Close But No Cigar: Fourth Circuit Finds Error But Affirms Tax Fraud Conviction

Posted On Thursday, March 21, 2013
By: John A. Schwab

The Fourth Circuit recently affirmed the tax fraud conviction of tax preparation consultant Michael R. Woods despite finding error by the trial court in the conduct of Mr. Woods’ trial.    U.S. v. Woods, No. 11-4817 (4th Cir. Mar. 18, 2013).  The two substantiated errors involved the prosecutor’s accusation during closing argument that Mr. Woods testified untruthfully, and the trial court’s failure to grant Mr. Woods’ request for a jury instruction on character evidence.  The court ultimately determined that the errors did not prejudice the outcome of trial.

Mr. Woods worked full-time as a data warehouse manager with the U.S. Department of Veteran Affairs but supplemented his income through his tax preparation business, M&R Computer Consulting and Tax.  During a four-day jury trial, the government presented evidence that Woods fabricated dependents for clients as well as educational, business, and travel expenses.  He charged clients $500 for each false dependent, whose names, birth dates, and social security numbers were stolen by Woods from the VA computer system.  Woods was charged in a thirty-four count indictment with preparing and filing false and fraudulent tax returns to the IRS, wire fraud, identity theft and aggravated identity theft. 

Woods represented himself at trial and testified on his own behalf, denying that he stole the identities from the VA and claiming that the incorrect tax return information was provided by his clients.  While Woods claimed that his jury trial was prejudiced by error, the Court held that two of the claimed errors, although valid, did not prejudice the trial’s outcome and were not reversible error.

In his first assignment of error, Woods claimed he was prejudiced by the prosecutor’s statement during closing argument that Woods lied when he testified under oath, arguing “So, Mr. Woods was right in the middle of getting these $500 payments for the fake dependents and he lied about it under oath when he testified this morning.”  The Fourth Circuit acknowledged that the prosecutor’s statement, accusing Woods of lying on the stand, was improper and noted that it has “long rebuked government counsel for making inflammatory statement of this nature,” citing U.S. v. Moore, 11 F.3d 475 (4th Cir. 1993) and U.S. v. Loayza, 107 F.3d 257, 262 (4th Cir. 1997).  Although the court found this to be plain error, it held that Woods’ “substantial rights” were unaffected.

Woods second assignment of error was based on the trial court’s refusal to instruct the jury on character evidence.  At trial, Woods’ presented evidence of his good character, consisting of his opinion of himself during his testimony as well as the opinion of his supervisor at the VA, Milton Harrison.  The testimony from Harrison, who was called as a government witness, was elicited by Mr. Woods on cross-examination by having Harrison agree that Woods’ integrity had never been called in the context of his work at the VA.  However, on re-direct examination by the prosecutor, Harrison conceded that the government’s evidence called into question Woods’ integrity.

The trial court, relying on the apparent equivocation by Harrison when questioned on re-direct examination by the prosecutor, refused to give the jury instruction on character evidence requested by Wood.  The Fourth Circuit, however, noted prior holdings that “questions put to defense character witnesses that assume[] a defendant’s guilt of the crime for which he was charged [are] improper” citing U.S. v. Mason, 993 F.2d 406, 408 (4th Cir. 1993).  It also held that it remains “the province of the jury to determine the credibility of [the] testimony and the proper weight to afford that particular evidence, including consideration of any inconsistencies in Harrison’s testimony.”  Once again, the Fourth Circuit stopped short of providing actual relief to Woods because it found he was not prejudiced by the trial court’s refusal to provide the instruction.  The Court stated that it was “firmly” convinced that the jury would have returned the same guilty verdict even with the requested instruction.

The full text of the opinion can be found here.