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United States v. Miner

United States Court of Appeals, Sixth Circuit

December 12, 2014

UNITED STATES OF AMERICA, Plaintiff-Appellee,
v.
DAVID MINER, Defendant-Appellant

Argued October 3, 2014.

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[Copyrighted Material Omitted]

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Appeal from the United States District Court for the Eastern District of Tennessee at Knoxville. No. 3:11-cr-00025-1--Thomas W. Phillips, District Judge.

ARGUED:

Robert L. Vogel, THE VOGEL LAW FIRM, Knoxville, Tennessee, for Appellant.

Frank M. Dale, UNITED STATES ATTORNEY'S OFFICE, Knoxville, Tennessee, for Appellee.

ON BRIEF:

Robert L. Vogel, THE VOGEL LAW FIRM, Knoxville, Tennessee, for Appellant.

Frank M. Dale, UNITED STATES ATTORNEY'S OFFICE, Knoxville, Tennessee, for Appellee.

Before: SILER, CLAY, and GRIFFIN, Circuit Judges.

OPINION

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GRIFFIN, Circuit Judge.

David Miner was prosecuted and convicted under 26 U.S.C. § 7212(a) for corruptly endeavoring to obstruct the " due administration" of federal income tax laws. He now appeals, claiming (1) that the district court reversibly erred in failing to instruct the jury that § 7212(a) requires proof that he was aware of a pending IRS proceeding; (2) that his conduct was constitutionally and statutorily protected; and (3) that certain witness testimony was improperly introduced at trial because the witness opined about his state of mind. Concluding that any error was harmless, we affirm.

I.

Uninspired by Justice Holmes's well-known sentiment that " [t]axes are what we pay for civilized society," Compania Gen. de Tabacos de Filipinas v. Collector of Internal Revenue, 275 U.S. 87, 100, 48 S.Ct. 100, 72 L.Ed. 177 (1927) (Holmes, J., dissenting), Miner marketed two schemes that promised to defeat their proverbial inevitability.[1] Miner's first scheme operated under the name of IRx Solutions and offered to assist clients in requesting alterations to their Individual Master Files (" IMFs" ), which are internal IRS records pertaining to each taxpayer. Miner told prospective clients that the IRS was engaged in widespread fraud by improperly coding individuals as businesses on their IMFs so that tax could be assessed against them. According to Miner, in fact, " everybody's [IMF] is wrong" and needed alteration. For an annual $1,800 fee, IRx Solutions promised to help individuals obtain their IMFs from the IRS, to " decode" them in order to expose " erroneous information," to " gather the evidence necessary to effectively challenge the IRS with substantiated allegations of fraud," and to " force the IRS to make the changes to your IMF necessary to get it out of your life." Further, IRx Solutions would " write letters to the IRS for you" in order to achieve its goal of altering the client's IMF.

The second scheme was offered by a second Miner company, the Blue Ridge Group. Under this program, Miner helped clients create common-law business trusts, into which he claimed that they could place any or all of their assets in order to avoid paying income tax.

Numerous clients purchased one or both of Miner's programs. In August 2006, the IRS began an undercover criminal investigation into Miner's activities. Ultimately, Miner was charged in a superseding indictment with one count of corrupt endeavor to obstruct or impede the due administration of the internal revenue laws, in violation of 26 U.S.C. § 7212(a), and two counts of willfully failing to file tax returns in 2004 and 2005, in violation of 26 U.S.C. § 7203.

At trial, one of Miner's employees testified about the general operation of the companies' schemes. In the IMF resolution program, for example, clients would be instructed to file Freedom of Information Act (" FOIA" ) and Privacy Act requests in order to obtain their IMFs. Miner would give the clients form letters to send to the IRS when their requests were not met favorably. The letters contained notices that if the IRS did not comply with the client's demands, the client would pursue

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legal remedies against the IRS and against the individual IRS agents who were working the client's file.

Several of Miner's clients also testified at trial about their interactions with him. Jeff Myslewski, for example, specifically testified that he purchased both the IMF resolution program and the trust creation program only after informing Miner that the IRS was actively pursuing him to pay assessed funds. Myslewski testified that one of the first things that he told Miner was that he was starting an offer in compromise with the IRS due to pending tax issues. Miner then told him about the IMF resolution program and about creating a business trust. Thus, only after Myslewski told Miner " what [his] specific situation with the IRS was" --including that federal tax liens had been filed against him several years earlier--did Miner assist Myslewski in creating a trust and in starting the process of obtaining his IMF.

Myslewski forwarded to Miner copies of IRS notices of deficiency and of taxes past due that Myslewski had previously received from the IRS. Soon afterward, Miner drafted a letter that he advised Myslewski to " mail to the IRS in response to its Notice of Deficiency." Miner told Myslewski that, although the IRS " [m]ost likely . . . will not answer the letter . . . also most likely, this letter will stall the IRS long enough for us to clean up your IMF." The letter itself (which Myslewski sent to the IRS) berated the IRS for keeping " fraudulent details" in the IMF file and informed the IRS that " I expect to bring charges against more than one IRS employee for the fraud clearly evident in my IMF and other files." When the IRS responded to the letter by informing Myslewski that he needed to file an amended tax return in order to amend his IMF, Miner prepared another letter for Myslewski to send to the IRS, threatening legal action and castigating the IRS for knowingly violating the law by refusing to comply with his request to amend the IMF. Myslewski similarly testified that the trust that he purchased from Miner was intended to be a tax-exempt entity, meaning that he purportedly could place his personal income in the trust and pay no taxes on it.

Other clients similarly testified that Miner helped them navigate existing IRS difficulties and advised them to create trusts for the purpose of avoiding the payment of income tax. For instance, Hans Himmel testified that he purchased Miner's programs because Miner promised that they would make him " invisible" to the IRS so that he would no longer need to pay income tax. So did Roger McGee. Steve Puleo similarly testified that Miner created a trust for him so that his company could pay him as a contractor without withholding taxes--a setup that Puleo agreed was " an arrangement for tax evasion." Puleo further testified that when the IRS directed his company to withhold the taxes notwithstanding the creation of the trust, Miner prepared and sent to the IRS letters complaining of its " illegal directive" to pay the taxes in question and threatening to sue the IRS unless it ceased its collection activity.

David Ebert likewise testified that he asked Miner to create a trust for him because he wanted to avoid paying income taxes. According to Ebert, Miner told him not to open an interest-bearing account for his trust in order to avoid the earned interest being reported by the bank to the IRS. Ebert also testified that Miner advised him that most clients wanted to avoid associating their social security numbers with the trusts' bank accounts because the IRS often searched for taxpayer assets using the taxpayer's social security number. " [W]ithdrawing cash from your personal

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account and depositing the cash into your trust account is perhaps the ideal way to handle things," suggested Miner, who noted that " a direct link between your paycheck and the trust" could be used by the IRS to cause Ebert " some headaches." Miner noted that his own practice was to establish a personal checking account " so the IRS can find something if it tries." Then, " when the balance gets large enough to attract attention," Miner would " withdraw cash and deposit in one of my trust accounts," thereby avoiding the " unwise" practice of establishing a direct link between his personal assets and his trust account.

Miner also gave Ebert instructions about what to do if the IRS contacted him, including a list of questions that would help Ebert " act as if you are cooperating with the IRS" but were in fact intended to prod the IRS into terminating the encounter. Finally, Ebert identified an email that he received from Miner after his trust was created, informing Ebert that he could " place [his] home, investments and cash assets in a ...


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