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Summary: NOT RECOMMENDED FOR PUBLICATION File Name: 20a0375n.06 Case Nos. 19-5417 & 19-5418 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT FILED Jun 24, 2020 ) DEBORAH S. HUNT, Clerk ) UNITED STATES OF AMERICA, ) ) ON APPEAL FROM THE UNITED Plaintiff-Appellee, ) STATES DISTRICT COURT FOR ) THE EASTERN DISTRICT OF v. ) KENTUCKY ) BETTY TAYLOR; HARRY TAYLOR ) OPINION ) Defendants-Appellants. ) ) BEFORE: NORRIS, DONALD, and NALBANDIAN, Circuit Judges. NALBANDIAN, Circuit Judge. Husband and wife, Harry
Summary: NOT RECOMMENDED FOR PUBLICATION File Name: 20a0375n.06 Case Nos. 19-5417 & 19-5418 UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT FILED Jun 24, 2020 ) DEBORAH S. HUNT, Clerk ) UNITED STATES OF AMERICA, ) ) ON APPEAL FROM THE UNITED Plaintiff-Appellee, ) STATES DISTRICT COURT FOR ) THE EASTERN DISTRICT OF v. ) KENTUCKY ) BETTY TAYLOR; HARRY TAYLOR ) OPINION ) Defendants-Appellants. ) ) BEFORE: NORRIS, DONALD, and NALBANDIAN, Circuit Judges. NALBANDIAN, Circuit Judge. Husband and wife, Harry ..
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NOT RECOMMENDED FOR PUBLICATION
File Name: 20a0375n.06
Case Nos. 19-5417 & 19-5418
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
FILED
Jun 24, 2020
) DEBORAH S. HUNT, Clerk
)
UNITED STATES OF AMERICA, )
) ON APPEAL FROM THE UNITED
Plaintiff-Appellee, ) STATES DISTRICT COURT FOR
) THE EASTERN DISTRICT OF
v. ) KENTUCKY
)
BETTY TAYLOR; HARRY TAYLOR ) OPINION
)
Defendants-Appellants. )
)
BEFORE: NORRIS, DONALD, and NALBANDIAN, Circuit Judges.
NALBANDIAN, Circuit Judge. Husband and wife, Harry and Betty Taylor, seek
resentencing and Harry Taylor seeks reversal of his conviction in this consolidated appeal. A jury
convicted both Taylors of conspiracy to commit mail and wire fraud, stealing money from the
Social Security Administration (SSA), and falsifying a material fact in relation to the delivery and
payment of a health care service. On appeal, Betty argues that the district court improperly applied
a two-level enhancement for obstruction of justice under U.S.S.G. § 3C1.1 and improperly denied
her a mitigating-role downward adjustment under U.S.S.G. § 3B1.2. Harry argues that the district
court should not have allowed evidence about his previously terminated Supplemental Security
Income (SSI) benefits under Federal Rule of Evidence 404(b). And he argues that he should have
received a downward departure under U.S.S.G. § 5H1.4 for his health concerns. We AFFIRM the
Case No. 19-5417/5418, United States v. Taylor
district court’s decisions on Betty’s claims and Harry’s first claim and DISMISS Harry’s second
claim.
I.
Around 2005 the Taylors and Harry’s brother, Gary Taylor, began running a coal brokerage
company, Taylors Cobra #1 Coal Company, Inc. (Cobra Coal). The company, at a basic level,
bought coal and resold it for a profit. When the Taylors started the company, they listed Betty as
the owner. Betty signed away the company to their daughter, at least on paper, in 2008. The
government implied that the Taylors did this so they could appear eligible for SSI and Kentucky
Medicaid1 because they would seem to have minimal assets. Harry had been receiving benefits
from 2005 to 2006, but the SSA terminated his benefits when it found out his wife had “excess
resources” from the company. The evidence at trial revealed that Harry ran much of the day-to-
day coal business, and Betty maintained the banking side, even when Harry received benefits.
Betty deposited and withdrew money and maintained the checks. An employee with the SSA’s
Office of the Inspector General testified about a statement that Betty’s daughter signed in which
she acknowledged that she and Betty did the “bookkeeping.” (R. 164, Trial Tr. (Day 3), PID
1509.) So Harry and Betty still had plenty of access to Cobra Coal’s resources until the business
closed around 2013.
