United States v. Heller

¶5ANDERSON, Circuit Judge:

¶6Daniel Neal Heller appeals his conviction on three counts of tax evasion in violation of 26 U.S.C. § 7201. He bases his appeal on four aspects of his prosecution and trial. Because of the conclusions we reach below as to the jury charge and the misconduct issue, we reverse Heller’s conviction and remand for a new trial.

¶7I. FACTS

¶8Daniel Neal Heller is an attorney who has practiced law in Miami, Florida since 1950. For most of the time he practiced law he kept two separate bank accounts which were related to his practice, a "personal” account which consisted of the income he claimed was earned at the time it was deposited into the personal account, and from which he made payments for things both of a personal nature, such as artwork for his home, and for business and office expenses. Heller’s other account was an attorney trust account. This account contained, among other kinds of client funds, some nonrefundable retainers which had been paid to him by clients and some legal fees'for cases in which Heller had not completed work. Heller sometimes borrowed funds from his attorney trust account for his personal use and in some instances repaid such loans. Heller did not report as taxable income any of the funds in his attorney trust account, including the amounts in the account which he borrowed. Instead, Heller claims that once the income was earned, i.e., once he completed work on a case whose fee had been deposited into the trust account, he shifted the money from his attorney trust account to his personal account and then reported the money as income. In support of this method, Heller relied at trial upon Cohen v. Commissioner, 24 T.C.Mem.Dec. (CCH) 728 (1965), a case in which the Tax Court approved a method of tax reporting by an attorney which was factually similar to Heller’s. Based on this theory, Heller requested that the court charge the jury that it was not criminal for a lawyer to report a fee when the work to be done for the fee was completed. The trial judge refused to give the requested charge, and instead gave the jury the following instructions which were related to the Cohen issue:

Mr. Heller contends that the tax laws were uncertain in 1975, 1976 and 1977. If you find credible evidence that the law was uncertain, you may consider that evidence on the question of whether Mr. Heller acted with improper intent. You may consider this evidence as bearing on Mr. Heller’s intent even if he had no specific knowledge of the United States Tax Court case which Mr. Caplin [sic] brought to your attention.

Mr. Heller’s position is that he believed that he could permissibly report his fees in the year when the work was completed. And as I have already instructed you, unless the government proves beyond a reasonable doubt that Mr. Heller acted in the belief that his returns were improperly filed, you must acquit.

¶9In addition to the legal uncertainty defense, Heller asserted a reliance defense, *152claiming that his accountant1 was fully aware of his method of reporting his income and had approved it. At trial, the accountant testified that he had been unaware of Heller’s method of dealing with earned and unearned fees until March 8, 1979. Heller claims that the accountant’s testimony at his trial on this issue was false and was the result of threats of prosecution made against him by the two IRS special agents, Plave and Lopez, who were in charge of the criminal investigation of Heller. Both of these IRS agents had been involved in an IRS program called “Operation Leprechaun” which had attracted the attention of one of Heller’s clients, The Miami News. During the course of the exposé of “Operation Leprechaun” by the newspaper, some legal proceedings occurred which involved Heller directly with IRS agents, and particularly with Agent Lopez, with whom Heller had a heated exchange of words in his office. When Heller learned that Agents Plave and Lopez had been assigned to his criminal investigation, he requested that they recuse themselves in favor of impartial investigators. They refused. Prior to meeting with Heller, Agents Plave and Lopez met with Heller’s accountant, at which time they suggested that the accountant could be a “defendant in a criminal case.” Heller claims that this alleged threat was made to induce his accountant to perjure himself when called as a defense witness, thus precluding Heller’s reliance defense. Heller claims that this intimidation of his defense witness constitutes governmental misconduct which requires reversal. Heller also claims that the trial judge should have set aside the verdict and granted a new trial because of certain character evidence which the prosecutor introduced at Heller’s trial and highlighted in her rebuttal summation to the jury.

