United States v. Sherri Davis

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued February 3, 2017 Decided July 21, 2017
No. 15-3044
UNITED STATES OF AMERICA,
APPELLEE
v.
SHERRI DAVIS,
APPELLANT
Consolidated with 15-3048, 15-3089, 15-3091
Appeals from the United States District Court
for the District of Columbia
(No. 1:14-cr-00037-1)
(No. 1:14-cr-00037-2)
Lisa B. Wright, Assistant Federal Public Defender, argued
the cause for appellant Andre Davis. Adam H. Kurland,
appointed by the court, argued the cause for appellant Sherri
Davis. With them on the briefs were A.J. Kramer, Federal
Public Defender, and Beverly G. Dyer, Assistant Federal Public
Defender. Tony Axam Jr. and David W. Bos, Assistant Federal
Public Defenders, entered appearances.
Alexander P. Robbins, Attorney, U.S. Department of
Justice, argued the cause for appellee. With him on the brief
2
was Gregory Victor Davis, Attorney. Frank P. Cihlar,
Attorney, entered an appearance.
Before: ROGERS and SRINIVASAN, Circuit Judges, and
GINSBURG, Senior Circuit Judge.
Opinion for the Court by Circuit Judge ROGERS.
ROGERS, Circuit Judge: Sherri Davis and her son, Andre
Davis, appeal from their convictions of conspiracy to commit
tax fraud and related offenses. Sherri owned a tax preparation
business, which the Internal Revenue Service determined was
filing returns that falsely reported charitable and business
deductions. A key government witness, LaDonna Davis, who
was Sherri’s niece and employee, described at trial how the
business operated generally, and specifically how Sherri had
taught her to prepare false returns. Andre worked with his
mother later on. Both Sherri and Andre challenge their
convictions on the grounds of prosecutorial misconduct during
closing arguments to the jury and various evidentiary errors by
the district court. Andre also contends that there was
insufficient evidence to demonstrate his guilt beyond a
reasonable doubt and suggests that the verdict against him on
two counts is explained, among other reasons, by the
government’s mischaracterizations of the evidence during
closing arguments. Upon consideration of the weakness of the
evidence offered against Andre and its centrality to the issue of
his mens rea, we conclude that the prosecutor’s blatant
misstatements of key evidence during closing arguments, in the
absence of any steps to mitigate the resulting prejudice, require
reversal of Andre’s convictions. Further, we conclude that the
evidence against Andre was insufficient and consequently he is
not subject to retrial. Finally, finding no such prejudice from the
closing arguments as to Sherri, and concluding her evidentiary
challenges are unpersuasive, we affirm Sherri’s convictions but
3
remand her case for resentencing and for consideration of her
claims of ineffective assistance of counsel.
I.
In 2003, Sherri Davis registered 2FT Fast Facts Tax Service
with the Internal Revenue Service (“IRS”). 2FT was a tax
preparation business aimed at recovering its clients’ tax
withholdings and maximizing their tax refunds. Sherri’s niece,
LaDonna Davis, began working for 2FT in 2006, first doing
clerical work but later preparing and filing tax returns herself.
LaDonna would work during the day and into the evenings, and
Sherri, who was a public school teacher, would join her once the
school day ended and sometimes work on returns until midnight.
2FT also employed other individuals to help around the office,
but only Sherri and LaDonna prepared tax returns. Clients were
charged between $99 and $500 for each return, often taken as a
deduction from the client’s refund without the client knowing
the specific amount. During tax season, 2FT would prepare
twenty to thirty returns a day, seven days a week. Fees,
annually totaling hundreds of thousands of dollars, were
deposited in Sherri’s bank account; employees were paid in
cash.
An IRS investigation of 2FT led to an interview with Sherri
about the responsibilities of tax preparers. Subsequent
undercover investigations in 2010 and 2011 captured LaDonna
on videotape preparing false returns for undercover IRS agents.
In April 2011, the IRS executed a search warrant for 2FT’s
business location at 1841 Burke Street, SE, Washington, DC,
where Sherri and LaDonna also lived, and seized computers and
files. At the time, IRS agents also interviewed LaDonna and she
agreed to cooperate with their investigation. In October 2011,
LaDonna entered into a plea agreement admitting conspiring to
defraud the United States of more than $14 million. She pled
4
guilty to conspiracy to defraud the United States, in violation of
18 U.S.C. §§ 2, 371, and aiding and abetting first degree theft,
in violation of D.C. Code §§ 22-3211, 22-3212, 22-1805. That
same month, the IRS expelled Sherri from its electronic filing
program and suspended 2FT’s electronic filing numbers
(“EFINs”). Sherri continued her tax preparation business under
a new name, Davis Financial Services. Instead of identifying
Sherri as owner, however, Davis Financial Services’ February
2012 IRS EFIN application listed Andre as the principal and the
primary contact.
Sherri was indicted for federal tax violations two years
later, in February 2014. A superseding indictment filed in July
2014 named Sherri and Andre as defendants and LaDonna as an
unindicted co-conspirator. Count 1 charged Sherri and Andre
with conspiracy to defraud the United States by preparing and
filing fraudulent and false individual income tax returns, in
violation of 18 U.S.C. §§ 2, 371. Counts 2 through 33 charged
Sherri with willfully aiding and assisting in the preparation of
false returns, in violation of 26 U.S.C. § 7206(2); Andre was
charged with the same violation in Counts 6, 15, 19, and 22.
Counts 34 through 36 charged Sherri with filing false individual
returns, in violation of 26 U.S.C. § 7206(1) and 18 U.S.C. § 2.
The district court granted the government’s pretrial motion to
dismiss Counts 2 through 6.
At trial, eleven of Sherri’s clients testified. According to
the government,
all t[old] essentially the same story: each worked for
an employer that withheld federal income taxes from
the wages it paid, each went to Sherri’s house between
2007 and 2013 to file a tax return for the prior year,
and each (with a single exception) used Sherri to
prepare returns for multiple tax years. Most of the
5
clients specifically identified Sherri as either the only
person who prepared their returns or one of two people
who prepared them. All of the returns reported huge
false deductions . . . .
