United States v. Dehlinger

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 09-4099
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
ERIK DEHLINGER,
Defendant - Appellant.
Appeal from the United States District Court for the District of
South Carolina, at Florence. Terry L. Wooten, District Judge.
(4:06-cr-00900-TLW-1)
Argued: January 29, 2010 Decided: March 5, 2010
Before MOTZ, GREGORY, and DAVIS, Circuit Judges.
Affirmed by unpublished per curiam opinion.
ARGUED: Michael Louis Minns, Rain Levy Minns, THE MINNS LAW
FIRM, Houston, Texas, for Appellant. Gregory Victor Davis,
UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for
Appellee. ON BRIEF: Ashley Blair Arnett, THE MINNS LAW FIRM,
Houston, Texas; John M. Ervin, III, LAW OFFICE OF JOHN M. ERVIN,
III, Darlington, South Carolina, for Appellant. John DiCicco,
Acting Assistant Attorney General, Alan Hechtkopf, Tax Division,
UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C.; W. Walter
Wilkins, United States Attorney, Columbia, South Carolina, for
Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
On August 22, 2006, Dr. Erik Dehlinger (“Dehlinger”) was
indicted in the United States District Court for the District of
South Carolina on one count of conspiracy to defraud the United
States in violation of 18 U.S.C. § 371 and three counts of
willfully filing false income tax returns in violation of 26
U.S.C. § 7206. The matter proceeded to trial and a jury found
Dehlinger not guilty on the conspiracy charge and guilty as to
the three tax evasion charges. On January 29, 2009, Dehlinger
was sentenced to 42 months imprisonment. He now appeals his
conviction and sentence. We affirm.
I.
From 1997 to 2002, Dehlinger was an emergency room doctor
at McLeod Hospital in Florence, South Carolina. In 1997 and
1998, Dehlinger engaged the services of Hoyt Wayne Terry
(“Terry”), a certified public accountant, to prepare his income
tax returns. In 1998, Terry calculated Dehlinger’s adjusted
gross income to be $301,091, with an income tax liability of
$85,188, and self-employment taxes of $16,342. Dehlinger had
previously paid $49,510 of his tax liability and therefore owed
an additional $52,200 to the Internal Revenue Service (“IRS”).
Unbeknownst to Terry, however, Dehlinger never filed this, or
the previous year’s, tax return. In neither of these years did
2
Dehlinger report any financial information to Terry regarding a
partnership or subchapter S corporation in which he had an
interest.
Dehlinger claimed that his good fortune in avoiding the
above-described tax liability resulted from his introduction by
his co-worker, Dr. Raghavan Chari, to the Anderson’s Ark and
Associates’ (“AAA”) programs. AAA purported to serve as a tax,
retirement planning, and investment company based in Costa Rica.
AAA sold audiotapes and books and conducted seminars, providing
advice on how to, allegedly legally, avoid personal income tax
liabilities. In March 1999, Dehlinger purchased an AAA audiotape
series entitled “Gateway to Financial Freedom,” delivered by
Guardian Management, an AAA affiliate.
Following this initial purchase, Dehlinger used several
other programs marketed by AAA, including both the “Look Back”
and “Look Forward” series. AAA and Guardian Management designed
“Look Back” to enable its users to both avoid tax liabilities
for the current year and also to “recapture” taxes paid in the
two years prior to usage of the program. Under the “Look Back”
program, a user would create a partnership with an AAA affiliate
such that the customer held a 95% interest and the AAA affiliate
held the remaining five percent interest. AAA would arrange for
an entity known as “La Maquina Blanca” to make a loan directly
to the AAA affiliate minority partner, in exchange for the
3
client’s execution of a promissory note. The partnership would
then use the loan funds to make a guaranteed payment to the AAA
affiliate minority partner, allegedly for consulting and
marketing services. In accordance with Section 707(c) of the
Internal Revenue Code, a guaranteed payment to a partner for the
performance of services constitutes a deductible ordinary
business expense on the partnership’s tax returns. 26 U.S.C. §
707(c). Because the partnership created by AAA reported zero or
at most minimal income, the guaranteed payment resulted in a net
loss for the partnership, which would then pass through to each
of the partners in proportion to their ownership interests. The
partners could use the loss to avoid paying taxes for the
current year and to “recapture” taxes paid for the two preceding
years.
