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  • United States v. Clifton, 127 F.3d 969, 10th Cir. (1997)

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    The document summarizes a court case where Darrell Clifton was convicted of three counts of filing false income tax returns between 1988-1990 by underreporting his taxable income. The district court decided the element of materiality, which is required for the charges, as a matter of law rather than submitting it to the jury. On appeal, the court found this to be an error based on a Supreme Court ruling, but determined that the error did not seriously affect the fairness of the proceedings because the defendant had stipulated to underreporting significant amounts of taxable income and not disputing owing additional tax, making the omitted income clearly material to correctly computing his taxes. The appeals court therefore affirmed the district court's judgment.

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    Filed: 1997-10-17 Precedential Status: Precedential Citations: 127 F.3d 969 Docket: 96-5018

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    The document summarizes a court case where Darrell Clifton was convicted of three counts of filing false income tax returns between 1988-1990 by underreporting his taxable income. The district court decided the element of materiality, which is required for the charges, as a matter of law rather than submitting it to the jury. On appeal, the court found this to be an error based on a Supreme Court ruling, but determined that the error did not seriously affect the fairness of the proceedings because the defendant had stipulated to underreporting significant amounts of taxable income and not disputing owing additional tax, making the omitted income clearly material to correctly computing his taxes. The appeals court therefore affirmed the district court's judgment.

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    15 views6 pages

    United States v. Clifton, 127 F.3d 969, 10th Cir. (1997)

    Uploaded by

    Scribd Government Docs
    The document summarizes a court case where Darrell Clifton was convicted of three counts of filing false income tax returns between 1988-1990 by underreporting his taxable income. The district court decided the element of materiality, which is required for the charges, as a matter of law rather than submitting it to the jury. On appeal, the court found this to be an error based on a Supreme Court ruling, but determined that the error did not seriously affect the fairness of the proceedings because the defendant had stipulated to underreporting significant amounts of taxable income and not disputing owing additional tax, making the omitted income clearly material to correctly computing his taxes. The appeals court therefore affirmed the district court's judgment.

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    of 6

    F I L E D

    United States Court of Appeals


    Tenth Circuit

    PUBLISH

    OCT 17 1997

    UNITED STATES COURT OF APPEALS

    PATRICK FISHER

    TENTH CIRCUIT

    UNITED STATES OF AMERICA,


    v.

    Plaintiff-Appellee,

    DARRELL CLIFTON,

    No. 96-5018

    Defendant-Appellant.

    APPEAL FROM THE UNITED STATES DISTRICT COURT


    FOR THE NORTHERN DISTRICT OF OKLAHOMA
    (D.C. No. 95-CR-36-K)
    John D. Russell, Assistant United States Attorney (Stephen C. Lewis, United States
    Attorney, with him on the brief), Tulsa, Oklahoma, for Plaintiff-Appellee.
    Craig Bryant, Assistant Federal Public Defender (Stephen J. Knorr, Federal Public
    Defender, with him on the brief), Tulsa, Oklahoma, for Defendant-Appellant.
    Before BALDOCK, KELLY, and BRISCOE, Circuit Judges.
    BALDOCK, Circuit Judge.

    Clerk

    Defendant Darrell Clifton underreported his taxable income for the years 1988-90.
    A jury convicted Defendant on three counts of subscribing to materially false income tax
    returns, in violation of 26 U.S.C. 7206(1). Rather than submitting the element of
    materiality to the jury as United States v. Gaudin, 515 U.S. 506 (1995) required, the
    district court decided the element as a matter of law. On appeal, Defendant complains for
    the first time that the district courts decision constitutes reversible error. We exercise
    jurisdiction under 28 U.S.C. 1291. Because Defendant did not object at trial, we review
    the district courts decision only for plain error under Fed. R. Crim. P. 52(b). Applying
    Johnson v. United States, 117 S. Ct. 1544 (1997), we hold that the error did not seriously
    affect the fairness, integrity or public reputation of judicial proceedings. Accordingly, we
    affirm.
    I.
    Section 7206(1) proscribes filing a federal tax return which the taxpayer does not
    believe to be true and correct as to every material matter. Because materiality is an
    element of a 7206(1) offense, see United States v. Samara, 643 F.2d 701, 703 (10th Cir.
    1981) ( 7206(1) requires proof of a false statement, willfully made, of a material matter),
    Defendant had the right to have the jury decide materiality. As the Supreme Court
    instructed us in Gaudin, 515 U.S. at 511:

    The Constitution gives a criminal defendant the right to demand that a jury
    find him guilty of all the elements of the crime with which he is charged;
    one of the elements in the present case is materiality; [defendant] therefore
    had a right to have the jury decide materiality
    Despite Gaudin, the government suggests that materiality under 26 U.S.C.
    7206(1) remains a question of law for the court. In Gaudin, the Court addressed
    materiality under 18 U.S.C. 1001, which proscribes the making of false statements to
    the government. The Court defined a material statement under 1001 as having a
    natural tendency to influence, or capable of influencing, the decision of the
    decisionmaking body to which it was addressed. Gaudin, 515 U.S. at 509. The Court
    concluded that materiality under 1001 was a mixed question of law and fact for the jury.
    Id. at 511-15. In comparison, we have defined materiality under 7206(1) as information
    necessary in order that the taxpayer . . . compute his tax correctly. United States v.
    Strand, 617 F.2d 571, 574 (10th Cir. 1980) (internal quotations omitted). The
    government contends that this definition makes the element of materiality in this case
    purely a question of law for the court because Defendants failure to report taxable
    income caused his tax returns to be inaccurate. See United States v. Klausner, 80 F.3d
    55, 58-61 (2d Cir. 1996) (holding that materiality under 7206(2) was a question of law
    for the court because false itemized deductions necessarily resulted in an inaccurate
    computation of tax). We do not agree.

