Attorney Asks Ninth Circuit to Reverse Tax Obstruction Conviction

UNITED STATES OF AMERICA
Plaintiff-Appellee,
v.
STEPHEN DOUGAN
Defendant-Appellant.

IN THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

On Appeal from the United States District Court
for the Eastern District of California

Hon. William B. Shubb

APPELLANT'S OPENING BRIEF

Jenny Louise Johnson Ware
Johnson Moore LLC
150 North Wacker Drive, Suite 1250
Chicago, Illinois 60606
312-549-9990
jenny.johnson@jmtaxlitigation.com

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TABLE OF CONTENTS

INTRODUCTION

JURISDICTIONAL STATEMENT 

CONSTITUTIONAL AND STATUTORY AUTHORITIES

ISSUES PRESENTED 

STATEMENT OF THE CASE 

SUMMARY OF THE ARGUMENT

ARGUMENT 

CONCLUSION

STATEMENT OF RELATED CASES

CERTIFICATE OF COMPLIANCE 

ADDENDUM 

CERTIFICATE OF SERVICE

TABLE OF AUTHORITIES

Cases

Berger v. United States, 295 U.S. 78 (1935)

Chambers v. Mississippi, 410 U.S. 284 (1973)

Chapman v. California, 386 U.S. 18 (1967)

Marinello v. United States, 138 S. Ct. 1101 (2018)

Russell v. United States, 369 U.S. 749 (1962)

Sansone v. United States, 380 U.S. 343 (1965)

Schmuck v. United States, 489 U.S. 705 (1989)

Stirone v. United States, 361 U.S. 212 (1960)

United States v. Adams, 778 F.2d 1117 (5th Cir. 1985)

United States v. Boulware, 384 F.3d 794 (9th Cir. 2004)

United States v. Chapman, 524 F.3d 1073 (9th Cir. 2008)

United States v. Davis, 854 F.3d 601 (9th Cir. 2017)

United States v. Frederick, 78 F.3d 1370 (9th Cir. 1996)

United States v. Harmon, 833 F.3d 1199 (9th Cir. 2016)

United States v. Hinkson, 585 F.3d 1247 (9th Cir. 2009) (en banc)

United States v. Kojayan, 8 F.3d 1315 (9th Cir. 1993)

United States v. Lindsay, 931 F.3d 852 (9th Cir. 2019)

United States v. Lopez-Alvarez, 970 F.2d 583 (9th Cir. 1992)

United States v. Miller, 891 F.3d 1220 (10th Cir. 2018)

United States v. Montana, 199 F.3d 947 (7th Cir. 1999)

United States v. Moran, 493 F.3d 1002 (9th Cir. 2007)

United States v. Necoechea, 986 F.2d 1273 (9th Cir. 1993)

United States v. Ponticelli, 622 F.2d 985 (9th Cir. 1980)

United States v. Preston, 873 F.3d 829 (9th Cir. 2017)

United States v. Reyes, 577 F.3d 1069 (9th Cir. 2009)

United States v. Shipsey, 190 F.3d 1081 (9th Cir. 1999)

United States v. Stever, 603 F.3d 747 (9th Cir. 2010)

United States v. Ward, 747 F.3d 1184 (9th Cir. 2014)

United States v. Young, 470 U.S. 1 (1985)

Statutes

18 U.S.C. § 3231

26 U.S.C. § 7201

26 U.S.C. § 7206(2)

26 U.S.C. § 7212(a)

28 U.S.C. § 1291

Rules

Circuit Rule 34-3

Federal Rule of Appellate Procedure 4(b)3

Federal Rule of Evidence 403

Federal Rule of Evidence 404(b)

Federal Rule of Evidence 801(a)

Federal Rule of Evidence 801(c)

Federal Rule of Evidence 803(3)

Other Authorities

Advisory Committee Note to Federal Rule of Evidence 801

Court's Manual of Model Jury Instructions, 3.01 Activities Not Charged

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INTRODUCTION

After a lengthy audit of his 2006 and 2007 income tax returns, attorney Stephen Dougan was charged with two counts of aiding and assisting in the preparation of a false tax document in violation of 26 U.S.C. § 7206(2) and one count of corruptly endeavoring to obstruct or impede the due administration of the internal revenue laws in violation of 26 U.S.C. § 7212(a) (“Section 7212(a)”). The jury acquitted him of the first count, related to his 2006 return, and could not reach a verdict on the second count, related to his 2007 return, but convicted him of corruptly endeavoring to obstruct the Internal Revenue Service (“IRS”) audit of those two returns.

At trial, the Government incorrectly but successfully employed the hearsay rule to exclude evidence the prosecutor complained would be prejudicial to the Government because it was the crux of Dougan's good faith defense. Allowing desire to win to trump the duty to do justice, the prosecutors then argued to the jury facts directly contradicted by the improperly excluded evidence and the expected testimony of key witnesses they chose not to call.

Straying well outside the bounds of the indictment in the presentation of evidence and argument, the Government also violated Dougan's Fifth Amendment right to be tried only on charges brought by the grand jury and Sixth Amendment right to be informed of the nature of the charges against him.

Both individually and collectively, the improper exclusion of exculpatory evidence, constructive amendment of the indictment, and prosecutorial misconduct at Dougan's trial violated his constitutional rights and require reversal of Dougan's conviction. To remedy the violation of Dougan's constitutional rights, preserve judicial integrity and deter future misconduct, this Court should not only reverse Dougan's conviction, but remand to the district court with instructions to dismiss the indictment with prejudice.

JURISDICTIONAL STATEMENT

The district court had jurisdiction pursuant to 18 U.S.C. § 3231 because this case arose from a prosecution of an offense against the laws of the United States. This is a direct appeal from a final decision of the U.S. District Court for the Eastern District of California, entering judgment of conviction and imposing a criminal sentence. This Court has jurisdiction of the appeal pursuant to 28 U.S.C. § 1291. The Judgment was entered on September 10, 2019. (E.R.1-7.) Dougan timely filed his notice of appeal on September 9, 2019, pursuant to Fed. R. App. P. 4(b). (E.R.69.) Dougan is out of custody on bail pending appeal.

CONSTITUTIONAL AND STATUTORY AUTHORITIES

All relevant constitutional and statutory authorities appear in the Addendum to this brief.

STATEMENT REGARDING ORAL ARGUMENT

Dougan respectfully requests oral argument because this case calls for the interpretation of fundamental constitutional rights in a factually complex case where multiple trial errors amplified each other in relation to the key issue of Dougan's intent. As a criminal appeal, this case has first priority in hearing date pursuant to Circuit Rule 34-3

ISSUES PRESENTED

1. Did the trial court abuse its discretion and deprive Dougan of his constitutional right to present a defense when it incorrectly applied the hearsay rule to exclude evidence of verbal acts that negate the mens rea of the charged crime?

2. Was Dougan's indictment constructively amended at trial when the indictment charged particular conduct undertaken to obstruct an IRS audit, the Government introduced evidence of different conduct that would satisfy the same element of the offense, the prosecutor represented in rebuttal argument that the uncharged conduct alone was sufficient to convict, and the trial court failed to assure that the jury convicted Dougan based solely on conduct charged in the indictment?

3. Did the district court err in denying Dougan's motion to dismiss for prosecutorial misconduct where the prosecutor's misbehavior deprived Dougan of due process of law, the court's denial of the motion hinged on an illogical inference and incorrect legal rule rather than relevant factual findings, and the nature of the misconduct justifies dismissal with prejudice?

4. Where the interrelated errors at Dougan's trial amplified each other in relation to the key issue of Dougan's intent, does the cumulative effect of those errors compel reversal and preclude any finding of harmless error?

STATEMENT OF THE CASE

Prior to his conviction, Dougan was a personal injury attorney in solo practice. (E.R.359:10-12; E.R.349:17.) Like other personal injury attorneys, Dougan would receive and deposit into his trust account the gross amount paid by a defendant to resolve a claim by one of Dougan's clients, then pay his clients, their medical expenses, and his own fees out of the trust account. (E.R.352:2-17; E.R.325:9-23.) The payors issued IRS Forms 1099 reporting the gross amount of the payments to Dougan. (E.R.549:3-11; E.R.326:12-18.) Dougan's fees were not the full amount reported on the Forms 1099, but rather ranged from 25% to 40% of the recovery. (E.R.232:4-7.) The amounts paid to clients and other case-related expenses are considered costs of goods sold that are subtracted from the gross receipts to compute Dougan's gross income. (E.R.146:25-147:14.)