In contrast to the “Look Back” program, the “Look Forward”
program sought to avoid current income tax liability. Under the
plan, AAA created a limited liability corporation (“LLC”) for
each client. The partnership created through the “Look Back”
program would provide consulting services to the LLC. The LLC
would then make a “consulting fee” payment to the partnership’s
bank account, over which the client had sole control. Again, the
losses would “pass-through” to the client, resulting in losses
on his or her income tax returns.
4
In reality, neither of these programs operated as it was
purported to operate. Baton Venture, the partnership AAA created
for Dehlinger as a part of the “Look Back” program, allegedly
received a loan from La Maquina Blanca of $650,000 in time to
make a guaranteed payment in that amount to Mason Advertising,
the AAA-created minority partner, by December 30, 1998. In fact,
Dehlinger neither signed the promissory note nor paid the loan
fees until March 1999, both prerequisites for the funding of the
loan, according to the note. Rather, Dehlinger backdated his
signature to December 20, 1998. In addition, Dehlinger never
made a payment on the loan or granted the creditor a security
interest even though he signed both the loan agreement and
promissory note. Finally, despite claiming a partnership loss of
$646,594 because of the guaranteed payment, there is no record
of such a payment made to Mason Advertising.
All in all, the partnership losses translated to a negative
$335,167 adjusted gross income for Dehlinger in 1998 and a
refund of nearly $45,000 when computed by the Guardian
Management Company. Dehlinger filed a Form 1045 in that year,
prepared by George Benoit (“Benoit”), a Guardian Management
employee. This return sought refunds of $34,135 and $34,442 for
taxes paid in 1996 and 1997. Dehlinger filed this return rather
than the one Terry had previously prepared. Dehlinger’s 1999
Form 1040, also prepared by Benoit, reported an income of
5
$240,164 from his medical practice. Again, however, Dehlinger
reported no taxable income and no tax liability. On his 2000
Form 1040, Dehlinger again reported no taxable income and no tax
liability. Dehlinger reported a partnership loss of $242,670 due
to a $250,000 guaranteed payment to Mason Advertising, resulting
in no tax liability despite an income from his medical practice
of $240,164. In February 2002, Dehlinger used an AAA-affiliated
CPA, Tara LaGrand (“LaGrand”), to prepare his 2001 tax returns.
LaGrand also amended Dehlinger’s 2000 tax return, using the
“Look Back” program to recapture taxes already paid.
On August 22, 2006, a grand jury sitting in the District of
South Carolina returned a four-count indictment charging
Dehlinger with one count of conspiracy to defraud the United
States, in violation of 18 U.S.C. § 371, and three counts of
making and subscribing a false return, in violation of 26 U.S.C.
§ 7206(1). Dehlinger pled not guilty on all counts.
At trial, Dehlinger testified on his own behalf, claiming
that Dr. Chari had convinced him that the programs sold by AAA
were legitimate means of avoiding income taxes. Dehlinger denied
knowing that the various components of the program were
illegitimate. He claimed that at the time he filed the returns,
he did not believe that he was committing fraud by taking
deductions related to the AAA programs. He also asserted that he
relied on his tax return preparers and the AAA principals,
6
including LaGrand, in filing the returns that reported zero tax
due and owed.
Following a five-day jury trial, the jury convicted
Dehlinger on three counts of making and subscribing a false
return, and acquitted him on the conspiracy to defraud count. On
January 7, 2009, the district court sentenced Dehlinger to 42
months’ incarceration, to be followed by one year of supervised
release. The court also ordered him to pay restitution of
$363,207, a fine of $5,000, and a $300 special assessment.
II.
Dehlinger challenges his conviction principally on the
ground of ineffective assistance of counsel, claiming that his
attorney had a conflict of interest that impaired his
representation of Dehlinger. Dehlinger also challenges the
district court’s (1) denial of his motion for a mistrial after a
witness volunteered testimony previously ruled to be
inadmissible hearsay; (2) admission of testimony from an
undercover IRS agent regarding his experience with AAA programs;
and (3) calculation of his base offense level and imposition of
a sentencing guidelines enhancement for obstruction of justice.
We address these issues in turn.