¶10II. DISCUSSION

¶11A. Governmental Misconduct

¶12Heller claims that he was deprived of his Fifth and Sixth Amendment rights to present testimony in his defense because IRS agents Lopez and Plave intimidated the accountant who prepared Heller’s tax returns for the years at issue. In support of this contention, Heller draws our attention to the fact that immediately following Plave’s admitted attempt to intimidate the accountant, the accountant caused his attorney to communicate to Plave that the accountant would provide testimony against Heller and that he wanted to be a witness and not a defendant.

¶13Heller cites a number of cases in which criminal convictions have been reversed as a result of prosecutorial or judicial interference with the testimony of a defense witness. Webb v. Texas, 409 U.S. 95, 93 S.Ct. 351, 34 L.Ed.2d 330 (1972) (where trial judge singled out a sole defense witness and admonished the witness at length as to the dangers of perjury and the witness thereafter refused to testify on behalf of the defense, defendant was deprived due process of law); United States v. Hammond, 598 F.2d 1008 (5th Cir.1979)2 (holding that government statement to a witness that they would have “nothing but trouble” if they testified on behalf of defense requires reversal); United States v. Morrison, 535 F.2d 223 (3d Cir.1976) (prosecutor who pointedly warned defense witness of the dangers of testifying falsely in favor of the defendant, inducing witness to refuse to answer certain questions on the ground that the answers might incriminate her, deprived defendant of evidence he expected to place before the jury and therefore denied him his Sixth Amendment rights); United States v. Thomas, 488 F.2d 334 (6th Cir.1973) (government’s threat to prosecute a witness if he chose to testify *153could not later be corrected by mere statement by the government that they would not prosecute the witness).

¶14In testimony given both at the instant trial and at Heller’s previous trial, IRS agent Plave acknowledged that on Friday, July 13, 1979, he threatened the accountant. Plave indicated to Heller's accountant that the accountant might be aiding and assisting Heller in tax fraud and indicated that the accountant could be a defendant as well as Heller. Plave also acknowledged that he intended to scare the accountant.3 It is also undisputed that on the following Monday, July 15, 1979, the accountant’s lawyer called Plave to say that the accountant would provide testimony against Heller and that he wanted to be a witness rather than a defendant. Finally, the record in this case is also clear that the accountant testified falsely against Heller. The accountant testified that Heller had told him that the monies deposited in his trust account were monies belonging to his clients, and that he had permission from the clients to borrow therefrom, and that the trust account might be in violation of Florida Bar Rules, but the trust account was a matter between Heller and his clients and was “not [the accountant’s] concern.” The accountant also testified that he had not known anything about Heller’s alleged case-closed method of accounting, and that he had not explained that method to IRS Agent Kaplan during the regular course of her civil tax audit. In other words, the accountant’s testimony was that Heller had concealed facts from him during the preparation of the returns, that he had not approved of Heller’s case-closed method of accounting, and that he had not even heard of the method until March 8, 1979. The testimony and records of IRS Agent Kaplan demonstrate that the accountant’s testimony was not true. At least by December 27, 1977, the date of the second meeting between Kaplan and the accountant during the civil tax audit, Kaplan’s testimony and records indicate that the accountant told her that the monies in the trust account were advances from clients toward fees for work to be done in the future. Most significantly, on December 7, 1978, or January 16, 1979, long before the accountant testified he knew, the accountant told Kaplan about Heller’s case-closed method of accounting.4 Although there is other evi*154dence,5 the foregoing undisputed evidence establishes that the accountant's testimony was false in very important respects, i.e., his knowledge of the case-closed method.

¶15We conclude that Heller has been deprived of an important defense witness by substantial interference on the part of the government. Under these unique circumstances, Heller is entitled to a new trial.6

¶16B. The Requested Instruction

¶17Heller claims that he was entitled to a jury instruction to the effect that if the jury found he was following the case-closed method he had not committed a crime. We agree.

