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United States of America v. Dennis Glick

January 4, 2012

UNITED STATES OF AMERICA, PLAINTIFF,
v.
DENNIS GLICK,
DEFENDANT.



The opinion of the court was delivered by: Tucker, J.

MEMORANDUM

January __, 2012

Presently before the Court is Defendant's Motion for Acquittal, or in the Alternative, a New Trial (Doc. 71), the Government's Opposition in response thereto (Docs. 90-96), and Defendant's Reply to the Government's Opposition(Doc.104). For the reasons set forth herein, the Court will deny Defendant's Motion.

I. FACTUAL BACKGROUND

After a five-day trial before this Court, on October 11, 2011, a jury returned a guilty verdict against Defendant, Dennis Glick ("Glick") as to all five counts of his Indictment. Count One of the Indictment charged Defendant with corruptly endeavoring to obstruct and impede the due administration of the Internal Revenue laws in violation of 26 U.S.C. § 7212(a). Counts Two through Five charged the Defendant with aiding or assisting in the preparation of false or fraudulent tax returns in violation of 26 U.S.C. § 7206(2).The Government alleged that Defendant Glick was a certified public accountant ("CPA") who, while working for the Felix family and their companies, particularly United Professional Plans, Incorporated ("UPPI"), falsified their individual income tax returns and then lied to federal agents about the falsification on two occasions.

UPPI was an "S" Corporation in which corporate income and losses pass through to the corporate owners, who must report corporate income and losses on their personal income tax returns. Dr. Paul and Jonathon Felix shared ownership of UPPI until Dr. Felix's death in November 2000, at which point Dr. Felix's ownership transferred to his wife, Marion Felix. The Government alleged that Jonathon Felix ("Felix"), from the mid-1990's to 2003, took large amounts of money from UPPI for personal use, but did not report this money to the Internal Revenue Service ("IRS") as taxable income. The Government also alleged that Defendant was aware of Jonathon Felix's actions. Upon a request to prepare Jonathon Felix's delinquent tax returns, Defendant was unable to acquire sufficient information to prepare the returns, but included a "management fee" in amounts that under-reported the actual amount of funds that Jonathon Felix was removing from UPPI for personal use. Finally, the Government alleged that Defendant prepared Dr. Paul and Marion Felix's tax returns, which contained flow-through and income figures from UPPI, even though Defendant was unable to prepare UPPI's tax returns. Presently before the Court is Defendant's Motion for Acquittal, or in the Alternative, a New Trial.

II. DISCUSSION

A. Motion for Acquittal

Defendant has not presented sufficient grounds for granting his Motion for Acquittal. A defendant bears an "extremely high" burden when challenging the sufficiency of the evidence supporting a jury verdict. United States v. Iglesias, 535 F.3d 150, 155 (3d Cir. 2008) (quoting United State v. Lore, 430 F.3d 190, 203-04 (3d Cir. 2005). In deciding on a motion for judgment of acquittal made pursuant to Fed. R. Crim. P. 29, a district court must "review the record in the light most favorable to the prosecution to determine whether any rational trier of fact could have found proof of guilty beyond a reasonable doubt based on the available evidence." United States v. Brodie, 403 F.3d 123, 133 (3d Cir. 2005) (quoting United States v. Smith, 294 F.3d 473, 476 (3d Cir. 2002). The court's review "must examine the totality of the evidence, both direct and circumstantial," United States v. Gambone, 314 F.3d 163, 170 (3d Cir. 2003), and "[t]he court is required to 'draw all reasonable inferences in favor of the jury's verdict,'" Smith, 294 F.3d at 476 (quoting United States v. Anderskow, 88 F.3d 245, 251 (3d Cir. 1996). "A finding of insufficiency should be 'confined to cases where the prosecution's failure is clear.'" Brodie, 403 F.3d at 133 (quoting Smith, 294 F.3d at 477). Moreover, "[c]courts must be ever vigilant in the context of FED. R. CRIM. P. 29 not to usurp the role of the jury by weighing credibility and assigning weight to the evidence, or by substituting its judgment for that of the jury." Id. In evaluating a motion for acquittal, the court may consider the "inferences" that arise from the government's evidence. Brodie, 403 F.3d at 149. It is the "court's obligation in the context of a Fed. R. Crim. P. 29 . . . to ensure that any inferences arising from circumstantial evidence are reasonable." Id. at 154. The "government need not conclusively eliminate every other possibility before the jury may reasonably infer that a defendant was guilty." United States v. Carbo, 572 F.3d 112, 118 (3d Cir. 2009).