Appellee Br. 11 (footnote omitted).
LaDonna was the government’s star witness. She had come
to live with Sherri when she was sixteen years old. She testified
that Sherri taught her how to prepare tax returns, which
primarily meant getting clients back what was withheld from
their paychecks, usually by inventing or exaggerating charitable
deductions and business losses and expenses. She described in
some detail how Sherri operated her tax preparation business.
For example, Sherri had instructed her to assign values for
charitable donations up to several thousands of dollars on blank
receipts provided either by 2FT or the clients. Eventually,
LaDonna testified, “it all became like a routine” and she began
filling in charitable deductions without even asking clients if
they had receipts. Trial Tr. 95 (Jan. 20, 2015 (pm)).
LaDonna also testified that Sherri would sometimes come
in and finish returns when LaDonna had been logged into the e-
filing system, so returns completed by Sherri “would come in
under my name” — that is, returns finished by Sherri listed
LaDonna as the preparer. Id. at 92. As another example of how
Sherri operated, LaDonna recounted how she had prepared a
return showing a client owed money and, after the client
became upset, Sherri made changes to the return, “put[ting]
some stuff in,” so that the client would no longer owe anything.
Id. at 18. Subsequently a number of clients were audited after
LaDonna misinterpreted Sherri’s instructions and included the
total mileage, not the annual mileage, on vehicles owned by
clients as part of their business deduction calculation. Sherri
told LaDonna to stop reporting total mileage and introduced the
6
clients to a woman who could create fake mileage logs for them
to provide to the auditors.
LaDonna testified at trial that once she had learned about
the audits and that an IRS representative had spoken with
Sherri, she began to suspect something was wrong and stopped
filing “Schedule C” forms showing business profits and losses.
Her concerns were heightened, she claimed, when IRS agents
executed the search warrant in April 2011. At the time,
LaDonna telephoned Sherri, who was in Las Vegas, to alert her
to what was happening, and Sherri told her to tell the agents that
she had learned how to prepare tax returns on her own and to
“go get [her]self committed so that [the agents] would think that
[she] was crazy.” Trial Tr. 12 (Jan. 20, 2015 (pm)). LaDonna
did not take Sherri’s advice and relations between the two
women became strained. (On cross examination, LaDonna
conceded that she never told the IRS agents during their
interviews of her that Sherri had told her to say something that
she knew was untrue.) LaDonna testified that they subsequently
had “a falling out” because she kept asking Sherri if anything
was wrong and, while Sherri kept trying to reassure her that
nothing was wrong she also wanted LaDonna “to lie about the
fact that she . . . [had] taught [LaDonna] how to do taxes.” Trial
Tr. 69 (Jan. 20, 2015 (pm)). LaDonna stopped working for 2FT
and moved out of 1841 Burke Street, SE; Sherri continued
preparing tax returns, telling LaDonna “no one told her that she
had to stop.” Id. at 14.
As to Andre, LaDonna testified that he would come home
during his spring and summer breaks from Lincoln University
in Pennsylvania, but that he was neither an employee of 2FT nor
prepared tax returns. Sometime after the search warrant was
executed in April 2011, however, LaDonna learned Andre was
planning to help Sherri prepare tax returns after his graduation.
She told him not to get involved in view of “everything else that
7
was going on,” and Andre responded that the investigation
“wasn’t a big deal, and that it was just going to go away.” Id.
Indeed, LaDonna testified that the entire Davis family thought
the IRS investigation would go no further and was her fault for
causing the client audits.
The government introduced evidence that in March 2012
the IRS accepted an application for a new EFIN for Davis
Financial Services, described as a sole proprietorship with
Andre listed as the primary contact and the principal.
According to records from TaxWise, a tax-preparation software
company, Davis Financial Services received $16,224 in fees in
connection with the filing of tax returns for 2012, and $7,829.95
in fees from 2013 returns, amounts significantly less than the
annual fees earned by 2FT through e-filings in prior years,
which ranged from approximately $70,000 to $159,000. A
spreadsheet from TaxWise also listed “Andre Davis,” “Davis
Financial Services,” and “1841 Burke Street SE” alongside
bank account and routing numbers. The government did not
offer evidence of who owned the bank account.
Neither Sherri nor Andre testified in their defense. Sherri
presented seven character witnesses to testify to her honesty and
trustworthiness, and to elicit testimony to impeach LaDonna’s
testimony and generally attack her credibility. Sherri also
called IRS Special Agent Abubaker Naim as a witness to
confirm that only LaDonna was present during the two times
undercover IRS agents went to 2FT, ostensibly to have their tax
returns prepared. Andre did not call any witnesses in his
defense.
At the close of all the evidence, the district court granted
Andre’s motion for judgment of acquittal as to Count 15,
relating to Deborah Johnson’s 2012 false tax return, ruling that
the government presented only “speculation” that Andre
8
knowingly assisted in the preparation of a false return “when all
we really have is [that Johnson] said she saw him do something
on a computer” and “handed [her return] to her.” Trial Tr. 15
(Jan. 28, 2015).
The jury found Sherri and Andre guilty on Count 1,
conspiracy to defraud the United States, and Sherri guilty of
aiding and assisting taxpayers in the preparation and filing of
false returns on Counts 7–14, 16–18, and 20–36. It also found
Andre guilty on Count 19 for aiding and assisting the
preparation and filing of Thomas Jaycox’s false 2012 tax return
showing charitable gifts of $51,000 and business and
miscellaneous expenses of $25,259. The district court denied
Sherri’s motion for a new trial based on prosecutorial
misconduct during closing arguments. It also denied both
defendants’ motions for judgment of acquittal notwithstanding
the verdicts. Sherri was sentenced to concurrent terms of forty-
eight months of imprisonment and thirty-six months of
supervised release, and ordered to pay restitution of $642,103.
