Court Opinion

ID: 217701
Source: CourtListenerOpinion
Date Created: 2011-05-31 14:07:05+00
Date Added: 2024-06-11T17:28:33.555039
License: Public Domain

[DO NOT PUBLISH]

               IN THE UNITED STATES COURT OF APPEALS

                        FOR THE ELEVENTH CIRCUIT
                         ________________________           FILED
                                                   U.S. COURT OF APPEALS
                                No. 10-14112         ELEVENTH CIRCUIT
                            Non-Argument Calendar        MAY 31, 2011
                          ________________________        JOHN LEY
                                                           CLERK
                  D.C. Docket No. 5:09-cr-00044-WTH-GRJ-1

UNITED STATES OF AMERICA,

                                                                  Plaintiff-Appellee,

                                      versus

MARK S. MAGGERT,

                                                             Defendant-Appellant.

                          ________________________

                   Appeal from the United States District Court
                       for the Middle District of Florida
                         ________________________

                                 (May 31, 2011)

Before HULL, MARCUS and FAY, Circuit Judges.

PER CURIAM:

      After a jury trial, Mark S. Maggert appeals his convictions and sentences for

attempted tax evasion, in violation of 26 U.S.C. § 7201. After review, we affirm.
                           I. BACKGROUND FACTS

A.    Offense Conduct

      Maggert, a dentist, worked for several dental offices as an independent

contractor. In 1998, Maggert and his wife attended a seminar by American Rights

Litigators (“ARL”) and Eddie Kahn at which they were told they did not have to

pay federal income tax. Maggert relayed this information to his accountant, who

counseled Maggert against ARL’s advice and ended their professional relationship

when Maggert persisted. Maggert dissolved his professional association, Mark S.

Maggert, D.D.S., P.A., and, from 1998 to 2005, did not file a federal tax return or

pay federal income tax.

      Beginning in 2002, Maggert instructed the accountants for the dental offices

where he worked to make his paychecks payable to Total Business Systems, LLC,

a Florida corporation, or to Mark’s Word of Faith International, a Nevada

corporation. The accountants complied and issued Form 1099s, using the

corporate identification numbers for these organizations rather than Maggert’s

social security number. Maggert deposited the paychecks into accounts he opened

in these organization’s names and withdrew money from the accounts on a regular

basis (over $40,000 in 2002, over $52,000 in 2003, $178,000 in 2004 and

$128,000 in 2005, for a total of $398,600).

                                         2
       The articles of organization for Total Business Systems, LLC identified the

managing member as Geneva Holdings, Inc., in Australia and the registered agent

as Ronald Saltzer. The articles of organization were signed by Saltzer and Alan R.

Horne, the “Director” of Geneva Holdings, Inc. Saltzer admitted that he knew

nothing about Total Business Systems, LLC or Geneva Holdings, Inc., and had

never met Maggert or Horne. Saltzer had agreed to act as the registered agent and

sign the articles of incorporation in exchange for a meal provided by Eddie Kahn.

       The articles of incorporation for Mark’s Word of Faith International listed

Maggert as the “Presiding Patriarch (Overseer).” Maggert’s wife signed the

articles of incorporation as a witness and “Scribe.” Maggert’s wife admitted there

was no such religious organization and that Maggert was not a spiritual leader or

priest.1

       Additionally, Maggert gave powers of attorney to two individuals

associated with ARL, Bryan Malatesta, a certified public accountant, and Milton

Baxley, an attorney. A former ARL employee testified that although she had seen

       1
         In 2004, Maggert formed a Nevada corporation also called Total Business Systems LLC.
The articles of incorporation listed “Mark S. Maggert, DDS” with a Las Vegas address as the
“manager.” A separate list of initial members also identified Maggert’s wife as a manager and
Mark’s Word of Faith International as a member.

                                             3
Malatesta and Baxley at ARL once or twice between 1998 and 2003, they were

never with clients and did not have office space at ARL.

B.    Criminal Investigation

      Michael Anderson, a special agent with the IRS Criminal Investigation

Division, participated in an investigation of ARL and executed a search warrant at

ARL’s Florida business location. According to Agent Anderson, ARL maintained

records for its “clients,” but did not have any tax accounting software or the

documents a CPA would need to represent someone before the IRS. None of

ARL’s records indicated that either CPA Malatesta or attorney Baxley maintained

a professional relationship with ARL’s clients. Instead, ARL paid Malatesta and

Baxley solely for the use of their names. ARL’s correspondence sent to the IRS

was generated by ARL employees.

      From 1999 to 2005, the IRS sent Defendant Maggert letters advising him of

his federal tax obligations, warning him of possible criminal sanctions and

attempting to set up appointments to meet with Maggert. Through ARL, Maggert

sent the IRS correspondence, often stamped with the signature of CPA Malatesta

or attorney Baxley. That correspondence asserted that Maggert had no obligation

to file a federal income tax return or pay federal income taxes and that the IRS did

not have the authority to investigate or determine Maggert’s tax liability.

