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Friday, December 8, 2017


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Ninth Circuit: Mistrial Not Required Based on Outburst of Co-Defendant

Convictions, Sentences Affirmed in Appeals by Three Participants in Tax-Fraud Scheme Aimed at Bilking Federal Government of $33 Million Through Bogus Refund Claims


By a MetNews Staff Writer


Three defendants convicted by a federal jury of participating in a scheme under which more than $33 million in tax refunds were falsely claimed, have lost their bid for reversals by the Ninth U.S. Circuit Court of Appeals on the ground that a co-defendant caused prejudice to them through her outburst in front of the jury.

Appellants Leroy Donovan Combs, Charles Wayne Uptergrove, and Ladonna Lee Moon contended that Judge Anthony W. Ishii of the Eastern District of California erred in denying their motions for a mistrial based on co-defendant Gaylene Lynette Bolanos’s tantrum. The argument was rejected Wednesday in a memorandum opinion.

The three-judge panel said:

“First, the outburst was not inherently prejudicial….In contrast to the ‘truly rare’ set of circumstances in United States v. Mannie…the jury in this case witnessed only a single two- to three-minute outburst from a co- defendant, rather than a ‘violent courtroom brawl,’ or a ‘campaign of intimidation.’ ”

Seventh Circuit Opinion

In Mannie, decided in 2007 by the Seventh Circuit, a conviction was reversed based on the denial of a motion for a mistrial by a man whose co-defendant engaged in “severe and violent disruptions during the trial.” The opinion in that case noted that the government’s theory was that both defendants were members of a street gang, and remarked:

“If the jury had witnessed these events in the context of a tax evasion case, it would likely be viewed as less prejudicial.”

Wednesday’s Ninth Circuit opinion continues:

“Second, the district court took reasonable steps to ensure the fairness of the proceedings and jury impartiality….The court read the jury a cautionary instruction prepared by defense counsel, and approved by all counsel, and gave the jurors an opportunity to express whether the outburst impacted their ability to be fair to all defendants. No juror expressed any concern over his or her ability to be fair and impartial.”

Lack of Instruction

All of the defendants were charged under 18 U.S.C. §287 which renders it a crime to make a claim to the United States government “knowing such claim to be false, fictitious, or fraudulent.” Uptergrove and Moon faulted Ishii for declining to instruct the jury that a conviction requires proof of willfulness or intent to defraud.

The three-judge panel quoted the Ninth Circuit’s 1979 opinion in United States v. Milton as saying that “the jury need not receive an instruction on intent to defraud the government, nor is it an element of the offense.”

In Milton, the court pointed out in a footnote that the statute “states the terms, ‘false, fictitious, or fraudulent,’ in the disjunctive” and made the point that submitting a claim knowing that it contains falsehoods is punishable even if the falsehoods were not calculated to defraud.

The Ninth Circuit’s memorandum opinion declares:

“Uptergrove and Moon fail to cite binding authority requiring the district court to instruct the jury on a good faith defense against false claim charges under §287.”

Bolanos and Oswald Georgner, who pled guilty, were apparently the masterminds of the scheme, under which refunds were claimed of moneys supposedly withheld by the Internal Revenue Service, which had not been. By the time the IRS caught on to the conspiracy, it had paid out about $400,000.

Two other defendants also pled guilty, and five defendants went to trial. There was a hung jury as to one of them.

Drawing the stiffest sentence was Bolanos: 10 years in prison, plus an order to pay restitution in the amount of $429,300. The next highest prison term was drawn by Combs, then 74: three years and nine months.

The Ninth Circuit rejected Combs’s contention that the penalty was excessive. The opinion says:

“The district court’s reference to Combs’ ‘long, long history of failing to comply with the tax laws’ is well supported by the undisputed presentence report as well as by evidence in the trial record, upon which the district court was permitted to rely in fashioning an appropriate sentence.”

The case is U.S.A. v. Combs, No. 16-10102.


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