305 371-8101

Defendant Appealed Convictions of Mail Fraud, Wire Fraud, and Tax Fraud

Defendant Appealed Convictions Alleging Improper Joinder

U.S. v. Midkiff,  U.S. App. LEXIS 14572 (8th Cir. 2010)

Following a nineteen-day trial, Neulan Dae Midkiff was convicted of conspiracy, mail and wire fraud, and failure to file tax returns. He appealed, contending that the district court improperly joined the failure-to-file charges with the other charges and abused its discretion in denying his motion for relief from prejudicial joinder. Midkiff also challenges the admission of certain evidence and contends that his 180-month sentence is unreasonable.

Midkiff contended that the charges for failing to file tax returns were improperly joined with the fraud and conspiracy charges. The Court found that United States v. McCarther, 596 F.3d 438, 441 (8th Cir. 2010). Rule 8(a) allows a single indictment to charge a defendant with multiple offenses if the offenses "are of the same or similar character, or are based on the same act or transaction, or are connected with or constitute parts of a common scheme or plan." Fed. R. Crim. P. 8(a).

"The rule is broadly construed in favor of joinder to promote judicial efficiency." McCarther, 596 F.3d at 441-42.

Tax charges may be joined with fraud charges if the unreported income arises solely and directly out of the fraudulent scheme. United States v. Bibby, 752 F.2d 1116, 1121 (6th Cir. 1985); United States v. Kopituk, 690 F.2d 1289, 1313 (11th Cir. 1982); United States v. Kenny, 645 F.2d 1323, 1344 (9th Cir. 1981). When the unreported income is derived from the charged conduct, the tax offense is based on the same act or transaction as the other offenses. See Bibby, 752 F.2d at 1121; Kopituk, 690 F.2d at 1313; Kenny, 645 F.2d at 1344.

Moreover, failure to file tax returns may have a logical and temporal relationship with the other offenses charged in the indictment such that the tax offenses are connected with or constitute parts of a common scheme or plan. See United States v. Johnson, 462 F.3d 815, 822 (8th Cir. 2006) (no error in joining drug and firearm offenses that were temporally and logically connected).

Because his unreported income was derived from the charged conduct, the 2004 and 2005 tax counts were properly joined with the fraud counts. The 2002 and 2003 tax counts were connected to the remaining counts under a common scheme.

The Appellate Court found that if the district court had severed the charges, evidence of Midkiff's fraud crimes would have been probative and admissible at his tax trial, and evidence of his failure to file returns would have been probative and admissible in his fraud trial. To sustain a conviction of 26 U.S.C. ? 7203, the government was required to prove that Midkiff willfully failed to file a tax return, despite an obligation to do so. See Cheek v. United States, 498 U.S. 192, 201, 111 S. Ct. 604, 112 L. Ed. 2d 617 (1991) ("Willfulness, as construed by our prior decisions in criminal tax cases, requires the Government to prove that the law imposed a duty on the defendant, that the defendant knew of this duty, and that he voluntarily and intentionally violated that duty."); United States v. Gleason, 726 F.2d 385, 388 (8th Cir. 1984) (per curiam) ("The elements of violation of  7203 are proof of failure to file the returns and willfulness in doing so.").

The Court held that the district court did not abuse its discretion in denying Midkiff's motion for severance. The evidence that Midkiff submitted tax protestor documents and engaged IMF Decoders to assist in dealing with his tax issues did not result in severe prejudice. Moreover, the district court instructed the jury that each crime should be considered separately and that its verdict of guilty on one count should not control its verdict on any other count. Accordingly, we affirm the district court's denial of relief from prejudicial joinder.

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