Court Opinion

ID: 2726970
Source: CourtListenerOpinion
Date Created: 2014-09-08 21:10:25.256093+00
Date Added: 2024-06-11T10:03:12.822845
License: Public Domain

FOR PUBLICATION
                                                                    Jul 15 2013, 6:06 am

ATTORNEY FOR APPELLANT:                      ATTORNEYS FOR APPELLEE:

DARREN BEDWELL                               GREGORY F. ZOELLER
Indianapolis, Indiana                        Attorney General of Indiana

                                             IAN MCLEAN
                                             Deputy Attorney General
                                             Indianapolis, Indiana

                             IN THE
                   COURT OF APPEALS OF INDIANA

TUAN CHU,                                    )
                                             )
      Appellant-Defendant,                   )
                                             )
             vs.                             )      No. 49A04-1210-CR-495
                                             )
STATE OF INDIANA,                            )
                                             )
      Appellee-Plaintiff.                    )

                   APPEAL FROM THE MARION SUPERIOR COURT
                        The Honorable Sheila A. Carlisle, Judge
                          Cause No. 49G03-1104-FC-26910

                                    July 15, 2013

                             OPINION - FOR PUBLICATION

BARNES, Judge
                                     Case Summary

       Tuan Chu appeals his convictions for three counts of Class D felony evasion of

income tax, three counts of Class D felony theft, and one count of Class D felony failure

to remit or collect sales tax. We affirm.

                                            Issue

       Chu raises one issue, which we restate as whether double jeopardy principles bar

his convictions because the Indiana Department of Revenue (“the Department”) had

already imposed nonpayment penalties for his failure to pay taxes.

                                            Facts

       Chu operated a glass repair business and did not pay state and local income taxes

or remit sales tax that he collected from customers. In April 2011, the Department issued

fifteen “RECORD OF JEOPARDY FINDINGS” for unpaid sales tax from 2004 through

2011 and unpaid income tax from 2004 through 2009. Ex. E. These notices informed

Chu that he owed the unpaid taxes, interest, and nonpayment penalties. The nonpayment

penalties assessed were 100% of the unpaid taxes.          Corresponding “JEOPARDY

ASSESSMENT NOTICE AND DEMANDS” were also issued. Id. Tax warrants were

issued and, on May 2, 2011, a judgment was entered against Chu in the amount of

$280,326.32.

       In the meantime, on April 18, 2011, the State charged Chu with Class C felony

corrupt business influence, three counts of Class D felony evasion of income tax, nine

counts of Class D felony theft, and four counts of Class D felony failure to remit or

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collect taxes. All of the criminal charges were based on conduct that occurred from 2007

through 2009. The State also alleged that Chu was an habitual offender.

        On August 16, 2012, following a bench trial, Chu was found guilty and convicted

of three counts of Class D felony evasion of income tax, three counts of Class D felony

theft, and one count of Class D felony failure to remit or collect sales tax.1 Chu was also

found to be an habitual offender. Chu now appeals.

                                               Analysis

        Chu argues that the nonpayment penalties and his criminal convictions violate

double jeopardy. Initially, the State asserts that any double jeopardy argument is waived

because Chu did not raise it at trial and did not frame it as fundamental error on appeal.

The State also acknowledges, however, that double jeopardy issues have been addressed

sua sponte by our supreme court. See e.g., Logan v. State, 729 N.E.2d 125, 136 (Ind.

2000). Because of our preference for resolving issues on their merits, we choose to

address Chu’s double jeopardy claim as raised on appeal. See Perry v. State, 956 N.E.2d

41, 51 (Ind. Ct. App. 2011).

        Chu argues that, because he was assessed the nonpayment penalties and convicted

of tax-related crimes, he was improperly punished twice for the same conduct. 2 Chu

1
   Chu was found not guilty of the corrupt business influence charge and six of the theft charges, and the
trial court vacated three of the failure to remit or collect taxes convictions on double jeopardy grounds.
2
   In his opening brief, Chu urges us to hold that “the criminal prosecution was barred by the state and
federal constitutional prohibitions against double jeopardy . . . .” Appellant’s Br. p. 14. Chu also
references the prohibitions against double jeopardy in the 5th Amendment to the United States
Constitution and Article 1, Section 14 of the Indiana Constitution. Chu cites several United States
Supreme Court cases and relies primarily on Bryant v. State, 660 N.E.2d 290 (Ind. 1995), which was
                                                    3
relies on Bryant v. State, 660 N.E.2d 290 (Ind. 1995), cert. denied, to support his

argument that the tax penalty was a punishment. In Bryant, our supreme court addressed

whether imposing both civil and criminal sanctions for the failure to pay the Indiana

Controlled Substance Excise Tax (“CSET”) violated the Double Jeopardy Clause of the

5th Amendment to the United States Constitution.

