United States v. David Evdokimow ( 2018 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_____________
No. 15-3876
_____________
UNITED STATES OF AMERICA
v.
DAVID EVDOKIMOW,
Appellant
______________
On Appeal from the United States District Court
for the District of New Jersey
(D.C. Crim. Action No. 1-14-cr-00605-001)
District Judge: Honorable Noel L. Hillman
______________
Argued: October 26, 2017
______________
Before: GREENAWAY, JR., COWEN, Circuit Judges, and PADOVA, District Judge*
(Opinion Filed: March 16, 2018)
______________
Robert J. Basil, Esq.
The Basil Law Group
1270 Broadway
Suite 305
New York, NY 10001
*
The Honorable John R. Padova, Senior United States District Judge for the
Eastern District of Pennsylvania, sitting by designation.
Lawrence S. Lustberg, Esq. [ARGUED]
Jason R. Halpin, Esq.
Gibbons P.C.
One Gateway Center
Newark, NJ 07102
Counsel for Appellant
Mark E. Coyne, Esq.
John F. Romano, Esq. [ARGUED]
Office of United States Attorney
970 Broad Street, Room 700
Newark, NJ 07102
Counsel for Appellee
______________
OPINION**
______________
PADOVA, Senior District Judge.
David Evdokimow appeals his conviction, after a jury trial, of eight counts relating
to his failure to report and pay taxes on his personal and business income. He raises two
claims of error. First, he argues that he was erroneously prevented from presenting
evidence that he filed amended tax returns and paid all of his tax liabilities some
seventeen months after learning of the criminal investigation against him. Second, he
contends that his trial was rendered fundamentally unfair by the Government’s comments
in closing argument, which he asserts improperly suggested to the jury that he had never
paid his outstanding taxes when, in fact, he had. We address each of these claims in turn
and conclude that there is no basis to overturn Evdokimow’s conviction.
**
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7
does not constitute binding precedent.
2
I. Background
Defendant David Evdokimow was a plastic surgeon who operated his own
practice, De’Omilia Plastic Surgery (“De’Omilia”) in northern New Jersey. Starting in
2006, Evdokimow hired two individuals, John Wright and Ginger Sweeton, to help him
make financial arrangements to reduce his taxes. Although Evdokimow’s prior
accountant warned him not to get involved with Wright and Sweeton, he retained them
anyway.
Wright, Sweeton, and Evdokimow put in place a scheme in which Evdokimow
arranged for the creation of a series of shell corporations to which he transferred proceeds
from his practice. Evdokimow then used those funds to pay his personal expenses. The
shell corporations were created with the assistance of Evdokimow’s friends and
employees, who were listed as the corporations’ directors and officers and also opened
bank accounts in the names of the corporations at Evdokimow’s request. Evdokimow
also had these associates create signature stamps, which he then used to write checks
from the shell corporations’ bank accounts and to file tax returns for the corporations.
Evdokimow kept the signature stamps in the basement of the house where his parents
lived, rather than in his office or his own home. Once Evdokimow transferred money
from his practice to the corporations, he claimed those transfers as business expenses on
both his personal tax returns and the business tax returns for De’Omilia, thereby reducing
his and his practice’s taxable income. Evdokimow also paid part of his employees’
salaries through checks purportedly written as bonuses or for reimbursement of expenses
3
from which no taxes had been withheld. He also had his patients make checks out to him
personally and would cash those checks at banks where either he or a trust in his name
had accounts. Evdokimow avoided cashing $10,000.00 or more in checks at any one
time to avoid his banks’ currency reporting requirements, and did not report that income
on his tax returns.
Evidokimow and Sweeton regularly discussed the tax scheme, and Sweeton
provided instructions to Evdokimow that explained not only the mechanics of the
arrangements, but also that their purpose was to “swap[] money to keep it from being
taxable to” him. Suppl. App. 439; 2524. Evdokimow also discussed the tax scheme on
multiple occasions with Dr. Augusto DaSilva, who had a similar arrangement with
Wright and Sweeton. Evdokimow and DaSilva occasionally used code phrases to discuss
Wright and Sweeton. On at least one occasion, an employee with knowledge of the
arrangements warned Evdokimow that he risked getting caught if he did not pay more
taxes.
In 2008, the Internal Revenue Service (“IRS”) audited Evdokimow’s 2006
personal tax return. In his response to the audit, Evdokimow made false statements to the
IRS agent to support representations in his return. Sweeton also told Evdokimow that she
would create documents to substantiate the deductions he had claimed in his returns.
Sweeton then created and provided to the IRS false documents that included fake mileage
logs to reflect nonexistent business trips and false invoices from the shell corporations to
De’Omilia. Based on these materials, the IRS agent found that Evdokimow owed
4
approximately $122,000 in taxes and penalties, which Evdokimow paid. In the wake of
the audit, DaSilva, who had also been audited, considered firing Sweeton, at which point
Evdokimow told DaSilva that “we know that what we’re involved with is bullshit” and
“if you’re going to the IRS, you’re going to go to jail . . . . You have no choice but to
continue.” Suppl. App. 1274; 1275.
The effect of the scheme was to substantially reduce Evdokimow’s tax payments.
Between 2006 and 2010, Evdokimow failed to report over $5.95 million in income on his
personal tax returns, which resulted in $935,476.00 in unpaid taxes. De’Omilia failed to
report over $5.83 million in income over the same period, which resulted in a tax
deficiency of more than $2 million.
The Government began a criminal investigation into Evdokimow’s taxes in the fall
of 2009. Evdokimow became aware of the investigation in January, 2012, when he was
served with a subpoena. DaSilva testified at trial that when Evdokimow learned about
the investigation, he warned DaSilva about it using coded language and later told DaSilva
that he intended to respond by suing Sweeton under the pretense that he knew nothing
about his taxes and had merely relied on Sweeton’s professional advice. Evdokimow
disputed DaSilva’s account, testifying that he had not read any of his tax returns until he
was subpoenaed in 2012, was not knowledgeable about accounting or bookkeeping, and
had depended on Sweeton up to that point.
After he became aware of the investigation, Evdokimow took steps to repay his
5
tax deficiencies.1 He retained lawyers and accountants to assist him to identify his
taxable income for the years 2005 through 2013, and did so without the help of Sweeton,
who refused to turn over financial documents to him. Evdokimow filed an amended tax
return for 2006 in June 2013, and filed amended returns for the remaining years in
September 2013. Evdokimow accordingly paid all of his tax liability, including penalties
and interest, totaling $3,395,394.00.
