Witaschek v. District of Columbia ( 2021 )

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DISTRICT OF COLUMBIA COURT OF APPEALS
No. 19-CT-165
MARK A. WITASCHEK, APPELLANT,
V.
DISTRICT OF COLUMBIA, APPELLEE.
Appeal from the Superior Court
of the District of Columbia
(CRT-4321-18)
(Hon. Darlene M. Soltys, Trial Judge)
(Argued April 13, 2021 Decided July 22, 2021)
Howard X. McEachern, with whom Bruce Fein, was on the brief, for
appellant.
John D. Martorana, Assistant Attorney General, with whom Karl A. Racine,
Attorney General for the District of Columbia, Loren L. AliKhan, Solicitor
General, Caroline S. Van Zile, Principal Deputy Solicitor General, and Carl J.
Schifferle, Deputy Solicitor General, were on the brief, for appellee. Thais-Lyn
Trayer also entered an appearance.
Before GLICKMAN, THOMPSON, and MCLEESE, Associate Judges.
THOMPSON, Associate Judge: Appellant Mark A. Witaschek challenges his
conviction, after a bench trial, of two counts of attempting to evade or defeat tax
2
(for tax years 2011 and 2012). See D.C. Code § 47-4101 (2015 Repl.). For the
reasons that follow, we affirm the judgment of conviction.
I.
In the midst of an “acrimonious” divorce, appellant’s (then soon-to-be) ex-
wife provided tax and financial information about appellant to District of Columbia
(“District”) officials, resulting in a February 2014 referral to the District’s Office
of Tax and Revenue (“OTR”). OTR Special Agent James Hessler interviewed
appellant’s ex-wife, who provided information about appellant’s residency from
2009 through 2013. Appellant’s ex-wife also provided bank records for bank
accounts held either jointly by the couple or solely by appellant. Comparing this
information with appellant’s tax returns, Agent Hessler questioned appellant’s
claim on his 2011 and 2012 income tax returns that he was only a part-year
resident of the District (a claimed status that resulted in a substantial reduction of
his District taxable income). 1 Agent Hessler therefore initiated a criminal tax
investigation of appellant for tax years 2009 through 2013.
1
When appellant filed his 2011 Form D-40 tax return, he subtracted
$326,326 from his $423,020 in total income because he purportedly obtained the
former amount during a period of non-residence that he alleged to have spent in
(continued…)
3
Agent Hessler arranged to interview appellant in April 2014. On the
appointed date, appellant’s attorney appeared instead. The attorney explained
appellant’s part-year residency claim for tax years 2009–2013 by providing a
packet of materials entitled “Proper Reporting by Mark Witaschek of 2011-2012
Income Based on Principle [sic] Residence/Domicile,” which contained
spreadsheets that provided dates and addresses relating to time that appellant
allegedly spent outside the District, in New Hampshire. In order to verify the
information the attorney provided, and pursuant to D.C. Code § 47-4310(a)(1)
(2015 Repl.), Agent Hessler crafted twenty-six summonses to third parties for
bank, investment, residential, real estate, employment, school, and other records.
After the inception of this criminal case (in which appellant was charged
with two counts of tax fraud/false statements based on tax returns he filed in 2012
and 2013, in addition to the tax-evasion charges on which he was eventually
convicted), appellant filed a motion to suppress the documents obtained by the
summonses. Analogizing the summonsed documents to the cell phone records at
issue in Carpenter v. United States, 138 S. Ct. 2206 (2018), appellant argued that
(…continued)
New Hampshire. In 2012, appellant again claimed to be a part-year resident on his
D-40 form and accordingly deducted $287,755 from his $362,649 total income.
4
the summonses were overbroad and that he had a legitimate expectation of privacy
in the records sought. Accordingly, he contended, obtaining the documents
without a warrant violated his rights under the Fourth Amendment. The District
opposed appellant’s motion on the grounds that the documents were relevant and
material to its investigation and that appellant did not have a legitimate expectation
of privacy in them under the third-party doctrine as articulated in cases such as
United States v. Miller, 425 U.S. 435 (1976). 2 The trial court denied the motion to
suppress, concluding that (1) appellant had no reasonable expectation of privacy in
any of the records that were produced because the documents were not his personal
records, but instead were created, owned, or possessed by third parties, and,
alternatively, that (2) even if appellant had a legitimate expectation of privacy in
the documents, suppression was not an appropriate remedy because Agent Hessler
had relied in good faith on the statute that authorized him to issue the summonses.
