Filed: Sep. 30, 2020
Latest Update: Sep. 30, 2020
Summary: 18-3622 (L) United States v. Little UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT SUMMARY ORDER RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION ASUMMARY O
Summary: 18-3622 (L) United States v. Little UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT SUMMARY ORDER RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN ELECTRONIC DATABASE (WITH THE NOTATION ASUMMARY OR..
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18-3622 (L)
United States v. Little
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
SUMMARY ORDER
RULINGS BY SUMMARY ORDER DO NOT HAVE PRECEDENTIAL EFFECT. CITATION TO A SUMMARY
ORDER FILED ON OR AFTER JANUARY 1, 2007, IS PERMITTED AND IS GOVERNED BY FEDERAL RULE OF
APPELLATE PROCEDURE 32.1 AND THIS COURT=S LOCAL RULE 32.1.1. WHEN CITING A SUMMARY ORDER
IN A DOCUMENT FILED WITH THIS COURT, A PARTY MUST CITE EITHER THE FEDERAL APPENDIX OR AN
ELECTRONIC DATABASE (WITH THE NOTATION ASUMMARY ORDER@). A PARTY CITING TO A SUMMARY
ORDER MUST SERVE A COPY OF IT ON ANY PARTY NOT REPRESENTED BY COUNSEL.
1 At a stated term of the United States Court of Appeals for the Second Circuit,
2 held at the Thurgood Marshall United States Courthouse, 40 Foley Square, in the City of
3 New York, on the 30th day of September, two thousand twenty.
4
5 PRESENT:
6 DENNIS JACOBS,
7 GERARD E. LYNCH,
8 MICHAEL H. PARK,
9 Circuit Judges.
10 _____________________________________
11
12 United States of America,
13
14 Appellee,
15
16 v. No. 18-3622-cr
17 No. 19-445-cr
18 Michael J. Little, AKA Sealed Defendant 1,
19
20 Defendant-Appellant.
21 _____________________________________
22
23 FOR DEFENDANT-APPELLANT: ROBERT A. CULP, Law Office of Robert A.
24 Culp, Garrison, NY for Michael J. Little
25
26 FOR APPELLEE: DINA MCLEOD, Assistant United States
27 Attorney (Christopher J. DiMase, Andrew S.
28 Dember, Anna M. Skotko, Assistant United
29 States Attorneys, on the brief), for Audrey
30 Strauss, Acting United States Attorney for
31 the Southern District of New York, New
32 York, NY.
1 Appeal from a judgment of the United States District Court for the Southern District of
2 New York (Castel, J.).
3 UPON DUE CONSIDERATION, IT IS HEREBY ORDERED, ADJUDGED, AND
4 DECREED that the judgment of the district court is AFFIRMED, except that the order of
5 restitution is AFFIRMED IN PART, VACATED IN PART, and REMANDED for further
6 proceedings.
7 Michael J. Little appeals from the judgment of conviction on nineteen counts arising from
8 a scheme to conceal assets from the Internal Revenue Service. After the death of Harry Seggerman
9 in 2001, Little and a foreign associate gathered millions of dollars held in Seggerman’s undisclosed
10 offshore accounts and placed them in a Swiss trust called Lixam Proviso. Little then helped
11 transfer the Lixam assets under the guise of gifts or loans to Seggerman’s surviving spouse and
12 children. He was paid about half-a-million dollars for his role.
13 In connection with that scheme, Little was charged and found guilty on one count of
14 corruptly impeding the administration of the IRS, 26 U.S.C. § 7212(a); one count of conspiracy to
15 defraud the United States, 18 U.S.C. § 371; and ten counts of willfully assisting in the filing of
16 false Forms 3520 (Annual Return to Report Transactions with Foreign Trusts and Receipt of
17 Certain Foreign Gifts), 26 U.S.C. § 7206(2). Little was also convicted on additional counts
18 relating to his failure to file his own tax returns or Report of Foreign Bank and Financial Accounts
19 (“FBAR”). He was sentenced to twenty months’ imprisonment and a one-year term of supervised
20 release. He was further ordered to pay $4,352,889.71 to the United States in restitution, an order
21 from which he also now appeals. We assume the parties’ familiarity with the underlying facts,
22 procedural history, and issues on appeal.
