Court Opinion

ID: 47958
Source: CourtListenerOpinion
Date Created: 2010-04-25 23:32:49+00
Date Added: 2024-06-11T17:18:10.649299
License: Public Domain

United States Court of Appeals
                                                                Fifth Circuit
                                                             F I L E D
                    UNITED STATES COURT OF APPEALS
                                                             January 12, 2007
                         FOR THE FIFTH CIRCUIT
                                                         Charles R. Fulbruge III
                                                                 Clerk

                             No. 05-10943

     UNITED STATES OF AMERICA,

                                         Plaintiff-Appellee,

                                  v.

     LORI KAY SPURLOCK; JERRY LEWIS POORE,

                                         Defendants-Appellants.

         Appeals from the United States District Court for the
                   Northern District of Texas, Dallas

Before JOLLY, DAVIS, and BENAVIDES, Circuit Judges.

BENAVIDES, Circuit Judge:*

     In 2004, a federal grand jury returned an 11-count indictment

against Jerry Lewis Poore and Lori Kay Spurlock.           Poore and

Spurlock were each indicted on charges of conspiring to defraud the

United States (Count 1), conspiring to commit bankruptcy fraud

(Count 9), and concealing bankruptcy assets (Count 10).              The

government charged Poore alone with three counts of attempting to

     *
      Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
evade and defeat taxes (Counts 2, 4 and 7) and three counts of

failing to file a tax return (Counts 3, 5 and 8).              It charged

Spurlock alone with concealing bankruptcy assets (Count 11).           The

government dropped one count (Count 6) on its own motion.

     A jury found Poore and Spurlock guilty on all remaining

counts. Poore was sentenced to 33 months’ imprisonment followed by

three years of supervised release, along with a concurrent sentence

of 12 months’ imprisonment followed by one year of supervised

release.    Spurlock   was   sentenced   to    27   months’   imprisonment

followed by three years of supervised release. They were also

ordered to pay, joint and severally, $164,002 in restitution.

     Poore and Spurlock contest the sufficiency of the evidence on

several of their convictions.       Spurlock further argues that her

conviction for conspiracy to commit bankruptcy fraud was based on

time-barred evidence, and that she should not have been held

jointly and severally liable for the full restitution amount.

Finding sufficient evidence as to each contested conviction, and no

merit in Spurlock’s two independent arguments, we AFFIRM the

judgments of the district court.

                             I.   BACKGROUND

     The convictions relate to a printing and copying business

Spurlock and Poore operated called Color Laser Institute (“CLI”).

The incriminating facts generally fall under the categories of (1)

tax fraud and evasion, and (2) bankruptcy fraud.

A.   Tax Fraud and Evasion
     CLI   had   two   business   bank   accounts   at    Bank   One—one   for

operations and one for petty cash.          Poore and Spurlock commonly

would pay personal bills out of the operating account at Bank One,

drawing checks for country club fees, mortgage payments, car

payments, lawn service and a down payment on Poore’s second home.

CLI paid some employees in cash and did not pay taxes on those

amounts.

     While CLI’s employees and accountant knew about the Bank One

accounts, Spurlock and Poore also kept a secret account at Bank of

America (“BofA”) on which Poore was the sole signatory.1               Checks

written to CLI were often deposited there, and some companies

wrote CLI checks to Poore personally, which were then deposited in

this account.      The defendants often used the BofA funds for

personal expenses.

     CLI’s   accountant,     Michael     Law,   was      hired   to   perform

compilation services and create CLI’s statements based on financial

data provided to him.       He was not hired to audit or verify the

financial information he received.         Law kept CLI’s books on the

accrual method, whereby income is counted when earned rather than

collected, and expenses are counted when they are incurred rather

than deducted.2    When balancing the books for a company that uses

     1
      While it is not entirely clear, it appears that the
accountant, Michael Law, only knew of the Bank One operating
account and was unaware of the Bank One petty cash account. That
fact is unimportant to the issues at hand, so we focus on Law’s
ignorance of the BofA account.
     2
       The alternative to the accrual method of accounting is
the cash method. Under the cash method, sales and expenses are
the accrual system, sales should equal cash deposits plus the

change in accounts receivable.       If the formula does not work, at

least one of the figures is wrong and must be adjusted to balance

company books.