A. Preparation of Dougan's Tax Returns

For many years, Dougan used Steven Crocker, a certified public accountant (“CPA”), to prepare his income tax returns. (E.R.291:8-15.) In late 2004, Crocker joined a larger accounting firm, Gilbert & Associates (“Gilbert”). (E.R.545:19-21.) Crocker became ill with liver cancer in 2007, leaving the preparation of Dougan's 2006 income tax return to another CPA who had worked under his supervision, Corrine Hernandez. (E.R.292:16-293:11.) Hernandez then suffered a brain aneurysm in October of 2008, about a week before the filing deadline for Dougan's 2007 income tax return. (E.R.547:23-548:3.) Darla Colson, a CPA at Gilbert who had no prior relationship with Dougan, took over responsibility for reviewing and signing the 2007 return and subsequently prepared Dougan's returns for 2008, 2009, and 2010. (E.R.547:16-18; E.R.548:24-25; E.R.337:12-13.)

The 2002, 2003, 2004, and 2005 returns prepared by Crocker all reported Dougan's income based on deposits into Dougan's operating account from his trust account, and Colson returned to the deposits method when she prepared his 2008, 2009 and 2010 returns because, as she testified at trial, “the correct method is to take the deposits.” (E.R.346:16-22; E.R.347:1-4; E.R.358:6-9.) The 2006 and 2007 returns prepared by Gilbert, however, underreported Dougan's income by totaling the Forms 1099 issued to Dougan and reporting one-third of that amount as his fee income. (E.R.552:20-553:2; E.R.561:24-562:17; E.R.346:24-25.) The origin of that mistake was disputed at trial, with Colson and other accountants from Gilbert testifying that notes in their return preparation workpapers reflect that Dougan indicated two-thirds of the gross proceeds were paid to clients and his fees were one-third, but no one testifying to receipt of that communication from Dougan. (E.R.550:15-557:19; E.R.350:3-24; E.R.353:14-17; E.R.354:18-355:14; E.R.356:19-20; E.R.327:19-23; E.R.328:11-14; E.R.288:20-25; E.R.289:1-7; E.R.290:10-11; E.R.295:19-21; E.R.296:11-13; E.R.294:1-7.)

Although Dougan sent two email messages referring to one-third of the amount shown on the Forms 1099 as his income, neither was a directive related to return preparation, and both appear to be an approximation rather than a precise assertion. (E.R.406; E.R.409.) The first, sent to Hernandez on October 4, 2007, asked a question: “Can you tell me what my total GROSS income was based on the 33% of the total 1099(s)?” (E.R.406 (emphasis in original).) As Colson acknowledged at trial, Dougan was “asking what his gross income would be based on a third of his 1099s,” not instructing Hernandez on how to calculate his gross income. (E.R.360:4-13.) The second, sent to Hernandez on September 15, 2008, related to the audit of the 2006 return:

Corrine: Please find attached the Tax Audit notice. After reviewing the same, I am NOT as concerned. There are 4x areas of inquiry. Two [ ]areas: Gross receipts and Costs of goods sold are easily explained. My 1099(s) total approximately $2.6 million and my net is only $899 or so. So, IRS wants to know where the difference went. As you know, I'm a personal injury lawyer. When the case resolves, the Insurance companies send me a 1099 for the entire amount, but I would receive 1/3 as my fees. The balance is distributed as client settlements and medical lien payments. Accordingly, I think this area of inquiry is easily answered.

(E.R.409 (emphasis in original).) Colson did not refer to the second email when preparing the 2007 return. (E.R.558:13-560:3.)

B. IRS Audit of Dougan's 2006 and 2007 Tax Returns

The IRS sent Dougan an audit notice for his 2006 tax year, dated September 10, 2008, that identified four preliminary items for examination: depreciation, advertising, cost of goods sold, and gross receipts or sales. (E.R.407-8.) On September 15, 2008, shortly after receiving the audit notice and forwarding it to Hernandez, (E.R.409), Dougan sent Hernandez another email message with the subject “ADVERTISING RECEIPTS.” (E.R.471(emphasis in original).) The attachments included an invoice from Fugitive Watch, Inc., dated September 1, 2006. (E.R.473.)

Although Hernandez had been the one preparing for the audit, Colson took over after Hernandez became ill. (E.R.563:14-17; E.R.564:1-11.) After finding the audit notice in the file, Colson prepared for the first meeting with the auditor by gathering documentation from Hernandez's files. (E.R.565:20-566:3.) At the first meeting with the auditor on October 20, 2008, Colson provided information responsive to the auditor's first Information Document Request (“IDR”), including the advertising documentation, bank statements for the business operating account, copies of 1099s, a sample fee agreement and a sample final accounting. (E.R.567:7-11; E.R.410-12; E.R.203:18-204:3; E.R.205:4-206:4.) The auditor then issued a second IDR, seeking seven additional categories of documents including, among others, invoices substantiating the claimed expenses for clerical services and “[a]ll checks paid to clients during 2006 in substantiation of the CGS figure.” (E.R.413.)

On October 21, 2008, Dougan sent Colson documents to support his clerical expenses and explained that he had outsourced a lot of his work because his paralegal had cancer at that time. (E.R.415; E.R.424-39; E.R.440-69.) Dougan also emailed Colson notes on each category of documents requested in the second IDR, noting with respect to the request for checks paid to clients: “Darla this is ridiculous. I will need to redact each check. I will start assembling the same and wait for your instructions.” (E.R.416-17.) Dougan sent Colson another message the following day, updating her on his efforts to assemble responsive documents and noting:

In respect to Clients' checks, I have given it great thought and discussed this issue with other counsel and accountants. They all agree with us that the Trust Account and any checks or funds paid out on behalf of the client are privileged & private and not discoverable by the IRS. However, I don't have any legal authority for this proposition at this time.

. . .

How do you want to handle this issue?

(E.R.418-19.)

On November 21, 2008, the auditor issued a third IDR seeking, among other things, cancelled checks from Dougan's trust account. (E.R.407-08.) Dougan sent Colson an email on November 29, 2008:

Darla: I am putting together all of the documents requested with the exception of the trust account checks. I believe this agent continues to attempt to invade the Trust Account. Please send me a copy of the 1996 case we discussed previously.

Additionally, do you have a tax attorney on staff? If not, then I need to locate a tax attorney to discuss my position of not producing anymore information with respect to the Trust Account.

(E.R.420.) On December 30, 2008, Dougan sent his response to the November 21 IDR, including redacted checks from his trust account, to Colson and tax attorney Robin Klomparens. (E.R.507; E.R.334:18-336:3; E.R.338:7-11.)

On April 7, 2009, Colson provided the auditor a copy of a court case supporting Dougan's privilege assertions. (E.R.217:9-13.) The auditor then sent Colson a case supporting the IRS's position and, on April 21, 2009, Colson reported to the auditor that Dougan had reviewed the auditor's case and contacting a tax attorney. (E.R.508-28.)¹ On April 21, 2009, Dougan sent an email to tax attorney Klomparens:

Robin: I have made the decision to provide the IRS the Account info. predicated on the case I forwarded you. If your clerk has not done the research, don't worry about it.

(E.R.405.)² Klomparens responded:

I have done the research and I have concerns about you releasing w/o a court order. There is a[n]other [N]inth [C]ircuit case that says the court needs to redact. The case they cite is an entirely different situation — it dealt with a tax shelter — so call me and we will discuss how to protect you and proceed.

(Id.) Dougan then forwarded the note from Klomparens to Colson. (Id.)

On April 29, 2009, Klomparens explained to the auditor that Dougan needed to redact names to protect his clients and that the IRS would need to summons the information so he could attempt to stop it and then be ordered by the court to provide it. (E.R.223:9-224:5.) On May 13, 2009, the IRS issued a summons to Dougan's bank seeking his account information and canceled checks. (E.R.382-86.) On June 3, 2009, another attorney representing Dougan, James Banks, contacted the auditor and offered to provide unredacted checks for review by a special master. (E.R.217:14-219:20; E.R.225:24-226:12.) The auditor rejected that option. (E.R.220:1-5.) After negotiations between Banks and the IRS failed, Banks filed a motion to quash the summons on Dougan's behalf in July 2009. (E.R.227:22-228:7.)