                                          4
      Based on financial information from its investigation, the IRS computed

Maggert’s taxable income for the years 2002 to 2005 and calculated that Maggert

owed the following federal income taxes: at least $51,538 in 2002; at least

$50,316 in 2003; at least $101,570 in 2004 and at least $90,464 in 2005.

C.    Trial Date Continued

      A federal grand jury indicted Maggert on four counts of attempt to evade

and defeat the federal income tax for the years 2002 through 2005. At his

September 28, 2009 initial appearance, Maggert stated he planned to obtain

counsel. When Maggert appeared without counsel at his October 16, 2009

arraignment, the district court gave Maggert two more weeks to find counsel.

      At an October 30, 2009 hearing, Maggert still had not obtained counsel and

indicated he wished to represent himself. The district court gave Maggert

appropriate warnings about his decision and found that Maggert’s decision to

proceed pro se was knowing and voluntary. The district court appointed standby

counsel that same day.

      The district court originally set trial for January 11, 2010, but granted

Maggert a 60-day continuance to hire counsel and prepare a defense. The district

court reset trial for March 15, 2010. The district court warned Maggert that: (1)

the trial date was firm, (2) no additional continuances would be granted and (3) if

                                          5
Maggert was unable to obtain counsel, he would be expected to proceed pro se on

that date with the aid of standby counsel.

      On March 15, 2010, Maggert failed to appear at trial. Standby counsel

advised the court she had no contact with Maggert prior to trial. With the jury

panel standing by, the district court issued a warrant for Maggert’s arrest and

recessed while the U.S. Marshal Service located Maggert that day.

D.    Trial

      Later that day, the parties selected a jury and gave opening statements. The

next day, the government called its first witness, an IRS custodian of records.

After the government finished its direct examination, Maggert informed the court

that he wanted standby counsel to conduct cross-examination. The district court

advised Maggert that he could either represent himself or standby counsel could

represent him, but not both. After a short recess, Maggert decided to have standby

counsel represent him.

      Standby counsel then moved for a mistrial and for a continuance to allow

her to consult with experts and prepare to defend Maggert. The district court

denied both requests, and the trial recommenced. The jury convicted Maggert on

all counts.

E.    Sentencing

                                          6
      The presentence investigation report (“PSI”): (1) calculated Maggert’s base

offense level as 20, pursuant to U.S.S.G. §§ 2T1.1(a)(1) and 2T4.1(H), based on a

loss amount of more than $400,000 but less than $1 million; and (2) recommended

a two-level sophisticated means enhancement, pursuant to U.S.S.G. § 2T1.1(b)(2),

because Maggert had attempted to hide assets or transactions from the IRS through

the use of fictitious entities. With a total offense level of 22 and a criminal history

category of II, the PSI recommended an advisory guidelines range of 46 to 57

months’ imprisonment.

      Maggert objected to, inter alia, the sophisticated means enhancement.

Maggert argued that his use of corporate entities could not be considered

“sophisticated” because he did not file fraudulent tax returns and the IRS easily

determined his income from 1099s his employers issued and subpoened bank

records.

      At the sentencing hearing, the district court overruled Maggert’s objection

and applied the sophisticated means enhancement. The district court adopted the

PSI’s guidelines calculations and advisory guidelines range of 46 to 57 months.

After considering the 18 U.S.C. § 3553(a) factors, the district court imposed a 42-

month sentence. Maggert appealed.

                                 II. DISCUSSION

                                           7
A.     Denial of Motion for Continuance

       Maggert argues that the district court should have granted his request for a

continuance on the second day of trial when his standby counsel began

representing him.2 “Under certain circumstances, denial of a motion for

continuance of trial may vitiate the effect of” the Sixth Amendment’s right to

counsel to such an extent that it results in a due process violation. United States v.

Valladares, 544 F.3d 1257, 1262 (11th Cir. 2008). “To prevail on such a claim, a

defendant must show that the denial of the motion for continuance was an abuse of

discretion which resulted in specific substantial prejudice” by identifying

“relevant, non-cumulative evidence that would have been presented if [the

defendant’s] request for a continuance had been granted.” Id. (quotation marks

omitted).

       Maggert has not shown an abuse of discretion resulting in specific

substantial prejudice. The district court gave Maggert a two-month continuance

(January 11 to March 15) and almost six months (September 28 to March 15) to

prepare for trial or find counsel. Standby counsel was available for most of that

       2
         Maggert’s brief lists the denial of his motion for a mistrial in its statement of the issues,
but fails to develop any argument regarding this issue. Therefore, we do not address the issue on
appeal. See United States v. Jernigan, 341 F.3d 1273, 1283 n.8 (11th Cir. 2003) (explaining that
an issue was abandoned where the defendant’s brief made only “passing references” to the issue).

