United States v. Ramon Aguirre

[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________ FILED
U.S. COURT OF APPEALS
No. 09-13731 ELEVENTH CIRCUIT
MARCH 18, 2010
Non-Argument Calendar
JOHN LEY
________________________
CLERK
D. C. Docket No. 08-00053-CR-1
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
RAMON AGUIRRE,
Defendant-Appellant.
________________________
Appeal from the United States District Court
for the Southern District of Georgia
_________________________
(March 18, 2010)
Before TJOFLAT, WILSON and FAY, Circuit Judges.
PER CURIAM:
Ramon Aguirre appeals from his convictions and sentences for tax evasion,
in violation of 26 U.S.C. § 7201. On appeal, he raises various arguments related to
the district court’s denial of his motion to suppress, its evidentiary rulings, and his
sentencing. Aguirre contends that the court erred in denying his motion to
suppress because the warrant authorizing a search of New Era Tax Service
(“NETS”) was overly broad on its face, and the Internal Revenue Service (“IRS”)
agents who searched his office exceeded the scope of the warrant. Addressing the
court’s evidentiary rulings, Aguirre argues that the court abused its discretion
under Fed.R.Evid. 404(b) by: (1) denying his motion to exclude evidence that he
defrauded the Department of Veterans Affairs (“VA”), thus overruling his
objection that the government’s notice of its intent to introduce this extrinsic
evidence was untimely; and (2) prohibiting him from introducing evidence related
to Jose Cruzastol’s preparation of fraudulent tax returns for various individuals.
He also contends that the court infringed on his Sixth Amendment right to present
a defense by barring his proposed evidence concerning Cruzastol.
Regarding his sentence, Aguirre argues that the district court clearly erred in
calculating the tax loss amount at sentencing by holding him responsible for Rabel
General Service’s (“RGS”) corporate tax liability, because it failed to make factual
findings in support of its determination of the amount of RGS’s tax liability.
2
Finally, Aguirre asserts that the court erred by increasing his offense level under
U.S.S.G. § 2T1.1(b)(1) based on his illegal receipt of VA benefits. In connection
with this argument, he asserts that, while this guideline may apply where a
defendant fails to report income from an illegal kickback scheme to the IRS, it
does not apply where a defendant conceals income from the VA. He further argues
that this increase to his offense level was inappropriate because his trial focused on
his failure to report his income to the IRS, not VA fraud.
For the reasons set forth below, we affirm in part, and remand in part for the
limited purpose of permitting the district court to make factual findings in support
of its determination of the amount of RGS’s corporate tax liability.
I.
A federal grand jury indicted Aguirre for the following offenses: (1) falsely
reporting that he and his wife had no taxable income for 2001 (“Count 1”);
(2) failing to file a personal income tax return for 2002 (“Count 2”); (3) failing to
file a personal income tax return for 2003 (“Count 3”); and (4) failing to file a
personal income tax return for 2004 (“Count 4”), all in violation of 26 U.S.C.
§ 7201. (R1-1).
The magistrate judge entered a scheduling order, which provided that, under
the court’s local rules, the government should provide Aguirre with written notice
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of any evidence it intended to admit under Fed.R.Evid. 404(b) within 20 days after
arraignment. The order specified that any notice of 404(b) evidence should
“outline in general form the evidence to be offered” and state the purpose for
which it was offered. Aguirre was arraigned on April 28, 2008.
Shortly after the magistrate entered the scheduling order, Aguirre filed a
written request that the government provide him with notice of any evidence of
previous crimes or bad acts that it intended to present at trial. On May 27, 2008,
the government responded, stating that it intended to introduce, under either Rule
404(b) or as evidence inextricably intertwined with the charged offenses, “any
evidence now known or later learned regarding the defendant’s prior frauds against
the government.”
Aguirre filed a motion to suppress, explaining that, on August 18, 2005, IRS
Agent Stephanie Huebner obtained a warrant to search the “office and storage
areas” of NETS, which was formerly known as J.R. Cruz Tax Service (“JRCTS”).
He further explained that Jose Cruzastol owned this tax preparation service, which
was located at 3107 Old McDuffie Road, Augusta, Georgia. Aguirre stated that he
owned an automotive repair service, RGS, which was located next to NETS at
3109 Old McDuffie Road. Aguirre alleged that, despite the fact that Huebner was
aware that he maintained a separate office at 3107 Old McDuffie Road, she failed
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to specify this fact in the warrant, and, on August 19, IRS agents searched the
entirety of the premises at 3107 Old McDuffie Road, including his office. Aguirre
arrived at the location during the search, and informed the agents that his office
was used only for RGS business. The agents, however, refused to discontinue their
search, and seized documents which, on their face, pertained to RGS. Almost two
months after the search, IRS agents informed Aguirre that he was the subject of a
criminal investigation. On November 3, 2005, March 14, 2007, and April 10,
2007, Aguirre met with IRS agents and answered their questions about RGS,
NETS, and his personal financial information.