While the motion to quash was pending, the IRS issued a letter on May 17, 2010, proposing adjustments to Dougan's 2006 and 2007 tax returns. (E.R.500-6.)³ Colson, Klomparens, and Douglas Youmans, another tax attorney from Klomparens' firm, collaborated on a letter to protest the adjustments. (E.R.421-23; E.R.487; E.R.488; E.R.489-99; E.R.339:19-345:6; E.R.82:23-83:10.) During the entire process of preparing the protest letter, Youmans and Klomparens knew that Dougan's fee agreements ranged from 25% to 40%. (E.R.77:3-5; E.R.80:3-7; E.R.113-14, ¶¶ 2, 4; E.R.117-18, ¶¶ 2, 4.) Indeed, a redlined version of the draft letter shows that it originally read:

Taxpayer is a plaintiff's attorney who charges fees on a contingency basis, generally charging 33.33% to 40% of any recovery after costs as his fee (the difference between the 33.33% and the 40% fee being based on whether a case is settled before trial, or it goes to trial.

(E.R.492.) The fee percentages in that sentence were subsequently revised so that the range of fees was asserted to be 25% to 33.33% instead of 33.33% to 40%. (Id.) Youmans wrote in an email dated June 8, 2010, that he had misplaced Dougan's fee contract during the initial drafting of the letter and that the contract “gave rise to the changes in the original protest reflected in the attached redline.” (E.R.487.) According to Youmans, the final letter referenced 33.3% rather than 40% to be “consistent with the manner in which the return had been prepared” and “present the taxpayer's position in the best light to the appeals officer.” (E.R.81:9-20.)

On August 15, 2011, a magistrate judge filed findings and recommendations supporting denial of Dougan's motion to quash the IRS summons issued to his bank on May 13, 2009. (E.R.387-97.) Dougan did not file any objection. (Id.) The district court adopted the findings and recommendations and denied the motion to quash on September 11, 2011. (Id.) After denial of the motion to quash, the auditor received unredacted bank records and Dougan's client files. (E.R.228:21-25.)

On August 22, 2012, Dougan, along with Klomparens and Youmans, appeared for an interview with the auditor and her supervisor. (E.R.212:5-12.) Shortly before that meeting, Colson had admitted that she changed the method of reporting for 2008 because it was incorrect to use a percentage of the 1099s. (E.R.229:19-233:20.) At that meeting, Dougan acknowledged that mistakes were made in his returns, asked the auditor and her supervisor to tell him how much he owed and offered to pay promptly multiple times.⁴ (E.R.541:22-25; E.R.542:11-12; E.R.582:11-23; E.R.91-92.)

C. Charges

On July 28, 2016, the grand jury charged Dougan with two counts of aiding and assisting in the preparation of a false tax document in violation of 26 U.S.C. §7206(2) and one count of corruptly endeavoring to impede the due administration of the internal revenue laws in violation of 26 U.S.C. § 7212(a). Count Three of the indictment, the sole count of conviction at trial, read as follows:

STEPHEN J. DOUGAN, defendant herein, between on or about October 3, 2007, and continuing through on or about November 28, 2012, in the State and Eastern District of California, did corruptly endeavor to obstruct and impede the due administration of the Internal Revenue laws by committing acts, including, but not limited to, the following:

1. Falsely representing to his tax preparer that the costs associated with his client settlements in 2006 amounted to two-thirds of all the Internal Revenue Service (“IRS”) Form 1099s he received in connection with his law practice that year (i.e., $1,779,357); this figure was subsequently represented as “Cost of goods sold” on Line 4 of Schedule C to his 2006 IRS Form 1040.

2. Falsely representing to his tax preparer that the gross income he received in 2006 was one-third of all the IRS Form 1099s he received in connection with his law practice that year (i.e., $889,679), this figure was subsequently represented as “Gross profit” and “Gross income” on Line 5 and Line 7 of Schedule C to his 2006 IRS Form 1040.

3. Falsely representing to his tax preparer that the costs associated with his client settlements in 2007 amounted to two-thirds of all the IRS Form 1099s he received in connection with his law practice that year (i.e., $1,787,265); this figure was subsequently represented as “Cost of goods sold” on Line 4 of Schedule C to his 2007 IRS Form 1040.

4. Falsely representing to his tax preparer that the gross income he received in 2007 was one-third of all the IRS Form 1099s he received in connection with his law practice that year (i.e., $893,632), this figure was subsequently represented as “Gross profit” and “Gross income” on Line 5 and Line 7 of Schedule C to his 2007 IRS Form 1040.

5. Falsely representing to his tax preparer the amount of rent he paid to use a business property in 2006 and 2007, which in turn caused the tax preparer to put a false amount of rent on the tax returns for those years.

6. Providing his IRS audit representatives with documents that under-represented his gross income in 2006 in order to substantiate his “Cost of goods sold” figure for that year.

7. Providing his IRS audit representatives with false information to substantiate his 2006 expense for “clerical services.”

8. Filing a letter with the IRS in which he falsely maintained that his gross income was one-third of all the IRS Form 1099s he received in connection with his law practice in a given year.

9. Responding, directly or indirectly, to questions and inquiries from IRS employees with false statements, both oral and written, about his income, tax preparation procedures, and audit procedures.

(E.R.611-12.)

On March 21, 2018, after Dougan's indictment but before trial, the Supreme Court decided Marinello v. United States, 138 S. Ct. 1101 (2018). Marinello restricted the scope of the Omnibus Clause in 26 U.S.C. § 7212(a), clarifying that it applies only to “obstructive conduct” with a “nexus” to a “particular administrative proceeding” that was pending or at least reasonably foreseeable to the defendant at the time of the allegedly obstructive conduct. Id. at 1104. As a result, the Government moved to strike paragraphs 1 through 5 of Count Three at a pretrial hearing on motions in limine. (E.R.576:13-577:25; E.R.573:11-574:9.) When the prosecutor read the indictment to the venire prior to voir dire, he elided the first five allegedly obstructive acts charged by the grand jury. (E.R.570:9-571:7.) That reading of the indictment prior to selection of the petit jury was the only opportunity for jurors to learn its contents; the indictment was neither read nor provided to the jury at any other time.

D. Trial Evidence Regarding Charged Conduct

Dougan's level of involvement and intent in committing the four remaining obstructive acts charged in the indictment were sharply disputed at trial. With respect to the allegation that Dougan provided “his IRS audit representatives with documents that under-represented his gross income in 2006 in order to substantiate his 'Cost of goods sold' figure for that year,” the Government introduced evidence that Colson provided the IRS with a copy of one fee agreement and one final accounting that reflected a 33.3% fee, but Colson testified on cross examination that she did not know where she got that agreement and that the agreement and final accounting were “just a sample.” (E.R.357:20-25; E.R.361:7-25.) There was no evidence regarding how or when Gilbert received that agreement, whether it was provided individually or with others in a representative sample that reflected other fee percentages, or what representations were or were not made when Gilbert received it.

The Government also focused a great deal of trial time on the redacted trust account checks produced in the audit, arguing the inference that “Dougan redacted checks to conceal income” rather than protect client confidentiality. (E.R.221:7-222:5.) The evidence showed that Dougan's name was redacted on five checks written in 2005 and one check written in 2006, but left unredacted on many more, including others deposited into the CD. (E.R.398-404.) Dougan was not under audit for 2005. (E.R.235:17-236:1.) To counter the prosecution's theory that the redactions were intentional to conceal income, the defense sought to introduce the email from Dougan to Klomparens dated April 21, 2009, in which Dougan informed his tax attorney and audit representative that he decided to produce the account information to the IRS. (E.R.405; E.R.47:5-22.) Defense counsel explained that Dougan's willingness to produce his account information contradicts any inference that he filed the motion to quash to conceal income. (E.R.60:13-61:5; E.R.63:21-64:11.)

In a lengthy conference outside the presence of the jury, the Government raised objections to the admission of the April 21, 2009 email based on privilege assertions, hearsay, and Rule 403. (E.R.47:22-64:21.) The prosecutor acknowledged that at the time the email was written, the taxpayer's representatives were going back and forth with the auditor about whether the redactions should be pulled back. (E.R.57:21-25.) The prosecutor then argued that “this is going to be the crux of their defense, that Mr. Dougan acted innocently, that he acted in good faith. That will be prejudicial to the government.” (E.R.59:25-60:3.) Defense counsel argued that the evidence was admissible to show Dougan's state of mind during the audit. (E.R.60:13-61:17; E.R.63:21-64:11.) The court concluded that the email was hearsay that did not meet the exception in Rule 803(3) because there was “too much time to reflect,” and that the prejudicial effect if it were offered for the truth of the matters asserted outweighed any probative value. (E.R.63:25-64:22.)