7
A.
Whether defendant’s trial counsel had a conflict of
interest presents a mixed question of law and fact, reviewed de
novo by this court. See Mickens v. Taylor, 240 F.3d 348, 360
(4th Cir. 2001) (en banc), aff’d, 535 U.S. 162 (2002); Williams
v. French, 146 F.3d 203, 212 (4th Cir. 1998).
This court considers ineffective assistance claims on
direct appeal only if it “‘conclusively appears’ from the record
that defense counsel did not provide effective representation.”
United States v. Gastiaburo, 16 F.3d 582, 590 (4th Cir. 1994)
(citations omitted); United States v. Baldovinos, 434 F.3d 233,
239 (4th Cir. 2006); United States v. Richardson, 195 F.3d 192,
198 (4th Cir. 1999); United States v. King, 263 Fed. App’x 332,
333 (4th Cir. 2008). The reason for this restriction is that,
generally, a motion under 28 U.S.C. § 2255 in the district court
is preferable than direct appeal, so that the parties may
adequately develop the record. Gastiaburo, 16 F.3d at 590(citations omitted); United States v. King, 119 F.3d 290, 295
(4th Cir. 1997).
The Supreme Court has held that criminal defendants have a
Sixth Amendment right to conflict-free representation by
counsel. Cuyler v. Sullivan, 446 U.S. 335, 345-50 (1980);
Holloway v. Arkansas, 435 U.S. 475 (1978). A defendant seeking a
new trial must show “‘some real conflict of interest . . .
8
resulting from [overlapping] representation [of two clients]’”
to succeed on this Sixth Amendment claim. United States v.
Atkinson, 565 F.2d 1283, 1284 (4th Cir. 1977) (quoting United
States v. Lovano, 420 F.2d 769, 772 (2d Cir. 1970)). The mere
fact of overlapping representation is insufficient to create a
Sixth Amendment violation. See id. Rather, a defendant must
establish that (1) his attorney labored under “an actual
conflict of interest” that (2) “adversely affected his lawyer's
performance.” Sullivan, 446 U.S. at 348; Strickland v.
Washington, 466 U.S. 668, 691-92 (1984); United States v. Stitt,
552 F.3d 345, 350 (4th Cir. 2008), cert. denied, 130 S. Ct. 65(2009); United States v. Tatum, 943 F.2d 370, 375 (4th Cir.
1991).
Dehlinger claims that his attorney, Scott Engelhard, Esq.
(“Engelhard”) had a conflict that arose from the latter’s
representation of him, LaGrand (the AAA-affiliated CPA who
prepared his 2001 tax returns and amended his 2000 tax returns),
and Collis Redd (“Redd”), an AAA tax planner. According to
Dehlinger, Engelhard refused to call LaGrand as a witness during
his trial, even though LaGrand could have offered exculpatory
9
evidence, because Engelhard’s loyalties were divided between the
two clients. 1
Here, although Dehlinger raises more than a colorable claim
that Engelhard’s loyalties were impermissibly divided, a review
of the record shows that the facts are not conclusive. It is not
for this court to determine the character, duration, and extent
of Engelhard’s representation of Dehlinger, LaGrand, and Redd,
in the first instance, and whether his representation of these
individuals created actual conflict that adversely affected his
representation of Dehlinger. Indeed, we decline to comment on
these issues. Although, at Dehlinger’s insistence, the district
court conducted limited, non-evidentiary post-verdict
proceedings to examine Dehlinger’s allegations against
Englehard, we agree with the court’s conclusion that the facts
and circumstances presented by this record should be evaluated
by a district judge acting on an adequate factual record in an
orderly post-conviction proceeding rather than on the basis of
dueling affidavits and declarations. Accordingly, we hold that
Dehlinger has not “conclusively” established the existence of an
1
According to Dehlinger, LaGrand could have testified that
her clients, Dehlinger included, believed that AAA’s tax
strategies were legal. Ostensibly, LaGrand’s testimony would
have contradicted the government’s evidence of Dehlinger’s
willful violation of the tax laws. Dehlinger further argues that
LaGrand’s testimony previously exculpated defendants in related
and similar prosecutions in other federal districts.
10
actual conflict of interest that adversely affected Engelhard’s
representation of Dehlinger. 2
B.
