APPEAL FROM AN ORDER OF JUDGMENT OF ACQUITTAL OF THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA
Before: SEITZ, Chief Judge, HIGGINBOTHAM and SLOVITER, Circuit Judges
A. LEON HIGGINBOTHAM, JR., Circuit Judge.
A federal grand jury indicted defendant/appellee Joseph L. Doan, Jr. ("Doan") and his brother Richard with charges of violating 26 U.S.C. § 7206(1) (tax perjury) for 1975 and 1976 (Counts One and Two).
The district court declared Joseph Doan's first trial a mistrial because the jury could not reach a verdict. The second trial resulted in a guilty verdict on both counts. The defendant moved the court for a judgment of acquittal asserting that the evidence was insufficient to support the conviction.*fn1
The district court initially denied defendant's motion, but on reconsideration stated that "[w]ith regard to Joseph Doan, . . . there is a complete absence of any evidence -- other than the underreporting itself -- which would establish the necessary element of willfulness." Appendix ("App.") at 49a. Thus, the district court ordered that Joseph Doan's motion for a judgment of acquittal be granted. App. at 50a. The government appeals this post-verdict order of the district court. We will reverse.
Joseph Doan had a twenty-five percent ownership interest in D-C Auto Rental ("D-C"). He received "management" fees from D-C prior to its sale to American Auto Leasing Co. ("American") in 1975. D-C continued to pay Doan "management" fees until its final liquidation in 1976. The terms of the sale required American to pay Doan a "consultant" fee of $250 a month for a period of 36 months. However, he was not used as a consultant. Additionally, American agreed to pay Joseph Doan $500 a month in consideration of his "covenant" not-to-compete with American for the next 5 years. Joseph Doan began receiving the monthly "consultant" and "convenant" fees in the fall of 1975.
Prior to the sale, Doan received 1099 forms from D-C's bookkeeper to reflect the "management" fees D-C paid to him. A representative of the Audit Division of the Internal Revenue Service described the 1099 form as follows:
[A] 1099 form is merely an information item that is issued to the recipient of income of more than $600 in one year. One copy would be retained by the payer, one copy would go to the recipient and one copy [would] be sent to the Internal Revenue Service.
App. at 100a. Because the bookkeeper was terminated shortly after D-C's sale to American, the 1099 forms which would have reflected the "management," "consultant" and "covenant" fees for 1975 and 1976 were not prepared or sent to Doan. Doan did not report his receipt of those fees on his 1975 and 1976 income tax returns. His failure to include the "management," "consultant" and "covenant" fees for the two years amounted to additional income of $22,838 which increased his tax liability by $9,156. He did, however, receive 1099 forms for 1977 and 1978, and he did report the fees paid to him in 1977 and 1978 as income.
The defendant initially testified at trial that he was uncertain when he received them whether the checks American sent to him in payment of his "consultant" and "covenant" fees represented taxable income. App. at 127a-28a. He finally admitted that he knew these fees were income when ...