Court Opinion

ID: 217947
Source: CourtListenerOpinion
Date Created: 2011-06-02 17:13:05+00
Date Added: 2024-06-11T17:28:34.490196
License: Public Domain

FILED
                                                              United States Court of Appeals
                                                                      Tenth Circuit

                   UNITED STATES COURT OF APPEALS                        June 2, 2011
                                                                  Elisabeth A. Shumaker
                                TENTH CIRCUIT                         Clerk of Court

 UNITED STATES OF AMERICA,

              Plaintiff-Appellee,                        No. 10-1226
 v.                                                      (D. of Colo.)
 WILLIAM C. CRABBE,                           (D.C. No. 1:06-CR-00294-MSK-1)

              Defendant-Appellant.

                           ORDER AND JUDGMENT *

Before O’BRIEN, TYMKOVICH, and GORSUCH, Circuit Judges.

      This case arises out of William Crabbe’s criminal conviction for failure to

pay taxes and filing false tax returns. Crabbe challenges the district court’s

denial of his motion for a new trial on two grounds: (1) the government withheld

exculpatory Brady material regarding a testifying witness, and (2) a new trial is

warranted by newly discovered evidence. Crabbe also appeals the district court’s

denial of his motion for discovery to support his request for a new trial. After

      *
         This order and judgment is not binding precedent except under the
doctrines of law of the case, res judicata and collateral estoppel. It may be cited,
however, for its persuasive value consistent with Fed. R. App. P. 32.1 and 10th
Cir. R. 32.1.
carefully reviewing the record on appeal, we conclude the district court properly

denied Crabbe’s motions for a new trial and additional discovery.

      Exercising jurisdiction under 28 U.S.C. § 1291, we AFFIRM the district

court’s decisions.

                                   I. Background

      Crabbe and James “Steve” Rowan were the majority owners of Columbine

Healthcare Systems, Inc., a staffing agency that provided temporary nurses to

health care institutions. Rowan was the president and primary manager. Crabbe

was the vice president, but witnesses at trial testified he was significantly less

involved in Columbine’s day-to-day operations. By law, employers must file a

quarterly 941 statement with the Internal Revenue Service (IRS), reporting the

employee payroll and remitting income and Social Security taxes withheld from

employee paychecks. For some period of time, Columbine did not comply with

this requirement, although it continued to withhold money from employees.

      Crabbe testified that he learned of Columbine’s mounting employment tax

liability in 1999. He suggested hiring a tax attorney to address the problem, and

Rowan agreed. But, Crabbe claims, Rowan refused to do more than put the

attorney on retainer, and insisted that Columbine leave the taxes unpaid until its

revenues increased. Pursuant to the attorney’s recommendation, Rowan did agree

to stay current with the new tax obligations, and for several months in 1999

                                          -2-
Columbine correctly reported and paid its taxes. But soon Columbine again

ceased all reporting and payment.

      In 2001, the tax attorney contacted Crabbe and again recommended that

Columbine attempt to stay current with its tax obligations. Crabbe raised the

issue once more with Rowan. They finally agreed Crabbe would file the past-due

941s and Rowan would file the current and future 941s.

      Crabbe then prepared and submitted some of the outstanding 941s. But in

preparing the forms, he used the payroll information for the corporate employees

only and failed to include the information for the nurse employees. Crabbe

testified at trial that this omission was unintentional. He claimed he did not

realize that the payroll information for the corporate and nurse employees were

kept in separate databases and that a complete 941 would require a report

generated by each.

      In 2002, Wayne Hoover, Columbine’s accountant, realized these 941s were

inaccurate and informed Crabbe of this fact. Hoover instructed a corporate

employee to file amended forms. By July of 2004, Columbine had become the

subject of a criminal tax investigation. At this point, the work of correcting the

flawed 941s had been underway for more than a year, but no amended forms had

been filed. In August of 2004, after learning of the investigation, Crabbe filed the

amended 941s himself.