2
See id. at 443 (“This Court has held repeatedly that the Fourth Amendment
does not prohibit the obtaining of information revealed to a third party and
conveyed by him to Government authorities, even if the information is revealed on
the assumption that it will be used only for a limited purpose and the confidence
placed in the third party will not be betrayed.”); see also Smith v. Maryland, 442
U.S. 735, 744–46 (1979) (holding that telephone company’s installation, at police
request, of a “pen register” to record the numbers dialed from the telephone at
Smith’s home was not a search for which a warrant was required, because Smith
“assumed the risk that the company would reveal to police the numbers he dialed,”
and had no legitimate expectation of privacy in the numbers dialed, which are used
by the telephone company for a variety of purposes).
5
The matter proceeded to trial, at which the bulk of the testimony centered
around the question of how, during tax years 2011 and 2012, appellant had
allocated his time between the District of Columbia and New Hampshire, from
which appellant had moved his family in 2009. Agent Hessler testified that he
cross-referenced records from the hotel where appellant stayed while in New
Hampshire with bank debit card records to calculate the maximum number of days
that appellant could have spent in New Hampshire during the years in question.
Agent Hessler determined that appellant could have spent a maximum of eighty-
nine days in New Hampshire in 2011 and sixty-seven days in that state in 2012.
During his testimony, appellant told the court that he had used TurboTax, a
tax preparation software program, to complete his 2011 and 2012 tax returns, and
that the program advised him that he was a part-year District resident. Appellant
testified that he had not known that he was only a part-year District resident before
he started the return, but after completing it with TurboTax came to believe that the
part-year-resident status entered on his returns was correct. He acknowledged,
however, that TurboTax’s designation of his status as a part-year resident was
dependent upon information he had entered. Appellant also acknowledged that,
because New Hampshire has no personal state income tax, he gained a financial
benefit by claiming only part-year District residency.
6
Referencing the definition of “resident” set out in D.C. Code
§ 47-1801.04(42) (2015 Repl. & 2020 Supp.), the trial court explained that the
term “resident” means a person who is domiciled in the District or who maintains a
place of abode in the District for 183 days out of the year regardless of domicile,
and that temporary absence from the District does not change a person’s domicile
or place of abode. The court further explained that a person is domiciled in the
District if he lives there and has no intent to return to where he was formerly
domiciled, and that to establish a change in domicile, a person must show physical
presence outside the District, an intent to abandon the domicile in the District, and
an intent to remain in the new domicile indefinitely. The trial court found that
appellant “was domiciled in New Hampshire until July 16, 2009, when he moved
his family to D.C., and that he remained domiciled here until sometime after April
2014 when he moved back to New Hampshire.” In so finding, the court
emphasized that appellant: (1) canceled his membership at a New Hampshire gym
in June 2009, citing the move; (2) signed a lease for a residence in the District in
July 2009; (3) in July 2009 moved “everything . . . he had” to the District using
three moving vans; (4) enrolled his children in District of Columbia public schools
from 2009 to 2013; (5) obtained a District driver’s license in December 2009 and
registered vehicles in the District; (6) listed his house on Powder Hill Road in New
7
Hampshire for sale in 2010 and sold it in 2011; (7) leased another residence in the
District in February 2011 and extended that lease until 2015; (8) filed for divorce
in October 2012 in the Superior Court, which found him to be a bona-fide resident
of the District for at least six months before the filing of the petition; and (9) self-
identified as living in the District on various forms.
The trial court acknowledged that if appellant “had a good-faith
misunderstanding of the law or good-faith belief that he was not violating the law,
then such belief would negate [the] willfulness” that is required for conviction of
tax evasion. Examining the evidence pertinent to good faith, the court found that
the New Hampshire address information supplied to OTR by appellant or his
attorney was unsupported and not believable and was “an after-the-fact attempt [by
appellant] to justify” his claim of part-year residency on his tax returns. The court
also credited the testimony of a Manchester, New Hampshire, hotel employee that
appellant told her he was being audited and “offered to pay a fee to use the hotel as
his residency” after “his ex-wife had accused him of cheating on [his] taxes.” The
court deemed this as evidence of another attempt by appellant “to establish
domicile after the fact . . . to justify or rationalize what he did [i.e., claim part-year
residency] on his 2011, 2012” tax returns. The court discredited appellant’s
explanation that the non-resident income he deducted for 2011 and 2012 was
8
derived from a business enterprise for which he paid New Hampshire tax, finding
that appellant was employing “fuzzy math” and “accounting magic.” The court
found that appellant used the entity Nova Cura, LLC to conceal his income. The
court also discredited appellant’s TurboTax defense, finding that he had an
incentive to claim residency in New Hampshire since it has no state income tax,
and that appellant’s financial background (he worked as a certified financial
planner) gave him the wherewithal to consult with tax experts in the event of
sincere confusion over his tax liability. Based on all these circumstances, the court
concluded that appellant did not have “a good-faith misunderstanding or good-faith
belief that [he] w[as] not violating the law when [he] filed [his] part-year
residency.” Rather, the court explained, the record showed that he “knew exactly
what [he] w[as] doing, and these [acts] were willful, affirmative acts done in an
attempt to evade or defeat the law[.]”
