United States v. Statin

Case: 08-20779 Document: 00511024362 Page: 1 Date Filed: 02/10/2010
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
February 10, 2010
No. 08-20779
Charles R. Fulbruge III
Clerk
UNITED STATES OF AMERICA,
Plaintiff-Appellee
v.
KAREY BERNARD STATIN,
Defendant-Appellant
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:07-CR-141-1
Before REAVLEY, CLEMENT, and SOUTHWICK, Circuit Judges.
PER CURIAM:*
Karey Statin was indicted for crimes arising out of his tax preparation
business. On appeal, he challenges the sufficiency of the evidence and claims
sentencing errors. We AFFIRM the conviction and the sentence.
BACKGROUND
Karey Statin was the sole proprietor of a tax preparation business called
Quick-Tax in Houston, Texas. On April 12, 2007, Statin was indicted on fifteen
counts of aiding and abetting the preparation of false tax returns between 2000
*
Pursuant to 5TH CIR . R. 47.5, the court has determined that this opinion should not be
published and is not precedent except under the limited circumstances set forth in 5TH CIR .
R. 47.5.4.
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and 2002 in violation of 26 U.S.C. § 7206(2). Counts One through Eight charged
Statin with including false income claims on Schedule C of Form 1040 so that
the taxpayers identified in these counts appeared to earn more income than they
actually earned in the tax year in question. By including false income claims on
a taxpayer’s Schedule C, the taxpayer received more earned income credit
(“EIC”), and potentially a larger refund, than was legitimate. Counts Nine
through Fifteen charged Statin with overstating or fabricating deductions on
Schedule A of Form 1040 so that the taxpayers identified in these counts
received unjustified itemized deductions.
Statin was tried by a jury in January 2008. His counsel moved for a
judgment of acquittal on all counts at the end of the government’s case-in-chief,
and then again at the close of trial. These motions were denied. On January 11,
2008, the jury returned guilty verdicts on all fifteen counts.
Following the conviction, Statin submitted separate motions for a
judgment of acquittal and for a new trial based on the government’s failure to
present sufficient evidence to sustain the convictions on each of the fifteen
counts. These motions were also denied.
On November 4, 2008, Statin was sentenced to terms of thirty-six months
on Counts One through Eight, to be served concurrently, and fifteen months on
Counts Nine through Fifteen, to be served concurrently with each other but
consecutively to the sentences for Counts One through Eight.
Statin alleges the district court erred in denying his motions for acquittal
because the evidence was insufficient to sustain convictions on any of the fifteen
counts. He also contests the district court’s calculation of his sentence range and
the reasonableness of the sentence issued.
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DISCUSSION
A. Sufficiency of the Evidence
A motion for judgment of acquittal calls on the district court to make a
legal conclusion that the evidence is insufficient; the denial of the motion is
therefore reviewed on appeal as are other legal issues, namely, de novo. United
States v. Clayton, 506 F.3d 405, 412 (5th Cir. 2007).
Guilt has been sufficiently shown when, “viewing the evidence and the
inferences that may be drawn from it in the light most favorable to the verdict,
a rational jury could have found the essential elements of the offenses beyond a
reasonable doubt.” United States v. Clark, 577 F.3d 273, 284 (5th Cir. 2009)
(citations omitted). “It is not necessary that the evidence exclude every
reasonable hypothesis of innocence or be wholly inconsistent with every
conclusion except that of guilt, provided a reasonable trier of fact could find that
the evidence establishes guilt beyond a reasonable doubt.” Id. (citations
omitted). Jurors are “free to choose among reasonable constructions of the
evidence” in order to arrive at a verdict. Id. (citation omitted).
(1) Tax Form 8453
Statin argues that his actions do not support conviction because he relied
on a Form 8453 signed by each taxpayer identified in the indictment. He claims
that a signed Form 8453 creates a presumption that the information it contains
was provided by the taxpayer and was “true, correct, and complete.”
A Form 8453 summarizes the information contained on the taxpayer’s
Form 1040. Each Form 8453 contains the following declarations, signed by the
taxpayer, the electronic return originator (“ERO”), and the tax preparer:
Taxpayer Declaration: Under penalties of perjury, I declare that the
information I have given my ERO and the amounts in Part I above
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agree with the amounts on the corresponding lines of the electronic
portion of my [year] Federal income tax return. To the best of my
knowledge and belief, my return is true, correct, and complete. . . .
ERO Declaration: I declare that I have reviewed the above
taxpayer’s return and that the entries on Form 8453 are complete
and correct to the best of my knowledge. . . .