We review a district court’s refusal to grant a mistrial
for abuse of discretion. United States v. West, 877 F.2d 281,
287-88 (4th Cir. 1989). An abuse of discretion is found “only
under the most extraordinary of circumstances” and requires that
a defendant have experienced prejudice. United States v.
Dorlouis, 107 F.3d 248, 257 (4th Cir. 1997). A defendant cannot
prove prejudice if a jury “could make individual guilt
determinations by . . . appraising the independent evidence
against each defendant,” but rather this court must find that
there is a “reasonable possibility” that the error influenced
the jury’s verdict. United States v. Porter, 821 F.2d 968, 972
(4th Cir. 1987); United States v. Seeright, 978 F.2d 842, 849
(4th Cir. 1992). A district court can generally prevent
prejudice to a defendant by “a cautionary or limiting
instruction, particularly if the danger of prejudice is slight
in view of the overwhelming evidence of guilt.” United States
v. Ham, 998 F.2d 1247, 1254 (4th Cir. 1993) (quoting United
States v. Masters, 622 F.2d 83, 87 (4th Cir. 1980); see also
2
In light of our holding, we deny Dehlinger’s motion to
file a supplemental brief.
11
United States v. Johnson, 610 F.2d 194, 196-97 (4th Cir. 1979)
(“The general rule is that if evidence which may have been taken
in the course of a trial be withdrawn from the consideration of
the jury by the direction of the presiding judge, that such
direction cures any error which may have been committed by its
introduction.”).
Here, the district court did not abuse its discretion in
denying Dehlinger’s motion for a mistrial after William Cauthen,
Jr. (“Cauthen”) offered testimony that the court had previously
deemed inadmissible and subsequently ordered stricken. The
district court had ruled that Cauthen could not characterize
anything on the AAA website as “right wing or fringe.” In
response to the prosecutor’s inquiry of his “impression of the
information that [he] saw on the AAA website,” however, Cauthen
stated that he “thought the information that I saw there was
sort of fringe material, right wing material, and that
potentially it could be fraud.” Upon Dehlinger’s objection and
motion for a mistrial, the district court ordered the statement
stricken from the record. The district court refused to grant a
mistrial. During final instructions the district court reminded
the jury that “if any evidence was stricken from the record,
[they] should not consider that evidence in making [their]
decision.”
12
Cauthen’s statement was one line in a four-day trial
replete with evidence establishing Dehlinger’s guilt, including
signed fraudulent tax returns. The district court quickly
ordered the statement stricken and, before deliberations,
reminded the jury not to consider such evidence. See United
States v. Harris, 165 F.3d 1062, 1066 (6th Cir. 1999) (affirming
the district court’s denial of a motion for mistrial after a
brief reference to a prior arrest where “the district court gave
an immediate and clear limiting instruction”); Black v. Shultz,
530 F.3d 702, 707 (8th Cir. 2008) (affirming the district
court’s refusal to grant a mistrial given the fact that the
court “gave a curative instruction” after a single statement was
made in violation of the court’s order). And although Dehlinger
claims before us that the statement was devastating to his
defense, he does not state how the statement made about the AAA
website prejudiced him or what impact it likely had on the
jury’s determination of his guilt. See United States v.
Baumgarten, 517 F.2d 1020, 1030 (8th Cir. 1975) (denying
defendant’s motion for a mistrial where witness’ brief reference
to defendant’s previous arrest was “of very little
significance”); United States v. Butler, 71 F.3d 243, 255 (7th
Cir. 1995) (holding that a prosecutor’s lone comment did not
warrant a mistrial as it “was a single, isolated, indirect
remark”).
13
C.
The decision whether to admit evidence is properly within a
district court’s discretion; thus, we review a district court’s
admission of evidence for abuse of discretion. United States v.
Hodge, 354 F.3d 305, 312 (4th Cir. 2004); United States v.
