United States v. Thomas Hazelrigg, III ( 2016 )

FILED
NOT FOR PUBLICATION
JUN 22 2016
UNITED STATES COURT OF APPEALS MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 15-30071
Plaintiff - Appellee, D.C. No. 2:13-cr-00239-TSZ-1
v.
MEMORANDUM*
THOMAS R. HAZELRIGG, III,
Defendant - Appellant.
Appeal from the United States District Court
for the Western District of Washington
Thomas S. Zilly, Senior District Judge, Presiding
Argued and Submitted June 9, 2016
Seattle, Washington
Before: EBEL,** PAEZ, and BYBEE, Circuit Judges.
Thomas Hazelrigg III appeals a judgment of conviction, entered after a jury
trial, on two counts of willfully attempting to evade or defeat taxes in violation of
26 U.S.C. § 7201. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
**
The Honorable David M. Ebel, Senior Circuit Judge for the U.S.
Court of Appeals for the Tenth Circuit, sitting by designation.
1. Hazelrigg argues that the district court admitted evidence of his lavish
living that was irrelevant, unduly prejudicial, and violative of due process. He also
argues that the district court admitted evidence in violation of Federal Rule of
Evidence 404(b). At trial, Hazelrigg objected only to photographs of the Bellevue
condominium, and only on relevance grounds. We therefore review Hazelrigg’s
relevance challenge to the Bellevue condominium photographs for abuse of
discretion. See United States v. Stinson, 647 F.3d 1196, 1210 (9th Cir. 2011). His
remaining challenges are reviewed for plain error. See United States v. Olano, 507
U.S. 725, 731-32 (1993). Under that standard, reversal is required only if the
admission of evidence was plainly erroneous, affected Hazelrigg’s substantial
rights, and undermined the integrity of the proceedings. See id. at 732.
2. The district court did not abuse its discretion in admitting photographs
of the Bellevue condominium. Evidence that Hazelrigg spent significant sums
from nominee accounts on nominee properties, including the Bellevue
condominium, was relevant to show his ability to pay his tax indebtedness and his
affirmative attempts to defeat collection. See Spies v. United States, 317 U.S. 492,
499 (1943) (explaining that a wide range of conduct may give rise to an inference
of willful attempt to defeat and evade taxes, including the “concealment of assets
or covering up sources of income, handling of one’s affairs to avoid making the
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records usual in transactions of the kind, and any conduct, the likely effect of
which would be to mislead or to conceal”); see also United States v. Carlson, 235
F.3d 466, 468-49 (9th Cir. 2000). Moreover, the Bellevue condominium was one
of several nominee properties the government showed Hazelrigg controlled
through straw owners. The government properly used photographs of the
residence to help the jury keep the properties straight and to tell a comprehensible
story. See Fed. R. Evid. 401 advisory committee’s note (including “views of real
estate” among examples of evidence regularly admitted to aid understanding).
3. The district court did not commit reversible plain error in admitting
the other “lavish living” evidence, to which no objection was made. See Olano,
507 U.S. at 732.
First, its admission was not a plainly erroneous application of the federal
rules governing relevance. As discussed above, evidence of Hazelrigg’s spending
from nominee accounts on nominee properties gave rise to an inference of willful
evasion, see Spies, 317 U.S. at 499; Carlson, 235 F.3d at 468-69, and was therefore
admissible because it tended to prove a fact of consequence, see Fed. R. Evid. 401,
402; cf. United States v. Scholl, 166 F.3d 964, 975 (9th Cir. 1999) (holding that
prosecutor’s questions about defendant’s two houses, time share in Hawaii, and
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golf club membership elicited testimony that “[a]lthough marginal,” was
nonetheless probative of the defendant’s defense).
Second, it is not obvious that admission of the evidence was unduly
prejudicial, because the government mostly tied evidence of Hazelrigg’s spending
to his use of the nominee accounts and properties. See United States v. Unruh, 855
F.2d 1363, 1377 (9th Cir. 1987) (admonishing that evidence of a defendant’s
wealth “should not be offered unless clearly connected” to the specific charges or
conduct at issue); see also United States v. Kessi, 868 F.2d 1097, 1106-07 (9th Cir.
1989). Hazelrigg makes much of the potential prejudice arising from the
government’s use of photographs. But the photographs were not misleading, did
not have “a visceral impact that far exceeds their probative value,” were not likely
to “arouse irrational fears and prejudices,” and did not “ma[k]e the difference
between acquittal and conviction.” United States v. Hitt, 981 F.2d 422, 424-25
(9th Cir. 1992).
Third, the admission of relevant evidence was not plainly a violation of
Hazelrigg’s due process right to a fair trial. See United States v. Socony-Vacuum
Oil Co., 310 U.S. 150, 240 (1940) (recognizing that appeals to class prejudice may
“so poison the minds of jurors . . . that an accused may be deprived of a fair trial”).
As Hazelrigg concedes, the government made no references to Hazelrigg’s lavish
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living in closing argument, let alone the “undignified and intemperate” “appeals to
class prejudice” present in Socony-Vacuum Oil Co., 310 U.S. at 239. Indeed, it
was Hazelrigg’s lawyer—not the government—who told the jury in closing, “The
image of [Hazelrigg] sitting in a hot tub with a big glass of champagne laughing
manically as he rolls [a] hundred dollars in his fingers, that is probably pretty
accurate” (emphasis added).
Even if we assumed, however, that the district court plainly erred in
admitting certain of the “lavish living” evidence, under our deferential standard of
review, reversal would not be warranted. See Olano, 507 U.S. at 734. Hazelrigg
has not demonstrated that his substantial rights were affected in light of the
considerable evidence that he ordered his financial affairs to evade creditors, the
Internal Revenue Service among them. See Spies, 317 U.S. at 499 (“If the tax-
evasion motive plays any part in . . . [conduct which misleads or conceals,] the
offense may be made out even though the conduct may also serve other
purposes . . . .”).
4. Finally, it was not a plainly erroneous application of Federal Rule of
Evidence 404(b) for the district court to admit evidence demonstrating that
Hazelrigg concealed his control of the Redmond residence during the IRS
collection period but subsequently held himself out as the owner. Because this
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evidence was intrinsic to the charged offense and “‘necessary to permit the
prosecutor to offer a coherent and comprehensible story regarding the commission
of the crime,’” it was “exempt from the requirements of Rule 404(b).” United
States v. Anderson, 741 F.3d 938, 949-50 (9th Cir. 2013) (quoting United States v.
Dorsey, 677 F.3d 944, 951 (9th Cir. 2012)).
AFFIRMED.
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