United States v. William Paul , 518 F. App'x 894 ( 2013 )

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
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No. 12-13208
Non-Argument Calendar
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D.C. Docket No. 2:11-cr-00057-MEF-CSC-2
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
WILLIAM PAUL,
Defendant-Appellant.
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Appeal from the United States District Court
for the Middle District of Alabama
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(May 20, 2013)
Before MARCUS, PRYOR and KRAVITCH, Circuit Judges.
PER CURIAM:
William Paul appeals his convictions and sentence of 53 months of
imprisonment for tax evasion, 26 U.S.C. § 7201, and willful failure to file a tax
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return, id. § 7203. Paul argues, for the first time, that the district court erred by
failing sua sponte to dismiss his charge of violating section 7203 and by admitting
an order of child support. Paul also argues about the denial of his motions for a
continuance; cumulative error; the sufficiency of the evidence; the enhancement of
his sentence for obstruction of justice and using sophisticated means; and the
reasonableness of his sentence. We affirm.
Paul argues that the district court committed three errors that collectively
denied him a fair trial, but his arguments about individual and cumulative error
fail. First, Paul argues, for the first time on appeal, that the district court should
have dismissed sua sponte his charge under section 7203 because a violation “is
not a crime” when IRS regulations provide monetary penalties, but we disagree.
The plain language of section 7203 provides that a violator “shall, in addition to
other penalties . . . , be guilty of a misdemeanor.” 26 U.S.C. § 7203. Second, Paul
argues that he was entitled to a third continuance after he decided to proceed pro se
about two months before trial, but the district court did not abuse its discretion in
denying Paul’s motion. The district court had twice continued Paul’s trial at the
request of a codefendant; discovery was complete several months before trial; Paul
knew how to access the discovery; and Paul received an electronic copy of
discovery materials from the government more than one month before trial. Paul
fails to explain how he was prejudiced by the “alleged inadequate opportunity to
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prepare for trial,” United States v. Graham, 643 F.3d 885, 893 (11th Cir. 2011)
(internal quotation marks omitted), or “how additional time would have aided [his]
defense,” United States v. Davis, 967 F.2d 516, 519 (11th Cir. 1992), reh’g granted
on other grounds, 30 F.3d 108 (11th Cir. 1994). Third, Paul argues, also for the
first time, that the district court erred by admitting an order of child support and
then limiting his cross-examination on the matter, but the district court did not
plainly err. Paul invited any error by stating that he had “[n]o objection” to
admitting the order into evidence, see United States v. Thayer, 204 F.3d 1352,
1355 (11th Cir. 2000), after which the district court eliminated the need for cross-
examination by withdrawing the order from evidence sua sponte on the ground it
was irrelevant, see United States v. Maxwell, 579 F.3d 1282, 1296 (11th Cir.
2009). And the district court eradicated any potential prejudice against Paul by
instructing the jury to disregard any testimony about or reference to the order. See
United States v. Tenorio-Angel, 756 F.2d 1505, 1512 (11th Cir. 1985). Because
Paul fails to identify any individual error, his argument about cumulative error
fails. See United States v. Waldon, 363 F.3d 1103, 1110 (11th Cir. 2004).
Paul argues that the government failed to prove that he violated the tax laws
willfully, but the district court did not err by submitting this question to the jury
and denying Paul’s motion for a judgment of acquittal. The government satisfied
its burden to “prove that the law imposed a duty on [Paul], that [he] knew of this
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duty, and that he voluntarily and intentionally violated that duty.” Cheek v. United
States, 498 U.S. 192, 201, 111 S. Ct. 604, 610 (1991). The evidence supported the
finding of the jury that Paul acted willfully in failing to file a tax return and in
aiding his wife to evade paying taxes based on testimony from Paul’s wife, the
Pauls’ accountants, and two agents of the Internal Revenue Service, Curtis Wolfe
and Carol Dox. Mrs. Paul and Agent Wolfe testified that Paul, who had served as
the office manager for his wife’s medical practice, changed the status of the
practice in 2004 from an S corporation to a nonprofit organization, applied for the
change of status, and listed himself as president of the nonprofit organization.
Agent Wolfe testified that Paul, who was responsible in his role as president to file
a Form 990 tax return yearly for the organization, failed to claim an exemption to
that yearly requirement when he applied for nonprofit status. And Agents Wolfe
and Dox testified that Paul filed a Form 990 and reported income for the
organization for tax years 2004 and 2005, but not 2006 or 2007. Presented with
these facts, the jury reasonably found that Paul knew to file a Form 990 for tax
year 2007, but willfully failed to do so. See 26 U.S.C. § 7203; see also Cheek, 498
U.S. at 202, 111 S. Ct. at 611 (“[O]ne cannot be aware that the law imposes a duty
upon him and yet be ignorant of it, misunderstand the law, or believe that the duty
does not exist.”).