With respect to the allegation that Dougan provided “his IRS audit representatives with false information to substantiate his 2006 expense for “clerical services,” the evidence showed that: (1) Dougan had outsourced a lot of his work because his paralegal had cancer at that time (E.R.440-69); (2) one of the 44 checks that Dougan produced to substantiate his clerical expenses was payable to Stephen Wagner in the amount of $2,500 (E.R.199); (3) Wagner is a divorce attorney who had no recollection whatsoever of what work he had done for Dougan (E.R.543:22-544:9); (4) eleven of the 44 checks were payable to Veronica Layman in the total amount of $24,500 (E.R.199); and (5) Layman was Dougan's former fiancé who testified on direct examination that she never worked for Dougan. (E.R.297:23-24; E.R.298:11-17.) Cross-examination of Layman revealed that she sued Dougan and his law firm for breach of employment agreement, listed Dougan's law firm as her employer from June 2006 to June 2010 on her resume, asked him for a letter of recommendation for a prospective employer, and sent email messages from a firm email address he assigned to her. (E.R.257-68; E.R.283-84; E.R.299:19-318:15.) During impeachment of Layman, the judge refused to allow defense counsel to read from the letter of recommendation that Layman requested and received from Dougan, (E.R.316:7-21), and excluded email messages reflecting work Layman performed for Dougan's firm. (E.R.319:5-322:16; E.R.269-82.) The Government later introduced evidence, over defense counsel's objection, that Dougan had signed a declaration in the lawsuit with Layman in which he asserted that Layman was never an employee. (E.R.207:8-210:22.)

With respect to the allegation that Dougan “fil[e]d a letter with the IRS in which he falsely maintained that his gross income was one-third of all the IRS Form 1099s he received in connection with his law practice in a given year,” the evidence reflected that the letter at issue was signed by Dougan's tax attorney, Youmans, and drafted by Youmans in collaboration with Dougan's accountant, Colson. (E.R.487; E.R.488; E.R.489-99; E.R.500-6; E.R.340:4-342:25.) Although Dougan was copied on an email message from Youmans distributing a redlined draft of the letter (E.R.487), and an email message from Colson with her suggested revisions (E.R.488), there was no evidence presented at trial that Dougan reviewed or approved the letter, knew it contents, or had previously made any relevant assertions of fact to his attorneys. Indeed, Colson was the only trial witness who had any involvement in the preparation of the letter and she specifically testified that she did not know what role, if any, Dougan had in drafting the protest letter because she worked on it with Youmans. (E.R.340:7-10.)

With respect to the allegation that Dougan “respond[ed], directly or indirectly, to questions and inquiries from IRS employees with false statements, both oral and written, about his income, tax preparation procedures, and audit procedures,” the evidence showed that there was one meeting, on August 22, 2012, in which Dougan responded to questions from the auditor and her supervisor. (E.R.212:5-214:1; E.R.241:5-243:25.) There is no evidence in the record that any statements Dougan made in that meeting were false. Moreover, to counter the charge that Dougan was acting corruptly with intent to obstruct, defense counsel sought to prove that Dougan offered to pay whatever amount of tax he owed during that meeting. (E.R.37:14-22; (E.R.41:4-11; E.R.532:16-583:10.) The court excluded this evidence. (E.R.37:19-22.)

E. Trial Evidence and Argument Regarding Uncharged Conduct

In addition to evidence regarding the four obstructive endeavors charged in Count Three and evidence regarding tax return preparation, which the Government introduced in an unsuccessful attempt to prove the first two counts of the indictment, the Government focused its trial presentation on two types of uncharged conduct that it encouraged the jury use to convict Dougan of Count Three: (1) providing a falsified invoice to substantiate his advertising expenses; and (2) withholding information from the auditor, with special emphasis on Dougan's failure to produce bank statements for a “hidden” CD. (E.R.534:6-535:10; E.R.536:23-537:20.)

In the section of closing argument where the prosecutor was outlining the proof for each element of Count Three, she asserted that the “endeavored” element was met by evidence that Dougan withheld documents and intentionally submitted a false invoice for advertising expenses. (E.R.169:13-174:16.) The other prosecutor then began his rebuttal argument this way:

Good afternoon. Ladies and Gentlemen. I want to start with Fugitive Watch. I want to start with this false invoice. This invoice the defendant provided during the audit and this invoice that standing alone is sufficient, we submit to you, to return a guilty verdict on Counts 3 and on Counts 1.

(E.R.179:23-E.R.180:3.) The prosecutor's rebuttal also spent significant time on the “half million dollars worth of checks that went into a CD that he didn't tell anybody about.” (E.R.188:5-190:21.)

Checks written in 2005 and deposited into the CD in May 2006 were the subject of a Rule 404(b) notice filed by the Government and a motion in limine filed by the defense seeking to exclude the uncharged conduct. (E.R.602-08; E.R.593-601.) The court allowed the Government to offer its evidence and argue that Dougan hid income he earned in 2005 by opening a CD that he failed to disclose when the auditor requested his bank statements. (E.R.166:12-169:10.) Although the evidence showed that the CD was at the same bank as Dougan's other accounts, reported to the IRS on a Form 1099, and identified on Dougan's 2006 return (E.R.237:19-238:2; E.R.239:18-240:4), the “hidden” “$900,000 CD” became a focal point of the prosecution. (E.R.534:6-535:10; E.R.152:11, 19; E.R.168:20; E.R.186:2-10.)

F. Improper Arguments in Closing and Rebuttal

In closing, the prosecutor referenced the June 2010 protest letter that Youmans sent to the IRS, then argued that the letter “shows that Mr. Dougan not only lied to the IRS and to his audit representatives at Gilbert but also to his tax attorneys” because 40 percent was “the fee actually received and taken, not 25.0 to 33.3 percent.” (E.R.163:4-24.) Neither of Dougan's two tax attorneys testified at trial and there was no evidence to support the allegation that Dougan lied to his attorneys about his fees. After trial, however, Youmans and Klomparens each signed sworn declarations attesting that when the prosecutors interviewed them shortly before trial, on December 29, 2018, they told the prosecutors that they knew Dougan had fee agreements ranging from 25% to 40% before drafting and sending the protest letter. (E.R.114, ¶ 6; E.R.118, ¶ 6.) The prosecutors signed sworn declarations to the contrary. (E.R.86, ¶11; E.R.88, ¶ 26.) Although the substance of what was communicated during the December 2018 interview is disputed, there is no question that the prosecutors interviewed Youmans and Klomparens less than two weeks before trial, then decided to argue in closing that Dougan lied to his tax attorneys without calling either of them to testify.

In addition, although well aware of the email exchange between Dougan and Klomparens on April 21, 2009, in which Dougan shared his decision to provide his account information to the IRS and Klomparens advised against it, (E.R.405), the prosecutor also argued in rebuttal:

Mr. Hanly [defense counsel] submitted that his client was told by his attorneys to redact client names. There's no evidence that anyone told him to redact his own name on half a million dollars worth of checks that went into a CD that he didn't tell anybody about.

. . .

The defendant fought those, fought keeping those checks, fought to keep those checks out of the hands of the IRS.

. . .

He fights that sample because if he pulls the redactions back, if he gives them all of the information, then they will know that med lien is a second source of income and that he concealed or had over half a million dollars worth of income. So he claims it was all about client confidences, but if that were true, ladies and gentlemen, we submit to you that he wouldn't have redacted his own name then.

. . .

If you have a good faith belief, that's not how you respond. You don't fight tooth and nail to keep your redactions on top of half a million dollars worth of income. You come clean.

(E.R.188:5-10; E.R.188:16-189:2; E.R.191:13-15; E.R.192:12-20; E.R.193:18-21. Defense counsel objected to this anticipated argument before it happened, specifically explaining that “if they get up in closing and argue that he intended to redact those checks to hide his income, they know that's not true.” (E.R.29:2-E.R.30:25.) The court overruled the objection. (E.R.29:8-14; E.R.30:17, 24-25.)

G. Jury Instructions, Communications and Verdict

Immediately following the rebuttal argument in which the prosecutor told the jury that the Fugitive Watch invoice, standing alone, was sufficient to convict Dougan on Count Three and that Dougan kept fighting to keep his checks out of the hands of the IRS to conceal income rather than protect his clients, the court instructed the jury. The court gave the instruction called for in this Court's Manual of Model Criminal Jury Instructions, 3.10 Activities Not Charged:

You are here only to determine whether the defendant is guilty or not guilty of the charges in the indictment. The defendant is not on trial for any conduct or offense not charged in the indictment.