        Specifically, after police found over 250 marijuana plants, marijuana seeds, dried

marijuana, and drug paraphernalia in Bryant’s home, the Department assessed a $83,680

tax based on the weight of the marijuana. The Department agent met with Bryant and

demanded payment. Because Bryant did not pay the CSET, the Department demanded

that he pay the CSET plus a 100% penalty for nonpayment, for a total obligation of

$167,360. The next day, the Department of Revenue levied Bryant’s bank accounts and

seized his home. The State then charged Bryant with failure to pay the CSET, a Class D

felony, and other marijuana-related offenses, and Bryant was convicted as charged.

        In determining whether the assessment of the CSET and its nonpayment penalty

and the conviction for nonpayment violated the 5th Amendment, our supreme court

explained:

                      Jeopardy is, in its constitutional sense, a technical term
                which has traditionally applied only to criminal prosecutions.

based solely on 5th Amendment double jeopardy principles. See Bryant, 660 N.E.2d at 295 n.12 (noting
that Bryant presented “no viable state constitutional basis for his appeal.”).
          In his reply brief, Chu clarifies that his claim is based on the Indiana Constitution and Indiana
precedent, and not on the 5th Amendment. Specifically, Chu asks us to hold that he “was subjected to
Bryant jeopardy when the State assessed the tax penalties against him” and to apply the actual evidence
test of Richardson v. State, 717 N.E.2d 32 (Ind. 1999). Reply Br. p. 4. Because Chu’s argument, even as
it is framed in his reply brief, depends on Bryant’s analysis of 5th Amendment double jeopardy principles,
we reject Chu’s assertion that his claim is based solely on the Indiana Constitution.

                                                    4
             Evans v. Brown, 109 U.S. 180, 3 S. Ct. 83, 27 L.Ed. 898
             (1883). Departing from this historical rule, however, the U.S.
             Supreme Court has held in recent years that particular
             forfeitures, civil fines and financial exactions can be
             “jeopardies.” Montana Dep’t of Revenue v. Kurth Ranch,
             511 U.S. 767, 114 S. Ct. 1937, 128 L.Ed.2d 767 (1994);
             United States v. Halper, 490 U.S. 435, 109 S.Ct. 1892, 104
             L.Ed.2d 487 (1989). Cf. Austin v. United States, 509 U.S.
             602, 113 S. Ct. 2801, 125 L.Ed.2d 488 (1993).               In
             determining whether a jeopardy has occurred, the Court has
             said that the sanction’s label of “criminal” or “civil” is not
             controlling. Halper, 490 U.S. at 447, 109 S. Ct. at 1901; see
             also United States v. Haywood, 864 F. Supp. 502, 506
             (W.D.N.C.1994) (description of sanction as “civil” does not
             foreclose possibility it is a jeopardy). Rather, the test is
             whether the civil sanction constitutes a “punishment.” Kurth
             Ranch, 511 U.S. at –, 114 S. Ct. at 1946. When the sanction
             serves the goals of punishment rather than the remedial
             purposes of compensating the government for its loss, it is a
             “punishment” and thus a “jeopardy” within the Double
             Jeopardy Clause. Id. The sanction’s essence as a punishment
             can be identified “only by assessing the character of the
             actual sanctions imposed on the individual by the machinery
             of the state.” Halper, 490 U.S. at 447, 109 S. Ct. at 1901.

Bryant, 660 N.E.2d at 295-96. In determining whether the CSET’s civil sanction was a

punishment, the Bryant court applied the four-factor test used by the Supreme Court in

Department of Revenue of Montana v. Kurth Ranch, 511 U.S. 767, 773, 114 S. Ct. 1937,

1943 (1994), which required the examination of the tax’s deterrent purpose (as opposed

to revenue purpose), its high rate, its prerequisite of the commission of a crime before

assessment, and the nature of the tax. Id. at 296. The Bryant court ultimately concluded,

“the assessment of the CSET and its 100 percent penalty against Bryant was a

punishment and thus a jeopardy.” Id. at 297.

                                           5
         Both Bryant and Kurth Ranch, however, rely heavily on the Supreme Court’s

decision in United States v. Halper, 490 U.S. 435, 109 S. Ct. 1892 (1989), which has

since been abrogated by Hudson v. United States, 522 U.S. 93, 118 S. Ct. 488 (1997).

