Court Opinion

ID: 2763219
Source: CourtListenerOpinion
Date Created: 2014-12-19 21:01:15.744107+00
Date Added: 2024-06-11T10:44:11.351328
License: Public Domain

FILED
                           NOT FOR PUBLICATION                             DEC 19 2014

                                                                        MOLLY C. DWYER, CLERK
                    UNITED STATES COURT OF APPEALS                       U.S. COURT OF APPEALS

                            FOR THE NINTH CIRCUIT

UNITED STATES OF AMERICA,                        No. 13-10503

              Plaintiff - Appellee,              D.C. No. 2:11-cr-02385-JAT-2

  v.
                                                 MEMORANDUM*
MICHAEL QUIEL,

              Defendant - Appellant.

UNITED STATES OF AMERICA,                        No. 13-10504

              Plaintiff - Appellee,              D.C. No. 2:11-cr-02385-JAT-1

  v.

STEPHEN KERR,

              Defendant - Appellant.

                   Appeal from the United States District Court
                            for the District of Arizona
                James A. Teilborg, Senior District Judge, Presiding

                     Argued and Submitted December 10, 2014
                             San Francisco, California

        *
             This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: O’SCANNLAIN, N.R. SMITH, and HURWITZ, Circuit Judges.

      Michael Quiel and Stephen Kerr appeal their convictions for willfully

making and subscribing false tax returns, in violation of 26 U.S.C. § 7206(1). Kerr

also appeals his conviction for willfully failing to file foreign bank account reports

(“FBARs”), in violation of 31 U.S.C. §§ 5314, 5322(a) and 31 C.F.R. §§ 1010.350,

1010.306(c)-(d). We affirm.

1.    “We review de novo claims of insufficient evidence.” United States v.

Chhun, 744 F.3d 1110, 1117 (9th Cir.), cert. denied, 135 S. Ct. 131 (2014). We

will uphold a conviction if, “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.” Jackson v. Virginia, 443 U.S. 307, 319 (1979).

The question of whether Defendants willfully failed to report income and file

FBARs is one of fact for the jury. See Rykoff v. United States, 40 F.3d 305, 307-08

(9th Cir. 1994). The jury could have concluded that Kerr and Quiel knew they had

a duty to report the income from their foreign accounts, because Christopher

Rusch, their attorney and business partner, testified that the accounts were set up

using nominees under Kerr’s and Quiel’s control in order to evade reporting

requirements. Even without Rusch’s testimony, the jury could have inferred

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control because (a) the accounts were traded in Kerr’s and Quiel’s stock for their

benefit; (b) the foreign firms never served their stated purpose of finding investors;

and (c) these firms were not actual, functioning businesses. Additionally, even

without Rusch’s testimony, the jury could infer motive from Kerr’s having recently

paid high tax rates and Quiel’s recent payment of a large tax penalty before either

engaged in these transactions. With regard to Kerr’s conviction for willful failure

to file FBARs, the evidence was sufficient to convict him given the jury

instructions, to which Kerr did not object.

2.    The district court did not err by admitting Rusch’s testimony. “The district

court’s conclusion concerning whether statements are protected by an individual

attorney-client privilege is a mixed question of law and fact which this court

reviews independently and without deference to the district court.” United States

v. Richey, 632 F.3d 559, 563 (9th Cir. 2011) (internal quotation marks omitted).

Defendants waived the protection of the privilege by relying on an advice-of-

counsel defense. Rock River Commc’ns, Inc. v. Universal Music Grp., Inc., 745
F.3d 343, 353 (9th Cir. 2014) (“A party who affirmatively places its attorney-client

communications at issue in a litigation implicitly waives the privilege.”).

