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United States v. Fountain

United States Court of Appeals, Third Circuit

July 10, 2015

UNITED STATES OF AMERICA
v.
PATRICIA FOUNTAIN, Appellant in 13-3023, CALVIN JOHNSON, JR., Appellant in 13-3025 and LARRY ISHMAEL, Appellant in 13-3478

Argued December 10, 2014

On Appeal from the United States District Court for the Eastern District of Pennsylvania. (D.C. No. 2-12-cr-00155-001, 2-12-cr-00155-002 and 2-12-cr-00155-003,). District Judge: Honorable Stewart Dalzell.

JOSEPH J. KHAN (Argued), Office of United States Attorney, Philadelphia, PA, Counsel for Appellee United States of America.

RICHARD COUGHLIN, JULIE A. MCGRAIN (Argued), Office of Federal Public Defender, Camden, NJ, Counsel for Appellant Patricia Fountain.

LAWRENCE J. BOZZELLI (Argued), Philadelphia, PA, Counsel for Appellant Calvin Johnson, Jr.

DANIEL I. SIEGEL (Argued), Office of Federal Public Defender, Wilmington, DE, Counsel for Appellant Larry Ishmael.

Before: FUENTES, FISHER, and KRAUSE, Circuit Judges.

OPINION

KRAUSE, Circuit Judge.

This is a consolidated criminal appeal, arising out of a large tax fraud conspiracy, that presents us with an opportunity to clarify the mental states required of the payor and payee to uphold a conviction for Hobbs Act extortion under color of official right. For the reasons set forth below, we will affirm.[1]

I. Background

Between 2007 and 2012, Appellant Patricia Fountain, an IRS employee, helped orchestrate several schemes to fraudulently obtain cash refunds from the IRS. Those schemes involved filing false tax returns that claimed refunds pursuant to the Telephone Excise Tax Refund (" TETR" ), the First Time Home Buyer Credit (" FTHBC" ), or the American Opportunity Tax Credit (" AOTC" ). Fountain employed her knowledge of the IRS's fraud detection procedures to avoid suspicion, including that TETR claims below $1,500 would not be flagged for review. Over time, Fountain and her significant other, Appellant Larry Ishmael, enlisted various people, including Appellant Calvin Johnson, Jr., to recruit claimants who would provide their personal information in exchange for a portion of a cash refund. During the same period, Johnson became involved in an additional conspiracy with some of his family members and other acquaintances that involved submitting fraudulent FTHBC and AOTC claims.

After a two-week trial, a jury convicted Fountain, Ishmael, and Johnson on multiple counts of conspiracy and filing false claims to the IRS in violation of 18 U.S.C. § § 286 and 287. Fountain was also convicted on one count of Hobbs Act Extortion and two counts of making or presenting false tax returns, violations of 18 U.S.C. § 1951(a) and 26 U.S.C. § 7206, respectively. Additionally, Johnson was convicted of filing false claims to the IRS while on pretrial release in violation of 18 U.S.C. § § 287 and 3147(1).

Fountain moved for a judgment of acquittal after trial on the Hobbs Act charge, which the District Court denied. Following evidentiary hearings on the dollar amounts involved in the Defendants' schemes, the District Court sentenced Fountain to 228 months' imprisonment and a three-year term of supervised release, and ordered her to pay restitution of $1,740,221.40. The District Court sentenced Ishmael to 144 months' imprisonment and a three-year term of supervised release, and ordered him to pay restitution of $1,751,809.40. Finally, the District Court sentenced Johnson to 216 months' imprisonment and a three-year term of supervised release, and ordered him to pay restitution of $1,248,392.40. Each of these sentences fell within the applicable Guidelines ranges after the District Judge imposed various enhancements.

II. Discussion

A. Fountain's Hobbs Act Conviction

Fountain contends that the evidence at trial was insufficient to support a conviction for extortion under color of official right. While sufficiency of the evidence is a question of law subject to plenary review, " [w]e review 'the evidence in the light most favorable to the Government,' afford 'deference to a jury's findings,' and draw 'all reasonable inferences in favor of the jury verdict.'" United States v. Moyer, 674 F.3d 192, 206 (3d Cir. 2012) (quoting United States v. Riley, 621 F.3d 312, 329 (3d Cir. 2010)). We will overturn the verdict " only when the record contains no evidence, regardless of how it is weighted, from which the jury could find guilt beyond a reasonable doubt." Id. (quoting Riley, 621 F.3d at 329) (internal quotation marks omitted).

The extortion count against Fountain alleged that she obtained and attempted to obtain money from Deborah Alexander under color of official right as an IRS employee. As the Government demonstrated at trial, Alexander was a client at Natashia Witherspoon's hair salon. Witherspoon, who was also Fountain's hairstylist, recruited Alexander and other clients to provide personal information so that Fountain could file fraudulent tax returns in their names. Witherspoon had Alexander fill out blank IRS forms with her personal information and then gave those forms to Fountain for her to file. Alexander never dealt directly with Fountain, but she knew Fountain worked for the IRS. Sometime after her tax return was filed, Witherspoon told her that she had to pay Fountain a $400 fee. Alexander testified that she became suspicious, but paid the fee anyway. Witherspoon testified that she told some people that Fountain would " red flag" them if they did not pay her fee, but did not say whether she conveyed that information to Alexander in particular. Likewise, Alexander did not recall Witherspoon mentioning any consequences for failing to make the payment.

We hold that the evidence adduced at trial was sufficient to support Fountain's Hobbs Act conviction. Because we have articulated the appropriate standard for an official right extortion conviction in varying ways in past cases, we take this opportunity to synthesize our case law and explain how we come to this result.

1. Elements of Hobbs Act Extortion Under Color of Official Right

The federal statute penalizing extortion, 18 U.S.C. ยง 1951, a codification of the 1946 ...


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