Court Opinion

ID: 68506
Source: CourtListenerOpinion
Date Created: 2010-04-26 06:34:09+00
Date Added: 2024-06-11T17:20:36.912464
License: Public Domain

[DO NOT PUBLISH]

                  IN THE UNITED STATES COURT OF APPEALS

                             FOR THE ELEVENTH CIRCUIT           FILED
                              ________________________ U.S. COURT OF APPEALS
                                                                         ELEVENTH CIRCUIT
                                                                            Aug. 18, 2009
                                     No. 07-13537
                                                                          THOMAS K. KAHN
                               ________________________
                                                                              CLERK

                          D.C. Docket No. 06-80059-CR-DTKH

UNITED STATES OF AMERICA,

                                                                            Plaintiff-Appellee,

                                             versus

LOUIS WAYNE RATFIELD,

                                                                        Defendant-Appellant.

                               ________________________

                      Appeal from the United States District Court
                          for the Southern District of Florida
                            _________________________

                                      (Augsut 18, 2009)

Before EDMONDSON, BLACK and SILER,* Circuit Judges.

PER CURIAM:

       *
        Honorable Eugene E. Siler, Jr., United States Circuit Judge for the Sixth Circuit, sitting
by designation.
       Louis Wayne Ratfield appeals his conviction for preparing and filing false

tax returns, specifically, (1) aiding and assisting in the preparation of false federal

tax returns for trusts and estates (IRS Form 1041), in violation of 26 U.S.C.

§ 7206(2) (Counts 1-20); (2) aiding and assisting in the preparation of false

individual and joint federal tax returns (IRS Form 1040), in violation of 26 U.S.C.

§ 7206(2) (Counts 21-42); (3) filing false federal income tax returns in violation of

26 U.S.C. § 7206(1) and 18 U.S.C. § 2 (Counts 43-45); (4) impeding the Internal

Revenue Service in violation of 26 U.S.C. § 7212(a) (Count 46); and (5) willfully

and knowingly disobeying and resisting the lawful orders issued by a United

States District Judge for the Southern District of Florida during proceedings held

in United States v. Louis W. Ratfield and LWR Financial Services Trust, Case No.

01-cv-8816, by committing acts that he knew to have been enjoined, or by failing

to perform acts that he had been ordered to perform, in violation of 18 U.S.C.

§ 401(3) (Counts 47-56).1 A jury returned a verdict convicting Ratfield on all

counts of the indictment except for Count 50.2

       1
        On March 15, 2007, the district court granted the Government’s motion to
dismiss Counts 16, 21, 27, 29 and 36 of the indictment with prejudice.
       2
        The jury failed to indicate a verdict for Count 50 on the verdict form, so it was
dismissed with prejudice.

                                                 2
      We have had oral argument in this case and the parties are intimately

familiar with the facts, so we will not extensively review the facts. Ratfield raises

three issues on appeal: (1) whether the district court abused its discretion by

allowing IRS revenue agent-witnesses to remain in the courtroom during the trial

after Ratfield invoked the rule of sequestration; (2) whether the district court

abused its discretion by admitting evidence showing that six years before

Ratfield’s trial commenced, the district court held one of Ratfield’s clients in civil

contempt for violating an order to provide documents to the IRS; and (3) whether

the district court abused its discretion by admitting testimony from IRS agents that

Ratfield was a tax protester, that his arguments were frivolous, and that trusts he

set up were abusive and a sham. We address these arguments in turn.

                                          I.

      Ratfield argues the district court abused its discretion by allowing two IRS

agents to remain in the courtroom after Ratfield invoked the sequestration rule,

Fed. R. Evid. 615.

