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United States v. Beckham

United States Court of Appeals, Eighth Circuit

March 8, 2019

United States of America Plaintiff- Appellee
v.
Mark A. Beckham Defendant-Appellant

          Submitted: January 18, 2019

          Appeal from United States District Court for the Eastern District of Missouri - St. Louis

          Before GRUENDER, WOLLMAN, and SHEPHERD, Circuit Judges.

          SHEPHERD, Circuit Judge.

         Mark 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[1] 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, we affirm.

         I.

         In 2009 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 Consulting.

         Horseman's 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 Consulting.

         In 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 representative.

         In the 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.

         The IRS 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.

         On 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.

         Beckham 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.

         On June 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 ยง 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 ...


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