Defendant Glick bases his Motion for Acquittal on the grounds that the Government failed to establish beyond a reasonable doubt that Defendant acted willfully as required for a conviction under 26 U.S.C. §7206(2), or corruptly as required for a conviction under 26 U.S.C. § 7212(a).

1. The Government Presented Sufficient Evidence for the Jury to Reasonably Infer that Defendant Acted Willfully

The Government presented evidence sufficient to permit a reasonable juror to find beyond a reasonable doubt that Defendant acted willfully. Willfulness, in the criminal tax context is defined as a "voluntary, intentional violation of a known legal duty." Cheek v. United States, 498 U.S. 192, 201 (1991). The Government's burden of proving knowledge of a known legal duty "requires negating a defendant's claim of ignorance of the law or a claim that because of a misunderstanding of the law, he had a good faith belief that he was not violating any of the provisions of the tax laws." Id. at 202; see also United States v. Ringwalt, 213 F. Supp. 2d 499 (3d Cir. 2002). The Government may prove willfulness through direct or circumstantial evidence. Ringwalt, 213 F. Supp. 2d at 504. All that is required is "some evidence from which a jury could infer an intent to mislead or conceal beyond mere failure to pay assessed taxes." Id. (quoting United States v. McGill, 964 F.2d 222, 237-38 (3d Cir. 1992)). Defendant argues that "at best" the evidence demonstrated that he was "negligent, mistaken, or careless" in putting down an estimated "management fee" on Jonathan Felix's delinquent returns in an effort to increase Felix's tax liability. In turn, Defendant argues that because such negligence or good faith negates a finding of willfulness, the Government failed to fulfill its burden of proving beyond a reasonable doubt that Defendant Glick acted willfully.

The Court agrees with the Government that a reasonable juror, upon examining the totality of the evidence, could have found beyond a reasonable doubt that Defendant Glick acted willfully. At trial, the Government presented evidence that Defendant Glick was well aware of his obligations as a tax preparer. Glick had thirty years of experience as a certified public accountant ("CPA"). The Government also presented evidence that Glick was aware that UPPI was an S-corporation, which required any taxable income to flow through from UPPI to its shareholders, Jonathan Felix and Dr. Paul Felix. The Government also presented testimony that Defendant Glick noticed $1 million of shareholder loans to Jonathon Felix from UPPI recorded in the UPPI books, and informed Felix that he should be being taxed for that income. Glick also reported to IRS agents that he had discovered that Felix had been charging personal expenditures to UPPI corporate credit cards, as well as writing UPPI checks to himself. Several witnesses indicated that Defendant Glick could not get the information he required to properly prepare Felix's tax returns. In addition, the evidence revealed that Defendant Glick, a CPA with thirty years of experience, fabricated the management fees on Felix's tax returns. And finally, the evidence also revealed that Defendant Glick lied twice to IRS investigators regarding the source of the management fee. See Brodie, 403 F.3d at 157 (holding that concealment leads to a reasonable inference of past wrongdoing); Ringwalt, 213 F. Supp. 2d at 512 (citing United States v. Bishop, 264 F.3d 535, 550 (5th Cir. 2001) ("False explanations or false exculpatory statements offered by defendants for prior fraudulent conduct is evidence of willfulness in criminal tax cases.").

Viewed in the light most favorable to the Government, this evidence was sufficient for a rational factfinder to infer that Defendant Glick acted willfully in preparing false and fraudulent tax returns -- that is that Defendant was aware of his duty, and intentionally violated that duty. Defendant relies on the fact that he merely acted negligently, or acted in good faith. However, given the evidence -- specifically Defendant's knowledge of Felix's exorbitant use of corporate funds for personal expenditures, it was reasonable for the jury to infer that the small amount of the ...


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