Andre was sentenced to sixty months of probation and ordered
to pay restitution of $37,537. The district court denied their
motions for a new trial under Brady v. Maryland, 373 U.S. 83
(1963), based on the disclosure at sentencing that LaDonna had
admitted filing false personal tax returns during pre-trial
interviews. Both defendants appeal, and we turn first to
Andre’s challenges to his convictions on Count 1, conspiracy,
and Count 19, aiding and abetting the preparation and filing of
a 2012 false income tax return for Thomas Jaycox.
II.
To prove Andre’s guilt beyond a reasonable doubt on
Count 1, conspiracy, the government had to prove that he
knowingly agreed with Sherri (or another person) to defraud the
federal government of money or to deceptively interfere with
9
the lawful functions of the IRS. See Hammerschmidt v. United
States, 265 U.S. 182, 188 (1924); United States v. Treadwell,
760 F.2d 327, 333 (D.C. Cir. 1985). To prove Andre’s guilt on
Count 19, the government had to prove that he aided or assisted
in the preparation or presentation of Jaycox’s false tax return
with a specific intent to violate the law. Cheek v. United States,
498 U.S. 192, 200–01 (1991). Andre maintains that neither
Jaycox’s testimony about his false 2012 tax return, nor the 2012
EFIN application, nor LaDonna’s testimony about her
conversation with him, nor the TaxWise records listing his
name on a spreadsheet indicating where Davis Financial
Services’ fees were deposited showed he knowingly and
intentionally aided in the filing of Jaycox’s false tax return
(Count 19) or joined in an agreement to further the conspiracy’s
object, that the object was illegal, and that he had a common
understanding to violate the law (Count 1). In his view, the
verdict may be explained, among other reasons, by the
government’s mischaracterization of evidence during closing
arguments. We agree.
A.
It is well established “that the prosecutor may not refer in
the opening or closing statement to evidence not admitted at
trial.” United States v. Valdez, 723 F.3d 206, 209 (D.C. Cir.
2013) (quoting United States v. Small, 74 F.3d 1276, 1282 (D.C.
Cir. 1996)). Generally, the court considers three factors in
assessing whether improper prosecutorial argument sufficiently
prejudiced the defendant to require reversal of the judgment of
conviction: “[1] the closeness of the case, [2] the centrality of
the issue affected by the error, and [3] the steps taken to
mitigate the effects of the error.” Id. (quoting Small, 74 F.3d at
1280); see United States v. McGill, 815 F.3d 846, 918 (D.C. Cir.
2016). When, as here, the defendant did not object to the
prosecutor’s alleged misstatements in the district court, our
review is for plain error. Id. at 888.
 10
To set the context for assessing Andre’s contention that the
court must reverse his convictions on both counts because of
prosecutorial misconduct during closing arguments, we
summarize the relevant evidence, and this necessarily entails
some overlap with our consideration of Andre’s sufficiency
challenge. The government’s case against Andre as to both
Count 1 and Count 19 was thin. See Part II.B, infra. Although
the evidence established that Andre began working with his
mother after graduating from college and that false tax returns
were filed under the Davis Financial Services EFIN during this
period, the evidence of Andre’s knowing participation in
Sherri’s tax fraud scheme was equivocal, at best. LaDonna
testified that she cautioned Andre against working for Sherri,
but she did not specify why she thought doing so “wasn’t a
good idea.” Trial Tr. 81 (Jan. 20, 2015 (pm)). Thomas Jaycox
testified on direct examination that Andre had prepared his 2012
tax return, but qualified his testimony on cross-examination and
redirect by clarifying that Sherri had, in fact, also “put[]
information on” and “finalize[d]” his return after Andre had
worked on it. Trial Tr. 47, 80 (Jan. 22, 2015 (am)). The
evidence thus failed to establish who entered the false
deductions into Jaycox’s return; Sherri was just as, if not more,
likely to have done so than Andre. The remaining evidence
against Andre, such as Andre’s name on the EFIN application
and other documents, at most confirms only that he was
engaged in operating a tax-preparation business, not that he had
the specific intent to file false returns or otherwise knowingly
joined Sherri’s conspiracy to defraud the United States.
Examination of the prosecutor’s closing arguments reveals
multiple misstatements of this evidence and, given the gaps in
the government’s evidentiary case, their prejudicial effect is
readily apparent. For instance, the prosecutor told the jury that
Andre personally designated the bank account into which tax
preparation fees were deposited in 2013 and that Andre and
11
Sherri made a “staggering amount of money” but failed to
report such income in their individual tax returns. Trial Tr. 170
(Jan. 28, 2015). Even assuming that the first point is not false,
because Andre’s designation of the bank account might be
viewed as a reasonable inference from the TaxWise evidence,
there is no evidentiary basis for the second, nor does the
government point to any on appeal. The evidence of earnings
and income reporting related only to Sherri’s receipt of fees and
failure to accurately report her individual income to the IRS.
There was no comparable evidence as to Andre. Not only was
there no direct evidence Andre received fees for preparing and
filing false returns, much less in “staggering amounts,” as the
prosecutor told the jury, Trial Tr. 170 (Jan. 28, 2015), there was
no evidence Andre under-reported his individual income on his
tax returns. Lumping Andre together with Sherri in this manner
was clearly prejudicial to Andre. The prosecutor also
misleadingly minimized Sherri’s role in completing Jaycox’s
2012 return, telling the jury that Sherri only “came over to make
sure it was okay, or something to that effect,” id. at 88, when
Jaycox testified that Sherri “finalize[d]” his taxes and “finished
everything else out” on his 2012 return. Trial Tr. 47, 80 (Jan.
22, 2015 (am)).