Aguirre argued that the IRS agents who conducted the search violated his
Fourth Amendment rights, and requested that the court suppress any evidence and
statements obtained as a result of the search. Aguirre asserted that the agents
exceeded the scope of the warrant by searching his office and seizing RGS
documents. He argued that he had placed the agents on notice that his office was
used only for RGS business, and that the agents were required to discontinue their
search as soon as he provided them with this notice. Aguirre also argued that the
statements he made during his subsequent three interviews with IRS agents should
be suppressed because these interviews were based on the fruits of the illegal
search. He alleged that he became the subject of a personal tax fraud investigation
5
based on the documents that IRS agents seized during the August 19 search.
Aguirre attached a copy of the search warrant and Huebner’s supporting
affidavit to his motion. The warrant authorized IRS agents to search the:
Office and storage areas of the business known as New Era Tax
Service fka J.R. Cruz Tax Service
3107 Old McDuffie Road
Augusta, Georgia 30906
The warrant listed the items to be seized as “contraband, fruits and
instrumentalities and evidence of the commission of the crime of a violation of 18
U.S.C. § 371 and 26 U.S.C. §§ 7206(1) and 7206(2) as described in the attached
affidavit.”
The warrant was supported by an affidavit executed by Huebner. In her
affidavit, Huebner alleged that the IRS had been conducting surveillance on NETS,
and that the results of this surveillance gave them reason to believe that Cruzastol
was preparing client tax returns that grossly exaggerated business expenses and
charitable deductions. Aguirre had prepared a fraudulent tax return for at least one
NETS client, and, along with Cruzastol, had attended a meeting with an IRS officer
in order to discuss the IRS’s concerns about NETS’s tax filings. Thus, Huebner
believed that Cruzastol filed false tax returns for NETS clients, and that Aguirre
was a NETS employee. Huebner stated that Aguirre’s hardware, software, and
documents likely contained evidence of tax fraud because he worked at NETS and
6
had prepared a fraudulent tax return for at least one NETS client. Huebner
included NETS and JRCTS client documents in her list of items to be seized.
The magistrate conducted a hearing regarding Aguirre’s motion to suppress.
At this hearing, Huebner testified that, when she and other IRS agents arrived at
NETS offices to conduct the search on August 19, 2005, the door to Aguirre’s
office was unlocked. Although the door to Aguirre’s office had a picture of a car
on it, it did not bear any signs or lettering with the words “Rabel General Services”
or “RGS.” Aguirre arrived at NETS during the course of the search, and told the
agents that they should not be inside of his office because he used it to conduct
business on behalf of RGS only. In response to Aguirre’s statement, Huebner
asked the other IRS agents whether there was an RGS sign on Aguirre’s door, and
the agents informed her that there was no such sign, and that they had found
numerous documents related to NETS business inside of Aguirre’s office.
Huebner ordered the agents to continue the search. In addition, Huebner testified
that RGS was a tax client of NETS and JRCTS.
The magistrate entered a report and recommendation, recommending that the
court deny Aguirre’s motion to suppress. The magistrate found that, at the time of
the search, Aguirre’s office was unlocked and was not labeled as an RGS office.
The magistrate further found that the IRS agents did not exceed the scope of the
7
warrant because Aguirre’s office fell within the parameters of the warrant. The
magistrate reasoned that the warrant authorized a search of NETS, and Aguirre
assisted with NETS business. The magistrate further found that the agents did not
exceed the scope of the warrant because there was no evidence that the agents
should have been on notice that 3107 Old McDuffie Road contained RGS offices
or property. In support of this finding, the magistrate noted that agents found
numerous NETS documents in Aguirre’s office. Addressing Aguirre’s argument
that IRS agents impermissibly seized documents related only to RGS, the
magistrate found that this seizure was permissible because RGS was a client of
NETS. The magistrate concluded that, because the August 19, 2005 search was not
illegal, Aguirre’s statements to IRS agents during his November 2005, March
2007, and April 2007 interviews should not be suppressed as fruits of an illegal
search. The court adopted the magistrate’s report and recommendation over
Aguirre’s objections.
On January 8, 2009, which was several days before trial, Aguirre filed a
motion in limine, informing the court that he had just received notice that the
government intended to introduce documents showing that he had illegally
received VA disability benefits. He argued that this evidence should be excluded
under Fed.R.Evid. 404(b) and 403. He asserted that the government’s disclosure
8
of the VA documents occurred only five calendar days and two business days
before trial, thus depriving him of the ability to meaningfully defend against the
evidence. He also asserted that this disclosure violated the magistrate’s scheduling
order. Aguirre noted, however, that, in its discovery, the government had disclosed
to him an IRS memorandum in which Huebner related that she had contacted the
VA regarding Aguirre’s disability status.
Aguirre attached a copy of Huebner’s memorandum to his motion in limine.
In the memorandum, which was prepared in September 2007, Huebner averred that
she had called Kathy Hersey, a special agent employed by the VA Office of the
Inspector General, on June 8, 2007. In response to Huebner’s questions regarding
Aguirre’s disability status, Hersey stated that Aguirre was awarded 100% disability
status in 1999 based on his representation that he could not work due to a
disability. Aguirre had informed the VA that he had sold his automotive repair
business, and did not report to the VA that he subsequently found employment
elsewhere. Huebner stated that she asked for copies of Aguirre’s VA documents,
but “Hersey was reluctant to provide the documents since [the] VA was not
officially involved in the investigation.”
