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United States v. Bryan

United States Court of Appeals for the Ninth Circuit

May 3, 1988, Argued and Submitted ; January 18, 1989, Filed

No. 87-3059

Opinion

 [*1033]  WALLACE, Circuit Judge:

 [**2]  Bryan appeals his conviction of twenty counts of mail fraud in violation of 18 U.S.C. § 1341, one count of conspiracy to defraud the United States in violation of 18 U.S.C. § 371, twenty-eight counts of aiding the preparation of false tax returns in violation of 26 U.S.C. § 7206, and two counts of willful failure to file corporate tax returns in violation of 26 U.S.C. § 7203. We vacate Bryan's convictions and remand for further consideration of his discovery requests.

In 1985, the grand jury in the District of Oregon returned a 51 count indictment charging Bryan and three other defendants with, among other things, 20 counts of mail fraud in violation of 18 U.S.C. § 1341. According to the indictment, Bryan devised a scheme intended to defraud both a class of taxpayers, who were induced by a series of misrepresentations to invest in illegal tax shelters created by Bryan and his co-defendants, and the United States Treasury, which was deprived of tax revenue as a result of the tax shelters. The tax shelters promoted by Bryan were advertised and marketed at [**3]  seminars targeted at upper-income taxpayers, such as doctors and dentists. Bryan promoted the first shelter by advising taxpayers that they could obtain favorable tax benefits by becoming "ministers" of the "Congregational Church of Human Morality" (Church), an organization created by Bryan in 1974. For a fee, a "minister" could form a "parish" of the Church. Thereafter, the taxpayer would make a large "contribution" to the Church, which the taxpayer would claim as a charitable deduction. Ninety-five percent of the contributions would then be returned by the Church to the "parish" of the taxpayer who made the contribution. This money was ostensibly for "parish use," which, the taxpayers were told, could be for anything the taxpayer wanted. The indictment alleged that the taxpayers induced to participate in this scheme were falsely assured that the money contributed to the Church could lawfully be claimed as charitable deductions on their tax returns.

The second shelter consisted of inducing investments in a company called Harvard Investment Management Corporation (Harvard). The investor would pay a fee to establish a commodity trading account in the name of a Subchapter S corporation [**4]  established for each investor. The investors were told that Harvard would engage in commodity straddle trades that would produce deductible losses far in excess of the taxpayer's investment. According to the indictment, no commodity trades were actually made by Harvard, and no deductible losses resulted. Instead, Bryan and his co-defendants prepared false commodity confirmation slips and monthly activity statements purporting to show substantial losses for each Harvard investor, thereby inducing the investors to claim fictitious losses on their Small Business Corporation Income Tax Returns. The indictment also alleged that Bryan and his co-defendants diverted some of the money invested by each taxpayer in Harvard for their own use and benefit.

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868 F.2d 1032 *; 1989 U.S. App. LEXIS 355 **

UNITED STATES OF AMERICA, Plaintiff-Appellee v. JAMES GERALD BRYAN, Defendant-Appellant

Prior History:  [**1]   Appeal from the United States District Court for the District of Oregon, D.C. No. 85-37-FR, Helen J. Frye, District Judge, Presiding.

CORE TERMS

documents, taxpayers, indictment, district court, discovery, defraud, counts, out-of-district, shelters, schemes, exculpatory, argues, plain error, instructions, unanimity instruction, scheme to defraud, transactions, duplicitous, fraudulent, unanimity, contends, investor, induced, investigating agency, close connection, returns, belong

Criminal Law & Procedure, Standards of Review, Abuse of Discretion, Discovery, General Overview, De Novo Review, Harmless & Invited Error, Discovery & Inspection, Brady Materials, Defective Joinder & Severance, Duplicity, Appellate Review, Trials, Jury Instructions, Objections, Plain Error, Definition of Plain Error, Particular Instructions, Unanimity, Requests to Charge