Submitted: January 18, 2019
from United States District Court for the Eastern District of
Missouri - St. Louis
GRUENDER, WOLLMAN, and SHEPHERD, Circuit Judges.
SHEPHERD, Circuit Judge.
Beckham appeals his conviction for corruptly endeavoring to
obstruct and impede the due administration of the internal
revenue laws in violation of 26 U.S.C. § 7212(a).
Beckham argues that the jury instructions were erroneous,
that the district court erroneously admitted evidence and
expert testimony, and that the district court should have
granted his motion for a mistrial based on improper witness
statements. Having jurisdiction under 28 U.S.C. § 1291,
and 2010, Beckham prepared and filed tax returns for John
Horseman, owner of the financial advisory firm JM Horseman
Group, LLC. Beckham allegedly induced Horseman to participate
in a tax-loss scheme designed to offset Horseman's own
taxes. As part of this scheme, Horseman signed subscription
agreements giving him $3, 300, 000 of common stock in Arbor
Homes, Inc. and $3, 000, 000 of equity in SNB Consulting,
LLC. Horseman initially paid roughly $80, 000 in cash and
executed over $6 million in promissory notes pursuant to the
subscription agreements. In return, Horseman claimed losses
sustained by these businesses on his individual and corporate
tax returns. Horseman eventually made around $240, 000 in
payments on these notes, but made the payments to an entity
Beckham controlled rather than to Arbor Homes or SNB
2009 and 2010 individual returns claimed
"nonpassive" losses from Arbor Homes that totaled
$4.3 million. Taxpayers prefer to claim nonpassive losses
because they may offset ordinary income, while passive losses
may only offset passive income. However, in order to claim
nonpassive losses, a taxpayer must have a sufficient economic
investment in a business entity, and the taxpayer must also
materially participate in the entity's activities.
See 26 U.S.C. §§ 469(c), 1366(d); 26
C.F.R. § 1.469-5T. Horseman did not work for or
otherwise materially participate in Arbor Homes during this
time period. In addition, the Horseman Group's 2010
corporate tax return-also prepared by Beckham-claimed $1.8
million in partnership losses from SNB Consulting. However,
this loss exceeded the Horseman Group's basis in SNB
2011, the IRS began a civil audit of Horseman's 2009
individual tax return, later expanding that audit to include
the 2010 individual and corporate returns. Beckham provided
the IRS agents assigned to the audit with completed forms
authorizing him to act as Horseman's representative,
representing that he was a currently-licensed CPA in
Missouri. In reality, Beckham was not licensed as a CPA,
which would have precluded him from serving as Horseman's
course of the audit, IRS Revenue Agent Anthony Grinstead
requested information regarding Horseman's participation
in Arbor Homes. Agent Grinstead requested this information in
order to verify that Horseman met the "material
participation" requirement to claim Arbor Homes'
losses as nonpassive losses. In response to this request,
Beckham provided Agent Grimstead with Horseman's 2009 day
planner, which contained falsified entries purportedly
showing that Horseman had worked several hundred hours for
Arbor Homes during 2009.
continued to request additional documents, many of which
Beckham never provided or admitted did not exist. On July 23,
2012, the IRS discovered Beckham was not a licensed CPA.
Beckham told the agents conducting the investigation that his
license had lapsed and he was in the process of getting it
renewed. In reality, Beckham's license had been revoked
in 2008, following a 2006 federal conviction for mail fraud.
See Gov't Mot. Determ. Admissibility Evid. 2,
Dist. Ct. Dkt. 92.
April 3, 2013, the IRS discovered that Horseman "did not
pay Arbor Homes 3 million dollars . . . [and] had not paid
any money on the loan." Evid. Hr'g Tr. 68, Dist. Ct.
Dkt. 51. This indicated that the deal between Horseman and
Arbor Homes was a sham, and that Horseman had overstated his
economic interest in Arbor Homes and had improperly claimed
Arbor Homes' losses on his individual tax returns.
Suspecting fraud, IRS Revenue Agent John Shake referred the
case to IRS criminal investigation. While the initial
referral was for criminal investigation of Horseman, the IRS
later added Beckham as a target. In June 2013, Beckham
admitted to IRS Special Agent Patric Murray that the
nonpassive losses Horseman claimed from Arbor Homes were
actually passive losses because Horseman was not sufficiently
involved in Arbor Homes.
was charged in a superseding indictment with one count of
corruptly endeavoring to obstruct the due administration of
the internal revenue laws in violation of 26 U.S.C. §
7212(a) and three counts of willfully assisting in the
preparation of false tax returns in violation of 26 U.S.C.
§ 7206(2). He filed a pretrial motion to suppress all
evidence the IRS gathered after July 23, 2012, claiming that
after that date the IRS impermissibly conducted a criminal
investigation under the guise of a civil audit. The district
court denied Beckham's motion.
27, 2017, the Supreme Court granted certiorari in United
States v. Marinello, 839 F.3d 209 (2d Cir. 2016),
cert. granted137 S.Ct. 2327 (2017), to resolve a
circuit split over whether § 7212(a) requires a
defendant to know about a pending IRS proceeding when he
engages in purportedly obstructive conduct. Beckham filed a
motion to stay his trial pending the Supreme Court's
decision. The district court denied Beckham's motion,
agreeing with the government that the issue could be
addressed through the use of a special verdict form that
asked the jury whether Beckham committed a corrupt act after
becoming aware of the audit and, if so, what that act was.
Beckham also filed a motion in limine to exclude the proposed