Even more critically, the prosecutor blatantly
misrepresented the evidence regarding Andre’s mens rea. First,
in the opening portion of his closing argument after asking the
jury, “how do we know that the Defendant Andre Davis acted
willfully,” the prosecutor told the jury that LaDonna had told
Andre about the criminal charges she was facing and that Andre
had reassured her by saying, “Don’t worry. I know what I’m
doing.” Trial Tr. 96 (Jan. 28, 2015). The prosecutor then told
the jury: “So he knows. He knows that 2FT is under criminal
investigation, but yet he continues to file. . . . He acted
willfully with the specific intent to violate the law.” Id. at 97.
But this did not accurately recount LaDonna’s testimony. Even
12
now, the government’s brief misstates that there was evidence
LaDonna had told Andre about the criminal nature of the
investigation in which she was involved. See Appellee Br. 17.
In fact, LaDonna’s account of the conversation never indicated
that she had told Andre or that he was otherwise aware of the
criminal nature of the IRS investigation of 2FT or that Sherri,
rather than LaDonna alone, was implicated in it. Second, in
rebuttal closing argument, the prosecutor again asked “how do
we know that these defendants were trying to commit fraud,”
and this time told the jury that it’s because “[t]hey’re
photocopying Goodwill receipts and whiting them out . . . to
have back-up documents to support the $47,000 and $50,000
deductions for Thomas Jaycox[.]” Id. at 170. But the evidence
regarding the business providing clients with blank Goodwill or
other charitable receipts pertained only to years prior to the time
when Andre began working with his mother and his tenure at
Davis Financial Services. Jaycox brought his own receipts in
2012. The government’s response on appeal, that the “Sherri or
Andre” statement is technically true, because Sherri provided
blank Goodwill receipts, rings hollow; the government tarred
Andre with evidence that it implicitly acknowledges had
nothing to do with him. See Appellee Br. 46.
The government’s evidence that Andre had the requisite
mens rea for the offenses for which he was convicted was close
to none and at best minimal. See Part II.B, infra. Perhaps
recognizing the weakness in the government’s case, the
prosecutor sought to convince the jury during closing arguments
that Andre knew about the fraudulent activity of the 2FT
business and nonetheless knowingly joined in it once he began
working with his mother. The prosecutor did so by
inappropriately bolstering what little evidence there was. No
remedial or limiting instruction was given to the jury at any
point to mitigate the obvious prejudice to Andre. But for the
government’s misrepresentations of key evidence, the court is
13
left with the distinct doubt that a jury would have found beyond
a reasonable doubt that Andre was knowingly involved in
preparing and filing false tax returns and thereby perpetrating
the fraudulent tax scheme. The prosecutor’s blatant
misstatements on that critical issue jeopardize the court’s
confidence that the prosecutor’s misconduct during closing
arguments did not affect the jury’s verdict against Andre. See
Kotteakos v. United States, 328 U.S. 750, 764–65 (1946);
Valdez, 723 F.3d at 209 (citing Gaither v. United States, 413
F.2d 1061, 1079 (D.C. Cir. 1969)). “This test applies regardless
of whether our review is for harmless error or [as here] plain
error.” United States v. Watson, 171 F.3d 695, 700 (D.C. Cir.
1999); see McGill, 815 F.3d at 918. Standard jury instructions,
such as that “statements and arguments of counsel are not
evidence,” Trial Tr. 33 (Jan. 28, 2015), and that it is the jury’s
“memory of the evidence . . . that should control during . . .
deliberations,” id. at 32, have long been recognized not to be “a
cure-all for such errors,” Gaither, 413 F.2d at 1079. Given that
the evidence against Andre “was not such that his conviction
was by any means a certainty,” the prosecutor’s egregious
misstatements of it during closing argument amount to plain
error, and accordingly, require reversal of Andre’s convictions.
United States v. Richardson, 161 F.3d 728, 737 (D.C. Cir.
1998).
B.
Although the prosecutor’s statements during closing
arguments to the jury alone would warrant vacating Andre’s
convictions, the court must also determine whether the
government may retry him. The court therefore proceeds to
address Andre’s challenge to the sufficiency of the evidence
against him. Because we conclude, for the following reasons,
that the evidence was insufficient to prove his guilt on either
Count 1 or 19, he is not subject to retrial. See Burks v. United
States, 437 U.S. 1, 13–17 (1978); United States v. Williams, 827
14
F.3d 1134, 1162 (D.C. Cir. 2016).
The government, while acknowledging Andre’s innocent
explanations for the evidence offered against him, responds that
it is incriminating when viewed collectively. See Appellee Br.
26 (citing United States v. Bryant, 117 F.3d 1464, 1468 (D.C.
Cir. 1997)). As the government sees it, the fact that Andre’s
name appears on the 2012 EFIN application, on the TaxWise
records, and on Jaycox’s 2012 tax return suffice, in light of
LaDonna’s testimony that Andre was “going to be working with
[his mother],” doing taxes, Trial Tr. 14 (Jan. 20, 2015 (pm)), to
uphold Andre’s convictions. See id. (citing United States v.
Hough, 803 F.3d 1181, 1188 (11th Cir. 2015)). It distinguishes
the evidence in Andre’s case from United States v. Gaskins, 690
F.3d 569 (D.C. Cir. 2012), where there was no evidence the
defendant ever discussed or was in the presence of unlawful
contraband or had access to the apartment, leased under his
name, where the contraband was found. See id. at 26–27.
Viewing the evidence most favorably to the government,
see Jackson v. Virginia, 443 U.S. 307, 319 (1979); McGill, 815
F.3d at 917, however, the court concludes that the evidence of
Andre’s mens rea was, at most, equivocal and thus insufficient
to sustain his convictions; see Direct Sales Co. v. United States
319 U.S. 703, 714 (1943); United States v. Spinner, 152 F.3d
950, 957 n.1 (D.C. Cir. 1998).
