Saturday, January 28, 2017

Sixth Circuit on Deliberate / Willful Ignorance Instruction as Harmless Error (1/28/17)

I posted a few days ago on willful blindness.  The Willful Blindness Concept -- What Does It Do? (Federal Tax Crimes Blog 1/23/17), here.  I had not yet picked up the Sixth Circuit decision in United States v. Asker, 2017 U.S. App. LEXIS 1057 (6th Cir.  2017) (unpublished), so I offer it here.  The defendant, Happy Asker, was convicted for conspiracy, tax perjury and tax obstruction.

Asker was a successful pizza chain owner and franchiser entrepeneur.  The DEA began a drug investigation based on credible tip information of individuals associated with the operation.  Based on the investigation, the DEA obtained a wiretap authorization.  The wiretap resulted in additional information that was used to obtain a search warrant.  The grand jury thereafter charged Asker and some associates  with income tax offenses related to income and payroll taxes for which Asker was ultimately convicted.

Asker raise several  arguments on appeal.  I deal only with the argument related to the willful blindness instruction.  The Court sets up the background (bold-face supplied by JAT):
As trial neared its conclusion, the government submitted proposed jury instructions that included an instruction for "Deliberate Ignorance." The instruction, which was modeled after the Sixth Circuit Pattern Criminal Jury Instruction § 2.09, read as follows: 
(1) Next, I want to explain something about proving a defendant's knowledge. 
(2) No one can avoid responsibility for a crime by deliberately ignoring the obvious. If you are convinced that the defendant deliberately ignored a high probability that the returns at issue that the defendant filed or aided or assisted in filing were false, then you may find that the defendant knew that they were false. 
(3) But to find this, you must be convinced beyond a reasonable doubt that the defendant was aware of a high probability that the claims were false, fictitious or fraudulent, and that the defendant deliberately closed his eyes to what was obvious. Carelessness, or negligence, or foolishness on his part is not the same as knowledge, and is not enough to convict. This, of course, is all for you to decide. 
Asker objected to the giving of this instruction, arguing that the evidence in the record failed to satisfy the "factual predicate" necessary for the instruction to be given. Asker believed that the record reflected that his attention was focused elsewhere in the business during the perpetration of this tax fraud, not that he had "purposely contrived to avoid learning the truth." Nonetheless, Asker conceded that Sixth Circuit law suggested that the giving of such an instruction even where the factual predicate has not been met can only amount to harmless error. 
Judge Hood took Asker's objection under advisement, but ultimately gave the contested instruction to the jury. She, too, acknowledged that the giving of this instruction could only amount to harmless error in the Sixth Circuit, but further reasoned: 
[I]t can be given . . . when the Defendant claims lack of guilty knowledge or when the facts and evidence support an inference of deliberate ignorance[,] and there are some statements made during the course of the Government's proofs and by the Defendant that I think may raise a question about whether or not there was some inference of deliberate ignorance. 
I think it is also appropriate where the evidence establishes that the Defendant deliberately chose not to inform himself of critical facts[,] and the [c]ourt may find based on the Defendant's testimony that he didn't look to critical facts relative to the amount of his income and whether or not there was unreported gross receipts and underreporting of payroll paid by cash. 
In addition, I think whether the Government can prove willfulness or whether the Defendant's actions constitute deliberate ignorance are all for the jury to decide in this particular case. 
Consequently, Judge Hood gave the proposed instruction to the jury. At the conclusion of the nine-day trial, and with this proposed instruction in hand, the jury convicted Asker on all counts. The district court sentenced him to fifty months of imprisonment, and he brings this appeal.
The Sixth Circuit then discussed and rejected his argument as follows:

