United States of America, Plaintiff-appellee, v. Solomon Gaines, Defendant-appellant, 690 F.2d 849 (11th Cir. 1982)

Appellant Solomon Gaines was convicted after trial by jury of three counts of willfully and knowingly filing a false income tax return, in violation of 26 U.S.C. § 7206.¹  Specifically, Gaines was convicted of filing tax returns for the years 1975-1977 that seriously understated his gross income. On appeal Gaines argues that the district court erred in refusing several proposed jury instructions and in restricting his attorney's summation to the jury. We affirm.

Gaines, a lifelong resident of Monroe County, Georgia, dropped out of school after the fifth grade and appears to be functionally illiterate. After working on his family's farm for several years Gaines began to work in the pulpwood business, where he proved to be very successful. In less than ten years he learned enough of the industry to establish his own independent contracting business and employ other people as needed. This business included cutting standing timber and hauling it to the lumber mills of Georgia Timberlands, Inc.²  For each delivery Georgia Timberlands issued scale tickets that indicated the weight of the timber received. At the end of each week Gaines took the scale tickets to the company office and company personnel computed the gross amount due less deductions for stumpage,³  workmen's compensation, and cash advances. Gaines then received a check for the net amount due with an attached stub indicating the gross income, the relevant deductions, and the net income remitted.

In 1975, 1976, and 1977 Georgia Timberlands provided Gaines with an appropriate written statement indicating his gross income for the year. Gaines, however, did not rely upon the statements in preparing his income tax returns for the three years in question. Instead, he gave his weekly check stubs and receipts for any business expenses to a bookkeeper, who then completed his tax returns. It is undisputed that Gaines failed to turn over all of the weekly check stubs to his bookkeeper and that, as a result, his returns seriously understated his income for the years in question. The discrepancies between the gross receipts reported in the returns and the gross receipts reflected in the annual statements provided by Georgia Timberlands were as follows:

 Actual Reported Receipts Receipts Discrepancy ----------- ----------- ----------- 1975 $ 30,408.07 $ 7,762.00 $ 22,646.07 1976 24,793.35 14,196.69 10,596.66 1977 23,616.45 9,665.65 13,950.80 ----------- ----------- ----------- $ 78,817.87 $ 31,624.34 $ 47,193.53

After receiving the incorrect tax returns Gaines signed and mailed them to the Internal Revenue Service.

Gaines was subsequently indicted for willfully and knowingly filing false income tax returns. At trial he did not dispute that the returns were false or that he had failed to give all of his weekly check stubs to his bookkeeper. The only issues for the jury, therefore, were whether Gaines had known that the tax returns contained false information and whether he had willfully filed the returns despite that knowledge. The jury convicted Gaines and this appeal followed.⁴ 

At trial, the district court gave the following jury instruction:

Now, whenever the fact appears beyond a reasonable doubt from the evidence in the case that the defendant signed his income tax return, the jury may draw the inference and find that the defendant had knowledge of the contents of the return. Whether or not the jury draws such an inference is left entirely to the jury.

Gaines contends that this instruction effectively required the jury to presume that he knew the contents of the three tax returns if he signed them. He argues that the upshot of the instruction was to shift to him the burden of proof as to one of the elements of the crime charged, in violation of the due process clause of the fifth amendment. Gaines argues further that the district court compounded the error by refusing to instruct the jury that it should not conclusively presume knowledge of the contents of the returns merely from the fact that Gaines signed them. We reject both contentions.

A conclusive presumption is an evidentiary device that tells the trier of fact that it must find a certain elemental fact upon proof of a basic evidentiary fact, at least in the absence of some proof by the defendant to rebut the presumed connection. County Court v. Allen, 442 U.S. 140, 157-59 & n.16, 99 S. Ct. 2213, 2224-2226, 60 L. Ed. 2d 777 (1979). Because such a required finding may affect the placement of the burden of proof the use of conclusive presumptions in criminal cases may raise difficult constitutional questions.⁵  See, e.g., Sandstrom v. Montana, 442 U.S. 510, 519, 99 S. Ct. 2450, 2456-2457, 61 L. Ed. 2d 39 (1979); County Court v. Allen, 442 U.S. at 157-59 & nn. 16-17, 99 S. Ct. at 2225-2226; Leary v. United States, 395 U.S. 6, 31-36, 89 S. Ct. 1532, 2224-2226 & nn. 16, 17, 23 L. Ed. 2d 57 (1969). A permissible inference, on the other hand, is a common evidentiary tool that allows, without requiring, the trier of fact to infer the existence of an elemental fact upon proof of a basic evidentiary fact. County Court v. Allen, 442 U.S. at 156-57, 99 S. Ct. at 2224-2225. Permissive inferences are a commonplace staple of the law of evidence that do not affect the placement of the burden of proof unless the connection permitted by the inference is irrational, and, absent proof of the invalidity of an inference as applied to a particular case, their use is generally countenanced. See, e.g., id.; Tot v. United States, 319 U.S. 463, 467, 63 S. Ct. 1241, 1244-1245, 87 L. Ed. 1519 (1943); Crane v. Lessee of Morris, 31 U.S. (6 Pet.) 598, 620-21, 8 L. Ed. 514 (1832); Georgia Southern & Florida Ry. v. Perry, 326 F.2d 921, 925 (5th Cir. 1964); see also 1 J. Weinstein & M. Berger, Weinstein's Evidence P 300(01) & n.3 (1981) (justifiable inference is not synonymous with presumption).