The Taylors were supposed to wait thirty-six months after transferring the assets to their
daughter in 2008 before receiving SSI again, but the evidence showed that they waited less than a
year before reapplying, sending in multiple applications between 2009 and 2012. The SSA finally
awarded them benefits again in 2012, and the benefits they received from 2012 and after were the
1
As noted during trial by an SSA employee located in Kentucky, “[w]ith Kentucky, SSI is an
automatic approval for the Medicaid.” (R. 163, Trial Tr. (Day 1), PID 1390.) So when the Taylors
applied and were approved for SSI, they then started receiving Kentucky Medicaid too.
2
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ones at issue. The jury, by convicting, found that the Taylors made false representations to the
SSA about their involvement with Cobra Coal and their access to its assets during and after 2012.
This meant the Taylors appeared to qualify for SSI and Kentucky Medicaid benefits, even though
they had access to excess resources.
A grand jury in 2016 charged Harry, Betty, and their daughter with conspiracy to commit
mail and wire fraud, Harry and Betty with stealing money from the SSA, and Harry and Betty with
“falsify[ing] and conceal[ing] a material fact in connection with the delivery and payment” of
Kentucky Medicaid. (R. 1, Indictment, PID 1–8.) The government’s theory was that the Taylors
made a “sham transfer” to their daughter when they realized they could not qualify for SSI benefits
with their excess resources from the company. (R. 160, Openings, PID 1006–10.) To the
government, the transfer was a sham because the Taylors still ran the business and accessed its
funds and assets without any change. Thus, they were ineligible for SSI and Kentucky Medicaid.
The defense, in part, argued that the company had no excess resources because the company made
no profit. So the Taylors were still eligible for SSI and Kentucky Medicaid.
Before trial, the government notified the defense, as required by Federal Rule of Evidence
404(b)(2), that it intended to introduce “bad acts” evidence against Harry. Specifically it wanted
to introduce evidence that the SSA terminated Harry’s SSI benefits in 2006 because of Betty’s
excess resources from Cobra Coal. It also wanted to introduce evidence of correspondence and
acknowledgements between Harry and the SSA from 2006 to 2008, including an
acknowledgement in 2008 in which Harry agreed that the SSA had overpaid him in 2005 and 2006
when his wife had excess resources from Cobra Coal. The government argued that all this
evidence constituted res gestae evidence or fell under a Rule 404(b)(2) exception. The Taylors
argued in response that the evidence was not so “inextricably intertwined” with the 2012 acts to
3
Case No. 19-5417/5418, United States v. Taylor
constitute res gestae evidence, and none of the 404(b) exceptions applied. (R. 64, Motion in
Limine, PID 202–10.) Before trial, the district court heard argument and ultimately decided that
the government could admit the evidence to show knowledge or an absence of mistake. But the
district court told the government to not show references to Harry acquiring the 2005 to 2006
benefits fraudulently.
Two specific parts of Harry, Betty, and their daughter’s joint trial are relevant here. First,
the government presented the evidence of Harry’s 2006 termination of benefits, his later
correspondence, and his ultimate admission of overpayment and agreement to repay in 2008. The
district court gave a limiting instruction to the jurors that they should only use this evidence to
assess whether the Taylors may have known about the potential wrongfulness of their actions and
what their states of mind may have been. The government also showed that, from 2009 to 2012,
the Taylors applied for and were denied benefits several times. In 2012, the SSA finally awarded
them benefits again. As mentioned, this payment period from 2012 and on constituted the
timeframe at issue.
The second relevant part of trial occurred when the defense called Gary Taylor, Harry’s
brother, to testify. He ran much of the day-to-day operations of Cobra Coal with Harry. During
his testimony, Gary showed and talked about receipts from the company and said the amounts on
the receipts accurately reflected Cobra Coal’s purchases. But when Harry first handed the receipts
over to the initial investigator, they did not list those amounts. On cross-examination, Gary
admitted that Harry must have altered some receipts because the copies at trial suddenly included
dollar amounts that were not in the originals. Betty’s lawyer gave the altered receipts, which were
the defense exhibits Gary introduced, to the government during reciprocal discovery, sometime
after Harry had given the initial receipts to investigators.
4
Case No. 19-5417/5418, United States v. Taylor
The government then called Leonard Hendrickson to testify. He sold low-quality coal to
Cobra Coal. Leonard confirmed that someone altered the receipts that recorded the values of those
transactions. He sold coal to Cobra Coal for less than the receipts reflected. So the receipts made
it look like Cobra Coal spent more money than it did.