On appeal, appellant argues that the trial court denied his motion to suppress
in contravention of the Supreme Court’s decision in Carpenter and that the trial
court applied the wrong standard in assessing whether he met the willfulness mens
rea requirement for tax evasion.3
3
In reviewing the denial of appellant’s motion to suppress, we “must view
the evidence in the light most favorable to the prevailing party.” Bennett v. United
(continued…)
9
II.
Carpenter raised the question of whether law enforcement’s warrantless
harvest of cell-site location information (“CSLI”) — yielding 12,898 location
points cataloging a defendant’s movements over the span of at least 127 days —
violated the Fourth Amendment. Id. at 2212. The Court emphasized that the CSLI
at issue in Carpenter created a “detailed chronicle” and “comprehensive dossier of
[Mr. Carpenter’s] physical movements” and thus implicated privacy concerns “far
beyond” those considered in Smith and Miller. Carpenter, 138 S. Ct. at 2220. The
Court concluded in its “narrow” holding — which does “not disturb the application
of Smith and Miller or . . . address other business records that might incidentally
reveal location information” — that the historical CSLI at issue was governed by
(…continued)
States, 26 A.3d 745, 751 (D.C. 2011) (quoting Barrie v. United States, 887 A.2d
29, 31 (D.C. 2005)). The scope of our review is limited: we defer to the trial
court’s factual findings unless they are clearly erroneous, and we review the
court’s legal conclusions de novo. Green v. United States, 231 A.3d 398, 405
(D.C. 2020) (citing Hooks v. United States, 208 A.3d 741, 745 (D.C. 2019)). We
review de novo appellant’s claim that the trial court erred in defining and applying
the legal standard for willfulness. In re L.B., 73 A.3d 1015, 1017 (D.C. 2013)
(“This court reviews de novo any errors of law in a trial court’s judgment after a
bench trial.”).
10
the Court’s line of decisions that preserved a privacy interest in records that reveal
an individual’s physical movements over time. 4 Id. at 2220–22.
Appellant argues that his records — which he asserts were obtained through
summonses that “sought disclosure of [his] personal, familial, political,
professional, religious, and sexual associations” without reasonable suspicion and
without the check of neutral magistrate — likewise created “a comprehensive
chronicle of [his] past movements.” Id. at 2211. The District argues that the
summonsed documents fell squarely within the third-party doctrine as it developed
prior to the 2018 decision in Carpenter (and as it continues to exist post-
Carpenter).5
We conclude that we need not definitively decide whether, under Carpenter,
all or some portion of the summonsed documents implicated a privacy interest in
appellant’s location information, because it is enough that, under the law in place
4
See, e.g., United States v. Jones, 565 U.S. 400, 415, 430 (2012) (five
Justices concurring that longer-term GPS monitoring impinges on expectations of
privacy).
5
See Carpenter, 138 S.Ct. at 2216–17 (“[W]hile the third-party doctrine
applies to telephone numbers and bank records, . . . an individual maintains a
legitimate expectation of privacy in the record of his physical movements as
captured through CSLI.”).
11
at the time the summonses were issued to third parties in 2014, OTR could
reasonably believe that issuance of the summonses pursuant to statute did not
violate the Fourth Amendment. Thus, the records were admissible under the so-
called good-faith exception to the exclusionary rule. See United States v. Leon,
468 U.S. 897, 919–26 (1984) (holding that “the extreme sanction of exclusion is
inappropriate” where government agents relied on an objectively reasonable
understanding that a search was lawful); Jones v. United States, 168 A.3d 703,
720 (D.C. 2017) (explaining that the good-faith exception “applies when the police
conduct a search in objectively reasonable reliance on binding judicial precedent”)
(internal quotation marks omitted).6
6
See, also, e.g., United States v. Castro-Aguirre, 983 F.3d 927, 935 (7th Cir.
