United States v. Donus R. Sroufe

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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 13-12889
Non-Argument Calendar
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D.C. Docket No. 1:11-cr-00311-CAP-AJB-1
UNITED STATES OF AMERICA,
Plaintiff-Appellee,
versus
DONUS R. SROUFE,
Defendant-Appellant.
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Appeal from the United States District Court
for the Northern District of Georgia
________________________
(September 22, 2014)
Before TJOFLAT, JORDAN, and FAY, Circuit Judges.
PER CURIAM:
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Donus R. Sroufe appeals his conviction and sentences for filing a false claim
for a tax refund, in violation of 18 U.S.C. § 287, and interfering with the
administration of internal revenue laws, in violation of 26 U.S.C. § 7212(a). We
affirm.
I. BACKGROUND
A. Offense Conduct
In March 2009, Sroufe submitted an unsigned Form 1040, U.S. Individual
Income Tax Return, for tax year 2008, to the United States Internal Revenue
Service (“IRS”). The Form 1040, along with an attached worksheet, reported
Sroufe had received approximately $2.5 million in income in 2008 from posted
money orders and bonds from the United States Department of the Treasury.
According to the tax return, numerous companies had paid taxes on Sroufe’s behalf
in 2008. The purported payments to the IRS exceeded $2.6 million in total. The
return stated Sroufe was due a tax refund of $1,759,476.89. All of these figures
were false; none of the listed companies had paid any taxes on Sroufe’s behalf in
2008.
Along with the Form 1040 and attached worksheet, Sroufe submitted a
signed Form 56, Notice Concerning Fiduciary Relationship, which listed the
Secretary of the Treasury Department as a fiduciary of Sroufe. He also included a
letter to the Commissioner of the IRS, which requested the Commissioner “file the
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enclosed 2008 Federal Tax Form 1040 along with any forms and/or returns that
may be due, including those that may be required for tax years 2006 and 2007” and
make any corrections, additions, or changes deemed necessary. ROA at 456.
The IRS treated Sroufe’s entire March 2009 submission as a frivolous tax
return and forwarded it to the agency’s Frivolous Return Program (“FRP”). The
FRP sent Sroufe a letter informing him that he had taken a frivolous position and
giving him 30 days to file a correct return in order to avoid a $5,000 penalty under
Internal Revenue Code (“I.R.C.”) § 6702. The letter stated Sroufe’s submissions
reflected “a desire to delay or impede the administration of Federal tax laws.”
ROA at 459. In a letter responding to the FRP, Sroufe asserted he had reviewed
his March submissions and believed them to be proper and correct. The IRS sent
two special agents to interview Sroufe at his residence; they informed him that the
bond upon which he had relied to calculate his 2008 taxable income appeared to be
a fictitious instrument.
In August 2009, Sroufe mailed a second, unsigned, Form 1040 for tax year
2008 to his purported fiduciary—the Secretary of the Treasury Department. The
tax return was forwarded to the IRS. It was nearly identical to his initial return,
except the second return included additional documentation and correspondence.
Notably, the August 2009 submission included a “Certified Payment Bond,” which
purported to pay the Treasury Department $2.5 million. The bond was a purely
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fictitious instrument; Sroufe had drafted it using certificate paper he had purchased
online. Sroufe also included a letter to the Treasury Secretary, requesting the
Secretary file and process the tax return, if it was deemed proper.
In September 2009, Sroufe sent another letter to the FRP, asking the
program to disregard his previous letter. Sroufe informed the FRP his original
Form 1040 was incorrect; he stated he was in the process of correcting all forms
and would send the corrections promptly. He further stated he intended to
complete and file his tax returns for tax years 2006, 2007, and 2008. Sroufe never
sent tax returns for tax years 2006 and 2007, nor did he send corrections to his
2008 return.
In October 2009, Sroufe sent another letter to the Treasury Secretary and
requested the Secretary to deposit an attached “NON-NEGOTIABLE
UNLIMITED PRIVATE BOND FOR SET-OFF” to “settle and close any and all
bills, taxes, liens, liabilities and/or claims . . . to a zero (-0-) ending balance.” ROA
at 573. The bond was a fictitious instrument.