Aguirre also attached copies of the VA documents that the government had
recently provided to him. These documents included, among other things:
9
(1) three letters from the VA to Aguirre, dated 2002, 2003, and 2004, asking that
Aguirre inform the VA if he had found employment or had become self-employed,
as his employment income could result in a decrease to his disability
compensation; and (2) a letter from the VA to Aguirre, dated 1999, informing
Aguirre that he was entitled to disability compensation in light of the fact that he
had sold his business and was unable to secure other employment.
The government also filed a motion in limine, requesting that, pursuant to
Fed.R.Evid. 609, Aguirre be prohibited from cross-examining any government
witness concerning the witness’s prior bad acts or specific instances of misconduct,
unless the matter involved dishonesty.
Immediately before the trial began, the government addressed Aguirre’s
motion in limine concerning the VA documents. The government stated that the
VA had initially refused to turn Aguirre’s documents over to Huebner, and that it
had provided Huebner’s memorandum about her conversation with Hersey to
Aguirre shortly after his arraignment. The government explained that it did not
obtain the VA records until Aguirre requested a document that Huebner had
referenced in her memorandum, and the government responded to Aguirre’s
request by issuing a subpoena for the VA records. The government averred that it
forwarded the documents to Aguirre immediately after it received them. The
10
government conceded that the evidence of Aguirre’s VA fraud was extrinsic, but
asserted that it should be admitted because it provided a motive for Aguirre’s
failure to report his employment income to the IRS. The court deferred its ruling
on the matter.
During Aguirre’s trial, Huebner testified that she investigated Aguirre for tax
evasion for the years 2001-2004. Huebner identified certain documents as
financial statements that Aguirre had provided to banks between 2001 and 2004 in
order to obtain loans or other lines of credit. These documents generally reflected
that Aguirre received at least $80,000 in annual income from his employment with
RGS, and that he had over $1,000,000 in assets. Huebner also reviewed Aguirre’s
IRS records for 2001 to 2004, which reflected that Aguirre reported that he did not
receive any employment income in 2001. These documents also reflected that
Aguirre did not file a personal income tax return for tax years 2002, 2003, and
2004. As part of her investigation, she met with Aguirre on several occasions to
review his finances. During these meetings, they reviewed Aguirre’s and RGS’s
transactions, and Aguirre would classify each transaction as a business or personal
expense. Based on this process, Huebner was able to calculate Aguirre’s
unreported taxable income for 2001-04. During one of these meetings, Aguirre
told Huebner that he did not want to report his income in his tax returns because it
11
would affect his VA disability payments.
After the conclusion of Huebner’s testimony on direct examination, Aguirre
addressed the government’s motion in limine to prohibit him from questioning
government witnesses about their previous bad acts. Aguirre argued that, in the
event that the government called Cruzastol as a witness, he should be able to
question Cruzastol regarding the fact that he falsified information such as
deductions on client tax returns, because these were acts of dishonesty. He
asserted that evidence that Cruzastol prepared fraudulent tax returns was “at the
heart of [the] defense” because he had relied on Cruzastol as a tax preparer. He
also argued that the evidence was admissible under Fed.R.Evid. 406 as evidence of
Cruzastol’s business habits. Aguirre stated that he also wished to present the
testimony of Lisa Owens Smith, who would testify that Cruzastol forged her name
to fraudulent tax returns.
The court determined that Fed.R.Evid. 404 and 403 prohibited the defense
from presenting evidence that Cruzastol filed fraudulent tax returns for various
individuals. The court reasoned that the defense sought to show that Cruzastol had
a particular character trait, and that he must have acted in conformity with this trait
when he handled Aguirre’s tax returns. The court further found that this evidence
regarding Cruzastol was extrinsic. The court explained that it did not want to
12
suggest to the jury that it should compare Aguirre’s culpability to Cruzastol’s
culpability, or that it should consider whether Aguirre, rather than Cruzastol, was
properly prosecuted by the U.S. Attorney’s Office. Thus, the court determined
that, to the extent the government’s motion in limine sought to exclude this
evidence, it was granted.
Addressing his motion in limine to exclude the evidence of his VA disability
benefits, Aguirre argued that this was extrinsic evidence of which the government
had failed to provide timely notice, as required by Rule 404(b). Aguirre argued
that, even if Hersey had refused to give Aguirre’s VA documents to Huebner, the
government could have subpoenaed the VA documents. Aguirre further argued
that, in any event, these documents constituted extrinsic evidence that could cause
the jury to conclude that he had defrauded the VA.
The court stated that it had “some concern” that this evidence could confuse
the jury or prejudice Aguirre. It also expressed its concern with the timeliness of
the government’s disclosure, although it credited the government’s assertion that it
did not receive the VA documents until shortly before the trial began. With these
concerns in mind, the court ruled that the government could present only the VA
documents that reflected that: (1) Aguirre received 100% disability compensation
from the VA; and (2) he was required to report any employment income to the VA,
13
as this could reduce his disability payments. The court reasoned that, “these
documents flush out precisely what [Aguirre] had to lose if he filed a true tax
return.” The court excluded the remaining VA documents, finding that the
introduction of all of this evidence could confuse the jury and prejudice Aguirre by
showing that he concealed another crime.
