Court Opinion

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Date Created: 2015-10-13 22:41:53.194145+00
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Opinions of the United
2007 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

4-12-2007

USA v. Havey
Precedential or Non-Precedential: Non-Precedential

Docket No. 06-1598

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Recommended Citation
"USA v. Havey" (2007). 2007 Decisions. Paper 1314.
http://digitalcommons.law.villanova.edu/thirdcircuit_2007/1314

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                                                                  NOT PRECEDENTIAL

                       UNITED STATES COURT OF APPEALS
                            FOR THE THIRD CIRCUIT
                                 ____________

                                       No. 06-1598

                                     ____________

                           UNITED STATES OF AMERICA,
                                            Appellee,

                                             v.

                                   JOHN A. HAVEY,
                                              Appellant.

                                     ____________

                     On Appeal from the United States District Court
                         for the Western District of Pennsylvania
                                  (D.C. No. 03-cr-00121)
                     District Judge: Honorable Donetta W. Ambrose
                                      ____________

                       Submitted Under Third Circuit LAR 34.1(a)
                                   March 16, 2007

           Before: FUENTES, GREENBERG, and LOURIE,* Circuit Judges.

                                  (Filed April 12, 2007)

                                     ____________

                               OPINION OF THE COURT
                                    ____________

      *
         Honorable Alan D. Lourie, United States Circuit Judge for the Federal Circuit,
sitting by designation.
LOURIE, Circuit Judge.

       John A. Havey (“Havey”) appeals from a judgment of conviction and sentence entered

by the United States District Court for the Western District of Pennsylvania. Because we

conclude that the District Court did not abuse its discretion in admitting certain contested

evidence, that Brady violations did not occur, that alleged cumulative trial errors did not

prejudice Havey, and that his sentence was reasonable, we will affirm.

       On April 1, 2003, a grand jury returned a three-count indictment against Havey

charging him with three counts of income tax evasion in violation of 26 U.S.C. § 7201 for

the tax years of 1993, 1994, and 1995. At trial, the government proffered evidence

demonstrating that Havey, a practicing attorney, diverted fees and other income into

investment accounts, instead of working business or escrow accounts, thereby apparently

avoiding personal income tax. The Internal Revenue Service (“IRS”) conducted an audit in

1998, which revealed that Havey had unreported income exceeding $500,000 for the 1993-95

tax years, and unpaid taxes exceeding $200,000. On February 16, 2005, a jury found Havey

guilty on all three counts of the indictment. On February 3, 2006, the District Court

sentenced Havey to twenty-one months imprisonment, at the lowest end of the advisory

guideline range, for each of the three counts, with all sentences to run concurrently, a term

of supervised release for three years, and a special assessment of $300. Judgment was

entered on February 13, 2006. On February 15, 2006, Havey filed his notice of appeal. We

have jurisdiction pursuant to 28 U.S.C. § 1291.

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       On appeal, Havey challenges his conviction on three grounds. First, he asserts that

the District Court abused its discretion by admitting evidence relating to his delinquency in

filing tax returns for years other than 1993-95, in violation of Federal Rule of Evidence

404(b). Second, he asserts Brady v. Maryland, 373 U.S. 83 (1963), violations based on the

government’s purported failure to provide him with certain allegedly exculpatory

information. Third, he argues that the cumulative prejudicial effect of various trial errors

deprived him of his constitutional rights to due process, confrontation, fundamental fairness,

and a fair trial. In addition, Havey presents reasons why his sentence should be vacated. We

address each argument in turn.

       First, Havey contends that the District Court abused its discretion in admitting certain

evidence, namely, an IRS collection letter dated January 6, 1996, that concerned Havey’s

delinquent filing for the 1991 tax year.1 Havey contends that the letter constituted evidence

of a prior bad act, i.e., the delinquent filing of taxes for 1991, and therefore was improperly

admitted in violation of Federal Rule of Evidence 404(b). Havey asserts that the District

Court failed to properly weigh the probative value of the letter against its prejudicial effect.

The government argues that the District Court did not abuse its discretion.

       We agree with the government that the District Court did not abuse its discretion in

admitting the 1996 collection letter. Rule 404(b) provides that:

       1

                While Havey states in his brief that the District Court erred in admitting
“evidence of Havey’s delinquent filing of income tax returns beginning in the 1980's,” he
fails to specifically identify any other evidence other than the 1996 collection letter. Havey
Br. at 40. Thus, we limit our discussion to that letter.

                                               3
       Evidence of other crimes, wrongs, or acts is not admissible to prove the
       character of a person in order to show action in conformity therewith. It may,
       however, be admissible for other purposes, such as proof of motive,
       opportunity, intent, preparation, plan, knowledge, identity, or absence of
       mistake or accident . . . .