¶18“It is settled that when the law is vague or highly debatable, a defendant — actually or imputedly — lacks the requisite intent to violate it.” United States v. Critzer, 498 F.2d 1160 (4th Cir.1974), cited with approval in United States v. Garber, 607 F.2d 92, 98-99 (5th Cir.1979) (en banc). Heller claims that the uncertainty in the law relevant to his case is evidenced by Cohen v. Commissioner, 24 T.C.Mem.Dec. (CCH) 728 (1965), a case in which the Tax Court approved a case-closed method of reporting advance payments to an attorney of costs and fees. Heller’s argument is supported *155by precedent in the Supreme Court and this circuit. James v. United States, 366 U.S. 213, 81 S.Ct. 1052, 6 L.Ed.2d 246 (1961), was construed by our Garber decision and the Fourth Circuit’s decision in Critzer as holding that the requisite element of intent could not be proved when the law was uncertain or cast in doubt by prior court decisions. The Former Fifth Circuit adopted this reasoning in United States v. McClain, 593 F.2d 658 (5th Cir.), cert. denied, 444 U.S. 918, 100 S.Ct. 234, 62 L.Ed.2d 173 (1979), in which we held that willfulness could not be proved when the area of conduct was not proscribed in reasonably certain terms, and in United States v. Garber, in which we remanded a case where the trial judge had denied a defendant the opportunity to present a legal uncertainty defense.

¶19Here, although Heller was allowed to present an uncertainty defense, he was denied the appropriate jury instruction. The Cohen case was sufficient, as a matter of law, to make it inappropriate to impose criminal liability for following the case-closed method of reporting the advance payment to an attorney of costs and fees. Therefore, if Heller followed such a method, or believed in good faith he was following the method, criminal liability cannot be imposed upon him. The jury should have been charged accordingly.

¶20The government argues that the Cohen case is distinguishable because it involved advance costs rather than fees, because such advance costs were burdened with an obligation as to how they could be used, and because in any event Heller did not actually follow the case-closed method.

¶21The Cohen case addressed the civil tax liability of an attorney whose principal client was Nationwide Insurance Company. Nationwide advanced to Cohen $100 for each common pleas court case and $50 for each county court case which he handled. Cohen deposited these advances to his business bank account and commingled them with his other funds.

¶22The first distinction urged by the government — i.e., that Cohen involved only advance costs rather than fees — is not factually correct. While it is true that the parties were motivated to initiate the arrangement for advancing payments because of the attorney’s shortage of funds to meet litigation costs, and it is also true that Nationwide characterized the payments as advance costs; on the other hand, the taxpayer showed the advances as received on account of his fee, and the opinion of the Tax Court clearly treated the advances as in part advances of fees.

¶23The government’s second distinction also fails. While the syllabus to the opinion does suggest that the advances were burdened with an obligation as to use, the opinion itself makes it clear that the advances were actually commingled with taxpayer’s own funds and the only strings or burdens mentioned by the Tax Court were that the advances would not become income until “each particular case was completed” and billed. Similarly, Heller claims that he deferred recognition until the work was completed.

¶24The government’s final distinction7 — i.e., that Heller did not follow the case-closed method in any event — is not relevant to the issue of whether Heller was entitled to the requested instruction. There was evidence to support Heller’s claim that he did follow the method, and therefore Heller was entitled to a proper instruction on his theory of defense.

¶25Of course, there was also evidence to support the government’s position that Heller did not actually follow the case-closed method and that his claim to have used the method was a ruse for tax evasion. For that reason, Heller was not enti*156tied to a judgment of acquittal notwithstanding the verdict. That issue — i.e., Heller’s intent to follow the case-closed method — is a question of fact for the jury. United States v. Garber, 607 F.2d at 97; United States v. Smalley, 754 F.2d 944, 949 (11th Cir.1985). Since there was a general verdict, we cannot know whether the jury concluded that Heller never intended to follow the case-closed method; or whether the jury erroneously concluded that, although Heller followed the case-closed method, that method was so clearly illegal that Heller was guilty of criminal intent. We therefore remand so that a properly instructed jury can determine guilt or innocence.

¶26C. Remaining Issues

¶27Heller further claims that the prosecutor’s presentation of certain testimony concerning questionable deductions which he had taken in other years and other testimony in the same vein and the prosecution’s comments in rebuttal summation deprived him of a fair trial. The admission of the evidence in question does not meet the abuse of discretion standard necessary for a reversal on this issue, nor do we find the prosecutor’s comments in rebuttal summation to be so highly prejudicial as to require reversal on this issue.

¶28REVERSED IN PART AND REMANDED.