Lancaster, 96 F.3d 734, 744 (4th Cir. 1996). A district court
abuses its discretion “only when it can be said that [it] acted
arbitrarily or irrationally in admitting evidence,” something
that occurs only under “the most extraordinary of
circumstances.” United States v. Williams, 445 F.3d 724, 732
(4th Cir. 2006) (citing United States v. Simpson, 910 F.2d 154,
157 (4th Cir. 1990)); see also United States v. Heater, 63 F.3d
311, 325 (4th Cir. 1995) (“[I]n order to find a district court's
error harmless, we need only be able to say ‘with fair
assurance, after pondering all that happened without stripping
the erroneous action from the whole, that the judgment was not
substantially swayed by the error.’”) (quoting United States v.
Nyman, 649 F.2d 208, 211–12 (4th Cir. 1980)).
1.
Fed. R. Evid. 701 allows lay witnesses to express opinions
that are “(a) rationally based on the perception of the witness,
(b) helpful to a clear understanding of the witness' testimony
or the determination of a fact in issue, and not based on
scientific, technical, or other specialized knowledge within the
14
scope of [expert testimony].” In addition, courts have held
that lay testimony generally requires that the opinion offered
be “the product of reasoning processes familiar to the average
person.” See United States v. Garcia, 413 F.3d 201, 215 (2d.
Cir. 2005); United States v. Cooks, 589 F.3d 173, 180 (5th Cir.
2009).
Dehlinger argues that the district court impermissibly
allowed lay witnesses to offer “expert testimony” designed to
show that he possessed a guilty state of mind during his
interactions with AAA. At trial, the district court permitted
Cauthen to offer testimony about the AAA website. As just
discussed, however, the court ordered testimony characterizing
the website as “fringe,” stricken from the record and instructed
the jury to disregard it. The court also permitted Special Agent
Mike Preiss, who conducted an undercover investigation into the
operation of AAA, to testify about investors’ relationships with
AAA, specifically focusing on Dehlinger. In permitting such
testimony, the court reasoned that the testimony would “provide
some evidence for the jury to consider in terms of what actually
went on at [AAA] and what the process was.” As a witness, Preiss
compared the partnership documents AAA sent him while he was
undercover with those that Dehlinger had obtained from AAA and
testified to his understanding of how the AAA programs worked,
and specifically, that he was to receive about $300,000 in tax
15
savings. Preiss also noted the existence of similar statements
about tax benefits in an executive summary AAA sent to
Dehlinger. Preiss further discussed and compared plan documents
that he had received from AAA with those Dehlinger had in his
possession. To his knowledge, Preiss indicated that the
partnerships and companies created by AAA conducted no business
of their own, as indicated in their income tax returns which
listed no gross income or receipts and included only minimal
expenditures, other than the guaranteed payment at issue. And
even though the partnership agreement explicitly set out the
various responsibilities of each partner to the agreement, the
partners never performed any of these duties. Priess testified
that, based on his experience with AAA, he was not obligated to
repay the loan for which he had cosigned and that was
subsequently used to fund the guaranteed payment to his AAA-
affiliated partner.
Dehlinger claims that Cauthen’s and Preiss’s testimony
amounted to impermissible expert testimony because their
statements demonstrate that Dehlinger knew the information on
the AAA website was illegitimate and that Dehlinger had the same
guilty state of mind as Preiss did during his interactions with
AAA, respectively. This argument fails. The testimony at issue
in this case is not, in either purpose or effect, that of an
expert. Both witnesses merely offered their opinion of their
16
individual experiences with AAA, making deductions and drawing
inferences that an “average person” would similarly be capable
of in an identical situation. Neither Cauthen nor Priess
testified about Dehlinger’s mental state or whether he knowingly
violated the tax laws. Cauthen limited his statements only to
his personal impressions of the AAA website, which were later
stricken, as previously discussed. Preiss’s testimony was
restricted to his own knowledge of, and experience with, AAA. He
offered his personal impressions of AAA and the similarities
inherent in the documents AAA provided to him and those
Dehlinger received. He did not, as Dehlinger would have us
believe, proffer testimony suggesting that Dehlinger himself
possessed a felonious intent. He never testified or even hinted
that, because he believed AAA’s programs were illegal, Dehlinger
must have believed they were illegal as well. In short, neither
Cauthen nor Priess testified to the ultimate issue of
Dehlinger’s willfulness as an expert witness would have.
2.
Where admission of lay testimony is challenged as bordering
on expert opinion, testimony that has no direct effect upon
proof of the elements of the substantive offenses charged, will
not be overturned, particularly if there is sufficient evidence
elsewhere in the record upon which the jury could have found the
defendant guilty. See Fed. R. Crim. P. 52(b)).
