United States v. Donald S. Fletcher

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 02-2307
___________
United States of America, *
*
Appellee, *
* Appeal from the United States
v. * District Court for the Eastern
* District of Arkansas.
*
Donald Stuart Fletcher, *
*
Appellant. *
___________
Submitted: December 10, 2002
Filed: March 6, 2003
___________
Before BOWMAN, MORRIS SHEPPARD ARNOLD, and RILEY, Circuit Judges.
___________
MORRIS SHEPPARD ARNOLD, Circuit Judge.
A jury convicted Donald Fletcher of one count of conspiracy to defraud the
United States, see 18 U.S.C. § 371, and two counts of aiding and assisting in the
preparation or presentation of false income tax returns, see 26 U.S.C. § 7206(2). The
district court1 sentenced Mr. Fletcher to seventy-one months in prison. Mr. Fletcher
appeals his convictions, arguing that the evidence was insufficient, that the
1
The Honorable Stephen M. Reasoner, United States District Judge for the
Eastern District of Arkansas.
government introduced evidence outside the scope of the indictment, that the district
court erred in admitting evidence of prior civil adjudications resulting from
Mr. Fletcher's past provision of tax services, and that the indictment was insufficient.
Mr. Fletcher also appeals his sentence, contending that the district court abused its
discretion in departing upward based on the prior civil adjudications. We affirm.
I.
This case arises out of Mr. Fletcher's involvement in James Otis & Company
(JO&C), a California company that provided tax consultation, tax preparation, and
audit representation services to self-employed taxpayers in Arkansas. The essence
of the charges was that Mr. Fletcher conspired with William Webber, Jr., Deborah
Rogers, and Ryan Rogers to prevent the Internal Revenue Service (IRS) from
determining JO&C's clients' income and tax liabilities, and induced taxpayers to file
false tax returns with the IRS. (Mr. Webber, Mr. Rogers, and Mrs. Rogers all pleaded
guilty shortly before trial, leaving Mr. Fletcher as the sole defendant.) A brief outline
of the scheme follows.
After Mr. Rogers had recruited a sufficient number of prospective clients in
Arkansas, Mr. Fletcher would travel to Arkansas and conduct seminars promoting
JO&C's tax services. During the seminars, Mr. Fletcher advocated reducing or
eliminating tax liability by converting what appeared to be ordinary personal
expenditures into tax deductible business expenses. Following these seminars,
Mr. Fletcher and Mr. Rogers together, or Mr. Rogers alone, met with individual
prospective clients. If persuaded to use JO&C's services, the clients signed a JO&C
"participation agreement" that Mr. Fletcher designed. Clients agreed to pay JO&C
either 5.5% of their gross income or an amount equal to half of the tax savings that
resulted from JO&C's services (savings often generated by amending previous years'
returns to create larger tax refunds). Mr. and Mrs. Rogers provided tax consultation
and audit representation services to the Arkansas clients, while Mr. Webber
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supervised and assisted a staff in preparing tax returns and audit documentation for
them.
JO&C furnished the Arkansas clients with tax data organizers, more commonly
referred to as workbooks, to record income and business expenses for tax purposes.
The Arkansas clients, on the basis of advice received through JO&C, recorded
ordinary personal expenditures as tax deductible business expenses. For example,
one client who operated a home-based day care center deducted veterinary and food
costs for her family pets as security and rodent control expenses. A doctor and his
wife deducted as a business travel expense a wholly personal one-night trip to Las
Vegas to get married; that same couple deducted as a security expense $17,384 in
health care costs incurred for the heart condition of the wife's intravenously-fed, non-
mobile, eleven-year old German shepherd. A dentist deducted $12,000 in wages
allegedly paid to his minor children, when no such wages were in fact paid. At times,
the tax preparers themselves inflated the clients' expenses. For example, one client's
workbook estimate of $3,277 in farm expenses was increased to $54,893 on his tax
return.
