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United States v. Farnsworth

August 8, 2006

UNITED STATES OF AMERICA, APPELLANT
v.
ARTHUR L. FARNSWORTH



On Appeal from the United States District Court for the Eastern District of Pennsylvania. (D.C. No. 04-cr-00707). District Judge: Honorable John R. Padova.

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

PRECEDENTIAL

Argued April 27, 2006

Before: AMBRO and FUENTES, Circuit Judges, and IRENAS,*fn1 District Judge.

OPINION OF THE COURT

On the morning that Arthur L. Farnsworth's trial for tax evasion was scheduled to begin, the District Court announced its intention to give a jury instruction that the Government strongly opposed. When the District Court declined to reconsider its ruling, the Government immediately appealed and obtained a stay of the proceedings after a jury was selected but before it was sworn. The Government urges us to reverse the District Court's ruling or, in the alternative, to issue a writ of mandamus instructing the District Court to give a different jury instruction. Because we hold that we do not have jurisdiction and that a writ of mandamus is not appropriate, we will dismiss the Government's appeal.

I. Background

On November 4, 2004, a federal grand jury returned a three-count indictment charging Arthur L. Farnsworth ("Farnsworth") with income tax evasion, in violation of 26 U.S.C. § 7201. Specifically, the indictment charges Farnsworth with willfully attempting to "evade and defeat income tax due and owing by him to the United States of America" for the calendar years 1998 through 2000 by (1) failing to make an income tax return as required by law; (2) failing to pay to the Internal Revenue Service ("IRS") the income tax due; and (3) concealing and attempting to conceal his true and correct income. The indictment further charges that Farnsworth transferred ownership of his assets to fraudulent trusts, encumbered his assets, and hid his money in overseas bank accounts.

Farnsworth's trial was scheduled to begin on Monday, January 30, 2006. Three days before trial, the District Court held a pre-trial conference to address outstanding motions and proposed jury instructions. During the conference, the District Court discussed whether the indictment charged Farnsworth with both methods of tax evasion-attempted evasion of the assessment of taxes and attempted evasion of the payment of taxes-as well as whether proof of an assessment is necessary to prove attempted evasion of payment.*fn2 The District Court sought additional briefing on these issues, which was provided by both parties on Sunday, January 29, the day before the trial was to begin.

On the day of trial, prior to jury selection, the District Court orally addressed the issues raised at the previous Friday's conference. First, the District Court ruled that the indictment charged Farnsworth with both methods of tax evasion. Second, the District Court ruled that, based on its reading of Third Circuit case law, it would instruct the jury that in order to prove attempted evasion of payment the Government must show that there had been either a self-assessment or an assessment by the IRS. In discussing its ruling on this issue, which gives rise to the Government's appeal, the District Court explained:

The . . . issue is whether or not the law in the Third Circuit requires an assessment, either a self-assessment or an assessment from the IRS[,] in order for there to be an evasion of payment charge. And I've read the government's submissions in that regard. The government recognizes the language in the Third Circuit which would require an assessment in order to maintain an evasion of payment charge.

[The] Government also points out law in other circuits[,] especially United States v. Dack[, 747 F.2d 1172 (7th Cir. 1984) (per curiam)]. We're bound by the law of the Third Circuit and if there's any weakness in the reasoning [I]'ll leave that for the government to argue directly to the Court of Appeals. But [I] do rule that evading payment does require in the Third Circuit an assessment, either self assessment or assessment by the Internal Revenue Service.

Ordinarily, . . . [I] would make a determination as to whether or not the evidence establishes a claim for evasion of payment under Rule 29, but the defendant has raised it up front and that is the Court's ruling and what does the Government intend to do in view of the Court's ruling in that regard? . . . . You have to establish that there was an assessment in order to proceed on the evading payment charge which I have concluded is in the indictment, of course along with evading assessment.

(JA 36-37 (emphasis added).) The Third Circuit decisions relied upon by the District Court were United States v. McGill, 964 F.2d 222 (3d Cir. 1992), and United States v. McLaughlin, 126 F.3d 130 (3d Cir. 1997).

After a lunch break, the Government asked the District Court to reconsider its determination that proof of either a self-assessment or a formal assessment by the IRS is necessary to prove attempted evasion of payment. The Government also informed the District Court that there was no evidence that Farnsworth self-assessed or that the IRS had made a ...


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