Evdokimow was indicted on October 15, 2014, and charged in a superseding
indictment on August 18, 2015, with one count of conspiracy to defraud the United States
by filing false tax returns in violation of 18 U.S.C. § 371, four counts of attempted
personal income tax evasion for tax years 2007 to 2010 in violation of 26 U.S.C. § 7201
and 18 U.S.C. § 2, and three counts of attempted corporate income tax evasion for tax
years 2008-2010, also in violation of 26 U.S.C. § 7201 and 18 U.S.C. § 2.
Before trial, the Government moved to preclude Evdokimow from presenting
evidence that he filed amended tax returns and paid additional taxes after learning of the
criminal investigation against him in January, 2012. The District Court granted the
motion in limine with respect to the amended tax returns and payments after oral
argument on September 9, 2015. The District Court concluded that any evidence
concerning Evdokimow’s subsequent tax payments was “of marginal probative value”
that was “substantially outweighed by its potential for prejudice and confusion to the
1
Because the District Court precluded Evdokimow from testifying regarding the
remedial steps he took after receiving the subpoena in 2012, our recitation of these facts
relies on counsels’ proffers of what the evidence would show, were it to be admitted.
6
jury.” App. 156. The Court reasoned that, while subsequent payments “could have
probative value,” the “delay of at least 18 months” between the point when Evdokimow
learned of the investigation and when he filed his amended returns eliminated any such
value in this case. App. 157. The Court further concluded that the eventual payment of
the taxes was “potentially confusing to the jury” and created a risk of jury nullification
that was “potentially uncurable . . . by even a careful instruction as to render it
admissible” because it opened the prospect of the defendant “argu[ing] to the jury that
[he] pay[s] [his] taxes like anybody else.” App. 157-58. Evdokimow sought
reconsideration of the District Court’s decision on the first day of trial, but the request
was denied.
After a twelve-day trial, the Government, in its summation, described
Evdokimow’s conduct at several points in terms of the “tax loss” that he had caused. The
Government also argued that Evdokimow had benefited from and “saved” millions of
dollars by underpaying his taxes. Evdokimow objected to these comments, arguing that
they misleadingly suggested to the jury that he still had tax obligations outstanding, when
in fact he had satisfied the tax debt before he was indicted. As a remedy, Evdokimow
requested that the District Court instruct the jury that he had paid his tax obligations after
learning about the investigation, which he conceded was a fact not in evidence. The
Court denied the request, but instructed the Government to be careful in rebuttal to make
clear that the issue before the jury related only to the time period covered by the
indictment. In rebuttal, the Government mentioned Evdokimow’s wealth and ability to
7
pay his taxes between 2006 and 2012, and argued that “[s]ometimes people that have a
lot of money are willing to commit crimes to get more. And that’s what happened here.”
App. 326-27.
The jury found Evdokimow guilty on all counts on November 18, 2015.
Evdokimow moved for judgment of acquittal or for a new trial under Federal Rules of
Criminal Procedure 29 and 33. The Court heard argument on and denied the motions on
February 16, 2017, and sentenced Evdokimow to 36 months’ imprisonment and a
$96,000.00 fine on the same day.
II. Analysis2
A. Exclusion of Evidence of Subsequent Tax Payments
Evdokimow asserts that the District Court erred by excluding evidence that he
filed amended tax returns and paid his tax debt after he learned he was under
investigation. Evidentiary rulings are generally reviewed for abuse of discretion.3 United
2
The District Court had jurisdiction under 18 U.S.C. § 3231. This Court has
jurisdiction over Evdokimow’s appeal pursuant to 28 U.S.C. § 1291.
3
Evdokimow urges us to exercise plenary review over this claim, arguing that the
District Court grounded its ruling on a misinterpretation of our decision in United States
v. Stoehr, 196 F.2d 276 (3d Cir. 1952), which amounts to legal error. Specifically,
Evdokimow argues that the District Court misread Stoehr to erroneously apply “a
presumption against admitting” evidence of his subsequent tax payments, when Stoehr in
fact favors admission of such evidence, and seems to argue that the District Court
erroneously read Stoehr to require exclusion of such evidence in every case. Appellant’s
Br. at 21. This argument mischaracterizes the District Court’s ruling. The District Court
clearly did not read Stoehr to require exclusion of that evidence as a matter of law.
Moreover, while the District Court referenced Stoehr, it did not rely on Stoehr for its
analysis, but rather applied the standard for exclusion of potentially relevant evidence
established by Federal Rule of Evidence 403. We therefore conclude that the District
8
States v. Friedman, 658 F.3d 342, 352 (3d Cir. 2011) (citation omitted). The District
Court’s discretion is “construed especially broadly in the context of [Federal] Rule [of
Evidence] 403.”4 United States v. Sussman, 709 F.3d 155, 173 (3d Cir. 2013) (quoting
United States v. Mathis, 264 F.3d 321, 326-27 (3d Cir. 2001)). “[W]hen a court engages
in a Rule 403 balancing and articulates on the record a rational explanation, we will
rarely disturb its ruling.” United States v. Finley, 726 F.3d 483, 491 (3d Cir. 2013)
(quoting United States v. Sampson, 980 F.2d 883, 889 (3d Cir. 1992)).
Evdokimow argues that we should not utilize this deferential standard of review
because the District Court failed to sufficiently explain its Rule 403 analysis. As we
explained in Finley, we have found that courts failed to properly perform this analysis
where they have “failed to mention anything about probative value or prejudice
surrounding particular evidence.” Id. (citations omitted). We have also held that trial
courts have failed to sufficiently explain their analyses when the “reasoning underlying
the Court’s Rule 403 balancing [is] not apparent from the record” or when the courts
“merely recite[] the text of the rule.” United States v. Caldwell, 760 F.3d 267, 284 (3d
Cir. 2014) (quotation omitted); see, e.g., United States v. Palma-Ruedas, 121 F.3d 841,
852 (3d Cir. 1997) rev’d on other grounds United States v. Rodriquez-Moreno, 526 U.S.