The determination whether a jury instruction describes a conclusive presumption or a permissible inference requires a careful examination of the words actually spoken to the jury. Sandstrom v. Montana, 442 U.S. at 514, 99 S. Ct. at 2454. The instruction does not create a conclusive presumption if no reasonable juror could have interpreted the words of the instruction to require a certain ultimate conclusion upon the finding of a subsidiary evidentiary fact. Id. In this case the district court instructed that "the jury may draw the inference and find that the defendant had knowledge of the contents of the return" (emphasis added). Indeed, emphasizing the permissive rather than mandatory nature of the instruction, the district court continued:

Whether or not the jury draws such an inference is left entirely to the jury.

The language of the instruction is clear: it permits the jury to draw an inference as to the requisite state of mind from a certain probative fact. Because the jury remained free to accept or reject the inference the instruction neither removed the issue of knowledge from the jury nor relieved the government of its burden of proving every material element of the crime charged.⁶  See United States v. Freeman, 619 F.2d 1112, 1123 (5th Cir. 1980) (similar jury instruction upheld as allowing permissible inference), cert. denied, 450 U.S. 910, 101 S. Ct. 1348, 67 L. Ed. 2d 334 (1981).

Gaines relies heavily upon the seventh circuit's decision in United States v. Bass, 425 F.2d 161 (7th Cir. 1970). In that case a jury instruction indistinguishable from the one at issue in this case was condemned as creating a conclusive presumption. By failing to appreciate the manifestly permissive language of the instruction the Bass decision created constitutional problems where none existed, and we decline to follow it. Rather, we adopt the position of the tenth circuit on this issue. In Wainwright v. United States, 448 F.2d 984 (10th Cir. 1971), cert. denied, 407 U.S. 911, 92 S. Ct. 2437, 32 L. Ed. 2d 684 (1972), that court reviewed and upheld a jury instruction that is indistinguishable from the ones given below and in Bass,⁷  and explicitly rejected the conclusion reached by the seventh circuit. Id. at 986-87; see also United States v. Romanow, 505 F.2d 813, 814-15 (1st Cir. 1974) (signature at bottom of tax return is only prima facie evidence of taxpayer's knowledge of contents of return).

Gaines also argues that his presentation of evidence suggesting he is illiterate rebutted any inference concerning his state of mind that might be drawn from his signature. Gaines contends that this rebuttal necessitated additional evidence of his knowledge and a jury instruction to that effect. We understand this argument to mean that even if the instruction given by the district court established a permissible inference rather than a conclusive presumption it was invalid in light of the circumstances of this case.

Although it is clear that the use of a permissible inference may be invalid in some cases, the burden of demonstrating invalidity is on the party challenging the use of the inference. See Barnes v. United States, 412 U.S. 837, 844-46 & nn. 8-11, 93 S. Ct. 2357, 2362-2363, & nn. 8-11, 37 L. Ed. 2d 380 (1973). This burden is a heavy one. An instruction based on a permissible inference will be overturned "only if, under the facts of the case, there is no rational way the trier could make the connection permitted by the inference." County Court v. Allen, 442 U.S. at 157, 99 S. Ct. at 22242225; see United States v. Corral-Martinez, 592 F.2d 263, 269-70 (5th Cir. 1979). Gaines has fallen far short of meeting the requisite burden. There are at least three ways in which the jury could properly have connected the fact that Gaines signed the returns to a finding that he knew that the returns contained false information. First, the jury might not have credited the evidence of Gaines' alleged illiteracy. Although hardly self-flattering, this testimony was self-serving and could be questioned in light of Gaines' demonstrated business acumen. Second, the jury could rationally have assumed that Gaines was illiterate with respect to words, but not with respect to numbers. Gaines' signature at the bottom of a form that prominently displayed the critical gross income figure on the reverse side indicates that he saw the return and probably saw the glaringly inaccurate number. That Gaines may not have comprehended the import of the standard perjury clause on the tax returns does not mean that he did not appreciate the difference between $7,762.00 and $30,408.07.⁸  Indeed, common sense indicates that a successful businessman would immediately recognize the difference between those two numbers. Third, the jury could have considered the import of Gaines' signature in light of his testimony indicating that he knew he had not turned over to his bookkeeper all of his business receipts. That consideration could reasonably lead to the conclusions that Gaines knew that his tax returns could not be accurate and that he knew he had nonetheless filed income tax returns for the years in question.⁹  As there are three rational ways in which the jury could make the connection permitted by the inference the jury instruction passes muster.

