BOUDIN, Circuit Judge.
Frederick and Kimberlee Allen—husband and wife—appeal from their convictions for tax-related offenses. For some years the Allens filed annual federal income tax returns reporting their income. However, for tax years 1997 through 1999, despite reportable income, the Allens filed returns reporting zero income. On the advice of their dentist, and their own research, they concluded that no provision of the Internal Revenue Code imposed "liability" on them for taxes, and attached this explanation to their returns.
Beginning in 1998, the Allens succeeded in stopping their mutual employer from withholding income taxes from their wages by claiming exemptions from withholding. Later, in 2000, the Allens convinced their employer to issue them paychecks directly instead of through a payroll company, and to treat them as "independent contractors" not subject to withholding of social security and medicare taxes. In 2001, Frederick Allen managed to secure the return of earlier-paid employment taxes withheld from the Allens' wages before their claim of "independent contractor" designation.
Between 2000 and 2008, despite reportable income asserted by the government to exceed $100,000 in each of the years, the Allens filed no tax returns at all. During the same period, they took a variety of steps that made it more difficult for the government to track and levy their assets, such as requesting that their paychecks be made payable to "cash" or payable directly to the Allens' creditors, closing all of their bank accounts, and transferring ownership of their home to a trust. The Allens paid all of their bills using cash and money orders, and cashed any checks through a stratagem with a bank teller friend.
Between 1999 and 2007, the Internal Revenue Service ("IRS") repeatedly informed the Allens that their "no liability" position was frivolous, and in 2007, the IRS specifically warned of criminal sanctions. In 2009, the government charged the Allens each with one count of conspiracy to defraud the United States, 18 U.S.C. § 371 (2006); one count of attempted evasion of payment of tax (for tax year 1999), 26 U.S.C. § 7201; and four counts of willful failure to file income tax returns (for tax years 2003-2006), id. § 7203.
The Allens were tried together by a jury in April 2010. The government offered evidence as to the taxes owed in the years at issue and evidence as to the warnings given to the Allens, the zero returns filed in several years and the absence of returns in the others, and various steps summarized above taken by the Allens to frustrate tax collection. A detailed recitation is unnecessary because the Allens do not claim that the evidence taken as a whole was insufficient to support the verdicts.
The Allens' main defense at trial, where both testified, was that they had a good faith belief that—as they understood the tax laws—they owed no taxes. Cheek v. United States, 498 U.S. 192, 111 S.Ct. 604, 112 L.Ed.2d 617 (1991).
Frederick Allen testified that some of the literature he relied on was prepared by a man named Larken Rose, with whom Allen ultimately worked on a "letter writing campaign . . . trying to get answers from various people in the government." The prosecutor's opening question in cross-examining Allen was: "Are you telling this jury that you firmly hold these beliefs even after your good friend Larken Rose went to jail for 15 fifteen [sic] months for not filing tax returns for these same and similar beliefs?"—to which Allen responded, "Absolutely."
Robert Schulz, who headed the We The People Foundation that the Allens joined and from which Frederick Allen received information, appeared as a defense witness. Schulz testified that his foundation did espouse the no-liability positions on which the Allens relied and that he believed those views to be correct. On cross-examination by the prosecutor, Schulz conceded that he had testified on behalf of another defendant charged with tax crimes, Richard Simkanin, who was ultimately convicted.
The jury convicted the Allens on all counts in April 2010, and the court sentenced each defendant to identical terms of 36 months' imprisonment. On appeal, the Allens argue only that the district court erred in refusing to give four requested jury instructions (all reprinted along with other disputed charges in an addendum to this decision). They also suggest that the prosecutor exceeded the proper bounds of cross-examination, although no objection was lodged at trial nor is one seriously developed on appeal.
Review as to instructions is ordinarily de novo as to questions of substantive law, while issues of phrasing and emphasis are reviewed for abuse of discretion. United States v. Teemer, 394 F.3d 59, 63 n. 2 (1st Cir.), cert. denied, 544 U.S. 1009, 125 S.Ct. 1964, 161 L.Ed.2d 790 (2005). Refusal to give a particular instruction requires reversal only where the requested instruction was both substantively correct and not substantially covered elsewhere in the charge—and even then only when the error was not harmless. United States v. Gonzalez, 570 F.3d 16, 21 (1st Cir.2009).
The first failure to instruct claim is that the district court erred in rejecting a tendered instruction concerning "guilt by association." Although the instructions given said that guilt must be based on the Allens' own intentions and actions, what the Allens requested was considerably more pointed: their proposed charge warned against "guilt by association" and against attributing guilt merely because the defendant was "associated with or friendly with anyone you may find to have acted in violation of the law."
The Allens justify this charge as a response to the cross-examination already described. Although the Allens also suggest in their summary of argument that the questions were impermissible, they
Here, the questions were relevant. When a defendant urges good faith in failing to pay taxes, what he understood to be his obligations matters. It was at least relevant to Frederick Allen's good faith not only that Allen had been repeatedly warned by the IRS but also that he knew that the views advocated by Larken Rose, similar to Allen's own, had lead to Rose's own conviction for not filing tax returns. He might nevertheless honestly entertain contrary views but that he had information contradicting his professed beliefs was still worth considering. See Cheek, 498 U.S. at 202, 111 S.Ct. 604.