Ultimately, JO&C's clients' tax returns prompted an investigation and audits
by the IRS. When informed of the investigation, Mr. Fletcher instructed his
colleagues and clients to delay the audit process for as long as possible. Mr. and
Mrs. Rogers also advised clients that, if asked by the IRS who prepared the tax
returns, they should respond that they prepared the returns themselves. Generally, the
tax preparers did not sign the amended returns or signed them illegibly in order to
avoid a connection between the preparer and the return. During the audit process,
Mr. Fletcher encouraged the fabrication of, and Mr. Webber and Mr. and Mrs. Rogers
fabricated, records to support the Arkansas clients' deductions by, for example,
creating phony invoices for professional services or false calendar entries for business
meetings.
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II.
Mr. Fletcher argues that the evidence was insufficient to sustain his
convictions. On appeal from a conviction, we must view the evidence in the light
most favorable to the verdict, giving the government the benefit of all reasonable
inferences. United States v. Peterson, 223 F.3d 756, 759 (8th Cir. 2000), cert. denied,
531 U.S. 1175 (2001). "We will reverse the conviction[] only if we can conclude
from the evidence that a reasonable fact finder must have entertained a reasonable
doubt about the government's proof concerning one of the essential elements of the
crime." United States v. McCarthy, 97 F.3d 1562, 1568 (8th Cir. 1996), cert. denied,
519 U.S. 1139 and 520 U.S. 1133 (1997).
Mr. Fletcher was charged under the portion of 18 U.S.C. § 371 that proscribes
conspiracies to defraud the United States by " 'impairing, obstructing, or defeating the
lawful function of any department of [the G]overnment.' " United States v.
Derezinski, 945 F.2d 1006, 1011 (8th Cir. 1991) (quoting Haas v. Henkel, 216 U.S.
462, 479 (1910)) (alteration in Derezinski). In particular, the indictment alleged a
conspiracy to defraud the IRS in the function of assessing and collecting taxes,
commonly known as a Klein conspiracy. See United States v. Ervasti, 201 F.3d
1029, 1037 (8th Cir. 2000); United States v. Klein, 247 F.2d 908 (2d Cir. 1957), cert.
denied, 355 U.S. 924 (1958). To convict a defendant of a Klein conspiracy, the
government must show the existence of an agreement to defraud the IRS and an overt
act by one of the conspirators in furtherance of the agreement's objectives. See
United States v. Zimmerman, 832 F.2d 454, 457 (8th Cir. 1987) (per curiam); see also
United States v. Furkin, 119 F.3d 1276, 1279 (7th Cir. 1997); United States v. Alston,
77 F.3d 713, 720 n.17 (3d Cir. 1996); United States v. Shoup, 608 F.2d 950, 956 (3d
Cir. 1979); United States v. Vogt, 910 F.2d 1184, 1202 (4th Cir. 1990), cert. denied,
498 U.S. 1083 (1991). Mr. Fletcher contends that the government failed to prove the
existence of, and his knowing participation in, any conspiracy to defraud the IRS. We
believe that the evidence demonstrates otherwise.
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Although Mr. Fletcher and every other individual working with JO&C
considered themselves to be "independent contractors," testimony at trial suggested
that Mr. Fletcher controlled JO&C. Becky Mears, who performed administrative
work for JO&C, testified that there was no distinction between Mr. Fletcher and
JO&C. Barbara Nofrey, who performed administrative work for Mr. Fletcher and
Mr. Webber, testified that Mr. Fletcher was the "head honcho" and controlled JO&C.
Ms. Nofrey further testified that Mr. Fletcher directed JO&C to pay Mr. Webber for
the tax return preparation work and that Mr. Fletcher was Mr. Webber's boss.
Mr. Webber testified that Mr. Fletcher brought in the funds, allocated how money
would be spent, and decided how the business would work. Mr. Webber also testified
that, despite Mr. Webber's concern that amended returns had a high audit rate,
Mr. Fletcher insisted that Mr. Webber prepare amended returns because "they would
provide for consistent income" to JO&C.