                                         -3-
       Both Crabbe and Rowan were indicted on more than thirty counts of tax-

related crimes. Rowan pleaded guilty in February of 2008. Three days later,

Rowan testified against Crabbe at his trial. Crabbe was subsequently convicted of

ten counts of failure to pay taxes in violation of 18 U.S.C. § 2 and six counts of

filing false tax returns in violation of 26 U.S.C. § 7203. Crabbe moved for a new

trial based on insufficiency of the evidence, but the motion was denied by the

district court. 1

       In June of 2009, Rowan’s attorney filed a motion to continue sentencing,

explaining that Rowan had been hospitalized with liver disease. He also

expressed doubts about his client’s mental competency, given his state of

confusion and disorientation. The court ordered a forensic psychiatrist to

evaluate whether Rowan was competent to be sentenced.

       The forensic psychiatrist issued a report concluding that, beginning in

March 2007, Rowan’s mental state had fluctuated between delirium (reflected in

severe disorientation, stupor, and distorted perceptions) and lucid periods. She

explained that during periods of delirium, it was likely Rowan would not be

competent to be sentenced, but that during the lucid period in which she

interviewed him, he was competent. She stated finally that she was unable to give

an opinion whether, on any particular subsequent date, Rowan would be

       1
         For additional information on the factual and procedural background of
this case, see this court’s resolution of Crabbe’s direct appeal in United States v.
Crabbe, 364 F. App’x 412 (10th Cir. 2010).

                                         -4-
competent to be sentenced; she would need to reevaluate him on the day of his

sentencing. Rowan died before he could be sentenced.

      Based in part on this information, Crabbe filed a motion for a new trial. He

argued the government withheld material information prior to trial—namely,

Rowan’s general lack of capacity to testify, and that Rowan was not mentally

competent at the time that he testified against Crabbe. The motion attached the

psychiatrist’s report and an affidavit from an assistant who helped with Rowan’s

transportation and other tasks, stating, “Beginning in the latter months of 2007

and throughout the remaining portions of his life, Mr. Rowan was confused

almost 100% of that time.” R., Vol. I at 36. The assistant also opined that “if

anyone had been around [Rowan] for even ten minutes they would have had to

have known that something was seriously wrong with the man.” Id. at 37.

      Soon afterward, Rowan’s former counsel, Ted Merriam, filed an ex parte

motion with the court explaining that after reviewing his own notes and the

records of Rowan’s trial testimony, he now believed there “may [have been]

fraudulent conduct by Mr. Rowan in providing testimony in Dr. Crabbe’s case.”

Id. at 138. Merriam sought the court’s guidance on the question of whether he

was obligated to disclose this information under the Colorado Rules of

Professional Conduct and, if he were not so obligated, if he might do so given

that Rowan’s daughter had waived the attorney-client privilege.

                                         -5-
      The district court denied Merriam’s motion, stating that he had provided

“no authority for this court to make such a determination.” Id. at 211. Crabbe

then filed a motion seeking discovery from Merriam to support his motion for a

new trial. The court denied Crabbe’s motions for a new trial and discovery.

                                  II. Discussion

      Crabbe challenges the district court’s denial of his motion for a new trial

and his motion for discovery. We address each argument in turn.

      A. Motion For a New Trial Based On Brady Violations

      First, Crabbe contends he is entitled to a new trial because the government

violated the dictates of Brady v. Maryland, 373 U.S. 83 (1963) by failing to

disclose evidence of Rowan’s incompetence.

      We review a denial of a motion for a new trial based on an alleged Brady

violation de novo. United States v. Erickson, 561 F.3d 1150, 1163 (10th Cir.

2009). But we defer to the district court’s fact finding unless clearly erroneous.

Id.

      Due process requires the government disclose all evidence that favors the

defendant and “is material either to guilt or to punishment.” United States v.

Robinson, 39 F.3d 1115, 1118 (10th Cir. 1994) (quotation omitted). “[T]o

establish a Brady violation, the defense must prove that: (1) the prosecution

suppressed the evidence; (2) the evidence would have been favorable to the

accused; and (3) the suppressed evidence is material.” United States v. Wolf, 839

                                         -6-
F.2d 1387, 1391 (10th Cir. 1988). The defendant cannot show suppression where

the evidence was not known to the government at the time of trial. United States

v. Erickson, 561 F.3d 1150, 1163–64 (10th Cir. 2009); see also Bowen v.

Maynard, 799 F.2d 593, 612 (10th Cir. 1986). Evidence is “material” under

Brady “only if there is a reasonable probability that, had the evidence been

disclosed to the defense, the result of the proceeding would have been different.