And other evidence supported that someone completely fabricated some receipts from the
business. The defense introduced receipts for work done by Junior Crase, a long-haul trucker. The
receipts reflected Cobra Coal’s payments to Crase, presumably for transporting coal. But the
government called Crase’s wife and a Bureau of Prisons representative who both testified that
those receipts could not be accurate because Junior Crase was in prison during the dates on the
receipts.
The jury convicted both Taylors on all counts related to them: (1) conspiracy to commit
mail and wire fraud in violation of 18 U.S.C. § 1349, (2) stealing money from the SSA in violation
of 18 U.S.C. § 641, and (3) falsifying a material fact in relation to the delivery and payment of a
health care service (Kentucky Medicaid) in violation of 18 U.S.C. § 1035(a)(1). The jury acquitted
the Taylors’ daughter on the conspiracy charge—the only charge against her.
At sentencing, the district court found that Harry and Betty obstructed justice by handing
the altered receipts over to the government, introducing the receipts into evidence, and/or not
objecting to the admission of the receipts. Specifically, Betty’s counsel gave receipts to the
government, but Betty’s counsel claims he had just copied the receipts before sending them the
government’s way. Betty did not give the receipts to him, he said. Betty also did not introduce
the receipts into evidence during trial. Harry’s attorney did. But Betty did not object to their
introduction. And it was a joint defense. So for both Harry and Betty the district court at
sentencing applied a two-level obstruction of justice enhancement under U.S.S.G. § 3C1.1. In
5
Case No. 19-5417/5418, United States v. Taylor
addition, the district court declined to apply a mitigating-role adjustment for Betty under U.S.S.G.
§ 3B1.2 for her alleged lesser involvement in the scheme and declined to apply medical downward
departures for either of them under U.S.S.G. § 5H1.4. The district court ultimately sentenced each
Taylor to prison for thirty months. They had to pay over $200,000 in restitution and would have
three years of supervised release. Both appealed.
II.
The Taylors each raise two issues on appeal. Betty argues that (1) the district court
improperly applied a two-level enhancement for obstruction of justice under U.S.S.G. § 3C1.1,
and (2) the district court should have applied a mitigating-role downward adjustment under
U.S.S.G. § 3B1.2. Harry argues that (1) under Federal Rule of Evidence 404(b), the district court
should not have admitted his earlier termination of SSI benefits, his later correspondence, and his
admission of overpayment, and (2) he was entitled to a downward departure for his medical issues
under U.S.S.G. § 5H1.4. We examine each issue in turn.
A.
Betty first argues that she should not have received a two-level sentence enhancement for
obstruction of justice under U.S.S.G. § 3C1.1. Our case law has shown inconsistencies for what
standard of review applies for this guideline. See United States v. Thomas, 933 F.3d 605, 608–10
(6th Cir. 2019) (discussing the “mixed messages on the standard of review for this guideline[]”).
In Thomas, we noted that we review legal interpretations of § 3C1.1 de novo and fact findings
related to § 3C1.1 for clear error.
Id. at 608.
But we did not decide what standard to use to “review
the application of the guideline to the facts—that is, the decision whether the historical facts rise
to the level of obstruction under § 3C1.1[.]”
Id. at 608–10
(emphasis added). On one hand, some
of our cases review de novo the application of § 3C1.1 to the facts.
Id. at 608 (collecting cases).
6
Case No. 19-5417/5418, United States v. Taylor
Others say clear error. Id. (same). And others apply both standards, “giv[ing] due deference to
the district court’s application of the guideline to the facts[.]”
Id. (quoting United States v.
Vasquez,
560 F.3d 461, 473 (6th Cir. 2009)). We left the “resolution of [that] standard of review
for another day” because the defendant’s challenge failed even under de novo review.
Id. at 610.
Here too, we find that we need not resolve the standard of review, because even under de novo
review, Betty’s claim fails. See United States v. Parsons, 798 F. App’x 922, 927 (6th Cir. 2020)
(noting the discrepancy described in Thomas and declining to decide the issue because the
challenge failed even under de novo review).
The obstructing justice sentencing enhancement applies if “the defendant willfully
obstructed or impeded, or attempted to obstruct or impede, the administration of justice with
respect to the investigation, prosecution, or sentencing of the instant offense of conviction[.]”
U.S.S.G. § 3C1.1. Conduct covered by this guideline includes “producing or attempting to
produce a false, altered, or counterfeit document or record during an official investigation or
judicial proceeding[.]” Id. § 3C1.1 cmt. n.4(C). “[T]he defendant is accountable for the
defendant’s own conduct and for conduct that the defendant aided or abetted, counseled,
commanded, induced, procured, or willfully caused.”
