United States Court of Appeals
                            For the Eighth Circuit
                        ___________________________

                                No. 18-1406
                        ___________________________

                             United States of America

                        lllllllllllllllllllllPlaintiff - Appellee

                                           v.

                                 Mark A. Beckham

                       lllllllllllllllllllllDefendant - Appellant
                                       ____________

                    Appeal from United States District Court
                  for the Eastern District of Missouri - St. Louis
                                  ____________

                           Submitted: January 18, 2019
                              Filed: March 8, 2019
                                 ____________

Before GRUENDER, WOLLMAN, and SHEPHERD, Circuit Judges.
                       ____________

SHEPHERD, Circuit Judge.

      Mark Beckham appeals his conviction for corruptly endeavoring to obstruct
and impede the due administration of the internal revenue laws in violation of 26
U.S.C. § 7212(a). Beckham argues that the jury instructions were erroneous, that the
district court1 erroneously admitted evidence and expert testimony, and that the
district court should have granted his motion for a mistrial based on improper witness
statements. Having jurisdiction under 28 U.S.C. § 1291, we affirm.

                                          I.

       In 2009 and 2010, Beckham prepared and filed tax returns for John Horseman,
owner of the financial advisory firm JM Horseman Group, LLC. Beckham allegedly
induced Horseman to participate in a tax-loss scheme designed to offset Horseman’s
own taxes. As part of this scheme, Horseman signed subscription agreements giving
him $3,300,000 of common stock in Arbor Homes, Inc. and $3,000,000 of equity in
SNB Consulting, LLC. Horseman initially paid roughly $80,000 in cash and
executed over $6 million in promissory notes pursuant to the subscription agreements.
In return, Horseman claimed losses sustained by these businesses on his individual
and corporate tax returns. Horseman eventually made around $240,000 in payments
on these notes, but made the payments to an entity Beckham controlled rather than
to Arbor Homes or SNB Consulting.

       Horseman’s 2009 and 2010 individual returns claimed “nonpassive” losses
from Arbor Homes that totaled $4.3 million. Taxpayers prefer to claim nonpassive
losses because they may offset ordinary income, while passive losses may only offset
passive income. However, in order to claim nonpassive losses, a taxpayer must have
a sufficient economic investment in a business entity, and the taxpayer must also
materially participate in the entity’s activities. See 26 U.S.C. §§ 469(c), 1366(d); 26
C.F.R. § 1.469-5T. Horseman did not work for or otherwise materially participate in
Arbor Homes during this time period. In addition, the Horseman Group’s 2010
corporate tax return—also prepared by Beckham—claimed $1.8 million in


      1
       The Honorable Ronnie L. White, United States District Judge for the Eastern
District of Missouri.

                                         -2-
partnership losses from SNB Consulting. However, this loss exceeded the Horseman
Group’s basis in SNB Consulting.

       In 2011, the IRS began a civil audit of Horseman’s 2009 individual tax return,
later expanding that audit to include the 2010 individual and corporate returns.
Beckham provided the IRS agents assigned to the audit with completed forms
authorizing him to act as Horseman’s representative, representing that he was a
currently-licensed CPA in Missouri. In reality, Beckham was not licensed as a CPA,
which would have precluded him from serving as Horseman’s representative.

       In the course of the audit, IRS Revenue Agent Anthony Grinstead requested
information regarding Horseman’s participation in Arbor Homes. Agent Grinstead
requested this information in order to verify that Horseman met the “material
participation” requirement to claim Arbor Homes’ losses as nonpassive losses. In
response to this request, Beckham provided Agent Grimstead with Horseman’s 2009
day planner, which contained falsified entries purportedly showing that Horseman
had worked several hundred hours for Arbor Homes during 2009.

       The IRS continued to request additional documents, many of which Beckham
never provided or admitted did not exist. On July 23, 2012, the IRS discovered
Beckham was not a licensed CPA. Beckham told the agents conducting the
investigation that his license had lapsed and he was in the process of getting it
renewed. In reality, Beckham’s license had been revoked in 2008, following a 2006
federal conviction for mail fraud. See Gov’t Mot. Determ. Admissibility Evid. 2,
Dist. Ct. Dkt. 92.