The clients’ testimony and LaDonna’s testimony confirm
that Andre had agreed to work with his mother on preparing tax
returns. But that alone is not the same as showing the requisite
mens rea to join Sherri’s conspiracy. Most of LaDonna’s
testimony, and that of Sherri’s clients, was about Sherri and
LaDonna preparing their tax returns and the general operations
of the 2FT tax preparation business. LaDonna also testified that
when she learned after the search warrant was executed that
Andre was going to begin working with his mother on taxes, she
15
had told him “that wasn’t a good idea, that he shouldn’t.” Trial
Tr. 81 (Jan. 20, 2015 (pm)). But she offered no relevant details
about Andre’s subsequent conduct or knowledge. And she
acknowledged at trial that the Davis family was blaming her for
the audits, and “everybody thought that it [i.e., the IRS
investigation] was not that serious . . . that it was just going to
. . . go away,” and “that none of this was going to proceed any
further.” Id. This evidence demonstrates that Andre agreed to
work for his mother despite knowledge of some type of
investigation, but it does not show that he knew his mother was
committing tax fraud, much less that he was involved in
falsifying tax returns, unlike the government’s clear evidence of
his mother’s and LaDonna’s knowing culpability. Being
present and working on clients’ tax returns, without more, does
not show the requisite specific intent.
Adding Andre’s name on the EFIN application and the
TaxWise summary spreadsheets does not add up to a showing
that Andre knowingly participated in a conspiracy either. That
Andre’s name was listed as the principal and the point of
contact for Davis Financial Services in its EFIN application is
not the same as evidence these designations were the result of
his action or agreement. The application in the record is a copy
of an electronic filing and does not indicate who actually
submitted it to the IRS. Signatures on the filed 2012 tax returns
were also electronic, and Sherri was known to complete tax
returns under her employees’ computer log-ins, such that their
names, rather than hers, would be listed as the preparer. That
Andre’s name is listed as the return preparer on Jaycox’s 2012
return is not the same as showing that Andre entered the false
information or condoned those entries by Sherri, or even knew
that Sherri was entering false information on the return.
Similarly, that Andre’s name was listed as the point of contact
in a TaxWise summary spreadsheet provides no more evidence
of his mens rea than the inclusion of his name on the EFIN
16
application. Even if Andre received Davis Financial Services’
tax preparation fees or directed where they should be deposited,
this would show only that Andre had joined the business, not
that he had knowledge of and assisted Sherri in conspiring to
defraud the government or in filing false returns with the IRS.
Thus, the government’s case as to both Count 19 and Count
1 largely rested on the testimony of client Thomas Jaycox that
he “remember[ed] Andre Davis doing [his] taxes one particular
year” and that his 2012 federal tax return, which included false
deductions, listed Andre as the tax preparer. Trial Tr. 54 (Jan.
22, 2015 (am)). Jaycox’s testimony, although incriminating,
had critical weaknesses. On cross-examination, Jaycox
conceded that he had originally told IRS agents that Sherri had
prepared his 2012 return without mentioning Andre’s
involvement. Jaycox explained that this was an oversight.
“Sherri prepared [his] taxes for years,” id. at 52, but one year,
he now recalled, Andre met with him first and then Sherri had
come over to “go back over [his taxes], finaliz[ing] them,” id.
at 47. Although he could not independently remember which
particular year this was, he concluded that it was 2013 based on
seeing Andre’s name on the bottom of his 2012 tax return.
Jaycox added another caveat on redirect examination: When the
prosecutor asked whether he could remember “seeing” Andre
“put numbers into a computer while preparing a tax return for
[him],” Jaycox testified that he could not. Id. at 79. He could
remember only “a young man preparing a return for [him],” and
admitted that “[he] wouldn’t know Andre Davis if [he] bumped
into him on the street.” Id.
Jaycox’s testimony on cross- and redirect examination thus
undercut the initial impression left by his testimony on direct
examination about Andre’s involvement in preparing his 2012
tax return. Although Jaycox did testify that he recalled that a
young man had prepared his taxes one year and a reasonable
17
jury could find that Andre was the “young man” who prepared
Jaycox’s 2012 income tax return based on Andre’s electronic
signature on the return and the lack of any evidence of any other
young man preparing returns for Sherri at the time, Jaycox
invariably limited Andre’s role. When asked if he recalled
seeing Andre put numbers into a computer while preparing a tax
return for him, Jaycox said he did not. As to who was putting
information on the return, Jaycox drew a sharp distinction. He
testified that “both of them” put information on the return: “The
initial portion of it was taken care of by the young man, and
then later Sherri came in and finished everything else out.” Id.
at 80. In sum, his testimony dovetailed with LaDonna's
description of how Sherri operated her tax preparation business.
Sherri would enter numbers in a return that was open on
LaDonna's computer and the return would identify LaDonna as
the preparer of the return even though Sherri had entered the
false information. As Jaycox put it, “[t]he way the process went
every year, Sherri would finalize the taxes.” Id. at 47.
In granting Andre’s motion for a judgment of acquittal on
Count 15 at the close of the evidence, the district court found
that there was insufficient evidence against Andre for that count
to be presented to the jury because
all we really have is [the witness] said she saw him
[Andre] do something on a computer. She doesn’t
know who circled the word “refund.” She doesn’t
have any information that she’s testified to about any
preparation he did on the return except he handed it to
her. Her returns had always been done by Ms. Davis.
She had talked to Ms. Davis on the phone and was told
to pick it up from Andre. Even construing that along
with the EFIN number, his number had been used in
his name to file the return, I still think that’s all
speculation that he willfully and intentionally provided
18
false information or provided assistance to
intentionally file a fraudulent return.