      Rule 615 provides, in relevant part, “At the request of a party the court shall

order witnesses excluded so that they cannot hear the testimony of other

witnesses.” Nevertheless, the rule “does not authorize exclusion of . . . an officer

or employee of a party which is not a natural person designated as its

                                           3
representative by its attorney, or [] a person whose presence is shown by a party to

be essential to the presentation of the party’s cause.” A decision regarding who

will be excused from the rule of sequestration is within the trial judge’s discretion

and will be reversed only upon a clear showing of abuse of discretion. United

States v. Alvarado, 647 F.2d 537, 540 (5th Cir. Unit A June 1981)3 (finding the

trial court did not abuse its discretion in excusing two drug enforcement agent-

witnesses from sequestration requirements).

       The district court did not abuse its discretion in deciding to allow the two

IRS agents to remain in the courtroom during trial. Agent Grimes testified as a

fact witness, an expert witness regarding trusts and taxation, and as a summary

witness regarding Ratfield’s evolving theories of the taxation of common law

trusts. Agent Grimes’ testimony aided the jury in understanding the significance

of Ratfield’s statements, the testimony of the other revenue agents, and the

testimony of Ratfield’s clients. Her testimony also permitted the other revenue

agents to testify primarily as fact witness and avoid repetitive testimony regarding

tax laws. Agent Grimes summarized Ratfield’s evolving theories regarding the

taxation of common law trusts, based on the testimony of other witnesses and

       3
         In Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir. 1981) (en banc), this
Court adopted as binding precedent all decisions of the former Fifth Circuit handed down prior to
the close of business on September 30, 1981.

                                               4
documents introduced into evidence.4 She could not have done so had she not

heard the evidence introduced during the course of the trial.

       Agent Lottman testified about his calculation of Ratfield’s taxable income

and also as a summary witness regarding the total tax loss to the Government.5

There was little, if any, overlap in the testimony of Agents Grimes and Lottman

because they focused on different aspects of the case. Consequently, we find

unpersuasive Ratfield’s contention they tailored their testimony to bolster each

       4
          In tax evasion cases, courts permit IRS agents to testify as summary witnesses. See, e.g.,
United States v. Stierhoff, 549 F.3d 19, 28 (1st Cir. 2008) (“We hold, therefore, that in a tax
evasion case, a summary witness may be permitted to summarize and analyze the facts of record
as long as the witness does not directly address the ultimate question of whether the accused did
in fact intend to evade federal income taxes.”); United States v. Gold, 743 F.2d 800, 817 (11th
Cir. 1984) (“[T]his court has expressly approved the use of expert legal testimony in a case
where an IRS agent merely stated his opinion as an accountant with regard to the tax
consequences of a transaction, and did not attempt to assume the role of the court.”) (internal
quotation omitted).
       5
          Ratfield also argues the district court erred by allowing Agent Lottman to testify as to
the ultimate issue in the case, which Ratfield describes as whether he impeded the IRS from
determining the correct tax due. Ratfield complains the admission of Lottman’s expert opinions
was unduly prejudicial, violating Fed. R. Evid. 403, and Lottman should not have been allowed
to tell the jury what verdict to reach. This claim was not raised in the district court, thus it is
subject to plain error review. See Fed. R. Crim. P. 52(b); United States v. Pielago, 135 F.3d 703,
708 (11th Cir. 1998).
         The jury was instructed that the ultimate issue in Count 46 was whether Ratfield had
specifically intended to impede and obstruct the IRS by, inter alia, having his clients file tax
returns and other documents that he knew to be false and frivolous. The district court instructed
the jury that in order to find Ratfield guilty of Count 46, it would have to find beyond a
reasonable doubt that Ratfield knowingly endeavored to obstruct or impede the IRS and that he
did so corruptly. A review of the record shows Agent Lottman did not offer any testimony
regarding his opinion about what Ratfield intended, so he did not invade the jury’s province as
fact-finder.

                                                 5
other or the testimony of the eleven other IRS agents, who testified regarding their

audits of Ratfield’s clients and their individual dealings with Ratfield.