Fed. R. Evid. 404(b) (emphasis added). The 1996 collection letter did not constitute

improper Rule 404(b) evidence. The record shows that the letter was not offered for the

purpose of proving the character of Havey “in order to show action in conformity therewith.”

Instead, the record demonstrates that the government introduced the letter at trial for the

narrow purpose of rebutting statements that Havey made during his direct examination.

       Specifically, at trial Havey testified that he had numerous conversations with an IRS

Agent, Mrs. Sweeney, on or before April 1997. Havey stated that Sweeney made threats to

“padlock” his office if he did not file his 1993-95 returns by April 11, 1997. According to

Havey, the purported threats caused him to file incomplete and inaccurate tax returns for the

1993-95 tax years. He further testified that he intended to subsequently file amended tax

returns that contained the correct information. Because he was primarily concerned with

meeting the filing deadline in order to avoid the forced closure of his business, Havey

testified that he lacked intent to defraud the government. That assertion constituted the crux

of Havey’s defense at trial.

       In response, the government introduced the collection letter during cross-examination

in order to discredit Havey’s theory that an IRS agent threatened to padlock his office

because he failed to file his 1993-95 tax returns. Instead, if any threat had been made, the

government argued that it concerned his delinquent 1991 tax return. The collection letter

                                              4
established that Havey had an outstanding tax liability for 1991 in an amount over $44,000.

As such, the government argued that any threatened enforcement action that may have

occurred in 1997 was related to the delinquent 1991 return, not the years of 1993-95 that

were the subject of the indictment. That was particularly so, according to the government,

in light of the fact that Havey had not yet filed his 1993-95 tax returns at that time.

       Thus, as the record shows, contrary to Havey’s assertion, the 1996 collection letter

fails to come within the first sentence of Rule 404(b) and thus does not constitute

inadmissible character evidence. It was not offered “to prove the character of a person in

order to show action in conformity therewith.” (Indeed, the mere fact that Havey filed

incomplete tax returns for 1993-95 in 1997 in and of itself acknowledges that Havey was

delinquent in filing his returns.) Instead, the evidence was clearly offered for the proper

purpose of rebutting Havey’s defense that the IRS threatened to padlock his office if he did

not file his 1993-95 tax returns. Because Rule 404(b) does not apply, and Havey was not

prejudiced by the admission of this evidence, Havey’s argument fails.

       Next, Havey argues that the government’s failure to disclose certain evidence requires

a new trial under Brady v. Maryland and Giglio v. United States, 405 U.S. 150 (1972).

Havey challenges the government’s failure to timely inform him of the following

information, which he construes as exculpatory or impeaching evidence: 1) that IRS

collection documents had been destroyed in 2001; 2) that his accountant’s billing records had

been destroyed; and 3) that another accountant was involved in the preparation of his

1993-95 tax forms. According to Havey, the destroyed IRS documents would have

                                              5
established beyond any doubt that he had no outstanding tax liability for the 1991 tax year

as of April 7, 1997, and would have strengthened his defense theory that he acted without

intent to defraud the government. Havey further argues that that evidence would have proven

that he acted out of fear because the IRS threatened to padlock his doors in April 1997 if he

did not file his 1993-95 tax forms by the April 11, 1997 deadline. The government responds

that none of the purported Brady material was exculpatory and thus improperly withheld.

       We agree with the government that Havey fails to demonstrate that the government

withheld exculpatory material. We have stated that it is “unwise to infer the existence of

Brady material based on speculation alone.” Ramos v. United States, 27 F.3d 65, 71 (3d Cir.

1994). Here, Havey offers nothing beyond his speculation to establish that the IRS

documents, which the trial record shows were destroyed in the normal course of business,

contained Brady material. Assuming arguendo that the destroyed documents did contain

evidence that Havey paid all of his taxes for the 1991 tax year, Havey still fails to “produce

a reasonable probability that the result of the proceeding would have been different,” United

States v. Pellulo, 14 F.3d 881, 886-87 (3d Cir. 1994). Even if the destroyed documents

contained evidence that Havey’s taxes from 1991 were paid in their entirety, the record is

still replete with overwhelming evidence that Havey filed false income tax returns on April

11, 1997 for the 1993-95 tax years, and that he failed to file any amended returns during the

ten months leading up to the audit that began in February 1998, contrary to his claim that he

intended to do so. We thus conclude that the destruction of the IRS documents and the

                                              6
government’s failure to inform Havey of the unavailable documents until just before trial do

not constitute a Brady violation.

       Moreover, we agree with the government that the fact that another individual was

involved in the preparation of his tax form without his knowledge is not exculpatory

information. As the District Court acknowledged, the heart of the allegations was not “who

prepared the return,” but the allegation that Havey diverted income into investment accounts

without reporting it to the IRS. Nor are the missing billing records of Havey’s accountant

exculpatory information. The manner in which Havey’s accountant or the undisclosed

individual divided the work in preparing Havey’s tax forms similarly has no bearing on

Havey’s failure to report income to the IRS.           Accordingly, we conclude that the

government’s failure to disclose that information likewise did not constitute a Brady

violation.

