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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 18-10221
________________________
D.C. Docket No. 8:13-cr-00237-SDM-TBM-2
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
STEPHEN DONALDSON, SR.,
DUANE CRITHFIELD,
Defendants-Appellants.
________________________
Appeals from the United States District Court
for the Middle District of Florida
_______________________
(March 22, 2019)
Before WILLIAM PRYOR and ROSENBAUM, Circuit Judges, and MOORE, *
District Judge.
MOORE, District Judge:
*
Honorable K. Michael Moore, United States District Chief Judge for the Southern District of
Florida, sitting by designation.
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Appellants Duane Crithfield and Stephen Donaldson, Sr. appeal multiple
orders relating to their convictions for conspiring to defraud the United States,
18
U.S.C. § 371, and willfully aiding the submission of false and fraudulent income
tax returns, 26 U.S.C § 7206(2). Following an 11–day bench trial, the district court
found Appellants guilty on all counts. Appellants then moved for a new trial,
which the district court also denied. Appellants raise three issues in this
consolidated appeal: whether (1) the government’s evidence was sufficient to
sustain their convictions; (2) the district court abused its discretion in denying
Appellants’ motion for a new trial; and (3) the district court improperly declined to
suppress certain documents obtained by the government because of an allegedly
false search warrant affidavit. After careful review, we affirm.
I. BACKGROUND
A. The Business Protection Plan.
In the 1990s, Appellants established a network of companies and trusts,
largely incorporated offshore, to promote and sell to closely held businesses the
Business Protection Plan (“BPP”), a purportedly lawful, insurance–based tax
shelter. Donaldson promoted and sold the BPP and Crithfield was a director and
officer of several of the offshore entities within the commercial enterprise. The
BPP effectively operated as follows: a closely held business paid a lump–sum
premium in exchange for an insurance policy issued by either Fidelity Insurance
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Company (“Fidelity”) or Citadel Insurance Company (“Citadel”), two entities
within Appellants’ commercial enterprise. That business then deducted that
premium from its taxable income as an “ordinary and necessary” business expense.
After collecting the premium, Appellants’ enterprise charged the business either
15% or 17% of the premium, a rate ostensibly lower than the business’s nominal
marginal tax rate, and then allocated the remaining 83% or 85% to a segregated
trust or limited liability company (“LLC”) set up solely for that business. The
business then assumed control of that trust or LLC, which contained the remaining
portion of its premium, without paying any tax or interest on that premium.
B. The Legal Opinions.
Appellants repeatedly assured their clients that the BPP was legitimate and
compliant with Internal Revenue Service (“IRS”) requirements. In 2001, Fidelity
obtained a legal opinion from Lord, Bissel and Brook (“Lord Bissel”), which
attested to the legality of the BPP’s structure. Based upon certain factual
representations made by Fidelity, Lord Bissel concluded that the insurance policies
offered to BPP clients involved legitimate risk shifting and risk distribution.
Specifically, Fidelity certified to Lord Bissel as a fact that BPP clients purchasing a
BPP policy transferred to Fidelity the risk–of–loss covered by the policy (i.e.¸ that
Fidelity bore the risk of reimbursing any claims on the policy). Based upon the
factual assumptions certified by Fidelity, Lord Bissel issued an opinion stating that
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it was “more likely than not” that a business purchasing a BPP risk policy would
be entitled to a federal income–tax deduction under
26 U.S.C. § 162 for the amount
of the premium paid.
In 2003, after Fidelity asked Lord Bissel to issue an updated opinion on the
BPP’s structure, Lord Bissel attorneys raised concerns with Appellants about
whether the BPP in fact involved legitimate risk shifting and distribution and
therefore qualified as deductible for tax purposes. After multiple rounds of
discussions among Appellants, Fidelity’s in–house counsel, and attorneys from
Lord Bissel, Lord Bissel determined that, contrary to the facts certified by Fidelity,
none of the entities in Appellants’ commercial enterprise retained any risk of loss
on the BPP’s business–risk policies. Attorneys at Lord Bissel reasoned that
because nearly all losses under any BPP business–risk policy were to be funded by
the LLC created for the BPP client, rather than Fidelity or the entity issuing the
policy, the BPP incentivized clients to not file any claims. After these discussions,
Lord Bissel decided that its prior opinion was “not appropriate in light of what
[Lord Bissel] had found,” and withdrew its 2001 opinion and its representation of
Fidelity. Lord Bissel then wrote several letters to Fidelity, Crithfield, and BPP
customers, stating that Fidelity’s factual representations concerning the BPP had
been inaccurate and that its 2001 opinion should not be relied upon. Appellants,
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meanwhile, continued to promote the BPP without informing potential clients
about the Lord Bissel withdrawal.