Gaines also incorrectly asserts that the district court erred in failing to give his proposed cautionary jury instruction.¹⁰  A district court's refusal to give a requested instruction constitutes reversible error only if

the instruction (1) is substantively correct; (2) was not substantially covered in the charge actually delivered to the jury; and (3) concerns an important point in the trial so that the failure to give it seriously impaired the defendant's ability to effectively present a given defense.

United States v. Grissom, 645 F.2d 461, 464 (5th Cir. 1981); see Pine v. United States, 135 F.2d 353, 355 (5th Cir.), cert. denied, 320 U.S. 740, 64 S. Ct. 40, 88 L. Ed. 439 (1943). In giving an instruction that correctly allowed the jury to infer that Gaines knew the contents of his tax returns, the district court necessarily refrained from instructing the jury to presume guilty knowledge from a finding that Gaines signed the returns. Consequently, the charge given implicitly covered the substance of the requested jury instruction. See United States v. Grote, 632 F.2d 387, 391 (5th Cir. 1980), cert. denied, 454 U.S. 819, 102 S. Ct. 98, 70 L. Ed. 2d 88 (1981). Additionally, a criminal defendant has no right to select the particular phrasing of the jury instructions given in his case. See United States v. Southers, 583 F.2d 1302, 1306-07 (5th Cir. 1978); United States v. Thetford, 676 F.2d 170, 178 (5th Cir. 1982); United States v. Hudler, 605 F.2d 488, 490 (10th Cir. 1979), cert. denied, 445 U.S. 961, 100 S. Ct. 1647, 64 L. Ed. 2d 236 (1980). The district court, therefore, has wide latitude in determining the exact formulation of the jury instruction. United States v. Enstam, 622 F.2d 857, 870 (5th Cir. 1980), cert. denied, 451 U.S. 907, 101 S. Ct. 1974, 68 L. Ed. 2d 294 (1981); United States v. L'Hoste, 609 F.2d 796, 805 (5th Cir.), cert. denied, 449 U.S. 833, 101 S. Ct. 104, 66 L. Ed. 2d 39 (1980). The proposed instruction was both confusing and cumulative, and the district court was well within its discretion in refusing to give it. See, e.g., United States v. Goss, 650 F.2d 1336, 1344 (5th Cir. 1981); United States v. Castro, 596 F.2d 674, 677 (5th Cir.), cert. denied, 444 U.S. 963, 100 S. Ct. 448, 62 L. Ed. 2d 375 (1979).

Gaines raises three other objections to the district court's handling of his requested jury instructions. First, he contends that the district court should have instructed the jury that the misdemeanor provisions of 26 U.S.C. § 7207¹¹  were lesser included offenses under the charged crime. Second, Gaines argues that the district court improperly refused to give his proposed instruction on the meaning of willfulness. Third, Gaines objects to the district court's refusal to give an instruction to the effect that it is not a crime under the Internal Revenue Code to keep inadequate records. We find no merit in any of these contentions.

Gaines' first argument concerning the lesser included offense instruction has been squarely foreclosed by precedent binding upon this court.¹²  In Escobar v. United States, 388 F.2d 661 (5th Cir. 1967), cert. denied, 390 U.S. 1024, 88 S. Ct. 1411, 20 L. Ed. 2d 282 (1968), the former fifth circuit stated that a "lesser-included offense instruction is only proper where the charged greater offense requires the jury to find a disputed factual element which is not required for conviction of the lesser-included offense." Id. at 666 (quoting Sansone v. United States, 380 U.S. 343, 350, 85 S. Ct. 1004, 1009-1010, 13 L. Ed. 2d 882 (1965) (emphasis omitted)). The court then pointed out that the only difference between the statutes is that section 7206 requires a false statement to be "made under the penalties of perjury" while section 7207 makes no such requirement. Id. Because it was not disputed that all the tax returns in question contained a perjury clause the Escobar court reasoned that a charge under section 7207 was not required. Accord United States v. Tsanas, 572 F.2d 340, 347 (2d Cir.), cert. denied, 435 U.S. 995, 98 S. Ct. 1647, 156 L. Ed. 2d 84 (1978); United States v. Fritz, 481 F.2d 644, 645 & n.2 (9th Cir. 1973). The case before us is indistinguishable from Escobar. Gaines admits that the three tax returns in question contained standard perjury clauses. Consequently, there was no factual dispute that would have justified a jury instruction on the lesser offenses set out in section 7207.¹³ 