Court’s ruling on the Government’s motion in limine was an evidentiary ruling applying
Rule 403, and we review the District Court’s ruling for abuse of discretion.
4
Rule 403 provides that “[t]he court may exclude relevant evidence if its
probative value is substantially outweighed by a danger of one or more of the following:
unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or
needlessly presenting cumulative evidence.” Fed. R. Evid. 403.
9
275 (1999) (explanation insufficient where court “merely stated a conclusion that the
probative value of the evidence outweighed its prejudicial effect”); Sampson, 980 F.2d at
889 (reversing where “[t]he record [did] not disclose a Rule 403 balancing”); Gov’t of
Virgin Islands v. Pinney, 967 F.2d 912, 918 (3d Cir. 1992) (reversing because “the trial
court did not explain why it was denying defendant’s motion under Rule 403”).
However, courts are not required to write a treatise on every motion in limine; even in
situations where “a more detailed explanation from the District Court would have been
helpful,” we will evaluate the Court’s ruling for abuse of discretion so long as “we are
able to see that the District Court conducted a Rule 403 analysis.” Finley, 726 F.3d at
491.
Here, the District Court ruled on the motion in limine only after hearing
substantial argument and receiving thorough briefing from the parties concerning the
evidence that the Government sought to preclude. In the course of its ruling, the Court
articulated its assessments of both probative value and prejudicial effect: it explained that
it found that the delay in filing amended returns reduced the probative value of that
evidence to demonstrate Evdokimow’s earlier mental state, and described its concern that
evidence of tax payments made years after the period charged in the Indictment would
confuse the jury and raise the prospect of nullification. Such analysis is sufficient to
enable us “to see that the District Court conducted a Rule 403 analysis” and assess it on
appeal. Id.
Evdokimow next argues that the District Court erred in its application of our
10
decision in United States v. Stoehr, 196 F.2d 276 (3d Cir. 1952), to assess the probative
value of the evidence of his amended returns and tax payments. Stoehr, like the instant
case, involved a defendant charged with and convicted at trial of willful tax evasion, who
maintained in his defense that his tax payments had been made in good faith reliance on
the advice of others. Id. at 279. The defendant sought to admit evidence showing that,
fifteen months after being confronted about the fraud, he offered a compromise payment
to the government in exchange for the release of all liability. Id. at 282. The lower court
excluded this evidence; we affirmed, noting that while evidence of a prompt amended
filing and payment of additional tax might have been admissible, in the case at issue the
trial court could have reasonably concluded that the fifteen-month delay “destroyed
whatever slight probative value a prompt offer might have had.”5 Id. at 283.
The District Court in this case reached a similar conclusion, ruling that
Evdokimow’s remedial tax payments, made seventeen or more months after he
purportedly learned of the fraud, were of “marginal probative value” regarding his intent
5
Contrary to the assertions of the dissent, Stoehr does not “indicate[] that evidence
of remedial actions should generally be admitted.” Dissenting Op. at 3. Rather, we
emphasized in Stoehr that district courts “must consider the circumstances of the
individual case” when making these determinations. Stoehr, 196 F.2d at 282. And in the
sixty-five years since Stoehr was decided, other courts have agreed with that notion,
becoming, if anything, more skeptical of the evidence’s admissibility. See, e.g., United
States v. Beavers, 756 F.3d 1044, 1050 (7th Cir. 2014) (“[S]ubsequent remedial actions
may not be probative of the defendant’s prior state of mind because such actions are
equally consistent with (1) promptly correcting a genuine mistake and (2) trying to cover
up a purposeful lie in the hope of avoiding prosecution.”); United States v. Radtke, 415
F.3d 826, 841 (8th Cir. 2005) (“little, if any, probative value in . . . amended filing”);
United States v. Pang, 362 F.3d 1187, 1194 (9th Cir. 2004) (“[E]vidence of belated tax
payments, made while awaiting prosecution, is irrelevant.”).
11
at the time he filed his original tax returns. App. 156. The District Court cited our
decision in Stoehr, noting that we had both endorsed the position that subsequent
remedial actions could be of some evidentiary value to prove a defendant’s earlier good
faith, and held that a significant delay in taking those actions could weaken or destroy
any such value. Evdokimow argues that the District Court erroneously focused on the
seventeen-month gap between the time he learned of the Government’s investigation and
the time he filed his first amended tax return, and that it failed to consider his
intermediate remedial steps, which, he argues, amount to the kind of prompt attempts to
address his liability that the Stoehr Court thought might be admissible. In fact, however,
the District Court acknowledged that Evdokimow’s proffered evidence included the steps
he took to investigate and reconstruct his income during the intervening seventeen
months. It is clear from the questions the Court asked during the hearing that it
considered the probative value of all of the steps Evdokimow took after learning of the
Government’s investigation, including those taken before he ultimately filed amended
returns. The District Court simply concluded that all of that evidence was of limited
probative value that was substantially outweighed by the risk of jury confusion. In light
of the “very substantial discretion” we afford such conclusions, we cannot say this ruling
was an abuse of discretion simply because some jurists might possibly come to a
“differing view of the highly subjective factors of (a) the probative value, or (b) the
prejudice presented by the evidence.” United States v. Long, 574 F.2d 761, 767 (3d Cir.
1978). We therefore hold that the District Court provided a rational explanation for its
12
ruling, and did not abuse its discretion in granting the motion in limine.
Even if the District Court had abused its discretion, we are nonetheless convinced
that any error was harmless. Errors in evidentiary rulings will not be reversed when “it is
highly probable that the error did not affect the result.” United States v. DeMuro, 677
F.3d 500, 557 (3d Cir. 2012) (quoting United States v. Friedman, 658 F.3d 342, 352 (3d
Cir. 2011)). Errors are harmless when “we have a sure conviction that the error did not
prejudice the defendant[],” United States v. Stadtmauer, 620 F.3d 238, 266 (3d Cir. 2010)
(alteration in original) (quotation omitted), and we will not reverse when the other
evidence in the record of the defendant’s guilt is overwhelming, see United States v.
Christie, 624 F.3d 558, 571 (3d Cir. 2010) (evidentiary error was harmless “given the
truly overwhelming quantity of legitimate evidence against” the defendant).
