United States v. Jennings ( 2002 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
UNITED STATES OF AMERICA, 
Plaintiff-Appellee,
v.  No. 00-4331
NELSON LEE JENNINGS,
Defendant-Appellant.

Appeal from the United States District Court
for the Eastern District of Virginia, at Norfolk.
Henry C. Morgan Jr., District Judge.
(CR-99-165)
Argued: June 7, 2001
Decided: November 14, 2002
Before LUTTIG, MOTZ, and GREGORY, Circuit Judges.
Affirmed by unpublished per curiam opinion.
COUNSEL
ARGUED: William P. Robinson, Jr., ROBINSON, NEELEY &
ANDERSON, Norfolk, Virginia, for Appellant. Stephen Westley
Haynie, Assistant United States Attorney, Norfolk, Virginia, for
Appellee. ON BRIEF: Helen F. Fahey, United States Attorney, Nor-
folk, Virginia, for Appellee.
2 UNITED STATES v. JENNINGS
Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).
OPINION
PER CURIAM:
Nelson Jennings, a tax preparer, was convicted of 12 counts of
willfully aiding or assisting in the preparation and presentation of
false and fraudulent returns in violation of 26 U.S.C. § 7206(2). For
the reasons that follow, we affirm.
I.
A computer program developed by the Internal Revenue Service
("IRS") uncovered an unusual pattern in a number of the tax returns
prepared by Jennings. J.A. 34-35. The IRS reviewed approximately
90 returns, discovering that the itemized deductions on the returns
were disproportionately high in relation to the adjusted gross income
of the taxpayers. J.A. 36-37.
The IRS thereafter designated 23 returns for full investigation,
including interviews with the taxpayers whose returns were selected.
During the interviews, the taxpayers signed affidavits stating that they
were not eligible for many of the deductions listed on the returns, that
they did not review the returns carefully or provide Jennings with
documentation to support the claimed deductions, and that they relied
on Jennings’ expertise in preparing the returns. Thus, contrary to the
signed statement in their tax returns,1 the taxpayers essentially denied
any knowledge of the fraudulent deductions, explaining that they
were interested only in the amount of the refund.
The government subsequently indicted Jennings on 23 counts of
1
In the tax returns, the taxpayers signed the following statement:
"Under penalties of perjury, I declare that I have examined this return
and accompanying schedules and statements, and to the best of my
knowledge and belief, they are true, correct, and complete." S.J.A. 148.
UNITED STATES v. JENNINGS 3
willfully aiding and assisting in the preparation and presentation of
false and fraudulent returns in violation of 26 U.S.C. § 7206(2).2 At
trial, the government called the taxpayer witnesses, who, "[f]or the
most part[ ]," testified consistently with their signed affidavits. S.J.A.
175. In addition to the taxpayer testimony, the district court also
admitted the fraudulent returns into evidence. J.A. 29-30.
The jury returned a guilty verdict on 12 of the 23 counts of the
indictment. J.A. 1034-35. The district court subsequently denied Jen-
nings’ motion to set aside the jury verdict and for a new trial, S.J.A.
173-78, and sentenced him to 27 months imprisonment, J.A. 1158-59.
This appeal followed.
II.
Jennings argues that the district court erred in refusing to grant him
a new trial because the government’s knowing use of perjured tax-
payer testimony violated his right to due process, thereby depriving
him of a fair trial. We disagree.
In denying Jennings’ motion for a new trial, the district court held
that "the taxpayer witnesses committed perjury either (1) when they
signed their returns stating that they had examined the figures on the
returns and that those figures were correct; or (2) when they signed
the affidavits and testified in Court that they did not examine the
deductions contained in the return." S.J.A. 176. Nevertheless, the dis-
trict court concluded that even "the presentation of [such] inherently
2
Section 7206(2) provides as follows:
Any person who . . . willfully aids or assists in, or procures,
counsels, or advises the preparation or presentation under, or in
connection with any matter arising under, the internal revenue
laws, of a return, affidavit, claim, or other document, which is
fraudulent or is false as to any material matter, whether or not
such falsity or fraud is with the knowledge or consent of the per-
son authorized or required to present such return, affidavit,
claim, or document . . . shall be guilty of a felony and, upon con-
viction thereof, shall be fined not more than $100,000 ($500,000
in the case of a corporation), or imprisoned not more than 3
years, or both, together with the costs of prosecution.