Id. § 3C1.1 cmt. n.9.
Here, a de novo interpretation of § 3C1.1 includes producing altered receipts to the
government and not objecting to the admission of those receipts by a co-defendant during trial,
since § 3C1.1’s commentary mentions producing an altered document “during an official
investigation or judicial proceeding” as an example. Id. § 3C1.1 cmt. n.4(C); see United States v.
Havis,
927 F.3d 382, 386 (6th Cir. 2019) (en banc) (Accompanying commentary helps interpret
the guideline unless the commentary is plainly erroneous or inconsistent with the guideline.).
7
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And we do not find that the district court clearly erred in its factual determination that Betty
would have known that someone altered these receipts. We have recently said that “in considering
whether a defendant had the requisite intent [for the § 3C1.1 enhancement], . . . [a] court may draw
all reasonable inferences from the defendant’s words and conduct, as well as other relevant
circumstances.” United States v. Sosa-Baladron, 800 F. App’x 313, 329 (6th Cir. 2020). The
district court here explained that the trial evidence included testimony that Betty held responsibility
for the financial aspects of Cobra Coal. She deposited funds, cashed checks, and withdrew money
from the account. And at trial, evidence came in that the Taylors’ daughter said she “shared the
bookkeeping and check writing with [her] mother, Betty, and [made] deposits and withdrawals.”
(See, e.g., R. 164, Trial Tr. (Day 3), PID 1509 (another witness reading that statement).) So the
district court did not clearly err in finding that Betty acted as Cobra Coal’s bookkeeper, seeing and
knowing about receipts, even if Betty argues otherwise on appeal. Betty also does not dispute that
the receipts remained on the Taylors’ property, so that factual finding stands. And Betty does not
dispute that her attorney produced those receipts to the government, even though those receipts
were allegedly just copies her counsel sent during reciprocal discovery and not ones Betty gave
him. There is no clear error over these factual findings that Betty knew about the alterations and
intended to keep those alterations quiet.
Now armed with the legal conclusion that altered receipts fit under § 3C1.1 and the factual
findings that Betty would have known about these receipts, it is easy to see that Betty’s claim still
fails, even if we review de novo the application of the guideline to the facts. Betty allowing what
she knew constituted altered receipts to go to the government and willingly allowing the
8
Case No. 19-5417/5418, United States v. Taylor
introduction of those receipts into evidence at trial obstructed justice such that § 3C1.1 applied.2
See United States v. Leek, 78 F.3d 585, at *7–8 (6th Cir. 1996) (unpublished table decision)
(applying the obstruction of justice enhancement after the defendants produced altered exhibits to
the prosecution). She misled the court, the prosecution, and the jury by letting this evidence in
and trying to benefit from it.
For these reasons, the district court properly applied the two-level obstruction of justice
enhancement.
B.
Betty also argues that the district court committed reversible error by not granting her a
three-level mitigating-role adjustment under U.S.S.G. § 3B1.2. We review denials of § 3B1.2
adjustments for clear error. United States v. Randolph, 794 F.3d 602, 616 (6th Cir. 2015).
Under § 3B1.2, “[i]f the defendant was a minimal participant in any criminal activity,” a
four-level reduction is appropriate. U.S.S.G. § 3B1.2(a). “If the defendant was a minor participant
in any criminal activity,” a two-level reduction applies. Id. § 3B1.2(b).
And a three-level reduction
applies if the defendant falls between a minimal and a minor participant.
Id. An adjustment is
2
The district court held two sentencing hearings, since counsel did not have the benefit of trial
transcripts before the first hearing. During the first hearing, the court commented on why it thought
the obstruction of justice enhancement applied. The district judge talked about the tampering of
the receipts, which is nothing like what she had seen in eighteen years as a judge. From our
reading, she concluded that the receipt tampering was enough to invoke the obstruction of justice
enhancement. But she also noted that “[t]here is a question here, and I don’t have to make the
finding, but of whether both of these, if not one, both of them, did not suborn perjury, which is in
and of itself a criminal act.” (R. 176, Sent’g Tr., PID 2028.) Presumably she meant urging Gary
Taylor to lie on the stand for them. So she seemed to find the receipt evidence sufficient for
obstruction of justice, but also noted the seeming suborning of perjury just added to that finding.
