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United States v. Stokes, 92-3789 (1993)

Court: Court of Appeals for the Fifth Circuit Number: 92-3789 Visitors: 14
Filed: Aug. 09, 1993
Latest Update: Mar. 02, 2020
Summary: UNITED STATES COURT OF APPEALS For the Fifth Circuit No. 92-3789 UNITED STATES OF AMERICA, Plaintiff- Appellee, VERSUS ELIZABETH ANN PRATT STOKES, Defendant-Appellant. Appeal from the United States District Court for the Eastern District of Louisiana (August 9, 1993) Before KING, HIGGINBOTHAM, and DeMOSS, Circuit Judges. DeMoss, Circuit Judge: I. Stokes was employed as the office manager of a satellite Tulane University Medical Center Cardiology Clinic (Tulane) in Hammond, Louisiana, from March
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                   UNITED STATES COURT OF APPEALS
                        For the Fifth Circuit



                            No. 92-3789


                     UNITED STATES OF AMERICA,


                                                      Plaintiff-
Appellee,


                               VERSUS



                  ELIZABETH ANN PRATT STOKES,

                                                 Defendant-Appellant.




            Appeal from the United States District Court
               for the Eastern District of Louisiana
                          (August 9, 1993)



Before KING, HIGGINBOTHAM, and DeMOSS, Circuit Judges.

DeMoss, Circuit Judge:
                                 I.

       Stokes was employed as the office manager of a satellite

Tulane University Medical Center Cardiology Clinic (Tulane) in

Hammond, Louisiana, from March 30, 1985, until June 2, 1987.      In

this capacity, she had signature authority on the clinic's bank

account.

     Stokes used money embezzled from Tulane to open two bank

accounts in the name of Cardiology Associates of Hammond.        She
deposited $134,000 into the first Cardiology Associates account and

$71,000 into the second.             Stokes's husband, Jimmy, was the only

person authorized to withdraw money from the second account.

     Stokes wrote checks on the first Cardiology Associates account

to herself and Jimmy for approximately $20,000 in 1986, and $30,000

in 1987.

     Stokes purchased a money order for $15,000 with a check

written to herself from the Cardiology Associates accounts and

bought a car.        Stokes then purchased a second money order for

$15,000 with a check written to herself and bought some land.

     Stokes and her husband, Jimmy, filed joint income tax returns

in 1986 and 1987.       The Stokes's 1986 return reflected their income

as $30,876.       Their 1987 return reflected their income as $20,464.

Stokes never gave her tax accountant any information about the

checks that came from the first Cardiology Associates accounts.

Nor did the tax preparer ever see any statements from the second

Cardiology Associates.          Therefore, none of the amounts from these

checks were declared on the Stokes's income tax returns.                  Rather,

Stokes only       reported   the     amounts   reflected    on    her   W-2   forms

received from Tulane Medical Center.

     On    June    5,   1992,    a   jury    convicted   Stokes    of   making   a

fraudulent income tax return for the tax years 1986 and 1987, in

violation of Title 26, U.S.C. § 7206(1).                 The probation officer

recommended in Stokes's presentence investigation (PSI) report that

the district court adjust Stokes's base offense level upward two

levels for using sophisticated means to impede discovery of the


                                         2
nature or extent of her offense pursuant to U.S.S.G. § 2T1.3.            The

district court adopted the PSI recommendations and made the upward

adjustment.

     On appeal to this Court, Stokes contends that the district

court improperly qualified an expert witness; the evidence at trial

was insufficient to find Stokes guilty of the indictment; and the

trial court erred in making a two level enhancement for the use of

sophisticated means.

     We AFFIRM in part and AMEND in part.

                                  II.

WHETHER THE DISTRICT COURT IMPROPERLY QUALIFIED AN EXPERT
WITNESS.

     Michael Susano, a revenue agent and eighteen year employee of

the IRS, was permitted by the district court to testify as an

expert in the calculation and compilation of income and taxes.

     Stokes objected at trial to Mr. Susano's admission as an

expert   because   Mr.   Susano   had   not   prepared   tax   returns   for

taxpayers for almost thirty years, all of his relevant experience

had been as a revenue agent with the IRS, and there was no

indication that he had ever been considered an expert in his field

outside of the Internal Revenue Service.