In December 2003, Appellants secured another legal opinion from tax
attorney James Duggan of the law firm Handler, Thayer and Duggan (“Handler
Thayer”), which similarly stated that the premiums paid for a business–risk policy
under the BPP were “more likely than not” deductible under § 162. However, the
Handler Thayer opinion rested on a set of assumptions substantially similar to
those that supported the initial Lord Bissel opinion. Specifically, Handler Thayer
assumed, inter alia, that (1) the premiums charged by Fidelity were calculated
using actuarial principles that were competitive with the premiums charged by
other insurers for similar policies, and that (2) the “primary emphasis” in the
promotion of the BPP to BPP clients was the risk protection offered by its
insurance products and that “any discussion of potential tax benefits [was]
incidental.”
In December 2006 and March 2007, more than three years after being
informed by Lord Bissel attorneys that BPP policies were not deductible under
26
U.S.C. § 162, Appellants collected BPP premiums from two clients, Brian James,
M.D., P.A. and Safety Productions, Inc., who proceeded to deduct their premiums
from their respective tax liabilities. Donaldson was the “primary consultant” and
“key person involved” in selling the plan to both clients.
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C. Searches.
On May 9, 2007, federal agents executed search warrants at several
properties affiliated with the commercial enterprise and its officers. In an affidavit
supporting the warrant, IRS Criminal Investigations Special Agent Carl Coffman
(“Affiant”) detailed the BPP structure and stated that, among other things: (1) the
BPP’s true purpose was to “shelter the income” of BPP clients by “lower[ing] the
profits in [the] business,” (2) there was no concern for whether the insurance
coverage was necessary for the clients, and (3) the clients provided self–
reinsurance with the funds in their offshore trusts. Affiant ultimately concluded
that there was probable cause to believe that the BPP was an “illegal tax scheme,”
the primary purpose of which was tax evasion.
D. Superseding Indictment.
On July 25, 2013, a grand jury charged Appellants with conspiracy to
defraud the United States, in violation of
18 U.S.C. § 371, and willfully aiding the
submission of false and fraudulent income tax returns for two BPP clients: Brian
James, M.D., P.A. and Safety Productions, Inc., in violation of 26 U.S.C § 7206(2).
E. Motion to Suppress.
Appellants moved to suppress the documents obtained during the
Government’s searches, arguing, among other things, that the Affiant misled the
issuing magistrate by stating that the Lord Bissel and Handler Thayer opinions
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themselves created a “illegal tax scheme.” The district court denied Appellants’
motion to suppress.
F. Bench Trial and Judgment.
On June 6, 2016, the parties began an 11–day bench trial. In anticipation of
testimony by Handler Thayer attorney James Duggan, the district court observed
that it was “not sure what [] value” Duggan’s testimony would provide that was
not already stated in the Handler Thayer opinion, and that Duggan’s testimony
would have to “improve[] on” the reasoning and conclusions within the opinion.
Donaldson’s counsel decided not to call Duggan as a witness, stating that “in light
of [Donaldson’s] own evidentiary determinations and decisions as to how the case
should proceed,” Duggan would not be called as a witness on Donaldson’s behalf.