But then at the second sentencing, when she ultimately decided to apply the enhancement,
the district judge only discussed the tampered receipt evidence in support of her finding. Thus, we
only review the obstruction of justice enhancement for the tampered receipts and not any potential
requests of Gary Taylor to perjure himself, since that does not appear to be part of the district
judge’s final decision to apply the enhancement.
9
Case No. 19-5417/5418, United States v. Taylor
appropriate for a minimal participant if she is “plainly among the least culpable of those involved
in the conduct of a group.” Id. § 3B1.2 cmt. n.4. And a minor participant is one “who is less
culpable than most other participants in the criminal activity, but whose role could not be described
as minimal.”
Id. § 3B1.2 cmt. n.5. Betty argues she falls in between. The proponent of the
adjustment must prove a mitigating role by a preponderance of the evidence. United States v.
Roberts,
223 F.3d 377, 379 (6th Cir. 2000).
When assessing the defendant’s participation level, we look to the average co-participant.
U.S.S.G. § 3B1.2 cmt. n.3(A). A non-exhaustive list of factors informs a district court about the
defendant’s participation level:
(i) the degree to which the defendant understood the scope and structure of the
criminal activity; (ii) the degree to which the defendant participated in planning or
organizing the criminal activity; (iii) the degree to which the defendant exercised
decision-making authority or influenced the exercise of decision-making authority;
(iv) the nature and extent of the defendant’s participation in the commission of the
criminal activity, including the acts the defendant performed and the responsibility
and discretion the defendant had in performing those acts; (v) the degree to which
the defendant stood to benefit from the criminal activity.
U.S.S.G. § 3B1.2 cmt. n.3(C). “‘[A] district court need not tick off sentencing factors to show that
it considered them,’ but a court cannot, for instance, ‘adopt[ ] the government’s argument with
little elaboration.’” United States v. Daneshvar, 925 F.3d 766, 790 (6th Cir. 2019) (second
alteration in original) (quoting United States v. Diaz,
884 F.3d 911, 914–15, 918 (9th Cir. 2018)
(referencing the § 3B1.2 cmt. n.3(C) factors specifically)).3 Here, the district court did not
3
We note, however, that Diaz also said that going forward, a district court would need to explicitly
assess the five
factors. 884 F.3d at 916 (“Going forward, the assessment of a defendant’s eligibility
for a minor-role adjustment must include consideration of the factors identified by the
Amendment, not merely the benchmarks established by our caselaw that pre-dates Amendment
794’s effective date.”). But in Daneshvar, we did not adopt all of Diaz. Rather, we only “adopt[ed]
. . . the rationale of the Ninth Circuit, holding that ‘a district court need not tick off sentencing
factors to show that it considered them,’ but a court cannot for instance, ‘adopt[ ] the government’s
argument with little
elaboration.’” 925 F.3d at 790 (second alteration in original) (quoting Diaz,
10
Case No. 19-5417/5418, United States v. Taylor
explicitly walk through the factors, but it also did not merely adopt the government’s argument
with little elaboration.
The district court found that Betty contributed to the scheme just as much as Harry. Betty
spends much time arguing why she had less of a role in the business than him. But the district
court emphasized that Betty “deposited more than a million dollars into the bank account” in three
years and “withdrew money from the bank account.” (R. 176, Sent’g Tr., PID 2033.) Yet she still
said she had no resources when applying for SSI. “[B]y virtue alone of her marching to and from
that bank with these checks,” she knew she had access to these resources and thus could not receive
benefits. (Id.) So the district court found that Betty defrauded the SSA of her own accord. She
lied just as much as her co-participant, Harry. We see no clear error with this analysis and
conclusion. The court found that Betty acted as an average participant, so it did not clearly err in
884 F.3d at 914–15, 918). So even though Diaz changed the law of the Ninth Circuit going
forward, we only follow the narrow point of Diaz that Daneshvar adopted: a district court need
not explicitly walk through the five factors. See also United States v. Karas, 793 F. App’x 380,
386 (6th Cir. 2019) (noting that “[t]he district court may consider [the] non-exhaustive list of
factors” (emphasis added)); United States v. Bragg, 762 F. App’x 298, 301–02 (6th Cir. 2019)
(finding that the district court’s “observations correspond[ed]” with at least two of the factors,
which was enough to avoid error, even though the district court did not walk through an explicit
factor-by-factor analysis).
Alternatively, some of our cases suggest that the district court needed to assess the factors.
