Arguelles-Olivares v. Mukasey

526 F.3d 171

Joel ARGUELLES-OLIVARES, also known as, Joel Arguelles, Petitioner, v. Michael B. MUKASEY, United States Attorney General, Respondent.

No. 05-60914.

United States Court of Appeals, Fifth Circuit.

April 22, 2008.

Simon M. Azar-Farr (argued), Simon Azar-Farr & Associates, San Antonio, TX, for Petitioner.

John S. Hogan (argued), Thomas Ward Hussey, Director, John Clifford Cunningham, Holly Michele Smith, U.S. Dept. of Justice, Office of Immigration Litigation, Michael B. Mukasey, U.S. Dept. of Justice, Washington, DC, Trey Lund, Field Office Director, U.S. Immigration and Customs Enforcement, Attn: Carl Perry, New Orleans, LA, Guadalupe R. Gonzales, Immigration & Customs Enforcement, Chief Counsel's Office, El Paso, TX, for Respondent.

On Petition for Review of an Order of the Board of Immigration Appeals.

Before GARWOOD, DENNIS and OWEN, Circuit Judges.

OWEN, Circuit Judge:

The petitioner seeks review of a removal order, contending that his prior conviction for filing a false federal tax return did not constitute a removable offense. We deny the petition for review.

I

Joel Arguelles-Olivares pleaded guilty to violating 26 U.S.C. § 7206(1) by knowingly filing a false tax return.¹ The Department of Homeland Security thereafter instituted removal proceedings, charging that Arguelles-Olivares was removable pursuant to 8 U.S.C. § 1227(a)(2)(A)(iii) for having been convicted of an aggravated felony within the meaning of 8 U.S.C. § 1101(a)(43)(M). Subsection (M) defines an aggravated felony as "an offense that (i) involves fraud or deceit in which the loss to the victim or victims exceeds $10,000; or (ii) is described in section 7201 of Title 26 (relating to tax evasion) in which the revenue loss to the government exceeds $10,000."² The Immigration Judge ordered Arguelles-Olivares removed, and the Board of Immigration Appeals affirmed the removal order.

Arguelles-Olivares contends that his tax offense is not an "aggravated felony" as defined by subsection (M)(i). He first asserts that subsection (M)(i) does not apply to any federal tax offenses because subsection (M)(ii) specifically identifies tax evasion, and only tax evasion, thereby reflecting congressional intent that no other tax offense qualifies as an aggravated felony. He additionally argues that, even if (M)(i) includes knowingly filing a false federal tax return, there is no competent evidence that the amount of loss was $10,000 or more.

II

We are not the first court to consider whether a federal tax offense other than tax evasion may constitute an aggravated felony under 8 U.S.C. § 1101(a)(43)(M). A divided panel of the Third Circuit concluded in Lee v. Ashcroft that it may not.³ The Ninth Circuit reached the opposite conclusion in Kawashima v. Gonzales,⁴ expressly rejecting the majority's reasoning in Lee. The arguments supporting each opposing view have been cogently considered by the Third Circuit in the majority and dissenting opinions in Lee and by the Ninth Circuit in Kawashima. We agree with then-Judge (now Justice) Alito's⁵ and the Ninth Circuit's construction of subsection (43)(M)(i).

The text of subsection (43)(M)(i) is straightforward and unambiguous. "The term `aggravated felony' means ... an offense that — (i) involves fraud or deceit in which the loss to the victim or victims exceeds $10,000...."<sup>6</sup> "Willfully" and knowingly signing and filing a false federal tax return unquestionably "involves fraud or deceit," and courts have concluded that the federal government is a "victim" within the meaning of (43)(M)(i).<sup>7</sup> The difficulty in construing (43)(M)(i) is the immediately succeeding subsection: "or (ii) is described in section 7201 of Title 26 (relating to tax evasion) in which the revenue loss to the Government exceeds $10,000."<sup>8</sup> The Third Circuit concluded that this more specific reference to tax evasion and the juxtaposition of the two subsections rendered subsection 43(M)(i) less than "plain and unambiguous."<sup>9</sup> That court "turn[ed] to the traditional tools of statutory construction," concluding that subsection (M)(ii) would be "mere surplusage" if subsection (M)(i) included tax offenses because "the government has not identified, and we are unable to envision" "a case where a conviction for tax evasion would not involve fraud or deceit," and that "the principle that the specific governs the general also favors the interpretation that subsection (M)(ii) identifies the only removable tax offense, tax evasion, while subsection (M)(i) does not apply to tax offenses."<sup>10</sup> The Third Circuit also reasoned that "for Congress to select tax evasion as the [only] `aggravated' tax felony, justifying removal of an alien who committed it, while sparing lesser tax felons, is thoroughly consistent with the history and structure of criminal tax offenses."¹¹ In support of this conclusion, Lee cites the Supreme Court's decision in Spies v. United States,¹² characterizing tax evasion as the "`capstone' of tax law violations," the "`climax of this variety of sanctions'" and "`the serious and inclusive felony.'"<sup>13</sup> The Third Circuit decided that "Congress' intent is clear," and "[t]o the extent that any ambiguity lingers, we note that there is a `longstanding principle of construing any lingering ambiguities in deportation statutes in favor of the alien.'"¹⁴

