Court Opinion

ID: 2967728
Source: CourtListenerOpinion
Date Created: 2015-09-22 03:16:31.63035+00
Date Added: 2024-06-11T08:40:47.982340
License: Public Domain

PUBLISHED

UNITED STATES COURT OF APPEALS
                FOR THE FOURTH CIRCUIT

UNITED STATES OF AMERICA,               
                 Plaintiff-Appellee,
                 v.                             No. 02-4421
WARREN MONROE HAYES,
            Defendant-Appellant.
                                        
UNITED STATES OF AMERICA,               
                 Plaintiff-Appellant,
                 v.                             No. 02-4478
WARREN MONROE HAYES,
             Defendant-Appellee.
                                        
           Appeals from the United States District Court
         for the Eastern District of Virginia, at Richmond.
            Richard L. Williams, Senior District Judge.
                           (CR-01-335)

                      Argued: January 24, 2003

                      Decided: March 14, 2003

  Before WILKINS, Chief Judge, WIDENER, Circuit Judge, and
      Morton I. GREENBERG, Senior Circuit Judge of the
            United States Court of Appeals for the
              Third Circuit, sitting by designation.

Affirmed in part and vacated and remanded in part by published opin-
ion. Chief Judge Wilkins wrote the opinion, in which Judge Widener
and Senior Judge Greenberg joined.
2                       UNITED STATES v. HAYES
                              COUNSEL

ARGUED: Mary Elizabeth Maguire, Assistant Federal Public
Defender, Richmond, Virginia, for Appellant. Laura C. Marshall,
Assistant United States Attorney, Richmond, Virginia, for Appellee.
ON BRIEF: Frank W. Dunham, Jr., Federal Public Defender, Rich-
mond, Virginia, for Appellant. Paul J. McNulty, United States Attor-
ney, Richmond, Virginia, for Appellee.

                              OPINION

WILKINS, Chief Judge:

   Warren Monroe Hayes appeals his convictions for 24 counts of
procuring the presentation of tax returns containing false statements,
in violation of 26 U.S.C.A. § 7206(2) (West 2002). He asserts that 20
of the charges against him are barred by the statute of limitations, that
six of his convictions are not supported by sufficient evidence, and
that the district court erred in admitting certain evidence. On cross-
appeal, the Government contends that the district court improperly
refused to consider relevant conduct at sentencing. Finding merit only
in the Government’s claim, we affirm Hayes’ convictions, vacate his
sentence, and remand.

                                   I.

   On November 19, 2001, a grand jury in the Eastern District of Vir-
ginia issued an indictment charging Hayes with preparing 24 tax
returns that fraudulently inflated the taxpayers’ deductions. The
returns in question were filed between February 17, 1996 and April
15, 1999.

   Hayes moved to dismiss all but four of the charges. In support, he
argued that a three-year statute of limitations applied under 26
U.S.C.A. § 6531 (West 2002) and that only four of the charges in the
indictment involved conduct within the preceding three years. The
district court denied Hayes’ motion, concluding that the applicable
limitations period is six years, not three.
                        UNITED STATES v. HAYES                           3
   At the ensuing trial, the Government presented testimony from sev-
eral witnesses who had retained Hayes to prepare their taxes. Their
testimony indicated that Hayes was not a full-time accountant or tax-
preparer but that he supplemented his income every year by preparing
returns for relatives and acquaintances. These returns were ostensibly
based on documents provided to Hayes by his customers. The cus-
tomers testified, however, that the returns prepared by Hayes substan-
tially overstated some of their deductions, primarily for charitable
contributions and medical expenses. The customers further testified
that they did not review the returns before filing them; thus, even as
they recognized that they were receiving larger refunds than they
were accustomed to, they did not become aware of the overstatements
until contacted by investigators from the Internal Revenue Service
(IRS).

   Hayes testified in his own behalf. He admitted that he made errors
in the returns he prepared but denied fabricating any figures in order
to increase his customers’ deductions.