On July 12, 2017, the district court issued an order finding Appellants guilty
of conspiring to defraud the United States and willfully aiding the submission of
false and fraudulent income tax returns. Therein, the court explicitly rejected
Appellants’ defense of reliance on the advice of counsel. The district court stated
that the issuance and withdrawal of Lord Bissel’s opinion letter, coupled with the
solicitation and issuance of the Handler Thayer opinion, “show that the defendants
knew exactly the lies they needed to tell the lawyers (or knew, at least, what the
lawyers needed to hear) in order to achieve a favorable legal opinion (necessary to
successful marketing of the BPP); that the defendants told the lawyers the
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necessary lies and achieved the desired opinion.” The court found that despite
Lord Bissel’s repeated warnings of the fraudulent nature of the BPP, Appellants
continued to market and operate the BPP as it had prior to Lord Bissel’s
withdrawal. The court concluded that “[i]f and to the extent that either defendant
has raised the defense of ‘advice of counsel,’ the evidence defeats the defense by
showing that [the Lord Bissel and Handler Thayer opinions]–even if correct based
on the stated facts–include assumptions of fact that vary dramatically and
decisively from pertinent history, as Crithfield and Donaldson well knew and as
they agreed and planned.”
Following the district court’s order and judgment, Appellants moved for a
new trial, arguing, inter alia, that the district court impermissibly “persuaded”
Donaldson to not call Duggan as a witness in his defense. The district court denied
Appellants’ motion for a new trial in a summary order. The district court
sentenced Donaldson to 76 months’ imprisonment and Crithfield to 54 months’
imprisonment, both followed by three years of supervised release, and a joint and
several restitution liability of $4,086,656.10.
II. STANDARDS OF REVIEW
First, this Court reviews de novo whether the Government presented
sufficient evidence to support a guilty verdict in a criminal trial. United States v.
Isnadin,
742 F.3d 1278, 1303 (11th Cir. 2014) (internal citation omitted). In
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conducting its review, the Court “views the evidence in the light most favorable to
the Government and resolves all reasonable inferences and credibility evaluations
in favor of the verdict.”
Id. “Evidence is sufficient to support a conviction if a
reasonable trier of fact could find that the evidence established guilt beyond a
reasonable doubt.”
Id. (internal citation omitted).
Second, this Court will overturn the denial of a motion for a new trial only if
the evidence preponderates heavily against the verdict, so that it would be a
miscarriage of justice to let the verdict stand. United States v. Albury,
782 F.3d
1285, 1295 (11th Cir. 2015) (internal citation and quotation marks omitted).
Third, in reviewing the denial of a motion to suppress evidence, this Court
considers the entire record, including trial testimony, and views the facts in the
light most favorable to the prevailing party. See United States v. Capers,
708 F.3d
1286, 1295–96 (11th Cir. 2013). This Court reviews the district court’s factual
findings for clear error and the district court’s application of the law to those facts
de novo.
Id. at 1295 (internal citation and quotation marks omitted).
III. DISCUSSION
A. Sufficiency of the Evidence.
Appellants challenge the sufficiency of the evidence supporting their
convictions for willfully conspiring to defraud the IRS,
18 U.S.C. § 371, and
willfully aiding the submission of false and fraudulent income tax returns for Brian
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James, M.D., P.A. and Safety Productions, Inc., 26 U.S.C § 7206(2). Appellants
argue that the district court erred in finding that the BPP was a sham agreement
and that Appellants’ reliance on the advice of counsel negated any finding of
willfulness to violate § 371 or § 7206(2). In response, the Government argues that
the evidence introduced at trial “amply support[ed]” the district court’s finding that
the BPP was a sham, that Appellants knew it was a sham, and that it was willfully
used to defraud the IRS and assist in the filing of false tax returns.
This Court views the evidence supporting Appellants’ convictions “in the
light most favorable to the Government and resolves all reasonable inferences and
credibility evaluations in favor of the verdict.” Isnadin, 742 F.3d at 1303. “The
evidence need not exclude every reasonable hypothesis of innocence or be wholly
inconsistent with every conclusion except that of guilt.” Id. (internal citation
omitted).
1. The BPP Operated As a Substantive Sham.
Crithfield argues that the district court erred in finding that the BPP was a
“sham” transaction solely motivated by tax evasion because the BPP “received the
blessings” of prominent tax lawyers. The Government contends that the district
court was presented with sufficient evidence to find that the BPP wholly lacked
economic substance or a substantial business purpose and was therefore properly
found to be a sham.
