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United States v. Bolton

United States Court of Appeals, Fifth Circuit

October 26, 2018

UNITED STATES OF AMERICA, Plaintiff - Appellee
v.
CHARLES BOLTON; LINDA BOLTON, Defendants - Appellants UNITED STATES OF AMERICA, Plaintiff - Appellee
v.
CHARLES BOLTON, Defendant-Appellant

          Appeals from the United States District Court Southern District of Mississippi

          Before STEWART, Chief Judge, and WIENER and HIGGINSON, Circuit Judges.

          CARL E.STEWART, CHIEF JUDGE:

         IT IS ORDERED that our prior panel opinion, United States v. Bolton, No. 17-60502 c/w 17-60576, 2018 WL 5303661 (5th Cir. Oct. 23, 2018), is WITHDRAWN and the following opinion is SUBSTITUTED therefor.

         A grand jury indicted Plaintiffs-Appellants Charles Bolton ("Charles") and his wife, Linda Bolton ("Linda"), on five counts of attempted tax evasion and five counts of filing false tax returns. The jury convicted Charles on four of the attempted tax evasion counts and all five counts of filing false tax returns. The jury acquitted both Boltons on one of the attempted tax evasion counts, failed to reach a verdict as to Linda on the remaining attempted tax evasion counts, and convicted Linda on all five counts of filing false tax returns.

         The district court sentenced Charles to 45 months of imprisonment, imposed three years of supervised release with a special condition requiring payment of $145, 849.78 in restitution and a $10, 000 fine. The district court sentenced Linda to 30 months of imprisonment, with a one-year term of supervised release, a $6, 000 fine, and restitution of $145, 849.78, owed jointly and severally with Charles. Both Charles and Linda appeal their convictions and sentences. We affirm the Boltons' convictions and sentences in all respects except that we modify the district court's judgment to reflect that the restitution owed by the Boltons is not due until their terms of supervised release commence.

         I. Facts & Procedural History

         In 1992, Charles became chief deputy sheriff of the Forrest County Sheriff's Office ("FCSO") in Hattiesburg, Mississippi. He was terminated from the FCSO in 2016 after he was convicted in this case. As chief deputy, he oversaw the Forrest County Juvenile and Adult Detention Center. At that time, he and his wife Linda also owned and operated two businesses, [1] Hall Avenue Package Store and Sports 22 Café and Lounge.

         In March 2014, the Federal Bureau of Investigation ("FBI") and the Mississippi State Auditor's Office began an investigation into whether the Boltons and others were stealing food from the FCSO's Detention Center.[2] In July 2015, the U.S. Attorney's Office for the Southern District of Mississippi received approval to recuse itself from the investigation and prosecution of Charles, and the matter was re-assigned to the U.S. Attorney's Office for the Eastern District of Louisiana. Around that time, the FBI referred several suspicious checks related to the Boltons' businesses to Internal Revenue Service ("IRS") Special Agent Bradley Luker who began a criminal tax investigation to determine whether the Boltons were guilty of violating any tax laws. Agent Luker provided information about the criminal tax investigation to Assistant United States Attorney Fred Harper of the Eastern District of Louisiana who had been assigned to Charles's case.

         A federal grand jury returned a ten-count indictment in March 2016 charging the Boltons with attempted tax evasion and aiding and abetting in attempted tax evasion for the tax years 2009 through 2013, in violation of 26 U.S.C. § 7201 and 18 U.S.C. § 2 (Counts 1-5), as well as filing false tax returns and aiding and abetting in the filing of false tax returns for tax years 2009 through 2013, in violation of 26 U.S.C. § 7206(1) and 18 U.S.C. § 2 (Counts 6-10). After the Boltons were indicted, attorney Joe Sam Owen ("Owen") enlisted as counsel of record on behalf of Charles. Linda was represented by several different attorneys before trial, and by attorney Robert McDuff at trial and sentencing.

         Prior to trial, the government stated its intent to introduce business records, checks, check registers, and tax returns of an individual named John Lee ("Lee"), who, through his law practice, Lee P.A., was involved with the Boltons, as business or public records. The government also subpoenaed Lee to testify at trial, and Charles subpoenaed a large number of checks from Lee's law practice as well as Lee's casino gambling records.

         Before trial, Lee hired attorney Rick Simmons who moved to quash a subpoena by the government to testify at trial on grounds that Lee would be invoking his Fifth Amendment privilege against self-incrimination. The district court denied the motion, but the parties stipulated at the outset of trial that Lee would not actually testify even if called.[3] The parties also stipulated that records or summaries of records were admissible as business records, and the Boltons stipulated to the authenticity of their handwriting on various exhibits. The parties further stipulated that Lee had invoked his Fifth Amendment privilege, and the jury was instructed that Lee would not be called as a witness.