B. Trial
In June 2011, Sroufe was indicted by a federal grand jury for interference
with administration of internal revenue laws, in violation of 26 U.S.C. § 7212(a)
(“Count One”), and filing a false claim against the United States for a tax refund,
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in violation of 18 U.S.C. § 287 (“Count Two”). Sroufe pled not guilty, and the
case proceeded to trial.
At trial, Sroufe did not contest that he had sent the documents at issue.
Instead, he argued that he never sought to defraud the government. He contended
the fraudulent documents were either an honest mistake or an attempt to ask the
Commissioner of the IRS or the Treasury Secretary for help. To rebut his defense,
the government introduced substantial evidence under Federal Rule of Evidence
404(b).
The government elicited testimony that Sroufe had not filed federal income
tax returns for tax years 1999 through 2007, although he had filed tax returns and
paid taxes prior to 1999. Sroufe did not contemporaneously object to this
testimony. When the witness began elaborating on Sroufe’s income and tax
information from 1998 and 1999, however, Sroufe objected to that testimony and
earlier testimony concerning years prior to 2008.
Other testimony revealed Sroufe’s income had increased dramatically from
1998 to 1999, from $178,000 to over $1.1 million. When Sroufe did not file
federal income tax returns from 1999 through 2002, the IRS had audited him. In
March 2004, the IRS had notified Sroufe he could be subjected to criminal
prosecution for failing to file a tax return or for providing fraudulent information to
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the IRS. Sroufe had told the auditor he did not believe he was required to file tax
returns.
Moreover, Sroufe previously had submitted numerous other frivolous
documents. For example, in June 2002, Sroufe filed a 134-page document with the
IRS asserting he was not liable for federal taxes and was not a citizen or resident of
the United States. Sroufe also attempted to negotiate a $50 million bond with
Wachovia (now Wells Fargo) Bank.
Before the last day of trial, Sroufe requested the district judge give a
cautionary instruction regarding the Rule 404(b) evidence of his failure to file tax
returns and other similar acts that had occurred before or after 2008. The district
judge agreed and ordered the jury to refrain from considering that evidence to
decide if Sroufe had committed the acts charged in the indictment. The judge
informed the jury, however, that it could consider the evidence for the very limited
purposes of deciding whether Sroufe
had the state of mind or intent necessary to commit the crime charged
in the Indictment; whether [Sroufe] had a motive or other opportunity
. . . to commit the acts charged in the Indictment; whether [Sroufe]
acted according to a plan or in preparing to commit a crime; and
whether [Sroufe] committed the acts charged in the Indictment by
accident or mistake and for no other purpose.
ROA at 1420.
At the close of evidence, Sroufe moved for a judgment of acquittal, which
was denied. Sroufe did not present any evidence. Before closing arguments, the
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government requested a jury instruction stating: “A tax return seeking a refund is a
claim against the United States whether or not the tax return is signed.” ROA at
1476. The district judge adopted the requested jury instruction. The jury
convicted Sroufe on both counts of the indictment.
C. Sentencing
At sentencing, the district judge determined Sroufe had a total offense level
of 22, a criminal history category of I, and a range of 41 to 51 months of
imprisonment under the Sentencing Guidelines. Sroufe moved for a downward
departure under Application Note 19(C) to U.S.S.G. § 2B1.1 and argued his
calculated offense level overstated the seriousness of his offense. He contended a
time-served sentence was consistent with the 18 U.S.C. § 3553(a) factors.
The district judge denied the motion and sentenced Sroufe to 36 months of
imprisonment on Count One and 51 months of imprisonment on Count Two, to be
served concurrently. The judge stated Sroufe had intended to defraud the IRS and
had attempted to obtain an approximately $1.7 million tax refund to which he was
not entitled. The judge noted Sroufe had submitted fictitious bonds to the IRS and
Wachovia Bank, and he had never admitted wrongdoing. The judge believed
Sroufe had not been misled and knew at the time that his actions were illegal.
Moreover, the judge noted that Sroufe had stopped filing tax returns and paying
taxes only after his income increased in 1999. The judge stated a sentence at the
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high-end of the Sentencing Guidelines range was appropriate and warranted under
the § 3553(a) factors. Sroufe objected to the procedural and substantive
reasonableness of his total sentence.