     Whether a witness is shown to be qualified as an expert is a

preliminary question to be determined within the sound discretion

of the trial judge.

     Trial judges have commonly allowed IRS agents to qualify as

experts in the field of tax computations in criminal tax cases.

See e.g. United States v. Mohney, 
949 F.2d 1397
, 1406 (6th Cir.

                                    3
1991); United States v. Windfelder, 
790 F.2d 576
, 581 (7th Cir.

1986).

     The trial judge did not abuse his discretion in allowing an

IRS revenue agent to testify as an expert in the calculation of

income and taxes.

                               III.

WHETHER THERE WAS SUFFICIENT EVIDENCE TO FIND THE DEFENDANT GUILTY
OF THE INDICTMENT.

     Stokes next complains that the evidence did not establish that

she was aware that the proceeds in the checks she wrote to her

benefit from the clinic's account should have been included in the

computation of her income.

     A conviction cannot stand unless the evidence supporting it is

such that when it is viewed in the light most favorable to the

prosecution, it can be found that any rational trier of fact could

have found all the elements of the offense beyond a reasonable

doubt.   Jackson v. Virginia, 
443 U.S. 307
, 
99 S. Ct. 2781
, 61 L.

Ed. 2d 560 (1979).

     Stokes could have asked her accountant whether the $30,000

used to purchase the car and real estate was taxable income.   Since

she never told the accountant about the money, the jury was free to

make the inference that this was a calculated decision by her.

Criminal willfulness can be inferred when a defendant does not

supply her tax preparer with evidence of substantial items of

income. United States v. Frank, 
437 F.2d 452
, 453 (9th Cir. 1971),

cert. denied, Frank v. United States, 
402 U.S. 974
(1971).

Moreover, evidence of a consistent pattern of under reporting large

                                4
amounts    of    income   will   support   the   necessary   inference   of

willfulness. Escobar v. United States, 
388 F.2d 661
, 661 (5th Cir.

1967), cert. denied, Escobar v. United States, 
390 U.S. 1024
(1968).

                                     IV.

WHETHER THE TRIAL COURT ERRED IN MAKING A TWO LEVEL ENHANCEMENT FOR
THE USE OF SOPHISTICATED MEANS.

     Stokes finally contends that the district court erred in

giving her a two level adjustment, pursuant to § 2T1.3(b)(2) of the

Sentencing Guidelines, for using sophisticated means to impede

discovery.      Stokes argues that since the enhancement authorized by

§2T1.3(b)(2) is directed toward concealment of the offense and that

as she did nothing tending to conceal or to impede discovery of the

purported tax offense, she should not be penalized.

     The government asserts that the evidence proves otherwise. It

points out that Stokes set up two clinic accounts under the name of

Cardiology Associates of Hammond.           One account was under her

signature authority, but did not have a taxpayer identification

number.    The second account was under her husband's signature

authority.       She wrote $50,589 worth of checks from the first

account.        Of this amount, two checks, each in the amount of

$15,000, were written by her and then transferred into cashier's

checks and these checks were then used to purchase the car and

land.     The government contends that the only possible purpose

behind exchanging clinic checks for cashier checks would be to

break the link between Stokes and Tulane.             It states that by

transferring the checks in this manner, Stokes impeded discovery.

                                      5
Likewise,   the   government   argues,   the    second   account   in    her

husband's name also could have had no other purpose than to create

a distance between herself and the $71,000.

     The tax fraud guideline directs a district court to add two

levels to a defendant's base offense level "[i]f sophisticated

means were used to impede discovery of the nature or extent of the

offense."   U.S.S.G. § 2T1.3(b)(2).

     However, the guideline adjustment for the use by a defendant

of sophisticated means in committing an offense provides that the

sophisticated means be tied to the offense of conviction.                Any

sophisticated means that Stokes employed to hide the money that she

took from Tulane occurred in her scheme to embezzle from Tulane. It

did not involve the evasion of taxes, the offense for which Stokes

was convicted.    There is nothing sophisticated about simply not

disclosing income to your accountant.          Simply put, Stokes didn't

try to hide the money because she didn't want to pay her taxes.

She hid it from Tulane because she didn't want Tulane to know that

she had taken money from their accounts.