When Huebner resumed her testimony on cross-examination, she testified
that Cruzastol had prepared Aguirre’s personal tax returns during the 1990’s.
During her interviews with Aguirre, Aguirre told her that Cruzastol had handled
RGS’s corporate tax returns for tax years 2001-2004. Aguirre also told Huebner
that he had not reviewed the 2001 tax return that Cruzastol prepared for RGS.
Aguirre also told her that Cruzastol had prepared the financial statements that he
had provided to banks between 2001 and 2004, and that he had not reviewed these
statements after he received them from Cruzastol. Aguirre further stated to
Huebner that he thought that Cruzastol had filed his tax returns for him.
Brandon Barnes, a VA representative, testified that he had received a request
to bring Aguirre’s VA records to court. Aguirre objected to this line of questioning
and the introduction of documentary evidence from the VA, adopting his previous
objections to this evidence under Rules 403 and 404(b). Barnes identified a
document as a letter that had been sent from the VA to Aguirre in February 1999,
14
and the court admitted this document into evidence over Aguirre’s objection.
Barnes explained that his letter notified Aguirre that his disability benefits had
been modified, and that he now received disability benefits at a rate of 100%
because he was unemployable. Barnes identified a set of three documents as letters
that were sent from the VA to Aguirre, each of which instructed Aguirre to notify
the VA if he received any income from employment, as this could decrease the
amount of compensation he received. Aguirre had received these letters in 2002,
2003, and 2004. The court admitted these letters into evidence over Aguirre’s
objection.
Shelley Berry testified that she had worked for Aguirre over the course of
four years, beginning in 2003. She testified that Aguirre was the “head man” who
ran NETS, and that Aguirre handled hiring decisions and writing checks on behalf
of NETS. On cross-examination, Berry testified that Cruzastol had inflated the
mileage reports on his clients’ tax returns. Cruzastol, along with another
employee, had been responsible for preparing client tax returns. Cruzastol had
prepared her personal tax returns in 2003 and 2004. Berry admitted that these tax
returns falsely reported that she did not receive any income from RGS.
After the conclusion of the government’s case, Aguirre presented the
testimony of several witnesses in his defense. Aguirre did not testify in his own
15
defense, and none of the defense witnesses testified that Aguirre relied on
Cruzastol to file his personal tax returns between 2001-2004. The jury convicted
Aguirre of Counts 1-4.
In preparing Aguirre’s presentence investigation report (“PSI”), the
probation officer noted that, under U.S.S.G. § 2T1.1(a), the base offense level for
tax evasion was based on the amount of tax loss caused by the defendant’s
conduct. In calculating the tax loss, the probation officer found that Aguirre
should be held responsible for both his personal tax liability and RGS’s corporate
tax liability. The officer stated that, “RGS’s tax liability for tax years 2001
through 2004 was $40,676; $100,708, $54,043, and $43,918, respectively.” The
officer did not explain how he arrived at these figures. In addition, the officer
noted that IRS officials determined that Aguirre had a personal tax liability of
$108,204. The officer combined Aguirre’s personal and corporate tax liability to
find that Aguirre’s tax loss amount was $347,549. Pursuant to the loss table set
forth in U.S.S.G. § 2T4.1(G), the officer determined that this tax loss amount
yielded a base offense level of 18.
The probation officer then increased Aguirre’s offense level by two levels
under § 2T1.1(b)(1), because the fact that he did not report income between 2001-
2004 enabled him to receive VA disability benefits of approximately $15,708 each
16
year. The officer increased Aguirre’s offense level by another two levels under
§ 2T1.1(b)(2) based on his finding that Aguirre’s offense involved the use of
sophisticated means. Accordingly, the officer determined that Aguirre’s total
offense level was 22. Based on a total offense level of 22 and a criminal history
category of I, the officer set Aguirre’s guideline range at 41 to 51 months’
imprisonment.
Aguirre filed written objections to the PSI. He objected to the two-level
increase under § 2T1.1(b)(1) , arguing that his receipt of VA disability benefits was
not at issue in this case, and that § 2T1.1(b)(1) typically applied in situations where
a defendant had failed to report to the IRS income received from illegal kickbacks.
Aguirre also objected to the probation officer’s determination that RGS’s corporate
tax liability should be included in his tax loss amount under § 2T4.1, asserting that
the government had failed to present any evidence establishing the amount of
RGS’s tax liability.
At sentencing, Aguirre reiterated his objection to the increase under
§ 2T1.1(b)(1), again arguing that this guideline was typically applied where a
defendant failed to report income received from an illegal kickback scheme to the
IRS, not where one failed to report income to the VA. The court reasoned that
Aguirre’s receipt of VA disability benefits played a large role in his case because
17
his interest in these benefits motivated him to fail to report his employment
income. The court also reasoned that it saw no difference between a defendant’s
failure to report income to the IRS and a defendant’s failure to deal honestly with
the VA.
Aguirre also reiterated his objection to the PSI’s aggregation of his personal
tax liability and RGS’s tax liability. The government responded that, at trial,
Huebner had testified regarding Aguirre’s business and personal expenses. The
government asserted that this testimony had reflected RGS’s income. Aguirre
argued that no government agent had testified regarding RGS’s tax liability. The
court found that the PSI appropriately aggregated Aguirre’s and RGS’s tax
liabilities, but did not make any statement concerning the specific amount of
corporate tax liability attributed to RGS.