        In 1999, Law began to notice that CLI’s sales numbers were

consistently higher than its recorded deposits in the Bank One

operating account, and change in accounts receivable did not make

up the difference.      Toward the end of that year, Law asked Spurlock

if all CLI’s deposits were being made.      Spurlock replied that they

were and suggested that sales be adjusted downward to account for

any discrepancy.       The lower CLI’s sales number, the less taxable

income it had.      Spurlock did not tell Law about the BofA account or

the deposits made into it, which might have accounted for the

discrepancies.      Deposits into the BofA account totaled $34,205 in

1997, $198,736 in 1998, $329,893 in 1999 and $37,227 through August

2000.

        There was significant disagreement at trial as to how many of

CLI’s BofA deposits had corresponding sales reports filed with

Law.3       These disputed reports are referred to here as the “BofA

recorded only when income is received and payments deducted.
        3
      This dispute is significant because, under the accrual
method of accounting, if all sales are reported then where the
amounts are deposited may be irrelevant. However, when an
accountant is checking the sales numbers against bank deposits
and adjusting the numbers so they match—as was the case here when
sales numbers were adjusted downward to match deposits—having
accurate deposit reports is crucial under the accrual method.

                                     4
sales figures”.     There is no dispute that Law did not have access

to the BofA accounts or deposit slips, but the defense argued that

the sales figures given to Law included all amounts deposited into

the BofA account.

     While prosecution witnesses suggested that BofA sales figures

were regularly unreported, defense witnesses tried to interpret the

data provided to Law as including the BofA sales figures. However,

even the defense’s fraud examiner testified that some of the checks

deposited in the Bank of America account did not have corresponding

sales information recorded in CLI’s books.

     A revenue agent testified that the payments to Poore funneled

through the Bank of America account should have been recognized by

him as income.     The total income tax Poore should have paid, but

did not pay for 1998 through 2000, was $93,243.           Poore did not file

any tax returns from 1992 to 2000.               Spurlock filed no returns

between 1993 and 1997.      Her 1997 and 1998 returns were filed late

in November 1999.    No returns or extension requests were filed for

1999 or 2000.

B.   Bankruptcy Fraud

     In   August    2001,   Spurlock       and   CLI   underwent   bankruptcy

proceedings.     The bankruptcy court entered an order of relief

freezing CLI’s assets.      Spurlock submitted schedules declaring her

assets and liabilities.      Spurlock listed assets of only $3,100 and

liabilities of $412,991 and no income.            She listed only one Bank

                                       5
One account with a balance of $100.      A bank statement for the CLI

operating account showed a balance of $3,704 as of the date of the

petition.   Spurlock failed to list one of her homes, and listed no

household   goods   and   furnishings,   no    accounts   receivable,   no

vehicles, and no business equipment or furnishings.

     Spurlock did not provide Bank One statements for the period

from August 22 through November 22, 2001.        Those statements showed

large balances and numerous deposits and withdrawals, even though

the business had been frozen by that point. For instance, in

September 2001, $11,000 was wire transferred to Spurlock’s father.

Spurlock instead provided the statement for November 23 to December

22, 2001, which showed a small balance due to large withdrawals and

payments in previous months.

     At a creditors’ meeting, Spurlock stated under oath that the

equipment CLI possessed was returned to the equipment’s lender or

owner.     However, in 2001 Poore sold a Toyota van, production

equipment, and three pallets of supplies such as paper and binders

to Michael Buban, who owned a litigation support business and

printing company that neighbored CLI.         The equipment purchased by

Buban was located on CLI’s premises and was being used by CLI.           A

CLI employee testified that the equipment was of the type purchased

and used by CLI.    Payments for these items totaled approximately

$50,000.    Without the benefit of this information, the bankruptcy

trustee concluded that there were no assets to distribute to

                                   6
creditors and Spurlock was discharged.

                             II.    ANALYSIS

      Poore argues that there was insufficient evidence to support

his convictions for (1) conspiracy to defraud the United States,

(2) tax evasion and (3) conspiracy to commit bankruptcy fraud.

Spurlock joins Poore’s first argument and further alleges that her

bankruptcy fraud conviction was illegal as potentially predicated

on statements made outside the statutory period, and that the

restitution order improperly imposed joint and several liability.

A.   Sufficiency of the Evidence

      In reviewing sufficiency claims, this court asks “whether,

viewing the evidence in the light most favorable to the verdict and

drawing all reasonable inferences from the evidence in support of

the verdict, a rational trier of fact could have found that the

evidence established the essential elements of the offense beyond

a reasonable doubt.”    United States v. Ferguson, 211 F.3d 878, 882

(5th Cir. 2000).