2020) (holding that defendants were not entitled to suppression of CSLI because
the use of a court order to collect CSLI was issued prior to the decision in
Carpenter requiring a warrant therefor, and thus the good-faith exception to the
warrant requirement applied); United States v. Carpenter, 926 F.3d 313, 318 (6th
Cir. 2019) (noting that while “[t]he Government’s acquisition of Carpenter’s CSLI
violated the Fourth Amendment[,]” suppression was inapposite because “the FBI
agents relied in good faith on the [statute] when they obtained the data”), on reh’g,
788 F. App’x 364, 365 (6th Cir. 2019) (“[W]e reject as meritless Carpenter’s
renewed argument that the district court should have granted his motion to
suppress.”); United States v. Chavez, 894 F.3d 593, 608 (4th Cir. 2018) (observing
that “[w]hile Carpenter is obviously controlling going forward, it can have no
effect on Chavez’s case” because “investigators in this case reasonably relied on
court orders and the Stored Communications Act in obtaining the cell site
records”); accord United States v. Curtis, 901 F.3d 846, 848–49 (7th Cir. 2018);
United States v. Joyner, 899 F.3d 1199, 1204–05 (11th Cir. 2018); United States v.
Leyva, No. 16-cr-20723, 2018 U.S. Dist. LEXIS 199327, at *7–8 (E.D. Mich. Nov.
26, 2018) (“[A]pplying Carpenter retroactively leads the Court to conclude that
(continued…)
12
Prior to Carpenter, the Supreme Court and this court repeatedly applied the
third-party doctrine to the types of records at issue here. See, e.g., Couch v. United
States, 409 U.S. 322, 324, 336 (1973) (holding that the petitioner lacked a
reasonable expectation of privacy in bank statements, payroll records, and reports
of sales shared with an accountant and subsequently sought by IRS summons in
connection with a criminal tax investigation); Donaldson v. United States, 400 U.S.
517, 519–22 (1971) (noting that there was “no constitutional issue” as to whether
employment records, 1099s, W-2 forms, and other documents pertaining to an
employee taxpayer are the employer’s records and obtainable by an IRS
subpoena), superseded by statute on other grounds; In re Richardson, 759 A.2d
649, 654 (D.C. 2000) (rejecting the argument that “the disclosure of [respondent’s]
bank records pursuant to a subpoena violated his Fourth Amendment right to be
free from unreasonable searches and seizures”). Further, it was well-established
under pre-Carpenter case law that the third-party doctrine applies to credit card
(…continued)
Leyva’s Fourth Amendment rights were violated, but there is no remedy for her
because of the good-faith exception.”); see also Davis v. United States, 564 U.S.
229, 249-50 (2011) (holding that where the police conducted a search of Davis’s
vehicle pursuant to then-binding precedent that was later overruled, the
exclusionary rule did not bar admission of the fruits of the search).
13
records. See, e.g., United States v. Graham, 824 F.3d 421, 430 n.9 (4th Cir. 2016)
(noting that while a credit card user “may not pause to consider that he is also
‘conveying’ to his credit card company the date and time of his purchase or the
store’s street address . . . he would hardly be able to use that as an excuse to claim
an expectation of privacy if those pieces of information appear in the credit card
company’s resulting records of the transaction”) (citation omitted), abrogated on
other grounds by Carpenter, 138 S. Ct. 2206; United States v. Phibbs, 999 F.2d
1053, 1077–78 (6th Cir. 1993) (observing that defendant “did not have both an
actual and a justifiable privacy interest in . . . his credit card statements”); United
States v. Wilson, No. 1:11-CR-53-TCB-ECS-3, 2013 U.S. Dist. LEXIS 37783, at
*18 (N.D. Ga. Feb. 20, 2013) (“[N]umerous courts have extended the [business
records/third party] doctrine well beyond bank records and telephone numbers to,
inter alia, credit card statements, electric utility records, motel registration records,
and employment records[.]”) (citation omitted). 7
7
Cf. United States v. Schaefer, No. 3:17-cr-00400-HZ, 2019 U.S. Dist.
LEXIS 8505, at *10–13 (D. Or. Jan. 17, 2019) (declining to apply Carpenter to a
string of online commercial transactions because defendant voluntarily conveyed
his purchasing information to the company and thus assumed the risk that the
company would share his purchases with law enforcement).