                                                  8
time, but Maggert did not seek her assistance. When the district court granted

Maggert’s first continuance request, it warned Maggert that the new trial date was

firm and no further continuances would be granted. Maggert let the trial begin

without raising any concern and did not ask standby counsel to take over until the

second day of trial.

       More importantly, the record reflects that once standby counsel took over,

she was able to cross-examine witnesses, object to evidence and offer objections

to the jury instructions. And, Maggert has not pointed to any relevant, non-

cumulative evidence he would have presented if his second continuance request

had been granted. Under these circumstances, we find no abuse of discretion and

no due process violation.3

B.     Jury Instruction on Elements of Attempted Tax Evasion

       For the first time on appeal, Maggert contends the district court did not

properly instruct the jury on the elements of a § 7201 offense for attempted tax

evasion.

       3
         To the extent Maggert argues that his trial counsel was ineffective, we decline to address
this issue on direct appeal. See United States v. Bender, 290 F.3d 1279, 1284 (11th Cir. 2002)
(explaining that generally we do not consider ineffective assistance of counsel claims on direct
appeal where the district court did not address the claim and develop the factual record).

                                                 9
      At trial, the district court instructed the jury that the defendant could be

found guilty of attempted tax evasion “only if all of the following facts are proved

beyond a reasonable doubt: first, that the defendant owed substantial income tax

upon income that was not declared in a tax return for the year in question and,

second, that the defendant knowingly and willfully attempted to evade or defeat

such tax.” The district court further instructed that “[t]he word ‘attempted’

contemplates that the defendant had knowledge and an understanding that during

the particular tax year involved he had income which was taxable and which he

was required by law to report but that he, nevertheless, tried or endeavored -- that

is, attempted -- to evade or defeat the tax or a substantial portion of the tax on that

income by willfully failing to report all of the income which he knew he had

during that year.”

      Maggert argues, and the government concedes, that the district court

omitted from its instruction that it was necessary to find an affirmative act of

attempted evasion. See United States v. Kaiser, 893 F.2d 1300, 1305 (11th Cir.

1999) (“The elements of tax evasion under § 7201 are: (1) willfulness; (2)

existence of a tax deficiency; and (3) an affirmative act constituting an evasion or

                                          10
attempted evasion of the tax.”).4 Because Maggert did not object to the jury

instruction in the district court, however, our review is for plain error only. United

States v. Felts, 579 F.3d 1341, 1343 (11th Cir. 2009). “Jury instructions will not

be reversed for plain error unless the charge, considered as a whole, is so clearly

erroneous as to result in a likelihood of a grave miscarriage of justice, or the error

seriously affects the fairness, integrity, or public reputation of judicial

proceedings.” United States v. Starke, 62 F.3d 1374, 1381 (11th Cir. 1995)

(quotation marks omitted). The challenged jury instruction must “be a plainly

incorrect statement of the law” and “probably responsible for an incorrect verdict,

leading to substantial injustice,” such that it misled the jury or left the jury to

speculate as to an essential point of law. United States v. Prather, 205 F.3d 1265,

1271 (11th Cir. 2000).

       4
         The district court modified the Eleventh Circuit’s Pattern Jury Instruction for tax
evasion, which states the elements of the offense as: (1) the defendant owed substantial income
tax in addition to the amount declared on the defendant’s return, (2) the defendant knew when he
filed his return that he owed the substantial amount of income tax, and (3) the defendant intended
to evade paying the taxes he knew he was required to pay. 11th Cir. Pattern Jury Instruction
107.1. In other words, Pattern Jury Instruction 107.1 applies when the defendant filed a tax
return that under-reported his taxable income, which in and of itself would constitute an
affirmative act. See United States v. Uscinski, 369 F.3d 1243, 1247 (11th Cir. 2004) (explaining
that when the tax evasion involves the filing of a fraudulent tax return, the offense is complete
upon filing of the return). Here, because Maggert did not file a tax return at all, the district court
omitted any reference to the filing of a tax return.

                                                 11
       Maggert has not shown plain error. First, it is not clear under our precedent

whether the district court’s instruction even misstated the law. Although the

district court’s instruction did not explicitly state that an affirmative act of evasion

was an element of the offense, the instruction as a whole conveyed to the jury that

it was required to find that Maggert tried to evade paying income taxes by

willfully failing to report that income on a tax return. This Circuit has not directly

addressed whether the willful failure to report taxable income constitutes an

affirmative act of evasion, and at least one former Fifth Circuit case suggests that

it does. See United States v. Buckley, 586 F.2d 498, 504 (5th Cir. 1978) (“Where

one of the affirmative acts of evasion relied upon by the government in proving

attempted tax evasion under the Section 7201 is the failure to file an income tax

return, failure to file [under Section 7203] is a lesser included offense . . . .”).5

Thus, the district court’s instruction was not a plainly incorrect statement of the

law.