II. DISCUSSION
On appeal, Sroufe argues (1) the district judge erred by admitting Rule
404(b) evidence of his failure to pay taxes or file tax returns for years not charged
in the indictment; (2) the judge erred by giving an erroneous and misleading jury
instruction; (3) the evidence was insufficient to convict him of making a false
claim for a tax refund; and (4) his sentence is procedurally and substantively
unreasonable. We address each argument in turn.
A. Admission of Evidence under Rule 404(b)
Sroufe argues the district judge erred by admitting extrinsic evidence
showing he had not filed federal income tax returns or paid federal taxes from
1999 through 2007, because the indictment charged him with filing a false income
tax return only in 2008. He contends the admission of such evidence resulted only
in prejudicing him as a person of bad character.
We review a district judge’s evidentiary rulings for abuse of discretion.
United States v. Baker, 432 F.3d 1189, 1202 (11th Cir. 2005). We will not reverse
an erroneous evidentiary ruling if the resulting error was harmless. United States
v. Langford, 647 F.3d 1309, 1323 (11th Cir. 2011). Where a defendant “fails to
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preserve an evidentiary ruling by contemporaneously objecting,” we review only
for plain error. United States v. Turner, 474 F.3d 1265, 1275 (11th Cir. 2007).
Under plain error review, we may correct an unpreserved error where there is
“(1) error, (2) that is plain, and (3) that affects substantial rights. . . . if (4) the error
seriously affects the fairness, integrity, or public reputation of judicial
proceedings.” Baker, 432 F.3d at 1202-03.
Federal Rule of Evidence 404(b) forbids the admission of evidence of “a
crime, wrong, or other act . . . to prove a person’s character in order to show that
on a particular occasion the person acted in accordance with the character.”
Fed.R.Evid. 404(b)(1). This evidence, however, may be admissible for other
purposes, such as proof of plan, knowledge, or absence of mistake or accident.
Fed.R.Evid. 404(b)(2); Baker, 432 F.3d at 1204. To be admissible, the Rule
404(b) evidence must (1) be relevant to an issue other than the defendant’s
character, (2) be sufficiently proved to allow a jury to find that the defendant
committed the extrinsic act, and (3) possess probative value that is not substantially
outweighed by its undue prejudice under Federal Rule of Evidence 403. United
States v. Sanders, 668 F.3d 1298, 1314 (11th Cir. 2012).
As an initial matter, Sroufe did not contemporaneously object to testimony
that he had failed to file federal income tax returns from 1999 through 2007, nor
did he contemporaneously object to the admission of an IRS document showing
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the same. Accordingly, we review only for plain error. See Turner, 474 F.3d
at 1275 (holding the defendant had not preserved an objection for appeal, when the
objection was presented the day following the disputed testimony).
Under any standard of review, the district judge committed no error in
admitting evidence that Sroufe had not paid taxes or filed tax returns in years not
alleged in the indictment. First, the evidence is relevant to issues other than
Sroufe’s character: his knowledge and absence of mistake. See Sanders, 668 F.3d
at 1314. Sroufe contended at trial that he never intended to impede the
administration of internal revenue laws, by filing frivolous documents, or to make
a false or fraudulent claim. This assertion is belied, however, by evidence that
Sroufe had filed tax returns and had paid all taxes due until 1999, when his income
dramatically increased. That evidence is highly probative on the issues of
knowledge and absence of mistake, because it demonstrates Sroufe knew he was
required to file accurate tax returns and knew what information was acceptable to
submit to the IRS. Even if there had been unfair prejudice posed by the 404(b)
evidence, it would have been cured by the district judge’s limiting instruction to
the jury. United States v. Brown, 665 F.3d 1239, 1247 (11th Cir. 2011).
B. Jury Instruction Regarding an Unsigned Tax Return
Sroufe argues the jury instruction that “[a] tax return seeking a refund is a
claim against the United States whether or not the tax return is signed,” was
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improper. Appellant’s Brief at 11. Sroufe contends the instruction does not
accurately state the law, is not supported by our precedent, and undermined his
mens rea defense.
We review de novo jury instructions challenged in the district court, in order
“to determine whether the instructions misstated the law or misled the jury to the
prejudice of the objecting party.” United States v. Gibson, 708 F.3d 1256, 1275
(11th Cir.) (internal quotation marks omitted), cert. denied, 134 S.Ct. 342 (2013).