See United States v. Ednie, 707 F. App’x 366, 371–72 (6th Cir. 2017) (criticizing the district court
in part for not walking through the factors from § 3B1.2 cmt. n.3(C)); United States v. Penny, 777
F. App’x 142, 151 (6th Cir. 2019) (“This argument would be more convincing had the government
been able to point to the court weighing whether [the defendant] was substantially less culpable
than the average participant, or the five factors intended to guide the determination.”). We have
also found the application notes to the guidelines authoritative so long as they are not plainly
erroneous or inconsistent with the guideline. Havis, 927 F.3d at 386. And “[t]his court gives
‘Application Notes to the Sentencing Guidelines . . . controlling weight.’” Ednie, 707 F. App’x at
371–72 (ellipsis in original) (quoting United States v. Hernandez-Fierros,
453 F.3d 309, 313 (6th
Cir. 2006)).
For our purposes, we find that, given the district court’s discussion of the issue, it needed
not assess the factors explicitly for us to affirm.
11
Case No. 19-5417/5418, United States v. Taylor
denying the mitigating role adjustment. (See id. (“[S]he’s just a regular participant in the
fraud[.]”).)
And the district court did not clearly err because many of its findings correspond with the
five factors from U.S.S.G. § 3B1.2 cmt. n.3(C). See United States v. Bragg, 762 F. App’x 298,
301–02 (6th Cir. 2019) (finding that the district court’s “observations correspond[ed]” with at least
two of the factors, which was enough to avoid error, even though the district court did not walk
through an explicit factor-by-factor analysis). The district court noted that Betty understood the
scope and nature of her untruthfulness with the SSA because she saw the account as she deposited
and withdrew money. So the first factor favors denying the adjustment because Betty knew how
much money she and Harry took home from the business. And as mentioned in the previous
section, evidence suggested that she knew they needed to report this income.
The district court also found that Betty actively “applied for Social Security and said she
didn’t have any resources.” (R. 176, Sent’g Tr., PID 2033.) And “[s]he transferred resources to
her daughter.” (Id.) These findings line up with the fourth factor because these were Betty’s own,
personal acts. And of course the fifth factor strongly weighs against the adjustment. The district
court’s findings correspond with this factor too because the court noted that Betty had access to
income from Cobra Coal but sought to obtain benefits at the same time. Thus, she stood to gain
much from the scheme.
So most factors favored denying the adjustment. Yet we note that even fewer than most of
the factors weighing toward denial does not require granting the adjustment. See United States v.
Romero, 704 F. App’x 445, 450 (6th Cir. 2017) (declining to find clear error for not applying
U.S.S.G. § 3B1.2, even though most of the non-exhaustive factors favored the defendant). We
find that the district court did not clearly err in denying the § 3B1.2 adjustment.
12
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C.
Harry also disputes the admission of his 2006 SSI benefits termination because of excess
resources and some correspondence and acknowledgements from 2006 to 2008. And he disputes
the introduction of his signed statement in 2008 in which he agreed that Social Security overpaid
him $8,370.00 between 2005 and 2006 and said he would repay that amount in monthly
installments.4 He argues that Rule 404(b) barred this evidence from coming in because it is bad
acts evidence. Rule 404(b)(1) does not allow “[e]vidence of a crime, wrong, or other act . . . to
prove a person’s character in order to show that on a particular occasion the person acted in
accordance with the character.” Fed. R. Evid. 404(b)(1). But “[t]his evidence may be admissible
for another purpose, such as proving . . . intent, . . . knowledge, . . . absence of mistake, or lack of
accident.” Id. at 404(b)(2). Any permitted use must be material or at issue in the case to be
admissible. See United States v. LaVictor,
848 F.3d 428, 445–46 (6th Cir. 2017).
A three-part test informs our review of the district court’s decision to admit evidence under
Rule 404(b):
[W]e first review for clear error the district court’s factual determination that the
“other . . . acts” occurred. Second, we examine de novo the district court’s legal
determination that the evidence was admissible for a legitimate purpose. Finally,
we review for abuse of discretion the district court’s determination that the
probative value of the other acts evidence is not substantially outweighed by its
unfairly prejudicial effect.
4
In his opening brief, Harry argued that the district court should not have allowed his 2006
termination of benefits into evidence. In his reply brief, he then argued that his 2009 termination
of benefits should not have come into evidence. We believe Harry meant to say the district court
should not have allowed in the 2006 termination and later documents (including the 2008
acknowledgment that he overpaid). We base this determination on the trial transcript citation that
Harry provides in the reply brief. (See Reply Br. at 1 (citing R. 163, Trial Tr. (Day 1), PID 1433–
34 (discussing the 2008 acknowledgment of the 2005 to 2006 overpayment and agreement to
repay)).)