(E.R.195:2-5.) But the court did not read the indictment to the jury, give a copy of the indictment to the jury or instruct the jury that it could convict Dougan on Count Three only if the jurors unanimously agreed that he committed at least one of the obstructive endeavors charged in the indictment.

The jury began its deliberations on Thursday, January 24, 2019. (E.R.198:16.) On January 25, 2019, at 12:57 p.m., the jury sent a note informing the court that “[t]he jury appears to be at an impasse as to obtain a unanimous verdict.” (E.R.131.) The court sent the jury back to continue deliberations. (E.R.137:20-138:6.) On Monday, January 28, 2019, the jury foreperson was absent due to illness and at least three other jurors were present but ill. (E.R.134:5-135:15.) The court conferred with counsel regarding a stipulation to proceed with fewer than twelve jurors and the jury continued deliberations. (E.R.128-29.) The jury returned its verdict that afternoon, finding Dougan not guilty on Count One and guilty on Count Three. (E.R.124.) The court declared a mistrial as to Count Two. (E.R.127.) The Government subsequently moved to dismiss Count Two without prejudice (E.R.73-74) and the court granted that motion. (E.R.71-72.)

H. Motions

During trial, on January 22, 2019, Dougan filed a motion to dismiss the indictment for prosecutorial misconduct. (E.R.244-68.) The defense also made an oral motion for judgment of acquittal, which was denied by the court, at the close of the Government's case on January 24, 2019. (E.R.31:3-E.R.33:22.) On February 6, 2019, Dougan amended his motion to dismiss. (E.R.95-123.) The amended motion argued for dismissal on the grounds that the prosecutors: (1) knowingly presented false testimony from Layman; (2) argued Layman's false testimony to the jury in closing argument; (3) failed to produce impeachment material related to Layman; (4) failed to produce exculpatory evidence of Layman's work for Dougan; (5) made representations to the jury in opening regarding anticipated testimony that the prosecutors knew to be false from one of Dougan's former clients; (6) failed to produce reports of a pretrial interview with Klomparens and Youmans that contained exculpatory information; and (7) made arguments to the jury that the prosecutors knew to be false, namely that Dougan redacted documents to conceal income, that Dougan did not offer to pay, and that Dougan lied to his tax attorneys regarding his fees. (Id.)

On March 18, 2019, the court held an evidentiary hearing on Dougan's motion to dismiss at which Youmans and Klomparens testified. (E.R.84.) The court denied Dougan's motion on April 1, 2019, finding that Layman testified truthfully at trial and rejecting all of Dougan's arguments regarding his tax attorneys. (E.R.8-15.) The court, however, did not make any factual finding regarding what was, or was not, communicated to the prosecutors when they interviewed Youmans and Klomparens on December 29, 2018. (Id.)

I. Sentencing and Bail Status

On September 6, 2019, Dougan was sentenced on Count Three to 36 months of imprisonment followed by 12 months of supervised release. (E.R.70.) Dougan filed a timely notice of appeal and a motion for release pending appeal on September 9, 2019. (E.R.69; E.R.67-68.) On September 10, 2019, the court entered the Judgment and Commitment. (E.R.1-7.) After briefing and argument, the court granted Dougan's motion for release pending appeal on October 7, 2019, (E.R.65-66), and Dougan is presently out of custody.

SUMMARY OF THE ARGUMENT

I. Dougan sought to introduce evidence of verbal acts evidencing his good faith during the audit he was charged with obstructing, including a decision to produce financial information and an offer to pay his tax liabilities. The decision to produce was critical evidence that would have thwarted the Government's effort to attribute a nefarious purpose to Dougan's redaction of documents. Dougan's offer to pay would similarly counter the charge that he was acting corruptly. Both Dougan's decision to produce and offer to pay were non-hearsay verbal acts or, in the alternative, admissible to reflect Dougan's state of mind during the charged crime. The trial court abused its discretion and deprived Dougan of his constitutional right to present a defense when it excluded that evidence, requiring reversal of Dougan's conviction because the error was not harmless beyond a reasonable doubt.

II. The trial court committed a second constitutional error, depriving Dougan of his Fifth and Sixth Amendment rights, by allowing constructive amendment of Dougan's indictment at trial. The grand jury charged specific conduct to satisfy the obstructive endeavor element of the offense, the Government's proof at trial included uncharged conduct that would satisfy the same element, the prosecutor exacerbated the error by encouraging the jury to convict based on uncharged conduct, and the court failed to assure that the jury 29 convicted Dougan based solely on the conduct charged in the indictment. Inserting the words “including, but not limited to” prior to a particularized list of charged conduct does not allow the Government to circumvent a defendant's constitutional rights by proving its case with other conduct.

The trial court also erred in denying Dougan's motion to dismiss for prosecutorial misconduct because the improper arguments made by the prosecutors in closing and rebuttal argument violated Dougan's due process rights in a manner that cannot be cured by any remedy short of dismissal. The trial court denied the motion based on an illogical inference and an inapplicable legal rule, without making any factual findings on the central issue of what the prosecutor knew when she misrepresented to the jury that Dougan lied to his attorneys. The prosecutors' combined misbehavior justifies dismissal of Dougan's indictment with prejudice both because it was outrageous conduct that amounts to a due process violation and because the court should exercise its supervisory powers to remedy the violation of Dougan's constitutional rights, preserve judicial integrity and deter future misconduct.

III. Although each of the errors described above independently demands reversal of Dougan's conviction, any possible doubt as to that result disappears when this court considers the cumulative effect of the interrelated errors.

ARGUMENT

I. EXCLUSION OF EXCULPATORY EVIDENCE AT TRIAL VIOLATED DOUGAN'S CONSTITUTIONAL RIGHT TO PRESENT A DEFENSE AND REQUIRES REVERSAL OF HIS CONVICTION.

A. Standard of Review

This Court reviews a district court's evidentiary rulings for abuse of discretion but the district court's interpretation of the Federal Rules of Evidence de novo. United States v. Boulware, 384 F.3d 794, 801 (9th Cir. 2004). The first step in the abuse of discretion test is to “determine de novo whether the trial court identified the correct legal rule to apply to the relief requested.” United States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009) (en banc)). If the trial court failed to do so, this Court “must conclude it abused its discretion.” Id. If the trial court identified the correct legal rule, this Court's second step is to determine “whether the trial court's application of the correct legal standard was “(1) 'illogical,' (2) 'implausible,' or (3) without 'support in inferences that may be drawn from the facts in the record.'” Id. (quoting Anderson v. City of Bessemer City, N.C., 470 U.S. 564, 577 (1985)). When the trial court excludes evidence under Rule 403 but does not engage in explicit balancing, this Court reviews that determination de novo. United States v. Moran, 493 F.3d 1002, 1012 (9th Cir. 2007). When erroneous exclusion of evidence is not a constitutional violation, the court must reverse unless there is a “'fair assurance' of harmlessness or, stated otherwise, unless it is more probable than not that the error did not materially affect the verdict.” Moran, 493 F.3d at 1014 (quoting United States v. Morales, 108 F.3d 1031, 1040 (9th Cir. 1997)).

The court reviews de novo whether there was been a violation of the Sixth Amendment right to make a defense. United States v. Stever, 603 F.3d 747, 752 (9th Cir. 2010). Moreover, “[a] violation of the right to present a defense requires reversal of a guilty verdict unless the Government convinces [the court] that the error was harmless beyond a reasonable doubt.” Id. at 757.

B. The Trial Court Improperly Excluded Evidence of Two Verbal Acts by Dougan That Negate the Mens Rea of the Crime.

In evaluating Dougan's guilt, the jury was required to weigh whether Dougan acted corruptly in endeavoring to obstruct or impede an IRS audit between on or about November 13, 2007, and on or about November 28, 2012. (E.R.196:6-197:4.) During that time period, Dougan took two actions that contradict a finding that he was acting with intent to secure an unlawful benefit by obstructing the audit. The trial court erroneously excluded evidence of those actions through incorrect application of the hearsay rule and disregard of the probative value of the evidence to the Section 7212(a) charge.

