United States v. Mark S. Maggert , 428 F. App'x 874 ( 2011 )

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 10-14112 ELEVENTH CIRCUIT
Non-Argument Calendar MAY 31, 2011
________________________ JOHN LEY
CLERK
D.C. Docket No. 5:09-cr-00044-WTH-GRJ-1
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
MARK S. MAGGERT,
Defendant-Appellant.
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(May 31, 2011)
Before HULL, MARCUS and FAY, Circuit Judges.
PER CURIAM:
After a jury trial, Mark S. Maggert appeals his convictions and sentences for
attempted tax evasion, in violation of 26 U.S.C. § 7201. After review, we affirm.
I. BACKGROUND FACTS
A. Offense Conduct
Maggert, a dentist, worked for several dental offices as an independent
contractor. In 1998, Maggert and his wife attended a seminar by American Rights
Litigators (“ARL”) and Eddie Kahn at which they were told they did not have to
pay federal income tax. Maggert relayed this information to his accountant, who
counseled Maggert against ARL’s advice and ended their professional relationship
when Maggert persisted. Maggert dissolved his professional association, Mark S.
Maggert, D.D.S., P.A., and, from 1998 to 2005, did not file a federal tax return or
pay federal income tax.
Beginning in 2002, Maggert instructed the accountants for the dental offices
where he worked to make his paychecks payable to Total Business Systems, LLC,
a Florida corporation, or to Mark’s Word of Faith International, a Nevada
corporation. The accountants complied and issued Form 1099s, using the
corporate identification numbers for these organizations rather than Maggert’s
social security number. Maggert deposited the paychecks into accounts he opened
in these organization’s names and withdrew money from the accounts on a regular
basis (over $40,000 in 2002, over $52,000 in 2003, $178,000 in 2004 and
$128,000 in 2005, for a total of $398,600).
2
The articles of organization for Total Business Systems, LLC identified the
managing member as Geneva Holdings, Inc., in Australia and the registered agent
as Ronald Saltzer. The articles of organization were signed by Saltzer and Alan R.
Horne, the “Director” of Geneva Holdings, Inc. Saltzer admitted that he knew
nothing about Total Business Systems, LLC or Geneva Holdings, Inc., and had
never met Maggert or Horne. Saltzer had agreed to act as the registered agent and
sign the articles of incorporation in exchange for a meal provided by Eddie Kahn.
The articles of incorporation for Mark’s Word of Faith International listed
Maggert as the “Presiding Patriarch (Overseer).” Maggert’s wife signed the
articles of incorporation as a witness and “Scribe.” Maggert’s wife admitted there
was no such religious organization and that Maggert was not a spiritual leader or
priest.1
Additionally, Maggert gave powers of attorney to two individuals
associated with ARL, Bryan Malatesta, a certified public accountant, and Milton
Baxley, an attorney. A former ARL employee testified that although she had seen
1
In 2004, Maggert formed a Nevada corporation also called Total Business Systems LLC.
The articles of incorporation listed “Mark S. Maggert, DDS” with a Las Vegas address as the
“manager.” A separate list of initial members also identified Maggert’s wife as a manager and
Mark’s Word of Faith International as a member.
3
Malatesta and Baxley at ARL once or twice between 1998 and 2003, they were
never with clients and did not have office space at ARL.
B. Criminal Investigation
Michael Anderson, a special agent with the IRS Criminal Investigation
Division, participated in an investigation of ARL and executed a search warrant at
ARL’s Florida business location. According to Agent Anderson, ARL maintained
records for its “clients,” but did not have any tax accounting software or the
documents a CPA would need to represent someone before the IRS. None of
ARL’s records indicated that either CPA Malatesta or attorney Baxley maintained
a professional relationship with ARL’s clients. Instead, ARL paid Malatesta and
Baxley solely for the use of their names. ARL’s correspondence sent to the IRS
was generated by ARL employees.
From 1999 to 2005, the IRS sent Defendant Maggert letters advising him of
his federal tax obligations, warning him of possible criminal sanctions and
attempting to set up appointments to meet with Maggert. Through ARL, Maggert
sent the IRS correspondence, often stamped with the signature of CPA Malatesta
or attorney Baxley. That correspondence asserted that Maggert had no obligation
to file a federal income tax return or pay federal income taxes and that the IRS did
not have the authority to investigate or determine Maggert’s tax liability.
4
Based on financial information from its investigation, the IRS computed
Maggert’s taxable income for the years 2002 to 2005 and calculated that Maggert
owed the following federal income taxes: at least $51,538 in 2002; at least
$50,316 in 2003; at least $101,570 in 2004 and at least $90,464 in 2005.
