United States District Court, S.D. New York
April 19, 2004.
UNITED STATES OF AMERICA, -against- KIMBERLY HOLLIER, Defendant
The opinion of the court was delivered by: VICTOR MARRERO, District Judge
DECISION AND ORDER
A jury convicted the defendant in this action of three counts tax
evasion, and he now moves the Court to set aside the verdict and enter a
judgment of acquittal. The Court finds that the evidence supporting the
conviction was more than sufficient and that were no legal errors to
justify entering a judgment of acquittal. The motion is denied.
A grand jury indicted defendant Kimberly Hollier ("Hollier") on three
counts of tax evasion, in violation of 26 U.S.C. § 7201, one count for each
of the years 1996, 1997, and 1998. The indictment charges that Hollier
earned wages as a carpenter for the New York City Housing Authority
("NYCHA"), but that he attempted to avoid paying taxes on those wages by,
among other means, not filing proper income tax returns and by filing
fraudulent Internal Revenue Service ("IRS") documents.
In two days of trial testimony, the Government presented substantial
and compelling evidence against Hollier. The evidence showed that Hollier
fraudulently sought to be considered "exempt" from having NYCHA withhold a portion of his
wages. Under applicable IRS regulations, an individual is exempt from
withholding only if he had no tax liability in the previous year and
expects to have no tax liability for the current year. In each of the
relevant years, Hollier declared on IRS Form W-4 that he was exempt from
withholding, even though he was earning a substantial amount of taxable
income almost $60,000 in 1997. Based on those false W-4s, Hollier
was initially considered "exempt" and presumably received full paychecks,
without federal tax withholdings. The IRS noticed the obvious discrepancy
and sent letters to NYCHA directing it to begin withholding federal taxes
from Hollier's paycheck. The IRS also sent letters notifying Hollier of
the change in his withholding status.
NYCHA then received a series of letters, purportedly from the IRS,
directing NYCHA to ignore the IRS's previous letters and to consider
Hollier exempt. The evidence overwhelmingly suggested that those letters
were fake. The Government introduced evidence of what actual IRS letters
computer-generated form letters would look like. The
wording on the fake letters did not match the IRS's form letters, and the
fake letters contained the wrong identification code. In fact, the
identification code on the fake letters corresponded to the type of form
letter which the IRS sends to notify employees (not employers) of a change in withholding statis. As
stated, Hollier had received such a letter.
Even beyond the common sense observation that only Hollier stood to
benefit from the fake letters, the evidenre overwhelmingly suggested that
Hollier created the frauduleit documents. One letter was faxed to NYCHA
along with a cover sheet containing Hollier's phone number and stating
that it was from "Kimberly Hollier." Another letter arrived at NYOA in an
IRS envelope with a postal sorting stamp and bar ccie for zip code
"11218." A NYCHA employee testified that NYCHA as located in zip code
10007 and that all of its mail typically includes the sorting stamp and
bar code for "10007." Hollier lived in Brooklyn in zip code 11218,
suggesting that he had "recycled" an envelope he had received from the
IRS to mae his fake IRS letters appear authentic.
IRS Agent Robert Doran testified that he interviewed Hollier in July
1998 and told Hollier that he was under criminal investigation for tax
evasion. In August 1998, Hollier filed, for the first time, his 1996 tax
return. In that return, Hollier states that he had zero taxable income
for the year 1996, and he sought a refund of all the funds which the
Government had withheld. In October 2000, Hollis: filed, also for the
first time, his 1997 and 1998 tax returns Each continued the same pattern
as 1996: Hollier claimed have no taxable income and sought a refund of all withheld taxes.
Hollier did not testify nor did he present any witnesses in his
defense. The Court instructed the jury that, for each count, it could
enter a guilty verdict only if the Government proved each of the
following three elements of tax evasion beyond a reasonable doubt: (1)
that Hollier owed taxes for the relevant year; (2) that Hollier committed
an affirmative act attempting to evade, or evading those taxes owed; and
(3) that Hollier acted wilfully. See Tr. at 275-76; see
also Sansone v. United States, 380 U.S. 343, 351 (1965) (listing
elements of tax evasion). After about two hours of deliberations, the
jury reached a guilty verdict on all three counts.