  The jury found Hayes guilty of all 24 counts charged in the indict-
ment. The court then sentenced Hayes to 24 concurrent terms of 30
months imprisonment.

                                    II.

   Hayes’ first claim is that the district court erred in refusing to apply
a three-year statute of limitations to the charges against him. This is
a legal issue which we review de novo. See Franks v. Ross, 313 F.3d
184, 192 (4th Cir. 2002).

   Section 6531 provides that criminal violations of tax laws are ordi-
narily subject to a three-year statute of limitations. The statute further
provides, however, that the limitations period is six years for eight
types of offenses. As is relevant here, the longer limitations period
applies to

     the offense of willfully aiding or assisting in, or procuring,
     counseling, or advising, the preparation or presentation
     under, or in connection with any matter arising under, the
4                      UNITED STATES v. HAYES
    internal revenue laws, of a false or fraudulent return, affida-
    vit, claim, or document (whether or not such falsity or fraud
    is with the knowledge or consent of the person authorized
    or required to present such return, affidavit, claim, or docu-
    ment).

26 U.S.C.A. § 6531(3). The district court concluded that the charges
against Hayes were governed by § 6531(3) and thus subject to a six-
year statute of limitations. We agree.

   The charges against Hayes alleged violations of § 7206(2), which
establishes criminal penalties for any person who

    [w]illfully aids or assists in, or procures, counsels, or
    advises the preparation or presentation under, or in connec-
    tion with any matter arising under, the internal revenue
    laws, of a return, affidavit, claim, or other document, which
    is fraudulent or is false as to any material matter, whether
    or not such falsity or fraud is with the knowledge or consent
    of the person authorized or required to present such return,
    affidavit, claim, or document.

Even a cursory comparison of these provisions demonstrates that
§ 6531(3) refers to offenses under § 7206(2). The language of the two
statutes is virtually identical, with the only substantive difference
being that § 6531(3) omits the requirement that the defendant’s false
statements relate to a "material matter."

   Hayes contends that this difference demonstrates that § 6531(3)
does not apply to violations of § 7206(2). This argument might be
persuasive if the additional requirement appeared in the procedural
provision establishing the statute of limitations rather than the sub-
stantive provision defining the crime. Here, however, the reverse is
true. Thus, while there may be offenses that satisfy § 6531(3) without
including all the elements of a § 7206(2) violation, it is not possible
to violate § 7206(2) without meeting all the requirements of
§ 6531(3). See United States v. Zavin, 190 F. Supp. 393, 394 (D.N.J.
1961) ("A return which is false as to any material matter is a false
return.").
                       UNITED STATES v. HAYES                         5
   Hayes further argues that the absence of any reference to § 7206(2)
in § 6531 demonstrates that Congress did not intend for the extended
statute of limitations to apply to § 7206(2) offenses. He bolsters this
argument by noting that § 6531(5) specifically alludes to § 7206(1).
We acknowledge that the legislative intent would be clearer if § 6531
identified both of the relevant portions of § 7206 in the same manner,
rather than referring to one by citation and to the other by incorporat-
ing its language. Nevertheless, the absence of an explicit reference to
§ 7206(2) within § 6531 does not preclude the application of a six-
year limitations period here. Of the eight categories of offenses sub-
ject to the six-year period under § 6531, four are defined through
descriptions of offense conduct, see 26 U.S.C.A. §§ 6531(1)-(4),
while the other four are defined through statutory references, see 26
U.S.C.A. §§ 6531(5)-(8). A holding that the six-year statute of limita-
tions applies only to the statutory provisions explicitly mentioned in
§ 6531 would effectively nullify the four paragraphs of that statute
that use descriptions rather than citations. This result would contra-
vene well-settled principles of statutory construction. See Lane v.
United States, 286 F.3d 723, 731 (4th Cir. 2002).

