Opinion ID: 202631
Heading Depth: 2
Heading Rank: 4

Heading: Materiality of the Adjustments to Pesaturo's Tax Return

Text: 31 Pesaturo challenges the jury's determination that he willfully made a material false statement regarding Covenant's 1995 tax return in violation of 26 U.S.C. § 7206(1). The government's burden under this statute is to prove the following elements: 32 (1) that the defendant made or caused to be made, a federal income tax return for the year in question which he verified to be true; (2) that the tax return was false as to a material matter; (3) that the defendant signed the return willfully and knowing it was false; and (4) that the return contained a written declaration that it was made under the penalty of perjury. 33 United States v. Boulerice, 325 F.3d 75, 79-80 (1st Cir.2003). 34 We review de novo whether there was sufficient evidence for the jury to find that Pesaturo's instruction to his accountant resulted in a materially false representation on Covenant's tax return. We will affirm if `after assaying all the evidence in the light most amiable to the government, and taking all inferences in its favor, a rational factfinder could find, beyond a reasonable doubt, that the prosecution successfully proved the essential elements of the crime.' United States v. Lavoie, 433 F.3d 95, 98 (1st Cir.2005) (quoting United States v. O'Brien, 14 F.3d 703, 706 (1st Cir.1994)). 35 Covenant's accountant testified that, when he found that the company's cash balance exceeded its receipts by $62,359, Pesaturo explained the discrepancy by claiming that the higher number reflected various cash sales for which receipts were unavailable. He further explained that a commensurate amount of cash had been used to purchase fuel from Sprague Energy and thus both sales and cost of goods sold should be adjusted to reflect these cash transactions. 36 Pesaturo offered no documents supporting the cash purchase of kerosene. Moreover, representatives of Sprague Energy testified at trial that the company rarely sold fuel on a cash basis and only to customers whose credit-worthiness was at issue; further testimony established that Covenant's credit-worthiness was not questioned by Sprague during this period. In addition, both the government and Pesaturo stipulated at trial that it was not the policy or practice of Valero Energy Corporation [Covenant's other fuel supplier] to accept cash . . . for payment. 37 Based on this evidence, a reasonable jury could have found that Pesaturo, alerted to the existence of unaccounted-for cash in Covenant's account, fabricated cash purchases to inflate Covenant's cost of goods sold in a misguided attempt to neutralize the extra receipts discovered by his accountant. The correct adjustment would have been a $62,359 adjustment in sales with no adjustment to cost of goods sold. However, that would have increased Covenant's tax liability, which Pesaturo wanted to avoid. 38