Bad Act Evidence Relevant to the Elements of the Crime (7/21/11)

Federal Rules of Evidence ("FRE") 404 provides:

Rule 404. Character Evidence Not Admissible To Prove Conduct; Exceptions; Other Crimes

(a) Character evidence generally. Evidence of a person's character or a trait of character is not admissible for the purpose of proving action in conformity therewith on a particular occasion, except:

(1) Character of accused. In a criminal case, evidence of a pertinent trait of character offered by an accused, or by the prosecution to rebut the same, or if evidence of a trait of character of the alleged victim of the crime is offered by an accused and admitted under Rule 404(a)(2), evidence of the same trait of character of the accused offered by the prosecution;

(2) Character of alleged victim. In a criminal case, and subject to the limitations imposed by Rule 412, evidence of a pertinent trait of character of the alleged victim of the crime offered by an accused, or by the prosecution to rebut the same, or evidence of a character trait of peacefulness of the alleged victim offered by the prosecution in a homicide case to rebut evidence that the alleged victim was the first aggressor;

(3) Character of witness. Evidence of the character of a witness, as provided in Rules 607, 608, and 609.

(b) Other crimes, wrongs, or acts. Evidence of other crimes, wrongs, or acts is not admissible to prove the character of a person in order to show action in conformity therewith. It may, however, be admissible for other purposes, such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident, provided that upon request by the accused, the prosecution in a criminal case shall provide reasonable notice in advance of trial, or during trial if the court excuses pretrial notice on good cause shown, of the general nature of any such evidence it intends to introduce at trial.

Given the limitations in 404(a), the Government will try to introduce so-called "bad act" evidence under 404(b) to get the bad acts before the jury because it assists in obtaining a conviction. In United States v. Maxwell, 643 F.3d 1096 (8th Cir, 2011), here, the Court addresses the admission of bad act evidence which might be characterized as subject to Rule 404(b) but which relates to the proof of the charged crime, thus avoiding Rule 404(b). The Eight Circuit first summarizes the nature of the claim:

Following a seven-day-long jury trial, Mark David Maxwell was convicted of one count of conspiracy to defraud the United States and two counts of aiding and assisting in the preparation of a false tax return. At trial, the government offered—without objection—evidence that Maxwell had failed to file personal income-tax returns from 2002 through 2007. Maxwell appeals, arguing that his personal filing history was impermissible specific-act character evidence, see Fed. R. Evid. 404(b), which the district court1 should have excluded or, at minimum, limited to a proper, non-propensity purpose, see Fed. R. Evid. 105.

The relevant background is as follows. Maxwell and his co-conspirators were in the business of preparing income-tax returns. They had various "schemes" to zero out or avoid filing relevant Forms 1040. They undertook various acts to avoid the IRS' detection of their schemes and their own tax liabilities. So the Government indicted.

The question presented is whether the admission of Maxwell's personal filing -- nonfiling -- history was (i) relevant to the conspiracy charge and thus admission was probative on the charge or (ii) impermissible "bad acts" evidence under Rule 404(b). Maxwell claimed that the evidence served only to invite the jury to convict because he was a tax deadbeat and not because he was guilty of the crime charged. The Court noted, however, that in fact that history was relevant and could be probative on the conspiracy crime charged.

Quoting the history of Rule 404(b), the Court noted that the filing history was "intrinsic" to the charged conspiracy offense of hiding their activity and defeating the lawful function of the IRS. The Government has the burden of proving the elements of the crime. For conspiracies, this requires the Government to prove elements not present in nonconspiracy cases -- specifically an agreement, voluntarily and intentionally reached, with the purpose of violating the law." Thus, reasoned the court:

In order to meet its burden at trial, the government was required to offer evidence of the existence of a conspiracy and Maxwell's intention to be a participant in it. Accordingly, evidence "tend[ing] to make the existence" of a conspiracy "more probable" was relevant in that it helped to establish an element of the charged offense. Fed. R. Evid. 401. And Maxwell's tax-filing history helped to demonstrate that he was working in concert with the other conspirators. As Maxwell's co-conspirator, Leiter, put it: The group was working hard "to drop off the [IRS's] radar screen." Trial Tr. at 802:16-21. The conspirators' tax-filing histories were but one reflection of that goal.

The Court then noted that, consistent with their goal of staying off the IRS's radar screen (an object of the Klein conspiracy), the conspirators had earlier filed returns as required but stopped doing so by 2003.

That each had filed some form of return prior to 2001 but had all stopped filing any form of return by 2003 was evidence of their mutual cooperation. That history was therefore relevant, via valid, non-propensity reasoning, to a material issue in the case.

The Eight Circuit distinguished other cases not involving a conspiracy charge where the bad acts (here filing history) were not related to the elements of the crime charged and thus could be treated as "other" bad acts.

Maxwell is thus a reminder that Rule 404(b) requires careful focus on the reason that the bad act evidence is proffered.

Addendum on 7/22/11:  The Eighth Circuit issued another 404(b) / "bad acts" opinion on 7/21/11, United States v. McLain, 646 F.3d 599 (8th Cir. 2011).  I can't find an easy link to it, so will just summarize it here.  The defendant ran a temporary staffing agency for nurses.  The defendant did not treat them as employees for federal tax purposes and hence did not file Forms 941.  He was indicted for "for failing to account for and pay employment taxes in violation of 26 U.S.C. § 7202." Discussing the his objection to introduction of acts evidence, the Court said:

Section 7202 is violated only when an employer "willfully fails" to account for and pay employment taxes, 26 U.S.C. § 2702, and at trial, McLain argued that he believed he could treat the nurses as independent contractors rather than employees. Minnesota law, however, requires nurse staffing agencies like Kirpal Nurses to certify that they are treating nurses as employees, not independent contractors. Minn. Stat. § 144A.72., Subd. 1(9). The government sought to undermine McLain's defense and prove his willfulness by introducing evidence of his compliance with this Minnesota statute. The district court agreed that such evidence was highly relevant to intent and allowed the government to introduce evidence about the Minnesota statute, its terms, the notice McLain received about it, and the forms he filed under the statute to certify his compliance with it.


McLain argues that the evidence relating to his compliance with Minnesota law was irrelevant to the federal charges and its potential prejudice substantially outweighs its probative value. We agree with the district court that such evidence was highly relevant to McLain's willfulness, a necessary element of the crime charged, 26 U.S.C. § 2702. In addition, because McLain's beliefs were a central issue at trial, the district court did not abuse its discretion in finding the evidence highly probative and not outweighed by any unfair prejudice.

As I have noted elsewhere, the Government is more aggressively pursuing Section 7202 violations.  See Chipping Away at Potential 7202 Defenses (4/29/09).  In this case, a subtheme seems to be some type of tax minimilist or protest (I surmise that from the amicus curiae; the amicus.curiae were: Freedom Law School, We the People Foundation for Constitutional Education, Inc., Amicus on Behalf of Appellants; nothing wrong with being a minimalist or protester per se but these people often cloak their old-fashioned tax cheating in slogans of supposed individual freedom and constitutional rights and, in the course of their tax cheating, do some pretty bad acts for which they hope to escape punishment by claiming a good faith believe in their slogans; I suspect there may be a lot of that in the case that does not come out in the opinion because not necesary to resolve the issues raised on appeal, although the extreme claims are suggested by the defendant's claim to "give" his tax deductions to other taxpayers.).