The court adopted the PSI’s factual findings and guideline applications, with
the exception that it found that Aguirre’s conduct did not warrant a two-level
increase for the use of sophisticated means under § 2T1.1(b)(2). Thus, the court
determined that Aguirre had a total offense level of 20 which, when combined with
his criminal history category of I, produced a guideline range of 33 to 41 months’
imprisonment. The court sentenced Aguirre to a term of 36 months’ imprisonment.
The court asked the parties if they had any objections to the sentence or the manner
18
in which it was calculated, and Aguirre stated that he adopted his previously filed
written objections to the PSI.
II.
“We review a district court’s denial of a motion to suppress evidence as a
mixed question of law and fact, with rulings of law reviewed de novo and findings
of fact reviewed for clear error.” United States v. Lindsey, 482 F.3d 1285, 1290
(11th Cir. 2007). In addition, we view the facts “in the light most favorable to the
prevailing party in [the] district court.” Id. Where a defendant fails to raise an
argument before the district court, however, we will review the argument on appeal
only for plain error. United States v. Martinelli, 454 F.3d 1300, 1310 (11th Cir.
2006). In order to satisfy plain-error review, the defendant must demonstrate:
“(1) error, (2) that is plain, and (3) that affects substantial rights.” Id. at 1310-11(quotation omitted). “If all three conditions are met, an appellate court may then
exercise its discretion to notice a forfeited error, but only if (4) the error seriously
affects the fairness, integrity, or public reputation of judicial proceedings.” Id. at
1311 (quotation omitted).
The Fourth Amendment guarantees “the right of the people to be secure in
their persons, houses, papers, and effects against unreasonable searches and
seizures.” U.S. Const. amend. IV. The Fourth Amendment’s Warrant Clause
19
requires that a search warrant must “particularly describ[e] the place to be
searched, and the persons or things to be seized.” Id.; Maryland v. Garrison, 480
U.S. 79, 84, 107 S.Ct. 1013, 1016, 94 L.Ed.2d 72 (1987). The purpose of this
requirement is to prevent “wide-ranging exploratory searches.” Garrison, 480 U.S.
at 84, 107 S.Ct. at 1016. Statements obtained from a defendant as a result of an
illegal search may be suppressed as the fruit of an illegal search. See United States
v. Terzado-Madruga, 897 F.2d 1099, 1112-13 (11th Cir. 1990).
A warrant is sufficient where it describes “the place to be searched with
sufficient particularity to direct the searcher, to confine his examination to the
place described, and to advise those being searched of his authority.” United
States v. Burke, 784 F.2d 1090, 1092 (11th Cir. 1986); see also Steele v. United
States, 267 U.S. 498, 503, 45 S.Ct. 414, 416, 69 L.Ed. 757 (1925) (holding that
“[i]t is enough if the description is such that the officer with a search warrant can,
with reasonable effort[,] ascertain and identify the place intended”). The
particularity requirement allows a practical margin of flexibility, depending on the
type of property to be seized, and “a description of property will be acceptable if it
is as specific as the circumstances and nature of activity under investigation
permit.” United States v. Wuagneux, 683 F.2d 1343, 1349 (11th Cir. 1982).
In Garrison, the Supreme Court addressed a situation where the police
20
obtained a search warrant to search a third-floor apartment, believing that there
was only a single apartment on the third floor. 480 U.S. at 80, 107 S.Ct. at 1014.
In fact, there were two apartments on the third floor, and the police, in executing
the search warrant, conducted a search of the second apartment before discovering
that it was a separate apartment. Id. Acknowledging that the search warrant’s
description of the place to be searched was inaccurate, the Supreme Court
nevertheless held that the warrant did not violate the particularity requirement
because the affiant had reasonably believed that the third floor housed only one
apartment. Id. at 85-86 & n.10, 107 S.Ct. at 1017 & n.10; see also United States v.
Ofshe, 817 F.2d 1508, 1514 (11th Cir. 1987) (holding that a warrant was
sufficiently particular, despite the fact that it failed to mention that one of the seven
offices in a multiple-use commercial building was used for a separate business,
because the officers reasonably believed that all of the offices inside the building
were part of the business that was the target of the warrant). The Supreme Court
also held, however, that the executing officers were “required to discontinue the
search of [the defendant’s] apartment as soon as they discovered that there were
two separate units on the third floor.” Garrison, 480 U.S. at 87, 107 S.Ct. at 1018.
Although Aguirre argued to the district court that the IRS agents exceeded
the scope of the warrant by searching his office and seizing RGS documents, he
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did not argue that the warrant lacked sufficient particularity on its face. As a
result, plain-error review applies to Aguirre’s argument that the warrant lacked
sufficient particularity. The court did not err, let alone plainly err, in failing to find
that the warrant lacked sufficient particularity because it failed to note that 3107
Old McDuffie Road housed an RGS office as well as NETS offices. Huebner’s
affidavit reflected that she and other agents had conducted surveillance of NETS
for approximately two years before they obtained the warrant, and that, during this
time, they observed that Aguirre prepared at least one tax return for a NETS client
and attended meetings concerning NETS business. In addition, this surveillance
revealed no indication that Aguirre’s presence or use of his office at 3107 Old
McDuffie Road was related to RGS, and not NETS, business. Moreover, RGS was
located at 3109 Old McDuffie Road, and thus had a separate address from NETS.