Evdokimow argues that the evidence that he eventually paid his taxes is highly
relevant to the issue of his intent when he filed his original, false returns, and that,
consequently, the exclusion of that evidence prejudiced his defense that his original
filings were made in good faith. However, the exclusion of evidence regarding
Evdokimow’s subsequent tax payments did not prevent him from putting on his defense.
Evdokimow presented a thorough good-faith defense to the jury, which heard his account
that he had deferred entirely to Sweeton for the preparation of his tax returns; that he had
not looked closely at his returns and was unaware of any fraud until he received a
subpoena; that he has since hired a new accountant; and that he cooperated with both the
Government’s investigation and the earlier IRS audit.
13
The jury also heard extensive evidence that contradicted Evdokimow’s account
that he was unaware of and uninvolved in the tax fraud.6 Alexandra Lehr, Evdokimow’s
former office manager, testified that he ignored warnings from his former accountant not
to involve himself with Wright and Sweeton. Grigor Damyanov and Christine
Chamberlain testified that Evdokimow was personally involved in recruiting them to
open bank accounts that were used in the scheme. Agent Valenti, the lead case agent,
DaSilva, Damyanov, Chamberlain, and Lehr all testified that Evdokimow used stamps of
other people’s signatures to write checks to pay his personal expenses. Agent Valenti,
Lehr, DaSilva, and Ilda Pereira, the branch manager at one of Evdokimow’s banks, all
testified that he had patients make checks out to him personally and cashed them in
amounts below currency reporting requirements. DaSilva also testified that Evdokimow
communicated with him in code about both the scheme and the government investigation.
He also testified that Evdokimow admitted to him that they were “involved” in “bullshit”
for which they could “go to jail.” Suppl. App. 1274, 1275. Given this overwhelming
evidence that Evdokimow engaged in the tax fraud scheme willfully and the fact that
Evdokimow was able to present a thorough good-faith defense to the jury, we hold that,
even if the District Court had abused its discretion in excluding the subsequent tax
payments, any error in excluding such evidence would have been harmless.
6
After a conviction on a jury verdict, we view the evidence in the light most
favorable to the Government. United States v. Hoffecker, 530 F.3d 137, 146 (3d Cir.
2008) (citing United States v. Wood, 486 F.3d 781, 783 (3d Cir. 2007)).
14
B. The Government’s Comments in Closing Argument
Evdokimow claims that the Government made prejudicial comments in its closing
argument that violated his Fifth Amendment right to due process by implying to the jury
that his tax debt remained outstanding at the time of trial when, in fact, he had paid his
deficiencies before he was indicted. Evdokimow objected to some of these comments
after the Government’s summation and in a motion for a new trial.7
“We review a district court’s ruling on contemporaneous objections to closing
arguments for abuse of discretion.” United States v. Berrios, 676 F.3d 118, 134 (3d Cir.
2012) (citing United States v. Lore, 430 F.3d 190, 210 (3d Cir. 2005)). Similarly, “[t]he
‘decision to grant or deny a motion for a new trial lies within the discretion of the district
court.’” United States v. Vitillo, 490 F.3d 314, 325 (3d Cir. 2007) (quoting United States
v. Cimera, 459 F.3d 452, 458 (3d Cir. 2006)). The Court exercises plenary review,
however, over the underlying legal question of whether a defendant’s Fifth Amendment
right to a fair trial has been infringed. United States v. Liburd, 607 F.3d 339, 342 (3d Cir.
2010) (citing United States v. Dees, 467 F.3d 847, 854 (3d Cir. 2006)). When reviewing
a claim that a prosecutor’s remarks violated a defendant’s Fifth Amendment right to a fair
trial, “we first determine whether those remarks constituted misconduct.” Gov’t of the
7
Evdokimow conceded at oral argument that he did not object below to at least
some of the comments he now objects to on appeal. Oral Arg. at 24:27 (argued October
26, 2017). Unpreserved errors are subject to plain error review. Gov’t of the Virgin
Islands v. Mills, 821 F.3d 448, 456 (3d Cir. 2006). However, we need not decide which
comments were preserved for appeal because we conclude, for the reasons set forth
below, that none of these comments amounted to a denial of due process. Consequently,
they would not merit reversal even if they were all objected to below.
15
Virgin Islands v. Mills, 821 F.3d 448, 456 (3d Cir. 2016) (citing Berrios, 676 F.3d at 134-
36) (additional citation omitted). “If so, we proceed to determine whether that
misconduct ‘so infected the trial with unfairness as to make the resulting conviction a
denial of due process’ . . . taking into account ‘the entire proceeding.’” Id. (quoting
Donnelly v. DeChristoforo, 416 U.S. 637, 643 (1974); and Liburd, 607 F.3d at 344)
(additional citation omitted).8
Evdokimow challenges six comments made by the Government during its closing
and one made during its rebuttal. These comments fall into two categories. First,
Evdokimow objects to the Government’s use of the word “loss” to describe the amount of
taxes that he evaded paying prior to learning of the Government’s investigation. The
Government showed two demonstrative summary exhibits during its closing, which had
been admitted into evidence without objection, and which set out the personal and
business income that went unreported for each of the years at issue, as well as the
additional taxes owed on those unreported amounts. At two points in its closing
argument, the Government referred to these exhibits as setting forth the “tax loss” in the
case.9 Second, Evdokimow objects to the Government’s argument that he “saved”
8
Courts normally assess whether errors of criminal procedure were harmless, Fed.
R. Crim. P. 52, and the parties debate the precise standard of harmless error that should
apply here. However, this Court has previously explained that, on direct appeal, the
harmless error inquiry is subsumed “within our inquiry into whether the misconduct
resulted in an unfair trial.” Mills, 821 F.3d at 460 n.11 (citations omitted).
9
Ohio App. at 315 (“You have on that issue, ladies and gentlemen, two summary
exhibits in evidence, Government Exhibit 111 and 112, and they set forth the tax loss
numbers in this case.”); 316 (“And you will see for each of those years, there’s an
16
money by virtue of his tax scheme. At several points during its summation, the
Government described both the motivations for and substance of Evdokimow’s actions as
“saving” or “benefiting” himself in the amount of millions of dollars. 10 The Government
also told the jury in its rebuttal that Evdokimow “could have paid his taxes between 2006
and 2012,” but that “[s]ometimes people that have a lot of money are willing to commit
crimes to get more. And that’s what happened here.” App. 326-27.