17
Dehlinger was found guilty of three counts of willfully
filing false income tax returns. One of the elements proved by
the government was that Dehlinger voluntarily and intentionally
violated a known legal duty. Cheek v. United States, 498 U.S.
192, 201 (1991). Even discounting Priess’s testimony, there was
sufficient evidence of willfulness. For instance, the government
presented evidence that, in 1998, Dehlinger had accurate Form
1040s prepared by Terry. Dehlinger, however, did not file this
form or inform Terry that this form was incorrect. Rather,
Dehlinger signed and filed a tax return that claimed a refund of
all taxes paid to a AAA partner. This evidence shows that
Dehlinger knowingly filed fraudulent tax returns. See United
States v. Mohney, 949 F.2d 1397, 1407 (6th Cir. 1991) (“A
taxpayer’s signature on a return does not in itself prove his
knowledge of the contents, but knowledge may be inferred from
the signature along with the surrounding facts and
circumstances, and the signature is prima facie evidence that
the signer knows the contents of the return.”) (citing United
States v. Harper, 458 F.2d 891, 894 (7th Cir. 1971)); United
States v. Drape, 668 F.2d 22, 26 (1st Cir. 1982) (holding that a
defendant’s signature is sufficient to establish knowledge once
it has been shown that the return was false). The district court
did not abuse its discretion in refusing to grant a mistrial.
18
D.
We review a district court’s interpretation of the
Sentencing Guidelines de novo and its factual findings for clear
error. United States v. Osborne, 514 F.3d 377, 387 (4th Cir.
2008), cert. denied, 128 S. Ct. 2525 (2008); United States v.
Daughtrey, 874 F.2d 213, 217-18 (4th Cir. 1989). If a defendant
fails to raise a timely objection during sentencing, however, we
review the district court’s actions for plain error. See United
States v. Olano, 507 U.S. 725, 731-32 (1993); United States v.
Uzenski, 434 F.3d 690, 711 (4th Cir. 2006); United States v.
Lynn, Nos. 08-5125, 08-5126, 08-5132, 09-4341, _ F.3d _, 2010 WL
322176 (4th Cir. Jan. 28, 2010).
Dehlinger claims that the district court improperly
sentenced him when it (1) took into account three years of tax
losses for which he was not indicted or convicted and (2)
increased his offense level by two levels for obstruction of
justice. As to the former issue, the district court properly
took into account three years of tax losses for which Dehlinger
was not indicted in calculating his base offense level. When an
offense involves tax evasion or filing fraudulent tax returns,
the Sentencing Guidelines calculates a defendant’s base offense
level on the attempted tax loss, defined as “the total amount of
loss that was the object of the offense.” U.S.S.G. §
2T1.1(c)(1); United States v. Delfino, 510 F.3d 468, 472 (4th
19
Cir. 2007). Tax loss is loss attributable to the offense of
conviction and any other loss due to relevant conduct, including
“all acts and omissions committed, aided, abetted, counseled,
commanded, induced, procured, or willfully caused by the
defendant . . . that occurred during the commission of the
offense of conviction, in preparation for that offense, or in
the course of attempting to avoid detection or responsibility
for that offense,” U.S.S.G. § 1B1.3(a)(1), and all such acts and
omissions that were part of the same course of conduct or common
scheme or plan as the offense of conviction, U.S.S.G. §
1B1.3(a)(2). “[A]ll conduct violating the tax laws should be
considered as part of the same course of conduct or common
scheme or plan unless the evidence demonstrates that the conduct
is clearly unrelated.” U.S.S.G. § 2T1.1 comment (n.2); United
States v. Ervasti, 201 F.3d 1029, 1042 (8th Cir. 2000).