Accordingly, at the time Huebner executed her affidavit in support of the warrant,
she and other IRS agents, through their lengthy investigation of NETS, lacked
information that reasonably should have put them on notice that 3107 Old
McDuffie Road also housed an office and documents related only to RGS business.
Because Aguirre objected below that the IRS officers exceeded the scope of
the warrant by searching his office, he has preserved this issue for appeal, and we
review the district court’s rulings of law as to this issue de novo. The agents who
22
executed the warrant did not exceed its scope. Once inside 3107 Old McDuffie
Road, the agents discovered that Aguirre’s office was unlocked, and that it lacked
any markings related to RGS. While the agents may have been on notice that this
was Aguirre’s personal office, the warrant, together with Huebner’s affidavit,
authorized a search of Aguirre’s office because he was believed to be a NETS
employee. By the time that Aguirre arrived at NETS and informed the agents that
his office was used for RGS business, the agents had already discovered numerous
documents inside the office that clearly related to NETS business. Accordingly,
the objective evidence available to the executing agents undermined Aguirre’s self-
serving contention that his office was not part of NETS. While Aguirre contends
that the warrant did not authorize the seizure of RGS documents, this contention
lacks merit because the warrant authorized the seizure of client documents, and
RGS was a client of NETS. Accordingly, the evidence available to the agents did
not reasonably place them on notice that Aguirre’s office was not part of NETS.
Thus, even assuming that Aguirre correctly argues that his subsequent interviews
with IRS agents were fruits of this search, the search was permissible and, as a
result, Aguirre’s statements did not warrant suppression as fruits of an
impermissible search.
III.
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We review a district court’s decision regarding the admissibility of evidence
for abuse of discretion. United States v. Schlei, 122 F.3d 944, 990 (11th Cir.
1997).
Under Fed.R.Evid. 404(b):
Evidence of other crimes, wrongs, or acts is not admissible to prove
the character of a person in order to show action in conformity
therewith. It may, however, be admissible for other purposes, such as
proof of motive, opportunity, intent, preparation, plan, knowledge,
identity, or absence of mistake or accident, provided that upon request
by the accused, the prosecution in a criminal case shall provide
reasonable notice in advance of trial, or during trial if the court
excuses pretrial notice on good cause shown, of the general nature of
any such evidence it intends to introduce at trial.
Fed.R.Evid. 404(b). Only extrinsic evidence is subject to the requirements of
Fed.R.Evid. 404(b). Schlei, 122 F.3d at 990. “The policy behind 404(b) is to
reduce surprise and promote early resolution on the issue of admissibility.” United
States v. Perez-Tosta, 36 F.3d 1552, 1561 (11th Cir. 1994) (quotation omitted).
We consider three factors in determining the reasonableness of pretrial
notice under Rule 404(b): (1) when the proponent could have learned of the
availability of the evidence; (2) the extent of the prejudice to the opposing party
due to a lack of time to prepare to meet the evidence; and (3) how significant the
evidence is to the proponent’s case. Perez-Tosta, 36 F.3d at 1562.
Here, the district court did not abuse its discretion by denying Aguirre’s
24
motion to exclude the documentary evidence of his VA fraud under Rule 404(b).
Aguirre correctly points out that the government did not timely provide him with a
document expressly informing him that it intended to introduce documents
indicating that he concealed his employment income from the VA so that he could
receive disability benefits. Aguirre certainly had some notice of this evidence,
however, because the government responded to his request concerning 404(b)
evidence by informing him that it intended to introduce any evidence of his “prior
frauds against the government,” and also disclosed Huebner’s memorandum
concerning the VA documents during discovery. Significantly, Aguirre failed to
explain below, and does not explain in his brief on appeal, how the lack of notice
deprived him of the ability to challenge this evidence at trial. Thus, he has failed to
demonstrate prejudice.
Finally, this evidence was significant to the government’s case because it
provided a motive for Aguirre’s failure to file tax returns. Although Huebner
testified that Aguirre told her that he did not want to report his employment income
because he received disability benefits, she did not testify about this subject at
length, and it does not appear that the government’s brief presentation of several
VA documents was needlessly cumulative. Accordingly, under these
circumstances, the court did not abuse its discretion in admitting this evidence.
25
IV.
Pursuant to Fed.R.Evid. 404(a), “Evidence of a person’s character or a trait
of character is not admissible for the purpose of proving action in conformity
therewith on a particular occasion.” Fed.R.Evid. 404(a). Nevertheless,
“[e]vidence of the habit of a person or of the routine practice of an organization,
whether corroborated or not and regardless of the presence of eye witnesses, is
relevant to prove that the conduct of the person or organization on a particular
occasion was in conformity with the habit or routine practice.” Fed.R.Evid. 406;
Loughan v. Firestone Tire & Rubber Co., 749 F.2d 1519, 1523 (1985).