       Next, Havey argues that the cumulative effect of various trial errors deprived him of

his constitutional rights to due process, confrontation, fundamental fairness, and a fair trial,

and thus warrants reversal. Because the basis of this argument is largely premised on the

purported errors discussed above, and in light of our conclusion that those arguments are

without merit, we likewise conclude that Havey’s constitutional argument is unavailing.

       In challenging his sentence, Havey raises two primary arguments. First, he argues that

the District Court failed to mitigate the sentence in light of his good works and community

service. Relying on United States v. Fred E. Cooper, 394 F.3d 172 (3d Cir. 2005), Havey

                                               7
asserts that the court unreasonably discounted his long history of community and charitable

involvement, which he contends supports a lesser sentence.

       We review sentences imposed by the district courts for “reasonableness.” United

States v. Booker, 543 U.S. 220, 261-62 (2005). In deciding whether a sentence is reasonable,

we must determine whether the District Court properly exercised its discretion in considering

the factors set forth in 18 U.S.C. § 3553(a). In United States v. Cooper, 437 F.3d 324, 329

(3d Cir. 2006), this court stated that it “need not discuss every argument made by a litigant

if an argument is clearly without merit,” nor must the court “discuss and make findings as

to each of the § 3553(a) factors if the record makes clear that the court took the factors into

account in sentencing.” Id. The court further noted that “[t]here are no magic words that a

district judge must invoke when sentencing, but the record should demonstrate that the court

considered the § 3553(a) factors and any sentencing grounds properly raised by the parties

which have recognized legal merit and factual support in the record.” Id. at 332.

       At the sentencing hearing, the District Court first noted the seriousness of the offense

of income tax evasion, noting that the government depends on honest and voluntary

compliance of the tax laws by its citizens. As such, punishment for tax evasion is necessary

to further the goal of deterrence. The court also did consider Havey’s reputation as “an

upstanding citizen and attorney.” Thus, it determined that correctional treatment for a long

period of time was not deemed necessary. The court also determined that Havey’s reliance

on Fred E. Cooper is misplaced because it is factually distinguishable. The court therefore

                                              8
sentenced Havey to a twenty-one month term of imprisonment—at the lowest end of the

applicable advisory guideline range.

       We conclude that the District Court’s explanation of its thought process is sufficient

to demonstrate that it meaningfully considered the relevant factors, and thus find the sentence

to be reasonable. We further agree with the government and the lower court that a different

result is not warranted in light of Fred E. Cooper. In that case, we affirmed the District

Court’s order granting a four-level downward departure from the applicable sentencing

guideline that the court granted because of the defendant’s exceptional good works. We

stated that “[d]ownward departures for good works . . . are permissible when the works are

exceptional.” Id. at 178. Thus, it was within the District Court’s discretion to grant a

downward departure if the court deemed Havey’s good works and community service

sufficient to warrant such a departure. Because the court was permitted to take those factors

into account in determining Havey’s sentence, and did so, but found that they were

insufficient to support a downward departure, we do not find its decision to impose a

sentence at the lowest end of the advisory range unreasonable under the circumstances.

       Second, Havey also argues that the district court impermissibly engaged in judicial

fact-finding in calculating the amount of the tax loss that was used in computing the base

offense level.   According to Havey, the court’s factual findings violated his Sixth

Amendment rights. We disagree. A sentencing court may make factual findings supported

by a preponderance of the evidence relevant to sentencing enhancements, as the District

Court did here. In United States v. Miller, 417 F.3d 358, 362 (3d Cir. 2005), we noted that

                                              9
the district court in that case “engaged in a fair amount of judicial fact finding” in calculating

the defendant’s prison sentence. Nonetheless, we determined that there was no legal error

in the sentencing court’s fact-finding, as long as, inter alia, the court recognized the advisory,

as opposed to mandatory, nature of the Guidelines in light of Booker. Id. at 362-63; see also

Cooper, 437 F.3d at 330 (stating “[a]s before Booker, the standard of proof under the

guidelines for sentencing facts continues to be preponderance of the evidence”). Here, in

addition to clearly acknowledging the advisory nature of the Guidelines, the District Court

found by a preponderance of the evidence that the tax loss amounted to $205,532.00. The

Court stated that that finding was based on the testimony of IRS Agents Young and Shirey,

as well as Havey’s accountant, Mr. Omer. Notably, when asked his position on this issue at

the sentencing hearing, Havey’s counsel stated that he rested on the trial record.

Accordingly, Havey’s challenges to his sentence have no merit.

       We have considered all of Havey’s remaining arguments and find them unpersuasive.

We will therefore affirm.

                                               10