As to Schulz, the cross-examination brought out that he had similarly testified as to tax obligations on behalf of another defendant charged with tax crimes who was ultimately convicted; indirectly, Schulz' testimony (to which the government had objected) could be regarded as supporting by example the reasonableness of the Allens' beliefs. So, the jury might consider, as impairing Schulz' own credibility as a professed believer, knowledge that his position had already been rejected by a federal court. It is, as with Allen, fairly modest impeachment but still relevant.
The Allens could have objected that the cross-examination—both of Frederick Allen and of Schulz—was substantially more prejudicial than helpful, Fed.R.Evid. 403; but, that judgment is primarily for the trial judge, and there was certainly no plain error. Showing that a tax protester does not believe what he says is a tricky task that requires that some latitude be allowed to the government.
As for the requested cautionary instruction, there is often some risk of prejudice in averting to convictions of others for the crime in question.
Here, the Allens' own conduct and the basis for their beliefs were the centerpiece of the trial, and the reference to the convictions of Rose and Simkanin was brief and undeveloped. Little risk existed that the latter would overwhelm, confuse or seriously taint the jury's understanding of the former. The instruction could reasonably have been given but, in matters like this not everything permissible is therefore compulsory: given the minimal risk of such prejudice in this case, refusing the instruction was not an abuse of discretion.
While accurate, e.g., United States v. Frankhauser, 80 F.3d 641, 653 (1st Cir. 1996), that statement of law was adequately conveyed to the jury by the court's instruction that the prosecution was required to prove "that the defendant whose case you are considering willfully joined in th[e] agreement" and that "[t]o act `willfully'. . . means to act voluntarily and intelligently and with the specific intent that the underlying crime be committed."
In turn the instructions clearly defined the underlying crime as "defraud[ing] the United States, or one of its agencies or departments, by dishonest means," and went on to define the term "defraud" in conventional phrasing that is not here contested. While the jury had to connect the two instructions, the central scienter issue—whether the Allens acted in good faith or instead knew they were acting contrary to law—was the heart of the evidence, the arguments and the instructions.
Indeed, the trial court instructed the jury:
This instruction also demonstrates the flaw in the Allens' third claim, namely, that the judge refused their request to provide their "theory of defense" instruction. That instruction was a lengthy and repetitive five-paragraph charge that essentially stated separately, for each non-conspiracy count, that the jury must acquit if it had a reasonable doubt about the defendant's guilt given the defendant's profession of a good faith belief that his or her income was not taxable.
The Allens say that they were disadvantaged because the district court did not use the phrase "theory of defense" in presenting the substantively correct good faith charge to the jury. It is quite true that in some situations a court ought to focus the jury's attention on just what the defendant disputes—whether it is an affirmative defense or merely a specification of just what element of the government's case is controverted and in a nutshell just what the defendant's version of the matter might be. But this is mandatory only where there is some risk that the theory of the defense might otherwise seem obscure.
In this case, the Allens did not deny that they had failed to report income or failed to file taxes at all, nor was there any real dispute about what they had been told by
Finally, the Allens attack the district court's refusal to give their requested charge stating: "In this case, the defendant is not presumed to know the law. For any law the government asserts the defendant knew, the government must prove beyond a reasonable doubt that the defendant knew it." The first sentence is more or less right but was covered in substance and more cogently by the district judge's charge; the second sentence is misleading and was properly refused.
Many are familiar with the saying that "a defendant is presumed to know the law," which is rarely intended as a factual presumption. Rather, it is ordinarily used as a shorthand for the "general rule that ignorance of the law or a mistake of law is no defense to criminal prosecution[, a proposition that] is deeply rooted in the American legal system." Cheek, 498 U.S. at 199, 111 S.Ct. 604. This is fair enough for conduct that is widely understood to be wrong, whether or not illegal, as is true of most familiar criminal violations.
However, for crimes that depend on legal rules that are by no means widely understood, Congress has in a number of cases imposed a requirement, usually phrased as a requirement of "willfulness," that requires as an element of the offense knowledge by the defendant that the conduct is illegal or at least wrongful. In this case, for slightly different reasons, all three of the offenses charged required knowledge on the part of the defendants that they did indeed owe taxes that they were required to declare and to pay.
But this was fully explained to the jury in the two good faith paragraphs quoted above. This explanation was stated in the affirmative and, in using the good faith and belief language, was far more useful than entering into a discussion about presumptions. Apart from the familiar "presumed innocent" phrase—usually matched with an explanation that the government carries the burden of proof—presumptions usually require some care in explanation. Their use is sometimes necessary but certainly not here.
The second sentence in the requested instruction—"For any law the government asserts the defendant knew, the government must prove beyond a reasonable doubt that the defendant knew it"—is misleading and was properly refused. It implies that the government's burden was to prove that the defendants knew of the particular statutes and regulations obligating them to pay income taxes and file returns. But "[k]nowledge of the law's demands does not depend on knowing the citation any more than ability to watch a program on TV depends on knowing the frequency on which the signal is broadcast.
Affirmed.
The Allens' requested "Guilt by Association" instruction
The Allens' requested "Conspiratorial Intent" instruction:
The Allens' requested "Not Know Law" instruction:
The Allens' requested "Theory of Defense" instruction:
Excerpts from jury instructions given to jury: