Court Opinion

ID: 223544
Source: CourtListenerOpinion
Date Created: 2011-08-18 19:03:23+00
Date Added: 2024-06-11T17:29:00.147847
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                             No. 10-4593

UNITED STATES OF AMERICA,

                Plaintiff - Appellee,

          v.

KEVIN JOHN WITASICK,

                Defendant - Appellant.

Appeal from the United States District Court for the Western
District of Virginia, at Danville.   Jackson L. Kiser, Senior
District Judge. (4:07-cr-00030-jlk)

Submitted:   July 29, 2011                 Decided:   August 18, 2011

Before MOTZ, GREGORY, and WYNN, Circuit Judges.

Affirmed by unpublished per curiam opinion.

Jerald C. Thompson, Tempe, Arizona, for Appellant. Frank P.
Cihlar, Gregory Victor Davis, Tax Division, DEPARTMENT OF
JUSTICE, Washington, D.C.; Timothy J. Heaphy, United States
Attorney, Roanoke, Virginia, for Appellee.

Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:

               Kevin      John     Witasick       appeals     his    conviction       and

fifteen-month          sentence     for     two    counts     of    tax    evasion     in

violation of 26 U.S.C. § 7201 (2006), two counts of tax perjury

in violation of 26 U.S.C. § 7206(1) (2006), one count of failure

to file a tax return in violation of 26 U.S.C. § 7203 (2006) and

one count of health care fraud in violation of 18 U.S.C. § 1347

(2006).        He   argues       that   insufficient        evidence    supported     his

convictions and that the trial on the tax counts was infected by

prosecutorial misconduct.               We affirm.

               Briefly, the Government alleged that Witasick, who was

an   attorney       in    the     Arizona     firm    of    Witasick,      Parker,    and

Thompson before moving to Virginia in 1999, owned Stoneleigh, a

historic       property     in    Stanleytown,        Virginia.        While   Witasick

operated an office of the Arizona firm out of Stoneleigh, he

claimed, on his 1999 tax return, that 75% of the (considerable)

funds     he    spent      remodeling       and      renovating     Stoneleigh       were

deductable as business expenses.                  In 2000, he claimed that 100%

of the expenses were deductable.                     He filed no tax return in

2001.     The resulting tax loss alleged by the Government was over

$100,000.

               At   the    same     time,     Witasick       falsely      claimed    that

Stoneleigh’s        groundskeeper         (and    Witasick’s       personal    trainer)

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Zeke Ca-stle 1 was the property manager of his firm’s Virginia

office, and listed Ca-stle as an employee on his firm’s group

health insurance plan.

                    I.   Insufficient Evidence (Tax Charges)

            Witasick       first      argues     that    insufficient        evidence

supported his convictions for tax evasion, filing a false tax

return, and failure to file.             He argues that he was entitled to

rely on the advice of his accountant and his attorney; in the

alternative, he alleges that the Government adduced no evidence

of tax loss.

            We review de novo challenges to the sufficiency of the

evidence supporting a jury verdict.               United States v. Kelly, 510
F.3d 433, 440 (4th Cir. 2007).                 “A defendant challenging the

sufficiency    of    the   evidence      faces    a     heavy    burden.”      United

States v. Foster, 507 F.3d 233, 245 (4th Cir. 2007).                        We review

a sufficiency of the evidence challenge by determining “whether,

after viewing the evidence in the light most favorable to the

prosecution, any rational trier of fact could have found the

essential   elements       of   the    crime   beyond     a     reasonable    doubt.”

United      States v.           Collins,         412 F.3d 515,       519

     1
       Although the parties use the spelling                         Castle in the
briefs, we have used the spelling Ca-stle                            gave when he
identified himself during the trial.

                                          3
(4th Cir. 2005)(quoting United States v. Fisher, 912 F.2d 728,

730 (4th Cir. 1990)).          We review both direct and circumstantial

evidence, and accord the government all reasonable inferences

from the facts shown to those sought to be established.                     United

States   v.   Harvey,    532 F.3d 326,    333   (4th Cir. 2008).          In

reviewing for sufficiency of the evidence, we do not review the

credibility of the witnesses, and assume that the jury resolved

all contradictions in the testimony in favor of the government.

Kelly, 510 F.3d at 440.           We will uphold the jury’s verdict if

substantial evidence supports it, and will reverse only in those

rare cases of clear failure by the prosecution.                        Foster, 507
F.3d at 244-45.

           In order to establish a violation of 26 U.S.C. § 7201

(2006), the Government must prove that Witasick acted willfully

and “committed an affirmative act that constituted an attempted

evasion of tax payments” and, as a result, “a substantial tax

deficiency existed.”          United States v. Wilson, 118 F.3d 228, 236

(4th Cir. 1997).       Moreover, in order to obtain a conviction for

filing false tax returns and failing to file tax returns, the

Government    must    similarly    prove      that   Witasick’s    actions      were

willful.      See    United    States    v.    Aramony,   88 F.3d 1369,   1382

(4th Cir. 1996)      (filing     false   tax    returns);      United   States    v.

Ostendorff, 371 F.2d 729, 730 (4th Cir. 1967) (failing to file

tax returns).

                                         4
              Willfulness,        in   this         context,       means       a   “voluntary,

intentional violation of a known legal duty.”                                 Cheek v. United

States,   498 U.S. 192,    201      (1991)(quoting              United     States       v.

Bishop, 412 U.S. 346, 360 (1973)).                            A belief, in good faith,

that one has complied with the tax laws negates willfulness and

is therefore a defense, even if the belief is unreasonable.                                  See

id. at 201-02.        In other words, the Government must demonstrate

that   Witasick       did     not      have         a    subjective       belief,        however

irrational or unreasonable, that he was compliant with tax laws.

              “Good   faith       reliance          on    a   qualified       accountant         has

long been a defense to willfulness in cases of tax fraud and

evasion.”        United      States        v.       Bishop,       291 F.3d 1100,     1107

(9th Cir. 2002).            The     good        faith         reliance    defense      is    not

applicable, however, where the defendant has failed to fully and

accurately disclose all relevant tax-related information to the

accountant     upon     whose      advice       the       defendant       claims     reliance.

See, e.g., Bishop, 291 F.3d at 1107; United States v. Masat, 948
F.2d 923,     930   (5th Cir. 1991).                    This    is     so    because      if    a

defendant did not make full disclosure to his accountant, he

likely did not act in good faith.                        See Bishop, 291 F.3d at 1107;

see    also    United       States      v.       DeClue,         899 F.2d 1465,     1472

(6th Cir. 1990) (“A taxpayer who relies on others to keep his

records and prepare his tax returns may not withhold information

                                                5
from those persons relative to taxable events and then escape

responsibility for the false tax returns which result.”).

            We have reviewed the evidence adduced at trial, and we

conclude     that    the    Government        adduced    ample      evidence    of

Witasick’s guilt, and the jury properly concluded that he did

not rely on the advice of his accountant.               In fact, the evidence

reveals that Witasick directed his accountant to over-deduct his

business   expenses,       despite   being     repeatedly    informed    by    the

accountant    that   only     business       expenditures    were    deductable.

Thus, there is no basis in the record for Witasick’s claim that

he relied in good faith on the advice of his tax preparer.

            The same is true of Witasick’s claim with regard to

his failure to file charge.           The evidence shows that Witasick

was not told by his attorney not to file a tax return until more

than a year after the return was due, at which time the offense

was complete.