   For the foregoing reasons, we conclude that application of
§ 6531(3) to offenses under § 7206(2) is appropriate, notwithstanding
that § 6531 neither expressly refers to § 7206(2) nor incorporates all
the elements of a § 7206(2) offense. We therefore hold that the dis-
trict court properly denied Hayes’ motion to dismiss the 20 charges
involving conduct occurring more than three years before he was
indicted.

                                  III.

   We next consider Hayes’ claim that there was insufficient evidence
to support six of his convictions. We review this claim de novo. See
United States v. Romer, 148 F.3d 359, 364 (4th Cir. 1998).

   Section 7206(2) requires the Government to prove that "‘(1) the
defendant aided, assisted, or otherwise caused the preparation and
presentation of a return; . . . the return was fraudulent or false as to
a material matter; and (3) the act of the defendant was willful.’"
United States v. Aramony, 88 F.3d 1369, 1382 (4th Cir. 1996) (quot-
ing United States v. Salerno, 902 F.2d 1429, 1432 (9th Cir. 1990)).
6                      UNITED STATES v. HAYES
The verdict of the jury that Hayes committed this offense will be
upheld if "‘there is substantial evidence, taking the view most favor-
able to the Government, to support it.’" United States v. Bennafield,
287 F.3d 320, 324 (4th Cir.) (quoting Glasser v. United States, 315
U.S. 60, 80 (1942)), cert. denied, 123 S. Ct. 388 (2002). With these
standards in mind, we now examine the evidence supporting the con-
victions challenged by Hayes.

               A. Count 7: Eunicea and Larry Ellerbe

   Eunicea Ellerbe testified that she retained Hayes through her sister,
Cynthia Peeples. Ellerbe gave relevant documents to Peeples for
delivery to Hayes, and Hayes then prepared a tax return for Ellerbe
and her husband. This return included, among other inaccurate fig-
ures, a claimed deduction of $16,381 for medical expenses. Ellerbe
testified that she did not give Hayes any information supporting such
a deduction.

   Hayes contends that his conviction relating to the Ellerbe tax return
is not supported by sufficient evidence because there was no evidence
negating the possibility that Peeples, rather than Hayes, invented the
deductions listed on the Ellerbe return. We disagree. Peeples testified
at trial that, in addition to recruiting Hayes to prepare returns for
Ellerbe, she twice hired him to prepare her own returns. The first
return included deductions not supported by the information Peeples
had provided to Hayes, and Peeples was audited as a result. She testi-
fied that she subsequently instructed Hayes "to do my taxes, but only
put the figures on my taxes of what I give you." J.A. 564-65. The jury
could reasonably infer that Peeples would not adhere to this policy for
herself and yet provide Hayes with false information about her sister’s
taxes. This inference is particularly strong in light of the substantial
similarities connecting the misstatements in the Ellerbe return with
those in other returns prepared by Hayes. Cf. Morgan v. Foretich, 846
F.2d 941, 944 (4th Cir. 1988) (holding that evidence that two half-
sisters suffered similar sexual abuse tended to show that they were
abused by their common parent or grandparents).

               B. Counts 12 and 13: Ronald Gullette

   Like Eunicea Ellerbe, Ronald Gullette retained Hayes through an
intermediary (Van Ashe) and never interacted with Hayes directly.
                        UNITED STATES v. HAYES                         7
Hayes thus contends that the evidence fails to establish that he created
the false information that was included on returns he prepared for
Gullette; instead, such information may have been given to Hayes by
Ashe. Once again, however, the jury could reasonably infer that
Hayes was responsible, because the misstatements in Gullette’s
returns were so similar to those in other returns prepared by Hayes.

                     C. Count 14: Linda Macklin

   Linda Macklin, Hayes’ sister-in-law, testified that Hayes prepared
her tax returns for 1996 and 1997. On her 1996 return, Hayes
included a medical expense of over $13,000. Macklin told the grand
jury that she had incurred more than $14,000 in medical bills in 1996,
when her daughter was born. On this basis, Hayes asserts that the
deduction noted on Macklin’s return was not fraudulent.