Evdokimow argues that these comments, taken together, falsely and improperly
implied to the jury that he had never paid the taxes at issue in the trial, when, in fact, he
had. He argues that creating this implication amounted to misconduct because the
suggestion was a) an improper appeal to the jurors’ emotions based on their individual
interests as taxpayers, and b) false and not supported by the evidence at trial. See Mills,
821 F.3d at 458 (stating that prosecutors “may not cross the line and invite the jury to
render a decision on grounds of bias, passion, prejudice, or sympathy”); United States v.
Rivas, 493 F.3d 131, 139 (3d Cir. 2007) (stating that prosecutors “cannot make
additional tax owing of between $150,000 and $404,000, again, plainly a substantial tax
loss to satisfy the first element of tax evasion.”).
10
Ohio App. at 313 (“Between 2006 and 2010, he concealed approximately $5.8 million
in taxable income from the IRS, and the scheme benefited him to the tune of millions of
dollars.”); 314 (“Now, why did the defendant do this? Money. As a result of this
scheme, he saved himself millions of dollars and had approximately $5.8 million of his
personal expenses spent.”); 317 (arguing that the Government had proved the requisite
state of mind based on “the fact that [Evdokimow]’s the one who saved millions of
dollars in taxes by underreporting the vast majority of his taxable income”); 318 (“And
yet despite all that bad luck on the defendant’s part, he was lucky enough to have saved
himself—to have had $5.8 million of his personal expenses paid and saved himself
millions of dollars in taxes.”).
17
arguments unsupported by the record evidence”) (citations omitted). For the purposes of
this appeal, we will assume arguendo that the Government’s references to “loss” and
“savings” suggested or raised an inference that Evdokimow had never paid his taxes, and
therefore amounted to misconduct. We must then determine whether these comments so
infected the entire proceeding with unfairness as to amount to a denial of due process.
Mills, 821 F.3d at 456 (quotation and citations omitted). For the reasons that follow, we
conclude that they do not.
To determine whether misconduct by the Government amounts to a denial of due
process, we assess “the severity of the conduct, the effect of the curative instructions, and
the quantum of evidence against the defendant.” Id. at 461 (quoting United States v. Lee,
612 F.3d 170, 194 (3d Cir. 2010)). Consequently, in our examination of the allegedly
improper statements made by the Government during its closing argument, we consider
first, the severity of the comments and their pervasiveness in light of the entire closing
argument; second, the District Court’s instructions on the role of lawyers’ arguments and
the elements of the offenses; and third, the strength of the evidence against Evdokimow.
See id. at 462-63.
The seven comments to which Evdokimow objects were made in the course of
seventy-two pages of closing and rebuttal argument by the Government. Even though we
assume that these comments encouraged an impermissible inference, we find that they
were not sufficiently severe or prevalent to infect the entirety of the proceedings with
unfairness, as they were made in passing in the course of lengthy argument and did not
18
explicitly state the improper premise (i.e., that Evdokimow had never paid his tax debt).
Compare id. at 462 (stating that argument that jurors would only be safe in their homes if
they convicted the defendant was severe misconduct), and Moore v. Morton, 255 F.3d 95,
116-18 (3d Cir. 2001) (stating that closing arguments in a rape case that failure to believe
a victim witness would “perpetrate[] a worse assault on her” and that jury could infer the
defendant had a race-based “preference” based on the race of his wife were too severe to
be cured by the trial court’s instructions), with Berrios, 676 F.3d at 135 (concluding that
“a mere ten lines [of objectionable argument] out of over seventy-five pages of closing
argument” did not merit reversal (citations omitted)). We therefore conclude that the lack
of pervasiveness and severity of these seven comments weighs against a finding that the
comments infected the fairness of the entire proceeding.
In addition, the District Court provided the jury with a number of instructions on
the significance of the lawyers’ arguments, the elements of the charged offenses, and the
jury’s obligation to reach a decision based only on the facts and the law. In assessing the
potential prejudice of a prosecutor’s challenged comments, we must consider the
comments in light of the District Court’s instructions to the jury in the full jury charge.
See Mills, 821 F.3d at 462-63 (finding that the admonition that the lawyers’ arguments
are not evidence and the “clear and complete jury instruction on the elements” weighed
against a finding of fundamental unfairness even when the District Court had not
specifically addressed the prosecutor’s improper statements (quoting Edward v. City of
Philadelphia, 860 F.2d 568, 574 (3d Cir. 1988))); Berrios, 676 F.3d at 135-36 (stating
19
that instructions given to the jury “to base its judgment on the evidence” and that
“arguments by counsel do not constitute evidence” were an “adequate response” to the
possibility of prejudice created by misconduct in the prosecutor’s closing statement).
Although the District Court denied Evdokimow’s specific request that it tell the jury that
he had already paid his outstanding tax debt, the Court did charge the jury at the end of
trial that it should decide the case based on the evidence and not on sympathy or bias, and
that the arguments of counsel were not evidence. The District Court also gave full
instructions on the elements of each offense with which Evdokimow was charged, which
included the instruction that, in order to prove the existence of a tax deficiency, “[t]he
Government [was] required to establish only that the defendant owed a substantial
amount of income tax during the years in question, regardless whether it is more or less
than the amount set forth in the indictment.” Suppl. App. 2265 (emphasis added). Such
instructions, which we presume the jury followed, Mills, 821 F.3d at 463 (citing
Richardson v. Marsh, 481 U.S. 200, 206 (1987)), served to clarify that nothing the
Government said during its closing should be taken to imply the existence of facts not
established through the evidence admitted at trial and that the only relevant period of
inquiry for the jury was the period of years charged in the indictment. We therefore
conclude that the instructions given were sufficient to address any potential prejudice
from the seven comments to which Evdokimow objects.
The final consideration we weigh in evaluating whether any improper comments
by the Government rendered the trial fundamentally unfair is the “strength of the
20
evidence against the defendant.” Id. at 463 (citing Darden v. Wainwright, 477 U.S. 168,
182 (1986) (additional citations omitted)). Because Evdokimow did not dispute that he
had underreported his taxes, but instead maintained that he had done so in good faith
reliance on his financial advisors, the central question at trial was Evdokimow’s mental
state. As described above, the jury heard overwhelming evidence of Evdokimow’s
knowledge of and willful involvement in the tax scheme with which he was charged.