On April 21, 2009, Dougan instructed his attorney that he had decided to provide his account information to the IRS. (E.R.405.) The attorney advised against doing so, and Dougan forwarded those messages to the accountant who was interfacing with the IRS auditor. Id. The excluded email was critical to Dougan's defense because it showed that he was not acting corruptly with intent to obstruct during two key time periods: (1) when he initially redacted his checks; and (2) when he filed the motion to quash. After successfully excluding this evidence, the Government argued to the jury that Dougan's asserted desire to protect his clients' confidentiality was an insincere cover for Dougan's initial and ongoing efforts to conceal his income because no one “told him to redact his own name.” (E.R.374:25-E.R.375:3; E.R.188:5-10; E.R.189:13-15.) Had Dougan intentionally redacted his own name to conceal income in December 2008, the April 2009 email would show that either: (a) he forgot he had been trying to conceal income just a few months earlier; or (b) he changed his mind. It is far more likely that Dougan's redactions were unrelated to any nefarious purpose in the first place. The email also shows that Dougan was acting in good faith, and not corruptly, when he continued his efforts to prevent disclosure of unredacted checks.

At a third key point during the audit — the August 2012 meeting at which Dougan was charged with corruptly making false statements to the auditor — Dougan acknowledged that his accountant recently admitted mistakes had been made in his return, asked the auditor to tell him how much he owed and offered to pay promptly. Dougan's acknowledgment of his increased tax liability and offer to 33 pay it makes it less likely that he was acting with intent to secure an unlawful benefit for himself in the form of a lower tax liability during that meeting. Although the court allowed defense counsel to include the offer to pay in his opening statement, the court subsequently excluded all evidence that Dougan offered to pay. (E.R.586:13-587:1; E.R.41:4-11; E.R.37:14-22.)

Dougan's verbal acts during the audit he is accused of obstructing are not hearsay, but rather admissible and critical evidence of his state of mind during the alleged crime.

1. The Trial Court Did Not Identify the Correct Legal Rule Because Dougan's Verbal Acts Are Not Hearsay.

Dougan's April 2009 decision to produce and August 2012 offer to pay are, by definition, not hearsay. Hearsay is defined as “a statement that: (1) the declarant does not make while testifying at the current trial or hearing; and (2) a party offers in evidence to prove the truth of the matter asserted in the statement.” Fed. R. Evid. 801(c). A “statement,” in turn, must be an “assertion.” Fed. R. Evid. 801(a). The Advisory Committee Note clarifies that “the effect of the definition of 'statement' is to exclude from the operation of the hearsay rule all evidence of conduct, verbal or nonverbal, not intended as an assertion.” Moreover, as indicated in the definition of hearsay:

If the significance of an offered statement lies solely in the fact that it was made, no issue is raised as to the truth of anything asserted, and the statement is not hearsay. . . . The effect is to exclude from hearsay the entire category of “verbal acts” and “verbal parts of an act,” in which the statement itself affects the legal rights of the parties or is a circumstance bearing on conduct affecting their rights.

Advisory Committee Note to Fed. R. Evid. 801.

The communication in Dougan's April 21, 2009 email is not an assertion — it is a directive notifying his attorney that he decided to produce his account information to the IRS. The significance of that communication lies solely in the fact that it was made. Dougan's offer to pay similarly is a verbal act. A “promise, offer or demand” is a “performative” rather than an “illocutionary utterance[ ].” United States v. Montana, 199 F.3d 947, 950 (7th Cir. 1999). Performative utterances “commit the speaker to a course of action” and “are not within the scope of the hearsay rule, because they do not make any truth claims.” Id. Neither Dougan's decision to produce nor his offer to pay make any truth claims — they each are a verbal act outside the definition of hearsay.

2. The Trial Court Did Not Apply the Correct Legal Rule Because Dougan's Decision To Produce and Offer To Pay Are Admissible Evidence of His State of Mind.

Even if either or both of the excluded communications could be regarded as an assertion offered for its truth, the hearsay rule would not justify exclusion because Dougan's decision to produce and offer to pay each fall within the state of mind exception in Rule 803(3). Rule 803(3) allows admission of a “statement of the declarant's then-existing state of mind (such as motive, intent, or plan).” In his April 2009 email, Dougan communicated his present intent and plan to provide his financial information to the IRS and in his August 2012 meeting, Dougan expressed his present intent and plan to pay what he owed.

In arguing to exclude the April 2009 email at trial, the Government asserted that the exception in Rule 803(3) did not apply because Dougan had too much “time to reflect.” (E.R.55:19-22; E.R.590-92.) The court ultimately agreed that “there's too much time to reflect” even as defense counsel explained that “[t]here's not too much time to reflect. It's during the audit. This is going on right during the audit.” (E.R.63:25-64:4.) The reasoning behind the notion that too much time to reflect renders an assertion about the declarant's state of mind unreliable presumes a lapse in time between the declaration and the period about which the declarant was commenting. United States v. Ponticelli, 622 F.2d 985, 991 (9th Cir. 1980). Dougan's decision to produce and offer to pay reflect his state of mind at the exact moment of his declaration. Even if Dougan's decision to produce and offer to pay were not verbal acts excluded entirely from the hearsay rule, they each occurred at a moment in time when his present state of mind was an element of the obstruction charge against him and are admissible pursuant to the exception in Rule 803(3).

3. The Trial Court Did Not Apply the Correct Legal Rule Because It Relied on Rules Inapposite to a Section 7212(a) Prosecution.

The court's evidentiary rulings were made as if the Government had not charged Dougan with violating Section 7212(a) and, as a result, failed to consider the probative value of the excluded evidence to Dougan's defense. Dougan's April 2009 decision to produce and August 2012 offer to pay occurred after the filing of the returns that were the subject of Counts One and Two of the indictment, but during the obstruction charged in Count Three. Dougan's state of mind at each of those points in time was directly at issue and the crux of Dougan's defense to Count Three. The court, however, incorrectly excluded exculpatory evidence of Dougan's state of mind after his returns were filed based on inapposite legal rules.

Although the court did not explain its reasoning when it sustained the Government's objections to testimony regarding Dougan's offer to pay, it did so in a conference with the attorneys prior to closing argument. (E.R.28:20-30:5.) In ordering that the defense could not talk about an intent to pay in closing, the court explained its ruling as follows:

It's sort of like these bank cases, you know, or these mortgage cases or whatever you want to call them. It's no defense that after you stole some money, you eventually intended to repay it. And so we're not going to go into that, either side.

(E.R.29:8-14.) This reasoning assumes a remedial offer to pay after the crime is complete. Similarly, in response to defense counsel's request that the Government not be allowed to argue that Dougan redacted checks to hide income because the April 2009 email that was excluded from evidence demonstrates the falsity of that argument, the prosecutor claimed that “the timing of that is after,” and the court agreed. (E.R.30:19-21.) Defense counsel tried yet again to explain that the April 2009 email was during the audit and before the motion to quash was filed, but the court insisted that “[i]t's not when he filed the tax return. I'm not going to revisit it.” (Id.)

In the Government's motion in limine, it argued a variation on the court's reasoning for excluding Dougan's offer to pay, relying on Sansone v. United States, 380 U.S. 343 (1965), to argue that subsequent intention to pay taxes is not a defense to a past intention to evade taxes. (E.R.591-92.) That line of reasoning is wholly irrelevant when the charge is obstruction of an audit and the defendant's offer to pay occurs during the alleged offense. As the Supreme Court explained in Sansone, the violation of 26 U.S.C. § 7201 charged in that case “was complete as soon as the false and fraudulent understatement of taxes . . . was filed.” Sansone, 380 U.S. at 354. An offer to pay subsequent to completion of the crime was not a defense. Dougan's offer to pay was made during the same meeting in which he was accused of corruptly obstructing the audit. Lack of the required mens rea during the alleged offense is most certainly a defense and Dougan's evidence demonstrating lack of that mens rea during the audit was both admissible and important.

4. The Trial Court Abused Its Discretion Because Its Exclusion of Dougan's Evidence Was Illogical, Implausible, and Unsupported by the Record.

To the extent this Court finds that the trial court selected the correct legal rules, its application of those rules to exclude admissible evidence at the crux of Dougan's defense was deeply flawed for the reasons already described above.

Considering the nature of the evidence and the nature of the obstruction charge against which Dougan had to defend himself, the court's exclusion of Dougan's decision to produce and offer to pay is illogical, implausible and unsupported by any inferences that could be drawn from facts in the record.

C. Exclusion of Dougan's Decision To Produce and Offer To Pay Violated Dougan's Constitutional Right to Present a Defense.