A videotape of Mr. Fletcher's seminar promoting JO&C's tax services and
related trust services reflects that Mr. Rogers introduced Mr. Fletcher as "the head of
our tax service department out of California." Mr. Fletcher repeatedly used the term
"we" in describing JO&C's services at the seminar, explaining, for example, "[W]e
do tax workbooks ... where we will show you ... based on a workbook, before you do
your tax returns what the numbers really should be." This is consistent with
Ms. Nofrey's testimony that Mr. Fletcher met with at least one (unidentified)
Arkansas client and, using tax software on his laptop computer, prepared draft tax
returns, taking information from the client in order "to get an idea what their potential
expenses could or should be to make their refunds come out to be a certain dollar
amount."
Also during the seminar, Mr. Fletcher stated "we can help you. You can get
your tax money back. You can make sure you don't pay any more for the next
twenty years." Mr. Fletcher explained, "the whole secret that we're talking about ...
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is to convert personal expenses into business expenses ... and the businesses that are
reimbursing your expenses are totally deductible because, they're not persons driving
cars or having meals or living in houses and therefore, all the stuff that wasn't
deductible yesterday is deductible." Mr. Fletcher also told the prospective clients that
JO&C knew of "secret" provisions hidden in the Internal Revenue Code, provisions
accountants and attorneys were not trained in, and that his method was not taught at
business schools such as Harvard and Stanford. Although Mr. Rogers delivered much
of the advice that was rendered directly to taxpayers, that advice, as taxpayers
described it at trial, was entirely consistent with Mr. Fletcher's comments during the
seminar about deducting a cat as a "rodent control device," or $500 for dog food as
a "security device," or even a bird as "aerial surveillance."
Contrary to Mr. Fletcher's assertion, then, there is ample evidence from which
the jury could have found, beyond a reasonable doubt, that Mr. Fletcher and others
had the intent necessary to defraud the United States in its efforts to collect taxes. We
cite as evidence of one particularly egregious example Mrs. Rogers's testimony that,
in the face of an IRS audit, Mr. Fletcher instructed her to create a phony invoice to
support a $1,275 deduction of legal and professional expenses on an amended tax
return filed on behalf of two Arkansas clients. From this exchange alone the jury
could certainly infer a purpose to defraud the government by interfering with IRS
functions, and the rest of the evidence that we have rehearsed further supports that
conclusion. We note, moreover, that the "requisite agreement need not be express,
but rather can be an informal tacit understanding between the coconspirators and can
be proved entirely by circumstantial evidence." Ervasti, 201 F.3d at 1038 (internal
citation and punctuation omitted). We believe, therefore, that the government
presented sufficient evidence to support Mr. Fletcher's conviction on the conspiracy
count.
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Mr. Fletcher was also charged with aiding in the preparation and presentation
of false tax returns, see 26 U.S.C. § 7206(2). Of the original sixteen false return
counts, the jury convicted Mr. Fletcher on two counts, both pertaining to the tax
returns of James and Ginger McNair; a mistrial was declared on the remaining counts.
The false return counts require the government to prove that Mr. Fletcher "[w]illfully
aid[ed] or assist[ed] in, or procure[d], counsel[ed], or advise[d] the preparation or
presentation ... of a return ... which is fraudulent or is false as to any material matter."
26 U.S.C. § 7206(2); see Ervasti, 201 F.3d at 1040-41. Liability under 26 U.S.C.
§ 7206(2) is not limited to return preparers; the statute reaches all knowing
participants in the fraud. See United States v. Rowlee, 899 F.2d 1275, 1279 (2d Cir.
1990), cert. denied, 498 U.S. 828 (1990); United States v. Hooks, 848 F.2d 785, 791
(7th Cir. 1988); United States v. Crum, 529 F.2d 1380, 1382 (9th Cir. 1976); United
States v. Maius, 378 F.2d 716, 718 (6th Cir. 1967), cert. denied, 389 U.S. 905 (1967).
We believe that the government presented sufficient evidence to support
Mr. Fletcher's conviction on the false return counts pertaining to Dr. and
Mrs. McNair. It was as a result of attending Mr. Fletcher's seminar in 1994 that the
McNairs retained JO&C to implement Mr. Fletcher's tax strategy of converting
ordinary personal expenses into business expenditures. Mr. Webber testified that
Mr. Fletcher's handwriting appears on a page of the McNairs' participation agreement
that explained the McNairs' fees and suggested investments. With JO&C's (and in
particular the Rogerses') assistance, the McNairs filed an amended tax return for
1991; on this return they deducted as business expenses a purely personal trip to Las
Vegas to get married and costs associated with the care of Mrs. McNair's sick dog.