Gaines' contention that there should have been an instruction on willfulness is equally unavailing. A criminal defendant has no right to select the particular wording of a proposed jury instruction. As long as the instruction actually given is a correct statement of the law, fairly presents the issues to the jury, and is substantially similar to the defendant's proposed instruction, the district court has great latitude in phrasing it. See United States v. Bizzard, 674 F.2d 1382, 1389 (11th Cir. 1982); United States v. Satterfield, 644 F.2d 1092, 1096 (5th Cir. 1981); United States v. Quimby, 636 F.2d 86, 90 (5th Cir. 1981). Only a cursory review of the two charges is necessary to show that the district court correctly defined willfulness and gave the substance of Gaines' proposed instruction.¹⁴  The district court did not err in rephrasing the requested jury instruction.¹⁵ 

Gaines' final jury instruction claim must also fail. The adequacy or inadequacy of a taxpayer's record keeping procedures is of limited relevance to a determination of guilt or innocence under section 7206. The care with which Gaines kept his records goes only to the issue of willfulness, see United States v. Irwin, 593 F.2d 138, 140-41 (1st Cir. 1979), an issue the district court presented to the jury in the instruction actually given. As the district court adequately presented the issue to the jury, the district court did not abuse its discretion in refusing to adopt Gaines' proffered language. Additionally, the district court had reason to reject the proposed instruction because it was tangential to the case and could have distracted the jury from the central issues. See United States v. Hartley, 678 F.2d 961, 974 (11th Cir. 1982).

Gaines' final contention on appeal is that the district court improperly restricted his counsel's summation. During closing argument defense counsel told the jury that Gaines could not be convicted unless his misstatements were substantial. The district court sustained the prosecution's objection to this line of argument and informed the jury that the issue in a section 7206(1) prosecution is whether the misstatements were material, not whether they were substantial. The court went on to say that materiality was a question for the court and that, in any event, no one could reasonably argue that the misstatements were not substantial.

The district court has broad discretion over the scope of closing argument. United States v. Newman, 628 F.2d 362, 365-66 (5th Cir. 1980). Absent a showing of an abuse of discretion the district court will not be reversed for limiting summation as long as the defendant has the opportunity to make all legally tenable arguments that are supported by the facts of the case. See United States v. Scales, 599 F.2d 78, 80-81 (5th Cir. 1979); United States v. Smith, 433 F.2d 1266, 1272 (5th Cir. 1970), cert. denied, 401 U.S. 977, 91 S. Ct. 1206, 28 L. Ed. 2d 328 (1971).

We find no abuse of discretion here. The district court properly determined that the substantiality of the misstatements was not relevant to the prosecution under section 7206. Schepps v. United States, 395 F.2d 749, 749 (5th Cir.), cert. denied, 393 U.S. 925, 89 S. Ct. 256, 21 L. Ed. 2d 261 (1968); Hoover v. United States, 358 F.2d 87, 89 (5th Cir.), cert. denied, 385 U.S. 822, 87 S. Ct. 50, 17 L. Ed. 2d 59 (1966). That issue is properly raised in a prosecution for tax evasion, but has no bearing in a case such as this one where the focus of inquiry is on the fact of misstatement. Schepps v. United States, 395 F.2d at 749. As noted by the district court, the relevant line of inquiry in a section 7206(1) prosecution is the materiality of the misstatements, see Hoover v. United States, 358 F.2d at 88; United States v. Tsanas, 572 F.2d at 343, and materiality is a legal issue left to the court, United States v. Taylor, 574 F.2d 232, 235 (5th Cir.), cert. denied, 439 U.S. 893, 99 S. Ct. 251, 58 L. Ed. 2d 239 (1978); United States v. Haynes, 573 F.2d 236, 240 (5th Cir.), cert. denied, 439 U.S. 850, 99 S. Ct. 154, 58 L. Ed. 2d 153 (1978); United States v. Strand, 617 F.2d 571, 574 (10th Cir.), cert. denied, 449 U.S. 841, 101 S. Ct. 120, 66 L. Ed. 2d 48 (1980). The district court properly prevented defense counsel from arguing to the jury a false legal proposition. The court also properly acted to correct any false impressions that the abortive argument may have left with the jury by explaining that the amounts of the misstatements were legally irrelevant in this case.¹⁶ 

AFFIRMED.