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United States v. Moore

decided: July 21, 1993.

UNITED STATES OF AMERICA, PLAINTIFF-APPELLEE,
v.
NORMA MOORE, E. JAMES HOLMES, FRED RODRIGUEZ, AND BETTY FLOREZ, DEFENDANTS-APPELLANTS.



Appeals from the United States District Court for the Northern District of Texas. D.C. DOCKET NUMBER CR5-91-15-02. JUDGE Sam R. Cummings

Before Wiener, Barksdale And DeMOSS, Circuit Judges.

Author: Demoss

DeMoss, Circuit Judge:

I

FACTS AND PROCEEDINGS

In 1987, E. James Holmes started a tax preparation organization for the primary purpose of assisting taxpayers in preparing amended income tax returns that would reflect substantial previously unclaimed deductions. Holmes' fee for this service was 10% of the amount to be refunded. He required the taxpayers to pay him this amount in advance, in cash. Holmes also conducted classes on how to prepare such amended tax returns.

The government describes Holmes' method of preparing these amended returns as a reverse process which starts with the total tax withheld. The preparer would then claim sufficient deductions to entitle the taxpayer to a refund of approximately 75% of the tax that had been withheld. The newly claimed deductions would be spread among several categories to minimize the chances of triggering an audit. Apparently, the vast majority of these deductions were simply fabricated by the preparer and were not supported by any documentation.

Norma Moore was a member of Holmes' organization for several months during 1987 until she left to start her own tax return preparation service using the same methods. Similarly, Betty Florez attended classes for approximately two months before she left to continue her own business preparing tax returns using the same methods. Fred Rodriguez started attending Holmes' classes in November 1987 and continued with the organization until after the IRS shut it down.

The IRS eventually identified 534 tax returns as fraudulently prepared by this organization and approximately $566,000 in tax refunds as fraudulent. All four defendants were indicted on one count each of conspiracy and multiple counts of aiding and assisting in the preparation of false tax returns. The case was tried to a jury and all defendants were convicted on the conspiracy count. Holmes, Moore, and Florez were each convicted on all respective counts of aiding and assisting. Rodriguez was convicted on three of the four aiding and assisting counts that he was charged with. Holmes received a 60 month prison sentence, while Moore, Florez and Rodriguez were each sentenced to 24 months.

All the defendants in this appeal raise issues concerning: (1) the admissibility of an expert summary witness' testimony and (2) the application of the sentencing guidelines. Defendant Rodriguez raises two additional grounds. He challenges both the sufficiency of the evidence against him and the effectiveness of his counsel.

We AFFIRM.

II

EXPERT SUMMARY WITNESS TESTIMONY

Upon review of the record, we find that Holmes never objected to Agent Copeland's testimony. Under FED. R. EVID. 103(a)(1), Holmes has waived his right to raise this issue on appeal. Nonetheless, we will address this issue as if all the defendants had properly objected.IRS Agent Copeland testified for the government in several capacities. As an expert witness, Copeland was proffered for his knowledge of tax law, of audits, and of preparing tax returns. His expertise extended far beyond mere income tax matters: Copeland was also a case agent in charge of the IRS' criminal investigations of tax violations. In addition to his specialized background, Copeland testified as one of two IRS agents who had investigated the present case. He had interviewed the defendants as well as many of the witnesses. He had personally led the raid on Holmes' home, had reviewed the documentation and had helped to prepare the case for trial. He was therefore both a general tax expert and a direct witness of the events leading to the defendants' indictment.

Copeland was also used in a third capacity. As an expert summary witness, he was to summarize both the government's own evidence and the trial testimony of all the witnesses. Present throughout the course of the trial, Copeland was to remind the jury of the detailed evidence which they had heard. His testimony therefore covered three areas: (1) general income tax matters; (2) the IRS' criminal investigation of the defendants; (3) the trial proceedings. The multifaceted nature of this testimony lies at the heart of the defendants' claims.

A district court's ruling on the admissibility of expert testimony is reviewed under the manifest error standard of review. We are required to sustain the court's decision unless it was manifestly erroneous. Salem v. United States Lines Co., 370 U.S. 31, 35, 82 S. Ct. 1119, 8 L. Ed. 2d 313 (1962); Peteet v. Dow Chem. Co., 868 F.2d 1428, 1431 (5th Cir.), cert. denied, 110 S. Ct. 328, 493 U.S. 935, 107 L/Ed.2d 318 (1989).

Federal Rule of Evidence 702 provides:

If scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training or education, may testify thereto in the form of an opinion or otherwise.

An expert's testimony may take the form of an opinion if it "serves to inform the jury about affairs not within the understanding of the average man." United States v. Webb, 625 F.2d 709, 711 (5th Cir. 1980). Furthermore, this opinion is not inadmissible should it address an ultimate issue to be decided by the jury. Federal Rule of Evidence 704(a) expressly provides, in pertinent part, that:

except as provided in subdivision (b) [prohibiting expert testimony as to a criminal defendant's mental state], testimony in the form of an opinion or inference otherwise admissible is not objectionable because it embraces an ultimate issue to be decided by the trier of fact. (emphasis added).

The basis of the "ultimate issue" rule under the Federal Rules of Evidence was to prevent a witness from "usurping the province of the jury." Rule 704 specifically abolished the "ultimate issue" rule, though the opinion must still satisfy Rules 701 and 702. FED.R.EVID. 704, Advisory Committee Notes. Therefore, it does not matter if Copeland testified as to an "ultimate issue" so long as the evidentiary thresholds in Rules 702 and 704 are satisfied. Once these requirements are met, an expert witness may be a summary witness. Courts have found that IRS agents, in specific, may testify as expert summary witnesses. See, e.g., United States v. Mohney, 949 F.2d 1397, 1406 (6th Cir. 1992); United States v. Bosch, 914 F.2d 1239 (9th Cir. 1990); United States v. DeClue, 899 F.2d 1465, 1473 (6th Cir. 1990); United States v. Dotson, 817 F.2d 1127, 1132 (5th Cir. 1987); United States v. Barnette, 800 F.2d 1558 (11th Cir. 1986). As a summary witness, an IRS agent may testify as to the agent's analysis of the transaction which may necessarily stem from the testimony of other witnesses. The agent may also explain his analysis of the facts based on his special expertise. Dotson, 817 F.2d at 1132.

In the present case, the appellants do not contest the qualifications of Agent Copeland as an expert. Nor do they attack the general admissibility of summary testimony by an expert witness. The appellants argue, however, that the scope of such testimony is very limited. They assert that the testimony is restricted to matters within the special expertise of the witness. Appellants contend that Agent Copeland did not testify as to any matters requiring special expertise. Instead, he only repeated selected testimony that was favorable to the government without providing any expert analysis. Appellants, therefore, conclude that the government presented Copeland in the guise of an expert summary witness in order to elicit otherwise inadmissible testimony. In specific, appellants argue that Agent Copeland's "selective" testimony was improperly used to bolster the credibility of government witnesses and to impermissibly suggest Agent Copeland's opinion of the credibility of the testimony. The question, therefore, is whether Copeland's testimony fell within his field of expertise. The answer turns, ultimately, upon what exactly Copeland's expertise was and what type of expert he was proffered as.

As a witness for the government, Copeland's purpose was obviously to strengthen the government's case. Perhaps, his testimony was selective but that is why cross examination is allowed. Furthermore, merely because testimony is selective does not mean that witness is not giving his expert opinion. An expert "may have been selective in relying on certain evidence while rejecting other evidence, but ...


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