On their 1994 tax return, they again deducted the dog-related expenses, as well as
thousands of dollars in auto and travel costs to and from a "rental home” that was in
fact in their front yard and occupied by Mrs. McNair's mother. Mrs. McNair testified
that she became concerned about JO&C's tax preparation services, challenging, for
example, the omission of the paid preparer's signature from the return. We find
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particularly telling Mrs. McNair's testimony that she addressed her questions and
concerns not only to Mr. and Mrs. Rogers, but also to Mr. Fletcher on one occasion.
From this evidence, the jury could certainly find that Mr. Fletcher willfully aided,
assisted in, procured, counseled, or advised the preparation or presentation of the
McNair's false and fraudulent income tax returns.
Finally, Mr. Fletcher's "free speech" argument is wholly unavailing. There was
ample evidence that Mr. Fletcher did more than merely advocate, through speech,
violation of the tax laws. See United States v. Buttorff, 572 F.2d 619, 623-24 (8th
Cir. 1978) (citing Brandenburg v. Ohio, 395 U.S. 444 (1969)), cert. denied, 437 U.S.
906 (1978). Mr. Fletcher was not prosecuted for speech alone, but rather for his role,
as outlined above, in the fraud that the JO&C actors actually perpetrated against the
United States. See, e.g., id. at 624. We note, moreover, that as a result of
Mr. Fletcher's seminars (where he explained how to convert ordinary personal
expenditures into tax deductible business expenses) and his follow-up meetings with
clients, his clients not only retained JO&C's tax services for the current year, they
began the process of filing amended tax returns for previous years. In these
circumstances, Mr. Fletcher's speech is not entitled to first amendment protection.
III.
Mr. Fletcher next argues that the district court erred in failing to grant a mistrial
during Mr. Webber's testimony. At trial, Mr. Webber testified that he attended client
appointments with Mr. Fletcher where Mr. Fletcher advised the clients how to
complete the workbooks. According to Mr. Webber, when clients were unable to
come up with a dollar amount for their business expenses, Mr. Fletcher would choose
a random number by, for example, opening the phone book and having the client
point to a number.
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Initially, the district court overruled Mr. Fletcher's objection to this testimony.
On cross-examination, however, it was revealed that these appointments occurred
sometime in 1991 or 1992, well outside the conspiracy period of "on or about
August 1, 1994 through December 1996." The district court then instructed the jury
to disregard the testimony but refused to grant Mr. Fletcher's motion for a mistrial.
Mr. Fletcher argues that the district court abused its discretion in failing to grant his
motion for mistrial. We disagree. "The admission of allegedly prejudicial testimony
is ordinarily cured by an instruction to the jury to disregard the testimony." United
States v. Nelson, 984 F.2d 894, 897 (8th Cir. 1993), cert. denied, 508 U.S. 966(1993). In this case, the district court clearly and promptly admonished the jury not
to consider Mr. Webber's testimony about workbook appointments. We assume that
the jury followed the district court's instruction. See United States v. Maza, 93 F.3d
1390, 1397 (8th Cir. 1996), cert. denied, 519 U.S. 1138 and 520 U.S. 1160 (1997).
We note further that in its final charge to the jury, the district court fortified its earlier
instruction by reminding the jury that "[t]estimony that I struck from the record, or
told you to disregard, is not evidence and must not be considered." Considering the
district court's curative instruction in context with the entire trial, including the
strength of the government's evidence rehearsed above, we cannot say that the jury
"was substantially swayed in spite of the instruction." See id.Mr. Fletcher also argues that the district court should have granted a mistrial
because of prosecutorial misconduct during the government's closing argument. In
particular, Mr. Fletcher asserts that the government based arguments on excluded
evidence and made misleading and confusing statements to the jury. Because
Mr. Fletcher did not object to these incidents, however, we review the district court's
decision not to grant a mistrial sua sponte for plain error. "Under plain error, the
question for determination is whether the argument was so prejudicial as to have
affected substantial rights resulting in a miscarriage of justice." United States v.
