United States v. Lusk

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 09-5064
UNITED STATES OF AMERICA,
Plaintiff - Appellee,
v.
BARRY G. LUSK,
Defendant - Appellant.
Appeal from the United States District Court for the District of
South Carolina, at Anderson. Henry F. Floyd, District Judge.
(8:08-cr-01218-HFF-1)
Submitted: September 7, 2010 Decided: September 24, 2010
Before WILKINSON, NIEMEYER, and DAVIS, Circuit Judges.
Affirmed by unpublished per curiam opinion.
J. Bradley Bennett, SALVINI & BENNETT, LLC, Greenville, South
Carolina, for Appellant. William N. Nettles, United States
Attorney, William C. Lucius, Assistant United States Attorney,
Greenville, South Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
Barry G. Lusk appeals his conviction and thirty-three
month sentence on one count of attempted tax evasion in
violation of 26 U.S.C. § 7201 (2006). Lusk argues that:
(1) the district court lacked jurisdiction to try him; 1 (2) the
Government did not put forth evidence sufficient to sustain a
conviction; (3) the district court erred in admitting evidence
of an airplane purchase on cross-examination of his wife; and
(4) his sentence was procedurally unreasonable. For the reasons
that follow, we affirm.
I. Jurisdiction
Counsel first questions whether the district court had
jurisdiction over this criminal matter in light of Shultz v.
I.R.S., 395 F.3d 297 (2d Cir. 2005). Congress has provided that
“[t]he district courts of the United States shall have original
jurisdiction, exclusive of the courts of the states, of all
offenses against the laws of the United States.” 18 U.S.C.
§ 3231. Lusk was charged with a violation of 26 U.S.C. § 7201,
which makes it a crime against the United States to “attempt[]
in any manner to evade or defeat any tax imposed by this
1
Counsel notes that in his opinion, this claim is without
merit. Accordingly, he makes the argument pursuant to Anders v.
California, 386 U.S. 764 (1967).
2
title[.]” The Shultz case, cited by Lusk in his pro se
supplemental brief, deals exclusively with the enforceability of
an administrative summons. Accordingly, Lusk’s jurisdictional
claim is entirely without merit.
II. Sufficiency of the Evidence
Lusk next argues that the Government failed to prove
that he acted willfully when he failed to file his tax return
and improperly requested refunds from the I.R.S. Specifically,
he claims that he relied in good faith on the advice of one Chad
Prater, a purported tax expert, who improperly advised him that
he need not file taxes, among other reasons, because the I.R.S.
lacks legal authority to tax personal income, and because he
(Lusk) is not a citizen of the United States. 2
“A defendant challenging the sufficiency of the
evidence faces a heavy burden.” United States v. Foster, 507
F.3d 233, 245 (4th Cir. 2007). We review a sufficiency of the
evidence challenge by determining whether, viewing the evidence
in the light most favorable to the government, any rational
trier of fact could find the essential elements of the crime
beyond a reasonable doubt. United States v. Collins, 412 F.3d
2Prater has been enjoined from offering tax advice to U.S.
citizens.
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515, 519 (4th Cir. 2005). We will uphold the jury’s verdict if
substantial evidence supports it, and will reverse only in those
rare cases of clear failure by the prosecution. Foster, 507
F.3d at 244-45. We do not review the credibility of the
witnesses and assume that the jury resolved all contradictions
in the testimony in favor of the Government. Id. at 245.
In order to establish a violation of 26 U.S.C. § 7201,
the Government must prove the defendant acted willfully and
committed an affirmative act that constituted an attempted
evasion of tax payments and, as a result, a substantial tax
deficiency existed. United States v. Wilson, 118 F.3d 228, 236
(4th Cir. 1997). Willfulness, in this context, means a
voluntary, intentional violation of a known legal duty. See
Cheek v. United States, 498 U.S. 192, 201 (1991). A belief, in
good faith, that one has complied with the tax laws negates
willfulness and is therefore a defense, even if the belief is
unreasonable. In other words, the Government must demonstrate
that Lusk did not have a subjective belief, however irrational
or unreasonable, that the income tax system did not apply to
him. Id. at 201-02.
Both Lusk and the Government adduced evidence bearing
on Lusk’s subjective belief. While Lusk testified that he
“completely believed” in Prater’s methodology for “avoiding”
taxes, the jury had ample evidence before it to conclude, based
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on the credibility of the witnesses (including Lusk) that Lusk
was not acting in good faith reliance on Prater’s advice. We
decline to invade this realm of fact-finding left to the jury.
III. Admission of Evidence of an Airplane Purchase
During its case-in-chief, the Government sought to
introduce evidence that Lusk purchased a $180,000 airplane in
2000, the year for which he filed no tax return. The Government
argued that in order to purchase the plane, Lusk had completed a
form that stated he was a U.S. citizen, contrary to his
representations to the I.R.S. The district court excluded the
evidence as unduly prejudicial when Lusk agreed to stipulate
that he signed a non-I.R.S. document indicating that he was a
U.S. citizen.
During the defense case, Lusk’s wife, Kelly Lusk,
testified that, among other things, she and her husband had
incentives to be good financial stewards, that they were
interested in making sound investments, and that their money
went primarily to care for their special needs child. The
district court allowed the Government to cross-examine Kelly
Lusk regarding the purchase of the airplane, finding that her
testimony on direct examination opened the door for such an
inquiry.