23
2
1 1. Constructive Amendment of the Indictment
2 Little first argues that discrepancies between the indictment and the jury instructions on the
3 conspiracy count rise to the level of a constructive amendment of the indictment and thereby
4 violate the Fifth Amendment’s Grand Jury Clause. Although the indictment described the third
5 object of the conspiracy as assisting the preparation of fraudulent Forms 1040 (income tax returns)
6 or Forms 706 (estate tax return), the jury instructions stated that “the third object is going to be
7 charged separately in Counts Ten through Nineteen,” the counts for assisting the preparation of
8 fraudulent Forms 3520. The district court further directed the jurors that they “should apply the
9 instructions for Counts Ten through Nineteen when considering whether the government proved
10 this third object of the conspiracy.”
11 Because Little raises his claim of constructive amendment for the first time on appeal, we
12 review it for plain error. See United States v. Bastian, 770 F.3d 212, 219 (2d Cir. 2014). “To
13 prevail on a constructive amendment claim, a defendant must demonstrate that ‘the terms of the
14 indictment are in effect altered by the presentation of evidence and jury instructions which so
15 modify essential elements of the offense charged that there is a substantial likelihood that the
16 defendant may have been convicted of an offense other than that charged in the indictment.’”
17 United States v. D’Amelio,
683 F.3d 412, 416 (2d Cir. 2012) (citation omitted). It is neither clear
18 nor obvious that there was a discrepancy between the indictment and the jury instructions. The
19 jury instructions described the third object of the conspiracy as “aiding and assisting in the
20 preparation and filing of false tax returns,” i.e., a violation of 26 U.S.C. § 7206(2). The same
21 statutory provision that criminalizes aid in filing a false 1040 also criminalizes aid in filing a false
22 3520. The references to Counts Ten through Nineteen thus could be understood to incorporate
23 that instruction’s description of the elements of a § 7206(2) violation rather than the conduct
3
1 described in that instruction. We therefore conclude that the district court did not commit plain
2 error in its jury instructions regarding the third object of the conspiracy.
3 Little also presses a claim of constructive amendment of the indictment with respect to
4 Count Eight, which charges willful failure to file an FBAR disclosing his interest in a foreign
5 financial account, “to wit, at least one foreign bank, securities, and other financial account at
6 Barclay’s Bank, located in Guernsey, Channel Islands.” Little contends that the government
7 constructively amended the indictment by offering proof of a second foreign account in the United
8 Kingdom, an account mentioned in the jury instructions. Such a discrepancy, however, does not
9 rise to the level of constructive amendment because “to wit” clauses do not modify essential
10 elements of the offense. See D’Amelio, 683 F.3d at 422.
11 2. Sufficiency of the Evidence of Willfulness
12 Several of the tax counts on which Little was convicted require that the government prove
13 a willful state of mind. Little contends that there was insufficient evidence that he willfully failed
14 to file tax returns, failed to file an FBAR, or assisted in the filing of fraudulent Forms 3520. “The
15 test for sufficiency is whether, as to a given count, a ‘rational trier of fact could have found the
16 defendant guilty beyond a reasonable doubt.’” United States v. Persico,
645 F.3d 85, 104 (2d Cir.
17 2011) (citation omitted). “In challenging the sufficiency of the evidence, the defendant faces an
18 uphill battle, and bears a very heavy burden, because the evidence must be viewed in the light most
19 favorable to the Government, with all reasonable inferences drawn in favor of the verdict.” United
20 States v. Crowley,
318 F.3d 401, 407 (2d Cir. 2003) (citations and internal quotation marks
21 omitted).
