Court Opinion

ID: 4213543
Source: CourtListenerOpinion
Date Created: 2017-10-20 20:01:43.401007+00
Date Added: 2024-06-11T07:47:42.674327
License: Public Domain

NOT FOR PUBLICATION                           FILED
                    UNITED STATES COURT OF APPEALS                       OCT 20 2017
                                                                      MOLLY C. DWYER, CLERK
                                                                       U.S. COURT OF APPEALS
                           FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,                       No. 16-50218

                Plaintiff-Appellee,             D.C. No. 3:13-cr-03046-CAB-1

 v.
                                                MEMORANDUM*
WILLIAM RICHARD BAILEY,

                Defendant-Appellant.

                   Appeal from the United States District Court
                      for the Southern District of California
                 Cathy Ann Bencivengo, District Judge, Presiding

                          Submitted September 1, 2017**
                              Pasadena, California

Before: W. FLETCHER and IKUTA, Circuit Judges, and BARKER,*** District
Judge.

      William Bailey was charged and convicted of eight counts of tax evasion in

violation of 26 U.S.C. § 7201 for the years 2004 through 2011 and sentenced to 41

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
      ***
            The Honorable Sarah Evans Barker, United States District Judge for
the Southern District of Indiana, sitting by designation.
months of incarceration (concurrently as to each count) and 3 years of supervised

release. On appeal, Bailey contests the district court’s denial of his discovery

request seeking access to the IRS’s “source code”1 and “system documentation”

used to calculate his 1998 tax liability. We have jurisdiction under 28 U.S.C.

§ 1291 and review the district court’s discovery and evidentiary rulings to

determine if there were any abuses of discretion. United States v. Mitchell, 502
F.3d 931, 964 (9th Cir. 2007) (citing United States v. Danielson, 325 F.3d 1054,

1074 (9th Cir. 2003)) (discovery rulings); United States v. Torres, 794 F.3d 1053,

1059 (9th Cir. 2015) (citing Mitchell, 502 F.3d at 964) (evidentiary rulings). We

review de novo whether Bailey was deprived of the Sixth Amendment right to

make a defense. United States v. Stever, 603 F.3d 747, 752 (9th Cir. 2010).

      Under an abuse of discretion standard, we defer to the district court’s rulings

unless those findings are “illogical, implausible, or without support in inferences

that may be drawn from the record.” United States v. Hinkson, 585 F.3d 1247,

1262 (9th Cir. 2009) (en banc). Moreover, we reverse a conviction for discovery

violations only when “the error resulted in prejudice to substantial rights.”

Mitchell, 502 F.3d at 964 (quoting United States v. Amlani, 111 F.3d 705, 712 (9th

1
  “Source code” is a computer instruction that explains why a particular command
is necessary to accomplish the desired objective. Bailey contended that he needed
this information to prove that the IRS fraudulently manipulated its computer
coding to fabricate his prior 1998 tax deficiency as a non-filer.

                                          2                                     16-50218
Cir. 1997)). The scope of Bailey’s entitlement to discovery is governed by Federal

Rule of Criminal Procedure 16(E), which allows a defendant to inspect materials

within the government’s possession if the defendant can make a threshold showing

that “(i) the item is material to preparing the defense; [or] (ii) the government

intends to use the item in its case-in-chief at trial ….”

      On a defense theory that his income was exempt from taxation because it

flowed to him through a trust, Bailey did not pay taxes on his earnings in excess of

$1,000,000 for the years 2004 through 2011. This same tax-avoidance theory had

been rejected in a prior case by the Tax Court and this Court, holding Bailey civilly

liable for taxes for the year 1998. Bailey v. C.I.R., 330 F. App’x 677, 678 (9th Cir.

2009). In this appeal of his conviction relating to his 2004-2011 tax liability,

Bailey challenges the denial of his request for production of the IRS’s computer

source code that had been used to compute his 1998 tax liability. Making

unsubstantiated claims that the source code would demonstrate that the IRS

fraudulently manipulated its own procedures to manufacture his 1998 tax liability,

Bailey contended that evidence of the fraud related to his 1998 taxes would prove

that he owed no taxes for the years 2004 through 2011.

      The district court denied Bailey’s discovery request on the following

grounds: that the information he sought was irrelevant to the pending charges for

tax evasion in 2004-2011; that his request constituted an improper attempt to attack

                                           3                                    16-50218
the 1998 Tax Court decision; and that the requested information would not be

admissible evidence at trial because it was irrelevant, misleading, confusing, and a

waste of the jury’s time.

      This denial of discovery by the district court was not an abuse of discretion.

Whether Bailey owed taxes in 1998 was not an element of the 2004-2011 tax

evasion charged in this case, and he ultimately was convicted based on those 2004-

2011 tax returns, not on his failure to file a tax return in 1998. Proof that his 1998

tax liability was the product of fraud, assuming that could have been established,

would have had nothing to do with his tax liability for the years 2004-2011.2 The

district court’s denial of Bailey’s discovery request and its exclusionary rulings at

trial were therefore neither illogical nor implausible, and the findings were

supported by the record. See Hinkson, 585 F.3d at 1263, 1267. The rulings did not

deprive Bailey of his Fifth and Sixth Amendment rights to present a complete

defense.

      AFFIRMED.

2
  Bailey also contends that the district court’s discovery ruling impeded his ability
to advance a “Devereaux defense” that would have established that he was
wrongly subjected to criminal charges based on fabricated evidence used to
establish his 1998 tax liability. See Devereaux v. Abbey, 263 F.3d 1070, 1074 (9th
Cir. 2001) (en banc). As noted above, evidence related to Bailey’s 1998 tax
liability is irrelevant to his 2004-2011 tax evasion charge and, thus, for this same
reason, Bailey’s Deveraux defense is unavailing.

                                           4                                    16-50218