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A transaction does not qualify for an IRS deduction when it either lacks (1) a
substantial business purpose besides the generation of a tax benefit or (2) economic
substance independent of a taxpayer’s federal income–tax considerations. See
United Parcel Serv. of Am., Inc. v. Comm’r of Internal Revenue,
254 F.3d 1014,
1018 (11th Cir. 2001). Even if a legitimate business purpose motivates a business
owner, a transaction lacking an economic effect and functioning only to produce a
tax deduction is a substantive sham. See Kirchman v. C.I.R.,
862 F.2d 1486, 1490–
92 (11th Cir. 1989); Stobie Creek Invs., LLC v. United States,
608 F.3d 1366, 1376
(Fed. Cir. 2010) (“A transaction lacks ‘economic reality’ when the tax result . . . is
‘purely fictional.’”) (internal citation omitted).
The evidence supports the district court’s finding that the BPP had no
economic substance independent of a taxpayer’s federal income–tax
considerations, and was thus a substantive sham. United Parcel Serv., 254 F.3d at
1018. Specifically, the district court did not err in concluding that the purchase of
BPP policies did not shift any risk to Appellants’ commercial enterprise and was
therefore non–deductible. Steere Tank Lines, Inc. v. United States,
577 F.2d 279,
280 (5th Cir. 1978) (holding that a “true insurance contract” requires the shifting or
distribution of risk); Beech Aircraft Corp. v. United States,
797 F.2d 920, 922
(10th Cir. 1986) (holding that risk shifting occurs only if a party transfers a risk of
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loss to another party, and if the insured retains the risk of his own loss, the
arrangement is self–insurance, which “is not the equivalent of insurance”).
The district court properly credited the testimony of multiple expert
witnesses who testified that none of the entities within the commercial enterprise
incurred any risk of loss under any BPP insurance policy, and that the structure of
the BPP therefore ensured that none of the enterprise entities ever reimbursed a
BPP client for a claim submitted pursuant to a BPP policy. 1 The district court also
properly credited the testimony of former Lord Bissel attorney Thomas Walsh,
whose 2003 letter to Appellants and BPP clients stated, inter alia, that the structure
of the commercial enterprise never resulted in Fidelity retaining any risk of loss on
any BPP policy, and that the risk of loss was actually assumed by the policy holder
itself. The district court therefore had sufficient evidence to conclude that the BPP
lacked economic effect worthy of “respect in taxation,” and was thus a substantive
sham. See Kirchman,
862 F.2d at 1490; United Parcel Serv., 254 F.3d at 1018.
Concluding that the BPP was a substantive sham, the district court
proceeded to evaluate whether Appellants (1) knowingly conspired to defraud the
United States by encouraging their clients to purchase the sham BPP policies and
therefore defeat the federal income tax and (2) willfully aided in their clients’
1
These experts ultimately opined that a BPP policy did not, in effect, qualify as insurance at all,
and therefore was not deductible under
26 U.S.C. § 162.
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submission of false and fraudulent income tax returns. We address the district
court’s analysis in turn.
2. Appellants Conspired to Defraud the United States.
Appellants argue that the district court had insufficient evidence to conclude
that they willfully conspired to defraud the IRS. In response, the Government
argues that Appellants acted willfully because they knew that the BPP was a sham,
yet nonetheless acted in concert to effect the submission of false tax documents.
The Government adds that Appellants knew that the Lord Bissel and Handler
Thayer opinions were issued based upon material misrepresentations, and thus
could not rely on them in good faith.
To convict a defendant for conspiracy to defraud the IRS under
18 U.S.C. §
371, a so–called Klein conspiracy, United States v. Klein,
247 F.2d 908 (2d Cir.
1957), the Government must prove beyond a reasonable doubt the defendant’s (1)