We have distinguished evidence of an individual’s habit under Rule 406
from character evidence under Rule 404:
Character is a generalized description of one’s disposition, or one’s
disposition in respect to a general trait, such as honesty, temperance,
or peacefulness. Habit . . . describes one’s regular response to a
repeated specific situation. If we speak of character for care, we think
of the person’s tendency to act prudently in all the varying situations
of life, in business, in family life, in handling automobiles, and in
walking across the street. A habit, on the other hand, is the person’s
regular practice of meeting a particular kind of situation with a
specific type of conduct, such as the habit of going down a particular
stairway two stairs at a time, or giving the hand signal for a left turn,
or of alighting from railway cars while they are moving. The doing of
the habitual acts may become semi-automatic.
Loughan, 749 F.2d at 1524 (quotation omitted). In order to establish that evidence
26
of an individual’s conduct on specific occasions rises to the level of admissible
habit evidence, the proponent must show that the conduct occurred so often that it
permits an “inference of systematic conduct.” Id. (quotation omitted).
In considering whether a defendant should be permitted to introduce
extrinsic evidence under Fed.R.Evid. 404(b), a district court should consider
whether the evidence bears “special relevance” to the defendant’s guilt, and
whether there are any other practical means by which the defendant could prove
his point. See United States v. Cohen, 888 F.2d 770, 775-76 (11th Cir. 1989);
United States v. Rodriguez, 917 F.2d 1286, 1287, 1289-90 (11th Cir. 1990),
vacated on reh’g in part on other grounds, 935 F.2d 194 (1991). For example, we
have held that the district court abused its discretion under Rule 404(b) by
excluding evidence that the defendants’ co-conspirator, who was also the
government’s key witness, could have executed the charged fraudulent scheme
without the defendants’ involvement, because this evidence bore a special
relevance to the defendants’ guilt. Cohen, 888 F.2d at 775-76. In addition, in
Rodriguez, we held that the district court did not abuse its discretion under Rule
404(b) by excluding evidence that the law enforcement officers who prosecuted the
defendants may have entrapped a defendant in an unrelated case, because the
defendants did not otherwise produce evidence that he was entrapped, and were
27
permitted to cross-examine the officers regarding their investigation tactics. 917
F.2d at 1287, 1289-90.
Also in Rodriguez, we rejected the defendants’ arguments that the court’s
exclusion of various items of proffered evidence amounted to the denial of their
Sixth Amendment rights to present a vigorous defense. Id. at 1291. We reasoned
that the court had excluded only irrelevant evidence, and again noted that the
defendants were able to cross-examine the government agents concerning their
tactics. Id.The court did not abuse its discretion in excluding Aguirre’s proposed
evidence regarding Cruzastol. As an initial matter, it appears that evidence that
Cruzastol falsified information on tax returns for approximately a dozen
individuals did not constitute evidence of habit under Rule 406. Evidence that
Cruzastol engaged in this behavior on a dozen occasions does not rise to the level
of demonstrating an individual’s “regular practice,” or his “semi-automatic”
response to a particular situation. Rather, the court did not abuse its discretion in
construing this proposed evidence as impermissible character evidence under Rule
404(b), because Aguirre sought to show that Cruzastol had acted dishonestly by
falsifying information on other individuals’ tax returns in support of his theory that
Cruzastol had acted dishonestly by failing to file his tax returns. This evidence
28
appears to fall within Rule 404(a)’s prohibition on, “[e]vidence of a person’s
character or a trait of character . . . for the purpose of proving action in conformity
therewith on a particular occasion.”
Moreover, Aguirre’s proposed evidence that Cruzastol made fraudulent
statements on client tax returns did not bear a special relevance to the issue of his
guilt. Apart from eliciting Huebner’s testimony on cross-examination that Aguirre
stated to her that he thought that Cruzastol had filed his tax returns, Aguirre did not
present any evidence indicating that he had relied on Cruzastol to prepare his
personal tax returns between 2001-2004. Moreover, even if the court had
permitted Aguirre to introduce his proposed evidence, its probative value would
have been limited because it would have shown that Cruzastol falsified deductions
on tax returns, not that he repeatedly failed to file tax returns or completely omitted
employment income on tax returns. In addition, the fact that Berry testified that it
was Aguirre who controlled NETS further undermined the probative value of the
proposed evidence concerning Cruzastol. Accordingly, for the foregoing reasons,
the court did not abuse its discretion in excluding this evidence under Rule 404(b).
Finally, the court’s ruling on this matter did not infringe on Aguirre’s Sixth
Amendment right to present a vigorous defense, as this right does not encompass
the right to introduce evidence that violates the federal rules. Although Aguirre
29
contends that his evidence regarding Cruzastol was crucial to his defense, the
record does not include any indication that the court barred Aguirre from calling
Cruzastol as a witness, or from testifying that he relied on Cruzastol to prepare and
file his tax returns. Moreover, the court permitted Aguirre to cross-examine Berry
about the fact that Cruzastol falsified information regarding mileage on client tax
returns, and that Cruzastol also omitted Berry’s RGS income from her 2003 and
2004 tax returns. The court also permitted Aguirre to cross-examine Huebner
regarding Cruzastol’s preparation of RGS’s tax returns and Aguirre’s financial
statements. Accordingly, Aguirre’s argument that the court prevented him from
presenting a full defense lacks merit.
