Court Opinion

ID: 2982959
Source: CourtListenerOpinion
Date Created: 2015-09-22 20:44:19.011394+00
Date Added: 2024-06-11T11:44:31.053269
License: Public Domain

NOT RECOMMENDED FOR PUBLICATION
                                File Name: 15a0554n.06

                                           No. 14-1959

                         UNITED STATES COURTS OF APPEALS
                              FOR THE SIXTH CIRCUIT
                                                                                        FILED
UNITED STATES OF AMERICA,                                )                        Aug 06, 2015
                                                         )                    DEBORAH S. HUNT, Clerk
       Plaintiff-Appellee,                               )
                                                         )
v.                                                       )      ON APPEAL FROM THE
                                                         )      UNITED STATES DISTRICT
MATTHEW BENDER,                                          )      COURT FOR THE EASTERN
                                                         )      DISTRICT OF MICHIGAN
       Defendant-Appellant.                              )
                                                         )
                                                         )

BEFORE:        GUY, GIBBONS, and ROGERS, Circuit Judges.

       ROGERS, Circuit Judge. This case is about evidentiary rulings at trial. Matthew Bender,

who ran a tax preparation business that filed thousands of fraudulent returns, was on trial for tax

fraud. Bender filed fraudulent returns not only for clients, but also for himself: Bender never

reported his tax preparation income. Three issues that arose at trial are presented on appeal.

First, an IRS agent proffered a summary exhibit that calculated Bender’s unreported income.

The district court admitted the exhibit over Bender’s objection that the exhibit was inaccurate.

Second, one witness—a client whose testimony established that Bender had falsified her tax

return—had a 20-year-old conviction for shoplifting that Bender wanted to use as impeachment

evidence. The district court excluded evidence of the old conviction. Third, after Bender failed

to make a required court appearance, Bender claimed that his preoccupation with his health

prevented him from appearing in court, excusing his failure to appear. Over Bender’s objection,

the Government was permitted to introduce evidence that Bender had tested positive for
No. 14-1959, USA v. Bender

marijuana and cocaine while on bail, as evidence impeaching Bender’s claimed concern about

his health. Any error in admitting the summary exhibit was harmless, and each of the other two

evidentiary rulings of the district court was not an abuse of discretion.

       Bender ran a tax preparation business out of his Detroit home. His business was actually

a massive tax fraud scheme. Between 2006 and 2011, he prepared and filed 3,621 federal tax

returns. Bender falsified nearly all of the tax returns he prepared, using false and inflated entries

to claim outsized refunds for his clients. An IRS audit revealed that more than 99 percent of the

returns Bender prepared from 2006 to 2008 claimed refunds. Bender’s scheme was done without

his clients’ input or knowledge. Despite his robust tax preparation business, he never reported

any income from it on his own tax returns.

       Multiple indictments were returned against Bender and several counts in the final

indictment were voluntarily dismissed by the Government, but Bender was ultimately tried for

three crimes. Based on nine separate false tax returns that he filed for clients, Bender was

charged with nine counts of willfully aiding in the preparation of a false tax return, 26 U.S.C §

7206(2). Bender was also charged with one count of corruptly endeavoring to impede the

administration of the internal revenue laws, 26 U.S.C. § 7212(a), under three theories: preparing

the fraudulent returns, directing his clients to file the false returns, and not filing his own returns.

While out on bail for the tax fraud charges, Bender failed to appear in court. As a result, he was

charged with one count of knowingly failing to appear, 18 U.S.C. § 3146(a). This charge was

severed from the tax fraud charges, and a separate trial was held. Bender was convicted on all

counts at both trials.    He was sentenced to 48 months’ imprisonment and 12 months of

supervised release.

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No. 14-1959, USA v. Bender

        Bender appeals, arguing first that the summary exhibit should have been excluded for

failure to satisfy Rule 1006. The first error, if any, was harmless. Bender does not explain how

he was prejudiced by the admission of the summary exhibit or otherwise respond to the

Government’s harmless error arguments.

        At the tax fraud trial, the clients for whom Bender prepared the nine false returns

testified. For example, Marvin Clark and Kenneth David testified that they did not use their

automobiles for work, but Bender still claimed deductions for job-related use of an automobile

on their returns. Deborah Hawkins testified that her husband did not own a lawn-care and snow-

removal business, but Bender had claimed a $12,721 loss for this fictional business on the

Hawkins’ return. Andrea Quickly testified that she had earned $2,828 in 2010, but the return

prepared by Bender for her reported $21,832 in wages and claimed a $5,295 refund. Other

clients testified to similar effect.

