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United States v. Wanland

United States Court of Appeals, Ninth Circuit

July 27, 2016

United States of America, Plaintiff-Appellee,
Donald M. Wanland, Jr., Defendant-Appellant.

          Argued and Submitted June 15, 2016 San Francisco, California

         Appeal from the United States District Court No. 2:09-cr-00008-LKK-1 for the Eastern District of California Lawrence K. Karlton, District Judge, Presiding

          John R. Hurley (argued) and Eduardo G. Roy, Prometheus Partners LLP, San Francisco, California, for Defendant-Appellant.

          Christopher Hales (argued) and Matthew D. Segal, Assistant United States Attorneys; Camil A. Skipper, Appellate Chief; United States Attorney's Office, Sacramento, California; for Plaintiff-Appellee.

          Before: J. Clifford Wallace, Mary M. Schroeder, and John B. Owens, Circuit Judges.


         Criminal Law

         The panel affirmed the district court in all respects in a case in which the defendant was convicted of tax related charges, including tax evasion.

         The panel held that neither the district court nor the jury erred in concluding that the defendant's monthly income from his law practice qualified as "salary or wages" under 26 U.S.C. § 6331(e), and therefore rejected the defendant's contention that the government could not prove concealment of property subject to a levy, as required for conviction under 26 U.S.C. § 7206(4).

         Rejecting the defendant's contention that the district court erred in dismissing the levy counts because they exceeded the three-year statute of limitations, the panel held that the six-year statute of limitations of 26 U.S.C. § 6531(1), covering tax offenses "involving the defrauding or attempting to defraud" the government, applies to prosecutions under § 7206(4).

         The panel held that the district court properly rejected the defendant's argument that res judicata precludes the government from pursuing a criminal action concerning his debts that were already discharged in bankruptcy. The panel held res judicata cannot apply because the IRS in a bankruptcy action and the United States government in a criminal action are not in privity.

         The panel resolved several of the defendant's arguments in a concurrently-filed memorandum disposition.



         Defendant Donald Wanland, Jr. appeals from his jury convictions and sentence for tax related charges, including tax evasion. Although Wanland raises many arguments challenging his convictions and sentence, none has merit, so we affirm the district court in all respects.[1]

         I. Factual Background

         Wanland was a successful civil attorney in Sacramento, California, and his law practice generated considerable income. In the 1990s, he entered into two partnership agreements with Richard Bernstein-the Law Offices of Wanland and Bernstein (from which Wanland drew his income) and 705 University Partners (which held the real estate at 705 University Avenue, the partnership's law office). Wanland received 75% of the profits, while Bernstein received 25% of the profits, in scheduled monthly draws. More specifically, partners were entitled to "withdraw from the partnership funds in equal monthly installments an amount equal to four-fifths of his distributive share of partnership net profits for the preceding year." 705 University Partners had its own bank account ("705 Account"), which Wanland used as both his business and personal account.[2]

         Wanland's disputes with the Internal Revenue Service ("IRS") began in the 1990s, and they continued into the new millennium. For tax years 2000-2003, Wanland filed personal tax returns reporting many hundreds of thousands of dollars of income, and owing around $450, 000 in taxes. Wanland never paid these taxes, and then stopped filing personal tax returns altogether. His law partnership continued to file returns showing income of around $300, 000 each year.

         After several failed attempts to resolve his tax deficiencies, an IRS Officer was assigned to Wanland's case. Following some initial correspondence, the officer sent a Collection Information Statement (IRS Form 433A) to Wanland's personal accountant to complete. Form 433A discloses an individual's income, expenses, assets, accounts, and liabilities so the IRS can assess an individual's ability to pay outstanding taxes.

         In November 2003, Wanland completed, signed, and submitted the Form 433A. He listed only one bank account with a balance of $9. He did not list the 705 Account, even though, in the previous month alone, he had deposited $35, 000 from his law practice into and spent over $18, 000 from the 705 Account. He also did not list his American Express card, even though he had used roughly $15, 000 from the 705 Account in October and November to pay down its balance. He also never disclosed the 705 Account to his accountants, who would have told Wanland that he needed to disclose it on the Form 433A.

         In April 2004, the IRS reassigned Wanland's case to a different IRS Officer, who concluded that Wanland had the ability to pay his tax liabilities, penalties, and interest. In May 2004, she met with Wanland and his accountant, and Wanland promised to pay $10, 000 per month towards his outstanding tax balance, and to get a loan to obtain more funds. He never got the loan, and stopped making payments after four months.

         In April 2005, Wanland provided an updated Form 433A, which reported the same account as the previous Form 433A, this time with an account balance of "minimal/unknown." He again omitted the 705 Account, even though he had deposited $20, 000 into it just a few days earlier. The IRS Officer, suspicious that Wanland had been hiding accounts, issued a summons to Wanland's bank around the same time. She then learned about the 705 Account, and issued levies on both partnerships-the Law Offices of Wanland and Bernstein and 705 University Partners. The levies stated:

This levy requires you to turn over to us: this taxpayer's wages and salary that have been earned but not paid, as well as wages and salary earned in the future until this levy is released, and (2) this taxpayer's other ...

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