Griffith, 301 F.3d 880, 883 (8th Cir. 2002) (internal quotations omitted). "Plain error
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review is extremely narrow and is limited to those errors which are so obvious or
otherwise flawed as to seriously undermine the fairness, integrity, or public reputation
of judicial proceedings." United States v. Beck, 250 F.3d 1163, 1166 (8th Cir. 2001).
Our examination of the record reveals that Mr. Fletcher is correct that the
government improperly referred to excluded evidence during its closing argument.
It is a well-established principle that the government must not urge a jury to convict
for reasons other than the evidence properly before the jury. See United States v.
Tulk, 171 F.3d 596, 599-600 (8th Cir. 1999); United States v. Beckman, 222 F.3d 512,
527 (8th Cir. 2000). In this case, the government twice referred, albeit briefly, to the
excluded portion of Mr. Webber's testimony concerning Mr. Fletcher's use of a
phonebook to divine a number for business expenses.
Likewise, it is apparent from the trial transcript that during closing argument,
the government erroneously referred to the McNairs' participation agreement as a
workbook. The significance of these references is that Mr. Fletcher's handwriting
appeared within that participation agreement, on a page explaining the McNairs' fees
and suggested investments. Mr. Fletcher contends that by erroneously referring to it
as a workbook, the government suggested that Mr. Fletcher helped fill out a taxpayer
workbook.
In assessing whether Mr. Fletcher was prejudiced by the government's
improper remarks, we consider "the cumulative effect of any misconduct, the strength
of the properly admitted evidence, and any curative actions taken by the trial court."
Tulk, 171 F.3d at 599. In the present case, we do not find circumstances warranting
reversal on the basis of prosecutorial misconduct because Mr. Fletcher has not shown
that he was prejudiced. We believe that the incriminating evidence admitted against
Mr. Fletcher was quite convincing and that he would have been convicted regardless
of the government's improper or confusing remarks. We note further that the district
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court instructed the jury that "statements, arguments, questions, and comments by
lawyers ... are not evidence." While the government may have confused the
participation agreement with a workbook in closing argument, the government
referred to the correct exhibit number for the particular page in question, and so the
jury could easily have located and reviewed the document and discovered its true
nature. Finally, with regard to the telephone book testimony, counsel for Mr. Fletcher
opened his closing argument by reminding the jury of the district court's earlier
instructions to disregard Mr. Webber's telephone book testimony. While we
disapprove of the government's references to evidence previously excluded, and find
unfortunate the government's references to the participation agreement as a
workbook, we do not believe that those references worked to undermine
Mr. Fletcher's substantial rights in any significant way. The district court did not
abuse its discretion in failing to grant a mistrial sua sponte.
IV.
Mr. Fletcher also asserts that the district court abused its discretion by
admitting evidence of prior civil adjudications arising out of Mr. Fletcher's past
provision of tax services. Prior to trial, the government notified Mr. Fletcher of its
intent to introduce evidence of two civil actions (in which Mr. Fletcher was
successfully sued for common law fraud, breach of fiduciary duty, breach of contract,
violations of Ohio consumer protection laws, and, in one case, civil violations of
RICO, see 18 U.S.C. § 1962(c), and common law conspiracy) pursuant to Fed. R.
Evid. 404(b) as proof of motive, intent, plan, knowledge and absence of mistake or
accident. See Davis v. Mutual Life Ins. Co., 6 F.3d 367 (6th Cir. 1993), cert. denied,
510 U.S. 1193 (1994); Hofstetter v. Fletcher, 905 F.2d 897 (6th Cir. 1988). At the
beginning of Mr. Florez's testimony, the district court instructed the jury that the
evidence of prior civil adjudications was not to be considered as proof that
Mr. Fletcher committed the charged offenses.
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Mr. Fletcher faults the district court for admitting the testimony of Michael
Florez, an attorney from Ohio who represented the plaintiffs in these civil actions.