Tax Preparer Declaration: Under penalties of perjury, I declare that
I have examined the above taxpayer’s return and accompanying
schedules and statements, and to the best of my knowledge and
belief, they are true, correct, and complete. This declaration is
based on all information of which I have any knowledge.
Statin signed both the ERO declaration and the tax preparer declaration
on each Form 8453. At trial, it was shown that each taxpayer identified in the
indictment signed a Form 8453. Statin provides no supporting authority for his
argument that the signed Form 8453 creates a presumption that the taxpayers
provided him with all the information contained on their Form 1040s and the
accompanying schedules. Without such a presumption, he claims, it would be
too easy for a taxpayer faced with an audit or criminal charges to blame the tax
preparer for the false information included on the taxpayer’s Form 1040.
The point has some validity. We disagree, though, with the conclusion
that his convictions must be reversed because the government’s evidence was
insufficient to rebut the presumption created by the signed Form 8453s. Even
if a signed Form 8453 creates the presumption suggested by Statin, the
government’s evidence was sufficient to rebut it. Our later discussion will detail
some of Statin’s personal actions, revealing him to be more than simply an
automaton transferring data provided by the taxpayers to their Form 1040s.
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(2) Sufficiency of the Evidence
All fifteen counts alleged in the indictment charged Statin with aiding and
abetting the preparation of false tax returns. The statute under which he was
charged states this:
Any person who . . . [w]illfully aids or assists in, or procures,
counsels, or advises the preparation or presentation under, or in
connection with any matter arising under, the internal revenue
laws, of a return, affidavit, claim, or other document, which is
fraudulent or is false as to any material matter, whether or not such
falsity or fraud is with the knowledge or consent of the person
authorized or required to present such return, affidavit, claim, or
document . . . shall be guilty of a felony . . . .
26 U.S.C. § 7206(2). Statin’s convictions will be sustained if, under the standard
already articulated, rational jurors could have found the following elements
beyond a reasonable doubt: (1) Statin “aided, assisted, counseled, or advised
another in the preparation” of the tax return in question; (2) the tax return
contained a statement falsely claiming income, deductions, or tax credits; (3)
Statin knew that the statement was false; (4) the false statement was material;
and (5) Statin acted willfully. Clark, 577 F.3d at 285; see also F IFTH C IRCUIT
P ATTERN J URY I NSTRUCTIONS (C RIMINAL C ASES) § 2.97 (West 2001).
We start our assessment by addressing the sufficiency of the evidence on
the first, second, and fourth elements. This will be followed by a lengthier
analysis of the third and fifth elements.
The first element simply requires joining Statin factually to a return. It
is satisfied if a rational jury could have found that Statin assisted the taxpayers
in preparing the tax returns identified in the indictment. For nine of the counts,
the taxpayers were able to identify Statin as the person who assisted in
preparing the tax returns. For the other six counts, the taxpayers could not
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specifically identify Statin as the tax preparer. However, the Form 8453
accompanying each of the fifteen tax returns contained Statin’s signatures and
unique ERO number. Viewing this evidence in the light most favorable to the
verdict, a rational jury could have found beyond a reasonable doubt that Statin
assisted the taxpayers in preparing all of the identified tax returns.
The second element is satisfied if a rational jury could have found that the
tax returns contained statements falsely claiming income, deductions, or tax
credits. The evidence shows that for each of the fifteen counts, the relevant
taxpayer testified that there was at least one false statement concerning claimed
income or deductions in the tax returns.1 There was sufficient evidence that
each tax return contained a false statement.
The fourth element is satisfied if a rational jury could have found that the
false statement in the tax return was material. The requirement of materiality
assures that what is criminalized are statements that could mislead the IRS into
accepting the false return. For the purpose of Section 7206(2), a false statement
is material if it has “a natural tendency to influence, or [is] capable of
influencing, the decision or the decisionmaking body to which it was addressed.”
Neder v. United States, 527 U.S. 1, 16 (1999) (alteration in original) (quoting
United States v. Gaudin, 515 U.S. 506, 509 (1995)). The government agency does
not need to be shown to have relied on the statement and may even have ignored
it. United States v. Puente, 982 F.2d 156, 159 (5th Cir. 1993).
Of the returns identified in Counts One through Eight, two were audited;
in another one, the IRS identified the false claims before a refund was ever
1
Statin argues that certain witnesses were not credible. However, determining
witnesses’ credibility is in the province of the jury. United States v. Casilla, 20 F.3d 600, 602
(5th Cir. 1994).
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issued to the taxpayer. As for the remaining five tax returns, all included
similar false claims of income as did those returns that were audited. A rational
jury could have found the materiality element beyond a reasonable doubt in
these counts.