      1.   Conspiracy to Defraud the United States

      Spurlock and Poore both argue that there was insufficient

evidence supporting their convictions for conspiracy to defraud the

United States in violation of 18 U.S.C. § 371.         The elements of the

offense are “(1) an agreement between two or more persons to pursue

an   unlawful   objective,   (2)   the   defendant’s   knowledge   of   the

unlawful objective and voluntary agreement to join the conspiracy,

                                     7
and (3) an overt act by one or more of the members of the

conspiracy in furtherance of the objective of the conspiracy.”

United States v. Freeman, 434 F.3d 369, 376 (5th Cir. 2005).

       The    indictment    set     forth       the   manner     and    means   of   the

conspiracy as follows:

       1.     The defendants concealed income to CLI by diverting CLI
              receipts into the bank account at Bank of America.
       2.     Thereafter the defendants failed to record these
              receipts on the books and records of CLI.
       3.     The defendants used these funds for living expenses and
              the acquisition of personal assets.
       4.     The defendants knowingly failed to file tax returns
              with the Internal Revenue Service to report this
              taxable income.

Poore and Spurlock argue that the second prong was not proven, as

there was significant testimony indicating that all of the BofA

sales figures were recorded on CLI’s books.

       A review of the record reveals that the evidence supporting

the verdict on this charge was more than sufficient.                      While there

was conflicting evidence regarding whether the BofA sales figures

were recorded on CLI’s books, “[t]he jury is free to choose among

reasonable constructions of the evidence.”                  Ferguson, 211 F.3d at

832.        Here,   the   jurors    may     have      credited    the   testimony     of

Silverman, the prosecution’s auditor, who indicated that a number

of deposits to the BofA account were not accounted for in the sales

figures provided to Law.           The defendants’ fraud examiner similarly

noted certain deposits in the BofA account that he could not find

                                            8
a corresponding sales receipt for.     While he suggested that the

slips may have been lost or misplaced by Law, the jurors were not

obligated to credit such hypothetical explanations.     Considering

that Poore and Spurlock kept a BofA account hidden from Law, had

customers write checks to Poore personally, and used BofA funds for

significant personal expenditures, a reasonable jury could have

concluded that Poore and Spurlock conspired to underreport CLI’s

sales.4

     Moreover, even if all of the BofA sales figures were reported

to Law, the evidence was still sufficient to convict Poore and

Spurlock on this count.   This is what government witness Silverman

was suggesting when he stated, as appellants repeatedly stress,

that “I give you the fact that [the BofA sales figures] may have

even all been reported by CLI.”   He was not recanting his testimony

as to the numerous BofA sales figures that went unreported, but

merely posing a hypothetical that even in such an event the

evidence still supports a finding of conspiracy to defraud.

     We agree with Silverman, and disagree with Poore’s argument

that, “[i]f the income (the sales) is being regularly reported to

the accountant[,] and if it appears on the books of CLI, then there

is no concealment or attempt to conceal these assets.”       By not

     4
      While general manager Marco Nunnerly indicated that he
recorded all payments he received on CLI’s books, he also
testified that Lori Spurlock would occasionally open up company
checks outside of his presence and take them to Poore. There was
no indication that these checks were ever recorded.

                                  9
providing Law with the BofA account, and by instructing Law to

adjust sales downward in the face of sales/deposits discrepancies,

a reasonable jury could have found that those were overt acts aimed

at concealing income and defrauding the United States of tax

revenue. Especially where, as here, the sales data was provided in

a rather sloppy and incomprehensive form, making an accountant

especially likely to rely on the deposit numbers.

     This is what Silverman meant when he explained that Law would

have expected that all deposits were made to the operating Bank One

account, and “not knowing where all those bank accounts are, or

whether they exist, he can’t properly do a tax return that reflects

the correct income.”   Providing an accountant with sloppy sales

data without the appropriate deposit numbers to compare it against,

and then advising a downward adjustment to the sales numbers is one

method of fraud consistent with the first “manner and means”

alleged in the indictment.5   That provides sufficient evidence to

     5
      Appellants also argue that the proof at trial was at fatal
variance with the indictment. A variance occurs when the
charging terms of an indictment remain unaltered but the evidence
at trial proves facts other than those alleged. United States v.
Puig-Infante, 19 F.3d 929, 935 (5th Cir. 1994). The appellants
argue that the government’s theory on this count changed when it
failed to show that CLI was not reporting all of its income and
instead attempted to show that it failed to file 1099s, W-2s and
K-1s. But “the government is not limited to the overt acts
pleaded in the indictment in proving a conspiracy, but may show
other acts of conspirators occurring during its life.” United
States v. Carlock, 806 F.2d 535, 550 (5th Cir. 1986). A fatal
variance only occurs when the indictment does not provide a
defendant sufficient notice of the evidence introduced at trial.
Here, where the indictment charges Poore and Spurlock with

                                10
uphold the convictions on this count.