3.    The district court did not violate Kerr’s and Quiel’s constitutional right to

confront Rusch by imposing a blanket ban on recross examination. We review

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“[w]hether limitations on the scope of questioning at trial constitute a violation of

the confrontation clause . . . de novo.” United States v. Jones, 982 F.2d 380, 383

(9th Cir. 1992). “Allowing recross is within the sound discretion of the trial court

except where new matter is elicited on redirect examination, in which case denial

of recross as to that new matter violates the Confrontation Clause.” United States

v. Baker, 10 F.3d 1374, 1404 (9th Cir. 1993), overruled on other grounds by

United States v. Nordby, 225 F.3d 1053 (9th Cir. 2000). Although the district court

may have imposed a blanket ban on recross examination, this ban did not violate

Kerr’s and Quiel’s constitutional right to recross Rusch regarding three new

exhibits admitted on redirect, because the exhibits were not “new matter.” The

exhibits merely bolstered Rusch’s prior testimony. See United States v. Croft, 124
F.3d 1109, 1121 (9th Cir. 1997). In any event, at Defendants’ request, Rusch

remained subject to the Government’s subpoena after his testimony and the

Defendants declined to recall him. See United States v. Ross, 33 F.3d 1507, 1518

(11th Cir. 1994).

      We reject the Defendants’ separate Confrontation Clause argument that the

exhibits constituted testimonial hearsay from a declarant not subject to cross-

examination. Defendants failed to object to the exhibits on the basis of the

Confrontation Clause, and we find that the district court did not plainly err. See

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United States v. Olano, 507 U.S. 725, 731-32 (1993). The exhibits did not contain

testimonial statements. See Crawford v. Washington, 541 U.S. 36, 51-53 (2004).

4.    We review the district court’s decision to allow extensive evidence of

Defendants’ business activities and to allow the Government to argue that

Defendants’ activities were fraudulent for plain error, because, although Kerr and

Quiel contend that admission of this evidence violated Fed. R. Evid. 403 and

404(b), they failed to make contemporaneous objections to this evidence. United

States v. Archdale, 229 F.3d 861, 864-65 (9th Cir. 2000). The district court did not

plainly err, because the evidence was (a) intrinsic to the charged offenses; (b) more

cumulative than prejudicial; and (c) addressed by a limiting instruction.

Additionally, we conclude that the district court did not abuse its discretion by

refusing to order a mistrial. See United States v. Guerrero, 756 F.2d 1342,

1347-48 (9th Cir. 1984).

5.    To the extent Defendants challenge the Government’s characterization of

their business activities as fraud during closing, they have not shown that the

prosecutor’s statements “so infected the trial with unfairness as to make the

resulting conviction a denial of due process.” Towery v. Shriro, 641 F.3d 300, 310

(2010) (internal quotation marks omitted).

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6.    On de novo review, we find that the district court did not err by refusing to

order the Government to turn over a special agent’s report or to disclose Quiel’s

individual tax master file. See United States v. Si, 343 F.3d 1116, 1122 (9th Cir.

2003). To warrant disclosure (1) “the evidence at issue must be favorable to the

accused”; (2) “the evidence must have been suppressed by the State, either

willfully or inadvertently”; and (3) “prejudice must result from the failure to

disclose the evidence.” Benn v. Lambert, 283 F.3d 1040, 1052-53 (9th Cir. 2002).

Defendants failed to show that the evidence was clearly exculpatory and did not

make the plausible showing of that fact required to warrant in camera inspection.

See Pennsylvania v. Ritchie, 480 U.S. 39, 58 n.15 (1987).

7.    The district court did not abuse its discretion by admitting evidence that Kerr

filed FBARs in later years. Kerr stipulated to the admission of the FBARs and

does not now claim that his stipulation was involuntary. See United States v.

Molina, 596 F.3d 1166, 1169 (9th Cir. 2010). Further, the FBARs were not

remedial measures under Fed. R. Evid. 407.

8.    The district court did not abuse its discretion by refusing to order a new trial

after Defendants were acquitted of conspiracy, see United States v. King, 660 F.3d
1071, 1076 (9th Cir. 2011), because Defendants cannot identify evidence that was

admitted against them solely because of the conspiracy charge.

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AFFIRMED.

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