Similarly, two of the tax returns identified in Counts Nine through Fifteen
were audited. In addition, an IRS witness testified that each of the remaining
five tax returns contained claims for impermissible deductions. Thus, these five
returns could have been subjected to an audit. A rational jury could have found
the materiality element beyond a reasonable doubt in these counts.
We now turn to whether the evidence is sufficient to support findings
beyond a reasonable doubt concerning the third and fifth elements, which are
that Statin knew the statements were false and acted willfully.
A defendant’s knowledge and willfulness often must be shown by
circumstantial evidence. See United States v. Rodriguez, 132 F.3d 208, 212 (5th
Cir. 1997). The government argues that knowledge and willfulness are shown
by various acts that were proven at trial.
According to the government, the evidence established that Statin
included false information in the tax returns. For each taxpayer, Statin asked
questions that allowed him to manipulate the return in a manner unlikely to
draw the IRS’s attention. By including false statements reasonably related to
the taxpayers’ actual work or activities, Statin purposefully established plausible
deniability should he ever come under IRS scrutiny.
In addition, the government argued that to manipulate EIC correctly
required a sophisticated understanding of this part of the tax code. An IRS
witness explained at trial that the EIC is a refundable tax credit included on
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Form 1040. If a taxpayer’s EIC exceeds total tax liability, the overage is sent to
the taxpayer as a refund. EIC rises with the taxpayer’s income, reaches a
plateau, and then falls back to zero as the taxpayer’s income continues to rise.
Therefore, for taxpayers with income below the plateau level, reporting
additional income actually increases EIC, which in turn decreases tax liability
and increases the probability, and potential amount, of a refund. The
government argues that this provision is counterintuitive, i.e., that a taxpayer
with little income could potentially receive a larger refund by adding a certain
amount of income.2
Based on that premise, the government claimed that the false statements
of income “on the first eight counts of the indictment were not made by accident,
by mistake, or some unfortunate miscommunication between taxpayer and Mr.
Statin.” Rather, the evidence showed that a sophisticated mind was behind the
manipulation. The only reasonable inference to be drawn, therefore, was that
Statin, and not the individual taxpayers, overstated the Schedule C income on
the tax returns by precisely the right amount to maximize EIC.
Furthermore, the government argued that a person with enough tax code
sophistication to manipulate EIC is certainly sophisticated enough to know what
cannot legitimately be claimed as an itemized deduction. Due to the taxpayers’
lack of sophistication and the high level of sophistication allegedly possessed by
Statin, the government argued that the most reasonable inference to be drawn
from the evidence was that Statin knowingly overstated, and in some instances
fabricated, deductions on the taxpayers’ returns.
2
Adding too little or too much Schedule C income would have placed the taxpayers’ total
income levels on either side of the EIC plateau, which would have resulted in a lower EIC, and
likely a lower refund.
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Based on the totality of the evidence and the reasonable inferences that
could be drawn, the government argued that Statin must have knowingly
included the false statements in the taxpayers’ tax returns, and also willfully
violated Section 7206(2).
Statin countered these inferences. Statin alleges the evidence shows that
the taxpayers provided the unknowing Statin with the false information. The
defense dismissed as self-serving the taxpayers’ testimony that they did not
provide Statin with the false information, particularly in light of the signed
Form 8453s. The defense also reminded jurors that some of the taxpayer
witnesses were unable to remember details of their tax preparation meetings,
and may have forgotten what they told Statin.
The defense stressed that the government never presented any evidence
that Statin had been trained in tax preparation or that he knew what
constituted a violation of Section 7206(2). Therefore, Statin could not willfully
violate Section 7206(2) because he did not know what this section prohibited.3
Finally, the defense argued that the taxpayers were sophisticated, and
would not have allowed Statin to include false information on their tax returns.
Statin’s work may have included mistakes, but they did not rise “to the level of
criminality. Maybe negligence, maybe gross negligence, but it is not willful.”
Jurors here had competing explanations of the evidence. They were free
to select among the reasonable inferences in order to arrive at a verdict. Clark,
577 F.3d at 284. Jurors implicitly chose to accept the government’s theory of the
case. Viewing the evidence in the light most favorable to the verdict, a rational
3
Statin was not a novice tax preparer just learning the business. During a 2003 search
of Quick-Tax by the IRS, Statin told the IRS agents that he had been involved in taxes for over
eighteen years and had been “empowering people with knowledge” for that long.
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juror could have found the knowledge and intent elements of this crime beyond
a reasonable doubt.
There was no error when the district court denied Statin’s motions for
judgment of acquittal.