The Hudson court specifically granted certiorari “because of concerns about the wide

variety of novel double jeopardy claims spawned in the wake of Halper.” Hudson, 522

U.S. at 98, 118 S. Ct. at 493. The Hudson court held, “[w]e believe that Halper’s

deviation from longstanding double jeopardy principles was ill considered.                      As

subsequent cases have demonstrated, Halper’s test for determining whether a particular

sanction is ‘punitive,’ and thus subject to the strictures of the Double Jeopardy Clause,

has proved unworkable.” Id. at 101-02, 118 S. Ct. at 494 (footnote omitted). The

Hudson court then applied the traditional double jeopardy principles exemplified in

United States v. Ward, 448 U.S. 242, 248-49, 100 S. Ct. 2636, 2641-42 (1980), to

determine that administratively imposed monetary penalties and occupational disbarment

for the violation of federal banking statutes and later criminal indictments for essentially

the same conduct did not violate the Double Jeopardy Clause of the 5th Amendment.3 Id.

at 102-03, 118 S. Ct. at 494-95.

3
    The Hudson court described the Ward test as follows:

                           Whether a particular punishment is criminal or civil is, at least
                 initially, a matter of statutory construction. . . . A court must first ask
                 whether the legislature, “in establishing the penalizing mechanism,
                 indicated either expressly or impliedly a preference for one label or the
                 other.” Ward, 448 U.S., at 248, 100 S. Ct., at 2641. Even in those cases
                 where the legislature “has indicated an intention to establish a civil
                 penalty, we have inquired further whether the statutory scheme was so
                 punitive either in purpose or effect,” id., at 248–249, 100 S. Ct., at 2641,
                 as to “transfor[m] what was clearly intended as a civil remedy into a
                                                      6
        Although the State analyzes the nonpayment penalties under Hudson to argue that

the subsequent convictions do not violate double jeopardy, Chu provides no argument

that the imposition of the nonpayment penalties and the criminal convictions violate

double jeopardy under Hudson. Instead, in his reply brief, Chu asserts that Bryant’s

holding has not been overturned and urges us to apply it as part of an Indiana

constitutional analysis. To the extent Hudson now controls the 5th Amendment analysis,

we decline to make a Hudson-based argument on Chu’s behalf, and Chu has not carried

his burden to the extent he raises a claim based on the 5th Amendment. See State v.

Peters, 921 N.E.2d 861, 867 (Ind. Ct. App. 2010) (explaining that we are a neutral arbiter

of disputes and not an advocate for either party).

        Even if we assume Bryant is still good law and is applicable in determining

whether a civil sanction is a punishment for Indiana double jeopardy purposes, we are not

                criminal penalty,” Rex Trailer Co. v. United States, 350 U.S. 148, 154,
                76 S. Ct. 219, 222, 100 L.Ed. 149 (1956).
                         In making this latter determination, the factors listed in Kennedy
                v. Mendoza–Martinez, 372 U.S. 144, 168-169, 83 S. Ct. 554, 567-568, 9
                L.Ed.2d 644 (1963), provide useful guideposts, including: (1) “[w]hether
                the sanction involves an affirmative disability or restraint”; (2) “whether
                it has historically been regarded as a punishment”; (3) “whether it comes
                into play only on a finding of scienter ”; (4) “whether its operation will
                promote the traditional aims of punishment-retribution and deterrence”;
                (5) “whether the behavior to which it applies is already a crime”; (6)
                “whether an alternative purpose to which it may rationally be connected
                is assignable for it”; and (7) “whether it appears excessive in relation to
                the alternative purpose assigned.” It is important to note, however, that
                “these factors must be considered in relation to the statute on its face,”
                id., at 169, 83 S.Ct., at 568, and “only the clearest proof” will suffice to
                override legislative intent and transform what has been denominated a
                civil remedy into a criminal penalty, Ward, supra, at 249, 100 S. Ct., at
                2641-2642 (internal quotation marks omitted).

Hudson, 522 U.S. at 99-100, 118 S. Ct. at 493.

                                                     7
convinced the nonpayment penalties assessed to Chu are punishments. As an initial

matter, in Bryant, our supreme court considered the CSET and the nonpayment penalty

together as one sanction when determining whether they constituted a punishment for

double jeopardy purposes. See Bryant, 660 N.E.2d at 295 n.11, n.13. Here, however,

Chu concedes that the underlying sales and income taxes are revenue generating and not

punitive and bases his argument on the assessment of the nonpayment penalties alone.

Thus, the nature of the civil sanction at issue here is significantly different than the civil

sanction Bryant faced.

       Even in applying the four-part test used in Bryant, we are not persuaded that the

nonpayment penalties are punishments for double jeopardy purposes.                As for the

deterrent purpose, although the assessment of a nonpayment penalty does serve a

deterrent purpose because it encourages individuals to timely pay their taxes to avoid the

imposition of a penalty, the Supreme Court has acknowledged “that all civil penalties

have some deterrent effect.” Hudson, 522 U.S. at 102, 118 S. Ct. at 494. Further,

because of the legitimate revenue generating purpose of the underlying taxes, the

government has a significant interest in individuals timely paying those taxes.

