905 F2d 1541 United States v. D Barnes

905 F.2d 1541

Unpublished Disposition

NOTICE: Ninth Circuit Rule 36-3 provides that dispositions other than opinions or orders designated for publication are not precedential and should not be cited except when relevant under the doctrines of law of the case, res judicata, or collateral estoppel.

UNITED STATES of America, Plaintiff-Appellee,
v.
Donald D. BARNES, Defendant-Appellant.

No. 89-10304.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted June 5, 1990.
Decided June 21, 1990.

Before SNEED, FARRIS and FERNANDEZ, Circuit Judges.

1

MEMORANDUM*

2

Donald D. Barnes ("Barnes") appeals his conviction on four counts of income tax evasion. 26 U.S.C. Sec. 7201. Barnes claims that the district court improperly instructed the jury. Barnes also claims that the district court improperly refused to give two instructions that Barnes had requested.

3

We affirm.

BACKGROUND FACTS

4

During 1982-1985, Barnes operated automobile dealerships in Northern California. Barnes purchased one of the dealerships, Fremont Ford ("Fremont"), in May of 1982. Barnes purchased the other dealership, Sunnyvale Chrysler-Plymouth ("Sunnyvale"), in May of 1985. Barnes admits that his personal tax returns for 1982-1985 failed to report several payments made to him by various vendors of his two dealerships. Barnes also does not dispute that he should have reported those payments as income and that he should have paid federal income taxes on those payments.

5

The main issue at trial was whether Barnes willfully evaded paying taxes. There are four events that are relevant to this appeal. First, by May of 1986, Barnes had been informed by the Internal Revenue Service ("IRS") that it was auditing his 1983 tax return. In September of 1986, Barnes fired the business manager he had at Fremont. The business manager was aware of the payments that Barnes had received from various vendors. In December of 1986, Barnes met with an IRS agent and the agent questioned him about the tax returns. After that meeting, Barnes sent the business manager a $1000 check in addition to a bonus check that Barnes had agreed to pay the manager when she was fired.

6

Second, Barnes had engaged in a series of transactions with one of the vendors, Dealers Service Agency. Dealers Service Agency was an insurance broker for automobile dealers. The agency was operated by John Sheppard. Barnes and Sheppard agreed that Barnes would recommend Sheppard to people who purchased an automobile at Fremont. In return, Sheppard would pay Barnes a percentage of any commission that Sheppard received for insuring the referred drivers. Barnes did not report any of the income he received from Sheppard in either 1984 or 1985. In March of 1987, Barnes sent Sheppard a check for $23,865--the amount of money that Barnes had received from Sheppard during 1984 and 1985. According to Barnes, his attorney had recommended that he pay Sheppard back so that Barnes could claim that the check represented a repayment of a loan. If Barnes had actually received a loan from Sheppard, then Barnes would not have been required to report that money as income.

7

Third, Barnes reported approximately $57,500 in income from Sunnyvale on his 1985 tax return. Barnes' return also included a $57,500 deduction for payments Barnes supposedly made to the previous owner of Sunnyvale pursuant to a non-competition agreement. Barnes claims that the reported income was not really income but was a reimbursement for payments that he had made to the previous owner of Sunnyvale under their purchase agreement. Barnes claims that Sunnyvale mistakenly recorded the money as salary instead of as a reimbursement for money that Barnes was obligated to pay to the previous owner. Barnes also claims that his accountant mistakenly listed $57,500 as a deduction because the accountant believed the non-competition agreement had been signed. In fact, Barnes had never finalized the non-competition agreement although Barnes testified that one of his attorneys had drafted an agreement.

8

The last transaction that is relevant to this appeal involves a purchase agreement that Barnes entered into when he bought the Fremont dealership. Under the agreement, Ford Motor Company retained some of the stock of the dealership. Barnes was obligated to purchase the stock from Ford Motor Company when Barnes received some profit from the dealership. Barnes argues that the agreement constituted an installment purchase. As such, Barnes would have been entitled to deduct the interest that would have been imputed to part of his payments to Ford Motor Company. Barnes argues that he would have been entitled to a deduction of approximately $49,000 in 1984.

JURISDICTION AND STANDARD OF REVIEW

9

The district court had jurisdiction pursuant to 18 U.S.C. Sec. 3231. We have jurisdiction pursuant to 28 U.S.C. Sec. 1291.

10

When we review jury instructions, we consider the instructions as a whole. United States v. Marsh, 894 F.2d 1035, 1040 (9th Cir.1989), cert. denied, --- U.S. ----, 110 S.Ct. 1143, 107 L.Ed.2d 1048 (1990). A district court is given wide latitude to frame jury instructions and we will not disturb the court's discretion unless the instructions as a whole were misleading or did not adequately guide the jury in its deliberations. Id.