V.
In the sentencing context, we review a district court’s factual findings for
clear error, and its legal conclusions de novo. United States v. Gupta, 572 F.3d
878, 887 (11th Cir. 2009), cert. denied, 463 F.3d 1182. “When a defendant
challenges one of the factual bases of his sentence, the Government has the burden
of establishing the disputed fact by a preponderance of the evidence.” Id.(quotation and alteration omitted). “This burden must be satisfied with reliable and
specific evidence.” Id. (quotation omitted). A court need only make a reasonable
estimate of loss. Id. at 888. However, a court must make factual findings
30
sufficient to support the loss amount set forth in the PSI, and “cannot simply rely
upon conclusory factual recitals of the PSI.” United States v. Renick, 273 F.3d
1009, 1026 (11th Cir. 2001) (quotation omitted). Where a district court fails to
identify the factual basis for its loss determination, meaningful appellate review is
not possible. Gupta, 572 F.3d at 889.
Here, it appears that the court clearly erred by failing to make factual
findings in support of its determination that RGS’s tax liability was $239,345.
Because Aguirre objected to this calculation of RGS’s loss amount, the court was
required to make factual findings concerning this matter, rather than simply rely on
the PSI. It bears noting that, in the PSI, the probation officer did not provide an
explanation as to how he arrived at this figure. The trial transcript reflects that
Huebner merely testified that she reviewed RGS’s business transactions. She did
not testify as to the amount of RGS’s corporate tax liability. While the probation
officer’s determination of RGS’s tax liability may have been based on the IRS’s
reliable and specific computation, the record does not demonstrate this fact.
Importantly, at the sentencing hearing, the parties and the court did not discuss the
basis for the computation of RGS’s tax liability, and it thus is not ascertainable
why or how the court concluded that it should adopt the PSI’s calculation of this
figure. Accordingly, it appears that meaningful appellate review of the court’s tax
31
loss determination is not possible, and we remand as to this issue so that the district
court may clarify its factual findings in this regard.
VI.
We review the district court’s interpretation and application of the
Sentencing Guidelines de novo. United States v. Barakat, 130 F.3d 1448, 1452
(11th Cir. 1997). We may affirm the district court based on any ground supported
by the record. United States v. Campa, 529 F.3d 980, 998 (11th Cir. 2008).
In determining a defendant’s offense level, the district court should consider
not only the offenses of conviction, but also the defendant’s relevant conduct,
which includes, among other things, “all acts and omissions committed . . . by the
defendant.” U.S.S.G. § 1B1.3(1)(A); United States v. Ignancio Munio, 909 F.2d
436, 438-39 (11th Cir. 1990). The district court must take into account “the
totality of the criminal transaction in which the defendant participated and which
gave rise to his indictment, without regard to the particular crimes charged in the
indictment.” Ignancio Munio, 909 F.2d at 438.
The Guidelines provide that, in a tax evasion case, a defendant’s offense
level should be increased by two levels, “[i]f the defendant failed to report or
correctly identify the source of income exceeding $10,000 in any year from
criminal activity.” U.S.S.G. § 2T1.1(b)(1). Under this guideline, the term
32
“criminal activity” refers to “any conduct constituting a criminal offense under
federal, state, local, or foreign law.” U.S.S.G. § 2T1.1 comment. (n. 3). Under 18
U.S.C. § 641, it is illegal for any individual to steal or embezzle money belonging
to a U.S. agency, including the VA. 26 U.S.C. § 641; See United States v. Moore,
504 F.3d 1345, 1347 (11th Cir. 2007) (noting that § 641 prohibits the theft of
money belonging to the VA).
Here, Aguirre’s argument that the court could not properly increase his
sentence due to his VA fraud because this conduct was not charged in the
indictment lacks merit, as our precedent forecloses this argument. Moreover, it
appears that Aguirre’s VA fraud qualified as relevant conduct under
§ 1B1.3(1)(A), since his failure to report his employment income, as charged in the
indictment, enabled his receipt of VA disability benefits.
Regardless of whether § 2T1.1(b)(1) could properly apply where a defendant
conceals income from the VA, the district court’s application of this guideline to
Aguirre may be upheld under an alternative rationale. Under the plain language of
§ 2T1.1(b)(1), a defendant may receive a two-level increase to his offense level
where he fails to report $10,000 or more in income derived from illegal activity to
the IRS. Because the commentary to this guideline provides that it applies to any
type of illegal activity, and 18 U.S.C. § 641 prohibits the theft of government
33
agency funds, it appears that Aguirre’s fraudulent receipt of VA disability benefits
falls within the guideline. Because the jury found Aguirre guilty of failing to file
tax returns in 2002, 2003, and 2004, the record reflects that Aguirre did not report
his illegally received income to the IRS. Accordingly, it appears that Aguirre’s
conduct falls within the plain meaning of § 2T1.1(b)(1), and Aguirre does not point
to controlling case law demonstrating otherwise.
Aguirre’s convictions are affirmed; his sentence is vacated and the case is
remanded for a recalculation of the loss amount to be used in resentencing.
AFFIRMED IN PART, REMANDED IN PART WITH
INSTRUCTIONS.
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