       On April 3, 2013, the IRS discovered that Horseman “did not pay Arbor Homes
3 million dollars . . . [and] had not paid any money on the loan.” Evid. Hr’g Tr. 68,
Dist. Ct. Dkt. 51. This indicated that the deal between Horseman and Arbor Homes
was a sham, and that Horseman had overstated his economic interest in Arbor Homes

                                         -3-
and had improperly claimed Arbor Homes’ losses on his individual tax returns.
Suspecting fraud, IRS Revenue Agent John Shake referred the case to IRS criminal
investigation. While the initial referral was for criminal investigation of Horseman,
the IRS later added Beckham as a target. In June 2013, Beckham admitted to IRS
Special Agent Patric Murray that the nonpassive losses Horseman claimed from
Arbor Homes were actually passive losses because Horseman was not sufficiently
involved in Arbor Homes.

       Beckham was charged in a superseding indictment with one count of corruptly
endeavoring to obstruct the due administration of the internal revenue laws in
violation of 26 U.S.C. § 7212(a) and three counts of willfully assisting in the
preparation of false tax returns in violation of 26 U.S.C. § 7206(2). He filed a pretrial
motion to suppress all evidence the IRS gathered after July 23, 2012, claiming that
after that date the IRS impermissibly conducted a criminal investigation under the
guise of a civil audit. The district court denied Beckham’s motion.

       On June 27, 2017, the Supreme Court granted certiorari in United States v.
Marinello, 

(2d Cir. 2016), cert. granted 

(2017), to
resolve a circuit split over whether § 7212(a) requires a defendant to know about a
pending IRS proceeding when he engages in purportedly obstructive conduct.
Beckham filed a motion to stay his trial pending the Supreme Court’s decision. The
district court denied Beckham’s motion, agreeing with the government that the issue
could be addressed through the use of a special verdict form that asked the jury
whether Beckham committed a corrupt act after becoming aware of the audit and, if
so, what that act was. Beckham also filed a motion in limine to exclude the proposed
expert testimony of IRS Revenue Agent Sarah Parman regarding Parman’s opinion
that the losses claimed on Horseman’s tax returns were improper. The district court
denied that motion as well.




                                          -4-
       Horseman testified at trial. During his testimony, the prosecution asked
Horseman whether he had ever stopped making payments to Beckham pursuant to the
subscription agreements. Horseman responded that he eventually stopped making
such payments because a tax attorney told him the deal was “fraudulent.” Beckham
moved for a mistrial based on this statement. The district court denied the motion,
but offered to give a curative instruction instead. Beckham declined the offer.

        At the instruction conference, Beckham objected to Jury Instruction 9—the
instruction on the § 7212(a) offense—because it did not require the jury to find that
he knew about the IRS audit at the time that he committed a corrupt act. He also
argued that the special verdict form—which directed the jurors, if they found
Beckham guilty of that offense, to indicate whether Beckham committed “at least one
corrupt act after becoming aware of the existence of an Internal Revenue Service
audit or proceeding[,]” see Proposed Jury Instructions 25, Dist. Ct. Dkt. 96, and, if
so, to identify which corrupt act they unanimously agreed Beckham committed after
learning of the proceeding—did not cure the faulty instruction. Beckham did not,
however, specifically object to the language of the special verdict form. The district
court overruled his objection.

       The jury acquitted Beckham of the three § 7206(2) charges, but found him
guilty of violating § 7212(a). On the special verdict form, the jury indicated that it
found Beckham committed at least one corrupt act after learning of the audit and that
it unanimously agreed Beckham committed the acts alleged in paragraph 10 of the
Superseding Indictment—submitting Horseman’s day planner to the IRS—after
learning of the audit. Beckham filed a motion for judgment of acquittal or, in the
alternative, for a new trial, which the district court denied. The district court
sentenced Beckham to 36 months imprisonment and Beckham appealed.




                                         -5-
                                           II.

       Six months after Beckham’s trial, the Supreme Court decided Marinello v.
United States, 

(2018). The Court held that, for a § 7212(a) offense,
“the Government must show . . . that there is a ‘nexus’ between the defendant’s
conduct and a particular administrative proceeding[.]” 

.
Further, that proceeding must be “reasonably foreseeable by the defendant” at the
time he acted. 