“Even when evidence is excluded on the basis of a valid application of the hearsay rules, such exclusion may violate due process if the evidence is sufficiently reliable and crucial to the defense.” United States v. Lopez-Alvarez, 970 F.2d 583, 588 (9th Cir. 1992). “When evidence is excluded on the basis of an improper application of the hearsay rules, due process concerns are still greater because the exclusion is unsupported by any legitimate state justification.” Id. In both circumstances, this court considers “the probative value of the evidence on the central issue; its reliability; whether it is capable of evaluation by the trier of fact; whether it is the sole evidence on the issue or merely cumulative; and whether it constitutes a major part of the attempted defense” to determine whether a constitutional violation occurred. United States v. Lindsay, 931 F.3d 852, 866-7 (9th Cir. 2019) (quoting Stever, 603 F.3d at 756). The court's application of this substantive standard is “more forgiving where the evidence was erroneously excluded.” Stever, 603 F.3d at 756.

Each of those factors supports a finding that the trial court deprived Dougan of his constitutional right to present a defense. Indeed, the Government conceded at trial that the April 2009 email was “going to be the crux of their defense.” (E.R.59:25-60:3.) The August 2012 offer to pay also is probative on the central issue of Dougan's intent and a major part of the defense because it is the sole evidence of his intent during the latter portion of the audit.

Individually and together, Dougan's decision to produce and offer to pay were critical to his defense and excluded without justification. “In these circumstances, where constitutional rights directly affecting the ascertainment of guilt are implicated, the hearsay rule may not be applied mechanistically to defeat the ends of justice.” Chambers v. Mississippi, 410 U.S. 284, 302 (1973). The “Constitution guarantees criminal defendants 'a meaningful opportunity to present a complete defense.'” Stever, 603 F.3d at 755 (quoting Holmes v. South Carolina, 547 U.S. 319, 324 (2006)). “This right includes, 'at a minimum, . . . the right to put before a jury evidence that might influence the determination of guilt.'” Id. (quoting Pennsylvania v. Richie, 480 U.S. 39, 56 (1987)).

D. This Court Must Reverse Dougan's Conviction Because the Exclusion of Exculpatory Evidence Was Not Harmless Beyond a Reasonable Doubt.

This Court must reverse the conviction unless it is able to “declare a belief that [the error] was harmless beyond a reasonable doubt.” Chapman v. California, 386 U.S. 18, 24 (1967). The Government's trial presentation focused heavily on its argument that Dougan redacted documents to conceal his income. Had Dougan's April 2009 decision to produce carried the day, the IRS would have had complete information about every topic he was allegedly concealing or misrepresenting in the charged endeavors to obstruct the audit. The excluded evidence undermines every aspect of the obstruction charge and it would defy logic to conclude that this violation of Dougan's constitutional right to present a defense was harmless.

II. CONSTRUCTIVE AMENDMENT OF THE INDICTMENT AT TRIAL MANDATES REVERSAL OF DOUGAN'S CONVICTION.

A. Standard of Review

Where a defendant raises a constructive amendment claim before the district court, review is de novo. United States v. Ward, 747 F.3d 1184, 1188 (9th Cir. 2014). Otherwise, a constructive amendment claim is reviewed for plain error. Id. Although Dougan arguably preserved a constructive amendment objection when he sought to exclude evidence of uncharged conduct, (E.R.593-601), the standard of review is unlikely to impact this Court's decision because constructive amendment of an indictment is plain error that cannot be “dismissed as harmless error” and always requires reversal. Stirone v. United States, 361 U.S. 212, 217 (1960) (finding the deprivation of a defendant's substantial right to be tried only on charges presented in an indictment is far too serious to be dismissed as harmless error); United States v. Davis, 854 F.3d 601, 605-6 (9th Cir. 2017) (acknowledging rule that constructive amendment mandates reversal).

B. Dougan's Indictment Was Constructively Amended at Trial.

Since at least 1887, the Supreme Court has enforced a rule that “a court cannot permit a defendant to be tried on charges that are not made in the indictment against him.” Stirone, 361 U.S. at 217 (citing Ex parte Bain, 121 U.S. 1 (1887)); see also Schmuck v. United States, 489 U.S. 705, 717 (1989) (“It is ancient doctrine of both the common law and of our Constitution that a defendant cannot be held to answer to a charge not contained in the indictment brought against him.”). Even under plain error review, an appellate court must “find that a constructive amendment occurred when the evidence presented at trial, together with the jury instructions, raises the possibility that the defendant was convicted of an offense other than that charged in the indictment.” United States v. Miller, 891 F.3d 1220, 1231 (10th Cir. 2018).

This Court's cases “instruct that the determination of whether a constructive amendment has been effected requires sensitivity to both the jury instructions as a reflection of the indictment, and to the nature of the proof offered at trial.” Ward, 747 F.3d at 1191. The court explained:

More specifically, when conduct necessary to satisfy an element of the offense is charged in the indictment and the government's proof at trial includes uncharged conduct that would satisfy the same element, we need some way of assuring that the jury convicted the defendant based solely on the conduct actually charged in the indictment. Typically, that assurance will be provided by jury instructions requiring the jury to find the conduct charged in the indictment before it may convict. If the jury instructions do not impose that limitation, however, the defendant's conviction could be based on conduct not charged in the indictment. That possibility results in a constructive amendment, requiring reversal, because it “destroy[s] the defendant's substantial right to be tried only on charges presented in an indictment.”

Id. at 1191 (quoting Stirone, 361 U.S. at 217).

1. The Indictment Charged Specific Conduct To Satisfy the Obstructive Endeavor Element of the Offense.

Count Three of the indictment specifically listed nine types of obstructive endeavors Dougan allegedly undertook in violation of Section 7212(a) between October 3, 2007 and November 28, 2012. (E.R.609-14.) After the Government moved to strike the first five paragraphs due to the limitations imposed by the Supreme Court in Marinello, the indictment charged Dougan with violating Section 7212(a) in four particular ways. (E.R.612:1-10.) Each description tied to identifiable conduct within the five-year time frame covered by the charge.

2. The Government's Proof at Trial Included Uncharged Conduct that Would Satisfy the Same Element.

The Government did not limit its proof at trial to the four types of obstructive endeavors described in the elided indictment. On the contrary, the Government's trial presentation focused extensively on two types of uncharged conduct: (1) providing a falsified invoice to substantiate advertising expenses; and (2) withholding information from the IRS, especially bank statements for a “hidden” CD account in which Dougan deposited checks that he failed to report as income on his 2005 return. This conduct would satisfy the same element of the offense for which the grand jury charged other particular conduct and does not fit within any of the types of obstructive endeavors charged by the grand jury.

The grand jury specifically charged Dougan with providing false information to substantiate his 2006 expense for “clerical services” but did not charge Dougan with providing false information to substantiate his 2006 expense for “advertising.” There is no overlap in substance or chronology. Dougan provided his documentation related to advertising expenses to Hernandez on September 15, 2008, and Colson produced it to the auditor on October 20, 2008. The auditor then requested substantiation of his clerical expenses, which Dougan provided to Colson on October 21, 2008.

Although much of the Government's evidence related to the CD account was outside the time frame of the indictment because Dougan wrote checks to himself in 2005 and opened the CD in which he deposited those checks in May of 2006, it was admitted into evidence ostensibly to prove Dougan's intent to conceal when he withheld information about the CD from the auditor. The grand jury, however, did not charge Dougan with any withholding of information or make any allegations about the CD.

3. The Prosecutor's Arguments Exacerbated the Error by Telling the Jury It Could Convict Dougan Based Solely on Uncharged Conduct.

The Government did not merely create a risk that the jury might convict based on uncharged conduct, but rather strongly encouraged the jury to do so. (E.R.152:3-156:5.) The prosecutor began his rebuttal argument by telling the jury that the Fugitive Watch invoice Dougan submitted to support his advertising expenses “standing alone is sufficient . . . to return a guilty verdict” on Count Three. (E.R.179:23-180:3 (emphasis added).)

4. The Jury Instructions Did Not Ensure that the Jury Convicted Dougan Based Solely on the Conduct Charged in the Indictment.

After the prosecutor beseeched the jury to convict Dougan based solely on conduct that was not charged in the indictment, the trial court did nothing to correct that error. Although the jury instructions included the standard admonition that the jury should convict based only on conduct charged in the indictment, the court made it impossible for the jury to perform that duty. The only exposure the jurors had to the indictment came before they were even selected to serve. The jurors could not possibly recall whether advertising expenses and a hidden CD were included in the indictment that was read to them fourteen days before they began deliberations. Rather, they had to trust the representations of the prosecutor, who actively misled them.