22 Because “willfulness under the tax laws requires ‘a voluntary, intentional violation of a
23 known legal duty,’” we must first verify that there was a legal duty before we consider whether
4
1 sufficient evidence supports a willful violation. United States v. Bok, 156 F.3d 157, 165 (2d Cir.
2 1998) (quoting Cheek v. United States,
498 U.S. 192, 200–01 (1991)). First, Little was under a
3 duty to file an annual income tax return during the charged years of 2005 to 2010. This is because
4 he was a lawful permanent resident who had not had his resident status “revoked,”
5 “administratively or judicially determined to have been abandoned” or, after 2008, otherwise
6 demonstrated to the Secretary that he should be “treated as a resident of a foreign country under
7 the provisions of a tax treaty.” 26 U.S.C. § 7701(b)(6); see also 26 U.S.C. § 7701(b)(1)(A)(i); 26
8 C.F.R. §§ 1.6012-1, 301.7701(b)-1(b). Second, Little was a “resident alien” or “person subject to
9 the jurisdiction of the United States” with an obligation to file an FBAR. 31 C.F.R. § 1010.350(a),
10 (b)(2); 31 C.F.R. § 103.24 (2007). Finally, Little had a duty not to assist in the filing of a fraudulent
11 Form 3520; but whether the forms at issue were in fact fraudulent is a question for the jury. See
12 United States v. Perez,
565 F.2d 1227, 1233–34 (2d Cir. 1977).
13 We conclude that substantial evidence supports the jury verdict on each of the challenged
14 counts. In a nutshell, Little contends that he merely misunderstood the byzantine tax code. But
15 Little is a British-trained barrister admitted to the New York Bar with a quarter-century of
16 experience in complex international financial transactions who, for much of his life, has claimed
17 German domicile for tax purposes. A reasonable juror could easily conclude that the failures of
18 such a sophisticated professional to report his income to the IRS, including compensation from the
19 Seggerman family, and to report foreign bank accounts into which his compensation was funneled,
20 were willful acts. See United States v. MacKenzie,
777 F.2d 811, 818 (2d Cir. 1985) (permitting
21 the inference of “knowledge of the law” from the “[d]efendants’ backgrounds,” including
22 education). Similarly, Little’s sophistication supports a conclusion that he was willfully
23 misleading the Seggerman family’s accountants when he informed them that the transfers from
5
1 Lixam Proviso were merely “gifts from a kind benefactor from overseas” and not distributions.
2 For these reasons, we conclude that the evidence of willfulness was sufficient to support
3 the verdict.
4 3. Jury Instructions
5 Little did not object to the jury instructions, so we review them for plain error. See United
6 States v. Vilar, 729 F.3d 62, 70 (2d Cir. 2013).
7 First, Little challenges the “conscious avoidance” instructions on the failure to file return
8 counts, the failure to file FBAR count, and the conspiracy count; and second, that the district
9 court’s instructions as to willfulness erroneously converted the standard into a reasonableness
10 standard. Conscious avoidance instructions are permissible only when the defendant mounts a
11 defense that he lacked “some specific aspect of knowledge required for conviction” and “a rational
12 juror may reach the conclusion beyond a reasonable doubt that the defendant was aware of a high
13 probability of the fact in dispute and consciously avoided confirming that fact.” United States v.
14 Coplan,
703 F.3d 46, 89 (2d Cir. 2012) (citation and internal quotation marks omitted). Here, each
15 predicate is met: Little defended himself by claiming ignorance of his obligations under the Tax
16 Code and, because of Little’s legal education and the relative straightforwardness of his
17 obligations, a reasonable juror could conclude that Little was aware of a high probability that his
18 actions were unlawful.