Lastly, Asker argues that the district court erred when it gave the government's proposed jury instruction on "deliberate ignorance." We review challenges to a jury instruction for an abuse of discretion. United States v. Mitchell, 681 F.3d 867, 876 (6th Cir. 2012). A jury charge is not an abuse of discretion unless it "fails accurately to reflect the law," United States v. Geisen, 612 F.3d 471, 485 (6th Cir. 2010), and reversal is not warranted unless "the instructions, viewed as a whole, were confusing, misleading, or prejudicial." United States v. Kuehne, 547 F.3d 667, 679 (6th Cir. 2008). 
"[T]he decision to give [the deliberate-ignorance] instruction is to be approached with significant prudence and caution . . . . Indeed, we have said that the instruction ought to 'be used sparingly.'" Mitchell, 681 F.3d at 876 (quoting Geisen, 612 F.3d at 486). It is an appropriate instruction where "(1) the defendant claims a lack of guilty knowledge; and (2) the facts and evidence support an inference of deliberate ignorance." Ibid. Thus, "the district court therefore must determine that there is evidence to support an inference 'that the defendant acted with reckless disregard of [the high probability of illegality] or with a conscious purpose to avoid learning the truth.'" Ibid. (alteration in original) (quoting United States v. Seelig, 622 F.2d 207, 213 (6th Cir. 1980)). 
At trial, the district court concluded that the instruction was appropriate because "there are some statements made during the course of the Government's proofs and  by the Defendant that I think may raise a question about whether or not there was some inference of deliberate indifference." Asker argues that the district court conflated mere "absence of knowledge — his defense — with avoidance of knowledge," thus diluting the government's burden of proof by permitting jurors to "pile inference on inference" to find that he met the knowledge requirement of the statute. Appellant's Br. at 57-59. The government argues that this "circumstantial evidence" distinction is unfounded in prior case law, and in any event is swallowed up by the harmless-error doctrine. Appellee's Br. at 54-55.   
The record and the case law both favor the government's position. Asker testified that he was not aware that both his tax returns and the tax returns for Happy's Pizza were false, satisfying the first element for an instruction on "deliberate ignorance." The remainder of the evidence on the record seems to support an "inference of deliberate ignorance." Mitchell, 681 F.3d at 876. With respect to the invalid tax returns, Asker claims that he signed them without going over them with his accountant, and that other employees at Happy's Pizza were responsible for reviewing the corporate returns for accuracy. Asker similarly argues that his job required him to focus on big-picture business issues, leaving the management of individual stores to their franchisee-owners. His argument is analogous to the one rejected by this court in Mitchell, where we permitted a deliberate-ignorance instruction where the defendant claimed that "despite his long tenure in the firm, he paid little attention to the clients of his partners and knew little about the actual running of the law firm." Id. at 878. Just as in Mitchell, where the defendant consistently accepted payments from his firm's profit-sharing scheme "without knowing where they were coming from," Asker drew his share of the weekly cash profits from the stores he owned while claiming ignorance of the fraudulent scheme that made those inflated profits possible. Ibid. Additionally, Asker hired the accountants whom he alleged were responsible for the fraud, and worked from the corporate office that the evidence indicated actively monitored the finances of each individual Happy's Pizza location. Ibid. (finding a deliberate-indifference instruction appropriate where the defendant had access to the firm's financial accounts). Taken together, this evidence is sufficient to support an instruction of "deliberate indifference." 
Asker's argument that the deliberate-ignorance instruction diluted the government's burden also fails. We have previously held that the presentation of "deliberate ignorance as an alternative to actual knowledge, either of which satisfies the statutory knowledge requirements" does not run the risk that the jury will misunderstand the government's burden of proving guilt beyond a reasonable doubt. United States v. Patel, 651 F. App'x 468, 472 (6th Cir. 2016). 
In any event, any error in the giving of the instruction is harmless. This court has held that even when unsupported by the evidence, "a deliberate ignorance instruction that properly states the law is harmless error." United States v. Rayborn, 491 F.3d 513, 520-21 (6th Cir. 2007). Consequently, we "will not overturn a jury's verdict so long as sufficient evidence supports one of the grounds for conviction" on each count. Ibid. This conclusion rests on the notion that an instruction on deliberate ignorance, "by its own terms, only applies when there is sufficient evidence to support a finding of deliberate ignorance beyond a reasonable doubt." United States v. Mari, 47 F.3d 782, 785 (6th Cir. 1995). Thus, "even if we assume that there was insufficient evidence to justify giving the instruction, the jury, in following the instruction, must not have convicted the defendant on the basis of deliberate ignorance." Ibid. Stated differently, as long as the instruction accurately states the law and the record reflects sufficient evidence to convict the defendant on alternative grounds (such as actual knowledge), we assume that the jury convicted the defendant on those alternative grounds. To conclude otherwise, and find that the jury actually convicted the defendant on a theory of deliberate ignorance despite insufficient evidence, "we would have to assume that the jury ignored the jury instructions." Ibid. Such an inference "flies in the face of a fundamental tenet of our jury system and has broad detrimental implications we are unwilling to embrace." United States v. Stone, 9 F.3d 934, 940 (11th Cir. 1993). Here, the instruction given conforms with Sixth Circuit Pattern Criminal Jury Instruction § 2.09, and the government presented substantial evidence suggesting that Asker was actually aware of the tax fraud that Happy's Pizza was perpetrating. Therefore, even if we did consider the instruction to be unsupported by the record, the error would be harmless in Asker's case.
JAT Comments:

1.  A picky point, but under the outline paragraph numbered V, the is an A section but no B section.  Probably just an oversight, but some of you may have wondered where the B section was.

2.  The willful ignorance instruction -- here called deliberate ignorance -- is dangerous as Judge Posner has so forcefully noted in United States v. Giovanetti, 919 F.2d 1223, 1228-1229 (7th Cir. 1990) (referring to the instruction as an ostrich instruction), here.  Hence, it seems to me, that the concession by the defendant's attorney that giving the instruction would be harmless error is odd.  He may have been compelled to concede that based on Sixth Circuit cases, but I think he should have strongly objected to the casual way  the notion is presented.  The notion almost invites the trial court to be cavalier in giving the instruction on sort of a no harm, no foul principle.

3.  Note how the court of appeals craftily justifies the giving the instruction even if it were error to do so.  Well, the reasoning goes, if the jury listened carefully to the instruction, it would have known not to apply it if it did not apply.

4.  Note that the Court views the deliberate ignorance instruction as creating guilt even in the absence of the knowledge required by the statute.  As I noted in the prior blog, that may be where the law is, but it is odd that the Court's can take the statutorily mandated requirement of knowledge to be met by something that is not knowledge.

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