Because “[i]t is not enough for the Government to claim
that the defendant knew the IRS may catch on to his unlawful scheme eventually[,]”
if the proceeding is currently pending, the defendant must be aware of that
proceeding. 

this Court required three elements for a § 7212(a) offense:
“(1) in any way corruptly (2) endeavoring (3) to obstruct or impede the due
administration of the Internal Revenue Code.” United States v. Williams, 

, 699 (8th Cir. 1981), superseded by statute on other grounds, Tax Reform Act of
1984, Pub. L. No. 98-369, § 159, 98 Stat. 494, 696, as recognized in United States v.
Brooks, 

, 956 (8th Cir. 1999). Marinello thus added two elements—a
nexus and knowledge of a currently-pending or reasonably foreseeable
proceeding—that this Court did not previously require. Beckham argues on appeal
that the district court erroneously instructed the jury on the § 7212(a) offense by
failing to include these two elements. The government concedes on appeal that, post-
Marinello, Jury Instruction 9 is erroneous. However, the government contends that
the district court cured the instructional error through the use of a special verdict form
and that, even if the special verdict form did not cure the error, the error was
harmless.

      We apply “harmless error analysis . . . to issues of instructional error,”
including “omitting an element altogether.” United States v. Dvorak, 

,
1024-25 (8th Cir. 2010) (citation omitted). An instructional error is harmless beyond

                                           -6-
a reasonable doubt if the evidence supporting the jury’s verdict is so overwhelming
that no rational jury could find otherwise. Neder v. United States, 

, 18-19
(1999) (stating that an error is harmless if “the court can[] conclude beyond a
reasonable doubt that the jury verdict would have been the same absent the error”);
see also United States v. Inman, 

, 750-51 (8th Cir. 2009) (finding
evidence sufficient to support conviction despite failure to submit an element of the
offense to the jury when the government presented uncontroverted testimony on the
disputed element). Whether the instructional error here was harmless hinges on
whether overwhelming evidence supports finding (1) that there was a nexus—in
either time, causation, or logic—between Beckham’s actions and the IRS audit; and
(2) that Beckham knew or should have known about the audit when he committed
some corrupt act. See 

-10.

       We first address Marinello’s nexus requirement. Marinello requires the
prosecution to prove that a defendant’s actions had “a relationship in time, causation,
or logic with [a pending IRS] proceeding.” 

(internal quotation marks
omitted). The government relies on a specific action to prove the nexus
requirement—Beckham providing the IRS with Horseman’s falsified day planner.
Because the IRS indisputably obtained the day planner as a functional part of the
audit during the audit, if Beckham provided the IRS with the planner, that would be
an act that has a nexus in time, causation, and logic to the pending IRS audit.

       At trial, Agent Grinstead testified that he received Horseman’s planner from
Beckham at an in-person meeting on January 19, 2012, while conducting the audit.
3 Trial Tr. 103, Dist. Ct. Dkt. 167. Beckham never contradicted this testimony,
arguing only that he acted as Horseman’s representative in his contacts with the IRS.
See 3 Trial Tr. 103, 144-45, Dist. Ct. Dkt. 167. Because, then, the government
presented uncontroverted evidence that Beckham gave Agent Grinstead the day
planner—evidence that Beckham did not attempt to dispute, see 

(finding testimony constituted overwhelming evidence when the defendant “did

                                         -7-
not question the credibility or accuracy of [the] testimony”)—no rational juror could
find that Beckham did not give the day planner to the IRS. See 

no
doubt that any rational jury would have concluded that the government proved the
[disputed element], for the record contains no evidence that could rationally lead to
a contrary finding.”). We therefore find the jury instruction error harmless as to the
nexus requirement.

      In addition to the nexus requirement, Marinello requires a defendant to act with
knowledge or a reason to know of a pending or imminent IRS proceeding, such as an
IRS audit. 

. We find that the evidence overwhelmingly
shows Beckham knew of a currently-pending IRS audit at the time he gave Agent
Grinstead Horseman’s day planner. On December 1, 2011—over a month before his
meeting with Agent Grinstead—Beckham undisputedly submitted falsified power of
attorney forms allowing him to act as Horseman’s representative throughout the audit.
See 3 Trial Tr. 75, Dist. Ct. Dkt. 167. He then proceeded to actually act on
Horseman’s behalf during the audit. Significantly, Beckham provided Agent
Grinstead with the planner in response to a request for information undisputably made
as part of the audit. We therefore find that no rational jury could find Beckham was
unaware of a pending IRS proceeding—the audit—at the time the IRS received the
day planner.