   This argument fails because Macklin testified that she never dis-
cussed her medical bills with Hayes. Also, it appears that Macklin
never claimed to have paid these bills herself; instead, she testified
that they were paid by her insurance, which rendered them non-
deductible, see 26 U.S.C.A. § 213(a) (West 2002). The jury could rea-
sonably infer from these circumstances that Macklin did not provide
Hayes with the $13,000 figure listed on her tax return and that Hayes
may instead have invented this number. Moreover, while the $13,000
deduction noted by Hayes was close to Macklin’s actual expenses,
this figure also resembles false medical deductions claimed by Hayes
in other returns he prepared.

        D. Counts 23 and 24: Gloria and Willard1 Turnage

   Gloria Turnage, like Linda Macklin, is Hayes’ sister-in-law, and,
like Macklin, Gloria hired Hayes to prepare tax returns for her and her
husband in 1996 and 1997. These returns included large deductions
for medical expenses and charitable contributions. Hayes asserts that
the Turnages’ testimony established that these deductions were accu-
rate. This is incorrect. Under questioning by the court, Willard Tur-
  1
   The indictment spells Mr. Turnage’s first name "Williard." J.A. 13. It
appears in the transcript as "Willard," however. Id. at 188. We have
adopted the latter spelling.
8                      UNITED STATES v. HAYES
nage testified that the deductions on the Turnages’ returns were
"wrong." J.A. 193. Thus, the evidence supports the conclusion that
the Turnages’ returns included false statements.

   Although Hayes has not raised this issue, we note that the evidence
also supports the inference that it was Hayes who fabricated the incor-
rect amounts noted on the Turnages’ returns. Gloria testified that she
gave Hayes a series of documents—"[m]y W-2s, my medical bills,
my financial statement from church, my day care," id. at 170—and let
him compute her deductions. Willard, for his part, stated that he "re-
ally didn’t do anything" to assist Hayes with the preparation of tax
returns. Id. at 189. It follows that neither Gloria nor Willard provided
Hayes with the incorrect numbers that appeared on their tax returns.
Consequently, Hayes must have either derived those numbers from
Gloria’s records or invented them himself. In light of the general reli-
ability of business records and the substantial similarities between the
errors on the Turnage returns and false deductions noted on other
returns prepared by Hayes, a jury could reasonably conclude that
Hayes fabricated the incorrect figures on the Turnage returns. Accord-
ingly, the evidence was sufficient to support Hayes’ convictions.

                                  IV.

   Hayes’ remaining claims challenge the admission of certain evi-
dence. Decisions allowing the introduction of evidence are reviewed
for abuse of discretion. See United States v. Robinson, 275 F.3d 371,
383 (4th Cir. 2001), cert. denied, 122 S. Ct. 1581, 1945 (2002).

                         A. Summary Charts

   Hayes initially challenges the admission of charts created by Spe-
cial Agent Jo Ann Haarstick of the IRS. These charts summarized the
alleged misstatements in tax returns prepared by Hayes. Hayes con-
tends that these charts were unnecessary because this case was not
unduly complex. He further asserts that the charts tended to bolster
the testimony of the taxpayers who claimed that Hayes included false
information in their returns.

   We uphold the admission of the charts for three reasons. First,
although the trial was short, numerous witnesses testified about multi-
                       UNITED STATES v. HAYES                        9
ple errors in 24 different tax returns; consequently, the charts may
have aided the jury in organizing the information it received before
Haarstick testified. See United States v. Loayza, 107 F.3d 257, 264
(4th Cir. 1997) (noting that a decision to admit summary charts
should be guided by consideration of the "complexity and length of
the case as well as the numbers of witnesses and exhibits"). Second,
the charts and accompanying testimony assisted the Government in
meeting its burden of proving that Hayes’ misstatements were mate-
rial to the computation of taxes owed by his customers. Third, the dis-
trict court minimized the possibility that the jury would treat the
charts as substantive evidence by instructing that, if the information
in the charts conflicted with the materials from which the charts were
derived, "it is the raw material underlying the charts and summaries
that controls." J.A. 624; see Loayza, 107 F.3d at 264 (upholding
admission of charts based in part on use of limiting instruction).