4 UNITED STATES v. JENNINGS
incredible . . . testimony" did not prejudice Jennings "by depriving
him of a fair trial." S.J.A. 177. We express no view regarding whether
the government knowingly used perjured testimony against Jennings
at the trial because, even if we assume that it did, there is no "reason-
able likelihood that the false testimony could have affected the judg-
ment of the jury." United States v. White, 238 F.3d 537, 540-41 (4th
Cir. 2001) (quoting Kyles v. Whitley, 514 U.S. 419, 433 n.7 (1995)).
First, the weight of the evidence in this case, even aside from the
taxpayers’ testimony, pointed heavily toward Jennings’ guilt. As the
district court observed in reaching this conclusion, "a simple compari-
son of the amounts the taxpayers claimed to have paid in medical
expenses and charitable contributions with the amount of income
earned by the taxpayers reveals the grossly disproportionate amount
of itemized deductions claimed on the returns." S.J.A. 177. Indeed,
the jury could have readily found that the returns were "fraudulent"
or "false" on their face since the total itemized deductions as a per-
centage of adjusted gross income on the 23 returns ranged from a low
of 45% to a high of 99%, with 22 of the 23 returns containing total
itemized deductions that were greater than 60% of adjusted gross
income. S.J.A. 172. See United States v. Conlin, 551 F.2d 534, 536
(2d Cir. 1977) (holding that the jury’s finding that a tax preparer acted
willfully was supported "by both the frequency and similarity of" the
overstated deductions in the returns that he prepared). Furthermore,
as the district court noted, the jury could have inferred guilt, espe-
cially as to willfulness, from Jennings’ repeated pattern of failing to
obtain "sufficient documentation despite the obvious disproportion
between the deductions and available income" on the returns. S.J.A.
177.
Second, even assuming arguendo that the government knowingly
submitted perjured testimony, Jennings conceded at oral argument
that he "ha[d] failed to demonstrate that [the taxpayers] lied about any
material fact." Knox v. Johnson, 224 F.3d 470, 478 (5th Cir. 2000).
Section 7206(2) expressly provides that a person may be convicted
"whether or not such falsity or fraud is with the knowledge or consent
of the person authorized or required to present such return, affidavit,
claim or document." Thus, even if the taxpayers’ testimony at trial
denying any knowledge of the claimed deductions was perjurious,
such testimony was not material since "the innocence or guilty knowl-
UNITED STATES v. JENNINGS 5
edge of a taxpayer is irrelevant to [a section 7206 prosecution]."
United States v. Jackson, 452 F.2d 144, 147 (7th Cir. 1971) (emphasis
added); see also United States v. Rowlee, 899 F.2d 1275, 1279 (2d
Cir. 1990) ("In fact, the guilt or innocence of the taxpayer for whom
the return was filed is irrelevant to the question of the adviser’s
guilt."). As a result, any perjured testimony in this case was relevant
only to the credibility of the taxpayer witnesses, not to establishing
a section 7206(2) violation by Jennings.
Finally, to the extent Jennings contends that his due process rights
were violated by not being afforded an opportunity to impeach the
credibility of the taxpayer witnesses, we disagree, for it is undisputed
that the government turned over to Jennings both the tax returns and
the affidavits almost two months prior to trial. Indeed, having been
made aware of the discrepancies in the various taxpayer statements,
defense counsel actually highlighted some of the inconsistencies dur-
ing his examination of the taxpayer witnesses at trial.
Accordingly, we hold that the district court did not abuse its discre-
tion in denying Jennings’ motion to set aside the verdict and for a new
trial because even if the government knowingly presented perjured
testimony, there is no "reasonable likelihood that the false testimony
could have affected the judgment of the jury."3
CONCLUSION
For the reasons stated herein, the judgment of the district court is
affirmed.
AFFIRMED
3
In a related claim, Jennings also argues that the district court erred
when it failed to instruct the jury that it was entitled to completely disre-
gard the taxpayer testimony because the taxpayer witnesses committed
perjury either in their returns or in their affidavits. J.A. 1009. Even
assuming arguendo that the taxpayer testimony was, in fact, perjurious,
the district court did not abuse its discretion in refusing Jennings’ prof-
fered instruction because the court appropriately administered a "broad
range of instructions on credibility." United States v. Gray, 137 F.3d
765, 773-74 (4th Cir. 1998).