Trial Tr. 15 (Jan. 28, 2015). The evidence about Andre’s role
in preparing Jaycox’s 2012 tax return, Count 19, is similarly
deficient. Even though Jaycox testified that the young man
prepared his 2012 income tax return, this statement was
“bookended” by the limitations Jaycox referred to on cross- and
redirect examination. Sherri had always prepared Jaycox’s
returns, and even the year the “young man” helped in the
preparation, he did only “[t]he initial portion of it[,] . . . and then
later Sherri came in and finished everything else out” on the
return. Trial Tr. 80 (Jan. 22, 2015 (am)). In view of the
overwhelming evidence of Sherri’s culpability in the conspiracy
generally, and specifically in “finaliz[ing],” id. at 47, and
“finish[ing],” id. at 80, Jaycox’s 2012 taxes, that Sherri was the
source of any false information is “an equally plausible if not
more plausible account than the government’s theory” that
Andre entered the false information, United States v. Wilson,
160 F.3d 732, 738 (D.C. Cir. 1998). Of course, “the
government cannot prevail on the basis of jury speculation,” id.;
see Cooper v. United States, 218 F.2d 39, 41–42 (D.C. Cir.
1954), and, here, its theory, and the jury’s verdict as to Andre
on Count 19, was based on speculation. Although the
government may meet its burden of proof by circumstantial as
well as direct evidence, it does not do so where the evidence is
“equivocal.” Direct Sales Co., 319 U.S. at 714.
Absent any other evidence of Andre’s mens rea, the
evidence likewise left a critical void and was insufficient to
demonstrate that Andre knowingly joined Sherri’s conspiracy
to defraud the United States under Count 1. Although the
government might have been able to show that Andre’s intent
to conspire could be inferred because he was working for a
business that was devoted to filing false returns and he was a
19
smart man who had to know what his mother was up to, that is
not how the government chose to try its case. The government,
instead, presented testimony from individual tax payers. It
showed that Andre was involved in the preparation of income
tax returns for Davis Financial Services. But no witness
testified that Andre entered false information on a client’s
income tax return. Rather, the government’s key witness to the
conspiracy, LaDonna, and its key witness to Andre’s
preparation and filing a false return, Jaycox, insisted that Sherri
“finalized” the taxes. To the extent the evidence indicated
2FT’s purpose was to file false tax returns, that did not
necessarily carry over to Davis Financial Services. But even if
a reasonable jury could find based on the false statements in
Jaycox’s 2012 return that a fraudulent purpose continued, and
that Andre submitted the EFIN application and received
payment for preparing tax returns, the evidence never
established beyond a reasonable doubt that he entered false
information on any returns or that he knew about or intended
that anyone working for Davis Financial Services would do so.
Although an unqualified and specific warning from LaDonna
might have been enough to alert Andre to steer clear of his
mother’s criminal conduct, her testimony did not reveal a
warning of that nature; instead LaDonna testified that the Davis
family blamed her for the client audits and thought the IRS
investigation would end shortly. It was the government’s
burden to establish Andre’s intent to defraud, yet the cumulative
evidence left the jury to speculate about whether Andre
knowingly joined his mother’s conspiracy to defraud the United
States. And, as shown, filling evidentiary gaps during closing
argument to the jury is not an option that is available to the
government. See Part II.A, supra.
In sum, the evidence failed to establish, beyond a
reasonable doubt, that Andre knowingly defrauded the United
States or knowingly assisted in the preparation and filing of a
20
false tax return.
III.
Sherri challenges her convictions on the grounds of
prosecutorial misconduct during closing argument and
evidentiary error by the district court. Although these
challenges fail, we conclude that her challenges to her sentence
and trial counsel’s assistance require further consideration by
the district court.
A.
In his final statement during rebuttal closing argument to
the jury, the prosecutor told the jury that “Sherri Davis is not
going to stop until somebody tells her to stop. Your job is to
tell her to stop.” Trial Tr. 177 (Jan. 28, 2015). Because Sherri
raised her objection that this statement constituted prosecutorial
misconduct in moving for a new trial, our review is for abuse of
discretion, see United States v. Vega, 826 F.3d 514, 529 (D.C.
Cir. 2016), and we find none.
“It is well established that a prosecutor may not make
statements calculated to arouse the passions or prejudices of the
jury,” United States v. Monaghan, 741 F.2d 1434, 1440 (D.C.
Cir. 1984), or “urge jurors to convict a criminal defendant in
order to protect community values, preserve civil order, or deter
future lawbreaking,” id. at 1441. As the last words to the jury,
the potential for prejudice from an impermissible closing
statement is heightened. See United States v. Holmes, 413 F.3d
770, 776 (8th Cir. 2005) (citing cases).
The district court reasonably concluded that the prejudice
caused by the misconduct was sufficiently mitigated. Before it
commenced deliberating, the jury was instructed to “ignore that
last comment of government counsel.” Trial Tr. 182 (Jan. 28,
21
2015). Sherri suggests this instruction may have done more
harm than good by bringing attention to the misstatement. This
type of “speculative assumption[]” is reasonably rejected, see
Lakeside v. Oregon, 435 U.S. 333, 340 (1978), particularly in
light of her counsel’s request for a curative instruction.
Additionally, the evidence against Sherri was overwhelming,
see supra Part I, and Sherri understandably does not challenge
her convictions on the ground of insufficient evidence, see
Reply Br. 28. Further, the prosecutor’s errant statement neither
bolstered nor discredited any witness testimony, nor concerned
a critical issue for which there was no evidence. Cf. United
States v. Kerr, 981 F.2d 1050, 1053–54 (9th Cir. 1991).
B.
Sherri’s contention that the district court erred in excluding
the testimony of her expert medical witness fares no better.
Under the Insanity Defense Reform Act of 1984, 18 U.S.C.
§§ 17, 4241 et seq., mental condition evidence is admissible if
“adequately keyed to the issue of whether [the defendant]
entertained the mens rea required for proof of the crime.”
United States v. Childress, 58 F.3d 693, 729 (D.C. Cir. 1995).
“Thus, ‘the proper focus is on the proffered link or relationship
between the specific psychiatric evidence offered and the mens
rea at issue in the case.’” Id. at 730 (quoting United States v.