Moreover, the comments at issue characterized evidence that the jury had already
encountered during the trial, such as the loss summary charts and accounts of
Evdokimow’s personal spending. See United States v. Gambone, 314 F.3d 163, 179 (3d
Cir. 2003) (“[W]e have held that probative evidence on the same issue as improper
remarks may mitigate prejudice stemming from those remarks.” (citations omitted)).
Because “the jury was presented with ample evidence on which it could convict”
Evdokimow, we conclude that any misconduct in the Government’s argument did not
impact the jury’s verdict. Berrios, 676 F.3d at 136. In light of the trial as a whole, and
upon consideration of the severity of the comments, the effect of the District Court’s
instructions, and the weight of the evidence, we hold that the seven comments to which
Evdokimow objects did not render Evdokimow’s trial fundamentally unfair and,
therefore, did not constitute a denial of due process.
Accordingly, because we find that the Government’s comments in the course of its
closing argument did not result in a denial of due process, we further find the District
Court did not abuse its discretion by overruling his objections to those comments,
21
denying his request for a jury instruction that he paid his taxes prior to his indictment,
and denying his motion for a new trial. It is clear from the record that the District Court
considered Evdokimow’s various objections. The District Court explained, however, that
the prosecutorial statements were not “so misleading or incomplete in light of [its] rulings
as to require any remedy or instruction.” Suppl. App. 2179. It also stressed that tax
deficiency was an element of the offense, which the Government was entitled to address
in summation. And importantly, the District Court explained that a curative instruction
“would only cloud and make murky” what the jury should have already known—that the
time period at issue was from 2006 to 2012. Suppl. App. 2182. Under these
circumstances, there is no basis to hold that the District Court abused its discretion in
declining to issue an instruction or grant a mistrial.
IV. Conclusion
For the foregoing reasons, we conclude that the District Court did not abuse its
discretion by excluding evidence that Evdokimow eventually paid his outstanding tax
debt, and also did not abuse its discretion by overruling his objections to the
Government’s comments in its closing argument, denying his request for a jury
instruction, and denying his motion for a new trial. We will therefore affirm the
judgment of the District Court.
22
United States v. Evdokimow, No. 15-3876.
COWEN, Circuit Judge, dissenting.
The District Court committed reversible error by preventing Evdokimow from
presenting—in his defense to criminal charges that he “willfully” failed to report and pay
his taxes—evidence that he actually filed amended tax returns and paid his tax liability in
its entirety after learning of the criminal investigation. I also conclude that the trial was
rendered fundamentally unfair because the government repeatedly suggested in its
closing argument that he had never paid his taxes. Accordingly, I must respectfully
dissent.
Initially, the District Court erred by excluding Evdokimow’s evidence of
subsequent amended tax returns and tax payments. In short, the District Court’s
reasoning is inconsistent with the approach to evidence of remedial actions that we set
forth in United States v. Stoehr, 196 F.2d 276 (3d Cir. 1952). I also believe that we
should not defer to the District Court’s ruling because it failed to engage in the requisite
“on-the-record” balancing.
The majority is correct that evidentiary rulings are generally reviewed for abuse of
discretion and that this discretion is construed especially broadly in the Rule 403 context.
See, e.g., United States v. Sussman, 709 F.3d 155, 173 (3d Cir. 2013). While we rarely
disturb a district court’s ruling, such deference is only appropriate if the district court
“‘engages in a Rule 403 balancing and articulates on the record a rational explanation’”
1
for its disposition. United States v. Finley, 726 F.3d 483, 491 (3d Cir. 2013) (quoting
United States v. Sampson, 980 F.2d 883, 889 (3d Cir. 1992)). “We have also held that
trial courts have failed to sufficiently explain their analyses when the ‘reasoning
underlying the Court’s Rule 403 balancing [is] not apparent from the record’ or when the
courts ‘merely recite[] the text of the rule.’” (Maj. Op. at 9-10 (quoting United States v.
Caldwell, 760 F.3d 267, 284 (3d Cir. 2014)).) “[W]e do not afford that court the
deference normally afforded when we review for abuse of discretion if the district court
failed to engage in on-the-record balancing” (and, in such cases, we either remand or
undertake the balancing ourselves where practical). United States v. Bailey, 840 F.3d 99,
117 (3d Cir.), cert denied, 137 S. Ct. 839 (2017). It is also critical not to overlook the
language of Rule 403 itself, which provides that the court may exclude relevant evidence
if its probative value is “substantially outweighed” by the danger of unfair prejudice,
confusing the issues, or misleading the jury. See, e.g., Blancha v. Raymark Indus., 972
F.2d 507, 516 (3d Cir. 1993) (noting that Rule 403 should be used sparingly because
evidence is concededly probative and balance should be struck in favor of admissibility).
Stoehr provides (as the government puts it) “definitive guidance” on the issue
before us (Appellee’s Brief at 15), and the District Court accordingly looked to what it
characterized as “the only clear precedent from the Third Circuit on this issue” (SA41).
While obviously predating Rule 403 itself, our 1952 ruling appears to anticipate the rule’s
basic approach to admissibility. In this tax evasion case, we observed that some courts
2
have displayed increased liberality in prosecutions for crimes involving fraudulent intent
with respect to the admission of the defendant’s subsequent statements and conduct.
Stoehr, 196 F.2d at 282. We agreed with the principle expressed by Judge Learned Hand
in Matot—“so long as evidence does not confuse the jury, its exclusion merely because
of logical remoteness from the issue is always a hazard and is usually undesirable.” Id.
(addressing United States v. Matot, 146 F.2d 197, 198 (2d Cir. 1944)). Such “a rule of
liberality” does not render admissible every subsequent self-serving act of the defendant,
and the district court must consider the circumstances of each individual case. Id. But
the district court must ask: “Is the evidence of defendant’s subsequent mental state
(which evidence is supplied by the subsequent act) of any probative value in establishing
his state of mind at the time of the alleged criminal acts, and if so, does the evidence not
unduly entangle the issues or confuse the jury?” Id. (citing 6 Wigmore on Evidence §
1732). As the majority points out, this Court ultimately upheld the district court’s
exclusion of evidence showing that, fifteen months after being confronted with his tax
fraud, Stoehr offered to make a compromise payment in exchange for the release of all
liability. Id. at 282-83. However, the Stoehr Court also noted that “evidence of a prompt
amended filing and payment of additional tax might have been admissible.” (Maj. Op. at
11.) “If the defendant here had promptly filed an amended return and made payment of
the additional sum owed, we think such evidence might very well have been admissible.”
