United States v. Michael Quiel

FILED
NOT FOR PUBLICATION DEC 19 2014
MOLLY C. DWYER, CLERK
UNITED STATES COURT OF APPEALS U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 13-10503
Plaintiff - Appellee, D.C. No. 2:11-cr-02385-JAT-2
v.
MEMORANDUM*
MICHAEL QUIEL,
Defendant - Appellant.
UNITED STATES OF AMERICA, No. 13-10504
Plaintiff - Appellee, D.C. No. 2:11-cr-02385-JAT-1
v.
STEPHEN KERR,
Defendant - Appellant.
Appeal from the United States District Court
for the District of Arizona
James A. Teilborg, Senior District Judge, Presiding
Argued and Submitted December 10, 2014
San Francisco, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by 9th Cir. R. 36-3.
Before: O’SCANNLAIN, N.R. SMITH, and HURWITZ, Circuit Judges.
Michael Quiel and Stephen Kerr appeal their convictions for willfully
making and subscribing false tax returns, in violation of 26 U.S.C. § 7206(1). Kerr
also appeals his conviction for willfully failing to file foreign bank account reports
(“FBARs”), in violation of 31 U.S.C. §§ 5314, 5322(a) and 31 C.F.R. §§ 1010.350,
1010.306(c)-(d). We affirm.
1. “We review de novo claims of insufficient evidence.” United States v.
Chhun, 744 F.3d 1110, 1117 (9th Cir.), cert. denied, 135 S. Ct. 131 (2014). We
will uphold a conviction if, “viewing the evidence in the light most favorable to the
prosecution, any rational trier of fact could have found the essential elements of the
crime beyond a reasonable doubt.” Jackson v. Virginia, 443 U.S. 307, 319 (1979).
The question of whether Defendants willfully failed to report income and file
FBARs is one of fact for the jury. See Rykoff v. United States, 40 F.3d 305, 307-08
(9th Cir. 1994). The jury could have concluded that Kerr and Quiel knew they had
a duty to report the income from their foreign accounts, because Christopher
Rusch, their attorney and business partner, testified that the accounts were set up
using nominees under Kerr’s and Quiel’s control in order to evade reporting
requirements. Even without Rusch’s testimony, the jury could have inferred
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control because (a) the accounts were traded in Kerr’s and Quiel’s stock for their
benefit; (b) the foreign firms never served their stated purpose of finding investors;
and (c) these firms were not actual, functioning businesses. Additionally, even
without Rusch’s testimony, the jury could infer motive from Kerr’s having recently
paid high tax rates and Quiel’s recent payment of a large tax penalty before either
engaged in these transactions. With regard to Kerr’s conviction for willful failure
to file FBARs, the evidence was sufficient to convict him given the jury
instructions, to which Kerr did not object.
2. The district court did not err by admitting Rusch’s testimony. “The district
court’s conclusion concerning whether statements are protected by an individual
attorney-client privilege is a mixed question of law and fact which this court
reviews independently and without deference to the district court.” United States
v. Richey, 632 F.3d 559, 563 (9th Cir. 2011) (internal quotation marks omitted).
Defendants waived the protection of the privilege by relying on an advice-of-
counsel defense. Rock River Commc’ns, Inc. v. Universal Music Grp., Inc., 745
F.3d 343, 353 (9th Cir. 2014) (“A party who affirmatively places its attorney-client
communications at issue in a litigation implicitly waives the privilege.”).
3. The district court did not violate Kerr’s and Quiel’s constitutional right to
confront Rusch by imposing a blanket ban on recross examination. We review
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“[w]hether limitations on the scope of questioning at trial constitute a violation of
the confrontation clause . . . de novo.” United States v. Jones, 982 F.2d 380, 383
(9th Cir. 1992). “Allowing recross is within the sound discretion of the trial court
except where new matter is elicited on redirect examination, in which case denial
of recross as to that new matter violates the Confrontation Clause.” United States
v. Baker, 10 F.3d 1374, 1404 (9th Cir. 1993), overruled on other grounds by
United States v. Nordby, 225 F.3d 1053 (9th Cir. 2000). Although the district court
may have imposed a blanket ban on recross examination, this ban did not violate
Kerr’s and Quiel’s constitutional right to recross Rusch regarding three new
exhibits admitted on redirect, because the exhibits were not “new matter.” The
exhibits merely bolstered Rusch’s prior testimony. See United States v. Croft, 124
F.3d 1109, 1121 (9th Cir. 1997). In any event, at Defendants’ request, Rusch
remained subject to the Government’s subpoena after his testimony and the
Defendants declined to recall him. See United States v. Ross, 33 F.3d 1507, 1518
(11th Cir. 1994).
We reject the Defendants’ separate Confrontation Clause argument that the
exhibits constituted testimonial hearsay from a declarant not subject to cross-
examination. Defendants failed to object to the exhibits on the basis of the
Confrontation Clause, and we find that the district court did not plainly err. See
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United States v. Olano, 507 U.S. 725, 731-32 (1993). The exhibits did not contain
testimonial statements. See Crawford v. Washington, 541 U.S. 36, 51-53 (2004).
4. We review the district court’s decision to allow extensive evidence of
Defendants’ business activities and to allow the Government to argue that
Defendants’ activities were fraudulent for plain error, because, although Kerr and
Quiel contend that admission of this evidence violated Fed. R. Evid. 403 and
404(b), they failed to make contemporaneous objections to this evidence. United
States v. Archdale, 229 F.3d 861, 864-65 (9th Cir. 2000). The district court did not
plainly err, because the evidence was (a) intrinsic to the charged offenses; (b) more
cumulative than prejudicial; and (c) addressed by a limiting instruction.
Additionally, we conclude that the district court did not abuse its discretion by
refusing to order a mistrial. See United States v. Guerrero, 756 F.2d 1342,
1347-48 (9th Cir. 1984).
5. To the extent Defendants challenge the Government’s characterization of
their business activities as fraud during closing, they have not shown that the
prosecutor’s statements “so infected the trial with unfairness as to make the
resulting conviction a denial of due process.” Towery v. Shriro, 641 F.3d 300, 310
(2010) (internal quotation marks omitted).
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6. On de novo review, we find that the district court did not err by refusing to
order the Government to turn over a special agent’s report or to disclose Quiel’s
individual tax master file. See United States v. Si, 343 F.3d 1116, 1122 (9th Cir.
2003). To warrant disclosure (1) “the evidence at issue must be favorable to the
accused”; (2) “the evidence must have been suppressed by the State, either
willfully or inadvertently”; and (3) “prejudice must result from the failure to
disclose the evidence.” Benn v. Lambert, 283 F.3d 1040, 1052-53 (9th Cir. 2002).
Defendants failed to show that the evidence was clearly exculpatory and did not
make the plausible showing of that fact required to warrant in camera inspection.
See Pennsylvania v. Ritchie, 480 U.S. 39, 58 n.15 (1987).
7. The district court did not abuse its discretion by admitting evidence that Kerr
filed FBARs in later years. Kerr stipulated to the admission of the FBARs and
does not now claim that his stipulation was involuntary. See United States v.
Molina, 596 F.3d 1166, 1169 (9th Cir. 2010). Further, the FBARs were not
remedial measures under Fed. R. Evid. 407.
8. The district court did not abuse its discretion by refusing to order a new trial
after Defendants were acquitted of conspiracy, see United States v. King, 660 F.3d
1071, 1076 (9th Cir. 2011), because Defendants cannot identify evidence that was
admitted against them solely because of the conspiracy charge.
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AFFIRMED.
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