Cameron, 907 F.2d 1051, 1067 n.31 (11th Cir. 1990)) (brackets
omitted). The district court granted the government’s in limine
motion to strike her medical expert’s testimony, finding that it
lacked a link to the issue of Sherri’s mens rea. The court also
concluded that the expert’s proffer that attention deficit
hyperactivity disorder (“ADHD”) “could cause Ms. Davis to
have difficulty completing tasks and accurately filling out
detailed forms[] . . . is precisely the type of ‘justification or
excuse’ evidence that is not permitted because of the danger that
it will mislead the jury.” United States v. Davis, 78 F. Supp. 3d
17, 21 (D.D.C. 2015). Our review is for abuse of discretion, see
United States v. Day, 524 F.3d 1361, 1369 (D.C. Cir. 2008);
22
United States v. Long, 328 F.3d 655, 662 (D.C. Cir. 2003), and
we find none.
At a pretrial evidentiary hearing, Dr. Robert Madsen, a
forensic psychiatrist, testified that Sherri suffered from ADHD,
and that people with this disorder are easily distracted and error-
prone. This condition, he opined, would not cause a person to
make up numbers out of whole cloth as Sherri was accused of
doing, although, he observed, people with ADHD “often are
prevaricators” or “liars.” Pre-Trial H’g Tr. 41 (Dec. 10, 2014).
The district court reasonably concluded that allowing Dr.
Madsen’s testimony would, in effect, “open[] up the jury to
theories of defense more akin to justification,” without offering
any insight into Sherri’s mens rea. Childress, 58 F.3d at 729
(quoting United States v. Pohlot, 827 F.2d 889, 905 (3d Cir.
1987)).
C.
Sherri’s contention that the district court erred in denying
her motion for a new trial based on a violation of Brady v.
Maryland, 373 U.S. 83 (1963), is also unpersuasive. Under
Brady and its progeny, the government must timely disclose
exculpatory or impeachment evidence to the defendant. Brady,
373 U.S. at 87; Strickler v. Greene, 527 U.S. 263, 280–82
(1999); see United States v. Straker, 800 F.3d 570, 603 (D.C.
Cir. 2015). Reversal of a conviction is warranted when “the
[withheld] evidence is material in the sense that its suppression
undermines confidence in the outcome of the trial.” United
States v. Bagley, 473 U.S. 667, 678 (1985). This court
“defer[s]” to the district court’s factual findings “under an abuse
of discretion standard” but reviews the question of materiality
and prejudice de novo. United States v. Oruche, 484 F.3d 590,
595 (D.C. Cir. 2007); accord Straker, 800 F.3d at 603; United
States v. Moore, 651 F.3d 30, 99 (D.C. Cir. 2011). Here, we
conclude there is no “reasonable probability that the suppressed
evidence would have produced a different verdict” for Sherri.
23
Strickler, 527 U.S. at 281.
Sherri’s focus is on the pre-trial admission by LaDonna
that she filed individual tax returns falsely claiming dependents.
Sherri maintains that this undisclosed information would have
helped cast LaDonna as the mastermind of the tax fraud
conspiracy and diminished her credibility. Even assuming the
evidence would have assisted Sherri in showing LaDonna was
the “mastermind,” it would not detract from the evidence of
Sherri’s major role in the conspiracy and the related criminal
conduct. The taxpayer witnesses identified Sherri as preparing
and being directly involved in preparing their false returns; this
remained true even after LaDonna withdrew from the
conspiracy. The impeachment value of the evidence that
LaDonna had knowingly filed five false individual tax returns
was cumulative to LaDonna’s admission at trial that she had
prepared and filed years of false income tax returns on behalf of
2FT clients. See United States v. Brodie, 524 F.3d 259, 269
(D.C. Cir. 2008); United States v. Cuffie, 80 F.3d 514, 517–18
(D.C. Cir. 1996). It is improbable that LaDonna’s credibility
“would have been further diminished” by the “new” evidence.
Wearry v. Cain, 136 S. Ct. 1002, 1006 (2016). Sherri suggests
that the evidence would have allowed her to attack LaDonna’s
“noncompliance with the truthtelling provisions of her
cooperation agreement.” Appellant Br. 33. But the record
indicates that LaDonna’s statements to IRS agents about her
own tax returns predated the cooperation
agreement. LaDonna’s later admissions about her own falsified
returns showed she was more forthcoming after entering into
the plea bargain.
D.
Sherri challenges the loss and restitution calculations
underlying her sentence. The court reviews sentencing
decisions for abuse of discretion, see Gall v. United States, 552
U.S. 38, 46 (2007); United States v. Pole, 741 F.3d 120, 127
24
(D.C. Cir. 2013), and factual findings for clear error, see id.;
United States v. Brockenborrugh, 575 F.3d 726, 738 (D.C. Cir.
2009); United States v. Leonzo, 50 F.3d 1086, 1088 (D.C. Cir.
1995). We conclude a remand for resentencing is required.
The district court estimated a tax loss attributable to Sherri
of more than $1.4 million, including a $642,103 loss to the
federal government that was subject to restitution, and a nearly
$800,000 loss to the District of Columbia. Sherri challenges the
reliability and sufficiency of the facts underlying both figures.
The government only defends the federal loss figures on the
assumption that this court need not reach Sherri’s challenge to
the District of Columbia tax loss because the federal tax loss
exceeded $550,000, the minimum loss necessary to reach
Sherri’s Sentencing Guidelines’ base offense level of 20. See
U.S.S.G. § 2T4.1. Sherri, however, challenged both loss figures
in the district court and on appeal. Because her challenge to the
federal loss calculation is compelling, the district court should
address both on remand.