         The Boltons' three-day jury trial began in September 2016. At trial, the government presented evidence that the Boltons treated money received by their two businesses as "loans" rather than "income" when reporting their business income on their personal income tax returns, prepared by Renee Moore ("Moore") of Nicholson and Company, thus falsely reducing their tax liability. The deposits in question included checks from various entities and individuals, including Lee and Manheim Mississippi Auto Auction.

         The jury ultimately convicted Charles on four counts of attempted tax evasion and all five counts of filing false tax returns. The jury acquitted each Bolton on one count of attempted tax evasion, failed to reach a verdict as to Linda on the remaining attempted tax evasion counts, and convicted Linda on all five counts of filing false tax returns.

         The presentence reports ("PSRs") for Charles and Linda described an interview (referred to as an "FBI 302") of Lee by federal agents regarding checks he had given to Charles. Linda moved for a new trial based on an alleged discrepancy between the information in the FBI 302 and the testimony of Agent Luker. Linda also argued that the failure to disclose the substance of the interview violated the government's discovery obligations and constituted a Brady violation. Charles joined the motion. The district court denied the new trial motion, finding no discrepancy between Agent Luker's trial testimony and the information in the FBI 302.

         Three days before sentencing, Charles's attorney, Owen, advised the court that Charles had obtained new counsel and that Charles would be complaining about his (Owen's) handling of the case. On the day of sentencing, Charles sought to be represented by new counsel, Willie J. Huntley-an out-of-state attorney who said he would need more time to review the case before being ready to proceed. The district court declined to grant a continuance and offered Charles the choice of being represented at sentencing by Owen or by an attorney from the Federal Public Defender's Office. Ultimately, Charles was represented at sentencing by Owen, and Huntley was allowed to assist.

         In sentencing Charles, the district court upwardly varied from the guidelines range of 27 to 33 months, imposing a 45-month term of imprisonment. The variance was based on the district court's finding that he had stolen food inventory from the FCSO Detention Center and used the food at his Sports 22 restaurant and catering business. The district court also imposed three years of supervised release with a special condition requiring payment of $145, 849.78 in restitution and a $10, 000 fine. Charles reported to federal prison on May 3, 2017. He then moved the district court for release pending appeal, which the district court denied.[4]

         After sentencing, Owen sought and received permission to withdraw as counsel of record for Charles. Three days after entry of the judgment, Charles filed a notice of appeal, and also filed three motions seeking a new trial or vacatur of his conviction and sentence. Among numerous other arguments, Charles argued that his representation by Owen was paid for by Lee and was therefore tainted by a conflict of interest. This court remanded the case pursuant to Federal Rule of Appellate Procedure 12.1(b) so that the district court could rule on the motions, expressly declining to retain jurisdiction.

         Following remand, the district court issued an order reviving the pending motions, setting briefing deadlines, and ordering former counsel Owen and McDuff to respond to various allegations of ineffective assistance of counsel. The government filed a consolidated response to all of the Boltons' pending motions, as did Owen and McDuff. On July 3, 2017, the district court denied the new trial motions. Charles noticed his appeal on July 12 (entered July 13), citing the district court's July 3 new trial order. Linda noticed her appeal on July 13, also citing the district court's July 3 new trial order.

         Owen asked the district court to deem the attorney-client privilege and the work-product doctrine waived so that he could respond to the Boltons' allegations of conflict and ineffective assistance of counsel. Charles objected and Owen noted that, in multiple motions, he and his firm were accused of harboring a conflict-of-interest and a litany of instances of ineffective assistance. The government supported the waiver. Charles then sought a protective order, which Owen opposed, precluding the availability of the documents to the prosecution, law enforcement, or the public. Owen identified the claims against him as involving an alleged conflict about Lee, trial preparation and use of an expert, jury selection, trial strategy, exhibits, witnesses, Linda's decision not to testify, Charles's decision not to testify, Charles's conviction, the PSR and objections, the in-camera sentencing conference, the sentencing hearing, and the post-sentencing submissions under seal.

         The district court acknowledged that Charles had waived his attorney-client privilege and work-product doctrine but determined that the documents should be filed under seal and not served on the government. The government moved for reconsideration on grounds that it would need the materials to respond to any appeal filed by Charles and to defend against allegations of ineffective assistance of counsel under 28 U.S.C. § 2255. The district court granted the government's motion and placed Owen's response to Charles's new trial motions on the public docket, finding that Charles "did not point to a single piece of formerly privileged evidence which would prejudice him either on appeal or in the event of a new trial." Charles noticed his appeal of that order (appeal No. 17-60576). Charles's second appeal, No. 17-60576, was consolidated with the existing appeal of the Boltons' convictions and sentences, No. 17-60502.