       2.   Tax Evasion

       Poore alone was charged with and convicted of tax evasion. To

establish tax evasion, there must be a tax deficiency and an

affirmative act taken as a willful attempt to evade or defeat the

tax.    United States v. Bishop, 264 F.3d 535, 550 (5th Cir. 2001).

Poore does not contest that there was a tax deficiency, but argues

that he made no willful attempt to evade the taxes.   The failure to

file a tax return, even if willful, is insufficient to sustain a

conviction for tax evasion.    United States v. Doyle, 956 F.2d 73,

75 (5th Cir. 1992).

       This court has pointed to a “wide range of conduct” that

supports finding a willful attempt to evade taxes:

       [K]eeping a double set of books, making false entries or
       alterations, creating false invoices or documents, destroying
       books or records, concealing assets or covering up sources of
       income, handling one’s affairs to avoid making the records
       normally accompanying transactions of a particular kind, any
       conduct likely to mislead or conceal, holding assets in
       others’   names,   providing    false   explanations,   giving
       inconsistent statements to government agents, failing to
       report a substantial amount of income, a consistent pattern of
       underreporting large amounts in income, or spending large
       amounts of cash that cannot be reconciled with the amount of
       reported income.

Bishop, 264 F.3d at 550.    Contradicting Poore’s argument that the

concealing income and failing to file tax returns, they had
sufficient notice that their failure to file financial documents
in relation to CLI, such as W-2s, could be an issue.

                                  11
government showed nothing more than a failure to file a tax return,

the evidence at trial demonstrated that Poore used several of the

tactics supporting willful tax evasion listed in Bishop.                  He

concealed assets using the BofA account, used the BofA funds for

personal expenses, handled affairs in cash to avoid making records,

and repeatedly failed to report large amounts of income.                 The

activities are comparable to those in Bishop, where this court

found the defendant “deposited [substantial sums] in his personal

account. . . . [and] gave inaccurate and misleading information to

his return preparers.”     Id. at 552.

     Based on this evidence, a rational juror could have found that

Poore took a number of actions that constituted a willful attempt

to evade or defeat certain taxes.

     3.   Conspiracy to Commit Bankruptcy Fraud

     Poore also contests the sufficiency of the evidence supporting

his conviction for conspiracy to commit bankruptcy fraud.             It is

uncontested that Poore sold a Toyota van, production equipment, and

three   pallets   of   supplies   to    Michael   Buban   while   bankruptcy

proceedings against Spurlock and CLI were underway.           Poore argues

that this activity could not support his conviction because (1) he

was not a party to Spurlock’s bankruptcy proceeding, and (2) the

sold items were his own property.

     First, one need not be the named party in a bankruptcy

                                       12
proceeding to be guilty of conspiring to commit bankruptcy fraud.

See 18 U.S.C. § 152(1).        To support a charge of conspiracy, all

that must be shown is that there are two or more people with an

unlawful purpose, the defendant’s knowledge of that purpose, and an

overt act in furtherance of it.          18 U.S.C. § 371.

       Second, there was sufficient evidence to find the items Poore

sold to Buban did in fact belong to CLI’s estate.                  The machinery

and copy supplies were of a type normally used in CLI’s business

operations;    a    CLI   employee,    Brandy     Arney,    testified    that   he

purchased some of the equipment; the equipment was all located on

CLI’s premises; and CLI depreciated such equipment in its taxes.

Given these facts, and considering that the timing of this large

sale coincided with the initiation of bankruptcy proceedings, the

jury   could   reasonably     have    inferred    that     Poore   and   Spurlock

conspired to conceal property of CLI’s estate.