Specifically, Mr. Fletcher argues that Mr. Florez's testimony constituted
impermissible hearsay. Although Mr. Fletcher lodged several hearsay objections
during the course of Mr. Florez's testimony at trial, in his brief on appeal he does not
identify with particularity the evidence that he believes should have been excluded.
Our independent review of Mr. Fletcher's objections convinces us that much of the
testimony objected to was properly admitted because it was not hearsay at all.
Mr. Fletcher objected, for example, to Mr. Florez's statement that the Hofstetter
and Davis plaintiffs' tax returns "were either prepared at Mr. Fletcher's direction ...
if he didn't write in the numbers, he instructed the individuals to write in certain
numbers." But Mr. Florez testified that he learned this information directly from
Mr. Fletcher during the course of taking Mr. Fletcher's deposition in the civil cases,
and a statement offered against a party is not hearsay if it is the party's own statement.
See Fed. R. Evid. 801(d)(2)(A). Likewise, Mr. Fletcher objected to Mr. Florez's
testimony describing official IRS assessments or liens levied against the Hofstetter
and Davis plaintiffs. Yet these IRS assessments or liens qualify as "[r]ecords, reports,
... or data compilations, in any form, of public offices or agencies, setting forth ...
matters observed pursuant to duty imposed by law as to which matters there was a
duty to report" admissible under the "public records and reports" exception to the
hearsay rule. See Fed. R. Evid. 803(8); Hughes v. United States, 953 F.2d 531, 539-
40 (9th Cir. 1992); Perez v. United States, 312 F.3d 191, 195 (5th Cir. 2002);
26 U.S.C. §§ 6201 et seq.
At oral argument, counsel for Mr. Fletcher expressed his specific concern about
Mr. Florez's testimony regarding an investigative report produced during discovery
in the Davis case. See Davis, 6 F.3d at 374-75. This was an internal report prepared
by a private insurance company investigating Mr. Fletcher's actions during his
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employ with that company. We note that, when Mr. Florez began to testify as to the
contents of this memo, the district court sustained Mr. Fletcher's objection to this
hearsay testimony. Mr. Fletcher remains concerned, however, that Mr. Florez still
relied on that investigative report in describing how Mr. Fletcher's tax scheme
operated. Indeed, it is true that on cross-examination Mr. Florez admitted that some
of his information came from the deposition of the author of the investigative report,
from documents produced in discovery in the Davis case, and from the tax returns,
receipts, and statements of his clients.
After reviewing the record and Mr. Florez's testimony in context, we believe
the admission of this hearsay testimony was, in any event, harmless error. Our careful
examination of Mr. Florez's testimony convinces us that most of Mr. Florez's
description of the tax scheme could plausibly be attributed to Mr. Florez's presence
at Mr. Fletcher's deposition and Mr. Florez's review of a videotape of Mr. Fletcher
promoting and explaining his services to prospective clients like the Hofstetter and
Davis plaintiffs. Mr. Florez's conclusory comments that Mr. Fletcher's employer
investigated and terminated him as a result of his tax scheme add very little to the
information already before the jury in this case, namely, that Mr. Fletcher was held
liable to approximately thirty plaintiffs for that very same tax scheme. We think,
moreover, that the effect of Mr. Florez's hearsay statements about his clients
deducting a parakeet as aerial surveillance and cat food as pest control do not begin
to approach the effect of hearing those same suggestions directly from Mr. Fletcher,
as the jury did when it viewed Mr. Fletcher's promotional video.
Mr. Fletcher maintains as well that the evidence of prior civil adjudications
should have been excluded under Fed. R. Evid. 403 because it presented a threat of
unfair prejudice or confusion that substantially outweighed its probative value. While
the evidence of prior civil adjudications was no doubt prejudicial, Rule 403 "is
concerned only with 'unfair prejudice,' that is, 'an undue tendency to suggest decision
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on an improper basis.' " United States v. Yellow, 18 F.3d 1438, 1442 (8th Cir. 1994)
(quoting Fed. R. Evid. 403 advisory committee's note) (emphasis added). We note
further that Rule 404(b) is a rule of inclusion, not exclusion, and "admits evidence of
other crimes or acts relevant to any issue in the trial, unless it tends to prove only
criminal disposition." United States v. Claxton, 276 F.3d 420, 423 (8th Cir. 2002)
(internal quotations omitted).