         II. Discussion

         The Boltons each raise a host of arguments on appeal including but not limited to: (1) whether the indictment was sufficient; (2) whether the evidence was sufficient to support the Boltons' convictions; (3) whether one or more Brady violations took place in the proceedings below; (4) whether the Boltons' Confrontation Clause rights were violated; (5) whether the government engaged in prosecutorial misconduct during trial; (6) whether the district court erred in its issuance of jury instructions; (7) whether the district court erred in imposing the Boltons' sentences; (8) whether Charles was denied his right to conflict-free choice of counsel or received ineffective assistance of counsel; and (9) whether the district court erred in holding that Charles waived his attorney-client privilege. We address each issue in turn.

         Indictment

         Charles argues that his indictment was insufficient. Because Charles failed to preserve his objection to the alleged defective indictment, plain error review applies. United States v. Robinson, 367 F.3d 278, 285 (5th Cir. 2004). "Plain error exists if (1) there is an error, (2) the error is plain, . . . (3) the error affect[s] substantial rights and (4) the error seriously affect[s] the fairness, integrity or public reputation of judicial proceedings." United States v. Garcia-Carrillo, 749 F.3d 376, 378 (5th Cir. 2014) (per curiam) (internal quotation marks and citation omitted).

         "An indictment is legally sufficient if (1) 'each count contains the essential elements of the offense charged,' (2) 'the elements are described with particularity,' and (3) 'the charge is specific enough to protect the defendant against a subsequent prosecution for the same offense.'" United States v. Fairley, 880 F.3d 198, 206 (5th Cir. 2018) ("'[T]he validity of an indictment is governed by practical, not technical considerations,' and '[t]he basic purpose behind an indictment is to inform a defendant of the charge against him[.]'").

         The government charged five counts of attempted tax evasion and aiding and abetting in attempted tax evasion for the tax years 2009 through 2013 in violation of 26 U.S.C. § 7201 and 18 U.S.C. § 2 (Counts 1-5), and five counts of filing false tax returns and aiding and abetting in the filing of false tax returns for the tax years 2009 through 2013 in violation of 26 U.S.C. § 7206(1) and 18 U.S.C. § 2 (Counts 6-10).

         A. Tax Evasion

         "The elements of [§7201 tax evasion are]: (1) willfulness, (2) existence of a tax deficiency; and (3) an affirmative act constituting an evasion or attempted evasion of the tax." United States v. Nolen, 472 F.3d 362, 377 (5th Cir. 2006). The indictment charged that, for the tax evasion counts, the Boltons "did willfully attempt to evade and defeat a large part of the income tax due and owing by defendants to the United States of America by, among other things, preparing and causing to be prepared, and by signing and causing to be signed, a false and fraudulent joint U.S. Individual Income Tax Return, Form 1040, on behalf of defendants, which was filed with the Internal Revenue Service." The indictment further alleged that the Boltons attempted to evade and evaded the assessment of their income taxes by cashing tens of thousands of dollars in checks purportedly issued in payment for liquor, wine, and catering services to prevent those payments from being recorded on their business bank statements; providing deceptive records to their tax return preparer; and making false statements to their tax return preparer that some payments for goods and services were loans. When compared to the elements required to prove tax evasion under § 7201, the indictment was sufficient in that it alleged with specificity the affirmative acts willfully taken by the Boltons to evade the tax they knew they owed, provided the Boltons notice of the alleged crime, and protected them from subsequent prosecution for the same crime. Fairley, 880 F.3d at 206.

         B. Filing False Tax Returns

         "A person commits the felony of filing a false tax return in violation of 26 U.S.C. § 7206(1) when he 'willfully makes and subscribes any return, statement, or other document, which contains or is verified by a written declaration that it is made under the penalties of perjury, and which he does not believe to be true and correct as to every material matter.'" United States v. Bishop, 264 F.3d 535, 546 (5th Cir. 2001) (quoting 26 U.S.C. § 7206(1)).

         The indictment alleged that the Boltons "did willfully make and subscribe to a joint United States Income Tax Return, Form 1040, which was verified by a written declaration that it was made under penalty of perjury and was filed with the Internal Revenue Service [which] defendants herein did not believe to be true and correct as to every material matter for each calendar tax year noted [2009-2013]" in that ...


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