Id. (discussing Heindell v. United States, 150 F.2d 493, 497 (6th Cir. 1945)). At the very
3
least, Stoehr and its rule of liberality indicated that evidence of remedial actions should
generally be admitted.
In this case, the District Court essentially turned this precedent “on its head.”
Initially, the District Court did “rely on Stoehr for its analysis.” (Id. at 9 n.3.) In addition
to acknowledging our ruling as the only clear Third Circuit precedent on this issue and
referencing our rule of liberality, it appropriately recognized that Stoehr “agrees with the
principle, the principles behind this rule of liberality in allowing such evidence.” (SA41.)
Evidence of a subsequent mental state “could have probative value in establishing the
defendant’s state of mind at the time of the alleged criminal act.” (Id.) However, the
District Court also referred to the absence of “a blanket exclusion of evidence of such
subsequent mental state.” (Id.) More importantly, the District Court explained that the
evidence “could have probative value” but “here the, similar to Stoehr, the lack of a
timely filing of an amended return and the payment of such fines takes it out of the, takes
this case out of the exception that Stoehr might allow for such admissibility.” (SA42.) It
thereby treated the admission of subsequent remedial actions as an exception, implying
that there is a presumption against the admission of such evidence. Such an approach is
contrary to our “rule of liberality,” the notion that the exclusion of such evidence merely
because of logical remoteness is “always a hazard and is usually undesirable,” and our
recognition of the fact that evidence of a promptly filed amended tax return and tax
4
payment “might very well have been admissible.” Id. at 282-83 (footnote omitted). In
other words, admission is the “rule”—and not the “exception.”
Similarly, the District Court never really addressed in its ruling the differences
between the circumstances of Stoehr’s compromise offer, on the one hand, and
Evdokimow’s subsequent filing of amended tax returns, his unconditional payment of his
full tax liability, and his explanation for why it took at least seventeen months for him to
take these particular remedial steps after he had received the subpoena, on the other hand.
It is uncontested that whether a defendant acts promptly must be assessed based on the
specific circumstances. See, e.g., id. at 282. While the majority points to the questions
the District Court asked counsel during the hearing, the District Court never discussed or
even acknowledged in its actual decision the evidence that Evdokimow “retained lawyers
and accountants to assist him to identify his taxable income for the years 2005 through
2013, and did so without the help of Sweeton, who refused to turn over financial
documents to him” (Maj. Op. at 6). In contrast, Stoehr made his offer of compromise
approximately fifteen months after “his newly retained accountant had informed him of
the amount of taxes due the government.” Id. at 283. The District Court also failed to
take into account the fact that Stoehr did not file an amended return—and did not actually
pay the money he owed. Id. Instead, Stoehr made a compromise offer “in return for a
release of ‘all criminal and/or civil liability’ for the years involved.” Id. at 282 (footnote
omitted). Evdokimow paid the government—without any condition or other “strings
5
attached”—his entire tax liability, including penalties and interest, amounting to
$3,395,394.00.
Taking into account the other side of the Rule 403 inquiry, I similarly conclude
that the District Court did not undertake the requisite “on-the-record” balancing. I
acknowledge that the District Court heard lengthy argument on this evidentiary question,
engaged counsel on the issues of confusion and nullification (as well as probative value
and Stoehr itself), and rendered a relatively lengthy ruling on the record (and returned to
this question again in its denial of Evdokimow’s motion for reconsideration as well as its
decision denying his motion for an acquittal or a new trial). Yet, given our rule of
liberality and the probative value of his amended tax returns and tax payments, see, e.g.,
id. at 282-83 (“If the defendant here had promptly filed an amended return and made
payment of the additional sum owed, we think such evidence might very well have been
admissible.” (footnote omitted)), this is not a case where “a relatively minor risk of
substantial undue prejudice should counsel against admitting [the evidence],” Bailey, 840
F.3d at 119. The District Court, in turn, did not explain its concerns about jury confusion
and nullification or articulate how such considerations substantially outweighed the
probative value of the evidence. See, e.g., Caldwell, 760 F.3d at 284 (“This statement
[i.e., ‘because knowledge and intent are at issue here, they are more probative than
prejudicial’ and ‘the probative value outweighs any prejudicial effect’] is nothing more
than a bare recitation of Rule 403, with an added notation about the Court’s
6
understanding that knowledge is at issue in the case.”). As to jury nullification, the
District Court stated that “[i]t would simply be every criminal defendant’s option in a tax
case to figure out what I should have paid a long time ago and pay it and just argue to the
jury that I pay my taxes like anybody else.” (SA43.) However, it never explained why
the district judge could not simply bar defense counsel from making such an
unacceptable appeal to the jurors. Likewise, wouldn’t appropriate jury instructions be
more than sufficient to guard against possible nullification and clear up any confusion
regarding the applicable time period? In fact, the District Court instructed the jury as to
the obligation to apply the law it gave to the facts. “You must apply the law that I give to
you, whether you agree with it or not.” (SA2249.) The District Court also told the jury
that, when it allowed evidence for a limited purpose only, “I instructed you to consider
that evidence only for that limited purpose, and you must do that.” (SA2251.) The jury
then could have been instructed that it “only consider subsequent [amended tax returns
and tax payments] to the extent they bore upon the defendant’s state of mind when the
[original] returns were filed—but that if the defendant possessed the required criminal
intent at the time the false returns were filed, repayment would not absolve him.”
(Appellant’s Reply Brief at 15 (citation omitted).)
In addition, Evdokimow asserts that the government made prejudicial comments
in its closing argument by implying that his tax liability remained outstanding even
though he had paid his outstanding taxes, penalties, and interest more than a year before
7
his indictment.1 As the majority observes, “we first determine whether those remarks
constituted misconduct.” Gov’t of the V.I. v. Mills, 821 F.3d 448, 456 (3d Cir. 2016)
(citing United States v. Berrios, 676 F.3d 118, 134-36 (3d Cir. 2012); United States v.