        Bender’s reputation for securing large refunds produced significant business, but he never

reported any income from his tax preparation work between 2006 and 2011. Bender did not file

returns for 2006, 2010, or 2011. His 2007, 2008, and 2009 returns did not mention his tax

preparation business or report his income from it.

        During the testimony of IRS Agent Andrew Dettling, the court admitted government

exhibit 43, a one-page summary chart entitled “Bender Tax Preparation 2006-2011,” which

presented a computation of Bender’s gross income from his tax preparation business:

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No. 14-1959, USA v. Bender

               Number of        Fee Per        Gross        Gross Receipts
   Year                                                       Reported         Exhibits
                Returns         Return        Receipts

 2006             469           $150         $70,350        Did Not File           7, 32
 2007             581           $150         $87,150             $0                8, 16
 2008             686           $150        $102,900             $0                9, 17
 2009             560           $150         $84,000             $0               18, 36
 2010             625           $150         $93,750        Did Not File          32, 37
 2011             678           $150        $101,700        Did Not File          32, 38
 Total           3,599          $150        $539,850             $0

Bender objected to the exhibit on one ground: that the summary exhibit was speculative and not

accurate because Agent Dettling had not verified that every client had been charged a $150 fee.

The Government replied that Bender had admitted during an audit that he charged $150 per

return, that the returns in the record reflected a $150 fee, and that electronic records reflected an

even higher fee in 2011. The district court overruled the objection, explaining that the court

would “receive [exhibit 43] into evidence as representing a summary which implicitly carries

with it the suggestion that the information contained therein is speculative and is not necessarily

exact.”

          Error, if any, in admitting the summary exhibit was harmless. None of the charges

against Bender required proof of the exact amount of fees he received.             Indeed, the jury

instructions permitted conviction on all counts even if Bender prepared the false returns for free.

The proof that Bender knowingly prepared and filed false tax returns was enough to convict him

of willfully aiding in the preparation of a false tax return, 26 U.S.C § 7206(2), and corruptly

endeavoring to impede the administration of the internal revenue laws, 26 U.S.C. § 7212(a),

although one way of “corruptly” impeding the due administration of the internal revenue laws is

failing to report income. Even if failure to report income was the only basis for the jury’s §

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No. 14-1959, USA v. Bender

7212(a) verdict, there was substantial evidence that Bender charged roughly $150 for preparing a

return, e.g., Bender had stated during an audit that he charged $150, several clients testified that

they were charged $150, and electronic records revealed that Bender had been charging $200 per

return in 2011. There was no dispute that Bender never reported any income. Therefore, any

error was harmless.

       For the first time on appeal, Bender also argues that the documents underlying the

summary exhibit were insufficiently voluminous and were inadmissible hearsay. When such

issues are not raised below, they are reviewed for plain error, see Puckett v. United States,

556 U.S. 129, 135 (2009); United States v. Deitz, 577 F.3d 672, 688, 690–91 (6th Cir. 2009).

Because the plain error standard incorporates a harmless error analysis, these claims fail for the

reasons just discussed.

       Second, the district court did not err in precluding impeachment of witness Debra

Hawkins by evidence of her earlier criminal convictions. During Hawkins’s testimony, Bender

sought to impeach Hawkins’s character for truthfulness by evidence of criminal convictions.

Hawkins had, on three separate occasions in 1990, 1991, and 1992, been convicted of second

degree retail fraud. Bender attempted to introduce evidence of the convictions via Rule 609(b),

which provides that convictions over ten years old are admissible only if they are substantially

more probative than prejudicial. Bender did not invoke Rule 609(a)(2), which provides that

crimes involving a dishonest act or false statement must be admitted. After reciting the Rule

609(b) factors from United States v. Sims, 588 F.2d 1145, 1149 (6th Cir. 1978), the district court

excluded evidence of the convictions, finding that the convictions were dissimilar to the charges

against Bender, were over 20 years old, and had minimal impeachment value.