A ‘reasonable probability’ is a probability sufficient to undermine confidence in

the outcome.” Robinson, 39 F.3d at 1118 (quotations omitted). This inquiry

“does not require demonstration by a preponderance that disclosure of the

suppressed evidence would have resulted ultimately in the defendant’s acquittal.”

Kyles v. Whitley, 514 U.S. 419, 434 (1995). Rather, the defendant need only

show that the ultimate verdict is not “worthy of confidence.” Id.

       The district court denied Crabbe’s motion after finding the first prong of a

Brady violation was not met. It concluded the prosecutors did not know of

Rowan’s diminished capacity at the time of trial. The only evidence Crabbe

offered to suggest knowledge was: (1) the government’s admission that Rowan

was frail and spoke in a low voice in pretrial meetings; (2) the fact that Rowan’s

assistant drove him to the meeting with prosecutors, suggesting he was unable to

drive himself; and (3) the assistant’s testimony that anyone spending “ten

minutes” with Rowan would have known that he was incapacitated. R., Vol. I at

37.

                                        -7-
      The court found Rowan’s physical frailty and the fact that he was driven to

a meeting did not create an inference that the government knew of his alleged

mental condition. The court also dismissed the assistant’s lay opinion as

unconvincing, vague, and contradicted by his subsequent assertion that Rowan

“may have part of the time seemed coherent.” Id. at 36. In addition, the court

pointed to the fact that neither the court, Crabbe’s lawyer, nor Crabbe himself had

observed the alleged incapacity when Rowan testified at his plea hearing and at

trial. This reasoning is persuasive. We conclude the finding that the government

was not aware of Rowan’s condition is not clearly erroneous.

      In an attempt to overcome this difficulty, Crabbe offers an alternative

argument. He contends the government committed a Brady violation in

withholding the specific facts that Rowan appeared frail and spoke in a low voice

during pretrial meetings and that he had a driver. 2 Crabbe asserts knowledge of

these facts would have caused him to investigate Rowan’s competence further,

furnishing him with evidence that would allow him to impeach or exclude

Rowan’s testimony at trial.

      The government undeniably knew of these facts at the time of trial. See id.

at 180–81. But we find this evidence was not material under Brady. Even if

      2
         Crabbe also asserts the government withheld the fact that prosecutors
internally questioned whether Rowan was competent to testify. But the
government vigorously denies that any such internal debate took place, and
Crabbe offers no evidence to support his claim. We therefore do not address this
argument.

                                        -8-
disclosure had led Crabbe to investigate further and discover sufficient evidence

of Rowan’s incompetence to either discredit or exclude his testimony, it is not

reasonably probable that the result of the proceeding would have been different.

Because Rowan’s testimony did not play an important role in the government’s

case against Crabbe, the suppressed evidence does not undermine our confidence

in the jury’s verdict.

      At trial, it was undisputed that Columbine did not remit the withheld

employee funds and that Crabbe filed false 941s omitting information about the

nurse employees. Crabbe’s defense was that he lacked knowledge and intent.

Specifically, he contended his failure to pay the taxes was not “willful,” but

rather the result of Rowan’s stubborn refusal to do so. Crabbe also asserted he

submitted false 941s unintentionally. He claimed that he prepared the 941s

according to Rowan’s instructions to simply open a payroll computer program and

click “print 941s,” and that he did not realize the information for nurse employees

was kept in a separate database, requiring an additional search.

      Rowan offered conflicting testimony, contending it was Crabbe who

initially refused to file the 941s. Rowan also stated that he instructed Crabbe to

generate payroll reports for both the corporate and nurse employees to obtain the

correct figure for the 941s, and that Crabbe deliberately chose to ignore him.

      Although the district court did not address the materiality question directly,

it observed “[a]s the Court’s Opinion and Order denying Mr. Crabbe’s motion for

                                         -9-
a new trial makes clear, it was not necessary to rely on Mr. Rowan’s testimony in

order to support the jury’s verdict against Mr. Crabbe.” Id. at 242 n. 5. In the

referenced order, the court denied Crabbe’s first motion for a new trial based on

insufficiency of evidence. There, the court set forth the evidence supporting

Crabbe’s conviction and concluded that this evidence was sufficient to uphold the

jury’s finding of guilt. In so doing, the court did briefly mention Rowan’s

testimony. But the bulk of its discussion focused on other points of evidence,

largely derived from Crabbe’s own testimony, that suggested guilt.