11

In the past, we have not always been clear about the standard of review that we use to scrutinize a district court's denial of a proposed jury instruction. United States v. Whitehead, 896 F.2d 432, 434 (9th Cir.1990); United States v. Sotelo-Murillo, 887 F.2d 176, 179 (9th Cir.1989). We have at times applied an abuse of discretion standard and have at other times reviewed the district court's decision de novo. Whitehead, 896 F.2d at 434. In this case, our decision is the same under either standard. Therefore, we need not address the intracircuit conflict on the appropriate standard of review.

DISCUSSION

12

A. Instructions on Bribery and Fabrication of Evidence.

13

A district court may give a proposed instruction as long as the requesting party has presented something more than hypothetical facts upon which the instruction could be based. Morris v. United States, 326 F.2d 192, 195 (9th Cir.1963). Generally, an instruction that is designed to establish consciousness of guilt should be given only when the jury could infer the defendant's guilt from the defendant's actions. See, e.g., United States v. Silverman, 861 F.2d 571, 581 (9th Cir.1988) (flight instruction valid only if sufficient evidence from which jury could infer that defendant fled because he or she had committed crime). In this case, the government requested an instruction on bribery. The district court ruled that there was enough evidence to warrant an instruction. The district court did not err.

14

The government presented evidence that an unexpected and undesignated check was sent to a former business manager who was familiar with Barnes' dealings. The check arrived at a time that was strangely congruent with Barnes' discovery that he was being investigated for tax fraud. The jury could infer that Barnes tried to bribe the business manager because he knew that he had not reported income on his tax returns and he wanted to keep that information from the IRS.

15

The district court ensured that the jury would not be unduly influenced by the bribery instruction when the court also instructed the jury that some of its instructions might not be relevant if the jury did not find that the facts supported certain inferences. Therefore, the court properly cautioned the jury that the fact that the court gave a bribery instruction did not mean that Barnes had actually bribed the business manager. There was evidence to support the court's instructions. The district court did not err when it gave the government's requested bribery instruction.

16

The government also requested that the jury be instructed that it could consider whether Barnes had fabricated evidence. If the jury believed that Barnes had fabricated evidence, the jury could consider whether that fact showed that Barnes knew that he had not reported all of his income.

17

The government presented evidence that Barnes had received various payments from John Sheppard. Barnes testified that he repaid part of the money so that he could claim that the income had been a loan from Sheppard. Barnes also stated that he returned the money because his attorney advised him to so do. The government's evidence would support an inference that Barnes paid Sheppard back in order to deceive the IRS. The jury could also infer that Barnes' actions tended to show that he was aware that he had not reported some of his income. The district court prefaced the fabrication instruction with the same caution that it gave with the bribery instruction. The jury was told that some of the instructions might not be relevant if the jury did not believe some of the evidence. Therefore, if the jury believed Barnes' story that the only reason he paid Sheppard was because his attorney told him to so do, then the jury would not need to use the fabrication of evidence instruction. The district court's caution ensured that the jury would not be misled by the fabrication instruction. The court did not err when it gave the government's instruction.

18

B. Missing Witness Instruction.

19

A district court has the discretion to give a missing witness instruction. United States v. Bramble, 680 F.2d 590, 592 (9th Cir.), cert. denied, 459 U.S. 1072, 103 S.Ct. 493, 74 L.Ed.2d 635 (1982). However, a missing witness instruction should be limited to those cases where it would be natural and reasonable for a jury to conclude that a witness is missing because the witness' testimony would have been unfavorable to the party on whose behalf the witness would have testified. United States v. Long, 533 F.2d 505, 509 (9th Cir.) (per curiam), cert. denied, 429 U.S. 829, 97 S.Ct. 88, 50 L.Ed.2d 92 (1976).

20

The government proposed a missing witness instruction because Barnes had not called as a witness the attorney who had prepared the non-competition agreement. The government argued that the jury should be entitled to infer that Barnes did not have his attorney testify because the attorney would likely have stated that he was never asked to draft a non-competition agreement.

21

Here, the district court initially indicated that it would not give the government's requested missing witness instruction. The court also indicated that it would not give an instruction that a defendant is not required to call any witnesses. Counsel for both parties agreed to the court's decision. However, Barnes' counsel later requested that the court instruct the jury that the defendant need not call any witnesses and to tell the jury that the court had found one of the defendant's witnesses unavailable. The court was concerned that the jury would be misled if it only heard about one of the missing witnesses. Therefore, the court said that it would either give both missing witness instructions or neither instruction. The parties agreed that both instructions should be given, but Barnes' counsel did so under protest. The instructions informed the jury that it could consider the fact that a witness was not called, but that the jury could not infer anything if either party could have called the witness. The instructions also told the jury that Barnes need not call any witnesses and that the jury could not consider the fact that a particular witness had not been called by Barnes. The instructions were proper and comprehensive. The district court did not err when it gave them.