       Because we conclude that no rational jury could find reasonable doubt as to
either of the two Marinello elements, we find that failure to instruct the jury on those
elements was harmless. We thus need not determine whether the special verdict form
properly cured the instructional error, and we decline to reverse Beckham’s
conviction on these grounds.




                                          -8-
                                         III.

       Beckham appeals the district court’s denial of his motion to exclude Agent
Parman’s expert testimony, arguing that the district court impermissibly allowed her
to instruct the jury on what the law is. “We review the district court’s decision to
admit expert testimony for abuse of discretion, according it substantial deference.”
United States v. Bailey, 

, 803 (8th Cir. 2009). “Improperly admitted
testimony warrants reversal of a conviction if the testimony substantially influence[d]
the jury’s verdict.” United States v. Merrell, 

, 582 (8th Cir. 2016)
(alteration in original) (internal quotation marks omitted).

       Agent Parman testified that, in her opinion, Horseman improperly claimed the
nonpassive losses on his tax returns because he did not materially participate in Arbor
Homes—a key part of the government’s case against Beckham on the § 7206(2)
charges. As part of her testimony, she discussed statutory requirements and
regulatory tests for whether a shareholder has materially participated in a business.
Beckham alleges that her testimony was improper because she instructed the jury on
(1) the economic substance doctrine; and (2) the law regarding material participation.
Significantly, these two points relate only to the § 7206(2) charges against Beckham
and do not relate whatsoever to the sole count of conviction—the § 7212(a) offense.
Thus, even if Parman testified improperly, her testimony did not influence the jury
because it acquitted Beckham of the charges about which she testified. See United
States v. Shores, 

, 374 (8th Cir. 2012) (finding that any error in
admitting testimony was harmless when the jury acquitted the defendant of the charge
to which the testimony related); United States v. Webb, 

, 965 (8th Cir.
2000) (same). We therefore decline to reverse Beckham’s conviction based on
improper testimony, and we uphold the district court’s denial of Beckham’s motion
to exclude.




                                         -9-
                                         IV.

       Beckham next argues that the district court improperly denied his motion to
suppress evidence that the IRS obtained after the civil audit morphed into a criminal
investigation. Specifically, Beckham alleges that any evidence gathered after the IRS
discovered he lacked a valid CPA license was inadmissible because, at that point, the
IRS began investigating him for criminal activity while maintaining that it was merely
conducting a civil audit of Horseman. We review facts underlying denial of a motion
to suppress for clear error, and we apply de novo review to any “legal conclusions
based upon those facts.” United States v. Wadena, 

, 851 (8th Cir. 1998).

       “[T]he IRS may not develop a criminal investigation under the auspices of a
civil audit.” United States v. Grunewald, 

, 534 (8th Cir. 1993). In order
to succeed on a motion to suppress evidence obtained through a criminal
investigation disguised as a civil audit, a defendant must show that “1) the IRS had
firm indications of fraud by the defendant, 2) there is clear and convincing evidence
that the IRS affirmatively and intentionally misled the defendant, and 3) the IRS’s
conduct resulted in prejudice to defendant’s constitutional rights.” 

seeks to suppress all evidence he provided to the IRS after July 23,
2012—the date the IRS discovered Beckham was not a licensed CPA.2

       Firm indications of fraud are different than initial indications or suspicions.

. Whether the IRS had firm indications of fraud is a question
of fact. 

district court found that the IRS had only “a mere suspicion of
fraud” until it discovered that a loan on Horseman’s tax returns was a sham.

      2
       Neither party has raised the issue of whether Beckham could credibly be
considered a target of the audit—which focused on Horseman and the Horseman
Group—or discussed whether Beckham must be considered a target of the audit for
Grunewald to apply. We therefore decline to address these questions and assume that
Grunewald’s framework applies.

