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United States v. Daraio

April 10, 2006

UNITED STATES OF AMERICA
v.
DOROTHEA DARAIO, APPELLANT



On Appeal from the United States District Court for the District of New Jersey (D.C. Crim. No. 04-00245). Honorable Joseph E. Irenas, District Judge.

The opinion of the court was delivered by: Greenberg, Circuit Judge.

PRECEDENTIAL

Argued March 6, 2006

BEFORE: ROTH and GREENBERG, Circuit Judges, and BUCKWALTER, District Judge*fn1

OPINION OF THE COURT

I. INTRODUCTION

Defendant Dorothea Daraio ("Daraio") appeals from a judgment of conviction and sentence entered on May 5, 2005, in this tax evasion case. Daraio raises three issues on this appeal. First, she argues that the evidence at trial coupled with the jury instructions constructively amended the indictment returned against her on which she was tried. Second, she contends that there was at trial, in the alternative to a constructive amendment of the indictment, a prejudicial variance in the evidence from the terms of the indictment. In these two contentions Daraio asserts that the government's proofs may have led the jury to convict her of unlawful conduct the indictment did not charge. Third, Daraio argues that the district court erred in admitting evidence under Federal Rule of Evidence 404(b) ("Rule 404(b) evidence") of her prior non-compliance with federal tax laws to prove her intent to commit the crime charged in this case. Daraio contends that by reason of any of these errors she is entitled to an outright reversal of her conviction or at least a new trial. For the reasons set forth below, we will affirm.

II. FACTS AND PROCEDURAL HISTORY

On August 17, 2004, a grand jury returned a superseding indictment charging Daraio with one count of tax evasion in violation of 26 U.S.C. § 7201 and 18 U.S.C. § 2.*fn2 In particular, the indictment charged Daraio with "knowingly and willfully attempt[ing] to evade and defeat the payment of a substantial part of the payroll taxes due and owing by Eagle Security, Inc.*fn3 to the United States for the quarterly periods that included April 1994 through April 1998, in the amount of approximately $222,607.40, by directing clients of Eagle Security, Inc. to pay their unpaid balances that they owed to Eagle Security, Inc. to E.S.S. Co." J.A. at 598. The indictment charged that Daraio gave those directions after or at about the time that the Internal Revenue Service ("IRS") issued levies on ten clients of Eagle Security, Inc. ("Eagle Security") requiring them to pay their balances due to Eagle Security to the IRS. The government produced evidence at the trial supporting the indictment which we need not describe at length.*fn4

Before the start of the presentation of evidence at the trial, the prosecutor in in limine proceedings filed and served a notice that the government would seek to introduce evidence of Daraio's prior tax non-compliance as demonstrated by her personal tax records and tax records from several corporations with which she was involved pursuant to Rule 404(b). The government sought to introduce this evidence on the theory that, as the district court recognized, "general feelings or general attitude toward the IRS can be proof of willingness or intent." J.A. at 109-10. The Rule 404(b) evidence ultimately included the following items:

(1) Payroll tax records for Joseph Daraio, Daraio's husband,*fn5 trading as ESS-Co. and Quest Investigators, pertaining to tax periods from 1989-1993 including the records themselves, as well as, for certain tax periods, certifications of a "lack of records" indicating the failure to file tax returns;

(2) Certifications by the IRS that Eagle Security did not file payroll tax returns in 1990-1993 and 1999-2004;

(3) Payroll tax records, again including certifications of lack of records, for ESS-Co., beginning in the third quarter of 1998 through the first quarter of 2004;

(4) Certifications of lack of records for ESS-Co. from 1992-1998 and 2000-2004;

(5) Corporate tax records for Eagle Security from 1990-2003,*fn6 that showed that it had not filed forms with the IRS in 1999, 2001, and 2002;

(6) Corporate tax records for ESS-Co. from 1998-2003;

(7) Joint personal income tax returns for Joseph Daraio and Daraio from 1984 and 1989-2003.

Over Daraio's continuing objection, the district court admitted the Rule 404(b) evidence, reasoning that evidence of past conduct is relevant when, as in this case, "the defendant has square[ly] raised intent."*fn7 J.A. at 23. The district court, however, gave the jury the following limiting instruction:

Ladies and gentlemen of the jury, you will soon, and at various other times during the trial, hear evidence of acts the defendant - - of acts of the defendant that may be similar to those charged in the ...


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