendant did not perform the charged act at all.” Jemal, 26 F.3d at 1273 n.3. Nevertheless this requirement for meticulous examination of the evidence does not preclude results such as that we reached in United States v. Balter, 91 F.3d at 437, in which we allowed testimony revealing the defendant’s previous experience as a murderer-for-hire when the “defense was that he was present at the murder scene but that he did not commit the murder.” As we explained, “[t]hese statements were relevant to show, among other things, that he had a financial motive to commit the murder and the intent to do so.” Id. 17 We hold that Daraio cannot obtain relief by reliance on the lessened value of Rule 404(b) evidence in cases involving a defense that “the defendant did not perform the charged act at all.” See Jemal, 26 F.3d at 1273 n.3. We reach this conclusion because we are satisfied that she did not explain clearly in the district court that she was not contesting the allegation that she had the intent to do the acts the indictment charged but rather contended that she did not do the acts at all. Consequently, she did not eliminate the intent issue from the case and thus the Rule 404(b) evidence was relevant to demonstrate her intent. In coming to our result on the Rule 404(b) evidence issue, we observe that in her reply to the prosecutor’s pre-trial Rule 404(b) notice, Daraio explicitly stated that a “major issue[] of dispute will be . . . whether the E.S.S. Co. documents prepared by [her daughter] Cheryl Daraio . . . were prepared in error without fraudulent intent or prepared at the direction of [Daraio] as part of the scheme alleged in the indictment.” Supp. App. at 342 (emphasis added). That statement was quite clear and set the framework for the case. Thus, it is not surprising that in explaining its initial decision to admit the Rule 404(b) evidence, the district court stated that Daraio squarely had raised the issue of intent. Indeed, we do not see how it could have reached a different conclusion. We also point out that her attorney argued that she had relied on her tax attorney in deciding to form E.S.S. Co. as a successor corporation to Eagle Security. Plainly this evidence was intended to demonstrate her benign intent. In addition, on cross-examination Daraio admitted that she faxed duplicate invoices, even though she did not prepare them, to an Eagle Security client. Her attorney later explained that she “did not willfully intend in the act of faxing those documents to Mr. Talbott, to have any money diverted from [Eagle Security] that should have gone to the IRS, to [E.S.S. Co.].” J.A. at 445 (emphasis added). Therefore, we reject Daraio’s assertion that intent was not at issue, and we cannot find on this record that the district court erred as a matter of law or abused its discretion in admitting the Rule 404(b) evidence concerning her prior tax noncompliance.