We will not reverse a defendant’s conviction based on a challenge to the jury
charge unless we are “left with a substantial and ineradicable doubt as to whether
the jury was properly guided in its deliberations.” Id. (internal quotation marks
omitted).
The criminal False Claims Act (“the Act”) provides: “Whoever makes or
presents . . . any claim upon or against the United States, or any department or
agency thereof, knowing such claim to be false, fictitious, or fraudulent, shall be
imprisoned not more than five years and shall be subject to a fine in the amount
provided in this title.” 18 U.S.C. § 287. The Act does not define the term “claim,”
but the Supreme Court has determined it should not be given a narrow reading.
See United States v. Neifert-White Co., 390 U.S. 228, 233, 88 S.Ct. 959, 962
(1968) (deciding this issue in an action to recover statutory forfeitures under a
previous version and separate provision of the Act). In Neifert-White, the Supreme
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Court held that the Act “reaches beyond ‘claims’ which might be legally enforced,
to all fraudulent attempts to cause the Government to pay out sums of money.” Id.
at 233, 88 S.Ct. at 962.
Filing a federal income tax return to the IRS constitutes a “claim” under 18
U.S.C. § 287. See United States v. Haynie, 568 F.2d 1091, 1091-92 (5th Cir. 1978)
(affirming defendant’s conviction for filing false tax returns without discussing
whether the returns were signed).1 We have not considered specifically, however,
whether the submission of an unsigned federal income tax return to the IRS
constitutes a “claim” under 18 U.S.C. § 287.
In a related context, we held that an unsigned Form 1040, marked “NOT A
TAX RETURN—SEE ATTACHED LETTER;” a W-2 form marked
“INCORRECT (CONCLUSORY);” and other IRS forms, combined with a letter
requesting a refund of taxes, constituted a frivolous income tax return for the
purpose of upholding a fine. Madison v. United States, 752 F.2d 607, 608-09 (11th
Cir. 1985) (internal quotation marks omitted). In Madison, the IRS fined a
taxpayer for filing a frivolous income tax return under I.R.C. § 6702(a). Id. at 608.
The taxpayer sued the IRS under I.R.C. § 6703(c) for a refund of the penalty
assessed. Id. The taxpayer argued he could not be penalized under § 6702,
1
In Bonner v. City of Prichard, Ala., 661 F.2d 1206, 1207 (11th Cir. 1981) (en banc), we
adopted as binding precedent decisions of the former Fifth Circuit handed down prior to October
1, 1981.
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because the documents he filed merely constituted a request for a refund of
erroneously collected taxes and did not purport to be a tax return. Id. at 609. We
held that because the documents filed were official tax forms and were completed
in detail, it was proper to treat the forms as a “purported return” for § 6702
purposes, notwithstanding the taxpayer’s disclaimer. Id.
The district judge did not err by including a jury charge stating: “A tax
return seeking a refund is a claim against the United States whether or not the tax
return is signed.” ROA at 1516. An unsigned Form 1040 may constitute a tax
return or a purported return, if the form is an official IRS tax form and was
completed in detail. Madison, 752 F.2d at 609. Sroufe submitted an official,
completed, IRS Form 1040. He also submitted several other completed and signed
IRS forms. Like the defendant in Madison, Sroufe submitted a letter requesting the
Treasury Secretary file his tax return. Under those circumstances, the IRS was
justified in treating the submissions as a tax return, though a frivolous one. Tax
returns submitted to the IRS constitute claims under § 287. Haynie, 568 F.2d at
1091.
Furthermore, the jury instruction did not undermine Sroufe’s mens rea
defense that he did not know he was filing a claim or that his tax return was
fraudulent. Even with the given instruction, the jury was free to accept Sroufe’s
argument that he honestly believed his tax returns were accurate. The jury also
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was free to believe Sroufe truly thought he had not filed a tax return, but merely
had requested guidance or information about his tax return. Therefore, the
instruction did not mislead the jury. Id.C. Sufficiency of the Evidence Regarding Count Two
Sroufe argues the evidence was insufficient to support his conviction for
knowingly presenting a false claim for refund. He contends he sincerely believed
he was seeking acceptance or correction to his belief that he could negotiate a
private bond; he argues no evidence proved he knew his claims were false.