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We review the district court’s admission of evidence
for an abuse of discretion, “which we will not find unless the
decision was arbitrary and irrational.” United States v. Blake,
571 F.3d 331, 346 (4th Cir. 2009) (internal quotation marks
omitted), cert. denied, 130 S. Ct. 1104 (2010). “Evidentiary
rulings are . . . subject to harmless error analysis.” United
States v. Roe, 606 F.3d 180, 185 (4th Cir. 2010).
Lusk argues that pursuant to Fed. R. Evid. 403,
evidence of the airplane’s purchase did little more than inflame
the jury, and should have been excluded as highly prejudicial.
Assuming, though, that the district court properly excluded the
evidence in the Government’s case-in-chief, we conclude it was
properly admitted to impeach Kelly Lusk in light of her
testimony regarding the couple’s financial prudence and goals.
Cf. United States v. Havens, 446 U.S. 620, 627-28 (1980) (“a
defendant’s statements made in response to proper cross-
examination reasonably suggested by the defendant’s direct
examination are subject to otherwise proper impeachment by the
government, albeit by evidence that has been illegally obtained
and that is inadmissible on the government’s direct case, or
otherwise, as substantive evidence of guilt.”). 3
3
While the witness here was not the defendant as was the
case in Havens, we conclude that Havens’s rationale applies with
equal force in the present context.
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IV. Reasonableness of Sentence
Finally, Lusk argues that his sentence was
procedurally unreasonable as a result of two errors made by the
district court in calculating his advisory Guideline range. He
contends the court erred in attributing to him a loss amount of
between $200,000 and $400,000, and that the court erred in
subjecting him to a two-level enhancement for obstructing
justice pursuant to U.S. Sentencing Guidelines Manual (“USSG”)
§ 3C1.1(2006).
A sentence is reviewed for reasonableness under an
abuse of discretion standard. Gall v. United States, 552 U.S.
38, 51 (2007). This review requires consideration of both the
procedural and substantive reasonableness of a sentence. Id.;
see United States v. Lynn, 592 F.3d at 572, 575 (4th Cir. 2010).
After determining whether the district court properly calculated
the defendant’s advisory Guideline range, this court must decide
whether the district court considered the 18 U.S.C. § 3553(a)
(2006) factors, analyzed the arguments presented by the parties,
and sufficiently explained the selected sentence. Lynn, 592
F.3d at 575-76; see United States v. Carter, 564 F.3d 325, 330
(4th Cir. 2009) (holding that, while the “individualized
assessment need not be elaborate or lengthy, . . . it must
provide a rationale tailored to the particular case . . . and
[be] adequate to permit meaningful appellate review”). Properly
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preserved claims of procedural error are subject to harmless
error review. Lynn, 592 F.3d at 576.
For the purpose of calculating the amount of loss in a
tax evasion case, the Guidelines define tax loss as the total
amount of loss that was the object of the offense. USSG
§ 2T1.1(c)(1). We have defined the object of the offense in a
tax evasion case as “the loss that would have resulted had a
defendant been successful in his scheme to evade payment of
tax.” United States v. Delfino, 510 F.3d 468, 472
(4th Cir. 2007), cert. denied, 129 S. Ct. 41 (2008). At trial,
the Government adduced evidence that Lusk failed to pay taxes
for the year 2000 totaling over $180,000. The Government also
introduced evidence that Lusk attempted to improperly obtain tax
refunds for 1998 and 1999 totaling over $90,000. In light of
this evidence, we conclude that the district court did not err
in calculating the amount of loss attributable to Lusk.
Lusk next argues that the court erred in applying a
USSG § 3C1.1 enhancement to his offense level for obstructing
justice. Under USSG § 3C1.1, a defendant’s base offense level
is to be increased two levels for obstruction of justice 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 . . . the obstructive conduct related
to (i) the defendant’s offense of conviction[.]
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USSG § 3C1.1. The application notes for § 3C1.1 specifically
include the commission of perjury by defendant. USSG § 3C1.1
cmt. n.4(b). For purposes of § 3C1.1, the Supreme Court has
defined perjury in the following manner: “[a] witness
testifying under oath or affirmation violates this statute if
she gives false testimony concerning a material matter with the
willful intent to provide false testimony, rather than as a
result of confusion, mistake, or faulty memory.” United
States v. Dunnigan, 507 U.S. 87, 94 (1993). Where “a defendant
objects to a sentence enhancement resulting from h[is] trial
testimony, a district court must review the evidence and make
independent findings necessary to establish a willful impediment
to or obstruction of justice, or an attempt to do the same,
under the perjury definition we have set out.” Id. at 95.
Here, the district court did not err in applying an
obstruction enhancement to Lusk’s offense level. Lusk
unequivocally testified that he believed in good faith that his
actions were lawful. In light of the jury instructions, to find
Lusk guilty, the jury necessarily found Lusk’s testimony
incredible. Accordingly, the court did not err in finding that
Lusk committed perjury.
Finally, because counsel submitted one issue to the
court in an Anders format, Lusk was given the opportunity to
submit a pro se supplemental brief. In that brief he again
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asserts that the district court lacked jurisdiction over his
trial, and makes myriad arguments that he is not subject to
income taxation. We have reviewed these claims and find them
totally without merit.
Accordingly, we affirm the judgment of the district
court. We dispense with oral argument because the facts and
legal contentions are adequately presented in the materials
before the court and argument would not aid the decisional
process.
AFFIRMED
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