Opinion ID: 563204
Heading Depth: 2
Heading Rank: 5

Heading: Instruction Regarding Reliance Upon Experts

Text: 53 Moving from the attempt analytically to make controlling the Frank Lyon definition of sham, appellants next have contended that the district court erred in declining to submit a jury instruction regarding the defense of reliance upon certain experts. Each appellant sought an instruction whereby the jury could not find willful wrongdoing if it found that each had acted upon the basis of advice from an expert or experts in the tax field. The instructions were denied. 54 Appellant Dunlap testified at trial that he had solicited and relied upon the advice of an accountant named Elizabeth Austin in the preparation of his 1987 trust return and the trust returns of his sisters, his brother, and Daniel Smith, all individuals to whom he had sold UBOs. 55 Schmidt and Lewis made similar contentions of reliance upon accountants and attorneys in their own testimony. Lewis claimed that he sought the advice of Darlene Baker, his tax preparer, and the advice of attorneys at the legal department for the Amway Corporation, for whom Lewis was a distributor. Baker testified that, in 1987, she researched the issue of whether personal expenses were deductible on a trust tax return, and concluded that they were. Elizabeth Hines and Richard Waak, members of Amway's legal department, testified that they corresponded with Lewis concerning his request to transfer his Amway distributorship into a UBO. They approved the transfer, but admitted that they did not review in depth the legality of the use of the UBO itself. 56 Schmidt contended that the evidence shows that he consulted several attorneys before he began promoting UBOs. 57 Returning again to the jury instruction standard, a district court may not refuse a theory of defense instruction if such instruction has an evidentiary foundation and is an accurate statement of the law. Dornhofer, 859 F.2d at 1199. As to the law itself, the essential elements of a reliance defense are 1) full disclosure of all pertinent facts to an expert and 2) good faith reliance on the expert's advice. United States v. Miller, 658 F.2d 235, 237 (4th Cir.1981). 58 Here the district court properly refused the requested instructions in the face of inadequate evidentiary support. Dunlap admitted that he relied upon Austin only as to the legality of certain deductions, not upon the essential questions of what income could be assigned to a UBO or whether a trustee could maintain control and dominion over assets held in trust and not invalidate the trust for tax purposes. In addition, Dunlap sought Austin's advice only after he had bought a UBO and had sold UBOs to others. Thus, there was no evidence that he relied upon her advice regarding his future conduct. See United States v. Polytarides, 584 F.2d 1350, 1352-1353 (4th Cir.1978) (instruction properly refused because there was no evidence that the defendant sought advice on the lawfulness of possible future conduct). 59 Evidence of Lewis' reliance was similarly insufficient to support the jury charge; he sought no advice from his accountant on the assignability of income, on continued exercise of control over assets, or on future conduct. The Amway attorneys testified that they reviewed UBO documents only to ensure that they met the Amway distributorship requirements. They did not evaluate the legality of UBOs for federal or state tax purposes. 60 As for Schmidt, what little evidence there is in the record of consultations with attorneys shows only that he spurned such advice. 61 The willfulness and reliance instructions actually given by the district court--instructions in fact requested by appellants--were more suitably founded upon the evidence presented than the ones which the appellants claim, on appeal, they sought.