13
Case No. 19-5417/5418, United States v. Taylor
United States v. Hardy, 228 F.3d 745, 750 (6th Cir. 2000) (alteration in original) (quoting United
States v. Merriweather,
78 F.3d 1070, 1074 (6th Cir. 1996)).5 Harry does not dispute the accuracy
of the 2006 termination, the evidence of what he and the SSA said between 2006 and 2008, or the
2008 reference to his overpayment. So there is no question over whether these other acts occurred.
We also find that the district court correctly determined “that the evidence was admissible
for a legitimate purpose.” Id. (quoting Merriweather, 78 F.3d at 1074). The district court found
that the 2006 termination, the 2006 to 2008 correspondence, and the 2008 evidence admitting
overpayment and agreement to repay showed knowledge or an absence of mistake under the
exceptions for 404(b). (See R. 163, Trial Tr. (Day 1), PID 1366 (noting that the evidence sounded
like it showed an absence of mistake);
id. at 1371–72 (concluding that the evidence was admissible
to show what the Taylors knew or should have known);
id. at 1426 (telling the jury to only use the
information for knowledge or the Taylors’ states of mind).) We agree with the district court.
Evidence of a previous time in which the SSA terminated the SSI benefits, plus resulting
correspondence, including Harry’s agreement that the SSA overpaid him, show that Harry knew
he should not receive SSI benefits if he or Betty continued their affiliation with Cobra Coal. And
this evidence shows an absence of mistake because the Taylors tried to hide their continued
affiliation with Cobra Coal after that point by Betty transferring ownership to her daughter in 2008,
even though the Taylors otherwise still maintained their active roles. And whether they knew that
5
We have noted before, however, that there was some discrepancy over this standard of review
too.
LaVictor, 848 F.3d at 444–45. Some cases of ours only used an abuse of discretion standard,
instead of this tripartite one.
Id. (collecting cases). But we later resolved this discrepancy, noting
that the standards “are not in fact inconsistent, because it is an abuse of discretion to make errors
of law or clear errors of factual determination.” United States v. Mandoka,
869 F.3d 448, 457 (6th
Cir. 2017) (quoting United States v. Bell,
516 F.3d 432, 440 (6th Cir. 2008)).
14
Case No. 19-5417/5418, United States v. Taylor
the SSA disallowed their particular participation in the business was material, especially since it
related to proving intent.
Third, the district court did not abuse its discretion in finding that the unfairly prejudicial
effect of this evidence does not substantially outweigh its probative value. All evidence that makes
a defendant look bad is in some sense prejudicial. But that does not make it substantially
prejudicial. The evidence had significant probative value because it showed Harry’s knowledge
and an absence of mistake. And it only provided some unfair prejudice because it showed that
Harry had perhaps frauded the SSA before, so jurors may wish to punish him for that instance.
But that prejudice is minor, especially given the district court’s limiting instruction during trial
explaining the proper purpose and urging the jury to ignore any mention of fraud over the pre-
2012 evidence. See LaVictor, 848 F.3d at 448 (limiting instruction “ameliorated the risk of unfair
prejudice”). It is true that a limiting instruction may not always expel the risk of a jury using the
evidence improperly. See United States v. Asher,
910 F.3d 854, 862 (6th Cir. 2018). An instruction
may not suffice if we find the evidence so unduly prejudicial.
Id. But we do not find the evidence
so unduly prejudicial here, so the limiting instruction helps dispel any concerns.
Harry argues that if less prejudicial evidence exists, then a district court should only admit
that evidence instead. And this is true, to a degree. We have said: “The Supreme Court has
cautioned that the existence of an alternative means of proof—even one with ‘substantially the
same or greater probative value but a lower danger of unfair prejudice’—does not require exclusion
of more prejudicial evidence.” Id. at 861 (quoting Old Chief v. United States,
519 U.S. 172, 182–
83 (1997)). “But we must ‘discount the value of the item first offered and exclude it if its
discounted probative value [is] substantially outweighed by unfairly prejudicial risk.’”
Id.
(alteration in original) (quoting Old
Chief, 519 U.S. at 183).
