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United States v. Cadet

September 11, 2009


The opinion of the court was delivered by: Nicholas G. Garaufis, United States District Judge.


Currently before the court are two motions in limine pertaining to the prosecution of Defendant Joseph Cadet ("Defendant" or "Cadet"). The Government seeks to introduce evidence of uncharged acts by the Defendant. (Gov't First Mot. in Limine (Docket Entry #30) ("Gov't Mot.").) Defendant seeks to preclude this evidence and to preclude the testimony of IRS Agent Frank Stamm ("Agent Stamm"). (Letter as Def's Mot. in Limine To Preclude Evidence from His Trial (Docket Entry #31) ("Def. Mot.").)

For the reasons set forth below, both the Government's motion and the Defendant's motion are GRANTED in part and DENIED in part.


Defendant Cadet, a tax preparer, is charged with thirty-five counts of aiding and assisting the preparation of false tax returns in violation of 26 U.S.C. § 7206(2). The Government alleges that Defendant secured unwarranted tax refunds for his clients by claiming false or inflated deductions in preparing their tax returns. (See Indictment (Docket Entry #1).) The Government seeks to introduce at trial evidence of Defendant's own personal tax history. It also seeks to present evidence of Defendant's interactions with an undercover agent. Defendant asks the court to preclude all of this evidence from being introduced at trial.

Rule 404(b) of the Federal Rules of Evidence prohibits the admission of evidence of the accused's "[o]ther crimes, wrongs, or acts" if the evidence is offered to show the accused acted in conformity with the prior bad acts. Such evidence may be admissible, however, if offered for a non-propensity purpose, "such as proof of motive, opportunity, intent, preparation, plan, knowledge, identity, or absence of mistake or accident." Fed. R. Evid. 404(b); see United States v. Germosen, 139 F.3d 120, 127 (2d Cir. 1998) (noting that uncharged acts evidence can be admitted "for any purpose except to show criminal propensity"). Uncharged acts evidence offered to show knowledge or intent must be "sufficiently similar to the conduct at issue to permit the jury" to draw a reasonable inference of knowledge or intent from the prior act. United States v. Peterson, 808 F.2d 969, 974 (2d Cir. 1987). Similarity, and ultimately, the relevancy of the uncharged act evidence is measured by the degree to which "the prior act approaches near identity with the elements" of the charged offense. United States v. Aminy, 15 F.3d 258, 260 (2d Cir. 1994).

A. Defendant's Tax History

According to the Government, Defendant did not file a personal tax return for 2002, 2003, 2004, or 2005. (Gov't Mot. 3.) Nor did Defendant file returns for his business entities, Cordet Management and Canarsie Capital Group, for 2003, 2004, and 2005. (Id.) Additionally, Defendant paid his employees by cash or personal check and did not report their earnings to the IRS. (Id.) None of this conduct is charged in the Indictment. Defendant argues that this evidence is irrelevant and merely serves to cast him in a negative light before the jury, inviting the inference that he was "generally a cheater when it came to taxes." (Def. Mot. 4.) The Government counters that it will use the evidence to prove that Cadet acted willfully in preparing the fraudulent tax returns and to show his intent to defraud the government. (See Gov't Mot. 7.)

The court finds that evidence of Defendant's personal tax history is not admissible. Although the Government has identified a valid non-propensity purpose for offering the tax history evidence, Defendant's failure to file various tax forms is, at best, marginally relevant to the issue of whether Defendant willfully aided in the preparation of fraudulent tax returns. Failing to file one's personal tax forms lacks the requisite "substantial similarity" to filing forms containing false information on behalf of others. Peterson, 808 F.2d at 974. If the evidence instead showed that Defendant had filed his personal tax forms, but had claimed false deductions for himself, the similarity might be sufficient for admissibility. As it stands, however, the only real similarity here is that both involve tax forms. In other words, Defendant's tax history is relevant only to demonstrate that he "engaged in other misconduct with the Internal Revenue Service, thereby showing that [he] has a propensity to disregard tax law." United States v. Reiss, No. CRIM.04-156 RAM/RLE, 2005 WL 2337917, at *3 (D. Minn. June 9, 2005) (holding evidence of untimely tax filings inadmissible under similar prosecution of tax preparer). This is exactly the sort of evidence that Rule 404(b) prevents from being presented to the finder of fact. The minimal probative value of Defendant's tax history on the issue of intent is substantially outweighed by the risk that the jury will infer from it that Defendant is "generally a cheater" when it comes to taxes. (Def. Mot. 4.) Thus, the evidence is inadmissible under Rule 403 in any event. See Fed. R. Evid. 403.

The Government relies heavily on United States v. Bok, 156 F.3d 157 (2d Cir. 1998), to suggest that Defendant's taxpaying record should be admissible to show intent. In Bok, the Second Circuit upheld the trial court's decision to allow the introduction of evidence of uncharged acts, such as the defendant's failure to file a state personal tax return for a given year. Bok, 156 F.3d at 165-66. But in that case, as in all the others cases cited in it, the defendant was charged with personal tax evasion, and thus his own personal taxpaying history was quite relevant to the issue of willfulness. Id. at 160. Such "near identity with the elements" of the charged offense is lacking here, where the charged offense involves a tax preparer fraudulently preparing tax returns for his clients. Aminy, 15 F.3d at 260. Accordingly, the evidence regarding Defendant's personal tax history is inadmissible at trial.

B. The Undercover Operation

In April 2006, an undercover IRS agent visited Defendant posing as a taxpayer who needed his tax return prepared. According to the Government, when Defendant initially prepared the agent's return, he informed the agent that the tax liability was more than $3,000 and offered to prepare the return again using "creative financing" for a higher fee. (Gov't Mot. 2.) The second return indicated a refund of over $2,400. (Id.) Defendant's alleged preparation of a false return for the agent is not charged in the Indictment.

The Government seeks to introduce at trial evidence of the undercover agent's interactions with Defendant, including the testimony of the undercover agent, the recording of the meeting between the agent and Defendant, and documents produced as a result of that meeting. They argue that this similar act evidence is admissible to show Defendant's modus operandi, motive, and intent, as well as to corroborate the testimony of other fact witnesses, Defendant's clients. (Gov't Mot. 8-9.) Defendant objects under Rule 404(b) and claims that the evidence is irrelevant and prejudicial. (Def. Mot. 4.)

The court finds that evidence of Defendant's interactions with the undercover agent is admissible. Although this is an uncharged act, the Government offers the evidence for several proper non-propensity purposes, such as demonstrating motive, intent, and corroboration. See Germosen, 139 F.3d at 127. Furthermore, Defendant's alleged preparation of a false tax return for the agent is "sufficiently similar" to the charged conduct to make relevant to Defendant's mental state. See Peterson, 808 F.2d at 974. Both acts involve Defendant's preparation of false returns for others in ...

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