Lee, 612 F.3d 170, 194 (3d Cir. 2010)). At the very least, prosecutors “cannot make
arguments unsupported by the record evidence.” United States v. Rivas, 493 F.3d 131,
139 (3d Cir. 2007) (citing United States v. Dispoz-O-Plastics, Inc., 172 F.3d 275, 285 (3d
Cir. 1999); United States v. Pelullo, 964 F.2d 193 (3d Cir. 1992)). The majority assumes
arguendo that the government’s references “suggested or raised an inference that
Evdokimow had never paid his taxes, and therefore amounted to misconduct” (and then
decided that these comments did not result in an unfair trial amounting to a denial of due
process). (Maj. Op. at 18.) However, I believe that the government’s comments did
improperly suggest or imply that Evdokimow still had not paid his taxes—which was
simply not true. After all, the government repeatedly referred to its loss and
Evdokimow’s gain, e.g.:
“[H]e concealed approximately $5.8 million in taxable income from the
IRS, and the scheme benefited him to the tune of millions of dollars”
(SA2125); “Now, why did the defendant do this? Money. As a result of
1
Evdokimow admits that he did not object below to some of the comments he
now challenges on appeal. However, the government acknowledges that “Evdokimow
argued that the language used by the Government insinuated to the jury ‘that the
government missed out on taxes’ or ‘suffered and lost money,’ which was not true
because Evdokimow amended his returns and paid those taxes.” (Appellee’s Brief at 43
(quoting SA2177).) The District Court considered but rejected this argument on its
merits.
8
this scheme, he saved himself millions of dollars and had approximately
$5.8 million of personal expenses spent” (SA2126); “they [Exhibits 111
and 112] set forth tax loss numbers in this case” (SA2137); “there’s an
additional tax owing of between $150,000 and $404,000, again, plainly a
substantial tax loss” (SA2138); “[y]ou know from the fact that he’s the one
who saved millions of dollars in taxes by underreporting the vast majority
of his taxable income” (SA2139); and “he was lucky to have saved
himself—to have had $5.8 million of his personal expenses paid and saved
himself millions of dollars in taxes” (SA2168).
Such statements indicated that the loss and gain were permanent or at least on-ongoing in
nature. The District Court itself expressed concern about the term “tax loss,” observing
inter alia that “loss sounds more permanent than deficiency” and “[p]erhaps ‘loss’ is not a
good word to use.” (SA2180-SA2181.)
Finally, I consider whether the erroneous exclusion of Evdokimow’s evidence of
amended tax returns and tax payments as well as the inappropriate comments rise to the
level of reversible error. Evidentiary rulings are subject to a harmless error standard of
review. See, e.g., United States v. DeMuro, 677 F.3d 550, 557 (3d Cir. 2012). We must
reverse unless it is highly probable that the error did not affect the result. See, e.g., id.
As the majority notes, errors are harmless if “‘we have a sure conviction that the error did
not prejudice the defendant,’” United States v. Stadtmauer, 620 F.3d 238, 266 (3d Cir.
2010) (quoting United States v. Jannotti, 729 F.2d 213, 220 n.2 (3d Cir. 1984)), and we
will not reverse when the record includes truly overwhelming evidence of guilt, see, e.g.,
United States v. Christie, 624 F.3d 558, 571 (3d Cir. 2010). However, I further note that
it is not enough for us to find that it is more likely than not that the error was harmless.
9
See, e.g., Jannotti, 729 F.2d at 220 n.2. According to the majority, any evidentiary error
was harmless given the “overwhelming evidence that Evdokimow engaged in the tax
fraud scheme willfully and the fact that Evdokimow was able to present a thorough good-
faith defense to the jury.” (Maj. Op. at 14). Similarly, it concluded that any misconduct
by the government did not amount to a denial of due process on account of the
comments’ relative lack of pervasiveness and severity, the jury instructions, and the
weight of the evidence.
I do not agree. Simply put, the District Court’s evidentiary ruling effectively
gutted the defense he wished to present to the jury. The government must prove that the
defendant acted willfully. See, e.g., Boulware v. United States, 552 U.S. 421, 424 n.2
(2008). The District Court instructed the jury that “[w]illfully means a voluntary and
intentional violation of a known legal duty.” (SA2268.) “The defendant’s conduct was
not willful if he acted through negligence, mistake, accident, or due to a good faith
misunderstanding of the requirements of the law” (id.). See, e.g., DeMuro, 677 F.3d at
557. While the government did present a strong case against Evdokimow, there was
clearly evidence to support his claim that he did not act willfully and was instead the
victim of a scam perpetrated by Sweeton. “Evdokimow presented a thorough good-faith
defense to the jury, which heard his account that he had deferred entirely to Sweeton for
the preparation of his tax returns; that he had not looked closely at his returns and was
unaware of any fraud until he received a subpoena; that he has since hired a new
10
accountant; and that he cooperated with both the Government’s investigation and the
earlier IRS audit.” (Maj. Op. at 13-14.) Obviously, evidence that he went so far as to file
amended tax returns and paid everything he owed the government once he had received
the subpoena and was able to determine, with the help of lawyers and accountants but
without the financial documents in Sweeton’s possession, his taxable income for the
multiple years at issue could have tilted the case in his favor. At the very least, it is not
“highly probable” that the exclusion of such evidence in these circumstances failed to
affect the outcome of the trial. Similarly, the government’s comments implying that
Evdokimow had not paid his taxes struck at the heart of this defense. Why would an
innocent (if naïve) individual who had relied on the experience and expertise of the
mastermind of the scheme fail to pay his taxes (which he does not dispute he owes) once
the scheme came to light?
Finally, we should not overlook the unfair and even downright impossible position
that resulted from the combination of the District Court’s evidentiary ruling and the
government’s closing argument. The District Court granted the government’s motion to
exclude evidence of the amended tax returns and tax payments. Having succeeded in
keeping from the jury evidence of Evdokimow’s payment of his tax liability in its
entirety, the government then indicated to the jury that Evdokimow still owed it money.
In essence, the government was permitted to do what the defendant could not—look to
what happened (or did not happen) after the defendant had received notice of the
11
investigation. It then went even further by falsely implying that he had not paid his taxes.
As Evdokimow aptly puts it, he “was caught in the perfect storm of these two related trial
errors.” (Appellant’s Reply Brief at 25.)
Accordingly, I would vacate Evdokimow’s conviction and remand for a new trial.
12