     We find therefore, that the trial court misinterpreted the

guidelines when it ordered a two level increase for sophisticated

means.

     Additionally,    the   record   reflects    that    the   trial   judge

erroneously considered Stokes's sentence to be a Class D felony.

Stokes was convicted pursuant to 26 U.S.C. § 7206(1), which imposes

a maximum term of three years of imprisonment.




                                     6
     Count 1 relating to 1976 taxes was a pre-guideline offense and

therefore the guideline provisions do not apply to that Count.

However, as to Count 2 of the indictment, based on a total offense

level of 11 and a criminal history category of I, the PSI found the

guideline imprisonment range to be eight to fourteen months.

     The PSI considered Count 2 to be a Class D felony, which

carries with it a term of supervised release of not more than three

years.   18 U.S.C. § 3583(b)(2).1    Pursuant to § 5D1.1, the PSI

stated that the Court shall order a term of supervised release to

follow imprisonment when a sentence of imprisonment of more than

one year is imposed; and that as to Count 2, a Class D felony, the

term of supervised release should be at least two years but not

more than three years.   § 5D1.2(b)(2).

     The district court followed the PSI recommendation outlined

above and sentenced Stokes to four months imprisonment and three

years supervised release as to Count 2.2

     The PSI erred in classifying Stokes's offense as to Count 2 as

a Class D felony.   We agree with the PSI's assertion that the term

of imprisonment authorized under 26 U.S.C. § 7206(1) is not more

than three years.    However, we find that Stokes's offense as to

Count 2 is a Class E felony and not a Class D felony.   18 U.S.C. §

    1
      Since Count 1 does not fall under the sentencing guidelines,
a period of supervised release is not applicable, and the defendant
may become eligible for parole as to that count.
    2
     The amount of loss in the pre-guideline count was included as
Relevant Conduct in arriving at the total loss figure on which the
guideline enhancement is based. This was considered in determining
that the pre-guideline count was ordered to run concurrently with
regard to the guideline count.

                                 7
3559(a)(1)(5).             The authorized term of supervised release for a

Class E felony is not more than a year.            18 U.S.C. § 3583(b)(3).

        Therefore, pursuant to 18 U.S.C. § 3576 and 18 U.S.C. §

3583(b)(3), we vacate the lower Court's sentence of three years

supervised release and amend the supervisory release term as to

Count 2 to a one year term.           See United States v. DiFrancesco, 
449 U.S. 117
, 
101 S. Ct. 426
, 
66 L. Ed. 2d 328
(1980).

                                        III.

                                     CONCLUSION

         We find Stokes's objection to the qualification of the expert

witness meritless; and find the evidence sufficient.           However, the

trial court misinterpreted the guidelines when it ordered the two

point increase for the use of sophisticated means.             Further, we

hold that the trial court clearly erred when it sentenced Stokes to

a period of supervised release applicable to a Class D felony

rather than to a Class E offense.                 Corrections of the error

regarding the enhancement for sophisticated means by the trial

court would not result in a change in the prison term.

        We AFFIRM the conviction and sentence as to Count 1.            We

AFFIRM the conviction as to Count 2 and AMEND the sentence of

supervised release to one year, and as amended AFFIRM the sentence

in Count 2.




c:br:opin:92-3789p:jm/nb                  8
HIGGINBOTHAM, Circuit Judge, concurring in part and dissenting in

part.

        I concur in the majority's opinion except its holding that the

district        court      erred   in   adjusting    the   offense    level   because

sophisticated means were used to impede discovery of the nature or

extent of the offense.              Whether the means of Stokes were more than

the planning of a routine tax-evasion case is a close question.                      To

me there was no misinterpretation of the legal effect of the

guidelines that we ought to examine de novo.                   Rather, this was a

judgment call of whether means used were "sophisticated."                      I find

no basis for upsetting this call and would affirm.

        At    its     essence      sentencing   is   inevitably      an   exercise   of

judgment.        The guidelines guide but cannot supplant that judgment.

Imposing our view in circumstances as these pretends an objective

standard that does not exist.              We assume a role in sentencing that

Congress surely did not intend.




c:br:opin:92-3789p:jm/nb

Source:  CourtListener

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