      We agree it is unlikely the jury relied on Rowan’s testimony in convicting

Crabbe for two reasons. First, Rowan’s testimony lacked credibility. Multiple

witnesses established that Rowan ran Columbine in a despotic manner and

marginalized Crabbe, making Rowan’s claim that it was Crabbe who refused to

file the 941s implausible. We note the prosecutors at trial appear to have reached

the same conclusion; when the government marshaled the evidence against

Crabbe in closing argument, it did not refer to Rowan’s testimony at all. The

government’s only allusion to Rowan’s testimony occurred in rebuttal, when one

prosecutor stated “I’m not saying Rowan is a good guy. You saw what I saw.

It’s absurd even to suggest that.” R., Vol. XXIV at 58.

      And second, the government presented significant evidence, independent of

Rowan’s testimony, suggesting Crabbe had the requisite knowledge and intent.

This evidence included the following:

                                        -10-
      (1) Crabbe’s own testimony that he wished to structure the business so that

no employment taxes would have to be paid for the nurses, and that he only

reluctantly accepted the advice that this would be impossible;

      (2) testimony that Crabbe was aware of Columbine’s mounting unpaid tax

liabilities, but took only occasional and mostly ineffectual steps to address the

problem;

      (3) evidence that during the years that Crabbe knew about the company’s

unpaid tax liability, he personally withdrew hundreds of thousands of dollars in

profit from Columbine;

      (4) Crabbe’s admission that when he prepared the past due 941s, he did so

without consulting with the company’s accountant, the company’s tax attorney,

the corporate employees ostensibly responsible for filing 941s, or the IRS;

      (5) documentary evidence showing that immediately before and during the

time that Crabbe filed the inaccurate 941s, he also saw and signed tax forms that

Columbine filed with the State of Colorado that had information obviously

inconsistent with the 941s;

      (6) testimony that Crabbe was advised by employees that their taxes were

not being properly credited;

                                         -11-
      (7) the fact that two of the false 941s listed Columbine’s “number of

employees” as 21 and 31 respectively, at a time when Columbine employed over

100 employees; 3 and

      (8) Crabbe’s admission that after he learned of his error in filing the 941s,

he took no action to ensure that the amended forms were filed for more than a

year and a half, even though he knew little progress was being made, and that he

only followed up upon learning that Columbine was the subject of a criminal

investigation.

      Given the limited value of Rowan’s testimony and the weight of the

evidence against Crabbe, we find it is not reasonably probable that any

information discrediting Rowan would have changed the “result of the

proceeding.” Crabbe is therefore unable to satisfy Brady’s materiality

requirement. We affirm the district court’s finding that the government did not

commit a Brady violation by withholding material exculpatory evidence. 4

      3
         Crabbe claimed that he did not prepare these particular 941s, and that he
only signed them without reading them. But the envelope to the IRS was made
out in his handwriting, and Crabbe admitted to preparing the other 941s submitted
during this time.
      4
          In arguing that Rowan’s evidence was material, Crabbe points to the
government’s statement in a 5K1.1 motion for a downward departure in Rowan’s
sentence. The motion states Rowan’s testimony was “helpful” and “highlight[ed]
important points in the Government’s case.” R., Vol. III, Doc. 241 at 3. Despite
this statement, the government is not judicially estopped from asserting here that
Rowan’s testimony was not essential for conviction. The two positions are not
clearly inconsistent, as Rowan’s testimony may have been helpful without being
                                                                      (continued...)

                                        -12-
      B. Motion For a New Trial Based on Newly Discovered Evidence

      Crabbe also contends the district court erred in denying his motion for a

new trial based on the newly discovered evidence of Rowan’s incompetence.

      Ordinarily, we review such a denial for abuse of discretion. Erickson, 561

F.3d at 1163. Denial of a new trial is abuse of discretion only where it is

“arbitrary, capricious, whimsical, or manifestly unreasonable.” United States v.

