United States v. Barringer

25 F.4th 239

UNITED STATES of America, Plaintiff – Appellee,

v.Teresa Blankenship BARRINGER, Defendant – Appellant.

No. 20-4584

United States Court of Appeals, Fourth Circuit.

Argued: December 7, 2021

Decided: February 2, 2022

ARGUED: Gerald Thomas Zerkin, Richmond, Virginia, for Appellant. Jennifer R. Bockhorst, OFFICE OF THE UNITED STATES ATTORNEY, Abingdon, Virginia, for Appellee. ON BRIEF: Daniel P. Bubar, Acting United States Attorney, OFFICE OF THE UNITED STATES ATTORNEY, Roanoke, Virginia, for Appellee.

Before, WILKINSON, NIEMEYER, and AGEE, Circuit Judges.

Affirmed by published opinion. Judge Agee wrote the opinion, in which Judge Wilkinson and Judge Niemeyer joined.

AGEE, Circuit Judge:

Teresa Blankenship Barringer challenges her convictions and 36-month sentence for multiple counts of willful failure to collect or pay over taxes, in violation of 26 U.S.C. § 7202, and making materially false statements to federal agents, in violation of 18 U.S.C. § 1001. For the reasons set forth below, we affirm the judgment of the district court.

I.

A.

Barringer was the long-time Executive Vice President ("EVP") and a Board member of J&R Manufacturing, Inc. ("J&R"), a Virginia company that produced electrical connectors for coal mining equipment. Her responsibilities as EVP included managing J&R's accounting, payroll, sales, and accounts receivable, while her duties as a Board member included collecting and paying federal payroll taxes. Using Internal Revenue Service ("IRS") Form 941, these taxes are withheld from employees’ paychecks and paid quarterly to the IRS along with a matching contribution from the employer (collectively, "941 taxes").

In late 2012, J&R began experiencing financial difficulties due to a downturn in the coal market, and, by 2014, it was delinquent on filing and paying its 941 taxes. Barringer subsequently received a letter from the IRS notifying her that she was civilly responsible for the delinquent taxes. Fearing that personal liability, Barringer sought to access her account in the company's 401(k) retirement plan, administered by AXA Equitable Insurance Company ("AXA"), as a source of funds from which to pay the 941 taxes. Relevant here, to withdraw funds from a 401(k) plan before retirement age, the participant must be vested¹ and must establish that a distributable event has occurred. Reaching retirement or leaving employment is such a distributable event, as are certain types of hardship (as referenced in the Code of Federal Regulations), such as to prevent foreclosure on a primary residence.

In November 2014, Barringer faxed AXA a Hardship Withdrawal Request Form requesting $311,859.04 from her 401(k) plan account "[t]o prevent eviction from a principal residence or ... a foreclosure of the mortgage on [her] principal residence" J.A. 144. Based on her representations, AXA approved the request, and Barringer deposited the funds into a J&R account to pay the delinquent 941 taxes and keep the company afloat, so that "[b]y 2015 ... J&R [had] caught up on the 941 taxes." J.A. 354. The AXA withdrawal form contained the following warning:

Any person who knowingly and with an intent to injure, defraud, or deceive any insurance company, files a statement of claim or an application containing false, incomplete, or misleading information may be guilty of a crime, which could result in imprisonment, fines, denial of insurance, and civil damages.

J.A. 115. Further, according to bank records, Barringer's mortgage balance was only approximately $200,000 when she withdrew the funds from her 401(k) account, she was on time with her payments, and she had not received any delinquent or foreclosure notices.

By 2016, J&R had again fallen behind on its 941 taxes. On September 2, 2016, Barringer requested from AXA a final distribution from her 401(k) account, citing the end of her employment with J&R on August 31, 2016, as the basis. AXA approved the request. When Barringer received the distribution, she again deposited the funds, along with some of her personal savings, into the J&R account in order to fund the company. But this time, although "there was money in the account that could have been paid to the IRS [for the delinquent 941 taxes, Barringer] chose to pay herself and other vendors [instead]." J.A. 281. Notwithstanding her representation to AXA, Barringer continued working for J&R until October 28, 2016, receiving benefits and payments from the company during that period.