C. Trial Date Continued
A federal grand jury indicted Maggert on four counts of attempt to evade
and defeat the federal income tax for the years 2002 through 2005. At his
September 28, 2009 initial appearance, Maggert stated he planned to obtain
counsel. When Maggert appeared without counsel at his October 16, 2009
arraignment, the district court gave Maggert two more weeks to find counsel.
At an October 30, 2009 hearing, Maggert still had not obtained counsel and
indicated he wished to represent himself. The district court gave Maggert
appropriate warnings about his decision and found that Maggert’s decision to
proceed pro se was knowing and voluntary. The district court appointed standby
counsel that same day.
The district court originally set trial for January 11, 2010, but granted
Maggert a 60-day continuance to hire counsel and prepare a defense. The district
court reset trial for March 15, 2010. The district court warned Maggert that: (1)
the trial date was firm, (2) no additional continuances would be granted and (3) if
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Maggert was unable to obtain counsel, he would be expected to proceed pro se on
that date with the aid of standby counsel.
On March 15, 2010, Maggert failed to appear at trial. Standby counsel
advised the court she had no contact with Maggert prior to trial. With the jury
panel standing by, the district court issued a warrant for Maggert’s arrest and
recessed while the U.S. Marshal Service located Maggert that day.
D. Trial
Later that day, the parties selected a jury and gave opening statements. The
next day, the government called its first witness, an IRS custodian of records.
After the government finished its direct examination, Maggert informed the court
that he wanted standby counsel to conduct cross-examination. The district court
advised Maggert that he could either represent himself or standby counsel could
represent him, but not both. After a short recess, Maggert decided to have standby
counsel represent him.
Standby counsel then moved for a mistrial and for a continuance to allow
her to consult with experts and prepare to defend Maggert. The district court
denied both requests, and the trial recommenced. The jury convicted Maggert on
all counts.
E. Sentencing
6
The presentence investigation report (“PSI”): (1) calculated Maggert’s base
offense level as 20, pursuant to U.S.S.G. §§ 2T1.1(a)(1) and 2T4.1(H), based on a
loss amount of more than $400,000 but less than $1 million; and (2) recommended
a two-level sophisticated means enhancement, pursuant to U.S.S.G. § 2T1.1(b)(2),
because Maggert had attempted to hide assets or transactions from the IRS through
the use of fictitious entities. With a total offense level of 22 and a criminal history
category of II, the PSI recommended an advisory guidelines range of 46 to 57
months’ imprisonment.
Maggert objected to, inter alia, the sophisticated means enhancement.
Maggert argued that his use of corporate entities could not be considered
“sophisticated” because he did not file fraudulent tax returns and the IRS easily
determined his income from 1099s his employers issued and subpoened bank
records.
At the sentencing hearing, the district court overruled Maggert’s objection
and applied the sophisticated means enhancement. The district court adopted the
PSI’s guidelines calculations and advisory guidelines range of 46 to 57 months.
After considering the 18 U.S.C. § 3553(a) factors, the district court imposed a 42-
month sentence. Maggert appealed.
II. DISCUSSION
7
A. Denial of Motion for Continuance
Maggert argues that the district court should have granted his request for a
continuance on the second day of trial when his standby counsel began
representing him.2 “Under certain circumstances, denial of a motion for
continuance of trial may vitiate the effect of” the Sixth Amendment’s right to
counsel to such an extent that it results in a due process violation. United States v.
Valladares, 544 F.3d 1257, 1262 (11th Cir. 2008). “To prevail on such a claim, a
defendant must show that the denial of the motion for continuance was an abuse of
discretion which resulted in specific substantial prejudice” by identifying
“relevant, non-cumulative evidence that would have been presented if [the
defendant’s] request for a continuance had been granted.” Id. (quotation marks
omitted).
Maggert has not shown an abuse of discretion resulting in specific
substantial prejudice. The district court gave Maggert a two-month continuance
(January 11 to March 15) and almost six months (September 28 to March 15) to
prepare for trial or find counsel. Standby counsel was available for most of that
2
Maggert’s brief lists the denial of his motion for a mistrial in its statement of the issues,
but fails to develop any argument regarding this issue. Therefore, we do not address the issue on
appeal. See United States v. Jernigan, 341 F.3d 1273, 1283 n.8 (11th Cir. 2003) (explaining that
an issue was abandoned where the defendant’s brief made only “passing references” to the issue).