II. STANDARD OF REVIEW
Where a jury has returned a guilty verdict, Federal Rule of Criminal
Procedure 29 permits a court to set aside the verdict and enter an
acquittal "of any offense for which the evidence is insufficient to
sustain a conviction." Fed.R.Crim.P. 29(a). However, the Court must
deny the motion if the Court concludes that, "viewing the evidence in the
light most favorable to the prosecution, any rational trier of
fact could have found the essential elements of the crime beyond a
reasonable doubt." Jackson v. Virginia, 443 U.S. 307, 319
(1979) (emphasis in original). III. DISCUSSION
Hollier first argues that no rational juror could have convicted him
because he fully disclosed to the IRS all the information necessary to
compute his proper tax liability. Hollier points out that he submitted
autheiric IRS Forms W-2 with each of his 1996, 1997, and 1998 tax
returns, and that those forms clearly showed his earnings. Becaise
Hollier fully volunteered this information to the IRS, the argument goes,
he could not have intended to hide anything from the IRS.
The Court is unpersuaded. Hollier filedthose tax returns years
after they were due and after he had already
committed independent acts of tax evasion which would suffice to uphold
the conviction e.g., submitting fraudulmt W-4s to NYCHA and
creating fake IRS correspondence. Moreover, Hollier's tax returns falsely
stated that Hollier had zerr taxable income, and actually sought a refund
from the Government for all taxes withheld. Hollier sought that
refund even after knowing he was under criminal investigation for tax
evasim. The fact that Hollier also included his W-2s (which the IRS no
doubt could obtain from NYCHA, in any case) in his submissions to the IRS
does not in any way suggest that Hollier was not committing tax evasion.
Rather, it indicates that Hollier's attempts to avoid his tax obligations
were especially bazen.
Hollier next argues that he was denier his right to a summation. At several points during closing remarks, Hollier's
attorney attempted to argue that Hollier actually believed that the
Government did not have the hight or authority to impose taxes on him.
This line of argument was apparently intended to show that Hollier's
actions were not willful. The Court sustained the Government's objections
because there was absolutely no evidence on the record regarding
Hollier's beliefs in this respect. The Court issued a short, written
decision explaining its reasoning on this point. See United
States v. Hollier, No. 03 Cr. 144, 2004 IL 34394450 (S.D.N.Y.
Feb. 25, 2004). Hollier re-argues that same point, but now suggests that
there exists evidence baring upon Hollier's willfulness. Specifically,
Hollier states that he submitted letters with each of his tax retuns
challenging the Government's right to impose taxes on him.
Hollier suggests that those letters should have been included in the
exhibits of Hollier's tax returns because the letrers were part of the
Hollier failed to object to those exhibits as incomplete when they were
offered into evidence, and hence the underlying issue is unpreserved.
See Fed.R. Crim. F. 51(b) ("A party may preserve a claim of
error by informing the court when the court ruling or order
is made or sought of the action the party wishes the court
to take, or the party's objection to the court's action and the grounds for that objection.") (emphasis
added). Hollier does not explain howche Court could have cured this
alleged error during summation because both sides had already
rested and the letters were never admitted into evidence. The Court
certainly could not have permitted Hollier to make closing arguments
based upon documents which might have been, but were not, in evidence.
More fundamentally, Hollier does not explain ho this alleged denial of
summation would justify a judgment of acquittal.
Hollier suggests that he could have introduced the missing letters into
evidence only had he testified, which, of course, he has a Fifth
Amendment right to avoid To the extent that Hollier suggests that this
issue involves a violation of the Fifth Amendment, Hollier's point is
urpersuasive. A defendant availing himself of the benefits of the Fifth
Amendment's right not to testify also bears the obvious consequence that
the jury will not hear his side of the story. See United States v.
Folami, 236 F.3d 860, 863 7th Cir. 2001) ("Defendants, of course,
have a Fifth Amendment right not to testify in their cases, but they must
live with the consequences of their decisions."). In any Brent, Hollier
could have presented the letters at issue by calling an IRS witness, or,
more simply, by timely objeiting to the Government's exhibits as
incomplete under Federal Rule of Evidence 106. See Fed. P. Evid. 106 ("When a writing or
recorded statement or part thereof is introduced by a party, an adverse
party may requier the introduction at that time of any other part or any
other writing or recorder statement which ought in fairness to be
considered contemporaneously with it.").*fn1
Hollier next argues that this prosecutict violates Hollier's First
Amendment sight to protest the tax system. The Second Circuit has
squarely rejected this argument. See United States v. Rowlee,
899 F.2d 1275, 1279 (2d Cir. 1990) ("The consensus of this and every
other circuit is that liability for a false or fraudulent tax return
cannot be avoided by evoking the First Amendment").