The government presented two charts purporting to
document the federal tax loss. On appeal, the government
explains that one was an earlier draft of the other and was
inadvertently included in the government’s sentencing
memorandum to the district court. See Amended Letter of
February 3, 2017, from David A. Hubbert, Acting Assistant
Attorney General, to Mark J. Langer, Clerk of the Court. The
charts are largely identical except for a column in the draft
“Description of Determination.” (The draft also includes losses
for taxpayer Neda Graves that are omitted from the final chart,
so the total numbers vary modestly.) In the “Description of
Determination” column, losses are labeled with descriptors such
as “based on MOI” (memorandum of interview), “based on
preparer pattern,” “audit amount,” and “per DOJ instructions.”
A note as to a loss of $11,866 states “$1,668 potential audit,
unsure what this is.” Although this could be a typographical
25
error, the $11,866 figure, like all the other loss figures in the
draft chart, are in the final chart minus the explanatory text.
At the sentencing hearing, the district court acknowledged
that the government would need to “produce some evidence” of
what the descriptions in the draft chart on federal tax losses
meant or the court would be at “a loss” trying to determine the
means used and accuracy of the claims. Sent. H’g Tr. 11 (July
16, 2015 (am)). The testimony by the government’s expert, IRS
Special Agent Naim, was incomplete, however, because he had
not prepared either chart and could only surmise the meaning of
the labels in the draft chart, conceding that “if it says based on
preparer pattern, the logical inference of that is that it was not
based on a memorandum of interview because it doesn’t say
memorandum of interview[.]” Id. at 44. Special Agent Naim
also could not confirm that the government had interviewed the
individuals about every year that was described as “based on
MOI” in the draft chart. He had interviewed one taxpayer,
Carlos Little, about only his 2012 return, yet the chart listed
three years of data as “based on MOI.” The prosecutor claimed
that Little’s grand jury testimony could have been the source of
the information and that “[a]ll the rest of the witnesses . . . were
interviewed, personally spoken to by someone from the IRS,
and/or personally testified here at trial.” Sent. H’g Tr. 23 (July
16, 2015 (pm)).
The district court concluded that the government presented
“essentially an accurate recitation of the losses,” id. at 39, by
assuming that if the loss figures were not supported by an MOI,
then they “came from the files of the IRS and from the
testimony that [the taxpayers] had proffered either at trial or in
grand jury or through the evidence from their returns that . . .
the government had,” id. at 38. Although a sentencing court
need only find facts by a preponderance of evidence, that
evidence must have a “sufficient indicia of reliability to support
its probable accuracy.” United States v. Fahnbulleh, 752 F.3d
26
470, 481 (D.C. Cir. 2014) (quoting United States v. Bras, 483
F.3d 103, 109 (D.C. Cir. 2007)). Here, the defendants identified
numerous inconsistencies in the government’s evidence that
cast doubt on the reliability of the information presented to the
district court. The discrepancy between Special Agent Naim’s
testimony that the final chart was based on personal interviews
and audits and the broader array of sources identified in the
draft chart and suggested by the prosecutor requires further
explanation. “[S]entences under the Guidelines ‘must be
supported by reasons,’ and that means ‘something more than
conclusions — a distinction important not only to the defendant
whose future is at stake but also to the appellate process.’”
United States v. McCants, 434 F.3d 557, 562 (D.C. Cir. 2006)
(quoting Childress, 58 F.3d at 723).
Nor is it clear that any error was harmless. Because the
data in the final chart appears unreliable as a whole, and not just
as to a few specific individual taxpayers, the court cannot be
confident that the government could prove more than the
$325,000 of loss that Sherri conceded, much less enough to
reach $550,000 so her base offense level would remain
unchanged. See U.S.S.B. § 2T4.1. And, although the base
offense level is the same whether the loss is $550,000 or $1.4
million, the difference in amount is significant and could affect
the district court’s evaluation of the “seriousness of the offense”
in choosing a specific sentence. 18 U.S.C. § 3553(a)(2)(A).
It is also evident that the district court based its restitution
calculation under 18 U.S.C. § 3664(e) on the federal loss
findings. See also Appellee Br. 66. Because the district court
must resolve factual disputes over restitution with “something
more than conclusions,” Pole, 741 F.3d at 128 (quoting
McCants, 434 F.3d at 562), the restitution order is riddled with
the same problems as the loss figures. We vacate Sherri’s
sentences and remand for resentencing on loss and restitution.
27
E.
To prove ineffective assistance of counsel, a defendant
must show both that “counsel’s representation fell below an
objective standard of reasonableness,” Strickland v.
Washington, 466 U.S. 668, 688 (1984), and “that counsel’s
errors were so serious as to deprive the defendant of a fair trial,”
id. at 687. “[U]nless the record alone conclusively shows that
the defendant either is or is not entitled to relief[,]” the court
will remand any “colorable claim” for further fact-finding.
United States v. Mohammed, 693 F.3d 192, 202 (D.C. Cir.
2012) (internal quotation marks omitted).
Sherri contends that she was denied the effective assistance
of counsel because trial counsel failed (1) to introduce into
evidence the undercover videotapes of LaDonna preparing false
tax returns for IRS agents; (2) to introduce a Facebook post by
a taxpayer witness referencing business endeavors that
purportedly suggest the claimed expenses on his returns were
not false or, at least, that Sherri was unaware they were false;
and (3) to request a mistrial following the prosecutor’s closing
argument and to consult with her about making that request.
Because the record does not conclusively demonstrate that
Sherri is not entitled to relief, “further factual development” is
necessary. United States v. Fareri, 712 F.3d 593, 595 (D.C. Cir.
2013). Although trial counsel moved for a new trial on the
ground that the prosecutor’s argument was prejudicial and we
affirm the district court’s denial of the motion, the district court
should address Sherri’s third objection as well because our
review was limited to determining whether the district court
abused its discretion, not whether Sherri has demonstrated
denial of her Sixth Amendment right to effective counsel.
Accordingly, we reverse the judgment of conviction of
Andre Davis on Counts 1 and 19, and we affirm the judgment
of conviction of Sherri Davis, but vacate her sentence and
remand her case for resentencing and for consideration of her
28
claims of ineffective assistance of counsel.