U.S. v. Stone

323 F.Supp.2d 886

UNITED STATES of America, v. Charles C. STONE, Dora B. Stone, and L. Byron Woody.

No. 1:02-CR-189.

United States District Court, E.D. Tennessee, at Chattanooga.

July 8, 2004.

Stephanie Evans, U.S. Dept of Justice, Office of the Tax Division, Washington, DC, for Plaintiff.

Roger W. Dickson, Miller & Martin, Chattanooga, TN, Douglas A. Trant, Trant and Woods, W. Thomas Dillard, Ritchie, Fels & Dillard, PC, Knoxville, TN, for Defendants.

MEMORANDUM & ORDER

COLLIER, District Judge.

I. INTRODUCTION

In this criminal tax prosecution, Defendants Charles Stone, Dora Stone, and Byron Woody were charged in Count One with conspiracy to defraud the United States in violation of Title 18, United States Code, Section 371, and Charles Stone and Dora Stone were charged with three counts of attempted tax evasion in violation of Title 26, United States Code, Section 7201 (Court File No. 1, Indictment). Count One alleged the defendants conspired to defraud the United States for the purpose of defeating the assessment of income taxes, and it alleged a number of overt acts were committed in furtherance of the conspiracy (Id. ¶¶ 13-23).

During the charge conference, the Court faced two issues relating to the Court's final instructions to the jury regarding the conspiracy count and finding an overt act in furtherance of the charged conspiracy. The first issue was whether the jury must be unanimous on which particular overt act or acts in furtherance of the conspiracy were committed. The second issue was whether the jury is limited to considering just the overt acts alleged in the indictment or whether the jury is permitted to consider other, unalleged overt acts supported by the evidence, in finding whether an overt act was committed.

When the Court was presented with these issues, the parties had not provided the Court with any authorities on point. Within the precise time frame the Court had to first consider the issues, the Court was also unable to locate any clear authority from the United States Court of Appeals for the Sixth Circuit on these precise issues. However, after the issues were raised the Court located ample authority, including some from other jurisdictions, and concluded the law was sufficiently clear to allow it to formulate a charge.

II. ANALYSIS

A. Proof of Overt Acts in Furtherance of a Conspiracy Are Means of Proving the Commission of the Conspiracy

As a starting point for analysis, the Court will examine some of the basic tenets of conspiracy law. "The [United States Supreme] Court has repeatedly said that the essence of a conspiracy is `an agreement to commit an unlawful act.'" United States v. Jimenez Recio, 537 U.S. 270, 274, 123 S.Ct. 819, 822, 154 L.Ed.2d 744 (2003) (quoting Iannelli v. United States, 420 U.S. 770, 777, 95 S.Ct. 1284, 1289, 43 L.Ed.2d 616 (1975)). The law forbids such agreements for a variety of reasons, including because concerted action decreases the likelihood the conspirators will turn from their agreed upon criminal plans and makes the commission of substantive crimes more likely. Jimenez Recio, 537 U.S. at 275, 123 S.Ct. at 822; Iannelli, 420 U.S. at 778, 95 S.Ct. at 1290 (quoting Callanan v. United States, 364 U.S. 587, 593-94, 81 S.Ct. 321, 325, 5 L.Ed.2d 312 (1961)). Because a conspiracy is a "distinct evil" independent of any substantive crime that is an object of the conspiracy, the agreement to commit a crime may be prosecuted and punished regardless of whether the substantive crime occurs. Salinas v. United States, 522 U.S. 52, 65, 118 S.Ct. 469, 477-78, 139 L.Ed.2d 352 (1997) (citing Callanan, 364 U.S. at 594, 81 S.Ct. at 325).

At common law, the offense of conspiracy did not require the allegation or proof of an overt act in furtherance of the conspiracy. See United States v. Shabani, 513 U.S. 10, 13-14, 115 S.Ct. 382, 384, 130 L.Ed.2d 225 (1994); Fiswick v. United States, 329 U.S. 211, 216 n. 4, 67 S.Ct. 224, 227 n. 4, 91 L.Ed. 196 (1946). The common law definition of conspiracy has been adopted by Congress for certain federal conspiracy offenses, including conspiracies to commit controlled substance offenses (21 U.S.C. § 846), conspiracies to commit antitrust offenses (15 U.S.C. § 1), and conspiracies to commit racketeering offenses (18 U.S.C. § 1962(d)). See Salinas, 522 U.S. at 63, 118 S.Ct. at 476; Shabani, 513 U.S. at 14, 115 S.Ct. at 385. However, the general federal conspiracy statute, 18 U.S.C. § 371, contains an explicit overt act component that requires the government to prove a member of the conspiracy did some "act to effect the object of the conspiracy." 18 U.S.C. § 371; Shabani, 513 U.S. at 14, 115 S.Ct. at 385. Because Count One in this case charged Defendants with conspiracy to defraud the United States in violation of 18 U.S.C. § 371, the Government was required to prove a member of the conspiracy committed an overt act in furtherance of the conspiracy.