8
time, but Maggert did not seek her assistance. When the district court granted
Maggert’s first continuance request, it warned Maggert that the new trial date was
firm and no further continuances would be granted. Maggert let the trial begin
without raising any concern and did not ask standby counsel to take over until the
second day of trial.
More importantly, the record reflects that once standby counsel took over,
she was able to cross-examine witnesses, object to evidence and offer objections
to the jury instructions. And, Maggert has not pointed to any relevant, non-
cumulative evidence he would have presented if his second continuance request
had been granted. Under these circumstances, we find no abuse of discretion and
no due process violation.3
B. Jury Instruction on Elements of Attempted Tax Evasion
For the first time on appeal, Maggert contends the district court did not
properly instruct the jury on the elements of a § 7201 offense for attempted tax
evasion.
3
To the extent Maggert argues that his trial counsel was ineffective, we decline to address
this issue on direct appeal. See United States v. Bender, 290 F.3d 1279, 1284 (11th Cir. 2002)
(explaining that generally we do not consider ineffective assistance of counsel claims on direct
appeal where the district court did not address the claim and develop the factual record).
9
At trial, the district court instructed the jury that the defendant could be
found guilty of attempted tax evasion “only if all of the following facts are proved
beyond a reasonable doubt: first, that the defendant owed substantial income tax
upon income that was not declared in a tax return for the year in question and,
second, that the defendant knowingly and willfully attempted to evade or defeat
such tax.” The district court further instructed that “[t]he word ‘attempted’
contemplates that the defendant had knowledge and an understanding that during
the particular tax year involved he had income which was taxable and which he
was required by law to report but that he, nevertheless, tried or endeavored -- that
is, attempted -- to evade or defeat the tax or a substantial portion of the tax on that
income by willfully failing to report all of the income which he knew he had
during that year.”
Maggert argues, and the government concedes, that the district court
omitted from its instruction that it was necessary to find an affirmative act of
attempted evasion. See United States v. Kaiser, 893 F.2d 1300, 1305 (11th Cir.
1999) (“The elements of tax evasion under § 7201 are: (1) willfulness; (2)
existence of a tax deficiency; and (3) an affirmative act constituting an evasion or
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attempted evasion of the tax.”).4 Because Maggert did not object to the jury
instruction in the district court, however, our review is for plain error only. United
States v. Felts, 579 F.3d 1341, 1343 (11th Cir. 2009). “Jury instructions will not
be reversed for plain error unless the charge, considered as a whole, is so clearly
erroneous as to result in a likelihood of a grave miscarriage of justice, or the error
seriously affects the fairness, integrity, or public reputation of judicial
proceedings.” United States v. Starke, 62 F.3d 1374, 1381 (11th Cir. 1995)
(quotation marks omitted). The challenged jury instruction must “be a plainly
incorrect statement of the law” and “probably responsible for an incorrect verdict,
leading to substantial injustice,” such that it misled the jury or left the jury to
speculate as to an essential point of law. United States v. Prather, 205 F.3d 1265,
1271 (11th Cir. 2000).
4
The district court modified the Eleventh Circuit’s Pattern Jury Instruction for tax
evasion, which states the elements of the offense as: (1) the defendant owed substantial income
tax in addition to the amount declared on the defendant’s return, (2) the defendant knew when he
filed his return that he owed the substantial amount of income tax, and (3) the defendant intended
to evade paying the taxes he knew he was required to pay. 11th Cir. Pattern Jury Instruction
107.1. In other words, Pattern Jury Instruction 107.1 applies when the defendant filed a tax
return that under-reported his taxable income, which in and of itself would constitute an
affirmative act. See United States v. Uscinski, 369 F.3d 1243, 1247 (11th Cir. 2004) (explaining
that when the tax evasion involves the filing of a fraudulent tax return, the offense is complete
upon filing of the return). Here, because Maggert did not file a tax return at all, the district court
omitted any reference to the filing of a tax return.
11
Maggert has not shown plain error. First, it is not clear under our precedent
whether the district court’s instruction even misstated the law. Although the
district court’s instruction did not explicitly state that an affirmative act of evasion
was an element of the offense, the instruction as a whole conveyed to the jury that
it was required to find that Maggert tried to evade paying income taxes by
willfully failing to report that income on a tax return. This Circuit has not directly
addressed whether the willful failure to report taxable income constitutes an
affirmative act of evasion, and at least one former Fifth Circuit case suggests that
it does. See United States v. Buckley, 586 F.2d 498, 504 (5th Cir. 1978) (“Where
one of the affirmative acts of evasion relied upon by the government in proving
attempted tax evasion under the Section 7201 is the failure to file an income tax
return, failure to file [under Section 7203] is a lesser included offense . . . .”).5
Thus, the district court’s instruction was not a plainly incorrect statement of the
law.
