Convictions for Tax Evasion, Stealing Government Property Affirmed, But Court Remands for Resentencing

U.S. v. Kupfer, 2015 WL 4926885 (8/19/15) (N.M.) (Published) - The 10th affirms convictions for tax evasion and stealing government property, but reverses the sentence due to errors in applying USSG § 2C1.1, instead of § 2B1.1 and imposing an obstruction of justice enhancement. The 10th rules the district court erred when it applied USSG § 2C1.1, on the grounds that the evidence at trial indicated there was a conspiracy to defraud involving state officials. The 2001 Sentencing Commission amendment 591 and § 1B1.2 make clear that only the offense of conviction may be considered, not the actual conduct, in deciding which guideline to use. Here Mr. Kupfer was convicted of stealing government property under 18 U.S.C. § 641. The statutory index sends Mr. Kupfer's offense to § 2B1.1. The conspiracy charge doesn't change that conclusion. § 2X1.1 calls for referring to the underlying substantive offense that was the object of the conspiracy. Accordingly, the guideline range should have been 78-97, not 121-151 months. And, as the government conceded, the 10th finds the district court also erred by imposing an obstruction-of-justice adjustment based on Mr. Kupfer's failure to reveal his under-reporting of income. That adjustment cannot be imposed for the failure to disclose one's own crime.

The 10th holds, consistent with the tax-evasion decision in Mr Kupfer's wife's case, that it was not error to refuse to instruct that under-reporting of taxes is not willful if it is merely negligent and it was okay not to hold a needless evidentiary hearing regarding a juror's comments about other charges the Kupfers were facing. The 10th holds evidence about an anti-smoking campaign was admissible intrinsic, and not 404(b), evidence where Mr. Kupfer was accused of getting paid too much for work he did on a voter-awareness campaign. The government argued that a consultant on the anti-smoking and voter-awareness campaigns paid kickbacks to Mr. Kupfer through excessive payments for work done on the voter-awareness campaign as payment for Mr. Kupfer getting more money for the consultant on the anti-smoking campaign through his and his wife's influence. The evidence showed that within several months of getting increases in the anti-smoking campaign, the consultant paid Mr. Kupfer $ 740,000 for a short training video for the voter-awareness campaign [I bet it was a really good video]. This was enough for the jury to draw a connection between the two distinct campaigns. It was also enough to tie in Mr. Kupfer, not just his wife. Both Kupfers had strong influence with the appropriate agency. The anti-smoking-campaign evidence was therefore highly probative. Meanwhile, any prejudice was not unfair, the 10th says, making the evidence okay under Rule 403. Admission of evidence of an elder-abuse contract was also okay, the 10th holds. It showed the consultant's normal billing rate for a legitimate media contract. Rule 404(b) played no role because the evidence didn't concern character. Minimal danger of prejudice arose. So it was okay under Rule 403. And, anyway, any error was harmless. It played a minor role involving a total of 5 questions. There was no mention of it in closing.