Redcorn, 528 F.3d 727, 745 (10th Cir. 2008) (quotations omitted). Here,

however, while both parties briefed the district court on the issue, the court did

not address it directly in its order. The court’s denial of the motion for a new

trial appears to have been solely on the ground that the government did not

commit a Brady violation or fraud upon the court.

      Although the district court erred in failing to address this question, we may

nonetheless affirm if we find Crabbe’s argument had no merit. “We may affirm

the rulings of the lower court on any ground that finds support in the record, even

where the lower court reached its conclusions from a different or even erroneous

course of reasoning.” United States v. Ledford, 443 F.3d 702, 707 (10th Cir.

2005) (quotation omitted). We will exercise that discretion where, as here, “the

parties have identified the issue, [] they have had an opportunity to make

      4
        (...continued)
necessary. See Johnson v. Lindon City Corp., 405 F.3d 1065, 1069 (10th Cir.
2005) (stating that, to show judicial estoppel, “a party’s later position must be
clearly inconsistent with its earlier position” (quotation omitted)).

                                         -13-
arguments to us concerning it, and [] no further factual development is necessary

to resolve it.” United States v. Pursley, 577 F.3d 1204, 1224 (10th Cir. 2009).

          A motion for a new trial based on newly discovered evidence is analyzed

under a five part test. United States v. Quintanilla, 193 F.3d 1139, 1147 (10th

Cir. 1999). To prevail, the defendant must show: (1) the evidence was

discovered after trial, (2) the failure to learn of the evidence was not caused by

the defendant’s own lack of diligence, (3) the new evidence is not merely

impeaching, (4) the new evidence is material to the principal issues involved, and

(5) the new evidence would probably produce an acquittal in a new trial. Id.

          The parties do not dispute that the first and second prongs of this test are

met here. And we agree with Crabbe that the newly discovered evidence is not

merely impeaching; Crabbe may well have been successful in excluding Rowan’s

testimony on grounds of incompetence if he had possessed the information in the

forensic psychiatrist’s report. The psychiatrist’s conclusion that Rowan had

fluctuated between delirium and lucidity since March of 2007 obviously

implicates his testimony in February of 2008.

          But for the same reasons discussed above, we find the newly discovered

evidence of Rowan’s incompetence would probably not result in an acquittal in a

new trial. There is sufficient evidence on the record independent of Rowan’s

testimony for a jury to conclude Crabbe possessed the necessary knowledge and

intent.

                                             -14-
      C. Motion for Discovery

      Finally, Crabbe challenges the district court’s denial of his motion for

discovery to support his pursuit of a new trial. We review discovery rulings for

abuse of discretion. Regan-Touhy v. Walgreen Co., 526 F.3d 641, 647 (10th Cir.

2008). “[W]here specific allegations before the court show reason to believe that

the petitioner may, if the facts are fully developed, be able to demonstrate that he

is entitled to a new trial, it is the duty of the court to provide the necessary

facilities and procedures for an adequate inquiry.” United States v. Velarde, 485

F.3d 553, 560 (10th Cir. 2007).

      The district court denied Crabbe’s request to depose Rowan’s attorney in

part because there was nothing in his ex parte motion to suggest that his

testimony would bear on the prosecutors’ knowledge of Rowan’s incompetence.

This ruling was clearly based on the court’s understanding that Crabbe’s motion

for a new trial was rooted only in his claim that the prosecutors committed a

Brady violation. But, as noted above, Crabbe also sought a new trial on the

grounds of newly discovered evidence. Because a defendant pursuing a new trial

on this theory need not show the prosecutor had knowledge of the new evidence,

the court’s ruling was insufficient.

      Nonetheless, we find the attorney’s testimony would not aid Crabbe in

obtaining a new trial under either the Brady or the newly discovered evidence

theory. As discussed above, Crabbe’s motion for a new trial fails on both counts

                                          -15-
because he cannot show the information was material or any likelihood that he

would have been acquitted if Rowan’s testimony were excluded. The attorney’s

evidence, which would bear only on the question of whether Rowan’s testimony

should have been excluded, would not address this issue.

      Accordingly, we affirm the district court’s denial of the motion.

                                 III. Conclusion

      For the foregoing reasons, we AFFIRM the judgment of the district court.

                                               ENTERED FOR THE COURT

                                               Timothy M. Tymkovich
                                               Circuit Judge

                                        -16-