                                                -5-
No. 14-1959, USA v. Bender

       These evidentiary determinations were within the district court’s discretion. When more

than ten years have passed since a witness’s conviction or release from confinement, evidence of

that conviction is admissible only if its probative value substantially outweighs its prejudicial

effect. Fed. R. Evid. 609(b). In Sims, this court elaborated on the Rule 609(b) standard with a

multi-factor test that directs district courts to consider the impeachment value of the crime, the

age of the conviction and subsequent history, the similarity between the past crime and the

charged crime, the importance of the witness’s testimony, and the centrality of the witness’s

credibility. Sims, 588 F.2d at 1149. As stated by the district court, Hawkins’ three convictions

for misdemeanor second degree retail fraud were over 20 years old, bore little resemblance to the

charged tax fraud, and had minimal impeachment value. Even granting Bender his argument that

the unfairly prejudicial effect of the convictions would have been minimal, exclusion of the

impeachment evidence was not an abuse of discretion because the conviction had so little

probative value.

       Hawkins’ criminal convictions were also not admissible under Rule 609(a)(2). For the

first time on appeal, Bender argues that Hawkins’ second degree retail fraud convictions were

crimes of dishonesty that must be admitted—without balancing prejudicial effect and probative

value—under Rule 609(a)(2). Because this objection was not made below, the district court’s

ruling is reviewed for plain error, see Deitz, 577 F.3d at 688, 690–91. Rule 609(a)(2) applies “if

the court can readily determine that establishing the elements of the crime required proving—or

the witness’s admitting—a dishonest act or false statement.” Hawkins’ second degree retail

fraud convictions did not require a dishonest act or false statement. The Michigan statute for

second degree retail fraud does not require a dishonest act or false statement for conviction, see

Mich. Comp. Laws § 750.356d(1) (1992), because one way to commit retail fraud is shoplifting,

                                               -6-
No. 14-1959, USA v. Bender

and shoplifting is a crime of stealth, not of dishonesty. See United States v. Washington,

702 F.3d 886, 892–94 (6th Cir. 2012).         While second degree retail fraud could involve a

dishonest act or false statement, e.g., the fraudulent return of a stolen item for a refund, a

dishonest act or false statement is not required and Bender never introduced evidence that

Hawkins’s convictions involved anything other than shoplifting.

       Bender’s third and final argument on appeal—that the district court erred in admitting

impeachment evidence of past drug use over his Rule 403 objection—is so cursory that the court

could deem it forfeited.     The entirety of Bender’s argument was encapsulated in a single

sentence: “The presentation of drug usage evidence by the Government was far more prejudicial

than probative.” In any event, the district court did not err.

       At the failure-to-appear trial, the central issue was Bender’s affirmative defense that

concerns about his health had prevented him from appearing in court. Bender had been released

on bond after his arraignment on the tax fraud charges. Bender admitted that he had failed to

attend several scheduled meetings with Pretrial Services and that he had failed to attend a bond

review hearing, even though he was aware that the court had ordered him to appear. He argued

that “uncontrollable circumstances,” 18 U.S.C. § 3149(c), excused his failure to appear, namely

his concerns about his health and his seeking of medical treatment. In response to Bender’s

testimony about his health concerns, the Government informed the court that it intended to cross-

examine Bender about his having failed several drug tests while awaiting trial, testing positive

for marijuana and cocaine.      Bender objected that the failed drug tests were more unfairly

prejudicial than probative, but the district court overruled the objection because Bender had put

his concerns about his health at issue. After Bender testified that he was unaware of any failed

                                                 -7-
No. 14-1959, USA v. Bender

drug tests and that he had not used drugs while awaiting trial, the Government called Bender’s

Pretrial Services officer to testify about the failed drug tests.

        Under Rule 403, evidence may be excluded when “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.” Appeals courts “afford broad discretion to a district court’s evidentiary ruling” and

“[t]his is particularly true with respect to Rule 403.”             Sprint/United Management Co. v.

Mendelsohn, 552 U.S. 379, 384 (2008). There is no reason to disturb the district court’s ruling.

While on bail, Bender failed to appear in court as ordered and was charged with violating 18

U.S.C. § 3146(a)(1), which prohibits knowingly failing to appear.                Bender asserted an

affirmative defense that uncontrollable circumstances prevented him from appearing, 18 U.S.C.

§ 3146(c), namely his concerns about his health. The Government introduced evidence that

Bender had tested positive for marijuana and cocaine use while on bail to show that Bender was

not truly concerned about his health. While the evidence of drug use risked unfair prejudice, it

also had substantial probative value for undermining Bender’s claim that his preoccupation with

his health prevented him from appearing in court. Accordingly, the district court did not abuse

its discretion in admitting the evidence.

        The judgment of the district court is affirmed.

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