      The jury was able to view and assess the credibility of these witnesses. The

district court’s decision to allow Agent Grimes and Agent Lottman to remain in

the courtroom aided the orderly presentation of the case. There were adequate

grounds to permit both IRS agents to remain in the courtroom, so we find no abuse

of discretion in excusing them from the sequestration rule.

                                          II.

      Ratfield argues the district judge abused his discretion by allowing the jury

to hear evidence that he had previously decided the issues against the defendant’s

position in a prior, related case. According to Ratfield, the introduction of this

evidence, which concerned one of the Government’s witnesses, was so prejudicial

as to make the trial unfair. Additionally, he argues the attempt at a curative

instruction was insufficient to cure the prejudice.

      District court rulings on the admissibility of evidence are reviewed for a

clear abuse of discretion. United States v. Brannan, 562 F.3d 1300, 1306 (11th

Cir. 2009). In determining whether the district court erred in failing to exclude

relevant evidence under Fed. R. Evid. 403, we give deference to the discretion of

the district judge, looking “at the evidence in a light most favorable to its

                                           6
admission, maximizing its probative value and minimizing its undue prejudicial

impact.” United States v. Elkins, 885 F.2d 775, 784 (11th Cir. 1989).

      Ratfield fails to show how he was unfairly prejudiced by Frederick

Crawford’s testimony, which was only relevant to Count 46, impeding the IRS in

violation of 26 U.S.C. § 7212(a). During trial, the Government introduced court

documents, which had been signed by Judge Hurley six years earlier, that included

(1) an order to Crawford, one of the Government’s witnesses in Ratfield’s case, to

produce documents to the IRS, (2) an order to show cause related to the order to

produce documents, and (3) an order incarcerating the witness for failure to

comply. Ratfield argues Crawford and the Government purposefully mentioned

the judge by name numerous times during the testimony to prejudice Ratfield.

After Ratfield objected, Judge Hurley instructed the jury that they should not take

it as any indication of what he thinks their verdict should be in the case. The

judge then instructed the jury as follows:

      Ladies and gentlemen, as you can imagine, there are lots of things
      that come before The Court. This is the first time I realized that I had
      any prior involvement dealing with Mr. Crawford and Mr. Crawford’s
      relationship with Mr. Ratfield.

      I want to make sure the jury understands that they cannot in any way
      take that as indicating that I have any view at all in terms of what the
      verdict should be as to Mr. Ratfield or whether the Government has
      proof in terms of Mr. Ratfield’s situation.

                                             7
       The only thing I was looking at obviously with Mr. Crawford is the
       statute that requires people to turn over books and records, and if they
       have the ability to do it and don’t do it, the Court has what is called
       civil contempt power which effectively says to someone, if you don’t
       turn it over, you will be held in jail until you do turn it over. It is a
       coercion to say to somebody you have the key to the jail cell yourself,
       you get out by turning over the records if you have them.

       I want to be very clear. I want to really emphasize to the jury they
       should not in any way, number one, consider that I have any view at
       all on the merits in terms of the charges against Mr. Ratfield. I assure
       you I do not. Those are matters for you, the jury, to decide. The fact
       that there is some prior proceeding that was related principally to
       Mr. Crawford as he indicated to us.

       There is no reason to conclude the jury did not follow the district court’s

instructions and consider Crawford’s evidence only with respect to Count 46 and

not with regard to the criminal contempt charges.6 Moreover, the jury indicated on

the special verdict form, that the only manner in which Ratfield impeded the IRS

was by filing tax returns stating zero income and zero taxes due and owing.

Therefore, the district court did not abuse its discretion in admitting the evidence.

                                             IIII.

       Ratfield argues he was unfairly prejudiced when numerous IRS agents were

permitted to testify that he was a tax protester, that his arguments were frivolous,

and the trusts he set up were abusive and a sham. Ratfield also contends the

       6
       At trial, the evidence was overwhelming that Ratfield violated the preliminary and
permanent injunctions.

                                              8
prejudice was compounded when the judge instructed the jury that he was

allowing the testimony about Ratfield being a tax protester because the good faith

defense is not available to someone making tax protester arguments.