In this case, the evidence of prior civil adjudications possessed significant
probative value, especially with respect to establishing Mr. Fletcher's intent,
knowledge, and motive, and we cannot say that the district court abused its discretion
in concluding that the probative value was not substantially outweighed by the threat
of unfair prejudice or confusion. The district court, moreover, instructed the jury that
the evidence of other bad acts was not to be considered to prove the acts charged.
"[U]nfair prejudice is unlikely to be found where the district court instructed the jury
that the bad acts evidence was not to be used as proof that the defendant committed
the charged offense." United States v. Warfield, 97 F.3d 1014, 1027 (8th Cir. 1996),
cert. denied, 520 U.S. 1110 (1997).
V.
We reject Mr. Fletcher's challenge to the sufficiency of the indictment.
18 U.S.C. § 371 proscribes both general conspiracies to defraud the United States and
conspiracies to commit specific offenses against the United States. Mr. Fletcher
asserts that the indictment was defective because it charged him with a conspiracy to
defraud, when the government was in fact trying to prosecute him for conspiring to
commit a specific offense, that is, aiding and assisting in the preparation or
presentation of false income tax returns.
Mr. Fletcher's reliance on United States v. Minarik, 875 F.2d 1186, 1193-95
(6th Cir. 1989), in support of his argument is misplaced. As we have previously
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explained, "In Minarik, the Sixth Circuit held that the bill of particulars alleged and
the facts proved at trial would only support a finding of conspiracy under the specific
offense clause ... The Sixth Circuit ... placed great emphasis on the fact that the
Government drastically changed its theory of prosecution as the case progressed."
Derezinski, 945 F.2d at 1010.
The facts of Minarik serve to distinguish it markedly from the instant case.
Here, the government has steadfastly asserted that Mr. Fletcher participated in a far-
ranging Klein conspiracy to prevent the IRS from determining JO&C's clients' income
and tax liabilities by both creating and inflating expenses. The government may have
in fact had the discretion to charge Mr. Fletcher under 18 U.S.C. § 371 for a
conspiracy that had the narrow purpose of preparing false tax returns. It is well
settled, however, that when a defendant's conduct violates more than one criminal
statute, as the evidence established that Mr. Fletcher's did, the government may elect
the statute under which it will proceed. See id.VII.
Mr. Fletcher also contends that the district court abused its discretion in
sentencing him when it departed upward based on the inadequacy of his criminal
history score. After Mr. Fletcher was convicted in this case, he pleaded guilty in the
District of Montana to charges arising from the operation of his JO&C tax scheme in
that state. Mr. Fletcher asserts that the district court in this case erred when it
departed upward based on prior civil adjudications, because these same prior civil
adjudications were the basis for an upward departure in the District of Montana. We
find no merit in this argument.
Under the sentencing guidelines, "[i]f reliable information indicates that the
criminal history category does not adequately reflect the seriousness of the
defendant's past criminal conduct or the likelihood that the defendant will commit
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other crimes, the court may consider imposing a sentence departing from the
otherwise applicable guideline range." U.S.S.G. § 4A1.3, p.s. Among the
information that a district court may properly consider is prior similar civilly-
adjudicated misconduct. U.S.S.G. § 4A1.3(c). Mr. Fletcher does not dispute that the
conduct underlying his prior civil adjudications was similar to his conduct in this
case. His argument, simply stated, appears to be that once the district court in
Montana considered the civil adjudications as reliable information bearing on
Mr. Fletcher's criminal history category, the district court in Arkansas could not
consider them. Mr. Fletcher cites no authority, and we have found none, to suggest
that the sentencing guidelines impose any such prohibition. We therefore conclude
that the district court did not abuse its discretion by departing upward based on the
same prior civil adjudications that the Montana district court used to depart upward.
VII.
For the reasons indicated, we affirm Mr. Fletcher's convictions and sentence.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
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