    Rather, we agree with the Ninth Circuits recent pronouncement in United States v.
    Uchimura,

    F.3d

    , 1997 WL 573130 at *2 (9th Cir. 1997), that [t]he Supreme

    Courts syllogism [in Gaudin] renders the fact/law distinction irrelevant--the only
    pertinent inquiry is whether materiality is an essential element of the crime. This must
    be so because even where the facts are undisputed, a criminal defendant still has the right
    to insist that the jury find each and every element of the crime beyond a reasonable doubt.
    Otherwise, directed verdicts for the government would be permissible. See Sullivan v.
    Louisiana, 508 U.S. 275, 280 (1993).
    To be sure, a jury usually will find a failure to report income material because such
    failure usually will affect the computation of tax. But as the Ninth Circuit recognized:
    [J]ust because a jury usually would agree with such a statement does not
    mean that a jury must agree with it, as a matter of law. Even if any failure
    to report income is material in most circumstances, it is not necessarily
    material in all circumstances, since the materiality of an underreporting of
    income necessarily depends upon the facts of each case.
    Uchimura, 1997 WL 573130 at *3. For instance, if a taxpayers allowable deductions
    exceed taxable income in a taxable year, no income tax will be due for that year.
    Therefore, taxpayers failure to report all taxable income will not affect the computation
    of tax, which in turn might very well affect the jurys deliberations on the element of
    materiality. For these reasons, we hold that materiality in a 7206(1) prosecution is an
    element of the crime which the district court must submit to the jury, unless of course

    defendant waives the right.1


    II.
    Undoubtedly then, the district court erred when it decided the element of
    materiality as a matter of law. Before we may correct an error not raised at trial, however,
    we must conclude that the error was both plain and affected Defendants substantial
    rights. Fed. R. Crim. P. 52(b); see generally United States v. Olano, 507 U.S. 725, 73137 (1993). Only then may we exercise our discretion to correct the error, but only if . . .
    the error seriously affects the fairness, integrity, or public reputation of judicial
    proceedings. United States v. Johnson, 117 S. Ct. 1544, 1549 (1997) (internal
    quotations and brackets omitted) (emphasis added).
    In Johnson, the Court held last term that a district court did not commit reversible
    error in deciding the element of materiality as a matter of law in a perjury prosecution
    under 18 U.S.C. 1623, despite Gaudin. The Court concluded that the error was plain,
    but bypassed the question of whether the error affected defendants substantial rights.
    Instead, the Court concluded that because the evidence of materiality at trial was

    We note that Defendants first trial, which occurred prior to the Supreme Courts
    decision in Gaudin, ended with a hung jury. Defendants second trial, however, occurred
    a month after the Court decided Gaudin. Thus, Defendant was not necessarily unaware of
    his right to have the element of materiality submitted to the jury. Nevertheless, we will
    give Defendant the benefit of the doubt in this instance. Had Defendant intentionally
    relinquished or abandoned a known right, his failure to object would constitute waiver
    and we would lack discretion to notice it under Fed. R. Crim. P. 52(b). See United States
    v. Olano, 507 U.S. 725, 732-33 (1993).
    1

    overwhelming and essentially uncontroverted, the error did not seriously affect the
    fairness, integrity, or public reputation of judicial proceedings:
    Indeed, it would be the reversal of a conviction such as this which would
    have that effect. Reversal for error, regardless of its effect on the judgment,
    encourages litigants to abuse the judicial process and bestirs the public to
    ridicule it. No miscarriage of justice will result here if we do not notice the
    error, and we decline to do so.
    Johnson, 117 S. Ct. at 1550 (internal citations and quotations omitted).
    While the district courts failure to submit the element of materiality to the jury in
    this case constitutes error which is plain under Gaudin, see Johnson, 117 S. Ct. at 1549,
    we, like the Court in Johnson, need not determine whether the error affected Defendants
    substantial rights because Defendant has not persuaded us that the error seriously affected
    the fairness, integrity, or public reputation of judicial proceedings. Defendant stipulated
    at trial that he underreported his taxable income for the years 1988-90 by $30,000,
    $40,000, and $76,000 respectively. Defendant did not dispute owing additional tax as a
    result. Surely then, the taxable income Defendant omitted from his federal income tax
    returns was necessary to a correct computation of tax, and thus material.
    Accordingly, the judgment of the district court is
    AFFIRMED.

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