                      B. Vouching by Haarstick

   Hayes next contends that the district court improperly permitted
Haarstick to vouch for other Government witnesses. This claim arises
from the following colloquy, which occurred at the end of the Gov-
ernment’s direct examination of Haarstick:

    Q And were any of the taxpayers subjects of the investiga-
      tion?

    A No.

    Q Why is that?

    A The element was willfulness. And when the interviews
      were done, to my knowledge —

      [DEFENSE COUNSEL]: This requires hearsay. Second
    of all, requires a legal opinion, which I don’t think she is
    qualified to make.

       THE COURT: No. It is a policy of the IRS. The objection
    is overruled.
10                     UNITED STATES v. HAYES
        Proceed.

      BY [THE PROSECUTOR]:

      Q If you could just — the question was why weren’t they
        considered to be — why wouldn’t the IRS have consid-
        ered them to be subjects of the investigation?

      A It was determined that they did not willfully know what
        was on the tax return. They had not reviewed it, didn’t
        have knowledge that it was false.

J.A. 483-84.

   It is impermissible for a prosecutor to indicate her personal belief
in the credibility of Government witnesses or to elicit one witness’
opinion that another witness has told the truth. See United States v.
Lewis, 10 F.3d 1086, 1089 (4th Cir. 1993). Such improper vouching
is not necessarily reversible error, however. Instead, a reviewing court
must assess the prejudicial effect of the improper comments by con-
sidering "(1) the degree to which the comments could have misled the
jury; (2) whether the comments were isolated or extensive; (3) the
strength of proof of guilt absent the inappropriate comments; and
(4) whether the comments were deliberately made to divert the jury’s
attention." United States v. Sanchez, 118 F.3d 192, 198 (4th Cir.
1997).

   We assume for purposes of decision that Haarstick’s testimony
amounted to improper vouching. Nevertheless, applying the factors
listed in Sanchez, we hold that any error was harmless.2

  With respect to the first factor, we conclude that the comments had
no appreciable effect on the jury. We recognize that the comments in
question went to the central issue to be decided at trial—that is,
  2
   The Government asserted at oral argument that this claim is subject
to plain error review because Hayes did not object on the basis of
improper vouching. We need not consider whether Hayes adequately
preserved this claim, because we conclude that the Government prevails
even under a harmless error standard.
                        UNITED STATES v. HAYES                        11
whether the misstatements in tax returns prepared by Hayes resulted
from inaccurate information provided by Hayes’ customers or from
Hayes’ own fabrications. But Haarstick’s statement that the Govern-
ment had resolved that question against Hayes only restated the obvi-
ous; if the IRS had believed Hayes rather than his customers, Hayes
would not have been indicted. Furthermore, Haarstick expressed the
conclusion of the IRS, without indicating either that the IRS had any
undisclosed knowledge to support that conclusion or that she person-
ally considered the testimony against Hayes to be credible. For these
reasons, we do not believe the testimony in question misled the jury.

   The remaining three factors also weigh against reversal. The testi-
mony at issue was not extensive, but rather amounted to two or three
sentences in the middle of the trial. In addition, the Government’s
case, viewed in its entirety, was quite strong, as it demonstrated a pat-
tern of similar misstatements on 24 different tax returns prepared by
Hayes; thus, the jury could not have credited Hayes’ defense—that he
relied entirely on information provided by his customers—without
concluding that Hayes’ diverse customers all made false claims
involving the same types of deductions and similar dollar amounts.
And finally, there is nothing in the record to indicate that the Govern-
ment deliberately elicited the statements in question for improper pur-
poses. For these reasons, we affirm Hayes’ 24 convictions for
violating § 7206(2).

                                   V.