       Second, there was overwhelming evidence that Maggert committed

numerous affirmative acts of evasion—creating two corporate entities, opening

bank accounts in the name of those corporate entities, instructing his employers to

       5
        Decisions of the former Fifth Circuit on or before September 30, 1981 are binding
precedent in the Eleventh Circuit. Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.
1981) (en banc).

                                               12
issue his paychecks to those corporate entities, depositing those paychecks into the

corporate entities’ bank accounts and then withdrawing money from those

accounts on a regular basis. Accordingly, we cannot say the district court’s

instruction on the elements of the attempted tax evasion was probably responsible

for an incorrect verdict.

C.     Jury Instruction on Good Faith Reliance on a Professional

       Maggert also challenges the district court’s refusal to give his requested jury

instruction on good faith reliance on professional advice.6 A defendant has a right

to have the jury instructed on his theory of defense if there is “any foundation in

the evidence.” United States v. Ruiz, 59 F.3d 1151, 1154 (11th Cir. 1995). Even

under this extremely low evidentiary burden, however, the instruction must have

“some basis in the evidence.” United States v. Hedges, 912 F.3d 1397, 1405 (11th

Cir. 1990). A district court’s refusal to give a requested jury instruction is

reversible error if “(1) the requested instruction was substantively correct, (2) the

court’s charge to the jury did not cover the gist of the instruction, and (3) the

failure to give the instruction substantially impaired the defendant’s ability to

       6
         “We review a district court’s refusal to give a requested jury instruction for abuse of
discretion.” United States v. Svete, 556 F.3d 1157, 1161 (11th Cir. 2009) (en banc).

                                                 13
present an effective defense.” United States v. Culver, 598 F.3d 740, 751 (11th

Cir.), cert. denied, 131 S. Ct. 336 (2010).

       The good faith reliance defense seeks to “refute the government’s proof that

the defendant intended to commit the offense.” United States v. Kottwitz, 614

F.3d 1241, 1271 (11th Cir.), modified in part on rehearing by 627 F.3d 1383 (11th

Cir. 2010) (quotation marks omitted). To establish the defense, the defendant

must show that he “(1) fully disclosed all relevant facts to the expert and (2) relied

in good faith on the expert’s advice.” Id.

       Here, there was no evidence in the record that Maggert even spoke to

Malatesta, Baxley or any other tax professional, much less sought and relied upon

their advice. There also was no evidence that Maggert provided Malatesta, Baxley

or any other tax professional at ARL the kind of information needed to furnish

professional tax advice. The only evidence in the record indicated that Malatesta

and Baxley did not maintain an office at ARL or meet with ARL’s clients and

were merely paid for the use of their names. Under the circumstances, the district

court’s refusal to give the requested good faith reliance instruction was not an

abuse of discretion.7

       7
        Although the district court refused to instruct the jury on good faith reliance on a
professional, it did instruct the jury that a defendant’s good faith was a valid defense because
good faith “is inconsistent with the element of willfulness which is an essential part of the

                                                 14
D.     Sophisticated Means Enhancement

       Under the advisory guidelines, the defendant’s offense level is increased by

two levels if the tax evasion offense used “sophisticated means.” U.S.S.G.

§ 2T1.1(b)(2). The commentary defines “sophisticated means” as “especially

complex or especially intricate offense conduct pertaining to the execution or

concealment of an offense” and gives as an example hiding assets through the use

of fictitious entities or corporate shells. U.S.S.G. § 2T1.1, cmt. n.4.8

       Here, the district court’s application of the sophisticated means

enhancement was not clear error. To facilitate his tax evasion scheme, Maggert

set up two fictitious entities and used them to try to hide his income. Such

conduct falls squarely within § 2T1.1’s definition of sophisticated means. That

Maggert did not file a tax return and that the IRS ultimately was able to glean

Maggert’s true earnings from Form 1099s submitted by his employers has no

bearing on whether his use of those corporate entities qualified under the advisory

guidelines as sophisticated means.9

charge.”
       8
       We review a district court’s determination that a defendant used sophisticated means to
accomplish tax evasion for clear error. United States v. Clarke, 562 F.3d 1158, 1165 (11th Cir.
2009).
       9
        On appeal, Maggert does not raise any other procedural sentencing error or argue that his
ultimate sentence is substantively unreasonable.

                                               15
For all of these reasons, we affirm Maggert’s convictions and sentences.

AFFIRMED.

                                 16