B.    Spurlock’s Conspiracy to Commit Bankruptcy Fraud Conviction

       Spurlock raises a separate argument concerning her conviction

for    conspiracy    to   commit     bankruptcy    fraud.      The    conspiracy

indictment listed two objects: (1) concealing property belonging to

the debtor estate and, (2) knowingly making “a false statement or

declaration under penalty or perjury in relation to a bankruptcy

case under Title 11.”         Spurlock argues that her conviction may

have been based on the conspiracy’s second object of knowingly

making a false statement, and that the indictment—referencing only

                                        13
a false statement and a bankruptcy case—made it possible for the

jury to render its verdict based on evidence of statements made in

bankruptcy proceedings from 1993 or 1995.                Such a verdict would be

barred by the applicable statute of limitations.                      The district

court denied Spurlock’s motion for acquittal and we review the

denial of a motion for acquittal de novo.                 Ferguson, 211 F.3d at

882.

       We   need   look   no    further     than   the   indictment    to     dismiss

Spurlock’s argument.            Consider the disputed paragraph of this

indictment in its entirety:

       Beginning in or about August 2001 and continuing through in or
       about March 2002, the exact dates being unknown to the Grand
       Jury, in the Northern District of Texas and elsewhere, the
       defendants Jerry Lewis Poore and Lori Kay Spurlock, aided and
       abetted by each other, knowingly and willfully combined,
       conspired, confederated, and agreed with each other to commit
       certain offenses against the United States, namely: in a
       bankruptcy case filed under Title 11 of the United States
       Code, knowingly and fraudulently conceal from creditors and
       the United States Trustee property belonging to the estate of
       the debtor, in violation of 18 U.S.C. § 152(1); and (b)
       knowingly make a false statement or declaration under penalty
       of perjury in relation to a bankruptcy case under Title 11, in
       violation of 18 U.S.C. § 152(3).

(Superseding Indictment, Count 9) (emphasis added).                    It is clear

from    this   language        that   the    indictment    alleges     that    false

statements were made roughly between August 2001 and March 2002.

Spurlock reads the paragraph’s opening language limiting the time

frame of the offense as applying only to the concealment object of

the conspiracy, leaving the false statement object entirely without

                                            14
time constraints.       This reading is curious and unsupported.

      A more natural reading of the indictment is that everything

prior to “namely:” constrains each of the two objects that follow.6

The district court, therefore, properly denied the motion for

judgment of acquittal.

C.    The Restitution Order

      Finally, Spurlock argues that the district court erred in

ordering her to pay, jointly and severally with Poore, a total of

$164,002 in restitution to the IRS and a defrauded bankruptcy

trustee.    Spurlock did not challenge the restitution order in the

district court, therefore this court reviews for plain error.

United States v. Inman, 411 F.3d 591, 595 (5th Cir. 2005).

      Spurlock does not contest the propriety of a restitution order

per se, but argues that she is less culpable than Poore and

therefore should be responsible for less than the full amount.

Spurlock was convicted of conspiring to defraud the United States

and   conspiracy   to    commit   bankruptcy   fraud.   If   a   defendant

contributes to the loss of each victim, “the court may make each

defendant liable for payment of the full amount of restitution or

may apportion liability among the defendants to reflect the level

      6
      It is admittedly peculiar that the false statement object
is preceded by a “(b)” while the concealment object lacks a
corresponding “(a)”, but that is without consequence. It does
not affect the opening language that limits the jury to
considering false statements made from 2001-2002.

                                     15
of contribution to the victim’s loss and economic circumstances of

each defendant.” 18 U.S.C. § 3664(h) (emphasis added). This Court

has previously upheld the imposition of joint and several liability

among multiple defendants. See, e.g., United States v. Chaney, 964
F.2d 437, 454 (5th Cir. 1992).

     Spurlock    relies      on    facts       indicating   that    Poore   was   her

superior   at   CLI,   and    that       he    was   abusive   in   their   personal

relationship. This, she argues, makes her less culpable than Poore

and should reduce the amount of restitution she is responsible for.

While evidence of Poore’s superior status at CLI and of his abusive

behavior might make him more culpable — and a judge could have held

him liable for a greater amount than Spurlock — we cannot say that

it was plain error for the district court to hold Spurlock equally

liable.    The proper question is not whether she is more or less

culpable than Poore, but whether she contributed to each of the

losses the victims incurred.              Here, she conspired in the schemes

that damaged the IRS and bankruptcy trustee, thereby allowing her

to be held fully liable for the damages they incurred.

                                  III.    CONCLUSION

     The judgments of the district court are AFFIRMED.

                                              16