United States v. Michael H. Boulware

470 F.3d 931 UNITED STATES of America, Plaintiff-Appellee, v. Michael H. BOULWARE, Defendant-Appellant. No. 05-10752. United States Court of Appeals, Ninth Circuit. Argued and Submitted October 16, 2006. Filed December 13, 2006. John D. Cline, Jones Day, San Francisco, California, for the defendant-appellant. Alan Hechtkopf (signed the brief) and Karen M. Quesnel, Department of Justice, Tax Division, Washington, D. C., for the plantiff-appellee. Appeal from the United States District Court for the District of Hawaii Edward Rafeedie, * Senior District Judge, Presiding. D.C. No. CR-99-00239-ER. Before: RYMER and THOMAS, Circuit Judges, and LARSON, ** District Judge. RYMER, Circuit Judge. 1 In a return trip following retrial after we reversed his first conviction, United States v. Boulware, 384 F.3d 794 (9th Cir. 2004) ( Boulware I ), Michael H. Boulware appeals his conviction and sentence for filing a false tax return in violation of 26 U.S.C. § 7206 (1), tax evasion in violation of 26 U.S.C. § 7201 , and conspiracy to make a false statement to influence a financial institution in violation of 18 U.S.C. § 1014 . We conclude there is no reversible error, and affirm. 2…

In a return trip following retrial after we reversed his first conviction, United States v. Boulware, 384 F.3d 794 (9th Cir.2004) (Bo ulware I), Michael H. Boulware appeals his conviction and sentence for filing a false tax return in violation of 26 U.S.C. § 7206 (1), tax evasion in violation of 26 U.S.C. § 7201 , and conspiracy to make a false statement to influence a financial institution in violation of 18 U.S.C. § 1014 . We conclude there is no reversible error, and affirm.

I

Without belaboring the background recited in our prior opinion, Boulware is the founder, former President, and majority owner of a closely held corporation, Hawaiian Isles Enterprises (HIE). HIE dealt in tobacco distribution, coffee processing and sales, arcade games, vending machines, and bottled water. A second superceding indictment charged Boulware with thirteen (later reduced to nine) counts of tax evasion and tax fraud in connection with his failure to report funds diverted from HIE as income for the years 1989-97; one count of conspiracy to make a false statement to influence a financial institution in connection with HIE’s use of false invoices in applying for a loan from GECC Finance…

concurring:

I agree entirely with the analysis and conclusions of the majority. I write separately only to comment that if we were writing on a clean slate, rather than under the controlling precedent of United States v. Miller, 545 F.2d 1204, 1211-15 (9th Cir.1976), I would adopt the approach of the Second Circuit concerning the return to capital defense. See United States v. Bok, 156 F.3d 157, 162 (2d Cir.1998); United States v. D’Agostino, 145 F.3d 69, 72-73 (2d Cir.1998).

I believe the Second Circuit’s analysis is more consistent with the statutory requirements of criminal tax evasion. The elements of criminal tax evasion under 26 U.S.C. § 7201 are: “(1) the existence of a tax deficiency, (2) willfulness in attempted evasion of taxes, and (3) an affirmative act constituting an evasion or attempted evasion.” United States v. Marabelles, 724 F.2d 1374, 1380 (9th Cir.1984). Thus, an explicit requirement to impose liability under § 7201 is “the existence of a tax deficiency.” As the majority opinion notes, notwithstanding a taxpayer’s wrongful intent regarding diverted income, a sole shareholder of a company cannot be held civilly liable for any distribution that exceeds the…