      In determining whether the district court erred in failing to exclude relevant

evidence under Rule 403, we give deference to the discretion of the district judge,

looking at the evidence in a light most favorable to its admission, and will reverse

only upon a clear showing of abuse of discretion. Elkins, 885 F.2d at 784;

Brannan, 562 F.3d at 1306.

      The district court did not abuse its discretion in allowing the IRS agents’

testimony. At trial, the ultimate issue the jury decided with respect to the charges

relating to the filing of false tax returns (Counts 1-46) was whether Ratfield acted

in good faith. Contrary to Ratfield’s claims, none of the Government’s witnesses

testified Ratfield was actually a tax protester. The record shows that Dr. Olson,

one of Ratfield’s clients, testified that he asked Ratfield if he wanted to go down

the path of what looked like being a tax protester. Agent Grimes testified the

arguments Ratfield made to the IRS were “protester type arguments.”

      Likewise, none of the witnesses opined that Ratfield’s arguments were

frivolous in the sense that he did not have a good faith belief in them. Instead,

they testified they treated his arguments as frivolous, which meant they were not

                                          9
required to provide a point-by-point refutation to his theories on income taxation

or his challenges to their authority to conduct audits.

      Agent Grimes explained that the IRS defined an “abusive trust” as a trust set

up to avoid taxes. The other agents accurately applied the terms “sham” and

“abusive” in that manner in their testimony. The IRS agents testified that, based

upon their training and experience as revenue agents, they recognized the trusts

Ratfield had set up for his clients were abusive because the person who controlled

the trust was also the beneficiary. Moreover, the evidence was overwhelming that

Ratfield set up the trusts so that he and his clients could reduce or eliminate their

income tax payments.

      The only issue was whether Ratfield acted in good faith. The district court

gave a comprehensive instruction on the good faith defense and specifically

instructed the jury:

      Let me tell you, I’ve said before that in this tax area, the Government
      must prove that someone acted willfully.

      When the issue of good faith has been raised, that requires the
      Government to prove that the person did not have a good faith
      subjective belief that they were following the law or that, to show that
      they misunderstood the law.

      Now, I’ve explained this before. The reason for this in the one area
      of the law is that Congress recognizes that the tax laws are complex,
      so if somebody has a good faith belief that they are not violating the

                                          10
      law, even though their position may seem really quite extraordinary,
      if they hold that in good faith, if they really believe that, that is a
      complete defense.

      Now, I’m allowing this testimony about tax protest in because that
      good faith defense is not available if what someone is really doing is
      just acting as a tax protester.

      In other words, the theory of the good faith defense is that somebody
      intends to follow the tax laws, but they just misunderstand them, and
      they in good faith believe what they are doing is not a violation of the
      law.

      If somebody is really against paying tax at all, and they are just
      making up language, that good faith doesn’t apply.

      But I want to be sure that the jury understands these issues are issues
      for the jury to decide. They are factual issues.

      And in allowing the agent to testify about this concept, I am not in
      any way suggesting that you need to accept these categorizations.

      It is for the jury to make those ultimate determinations as to whether
      the Government has or has not proven that Mr. Ratfield did not have a
      good faith belief, and again, it will be for the jury to decide whether
      this tax protester issue is in place in this case or not.

      Based on our review of the record, the Government’s witnesses did not

opine whether Ratfield acted in good faith. The witnesses’ testimony concerned

Ratfield’s conduct, his evolving theories on the IRS’s authority to tax and the

taxation of trusts and the fact that they advised him his theories lacked any support

in the law. This testimony was relevant to the jury’s determination whether

                                         11
Ratfield acted in good faith. Ratfield’s argument he was unfairly prejudiced by

the IRS agents’ testimony and the jury instruction on the good faith defense is

without merit. We conclude the district court did not abuse its discretion.

      AFFIRMED.

                                         12