22

C. Instructions on Nontaxable Reimbursement and Installment Sales.

23

A defendant is entitled to an instruction on his defense to a case any time that defense has some foundation in the evidence. Sotelo-Murillo, 887 F.2d at 178. The defendant should receive the requested instruction even if the evidence is weak, insufficient, inconsistent or not highly credible. Id. However, a court need not give the exact instruction requested as long as the defendant's theory is adequately presented by the other instructions. United States v. Lopez, 885 F.2d 1428, 1434 (9th Cir.1989), cert. denied, --- U.S. ----, 110 S.Ct. 748, 107 L.Ed.2d 765 (1990); United States v. Yarbrough, 852 F.2d 1522, 1541 (9th Cir.), cert. denied, --- U.S. ---- 109 S.Ct. 171, 102 L.Ed.2d 140 (1988).

24

Barnes claimed that certain amounts which he had included in his returns as income payments from one of his corporations were erroneously included and that he had not taken a possible deduction for imputed interest payments. Barnes argues that those errors, if they were errors, showed that he made mistakes which were not in his favor. Thus, he says, the jury could infer that he acted carelessly rather than willfully. Barnes then argues that his defense of carelessness was presented by the instructions he requested regarding nontaxable reimbursements and installment sales.

25

While the jury might have been able to infer carelessness from the evidence, Barnes' requested instructions certainly did not present that theory to it. The instructions merely indicated that if there were errors in the tax returns, the jury should adjust the returns for those errors. Nothing in the instructions actually given by the district court precluded Barnes from arguing that some reported income should have been omitted. In fact, the court's instructions squarely put the burden on the government to show that Barnes had actually failed to report income. Similarly, none of the instructions prevented Barnes from arguing that he was entitled to a deduction for interest payments. The court explicitly instructed the jury that it should credit Barnes with any unclaimed deductions.

26

We agree that the theories which purportedly supported Barnes' claims were complex. However, that merely underscores the fact that the requested instructions focused on issues that were collateral to Barnes' defense of carelessness. The errors they refer to are quite technical and may reflect tax advisors' misunderstandings about various legal theories. The instructions do not cast any light on Barnes' own mental state--the primary issue before the jury. Furthermore, the instructions could do nothing to reduce the admitted amounts of unreported income to a insubstantial level. In short, the district court did not err when it refused to give the requested instructions on nontaxable reimbursements and installment sale contracts.

27

E. Specific Unanimity Instruction.

28

At the outset, we note that Barnes did not ask the court to give a specific unanimity instruction. Barnes only asked the judge to give the jury a special verdict form on which the jury had to indicate the exact amount of income that it found Barnes had not reported for each year at issue. Since Barnes did not request a specific unanimity instruction or object to the court's instructions on that subject, our review is limited to whether the district court committed plain error. United States v. Bryan, 868 F.2d 1032, 1038-39 (9th Cir.), cert. denied, --- U.S. ----, 110 S.Ct. 167, 107 L.Ed.2d 124 (1989). Here, the district court refused to use the verdict form and instead asked the jury to indicate solely whether it found Barnes guilty or not on each of the five charges. The district court did not err.

29

A defendant is not entitled to a specific unanimity instruction unless there is a genuine possibility that a jury will be confused by a general unanimity instruction. Bryan, 868 F.2d at 1039; United States v. Bordallo, 857 F.2d 519, 528-29 (9th Cir.1988), am'd on other grounds, reh'g denied, 872 F.2d 334 (9th Cir.), cert. denied, --- U.S. ----, 110 S.Ct. 71, 107 L.Ed.2d 38 (1989).

30

The government need not establish an exact amount of unreported income in order to prove tax evasion. United States v. Pisello 877 F.2d 762, 766 (9th Cir.), stay denied, --- U.S. ----, 110 S.Ct. 316, 107 L.Ed.2d 307 (1989); United States v. Thompson, 806 F.2d 1332, 1336 (7th Cir.1986); United States v. Stone, 770 F.2d 842, 845 (9th Cir.1985). When the government proves tax evasion using a specific item approach, it need only prove that the defendant did not report an amount of income. Marabelles, 724 F.2d at 1378; Marks v. United States, 391 F.2d 210, 211 (9th Cir.), cert. denied, 393 U.S. 839, 89 S.Ct. 116, 21 L.Ed.2d 109 (1968). Therefore, the jury did not need to determine an exact figure of unreported income for each year charged. That is particularly true in this case since Barnes conceded that he did not report the specific items listed by the government. It is clear that the only real issue in this case was Barnes' mental state.

31

Furthermore, the district court instructed the jury that it had to consider each count separately and that it must reach a unanimous verdict for every separate count. Barnes has not shown what facet of the case would have confused the jury or why the jury could not have adequately reached a verdict without first agreeing on an exact amount of unreported income for each year. The district court did not plainly err when it refused to give the jury Barnes' special verdict form.

CONCLUSION

32

The district court did not err when it instructed the jury on bribery and fabrication of evidence. The district court did not abuse its discretion when it instructed the jury on missing witnesses. Furthermore, the district court properly refused to give an instruction on nontaxable reimbursements and on installment sales. Finally, the district court did not err when it refused to use Barnes' special verdict form.

33

AFFIRMED.

*

This disposition is not appropriate for publication and may not be cited to or by the courts of this circuit except as provided by 9th Cir.R. 36-3