14
While there appears to be a dearth of pre-Carpenter case law specifically
involving debit card (rather than credit card) records, no reason appears why OTR
could not reasonably have regarded them as falling squarely within the third-party
doctrine. 8 We therefore hold that the trial court did not err in reasoning that Agent
Hessler and OTR acted in objectively reasonable good-faith in reliance on then-
existing law in issuing the summonses, and in ruling that the documents need not
be suppressed.
III.
The mens rea standard that is applicable in criminal tax cases requires proof
“that the law imposed a duty on the defendant, that the defendant knew of this
duty, and that he voluntarily and intentionally violated that duty.” Cheek v. United
States, 498 U.S. 192, 200–01 (1991); see also Stedman v. District of Columbia, 12
A.3d 1156, 1157 n.1 (D.C. 2011) (noting that “[a]lthough the District’s tax code
8
United States v. Frei, No. 3:17-cr-00032, 2019 U.S. Dist. LEXIS 6436,
*3-8 (M.D. Tenn. Jan. 14, 2019) (rejecting Carpenter claim and reasoning that “the
only location-revealing data available in bank records is information identifying
the vendor and the city where the defendant used his bank card,” while “[i]n
contrast, CSLI provides an ‘all-encompassing record of the holder’s whereabouts’
that allows law enforcement to ‘achieve[] near perfect surveillance, as if [there
was] an ankle monitor [on] the phone’s user’”) (quoting Carpenter, 138 S. Ct. at2217–18).
15
does not define ‘willful,’ a breach of the federal tax laws is ‘willful’” under the
Cheek standard, and that the tax laws have been revised to “align them more
closely with federal penalty provisions”) (cleaned up). The defendant’s knowledge
of the duty can be negated if the factfinder credits a defendant’s good-faith belief
that he was not violating the law, even if that belief is objectively unreasonable.
Cheek, 498 U.S. at 202. But the factfinder can consider other objective evidence,
such as form instructions, tax rulings, or other evidence showing the defendant’s
awareness of the relevant tax provisions, in determining whether the defendant’s
asserted belief was genuinely held. Id. “[T]he more unreasonable the asserted
beliefs or misunderstandings are, the more likely the [factfinder] will consider
them to be nothing more than simple disagreement with known legal duties
imposed by the tax laws and will find that the Government has carried its burden of
proving knowledge.” Id. at 203–04.
In this case, the trial court’s finding of willfulness was amply supported by
the evidence, which the court found amounted to “overwhelming” proof that
appellant was domiciled in the District during the periods in question. But
appellant zeroes in on the following sentence in the trial court’s twenty-seven-page
ruling to argue that the court contravened Cheek and failed to apply the correct
legal standard for willfulness:
16
[I]f I discredit his claim of a good-faith misunderstanding or a good-
faith belief, or if I find it to be unreasonable, and I consider it to be
nothing more than simple disagreement with [known] legal duties,
then I could find that the Government has carried its burden by
proving knowledge and willfulness.
November 5, 2018, Transcript at 17 (emphasis added). Appellant asks us to read
the italicized clause as evincing that the trial court thought, erroneously, that
appellant’s belief that he was only a part-year resident of the District had to be
reasonable to be held in good faith.
We conclude that even if the court erroneously thought that appellant’s
belief needed to be reasonable to be held in good faith, the error was assuredly
harmless. The court cited many reasons why it found that appellant did not believe
in good faith that he was only a part-year resident of the District. The court’s
finding on the issue could not have been clearer: “So therefore, Mr. Witaschek, I
do not credit your testimony. I do not find that you had a good-faith
misunderstanding or a good-faith belief that you were not violating the law when
you filed your part-year residency.” Thus, whether any such belief might have
been unreasonable was not a factor that affected the verdicts. 9
9
Cf. Douglas v. United States, 859 A.2d 641, 642 (D.C. 2004) (reasoning
that “it [wa]s plain enough that [the trial judge] credited the testimony of the
(continued…)
17
For the foregoing reasons, the judgment of the trial court is
Affirmed.
(…continued)
complainant that Douglas was the aggressor”; that “[h]ad the judge ‘instructed
herself’ correctly on the law of self-defense . . . her determination as fact-finder
that Douglas’s account was not credible would have led her to the same conclusion
— that Douglas did not act in self-defense” and thus Douglas “suffered no
prejudice from the judge’s putative legal error”).