In United States v. Negro, the United States Court of Appeals for the Second Circuit reviewed a conviction under the general conspiracy statute (formerly 18 U.S.C. § 88), and it considered whether an overt act is an element of conspiracy for the purpose of determining whether proof of an unalleged overt act may support a conspiracy conviction. United States v. Negro, 164 F.2d 168, 172 (2d Cir.1947). The court discussed six Supreme Court cases decided from 1879 through 1942 regarding the relationship between a conspiracy and an overt act in furtherance of it (i.e., whether an overt act is part of the offense defined by the general conspiracy statute or whether an overt act is separate from the crime of conspiracy and yet is either a required mode of proving the conspiracy existed or a device for affording a locus poenitentiae). Id. It then concluded an overt act is not part of the crime of conspiracy for at least some purposes. Id. at 173 (citing United States v. Cohen, 145 F.2d 82, 94 (2d Cir.1944) ("It has been said over and over again that the conspiracy, not the overt act, is the `gist' of the crime."); Marino v. United States, 91 F.2d 691, 694-95 (9th Cir.1937) ("An overt act is something apart from the conspiracy, and is an act to effect the object of the conspiracy.") (internal quotation omitted); and Troutman v. United States, 100 F.2d 628, 632 (10th Cir.1938) (stating crime of conspiracy is complete when agreement has been formed and one or more overt acts have been done in furtherance of unlawful design)). The Negro court suggested the doctrine of double jeopardy would prevent a second prosecution for conspiracy on the same facts that merely substituted different overt acts for those alleged in the first, unsuccessful prosecution. 164 F.2d at 173. It also stated an overt act is not part of the crime of conspiracy because an alleged overt act need not be proved at trial if an unalleged overt act is proved instead. Id.

The relationship between the overt act requirement and the elements of a general conspiracy was further addressed in Yates v. United States, where the Supreme Court explained, "[t]he function of the overt act in a conspiracy prosecution is simply to manifest `that the conspiracy is at work,' ... and is neither a project still resting solely in the minds of conspirators nor a fully completed operation no longer in existence." 354 U.S. 298, 334, 77 S.Ct. 1064, 1085, 1 L.Ed.2d 1356 (1957) (internal citation omitted) (quoting Carlson v. United States, 187 F.2d 366, 370 (10th Cir.1951)), overruled on other grounds by Burks v. United States, 437 U.S. 1, 98 S.Ct. 2141, 57 L.Ed.2d 1 (1978). In reaching a conclusion similar to the Second Circuit's in Negro regarding the function of overt acts in prosecutions under the general conspiracy statute, the Supreme Court in Yates did not rely upon Negro or the authorities supporting that decision. The Yates Court instead cited a Tenth Circuit decision, Carlson, which relied upon United States v. Offutt, 127 F.2d 336 (D.C.Cir.1942). In Offutt, the court of appeals reviewed an indictment alleging a conspiracy under the general conspiracy statute and explained, "it is well settled that an overt act need not be a wrong. It is rather a manifestation that the conspiracy is at work." Id. at 340. Citing Offutt, the Tenth Circuit in Carlson stated, "[t]he overt act merely manifests that the conspiracy is at work," 187 F.2d at 370, and numerous courts have joined Yates by citing Carlson for this proposition. See United States ex rel. Epton v. Nenna, 446 F.2d 363, 368 (2d Cir.1971) (Carlson citation within Yates quotation); United States v. Armone, 363 F.2d 385, 400 (2d Cir.1966) (same); United States v. Archbold-Newball, 554 F.2d 665, 684 (5th Cir.1977) (same); Castro v. United States, 296 F.2d 540, 542-43 (5th Cir.1961) ("The overt act ... need not be a crime and is not a part of the offense charged, but simply something done in furtherance of the object of the conspiracy...."); United States v. Stoner, 98 F.3d 527, 534 (10th Cir.1996) (Carlson citation in parenthetical to Yates citation and quotation).

In addition to showing "the operation of the conspiracy," United States v. Medina, 761 F.2d 12, 15 (1st Cir.1985) (citing Yates), the allegation and proof of overt acts may mark the duration or the scope of an alleged conspiracy. Fiswick, 329 U.S. at 216, 67 S.Ct. at 227; see also Castro, 296 F.2d at 543 ("[T]he only purpose of proof of the overt act is to eliminate the possibility of abandonment of the conspiracy."). Even in conspiracy prosecutions where the allegation and finding of an overt act is not required, evidence of overt acts in furtherance of a conspiracy can play a practical role because "[c]onspiracies can usually be proved only by showing what the conspirators did in execution of them. `Necessarily the existence of the conspiracy in most cases can be made to appear only inferentially from the acts of the parties committed in furtherance thereof.'" Culp v. United States, 131 F.2d 93, 100 (8th Cir.1942) (quot...