B. Guidelines Range Calculation
Statin was sentenced to terms of thirty-six months on Counts One through
Eight, to be served concurrently, and fifteen months on Counts Nine through
Fifteen, to be served concurrently with each other but after the sentences for
Counts One through Eight. Thus, he was sentenced to a total of fifty-one
months, which was the top of the forty-one months to fifty-one months guidelines
range calculated by the district court.
Sentences both inside and outside the Guidelines range are reviewed for
abuse of discretion. Gall v. United States, 552 U.S. 38, 51 (2007). Initially, the
appellate court determines whether the district court committed any significant
procedural error; if the district court’s decision is procedurally sound, the court
then considers the substantive reasonableness of the sentence imposed. Id. The
district court’s interpretation and application of the Sentencing Guidelines are
reviewed de novo; generally, its factual findings are reviewed for clear error.
United States v. Klein, 543 F.3d 206, 213 (5th Cir. 2008).
Statin argues the district court erred in calculating his sentence range in
the following ways: (1) by including tax harm amounts from counts that should
have been granted a judgment of acquittal; (2) by including tax harm amounts
from returns not identified in the indictment; (3) by imposing an obstruction of
justice enhancement pursuant to U.S.S.G. § 3C1.1; and (4) by violating the Sixth
Amendment.
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Because we have held already that there was sufficient evidence to sustain
all fifteen convictions, we reject Statin’s first argument.
Next, we turn to whether the district court erred by including relevant
conduct in its loss calculation. A district court may find the relevant conduct
occurred by a preponderance of the evidence. United States v. Loe, 262 F.3d 427,
437 (5th Cir. 2001). We review that finding for clear error. Id.
To determine the loss calculation for sentencing purposes, the Presentence
Report included a four-page chart listing the tax harm associated with the
returns identified in the indictment as well as the tax harm associated with
other returns that were part of Statin’s relevant conduct. See U.S.S.G. §
1B1.3(a)(1)(A). The loss calculation from all the tax returns listed in the chart
was $155,427. Statin raises several objections to this chart.
First, he argues that the statute of limitations would preclude the
government from prosecuting him for violations associated with three tax
returns from 1998 and 1999. According to Statin, that fact required exclusion
of the tax harm from these returns from the loss calculation. However, “there
is no separate statute of limitations beyond which relevant conduct suddenly
becomes irrelevant,” and “a defendant’s prior conduct will not necessarily be
placed off limits simply because of a lapse of time.” United States v. Rhine, 583
F.3d 878, 886 (5th Cir. 2009) (citations and internal quotations omitted). There
is close temporal proximity between the relevant conduct in 1998 and 1999 and
the tax returns identified in the indictment, which ranged from 2000 through
2002. It was not error to include the 1998 and 1999 tax returns in relevant
conduct for the purpose of calculating tax loss.
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Second, Statin claims that many of the returns on the chart were only
subject to a criminal investigation and not to an audit. Statin notes that the IRS
agent’s testimony was that criminal investigators have different skills. Statin
argues that there was no showing that the criminal investigators had the skill
to determine the proper amount of tax harm. Similarly, he argues that some of
the returns identified in the indictment were not subject to either an audit or a
criminal investigation. He argues the tax harm on these returns is “defective
particularly where there is insufficient evidence.”
Statin does not cite any authority suggesting that the calculation of tax
harm requires an audit or criminal investigation. The Presentence Report
explains that the IRS analyzed each of the tax returns listed in the chart,
compared each to the return that should have been filed, and arrived at the tax
harm by calculating the difference. The district court is entitled to rely on the
information in the Presentence Report as long as the information bears some
indicia of reliability. United States v. Shipley, 963 F.2d 56, 59 (5th Cir. 1992).
The defendant has the burden to demonstrate that the information on which the
district court relied was materially untrue. Id. Statin did not so demonstrate.
Statin also argues that the chart does not indicate if the tax harm from the
returns comprising the relevant conduct was from Schedule C inclusions,
Schedule A deductions, or something else. However, Statin does not explain why
such a distinction would be relevant for calculating loss.
Finally, Statin argues that his Sixth Amendment rights were violated
because the jury did not find all the elements of the relevant conduct beyond a
reasonable doubt. However, elements of relevant conduct need only be found by
the district court by a preponderance of evidence. See United States v. Johnson,
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445 F.3d 793, 798 (5th Cir. 2006). As discussed above, the district court is
entitled to rely on the factual findings stated in the Presentence Report as long
as there is some indicia of reliability. Shipley, 963 F.2d at 59. Statin did not
carry his burden to demonstrate that those facts were materially incorrect.