Here, the presentence investigation report recommended a
tax loss of $363,207, which included tax loss for the six-year
period from 1996 to 2001. During sentencing, Dehlinger did not
object to the very inclusion of tax losses from 1996, 1997, and
1998. Rather, Dehlinger objected to the inclusion of those tax
losses only to the extent that they did not reflect deductions
to which he may have been entitled. The district court did not
err in overruling Dehlinger’s objection and including tax losses
from 1996 to 1998 because it was shown at trial that Dehlinger
20
used the same AAA programs and made the same types of deductions
in those three years as the subsequent three years for which he
was indicted and convicted. See Ervasti, 201 F.3d at 1042 (using
"fraud loss," which defendant conceded to be $5,747,478.88,
rather than "tax loss," to which she did not “ascribe a precise
value,” as the basis for calculating the base offense level in a
mail fraud case in which the defendant misappropriated impounded
tax monies from clients of their payroll processing
corporation); see also United States v. Hayes, 322 F.3d 792,
801-02 (4th Cir. 2003) (vacating a sentence because the district
court did not consider all relevant evidence in determining the
applicable tax loss).
As to the second of Dehlinger’s sentencing issues, the
district court did not err in increasing Dehlinger’s offense
level by two levels for obstruction of justice. The Sentencing
Guidelines allow a two level increase if “the defendant
willfully obstructed or impeded, or attempted to obstruct or
impede, the administration of justice with respect to the
investigation, prosecution, or sentencing of the instant offense
of conviction and any relevant conduct.” U.S.S.G. § 3C1.1;
United States v. Puckett, 61 F.3d 1092, 1095 (4th Cir. 1995).
Obstruction of justice includes committing perjury at trial.
U.S.S.G. § 3C1.1, comment (n.4(b)). A district court applying an
enhancement based on obstruction of justice must necessarily
21
find, by a preponderance of the evidence, that the defendant (1)
gave false testimony, (2) concerning a material matter, (3) with
the willful intent to deceive while under oath. United States v.
Dunnigan, 507 U.S. 87, 92-98 (1993); United States v. Sun, 278
F.3d 302, 314 (4th Cir. 2002) (citing United States v. Smith, 62
F.3d 641, 646 (4th Cir. 1995)).
The district court found that Dehlinger committed perjury
when he testified (extensively) under oath that he relied on
others, taking advice from his accountant and financial planner,
as well as Dr. Chari, regarding the legality and soundness of
the AAA programs. Specifically, Dehlinger claimed that he took
certain deductions “because Richard Marks and George Benoit said
they were appropriate deductions.” Tr. 108. As an initial
matter, the district court’s enhancement for perjury did not
constitute double counting (even though Dehlinger’s crime
constituted lying to the IRS) because the crime for which he was
convicted was completed by the time he went on trial. Indeed,
his crime was complete after he had filed the fraudulent tax
returns. Lying under oath constitutes a new and different
circumstance designed to hide the already completed crime. In
short, the conduct underlying Dehlinger’s conviction is
different from the conduct upon which the district court based
its enhancement.
22
Second, the district court properly reasoned that, since
the jury found Dehlinger guilty of all tax evasion charges, it
must have rejected all of his testimony regarding good faith and
lack of willfulness. During sentencing, the district court
discussed at length its reasons for enhancing Dehlinger’s
sentence; namely, that Dehlinger (1) gave false testimony, (2)
concerning a material matter, (3) with the willful intent to
deceive while under oath. The district court said,
[Defendant’s] testimony was to say, if it is
detrimental reliance, if that is the description, the
proper description, it may well be; but it was more
specific about what was going on, what I did and,
gosh, I really did not know that this was not on the
up and up. And it seems that the jury evaluated that
testimony and the jury found the defendant guilty and
ignored that testimony altogether. . . .
But [defendant] was very specific about what he had
done and the fact that it was not bad motive or
criminal intent by him; but the specifics were such
that, it seems to me, there was a rejection of those
facts. . . . But the testimony was detailed and
specific about what happened; and he asked the jury to
rely on his position that he did not know what was up
in light of a lot of evidence that indicated that he
knew some of the things that were going on simply were
not legal, and ultimately the jury concluded they were
criminal.
Sent. Tr. 34-38. These observations by the district court
support its determination that Dehlinger committed perjury for
the sole purpose of deceiving the jury regarding his culpability
and involvement with AAA. The district court therefore properly
sentenced Dehlinger.
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III.
For the foregoing reasons, we affirm Dehlinger’s conviction
and sentence, without prejudice to any post conviction claim
based on ineffective assistance of counsel that appellant may
elect to pursue.
AFFIRMED
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