       Regarding the rate of the nonpayment penalties, although Chu compares it to the

maximum fines imposed for the commission of a felony, he makes no argument

comparing the rate of the nonpayment penalties to other tax penalties or to other civil

sanctions. Without more, we are not convinced that the rate of the 100% nonpayment

penalties alone is such that it constitutes a punishment.

                                              8
       As for the prerequisite of the commission of a crime before a nonpayment penalty

may be imposed, we disagree with Chu’s bare assertion that the imposition of the

nonpayment penalties “was conditioned on the commission of a crime . . . .” Appellant’s

Br. p. 13. Although the failure to pay the taxes also may have been a violation of a

criminal statute, there is no indication that the Department’s assessment of the

nonpayment penalties was dependent of the State’s decision to prosecute Chu for the

failure to pay the taxes. Cf. Bryant, 660 N.E.2d at 296-97 (observing that the CSET is

only assessed when police contact the Department of Revenue to report an individual

who was in custody for the delivery, possession, or manufacture of a controlled

substance).

       Finally, although Chu does not specifically address the nature of the nonpayment

penalty, he does argue that the Department’s use of jeopardy assessments suggests it was

punitive. “Jeopardy assessments are a powerful collection tool that, when properly used,

further the important state interest of collecting state tax revenue needed to pay for

critical governmental services and conducting the business of the state.” Garwood v.

Indiana Dep’t of State Revenue, 953 N.E.2d 682, 690 (Ind. T.C. 2011), trans. denied.

“[O]ur Legislature very narrowly tailored the Department’s jeopardy assessment power to

further the essential state interest of exercising its power to tax when collection is at risk.”

Id. at 686. In Garwood, the court suggested, “the Department wielded the power of

jeopardy assessments as a sword to eliminate a socially undesirable activity and close

down a suspected ‘puppy mill,’ not to fill the State’s coffers with the tax liabilities the

Garwoods purportedly owed.” Id. at 690 (footnote omitted). Chu, however, does not

                                               9
explain what socially undesirable activity the Department was seeking to eliminate when

it issued the jeopardy assessments against him, nor does he assert that the jeopardy

assessments were issued in the absence of the necessary statutory requirements. See id.

Without more, we are not convinced that the issuance of jeopardy assessments rendered

the nonpayment penalties punitive.

       As such, Chu has not shown that the nonpayment penalties were punishments for

double jeopardy purposes. Even if Chu had made such a showing, we are not convinced

that Chu would be entitled to relief under the Indiana Constitution.

       In Richardson v. State, 717 N.E.2d 32, 43-44 (Ind. 1999), our supreme court

clarified the proper analysis for double jeopardy challenges under the Indiana

Constitution and held that two or more offenses are the “same offense” “if, with respect

to either the statutory elements of the challenged crimes or the actual evidence used to

convict, the essential elements of one challenged offense also establish the essential

elements of another challenged offense.” Jones v. State, 812 N.E.2d 820, 823-24 (Ind.

Ct. App. 2004). In Jones we considered whether the Richardson analysis could be

properly applied to a civil contempt sanction and a criminal conviction. Id. at 824. As

Chu acknowledges, in Jones we held:

                     After carefully reviewing the language used by the
              supreme court in the Richardson opinion and considering its
              analysis, we conclude that it is not applicable to a fact pattern
              such as that with which we are faced today. Jones’ double
              jeopardy challenge focuses on one criminal conviction and
              one civil contempt sanction, not on two statutorily defined
              crimes. Jones was held in contempt of court for failing to pay
              child support after having been ordered to do so; he was not
              convicted pursuant to a statutorily defined crime. Indiana

                                             10
             Code Section 31-14-12-3 provides, “If the court finds that a
             party is delinquent as a result of an intentional violation of an
             order for support, the court may find the party in contempt of
             court.” This section merely grants authority to the trial court,
             in its discretion, to find a party in contempt of court for
             failing to pay child support. It does not create a “statutorily
             defined crime” as contemplated by the analysis set forth in
             Richardson. Richardson, 717 N.E.2d at 49.

Jones, 812 N.E.2d at 824-25. Although Chu asks us to revisit Jones because it elevates

form over substance, we stand by the reasoning in Jones. Accordingly, because the

nonpayment penalties are not statutorily defined crimes as contemplated in Richardson,

Chu has not established that the imposition of the nonpayment penalties and the

subsequent criminal convictions violate Richardson’s actual evidence test and are barred

by the Indiana Constitution.

                                       Conclusion

      Chu has not shown that the assessment of nonpayment penalties and the criminal

convictions violate United States or Indiana double jeopardy principles. We affirm.

      Affirmed.

NAJAM, J., and BAILEY, J., concur.

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