agreement with another to impede the functions of the IRS, (2) knowing and
voluntary participation in the agreement, and (3) commission of an act in
furtherance of the agreement. United States v. Hough,
803 F.3d 1181, 1187 (11th
Cir. 2015); United States v. Kottwitz,
614 F.3d 1241, 1264 (11th Cir.), vacated in
part on other grounds,
627 F.3d 1383 (11th Cir. 2010).
One becomes a member of a conspiracy if he or she understands the
essential nature of the plan and willfully joins that plan. United States v. Andrews,
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953 F.2d 1312, 1318 (11th Cir. 1992). Circumstantial evidence can help prove a
person’s knowledge of, and participation in, a conspiracy. See Hough, 803 F.3d at
1187 (stating that conspiracy can be proven through “concerted actions, overt acts,
relationship, and the entirety of their conduct”). The Government is not required to
prove that each conspirator knew every detail or participated in every aspect of the
conspiracy, only that he or she knew of the conspiracy’s “essential nature.” United
States v. Browning,
723 F.2d 1544, 1546 (11th Cir. 1984).
The record firmly supports the district court’s finding that Appellants
“conceived, designed, constructed, marketed, and otherwise fully implemented and
executed the BPP,” a substantive sham designed primarily, if not exclusively, to
defeat the federal income tax. As stated by the district court, Appellants were
“necessarily and unavoidably aware of the nature and purpose of the BPP scheme
and acted together and with others to further this plan.”
First, by creating, implementing, and executing the BPP, Appellants
unquestionably agreed to cause, and took numerous overt steps towards causing,
the underreporting of large amounts of their clients’ income. See United States v.
Schafer,
580 F.2d 774, 782 (5th Cir. 1978) (holding that evidence of a “consistent
pattern of under–reporting large amounts of income” supported a finding of willful
intent to violate tax law).
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Second, Appellants do not dispute that they closely worked together–
Donaldson as salesman and promoter and Crithfield as officer and director–to
create, market, promote, sell, and administer the BPP.
Third, Appellants’ continued operation of the BPP following Lord Bissel’s
categorical withdrawal of its 2001 opinion and representation of Fidelity supported
the district court’s finding that Appellants acted willfully and in furtherance of
their agreement to sell sham insurance. See Hough, 803 F.3d at 1187. 2
Appellants’ advice-of-counsel defense fails. To establish an advice of
counsel defense, Appellants bear the burden of proving that they (1) fully disclosed
to their attorney all material facts relevant to the advice for which the attorney was
retained to provide and (2) relied in good faith on the advice given. See United
States v. Vernon,
723 F.3d 1234, 1269 (11th Cir. 2013) (internal citation and
quotation marks omitted). Here, Lord Bissel and Handler Thayer were not
provided with all material facts relevant to their advice. Fidelity certified facts to
Lord Bissel and Handler Thayer that were demonstrably false, including that BPP
2
Donaldson states that there is no record evidence of him speaking to anyone at Handler Thayer
prior to the issuance of the Handler Thayer opinion, and that the district court therefore erred in
stating that he “lied” to “the lawyers” to secure a favorable opinion. However, the district court
never stated that Donaldson lied specifically to Handler Thayer. The district court merely found
that Donaldson lied to “lawyers,” a contention amply supported by the record. Moreover, the
Government did not need to prove that Donaldson knew of or participated in every aspect of the
conspiracy, but only that he knew of the conspiracy’s “essential nature.” See Browning,
723
F.2d at 1546. The overwhelming evidence presented at trial supported a conclusion that
Donaldson was well aware of the essential nature of Appellants’ conspiracy to defraud the IRS.
See
id.
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policies involved genuine risk shifting and distribution and that the premiums
charged by Fidelity were calculated using arms–length actuarial principles.
Donaldson argues that his role as “mere salesman” in the commercial
enterprise also negates his willful intent. In United States v. Parker,
839 F.2d
1473, 1478 (11th Cir. 1988), this Court reversed the conviction of salesmen who
had no reason to suspect that the securities they traded lacked sufficient collateral.
This Court reasoned that because there was no evidence that the salesmen were
aware of, or participated in, a fraud perpetrated solely by their employer, their
convictions should be vacated.
Id. at 1479. Unlike the salesmen in Parker,
Donaldson had ample reason to suspect that he was marketing and selling an illegal
product. That reason came directly from Fidelity’s lawyers at Lord Bissel, who
withdrew their 2001 opinion sanctioning the BPP because several “material facts”
represented to Lord Bissel by Appellants “may not have been true.” Donaldson
was thus fully aware of Lord Bissel’s concerns with the BPP’s legality.
Nonetheless, even after Lord Bissel’s withdrawal, Donaldson continued to promote
the BPP as fully compliant with the tax law. Parker is therefore inapposite to the
instant case because Donaldson was aware of the BPP’s potential illegality before
proceeding to market and sell it.