            Witasick argues in the alternative that the Government

did not adduce admissible evidence of a tax loss.                     We do not

agree.     As discussed above, in order to prove a violation of

§ 7201, the Government must prove, among other elements, “the

existence of a tax deficiency.”              Boulware v. United States, 552
U.S. 421, 424 (2008)(quoting Sansone v. United States, 380 U.S.
343, 351 (1965); see also Wilson, 118 F.3d at 236.                    To show a

tax   deficiency,     the    Government       must   prove   first     that    the

                                         6
taxpayer “had unreported income, and second, that the income was

taxable.”         United    States      v.    Abodeely,       801 F.2d 1020,    1023

(8th Cir. 1986).           The    Government        need   not      prove     the   precise

amount of the tax due and owing.                    United States v. Citron, 783
F.2d 307, 314-15 (2d Cir. 1986).                     To prove a violation of 26

U.S.C. § 7206(a), tax perjury, the Government must prove that

“(1) the    defendant        made       and       subscribed     to     a     tax    return

containing a written declaration; (2) the tax return was made

under penalties of perjury; (3) the defendant did not believe

the return to be true and correct as to every material matter;

and   (4)   the    defendant       acted      willfully.”            United      States        v.

Aramony, 88 F.3d 1369, 1382 (4th Cir. 1996).

            The     gravamen       of   Witasick’s         objection        is    that        the

Government’s       summary       witness,     IRS     agent      Jacqueline         English,

exceeded    the    scope     of   summary         testimony    and    testified          as    an

expert.     We need not resolve this claim, however, as multiple

witnesses testified that the amount of space at Stoneleigh being

used for business purposes was considerably less than 75% and

100% in the tax years 1999 and 2000, respectively.                                Thus, the

Government adduced sufficient evidence that tended to show that

Witasick over-deducted his business expenses, and substantially

so.    Thus, the jury could properly infer that Witasick made

material representations in his tax return that resulted in a

                                              7
tax deficiency.           We therefore affirm his convictions for the

tax-related charges.

         II.    Sufficiency of the Evidence (Health Care Fraud)

               Witasick next argues that there was no evidence that

he   personally       acted    to     place       Ca-stle    on     his   firm’s       health

insurance policy, that he and the law firm were one and the

same, and that this type of case falls outside the scope of 18

U.S.C. § 1347.

               To   prove    health    care       fraud,     the    Government        had   to

prove that Witasick “knowingly and willfully executed a scheme

to defraud any health care benefit program.”                          United States v.

Girod,    Nos.      10-30128,       10-30339,         2011 WL 2675925,        at    *5

(5th Cir. July 11, 2011); see 18 U.S.C. § 1347.                             To prove a

scheme    to    defraud,      the   Government       had     to    show   that    Witasick

“acted    with      the     specific    intent       to     defraud,      which       may   be

inferred from the totality of the circumstances and need not be

proven by direct evidence.”                 United States v. Godwin, 272 F.3d
659, 666 (4th Cir. 2001) (internal quotation marks omitted).                                In

particular, we look to the “common-law understanding of fraud,”

which     includes        “acts     taken     to      conceal,       create       a     false

impression, mislead, or otherwise deceive.”                          United States v.

Colton, 231 F.3d 890, 898 (4th Cir. 2000).

                                              8
             Turning to Witasick’s first claim that there was no

evidence that he directed Ca-stle’s name be placed on the health

care policy, we find the claim belied by the record.                                  Ample

evidence was introduced that showed that Witasick, either alone

or    in   concert    with    his    law   partners,        made   the    decision      to

falsely list Ca-stle as a law firm employee.                       Furthermore, the

Government         adduced      evidence       that         Witasick      made        false

representations       to     representatives         from     Anthem,    the     insurer,

when questioned about Ca-stle’s employment status.                               Thus, we

conclude     that the Government adduced substantial evidence that

Witasick engaged in fraud.

             We also reject Witasick’s argument that he and his law

firm were one and the same at the time the alleged misconduct

occurred.      Anthem’s representative testified that Anthem had a

policy with “Witasick, Parker & Thompson,” the law partnership,

rather      than      with      “Witasick        &     Associates,”         the        sole

proprietorship that existed after Witasick falsely listed Ca-

stle as an employee.            Thus, Witasick’s claim that his personal

employee     could    be     considered    his       firm’s    employee     is    without

merit.