We are persuaded, however, that Congress did not intend to single out tax evasion under 26 U.S.C. § 7201 for inclusion among aggravated felonies to the exclusion of all other tax felonies. We also conclude that subsection 43(M)(i) is unambiguous. Congress may well have seen subsection 43(M)(ii) as a necessary addition to subsection 43(M) since neither fraud nor deceit is a specific element of the crime of tax evasion under 26 U.S.C. § 7201,¹⁵ as both the dissent in Lee and the Ninth Circuit recognized.¹⁶ Moreover, it is difficult to discern why Congress would want only a violation of 26 U.S.C. § 7201 involving $10,000 or more to constitute an aggravated felony, but not tax felonies involving fraud and deceit and the same amount of loss to the Government fisc. Although the maximum term of imprisonment for a violation of § 7201 is five years, while the maximum prison term for a violation of § 7206 is three years, both are serious crimes carrying the same maximum fines.

We respectfully part company with Lee in this regard, including its reliance on Spies v. United States.¹⁷ The Third Circuit reasoned that in Spies the Supreme Court described the felony defined in former 26 U.S.C. § 145(b) as "the `capstone' of tax law violations,"<sup>18</sup> and "[t]hus, for Congress to select tax evasion as the `aggravated' tax felony, justifying removal of an alien who committed it, while sparing lesser tax felons, is thoroughly consistent with the history and structure of criminal tax offenses."¹⁹ The Spies decision focused on "the acts necessary to make out the felony [under section 145(b) of the Revenue Act of 1936] and those which may make out the misdemeanor [under section 145(a)]."²⁰ The two provisions were similarly worded.²¹ The Supreme Court's references to tax evasion as the "capstone" and the "climax of this variety of sanctions" must be considered in this context, as distinguishing the elements of the misdemeanor offense from those of the felony offense, not as comparing felony tax evasion with other felony tax offenses. Indeed, 26 U.S.C. § 7206 was not enacted until 1954, eleven years after Spies was decided in 1943.

The Supreme Court recently quoted the "capstone" statement that appears in Spies regarding 26 U.S.C. § 7201,²² but also noted that "26 U.S.C. § 7206(1), criminalizing the willful filing of a tax return believed to be materially false" is "[a] related provision."²³ The Court further observed in Boulware that "it is arguable that `the nature and character of the funds received can be critical in determining whether ... § 7206(1) has been violated, [even if] proof of a tax deficiency [required under § 7201] is unnecessary.'"²⁴ The Court did not resolve the question, and of course, the Court was not construing 8 U.S.C. § 1101(a)(43)(M). But the Court's discussion does support our conclusion that the "capstone" argument advanced by the Third Circuit does not have the import that our sister court ascribes to it.

Other circuit courts have noted, correctly, that under some circumstances, a conviction for a violation of § 7206 may merge into a conviction under § 7201 as a lesser included offense.²⁵ But the corollary is that merger is not always appropriate. Section 7206 is a separate offense that is "separately punishable" from a violation of § 7201, unless there is also a violation of § 7201 and the § 7206 violation was incidental thereto.

There is no indication in the Tax Code that 26 U.S.C. § 7201, which addresses tax evasion, is the preferred means of prosecuting felony tax offenses. We cannot agree that Congress intended to exclude tax offenses involving fraud and deceit from 8 U.S.C. § 1101(a)(43)(M)(i) when it included a specific reference to 26 U.S.C. § 7201 in (43)(M)(ii).

Accordingly, a conviction under 26 U.S.C. § 7206(1) for filing a false tax return constitutes an aggravated felony for purposes of 8 U.S.C. § 1101(a)(43)(M) if that offense involved a loss of $10,000 or more.

III

Arguelles-Olivares contends there is no evidence that his tax offense involved $10,000 or more because the judgment of conviction does not mention the amount of actual loss. He asserts that it was error to rely on the Pre-Sentence Investigation Report (PSR), prepared in the tax offense proceedings, as evidence of the amount of loss in his immigration proceedings. Arguelles-Olivares asserts that the PSR must be excluded under the "categorical approach" of examining prior convictions and that the PSR's admission into evidence and reliance upon it was problematic for a number of other reasons. We first consider the pertinence of the "categorical approach."

A

The judgment in the tax offense prosecution...