The evidence presented at trial was thus sufficient to support a finding that
Appellants (1) agreed to impede the functions of the IRS, (2) voluntarily,
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knowingly, and willfully participated in their agreement, and (3) acted repeatedly
in furtherance of their agreement.3 See Hough, 803 F.3d at 1187.
3. Appellants Willfully Aided in the Filing of False Tax Returns.
Appellants argue that their convictions for substantive tax fraud under §
7206(2) should be overturned because they relied on advice from counsel that
sanctioned the structure of the BPP as IRS–compliant. In response, the
Government argues that Appellants acted willfully and “did not establish good–
faith reliance on the [Lord Bissel] or [Handler Thayer] opinions.”
To prove a violation of § 7206(2), the Government must prove beyond a
reasonable doubt that the defendant (1) willfully and knowingly aided or assisted
(2) in the preparation or filing of a tax return (3) containing material statements
that the defendant knew to be false. See Kottwitz,
614 F.3d at 1269 (internal
quotation marks and citation omitted). A defendant willfully violates § 7206(2)
when he or she creates, organizes, and operates a fraudulent tax shelter that results
in the preparation or presentation of a materially false tax return. See United States
v. Kelley,
864 F.2d 569, 576–77 (7th Cir. 1989).
3
Crithfield argues that his role in the creation, implementation, and administration of the BPP
was insufficient for the district court to conclude that he acted willfully to defraud the IRS.
However, the record reflects that Crithfield knew of the enterprise’s operations, remained in
regular contact with Donaldson, and had direct awareness of Lord Bissel’s issues with the BPP’s
operations and Lord Bissel’s subsequent withdrawal. The district court was therefore presented
with sufficient evidence to conclude that Crithfield willfully conspired with Donaldson to create,
operate, and promote the BPP, fully knowing that the BPP was a substantive sham.
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Here, the district court properly concluded that two BPP clients–Brian
James, M.D., P.A. and Safety Products, Inc.–paid Citadel hefty premiums in
exchange for sham BPP business–risk policies that were created, promoted, and
administered by Appellants. After Donaldson assured these clients that the BPP
was a mere “asset protection investment mechanism” that would “fly with the
IRS,” the clients impermissibly deducted those premiums from their corporate tax
returns. Trial testimony showed that Donaldson was the “primary consultant” and
“key person involved” in getting both clients to purchase BPP policies. Although
Appellants argue that they were merely relying on the expertise of the attorneys at
Lord Bissel and Handler Thayer in administering the BPP, Appellants’ advice–of–
counsel argument fails for the reasons stated in Section III.A.2, supra.
The district court therefore had sufficient evidence to conclude that by
creating, marketing, and administering the BPP, a fraudulent tax shelter that
resulted in the preparation of materially false tax returns by Brian James, M.D.,
P.A. and Safety Products, Inc., Appellants willfully violated § 7206(2). See Kelley,
864 F.2d at 576–77; Kottwitz,
614 F.3d at 1269.
B. Denial of Motion for Acquittal or New Trial.
Donaldson argues that the district court abused its discretion in denying his
motion for a new trial because the district court impermissibly “persuaded”
Donaldson to not call Handler Thayer attorney James Duggan as a witness in his
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defense. Donaldson claims that if Duggan testified, he would have stated that,
contrary to the district court’s findings, Donaldson did not lie to Duggan to secure
a favorable opinion from Handler Thayer and that the insurance plans offered by
the BPP were not “fantastical and superfluous.” The Government argues that the
district court did not discourage Donaldson from calling Duggan as a witness, and
that, even if it did, any error on the district court’s part was harmless.
The district court may exercise its discretion to vacate a judgment and grant
a new trial if the interest of justice so requires. Fed R. Crim. P. 33. This Court
will overturn the denial of a motion for a new trial only if the evidence
preponderates heavily against the verdict such that it would be a miscarriage of
justice to let the verdict stand. Albury, 782 F.3d at 1295.
First, the district court did not discourage Donaldson from calling Duggan as
a witness. The district court stated, after admitting into evidence the text of the
Handler Thayer opinion, that it was not sure what additional value Duggan’s
testimony would provide, and that any such testimony would have to include
relevant information not already mentioned in the Handler Thayer opinion. Then,
Donaldson’s counsel decided not to call Duggan as a witness. Contrary to
Donaldson’s assertion, the district court never “informed” Donaldson that
Duggan’s testimony was “unnecessary.” Nor did the district court even offer
Donaldson “guidance” regarding his own decision of whether to call a witness.
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The district court merely questioned the potential efficacy of Duggan as a witness,
and Donaldson’s counsel made a voluntary decision against calling Duggan as a
witness “in light of [his] own evidentiary determinations and decisions as to how
the case should proceed.”
Moreover, the district court did not find, as Donaldson suggests, that the
coverages offered within the BPP were superfluous for all purposes. Rather, the
district court found that the coverages were superfluous for the specific customers
who bought them, including one doctor’s office that purchased wholly unnecessary
insurance for protection against international kidnapping.
Because Donaldson fails to show a “miscarriage of justice” caused by his
attorneys’ decision to not call Duggan as a witness, this Court affirms the district
court’s denial of Donaldson’s motion for a new trial. See Albury, 782 F.3d at
1295.
C. Denial of Motion to Suppress.
Finally, Appellants challenge the district court’s denial of their motion to
suppress all evidence seized by federal agents on May 9, 2007 pursuant to several
search warrants. Appellants argue that the warrants were issued in reliance on a
32–page affidavit that intentionally and falsely stated that the Lord Bissel and
Handler Thayer opinions themselves created an “illegal tax scheme,” when the
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Government did not challenge the lawfulness of the opinions themselves.4 In
response, the Government argues that the affidavit was “truthful and entirely
consistent with the [the Government’s] proof at trial.”
To attack the veracity of an affidavit supporting a search warrant, the burden
falls on the defendant to show that the affiant “knowingly and intentionally, or
with reckless disregard for the truth,” misstated facts that were essential to the
finding of probable cause. See Franks v. Delaware,
438 U.S. 154, 155–156
(1978). However, “intentional or reckless omissions will invalidate a warrant only
if inclusion of the omitted facts would have prevented a finding of probable
cause.” United States v. Lebowitz,
676 F.3d 1000, 1010 (11th Cir. 2012) (internal
citation omitted). If probable cause still exists once any misrepresentations are
taken out of the warrant and any omissions are inserted, “there is no . . . Franks
violation.” See Capers, 708 F.3d at 1296.
Here, probable cause supported the searches at issue regardless of whether
the Affiant falsely stated that the legal opinions at issue created an “illegal tax
scheme.” Lebowitz,
676 F.3d at 1010. The detailed 32–page affidavit in support
of the warrant provided sufficient evidence for the issuing magistrate to conclude
that Appellants may have devised the BPP scheme precisely to effect the
4
Appellants invite the Court to address other suppression arguments briefed before the district
court, but not on appeal. This Court declines to do so. Timson v. Sampson,
518 F.3d 870, 874
(11th Cir. 2008) (holding that issues not briefed on appeal are considered abandoned).
21
Case: 18-10221 Date Filed: 03/22/2019 Page: 22 of 22
submission of materially false tax returns. See Illinois v. Gates,
462 U.S. 213, 232
(1983) (“[P]robable cause is a fluid concept–turning on the assessment of
probabilities in particular factual contexts–not readily or even usefully reduced to a
neat set of legal rules.”). Specifically, the Affiant presented evidence that the BPP
was promoted primarily as a vehicle for asset protection and tax avoidance; that
Lord Bissel questioned its legality and that Appellants continued their operations
anyway; that BPP clients were encouraged to buy insurance against risks unlikely
to occur; that BPP clients were encouraged to not submit claims against their BPP
policies; and that the premium amount was calculated not by accounting
professionals using actuarially sound principles, but by the clients themselves.
Thus, even if the Affiant had not asserted that the Lord Bissel and Handler
Thayer opinions themselves created an “illegal tax scheme,” the affidavit
nonetheless presented sufficient facts to support a finding of probable cause. See
Capers, 708 F.3d at 1296. The district court’s order denying Appellants’ motion to
suppress is therefore affirmed.
IV. CONCLUSION
We AFFIRM the judgment of the district court.
22