   We now turn to the Government’s cross-appeal. The Government
contends that the district court improperly refused to consider evi-
dence that Hayes’ offenses resulted in tax losses exceeding $274,000.
"We review the district court’s factual findings for clear error, but if
the issue on review turns primarily on the legal interpretation of a
guideline term, the standard moves closer to de novo review." United
States v. Hudson, 272 F.3d 260, 263 (4th Cir. 2001) (alteration and
internal quotation marks omitted).

   The presentence report (PSR) prepared before Hayes’ sentencing
concluded that the crimes of which Hayes had been convicted cost the
Government a total of $75,814 ("Indictment Losses"). The PSR then
estimated that the Government suffered additional losses of $199,017
12                     UNITED STATES v. HAYES
from 63 tax returns prepared by Hayes that did not result in prosecu-
tion ("Non-Indictment Losses"). In computing Hayes’ sentencing
range, the PSR included both the Indictment Losses and the Non-
Indictment Losses in Hayes’ relevant conduct. See U.S. Sentencing
Guidelines Manual § 1B1.3 (2000) (defining relevant conduct).

   Before the sentencing hearing, Hayes filed written objections to the
PSR. With respect to the Non-Indictment Losses, he argued that
(1) the 63 returns in question were not part of his relevant conduct,
(2) the value of the Non-Indictment Losses was calculated improp-
erly, and (3) consideration of the Indictment Losses alone would
result in an appropriate sentence under 18 U.S.C.A. § 3553(a) (West
2000). The Government, responding in writing, disagreed with these
assertions and offered to introduce evidence in support of its position.

   The Government did not have an opportunity to present this evi-
dence. At the beginning of the sentencing hearing, the district court
ruled:

        Given the facts in the pre-sentence report, I grant the
     defendant’s objections to the calculations of the tax loss
     amount. Even though relevant conduct may be considered,
     The Court finds that a tax loss amount of $75,814, the total
     loss amount for the counts charged in the indictment, results
     in a sentence sufficient, but not greater than necessary, to
     reflect the seriousness of the offense, provide just punish-
     ment for an adequate deterrence, and to protect the public,
     in satisfaction of [§ 3553(a)].

J.A. 691. The Government noted an objection and proffered evidence
to support its assertions, but the court did not change its ruling. The
effect of this ruling was to reduce Hayes’ base offense level from 16
to 14. See U.S.S.G. §§ 2T1.4(a)(1), 2T4.1(I) & (K) (2000).

   The Government asserts that the district court erred in refusing to
consider its evidence. Hayes counters that the court did not refuse to
consider any evidence, but instead found such evidence insufficient
to demonstrate that the Non-Indictment Losses resulted from relevant
conduct.
                        UNITED STATES v. HAYES                        13
   We agree with the Government’s position. The statements of the
district court do not reflect any inquiry whatsoever into the adequacy
of the Government’s proffers. Instead, the ruling quoted above indi-
cates that the court simply made a personal assessment of what loss
amount would result in an appropriate sentence, without regard to the
sentencing guidelines. However, "[t]he relevant conduct provisions
are designed to channel the sentencing discretion of the district courts
and to make mandatory the consideration of factors that previously
would have been optional." Witte v. United States, 515 U.S. 389, 402
(1995); see U.S.S.G. § 1B1.3(a) (providing that a defendant’s offense
level ordinarily "shall be determined on the basis of" relevant conduct
(emphasis added)). Thus, while the guidelines preserve a broad range
of discretion for district courts, a court has no discretion to disregard
relevant conduct in order to achieve the sentence it considers appro-
priate.

   For these reasons, we must vacate Hayes’ sentence and remand for
further proceedings. On remand, the district court must apply § 1B1.3
to determine whether to treat some or all of the Non-Indictment
Losses as part of Hayes’ relevant conduct. We take no position
regarding the procedures the court must follow or what its ultimate
conclusion should be.

                                  VI.

  For the reasons stated above, we affirm Hayes’ convictions but
vacate his sentence and remand for resentencing.

    AFFIRMED IN PART; VACATED AND REMANDED IN PART