Opinion ID: 3151612
Heading Depth: 2
Heading Rank: 2

Heading: Good Faith Reliance Defense

Text: In a pre-trial ruling, the district court refused to allow the Wilsons to call their accountant in support of the defense that they relied in good faith on his advice. We generally review a district court’s evidentiary rulings for an abuse of discretion. United States v. Yu Qin, 688 F.3d 257, 261 (6th Cir. 2012). “We will find that a district court has abused its discretion when we are ‘left with the definite and firm conviction that the district court committed a clear error of judgment in the conclusion it reached upon a weighing of the relevant factors.’” Id. (quoting United States v. Jenkins, 345 F.3d 928, 936 (6th Cir. 2003)). Before trial, the Wilsons indicated their intention to call only one witness, the accountant, who purportedly would testify that the amounts paid to Maxine Pochmara were properly reported as a return on her investment in the store, rather than as wages. The district court was skeptical, since Robert Pochmara received nothing at all for his labor, and Maxine Pochmara was said to have received a return on her investment, although it had been reported in the form of W-2 wages. The government objected to permitting the defendants to raise the defense solely on the 6 United States v. Wilson Nos. 14-1159/1160 accountant’s testimony that the income was a return on Maxine Pochmara’s investment and, perhaps, that he had so advised defendants. The government further expressed concern that, since it believed the accountant was an unindicted co-conspirator in the fraudulent scheme, if he were called to testify he might invoke his Fifth Amendment right not to incriminate himself. After the parties briefed the issue, the district court ruled that: [T]he “elements of a ‘reliance defense’ include: (1) full disclosure of all pertinent facts, and (2) good faith reliance on the accountant’s advice.’” United States v. Rozin, 664 F.3d 1052, 1060 (6th Cir. 2012) (quoting United States v. Duncan, 850 F.2d 1104, 1116 (6th Cir. 1988)). Where a defendant “either did not provide full information to those he supposedly relied upon, or he had reason to believe that the advice provided by these individuals was incorrect,” that defendant cannot “mount a credible good faith reliance defense.” Rozin, 664 F.3d at 1060. . . . .... . . . It is unclear whether [the accountant’s] testimony alone could satisfy the Wilsons’ burden of demonstrating he possessed all of the pertinent information when he provided the advice. What is clear, however, is that his testimony, without more, will not be enough to show that the Wilsons actually, and in good faith, relied upon him. . . . There must be evidence they provided him all the pertinent facts for making disclosures to the government, and evidence to demonstrate they relied upon his advice in good faith. Unless the Wilsons can provide this evidence, either through their testimony or that of another, there is no foundation for [the accountant’s] testimony. Wilson, 2013 WL 2048308, at  (footnote omitted). At the conclusion of the government’s case, the district court asked the Wilsons whether either of them wished to testify, and both declined. The court then reiterated its ruling about the conditions under which the Wilsons’ accountant could testify, and the Wilsons reaffirmed their intention not to testify or put on any witnesses. In ruling on the Government’s motion in limine, the district court held that the Wilsons’ accountant could not testify because his testimony alone could not establish the second element of the good faith defense, which is that “the Wilsons actually, and in good faith, relied upon [the accountant].” However, the accountant’s testimony could have established both elements of the defense. First, to find that the Wilsons disclosed all pertinent facts to the accountant, the jury 7 United States v. Wilson Nos. 14-1159/1160 could have compared the information provided to the accountant with the Government’s evidence. Second, the jury could have also found that the Wilsons acted in good faith reliance on the accountant’s advice based on the fact that the Wilsons provided information to the accountant and acted in accordance with his advice. Moreover, the accountant should not have been barred from testifying on the basis that the Wilsons’ pre-trial proffer was inadequate. A party must make a proffer sufficient only to inform the court of the substance of the evidence, and need not make a formal offer of proof. Fed. R. Evid. 103(a)(2); see also Griffin v. Finkbeiner, 689 F.3d 584, 597–98 (6th Cir. 2012); United States v. Ganier, 468 F.3d 920, 924 (6th Cir. 2006). In this case, the Wilsons made an adequate proffer because their attorney discussed the substance of the accountant’s testimony at the final pre-trial conference. At that hearing, the court stated that “the defense in th[is] case is related to the fact that advice was sought from a certified public accountant who said that both the tax reporting and the responses to the pension board were correct and in accord with the law.” The Wilsons’ attorney responded “[t]hat’s correct,” and then elaborated that he “expected [the accountant] to say that [the payment to Maxine Pochmara] was a return on investment, using those words.” When the court further questioned the attorney about how the payment was a return on an investment, the attorney stated that he did not want to answer that question “in th[e] open courtroom prior to trial.” The following exchange then occurred: THE COURT: But the accountant says, this is an appropriate way in which to structure this and your clients relied on it. That’s your suggestion. MR. JACOBS: Yes, sir. THE COURT: So the question that we’ve got at this stage is whether that reliance provides your client a defense as opposed to a co-defendant. 8 United States v. Wilson Nos. 14-1159/1160 MR. JACOBS: I believe so. I think the Court has correctly stated the issue as the ability to rely on the accountant and the ability to use that reliance as somehow a defense to a criminal charge. These exchanges make clear that the court knew the substance of the accountant’s proposed testimony. Because an accountant’s testimony alone may establish both elements of a good faith defense and because the Wilsons’ pre-trial proffer was adequate, the accountant should have been allowed to testify at trial.1