Hollier next contends that the Court erred ix excluding evidence from
two proposed witnesses who would have testified to Hollier's good
character. The Court stands by is initial oral ruling that those
witrasses were properly preiluded from testifying. Under Federal 3.ule of
Evidence 404 (a (1), this type of character evideire
which is generally not admissible is admissible when it pertains
to a "pertinent trait" of a criminal defendant. Fed.R.Evid. 404(a)(1). The Second Circuit has described this exception as
one "based on notions of fairness rather than bgic." United States
v. Pujana-Mena 949 F.2d 24, 30 (2d Cir. 1991). Accordingly, the
Second Circuit has also stated that the Rule "applies a lower
threshold of relevancy to character evidence than that applicable toother
evidence." United States v. Han, 230 F.3d 560, 564 (2d
The proffered evidence failed to meet even this low threshold of
relevancy. The proposed witnesses did not know Hollier until a time long
past the events alleged in the indictment. Moreover, the defense proposed
that they would testify as to Hollier's good character in genenl, which
has nothing do with his character traits in his rapacity as a taxpayer.
The text of the Rule itself is limited to "pertinent" character traits,
and the Second Circuit has stated that the proffered evidence must "reate
to some element at issue in the case." Id. (emphasis aided). In
any event, this alleged error would not justify a judgment of
Finally, Hollier argues that the Court: erred in permitting an IRS
revenie agent to testify that Hollier paid taxes in the years 1987
through 1989, thereby implying that he had not paid taxes since then,
including years not included in the indictment. Apart from the fact that
Hollier did not object to this testimony, the Court concludes that it was porpperly
presented. Under Federal Rule of Evidenre 404(b), `"[e]vidence of other
crrimes, wrongs, or acts is not admissible to prove the character of a
person in order to show action in conformity therewith.'" Fed.
R. Evid. 404(b). The revenue agent's testimony, however, was relevant
for a different purpose: to show that Hollier acted willfully when he
failed to pay his federal taxses in the relevant years. Rule 404(b)
(provides for admissiom of evidence for just suci limited
"non-propensity" related purposes, including "intent, preparation, plan,
knowledge, identity, or absence if mistake oar accident."
Id. Where evidence is offerer for a non-propensity related
purpose, it is admissible as long as tlfae evidence is also relevant
under Rules 401 and 402, and is more probative than unfairly prejudicial
under Rule 403. See Uinited States v. Mickenss, 926 F.2d 1323,
1329 (2d Cir. 1991). The IRS agent's testimony meets those standards.
First, evidence off Hollier's failure to pay raxes not poertaining to
the tax devasion charges in the indictment is relevant under
Rules 401 and 402 because it ma:es "more probable" than otherwise the
existence of the "willfulness" element of the offense. See Fed.R.Evid.
401 ("Relevant evidence' means evidentce having any tendency to niake the
existence of any factt that is of consequence to the determination of the action more probable or less probable than it
would be withoit the evidence."); Fee. R. Evid. 402 (stating that
relevant evidence is generally amissible). The Second Circuit has heir
that "a defendant's past taxpaying record is admissible to prove
willfulness circumstantially" because such evidence is "indicative of an
intent to evade the tax system." United States v. Bok,
156 F.3d 155-66 (2d Cir. 1998); see also United States v. Ebner,
782 F.2d 1120, 1126 n.7 (2d Cir. 1986) ("The jury may consider evidence of
intent to evade taxes in one year as evidence of iitent to evade payment
in prior or subsequent years.").
Second, the evidenre here at issue is nor such that its "probative
value is substantially outweighed be the danger of unfair prejudice"
under Rule 403. Fed.R.Evid. 403. Evidence is unfairly prejudicial if it
"tends to have some adverse effect upon a defendant beyond tending to
prore the fact or issue that justified is admission into eviience."
United States v. Figueroa, 18 F.2d 934, 942 (2d Cir. 1980).
"The prejudicial effect may be created by the tendency of the evidence to
prove some adverse fact not properly in issue or unfairly to excite
emotuons against the defencant." Id.
The IRS agent's brief testimony did not involve any fact which would
excite the jurors' emotions. As explained above, the Second Circuit han
recognized the probative value of precisely this type of evdence. The Court notes, moreover, that
because "proof of willfulness usually must be accomplished by means of
circumstantial evidenc[e] . . . trial courts should follow a
liberal policy in admitting evidence directed towards establishing the
defendants state of mind." United States v. Collorafi,
876 F.2d 302, 305 (2d Cir. 1989). The Court, on several occasions, issuer
limiting instructions to the jury in precisely this point, further
reducing any risk of unfair rejudice. As with Hollier's other evidentiary
complaints, the Court is unpersuaded that the alleged error would
justtify a judgment of acquittal.
For the reasons stated it is hereby
ORDERED that the motion of Kimberly Hollier for entry of a
judgment of acquittal is Denied.