15
Case No. 19-5417/5418, United States v. Taylor
Harry points to evidence that the government introduced showing that the Taylors applied
for SSI and were denied several times between 2009 and 2012. But no other evidence gave the
exact indication of knowledge or absence of mistake that the 2006 to 2008 evidence gave. The
2006 termination, 2006 to 2008 correspondence and acknowledgments, and 2008 admission of
overpayment show that Harry had not just been denied, but had his benefits terminated. Actual
termination is much more impactful than a mere denial, so it further suggests that Harry would
have known and learned that he cannot have access to “excess resources” going forward, based on
that experience. And yes, to the Taylors’ credit, the information from 2009 to 2012 showed that
the SSA told the Taylors they were ineligible to receive benefits. But the 2006 to 2008 evidence,
and especially the 2008 admission of overpayment, show Harry’s actual acknowledgment that he,
in fact, agreed that the SSA overpaid him. Instead of an argument that the Taylors “must have
known” about the SSA requirements based on their 2009 to 2012 denials, Harry’s
acknowledgements show that Harry in fact undeniably knew about the SSA requirements. So we
decline to find that the other, less prejudicial evidence from 2009 to 2012 mandated excluding the
2006 to 2008 evidence. See Asher, 910 F.3d at 861; Old
Chief, 519 U.S. at 182–83.
So any unfair prejudice did not substantially outweigh the probative value of the evidence.
The district court did not abuse its discretion when assessing prejudice. Because we find that the
district court adequately admitted the evidence under 404(b)’s exceptions, we need not address
whether the res gestae exception applied too.
16
Case No. 19-5417/5418, United States v. Taylor
D.
Harry suffers from several health issues. Most relevant here, he had methicillin-resistant
staph aureus (MRSA), more commonly known as a staph infection. After having it once, he is
more susceptible to recurrence. And his MRSA had reoccurred before. So Harry seeks
resentencing for a downward departure based on his poor health, especially because he is more
susceptible to an infection and thus recurrence in jail. The relevant guideline notes:
[A] [p]hysical condition . . . may be relevant in determining whether a departure is
warranted, if the condition or appearance, individually or in combination with other
offender characteristics, is present to an unusual degree and distinguishes the case
from the typical cases covered by the guidelines. An extraordinary impairment may
be a reason to depart downward; e.g., in the case of a seriously infirm defendant,
home detention may be as efficient as, and less costly than, imprisonment.
U.S.S.G. § 5H1.4.
But “we do not review a district court’s decision not to depart downward unless the record
shows that the district court was unaware of, or did not understand, its discretion to make such a
departure.” United States v. Santillana, 540 F.3d 428, 431 (6th Cir. 2008). If the district court
recognized its discretion, the failure to give a downward departure is unreviewable. United States
v. Church,
731 F.3d 530, 533–34 (6th Cir. 2013). “We do not require that a district court explicitly
state that it is aware of its discretion to make such a departure. Rather, we presume that the district
court understood its discretion, absent clear evidence to the contrary.”
Santillana, 540 F.3d at 431
(citations omitted); see United States v. Theunick,
651 F.3d 578, 592 (6th Cir. 2011) (finding a
departure unreviewable in the U.S.S.G. § 5H1.4 context for these reasons); United States v. Darji,
609 F. App’x 320, 330–31 (6th Cir. 2015) (same); United States v. Hohn, 443 F. App’x 931, 933
(6th Cir. 2011) (same). If the district court does not appear to have misunderstood its discretion:
17
Case No. 19-5417/5418, United States v. Taylor
[W]e review the decision of the district court only if “(1) the sentence was imposed
in violation of the law; (2) it was imposed as a result of an incorrect application of
the guidelines; (3) the sentence represented an upward departure; or (4) the sentence
was imposed for ‘an offense for which there is no Sentencing Guideline and is
plainly unreasonable.’”
Santillana, 540 F.3d at 431 (quoting United States v. Puckett,
422 F.3d 340, 346 (6th Cir. 2005));
see also 18 U.S.C. § 3742(a).
The district court here clearly understood its discretion in deciding whether to grant a
downward departure under U.S.S.G. § 5H1.4. The district judge’s analysis showed that she
weighed the factors for and against granting the departure. Nothing suggested that she thought she
did not have discretion to grant a departure. See Santillana, 540 F.3d at 431 (“[W]e presume that
the district court understood its discretion, absent clear evidence to the contrary.”).
And Harry does not argue that any of the other four reviewability factors apply, nor do we
find that any apply. So we decline to review the district court’s decision to deny the motion for a
downward departure.
* * *
For these reasons, we AFFIRM the district court’s decisions related to Betty and related to
Harry’s evidentiary argument. And we DISMISS Harry’s appeal of the denied request for a
downward departure under U.S.S.G. § 5H1.4.
18