We now address Statin’s claim that the district court erred by applying the
obstruction of justice enhancement. See U.S.S.G § 3C.1. The Presentence
Report recommended application of the enhancement for the following reasons:
(1) Statin attempted to get a former client to sign a false affidavit in an effort to
undermine the testimony of one of the taxpayer-witnesses; (2) Statin got one of
the taxpayer-witnesses to sign a letter falsely stating that a former client owned
an auto detail shop; that person then contacted Statin and told him not to use
the letter because it was false; (3) Statin told his clients not to respond to
summonses sent by the IRS in connection with this investigation; and (4) Statin
provided the probation officer with false information concerning his three
previous convictions for driving under the influence.
Statin objected to the enhancement recommendation in a motion and at
the sentencing hearing. However, the district court adopted the Presentence
Report in its entirety, including the obstruction enhancement recommendation.
Application of a sentencing enhancement based on obstruction of justice
is reviewed for clear error. United States v. Johnson, 352 F.3d 146, 147 (5th Cir.
2003). The “finding of obstructive conduct must be plausible in light of the
record as a whole.” Id. Under this standard, this court is precluded from
reversing the district court’s findings unless the court is “left with the definite
and firm conviction that a mistake has been committed.” Jauch v. Nautical
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Servs., 470 F.3d 207, 213 (5th Cir. 2006) (quoting Anderson v. City of Bessemer,
470 U.S. 564, 573 (1985)).
We earlier summarized the government’s evidence. Statin did not present
any rebuttal evidence demonstrating that the information was materially false.
The enhancement was validly applied.
Statin’s final argument, based on the Sixth Amendment, is foreclosed.
This circuit has already held that a district judge and not a jury may make the
fact-findings necessary for sentencing. Johnson, 445 F.3d at 798.
The district court did not err in calculating Statin’s sentencing range.
C. Reasonableness of Sentence
Statin also argues that his sentence is unreasonable. His arguments are
these: (1) the underlying conviction that formed the basis of his convictions only
involved $19,099 in tax loss; (2) the four-level enhancement for tax loss
overstates the severity of the crime; (3) Statin needs to provide for his family as
shown in his request for a downward departure; (4) the district court failed to
adequately explain why it rejected Statin’s mitigating arguments for a lesser
sentence; and (5) the district court failed to justify the sentence based on the
factors set out in 18 U.S.C. § 3553(a).
The government argues that plain error review should apply to the
determination of whether Statin’s sentence is reasonable. That is because Statin
failed to object to reasonableness at the sentencing hearing. Statin disagrees.
He argues that “his written objections, assertions of innocence, requests for
mitigation and downward departure, argument at sentencing, the filing of his
Motion for Bond Pending Appeal, and [ ] his Motion for Reconsideration for Bond
Pending Appeal” constituted objections to the reasonableness of his sentence.
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However, Statin claims that his sentence should be vacated even under plain
error review.
Defense counsel’s actions at the sentencing hearing did not amount to an
objection to the reasonableness of his sentence. See United States v. Peltier, 505
F.3d 389, 391-92 (5th Cir. 2007) (requiring an objection to reasonableness after
pronouncement of sentence to adequately preserve error). Therefore, we will
apply plain error review. United States v. Mondragon-Santiago, 564 F.3d 357,
361 n.2 (5th Cir. 2009). Under this standard, Statin’s sentence may only be
corrected if: “(1) there is an error (and in light of Booker, an ‘unreasonable’
sentence equates to a finding of error); (2) it is plain; and (3) it affects
substantial rights.” Peltier, 505 F.3d at 392 (citation omitted).
At sentencing, the district court explained its reasons for giving Statin a
sentence at the high end of the Guidelines range. Discussed was the need to
impose a sentence that accurately reflected the severity of the crime. Even if the
obstruction enhancement did not apply, the court said it “would nonetheless
arrive at a fifty-one month sentence under 3553A.” In addition, Statin’s appeal
for a downward departure in order to take care of his granddaughter was
unpersuasive. Family hardship is almost always a consequence of incarceration,
the court said, but it “doesn’t take this case out of the heartland,” and there were
other individuals who could care for his granddaughter.
This court infers that the district court has considered all factors for a fair
sentence when a sentence is imposed within a properly calculated Guidelines
range. United States v. Mares, 402 F.3d 511, 519 (5th Cir. 2005). There is great
discretion given to the sentencing judge, and “it will be rare for a reviewing court
to say such a sentence is ‘unreasonable.’” Id. Statin has not demonstrated that
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this is one of the rare cases in which a sentence within a properly calculated
Guidelines range should be found unreasonable. Accordingly, Statin’s sentence
is not unreasonable.
Statin’s conviction and sentence are AFFIRMED.
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