Most tax crimes have an explicit statutory element of willfulness, interpreted to mean the voluntary, intentional violation of a known legal duty. Certainly, the tax perjury counts of conviction required willfulness. The FBAR count of conviction, although not specifically tax, also has a willfulness element. The acquitted conspiracy count does not have an explicit element of willfulness, but as interpreted the key mens rea element substantially overlaps with willfulness. See John A. Townsend, Tax Obstruction Crimes: Is Making the IRS’s Job Harder Enough?, 9 HOUS. BUS. & TAX L.J. 260 (2009), here. Kerr argued this overlap between the acquitted conspiracy count and the convicted tax perjury and FBAR counts made the convictions defective. Here is the court's entire discussion:
B. Willful Intent
Kerr argues that the "overt acts of the substantive offenses were required elements of the conspiracy count." (Doc. 314 at 10). Kerr claims that the Government failed to prove "any other knowledge or intent of illegality except for that required to prove the conspiracy–that the Defendants did this to defraud the IRS." (Id. at 11). Because the jury acquitted Kerr of conspiracy, he alleges that the elements of the substantive counts cannot be proven; therefore, the government "failed to prove the required illegal intent." (Id. at 10).
"[I]t is well-established that 'inconsistent verdicts may stand, even when a conviction is rationally incompatible with an acquittal, provided there is sufficient evidence to support a guilty verdict.'" United States v. Suarez, 682 F.3d 1214, 1218 (9th Cir. 2012) (internal citations omitted). In this case, the jury was instructed that they must find Kerr acted "willfully" to be guilty of the substantive counts. (Doc. 287 at 25, 28). The jury could have acquitted Kerr of conspiracy for reasons unrelated to Kerr's intent. For example, the jury could have determined that the Government did not prove there was an agreement between the co-conspirators. The jury was properly instructed about Kerr's intent for the substantive counts; thus, by finding Kerr guilty, the jury found that Kerr acted willfully. Therefore, the Court denies Kerr's motion for judgment of acquittal or a new trial under this theory.Instruction on Deductible Expenses
Gross income less deductions yields taxable income. Positive taxable income in excess of the taxable income reported on the return is required for there to be a tax due and owing. Tax due and owing is an element of tax evasion. The defendants were not charged with tax evasion. Rather, they were charged and convicted of tax perjury relating to omitted gross income. Tax perjury does not have a requirement of tax due and owing. Nevertheless, Kerr wanted the jury to be instructed on deductible expenses thus reducing or eliminating tax due and owing in order to support his claim of lack of willfulness -- i.e., no motive to commit tax perjury if there is no tax due and owing. Here is the court's discussion:
J. Instruction on Deductible Expenses
Kerr claims that the Court failed to include the required jury instruction on deductible expenses. (Doc. 302 at 29). When reviewing a claim of error relating to jury instructions, the instructions must be viewed as a whole. United States v. Abushi, 62 F.2d 1289, 1299 (9th Cir. 1982). A trial judge is given substantial latitude in tailoring jury instructions so long as they fairly and adequately address the issues presented. United States v. James, 576 F.2d 223, 226 (9th Cir. 1978). In United States v. Marabelles, the Court addressed the issue of whether the defendant was entitled to an instruction regarding deductible expenses in a tax evasion and false return case. 724 F.3d 1374, 1382 (9th Cir. 1984). The defendant in that case requested an instruction related to unsubstantiated expenses that he claimed reduced his tax liability. Id. The Ninth Circuit Court of Appeals held that the district court's refusal to provide the defendant's instruction was not error because it would not have "materially affected the §7206(1) conviction since a tax deficiency is not an element of that crime." Id.
In the present case, Kerr does not cite to a specific instruction requested, or provide any factual or legal support for his argument. Looking at the instructions as a whole, the jury was instructed that they could consider a lack of tax due when determining willfulness. (Doc. 287 at 27). Furthermore, the gross income instruction defines gross income as "all income received before making any deductions allowed by law," which indicates that Defendants may be entitled to deduct expenses. (Id. at 38). These instructions fairly and adequately address the issue presented. Accordingly, the Court denies Kerr's motion for judgment of acquittal or a new trial under this theory.Confrontation Clause Argument
Quiel claimed that his Sixth Amendment right to confront the witnesses against him was denied because the Court did not allow him to "recross." Early in the trial, when Quiel's lawyer attempted to recross a witness, the court said:
"Well, that's called recross, which we don't permit. You had three follow-up." (Id.). Quiel's counsel, responded "Yes, Your Honor, in relationship to her questions." (Id.). In reply, the Court stated, "There's no such thing as recross examination. That will be denied." (Id.)As a result of this ruling, Quiel claimed, his lawyer's ability to deal with other witnesses was hampered because he knew he could not recross. Actually, as the court recounts in the opinion, the law relating the recross is not as clear cut than the wording of the original ruling -- "no such thing as recross examination.". The Confrontation Clause guarantees the right to recross if new matter, not within the scope of the direct and cross examination comes out on redirect examination. The court found that alleged new matter was already in play on the original direct and cross where the defendants had the opportunity to explore. Further, since these were prosecution witnesses in the case in chief, had the defendants wanted to question the witnesses further, they could have called and confronted the witnesses during the defendant's case.