19 Second, Little challenges the willfulness instruction. He contends that the permission the
20 district court gave the jury to “consider whether the defendant’s belief was actually reasonable as
21 a factor in deciding whether he held the belief in good faith” converted the jury charge into a
22 reasonableness instruction. But Little misreads the instruction by ignoring the context. The
23 preceding sentence unambiguously rejects a reasonableness standard, warning the jury that “if you
6
1 find that the defendant honestly believed that he was not required to file a return, even if that belief
2 was unreasonable or irrational, then you should find him not guilty.” In context, the instruction
3 does not run contrary to the statutory mens rea. Rather, the instruction strictly limits considerations
4 of the defendant’s reasonableness (or lack thereof) to whether it raises the inference of willfulness,
5 a “factor” expressly approved by the Supreme Court. See Cheek, 498 U.S. at 203–04 (“[T]he more
6 unreasonable the asserted beliefs or misunderstandings are, the more likely the jury will . . . find
7 that the [g]overnment has carried its burden of proving knowledge.”)
8 For these reasons, we conclude that the jury instructions were proper.
9 4. Joinder
10 Little next argues that the counts of failure to file were improperly joined in the indictment.
11 “Tax counts can properly be joined with non-tax counts where it is shown that the tax offenses
12 arose directly from the other offenses charged. The most direct link possible between non-tax
13 crimes and tax fraud is that funds derived from non-tax violations either are or produce the
14 unreported income.” United States v. Turoff,
853 F.2d 1037, 1043 (2d Cir. 1988) (cleaned up).
15 Little’s contention is that the failure-to-file counts had nothing directly to do with the broader
16 Seggerman conspiracy.
17 But the indictment and record belie that contention. Little was charged with failure to file
18 tax returns for the years in which he received payments from the Seggermans for his role in the
19 scheme. Moreover, Little received such income, in part, through the bank account for which he
20 failed to file an FBAR. We therefore conclude that the charges were properly joined and the
21 district court appropriately exercised its discretion when it denied Little’s motion to sever.
22 5. Restitution Order
23 Finally, the district court did err in its restitution order. For convictions of offenses defined
7
1 in Title 26 of the United States Code, courts lack the statutory authority to order restitution that
2 begins immediately upon judgment. See United States v. Adams, 955 F.3d 238, 250 (2d Cir. 2020)
3 (citing 18 U.S.C. §§ 3663(a), 3663A). Hence, the $134,449.71 ordered as restitution for Little’s
4 failure to file tax returns in violation of 26 U.S.C. § 7203 is ultra vires. While we have sometimes,
5 in similar cases, exercised our power to modify a judgment to impose restitution as a condition of
6 supervised release, see
Adams, 955 F.3d at 250–51, we decline to do so here. The district court
7 calculated Little’s restitution obligation by applying the 20% rate provided for in Section
8 2T1.1(c)(2)(a) of the Sentencing Guidelines to Little’s earnings between 2005 and 2010. Since
9 then, however, the governments of the United States and the United Kingdom have apparently
10 agreed that the United States may tax Little’s business income only up to September 2008.
11 Accordingly, we conclude that the proper course under these circumstances is to vacate that part
12 of the restitution order relating to Little’s failure to file tax returns and remand this case for the
13 district court to assess in the first instance what effect, if any, this agreement might have on the
14 amount of restitution owed to the United States. The balance of the restitution order—the
15 $4,218,140.00 for which Little is one of the jointly and severally liable coconspirators—is
16 affirmed. 1
17 We have considered the remainder of Little’s arguments and find them to be without merit.
18 For the foregoing reasons, we AFFIRM the judgment of conviction, except for the order of
19
20
1
We reject Little’s argument that this restitution obligation must be apportioned among the
coconspirators. The decision whether to apportion or hold the coconspirators jointly and severally liable
is committed to the discretion of the trial court. See United States v. Nucci, 364 F.3d 419, 422 (2d Cir.
2004) (citing 18 U.S.C. § 3664(h)).
8
1 restitution, which we AFFIRM IN PART and VACATE IN PART and REMAND for further
2 proceedings.
3 FOR THE COURT:
4 Catherine O’Hagan Wolfe, Clerk of Court
9