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The evidence also supported the finding of the jury that Paul willfully aided
his wife when she evaded paying taxes. See 26 U.S.C. § 7201. Mrs. Paul and
Agent Wolfe testified that Paul arranged the financial affairs of the medical
practice so Mrs. Paul could avoid reporting income. Mrs. Paul testified that she
was obliged to pay taxes and complied with that duty before marrying Paul, but in
tax years 2004 through 2007 she neglected her obligation at Paul’s insistence that
she treat her income from the medical practice as loans. As part of this scheme,
Paul wrote “loan/draw” on the subject line of checks issued to Mrs. Paul and did
not issue her a W-2 or Form 1099. During the investigation that ensued, Paul
contended that he was not obliged to pay taxes and gave inconsistent statements to
justify his position. Agent Wolfe testified about a meeting in 2009 with Paul
during which he asserted that he had taken a vow of poverty and that his wife, the
sole provider for the family, was simply not required to pay taxes. Agent Wolfe
also testified about a meeting in 2010 with Paul and his wife during which they
said they were excused from paying taxes because Mrs. Paul received loans from
the medical practice. And Paul aided Mrs. Paul in withholding information from
and understating her income in filings with the Revenue Service. In 2005, Mrs.
Paul entered an agreement with her bank stating that her monthly income was
$7,000, and a loan agreement purportedly entered by Mrs. Paul and her medical
practice guaranteed her a salary of $400,000. Nonetheless, Mrs. Paul filed a
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delinquent tax return for tax year 2006 provided by Paul that reported his wife’s
income as $2,589. Although Mrs. Paul testified that she received nontaxable
income from the medical practice, the scheme and methods Paul used to conceal
Mrs. Paul’s income, and the substantial amount of that income reveals that Paul
knew his wife was required to pay taxes, but he voluntarily and intentionally
helped her evade that obligation. See id.; United States v. Daniels, 617 F.2d 146,
148–49 (5th Cir. 1980).
The district court did not clearly err by enhancing Paul’s sentence for his use
of sophisticated means. A defendant is subject to a two-level increase to his base
offense level if he uses “especially complex or especially intricate . . . conduct [in]
the execution or concealment of an offense.” United States Sentencing Guidelines
Manual § 2T1.1(b)(2) & cmt. n.4 (Nov. 2011). Paul converted his wife’s medical
practice to a nonprofit organization, classified payments from the practice as loans
to avoid reporting income, and deposited that money in 35 bank accounts that he
controlled on behalf of 13 shell businesses that he created within his nonprofit
organization. Paul’s tax avoidance scheme was sophisticated. See United States v.
Campbell, 491 F.3d 1306, 1315–16 (11th Cir. 2007).
The district court also did not clearly err by enhancing Paul’s sentence for
obstruction of justice. The Sentencing Guidelines provide for a two-level
enhancement of a sentence if a defendant “willfully obstructed or impeded, or
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attempted to obstruct or impede, the administration of justice with respect to the
investigation, prosecution, or sentencing of the instant offense of conviction” and
his “obstructive conduct related to (A) [his] offense of conviction and any relevant
conduct; or (B) a closely related offense.” U.S.S.G. § 3C1.1. Paul obstructed
justice by attempting to interfere when his codefendant, Mrs. Paul, and her counsel
were involved in plea negotiations. See id. § 3C1.1 cmt. n.4(A), (D). Paul
instructed Mrs. Paul’s attorney not to contact her, and Paul forwarded emails
between Mrs. Paul and her attorney to counsel for the government. And Mrs. Paul
testified that Paul asked her not to plead guilty. Paul argues that “the impetus for
[his] conduct was protection of his wife, not prevention of her guilty plea,” but the
district court was entitled to reach a contrary finding based on the extent of Paul’s
involvement in the fraud and his pending criminal charges. See United States v.
Garcia, 13 F.3d 1464, 1471 (11th Cir. 1994).
The district court also did not abuse its discretion by varying upward from
the advisory guidelines range and sentencing Paul to 53 months of imprisonment.
Paul orchestrated a “loan scheme” to evade paying taxes on income from his wife’s
medical practice, failed to file tax returns to conceal that wrongdoing, and
underreported income on delinquent tax returns filed after the Revenue Service
discovered the fraud. Despite the substantial evidence of his guilt, Paul maintained
at his sentencing hearing that he was innocent. And the district court was
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concerned about Paul’s ability to manipulate his wife and influence her to
disregard her obligation to comply with the tax laws. The district court explained
that it had varied upward 12 months from the high end of Paul’s advisory
sentencing range of 33 to 41 months on the grounds that the “guidelines
underrepresent[ed] the conduct that [he] committed in this case” and that a
sentence at the low end of the guidelines range would “not [be] sufficient” to
address the statutory purposes of sentencing. The district court reasonably
determined that a sentence of 53 months would best “reflect the seriousness of the
offense, . . . promote respect for the law and . . . provide just punishment for the
offense, . . . afford adequate deterrence to criminal conduct, and . . . protect the
public from any further [similar] crimes.” See 18 U.S.C. § 3553. Paul’s sentence,
which is well below the maximum statutory penalty of 21 years of imprisonment,
is reasonable. See United States v. Gonzalez, 550 F.3d 1319, 1324 (11th Cir.
2008).
We AFFIRM Paul’s convictions and sentence.
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