                                        -10-
Beckham points to nothing that indicates this factual finding is clearly erroneous. He
presented the IRS with a plausible explanation for his license expiration when asked
why he had no CPA license. At most, the IRS merely suspected the case might
involve fraud until it discovered the sham loan, at which point it suspended the civil
audit. Thus, we find no clear error in the district court’s determination that the IRS
developed firm indications of fraud on April 3, 2013—the date it discovered the sham
loan.

       Affirmative and intentional misleading requires something more than the IRS
failing to tell the defendant that “information developed in an audit may result in a
further criminal investigation . . . .” 

. To affirmatively
and intentionally deceive a defendant by disguising a criminal investigation as a civil
audit, the IRS must utilize the audit “with the express purpose of obtaining records
for the criminal investigation.” 

. This Court has found no
Grunewald violation when a civil auditor failed to inform defendants about a
simultaneous criminal investigation conducted by a different IRS agent. Here, despite
preliminary consultations with an IRS Fraud Technical Advisor, the auditing agents
did not involve IRS Criminal Investigation in the case until after they suspended the
civil audit. We thus find no clear error in the district court’s determination that the
IRS did not affirmatively and intentionally mislead Beckham.

       We also agree with the district court that the IRS’s conduct in its audit of
Horseman’s individual and corporate tax returns did not violate Beckham’s
constitutional rights. Beckham moved to suppress all evidence gathered after July 23,
2012. However, the only count of conviction hinged on evidence provided to the IRS
in January 2012—six months before that cutoff date. Because the IRS collected this
evidence before the date Beckham alleges a criminal investigation began, Beckham
cannot claim that it was the fruit of that investigation. We thus find no clear error in
the district court’s determination that the IRS’s conduct did not result in prejudice to
Beckham’s constitutional rights.

                                         -11-
       Finding no error in the district court’s analysis of the relevant factors, we find
no error in the district court’s denial of Beckham’s motion to suppress. We affirm the
district court’s ruling.

                                          V.

       Finally, Beckham argues that the district court erred in denying his motion for
a mistrial based on improper statements Horseman made while testifying. We review
a district court’s denial of a motion for a mistrial based on improper witness
statements for an abuse of discretion. United States v. Branch, 

, 607
(8th Cir. 2009).

      A mistrial is a drastic remedy for jury exposure to improper witness
statements—a remedy which we disfavor. United States v. Sherman, 

,
987 (8th Cir. 2006). This Court considers five factors in determining whether a
motion for a mistrial based on improper witness statements should be granted: “(1)
whether the remark was unsolicited; (2) whether the government’s line of questioning
was reasonable; (3) whether a limiting instruction was immediate, clear, and forceful;
(4) whether any bad faith was evidenced by the government; and (5) whether the
remark was only a small part of the evidence against the defendant.” 

(citing United States v. Caver, 

, 243 (6th Cir. 2006).

       Beckham moved for a mistrial based on Horseman’s statement that Beckham’s
actions constituted fraud, an element of the § 7206(2) charges. Applying the Branch
factors here, we find no abuse of discretion in the district court’s decision to deny
Beckham’s motion. The government asked Horseman if he ever stopped paying
Beckham pursuant to the subscription agreements. Horseman responded that he
continued making payments until he “spoke with a tax attorney who informed [him]
that this whole deal was fraudulent . . . .” 2 Trial Tr. 106-07, Dist. Ct. Dkt. 166. His
statement as to fraud did not directly respond to the question and was therefore

                                          -12-
unsolicited. See 

. The government’s line of questioning
directly related to the charges against Beckham. While the district court did not give
a curative instruction, it failed to do so because Beckham refused such an instruction.
See United States v. Peyton, 

, 878 (8th Cir. 1997) (upholding denial of
a motion for a mistrial when the district court offered a curative instruction and the
defendant refused it). The jury clearly disregarded Horseman’s statement that the
“deal was fraudulent” because it acquitted Beckham of the charges with fraud as an
element—the § 7206(2) charges. Moreover, whether Beckham convinced Horseman
to enter into a fraudulent transaction is irrelevant to the sole count of
conviction—obstructing and impeding administration of the internal revenue
laws—because fraud is not a requirement for that offense. See 26 U.S.C. § 7212(a).
 We therefore uphold the district court’s denial of Beckham’s motion for a mistrial.

      We affirm the district court’s judgment.
                      ______________________________




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