We review a challenge to the sufficiency of the evidence de novo. United
States v. Gamory, 635 F.3d 480, 497 (11th Cir. 2011). In considering the
sufficiency of the evidence, we view the evidence in the light most favorable to the
government, with all inferences and credibility choices made in the government’s
favor, and we affirm the conviction if, based on this evidence, a reasonable jury
could have found the defendant guilty beyond a reasonable doubt. Id.When Sroufe submitted his second federal income tax return in August
2009, he already had been informed by the FRP and two IRS agents that he
previously had taken a frivolous position and that his purported bonds were
fictitious instruments. The jury easily could conclude he knew the documents were
fraudulent, when he decided to resubmit essentially the same documents. Based on
the evidence presented, a reasonable jury could have found beyond a reasonable
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doubt that Sroufe knew the claim he submitted to the government was false. See
id.D. Reasonableness of Sroufe’s Sentence
Finally, Sroufe argues his 51-month sentence of imprisonment is
procedurally unreasonable, because the district judge failed to apply a downward
departure under Application Note 19(C) to U.S.S.G. § 2B1.1, in determining his
proper base offense level. He further asserts his total sentence is substantively
unreasonable, because it is greater than necessary to achieve the goals of
sentencing in 18 U.S.C. § 3553(a).
We review the reasonableness of a district judge’s sentence through a
two-step process using a deferential abuse-of-discretion standard of review. Gall
v. United States, 552 U.S. 38, 51, 128 S.Ct. 586, 597 (2007). First, we look at
whether the district judge committed any procedural error; second, we determine
whether the sentence is substantively reasonable. Id.Regarding Sroufe’s argument his sentence is procedurally unreasonable, we
lack jurisdiction to review a district judge’s discretionary refusal to grant a
downward departure, unless the district judge incorrectly believed he lacked
authority to depart from the Guidelines range. United States v. Dudley, 463 F.3d
1221, 1228 (11th Cir. 2006). There is no indication in the record that the judge’s
refusal to grant a downward departure under Application Note 19(C) to U.S.S.G. §
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2B1.1 was based on a misunderstanding of his authority. Accordingly, Sroufe’s
procedural-unreasonableness argument is foreclosed by Dudley. Id.
We examine whether a sentence is substantively reasonable in light of the
totality of the circumstances and the § 3553(a) factors. Gall, 552 U.S. at 51, 128
S.Ct. at 597. The § 3553(a) factors to be considered by a sentencing judge include,
among others: (1) the nature and circumstances of the offense and the history and
characteristics of the defendant; (2) the need for the sentence imposed to reflect the
seriousness of the offense, to promote respect for the law, and to provide just
punishment for the offense; (3) the need to provide the defendant with needed
medical care or other correctional treatment; (4) the need to protect the public from
further crimes of the defendant; and (5) the applicable Guidelines range. 18 U.S.C.
§ 3553(a).
A sentence is substantively unreasonable if it “does not achieve the purposes
of sentencing stated in § 3553(a).” United States v. Pugh, 515 F.3d 1179, 1191
(11th Cir. 2008) (quotations omitted). In addition, a sentence may be substantively
unreasonable if a district judge unjustifiably relied on any one § 3553(a) factor,
failed to consider pertinent § 3553(a) factors, selected the sentence arbitrarily, or
based the sentence on impermissible factors. Id. at 1191-92. We will remand only
when “left with the definite and firm conviction that the district judge committed a
clear error of judgment in weighing the § 3553(a) factors by arriving at a sentence
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that lies outside the range of reasonable sentences dictated by the facts of the case.”
Id. at 1191 (quotations omitted). The party challenging the sentence has the
burden of establishing the sentence is unreasonable based on the record and the
§ 3553(a) factors. United States v. Talley, 431 F.3d 784, 788 (11th Cir. 2005).
As for substantive reasonableness, Sroufe has failed to meet his burden of
establishing that his 51-month total sentence, which is within the Guidelines range,
is unreasonable. The district judge considered the totality of the circumstances and
the § 3553(a) factors and adequately considered mitigating evidence. The judge
expressly stated that a sentence at the high end of the Guidelines range was
appropriate, because Sroufe had never admitted wrongdoing and knew he had been
engaging in illegal conduct. In explaining the sentence, the judge stated it was
necessary to deter Sroufe and others. In light of the totality of the circumstances
and the § 3553(a) factors, Sroufe has not shown his total sentence is substantively
unreasonable.
AFFIRMED.
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