Second, there was overwhelming evidence that Maggert committed
numerous affirmative acts of evasion—creating two corporate entities, opening
bank accounts in the name of those corporate entities, instructing his employers to
5
Decisions of the former Fifth Circuit on or before September 30, 1981 are binding
precedent in the Eleventh Circuit. Bonner v. City of Prichard, 661 F.2d 1206, 1209 (11th Cir.
1981) (en banc).
12
issue his paychecks to those corporate entities, depositing those paychecks into the
corporate entities’ bank accounts and then withdrawing money from those
accounts on a regular basis. Accordingly, we cannot say the district court’s
instruction on the elements of the attempted tax evasion was probably responsible
for an incorrect verdict.
C. Jury Instruction on Good Faith Reliance on a Professional
Maggert also challenges the district court’s refusal to give his requested jury
instruction on good faith reliance on professional advice.6 A defendant has a right
to have the jury instructed on his theory of defense if there is “any foundation in
the evidence.” United States v. Ruiz, 59 F.3d 1151, 1154 (11th Cir. 1995). Even
under this extremely low evidentiary burden, however, the instruction must have
“some basis in the evidence.” United States v. Hedges, 912 F.3d 1397, 1405 (11th
Cir. 1990). A district court’s refusal to give a requested jury instruction is
reversible error if “(1) the requested instruction was substantively correct, (2) the
court’s charge to the jury did not cover the gist of the instruction, and (3) the
failure to give the instruction substantially impaired the defendant’s ability to
6
“We review a district court’s refusal to give a requested jury instruction for abuse of
discretion.” United States v. Svete, 556 F.3d 1157, 1161 (11th Cir. 2009) (en banc).
13
present an effective defense.” United States v. Culver, 598 F.3d 740, 751 (11th
Cir.), cert. denied, 131 S. Ct. 336 (2010).
The good faith reliance defense seeks to “refute the government’s proof that
the defendant intended to commit the offense.” United States v. Kottwitz, 614
F.3d 1241, 1271 (11th Cir.), modified in part on rehearing by 627 F.3d 1383 (11th
Cir. 2010) (quotation marks omitted). To establish the defense, the defendant
must show that he “(1) fully disclosed all relevant facts to the expert and (2) relied
in good faith on the expert’s advice.” Id.Here, there was no evidence in the record that Maggert even spoke to
Malatesta, Baxley or any other tax professional, much less sought and relied upon
their advice. There also was no evidence that Maggert provided Malatesta, Baxley
or any other tax professional at ARL the kind of information needed to furnish
professional tax advice. The only evidence in the record indicated that Malatesta
and Baxley did not maintain an office at ARL or meet with ARL’s clients and
were merely paid for the use of their names. Under the circumstances, the district
court’s refusal to give the requested good faith reliance instruction was not an
abuse of discretion.7
7
Although the district court refused to instruct the jury on good faith reliance on a
professional, it did instruct the jury that a defendant’s good faith was a valid defense because
good faith “is inconsistent with the element of willfulness which is an essential part of the
14
D. Sophisticated Means Enhancement
Under the advisory guidelines, the defendant’s offense level is increased by
two levels if the tax evasion offense used “sophisticated means.” U.S.S.G.
§ 2T1.1(b)(2). The commentary defines “sophisticated means” as “especially
complex or especially intricate offense conduct pertaining to the execution or
concealment of an offense” and gives as an example hiding assets through the use
of fictitious entities or corporate shells. U.S.S.G. § 2T1.1, cmt. n.4.8
Here, the district court’s application of the sophisticated means
enhancement was not clear error. To facilitate his tax evasion scheme, Maggert
set up two fictitious entities and used them to try to hide his income. Such
conduct falls squarely within § 2T1.1’s definition of sophisticated means. That
Maggert did not file a tax return and that the IRS ultimately was able to glean
Maggert’s true earnings from Form 1099s submitted by his employers has no
bearing on whether his use of those corporate entities qualified under the advisory
guidelines as sophisticated means.9
charge.”
8
We review a district court’s determination that a defendant used sophisticated means to
accomplish tax evasion for clear error. United States v. Clarke, 562 F.3d 1158, 1165 (11th Cir.
2009).
9
On appeal, Maggert does not raise any other procedural sentencing error or argue that his
ultimate sentence is substantively unreasonable.
15
For all of these reasons, we affirm Maggert’s convictions and sentences.
AFFIRMED.
16