United States v. David Kalai

NOT FOR PUBLICATION FILED
UNITED STATES COURT OF APPEALS AUG 16 2017
MOLLY C. DWYER, CLERK
U.S. COURT OF APPEALS
FOR THE NINTH CIRCUIT
UNITED STATES OF AMERICA, No. 15-50375
Plaintiff-Appellee, D.C. No.
2:11-cr-00930-TJH-2
v.
DAVID KALAI, MEMORANDUM*
Defendant-Appellant.
UNITED STATES OF AMERICA, No. 15-50381
Plaintiff-Appellee,
D.C. No.
v. 2:11-cr-00930-TJH-3
NADAV KALAI,
Defendant-Appellant.
Appeal from the United States District Court
for the Central District of California
Terry J. Hatter, District Judge, Presiding
Submitted August 10, 2017**
Pasadena, California
*
This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
**
The panel unanimously concludes this case is suitable for decision
without oral argument. See Fed. R. App. P. 34(a)(2).
Before: CALLAHAN and OWENS, Circuit Judges, and GILLIAM,*** District
Judge.
David Kalai (David) appeals from his jury convictions for one count of
conspiracy to defraud the United States, in violation of 18 U.S.C. § 371, and two
counts of willful failure to file reports of foreign bank and financial accounts
(FBARs), in violation of 31 U.S.C. §§ 5314, 5322(a). David contends that the
district court clearly erred by finding him competent to stand trial. David’s son,
Nadav Kalai (Nadav), was convicted of the same charges, but appeals only from
his jury convictions for the two FBAR counts. Nadav argues that the district
court’s jury instructions for those counts were erroneous and that there was
insufficient evidence to convict him. Because the parties are familiar with the
facts, we do not recount them here. We have jurisdiction pursuant to 28 U.S.C.
§ 1291, and we affirm.
1. The district court’s finding that David was competent to stand trial was
supported by ample evidence in the record. The only disagreement among the four
experts for the government and defense was whether David could reasonably assist
counsel in his defense, in light of a cognitive impairment that caused memory
issues. In assessing these expert opinions, the district court was “free to assign
***
The Honorable Haywood S. Gilliam, Jr., United States District Judge
for the Northern District of California, sitting by designation.
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greater weight to the findings of experts produced by the Government than to the
opposing opinions of the medical witnesses produced by the defendant.” United
States v. Frank, 956 F.2d 872, 875 (9th Cir. 1991). Therefore, David’s focus on
conflicts in the record and on discrediting the government’s experts does not
establish clear error. Id.Moreover, the record as a whole supports the district court’s competency
finding. David was able to engage in logical, detailed discussions regarding his
case, and was easily redirected back to the topic at hand when he digressed or
repeated himself. Furthermore, he demonstrated the ability to thoughtfully
consider his legal options and to weigh advice from his lawyer and others.
Although the record indicates David could be difficult to work with, was in poor
health, and struggled with memory lapses and focus, it also reflects his ability to
think logically and coherently and thereby assist in his defense. Therefore, the
district court did not clearly err by finding David competent to stand trial.
2. Regarding Nadav’s appeal, the jury instructions given by the district
court for the FBAR counts were not “misleading or inadequate.” United States v.
Hofus, 598 F.3d 1171, 1174 (9th Cir. 2010) (citation omitted). A conviction for
willful failure to file a FBAR requires proof that “the defendant acted with
knowledge that his conduct was unlawful,” meaning he intentionally violated “a
known legal duty.” Ratzlaf v. United States, 510 U.S. 135, 137, 141-42 (1994).
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The district court appropriately instructed the jury that (1) the government had to
prove Nadav “willfully failed to file a [FBAR]” and (2) “willfully” meant Nadav
“knew federal law imposed a duty on him to file a [FBAR] . . . [and] intentionally
and voluntarily violated that duty.” Nadav’s proposed additions to those
instructions were superfluous, because the jury could not find that Nadav
intentionally violated a known duty without also finding that he knew the foreign
account at issue contained over $10,000—the amount that triggered the
requirement to file a FBAR.
The district court’s additional instruction to review the blank FBAR form in
evidence in response to a jury question further demonstrates the adequacy of the
instructions, because that form stated that “[n]o report is required if the aggregate
value of the [foreign] accounts did not exceed $10,000.” See Beardslee v.
Woodford, 358 F.3d 560, 590 (9th Cir. 2004) (“Written instructions in response to
juror notes may be treated as jury instructions for purposes of review.”).
Moreover, the jury heard testimony on FBAR filing requirements, and Nadav’s
counsel argued in closing that Nadav could only be convicted if he knew the
account contained over $10,000. Cf. United States v. Johnson, 680 F.3d 1140,
1148 (9th Cir. 2012) (separate perjury instruction not required in part because the
defense “pointed out [the witness’s] alleged perjury to the jury”). Accordingly,
viewed “as a whole in the context of the entire trial,” id. at 1147 (citation omitted),
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the jury instructions were both correct and adequate, and there are no grounds for
reversal on this basis.
3. Sufficient evidence supported Nadav’s convictions on the FBAR counts.
Although the government did not introduce direct evidence of Nadav’s knowledge
of the amount in the foreign account at issue, it provided sufficient circumstantial
evidence from which the jury could reasonably infer that Nadav knew the account
contained more than $10,000, and therefore knew of his duty to file FBARs. See
Jackson v. Virginia, 443 U.S. 307, 319 (1979)
In particular, the evidence of Nadav’s established methods for helping
wealthy clients evade tax liability, and evidence that Nadav used those methods in
opening the foreign account, would reasonably allow the jury to infer that Nadav
knew the foreign account contained more than $10,000 and sought to hide that
income from the Internal Revenue Service. Cf. Karme v. Comm’r of Internal
Revenue, 673 F.2d 1062, 1064 (9th Cir. 1982) (in tax case, testimony unrelated to
particular transaction was admissible because it “tend[ed] to establish a pattern or
practice of tax planning of which [the] transaction was a part”). Such inferences
were especially reasonable in light of Nadav’s statements that his strategy was only
useful for wealthy clients, as well as evidence that the money involved in his
clients’ accounts far exceeded $10,000. The jury could reasonably rely on that
evidence, as well as its experience and common sense, and find that Nadav knew
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the foreign account contained more than $10,000.
Evidence that Nadav had signatory authority over the account and was
informed of at least one transfer of funds further supported the jury’s conclusion
that Nadav’s failure to file was willful. Furthermore, the steps Nadav took to
conceal the foreign account could allow the jury to infer knowledge of the account
balance and therefore find willfulness. Cf. Hawkins v. Franchise Tax Bd. of Cal.,
769 F.3d 662, 668 (9th Cir. 2014) (holding that willfulness in the context of felony
tax evasion may be shown through “any kind of conduct, the likely effect of which
would be to mislead or conceal” (quoting Spies v. United States, 317 U.S. 492, 499
(1943))). Accordingly, sufficient evidence supported Nadav’s convictions on the
FBAR counts.
AFFIRMED.
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