On July 25, 2019, Barringer's attorneys met with agents of the IRS, Federal Bureau of Investigation, Virginia State Police, and attorneys from the United States Attorney's Office, all of whom were investigating potential financial crimes at J&R. Barringer joined the interview at the suggestion of one of her attorneys.² During the interview, "[i]t was explained to her she didn't have to be there, she didn't have to answer any questions, and that things she did say could be used against her." J.A. 208. On this last point, "[i]t was expressed to her at the beginning of the interview and at the end of the interview that it was very important that she was truthful to federal law enforcement, that it was a crime to lie to [the agents]." Id.

During the interview, Barringer stated that her last day of employment at J&R was October 28, 2016, which was consistent with her claims in two civil cases.³ However, later in the interview, Barringer changed her answer and asserted that she left J&R on August 31, 2016. Barringer also explained that she had tried to withdraw funds from her 401(k) account to pay the 941 taxes, but that AXA denied her request. After receiving this denial, she confirmed that she nonetheless submitted a withdrawal form to AXA, claiming that she needed the funds to prevent foreclosure because she feared she would be unable to pay her mortgage if J&R collapsed.

B.

A federal grand jury subsequently returned a nine-count indictment against Barringer for willfully failing to collect and truthfully account for and pay taxes, in violation of 26 U.S.C. § 7202 (Counts One through Four); wire fraud, in violation of 18 U.S.C. § 1343 (Counts Five and Six); and making materially false statements to federal agents, in violation of 18 U.S.C. § 1001(a)(2) (Counts Seven through Nine).

Barringer moved pretrial to dismiss the indictment. First, she requested dismissal of the tax charges in Counts One through Four on equal protection grounds, highlighting that the Government had charged her, but not Roy Riley, the owner of J&R. Next, she claimed the wire fraud charges in Counts Five and Six were insufficient as a matter of law because the relevant statute only targets schemes aimed at appropriating funds or property from others, and the funds at issue were hers alone. Finally, she argued that if the tax and wire fraud charges were dismissed, then the false statements alleged in Counts Seven through Nine by definition could not have been material to a matter within the Government's jurisdiction, as required by the relevant statute. The court denied the motion as to Counts One through Four, finding that "the motion d[id] not allege [a] sufficient factual basis" to support dismissal "on the ground of selective prosecution." J.A. 76. As for the remaining counts, it denied the motion without prejudice as premature.

After the Government successfully moved to dismiss Count One,⁴ Barringer proceeded to trial on Counts Two through Nine. During opening statements, the prosecutor stated that the case was about "[t]axes, fraud, and lies." J.A. 86. Relevant here, Ron Vincek, AXA's senior director of 401(k) operations, testified. He explained that the withdrawal form requesting distribution due to end of employment (Barringer's second request in September 2016) required the employee and the plan sponsor to certify that the information was correct. The form requesting distribution for a hardship (Barringer's first request in November 2014) required a valid hardship, limited the withdrawal amount to the sum needed, and required approval by the "plan administrator or authorized person to act upon the administration of the plan." J.A. 115. On this point, Vincek indicated that reinvestment into a company was not a valid reason for a hardship withdrawal. He also noted that AXA would not approve a withdrawal request if the stated reason for the withdrawal did not satisfy IRS requirements and opined that failure to comply with those requirements could jeopardize the validity of J&R's entire 401(k) plan.

IRS Special Agent Trevor McMurray testified that J&R had unpaid taxes in the first three quarters of 2016, in the amounts of $78,161.09, $64,848.13, and $43,883.20, and that at Barringer's direction, J&R paid $96,159.83 in other bills without first paying off those balances. He did, however, note that the company paid off its outstanding tax balance in 2019, which post-dated Barringer's employment at J&R.⁵

Barringer also testified. She confirmed that she and the other Board members were responsible for paying the 941 taxes, and that she proposed using the 401(k) funds to pay the 941 taxes after receiving the IRS letter informing her of her civil liability. Relatedly, she testified that, in her mind, she did nothing wrong when she withdrew funds from her 401(k) account to pay the 941 taxes because she was using her own funds to save the company. And she did so because she believed that she would be unable to pay her mortgage if J&R collapsed. Barringer also testified that she contacted AXA in 2016 to inquire whether she could close her 401(k) account, but that AXA informed her she could only do so if she was no longer employed at J&R. She stated that she listed her last day of employment with J&R as August 31, 2016, in order to access the 401(k) funds, but that she intended to be rehired the following week. J.A. 363–64.⁶

During closing arguments, the prosecutor reiterated that the case was "about taxes, fraud, and lies," J.A. 540, and emphasized that Barringer's false...