             Finally, we turn to Witasick’s argument that § 1347,

the    statute     under     which    Witasick        was     prosecuted,      does    not

contemplate criminal liability for the activities alleged.                              We

review questions of statutory interpretation de novo.                              United

                                           9
States    v.    Carr,      592 F.3d 636,     639   n.4    (4th Cir. 2010).          In

interpreting         the   scope    of    a   statute,      we    look    first    to   the

language of the statute.                 See North Carolina ex rel. Cooper v.

Tenn. Valley Auth., 515 F.3d 344, 351 (4th Cir. 2008).

               Here,    the      language     of   the   statute       provides    that    a

person is guilty of health care fraud if he:

     knowingly and willfully executes,                          or     attempts   to
     execute, a scheme or artifice--

               (1) to defraud any health care benefit program;
     or

          (2) to obtain, by means of false or fraudulent
     pretenses, representations, or promises, any of the
     money or property owned by, or under the custody or
     control of, any health care benefit program,

     in connection with the delivery of or payment                                for
     health care benefits, items, or services[.]

18 U.S.C. § 1347.             While Witasick seeks to invoke the rule of

lenity that ambiguous criminal statutes must be construed in

favor    of    the     accused,     we    conclude       that    the    statute    is   not

ambiguous.        Witasick was convicted of knowingly making false

statements to Anthem and its representative, and with improperly

listing Ca-stle on the law firm’s group health insurance policy

-- a classic example of a scheme to defraud.                         This conduct falls

squarely within the statute’s ambit, and no further inquiry into

                                              10
the legislative history is required. 2                   Thus, we affirm his health

care fraud conviction.

                            III.     Prosecutorial Misconduct

                Finally, Witasick argues that he was the victim of

prosecutorial misconduct.                  He claims that the prosecutor was

required to present exculpatory evidence to the grand jury and

did    not      do    so.       To      succeed     on   a    claim   of      prosecutorial

misconduct, a defendant must show that the prosecutor’s conduct

was improper and that it “prejudicially affected his substantial

rights so as to deprive him of a fair trial.”                           United States v.

Scheetz, 293 F.3d 175, 185 (4th Cir. 2002).                             “In reviewing a

claim      of    prosecutorial          misconduct,      we     review     the    claim    to

determine        whether       the      conduct     so   infected       the     trial   with

unfairness as to make the resulting conviction a denial of due

process.”       Id. (internal quotation marks omitted).

                Witasick’s argument that the prosecution must present

exculpatory          evidence      to    the   grand     jury    is   similar      to     that

rejected by the Supreme Court in United States v. Williams, 504
U.S. 36,     44-46       (1992).       While     Witasick    seeks      to   distinguish

       2
        Our conclusion is supported by the Second Circuit’s
decision in United States v. Josephberg, 562 F.3d 478 (2d Cir.
2009), a case in which the court affirmed a conviction under §
1347 for conduct virtually identical to that at issue here.

                                               11
Williams,      we    find   his   attempts     unpersuasive.           The    Court   was

emphatic that “[i]mposing upon the prosecutor a legal obligation

to   present        exculpatory    evidence     in     his    possession      would    be

incompatible with [the adversarial] system.”                         Id. at 52.        We

also    find    no    support     in   Witasick’s      claim    that    the    Citizens

Protection Act, 28 U.S.C. § 530B(a) and the Virginia Rules of

Professional Conduct require such disclosure.

               Accordingly, we affirm the judgment of the district

court.      We dispense with oral argument because the facts and

legal    contentions        are   adequately     presented       in    the    materials

before    the    court      and   argument     would    not    aid    the    decisional

process.

                                                                               AFFIRMED

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