5. Allowing the Jury To Convict Based on Uncharged Obstructive Endeavors Is a Constructive Amendment.

“It is the exclusive prerogative of the grand jury finally to determine the charges, and once it has done so neither a prosecutor nor a judge can change the charging part of an indictment to suit [his or her] own notions of what it ought to have been, or what the grand jury probably would have made it if their attention had been called to suggested changes.” Ward, 747 F.3d at 1189 (quoting United States v. Leichtnam, 948 F.2d 370, 375-76 (7th Cir. 1991)). As the Tenth Circuit recently reiterated, it is settled law that “the language employed by the government in its indictments becomes an essential and delimiting part of the charge itself, such that if an indictment charges particulars, the jury instructions and evidence introduced at trial must comport with these particulars.” Miller, 891 F.3d at 1235 (quoting United States v. Farr, 536 F.3d 1174, 1181 (10th Cir. 2008)).

As described above, the jury instructions and evidence at Dougan's trial did not comport with the particulars in his indictment. Indeed, the Government strayed much further from the indictment in Dougan's trial than it did in other trials where constructive amendment required reversal. In Miller, for example, the indictment charged the defendant with making a false statement — an answer of no — to a specific question regarding revocation of his state professional license or controlled substance license in an application filed with the DEA. 891 F.3d at 1232. At trial, the Government presented testimony that the defendant had also made a second false statement in that same application. Id. The Court of Appeals found that “[t]his evidence of a different, unindicted false statement was not corrected by the jury instructions, which failed to narrow the basis for the false-statement count back down to the specific false statement charged in the indictment.” Id. As a result, there was a “very real possibility that Defendant was convicted on a different set of facts than those alleged in the indictment.” Id. at 1233.

Similarly, in United States v. Adams, 778 F.2d 1117, 1118-19 (5th Cir. 1985), the indictment alleged that the defendant furnished a false driver's license to a firearms dealer because the name on the license was incorrect. The government's theory at trial, however, was that the license was false in two ways — it had an incorrect name and an incorrect address. Id. at 1120. The jury instructions failed to limit the jury to consideration of only the false name. Id. at 1121-22. As a result, the Court of Appeals for the Fifth Circuit found that the Supreme Court's decision in Stirone compelled the “inescapable conclusion” that a constructive amendment occurred. Id. at 1124.

D. The Government Cannot Circumvent a Defendant's Constitutional Rights by Using Overbroad Charging Language.

When Dougan presented his constructive amendment argument to the trial court as grounds for granting his motion for release pending appeal, the Government opposed the motion by arguing that the indictment encompassed all of Dougan's conduct during the five-year period alleged in Count Three because the words “including, but not limited to” appeared prior to the specific list of allegedly obstructive endeavors. The Government cannot circumvent a defendant's fundamental Fifth and Sixth Amendment rights by inserting the words “including, but not limited to” prior to the facts and circumstances that are required in an indictment, then asking the jury to convict at trial based on different, uncharged facts and circumstances.

In Russell v. United States, the Court explained that “[a]ny discussion of the purpose served by a grand jury indictment in the administration of federal criminal law must begin with the Fifth and Sixth Amendments to the Constitution.” 369 U.S. 749, 760 (1962) (emphasis added). The Court described the Fifth Amendment grand jury right, then noted that “[o]f like relevance is the guaranty of the Sixth Amendment that 'In all criminal prosecutions, the accused shall enjoy the right . . . to be informed of the nature and cause of the accusation[.]'” Id. at 761 (quoting U.S. Const. amend. VI). The Supreme Court reversed the convictions in Russell because the indictments “failed to satisfy the first essential criterion by which the sufficiency of an indictment is to be tested, i.e. . . . they failed to sufficiently apprise the defendant 'of what he must be prepared to meet.'” Id. at 764. “Undoubtedly, the language of the statute may be used in the general description of an offense, but it must be accompanied with such a statement of the facts and circumstances as will inform the accused of the specific offense, coming under the general description, with which he is charged.” Id. at 765 (quoting United States v. Hess, 124 U.S. 483, 487 (1888)).

Recognizing that “[a]n indictment must include 'a statement of the facts and circumstances that will inform the accused of the specific offense with which he is charged,'” this Court already has rejected the notion that broad allegations in an indictment could rescue a conviction from reversal for constructive amendment. United States v. Shipsey, 190 F.3d 1081, 1087 (9th Cir. 1999) (quoting United States v. Cecil, 608 F.2d 1294, 1296 (9th Cir. 1979)). In Shipsey, the indictment tracked broad statutory language, alleging that the defendant “did embezzle, steal and unlawfully and willfully abstract and convert” property. Id. at 1084. Denying the defendant's motion for a new trial, the district court held that even though the theft counts incorporated specific allegations of theft by false pretenses, the government could prove theft by any theory encompassed by the statute as charged in the indictment. Id. at 1085. On plain error review, the court reversed the conviction on the grounds that the district court erred by constructively amending the theft counts. Id. at 1087-88. Noting that “[n]owhere in the indictment is there a statement of facts and circumstances that would support other possible . . . theft theories broadly invoked in the theft counts,” the court concluded that “Shipsey had notice only of the theory of theft by fraudulent pretenses and the government was obligated to prove this theory of theft.” Id. at 1087.

Nowhere in Dougan's indictment is there a statement of facts and circumstances that would inform Dougan that he was charged with making misrepresentations about his advertising expenses or withholding information regarding the CD reported on his 2006 return. Dougan had notice only of the theories alleged in the indictment, and the Government was obligated to prove one of those theories. As the court concluded in Shipsey, “[b]ecause there is a real likelihood that the jury actually convicted [Dougan] of a crime for which the grand jury did not indict him, the district court's instruction constructively amended the indictment.” Id. Reversal of Dougan's conviction is thus mandatory.

III. THE TRIAL COURT ERRED IN DENYING DOUGAN'S MOTION TO DISMISS FOR PROSECUTORIAL MISCONDUCT.

A. Standard of Review

This Court reviews de novo a district court's denial of a motion to dismiss an indictment based on prosecutorial misconduct. United States v. Harmon, 833 F.3d 1199, 1203 (9th Cir. 2016).

B. Prosecutorial Misconduct at Dougan's Trial Denied Him Due Process of Law.

In arguing the Government's case to the jury, the prosecutors: (1) strenuously represented that Dougan redacted checks to hide income and kept fighting to keep his information out of the hands of the government rather than to protect his clients' confidentiality; (2) asserted that Dougan lied to his attorneys regarding his fees; and (3) told the jury that a falsified advertising invoice was sufficient, standing alone, to convict Dougan of Count Three. All three statements were false. Although defense counsel warned that “if they get up in closing and argue that he intended to redact those checks to hide his income, they know that's not true,” (E.R.29:2-30:25), the prosecutor proceeded to do exactly that as well as make two additional misrepresentations to the jury on key issues in the case.

Making a false assertion of material fact to the jury in closing argument is prosecutorial misconduct that justifies reversal of the resulting conviction. United States v. Reyes, 577 F.3d 1069, 1073 (9th Cir. 2009). In the Reyes trial, as in Dougan's trial, the principal defense was lack of intent. Id. at 1076. Reyes sought to establish reasonable doubt by demonstrating that his company's Finance Department knew about the backdated stock options for which he was being prosecuted. Id. Similar to the prosecutors in Dougan's trial calling Colson to testify but not Youmans or Klomparens, the prosecutors in Reyes' trial called one witness from the Finance Department to testify that she did not know about the backdating and did not call other employees in the Finance Department who had told the Government they did know. Id. at 1074. The prosecutor then argued to the jury that the employees in the Finance Department did not have any idea that the backdating was occurring. Id. The dispositive issue that required reversal of the conviction in Reyes was the “government attorney's misconduct in falsely telling the jury that the Finance Department did not know about the backdating, when the prosecutor knew that their statements revealed that they did.” Id. at 1075.

Explaining where the prosecutor went wrong in the Reyes trial, the court found:

During closing argument, the prosecutor did not confine his argument to the evidence before the jury or reasonable inferences that could have been drawn from that evidence. The prosecutor asserted as fact a proposition that he knew was contradicted by evidence not presented to the jury.

Id. at 1076. In Dougan's trial, the prosecutors similarly asserted as fact that Dougan fought disclosure of his financial information to conceal his own income rather than protect client confidentiality even though the prosecutors knew that proposition was contradicted by evidence they fought to keep away from the jury. The prosecutors insisted that the court exclude Dougan's April 2009 email precisely because it was “the crux of [Dougan's] defense” and would “be prejudicial to the government.” (E.R.59:25-60:3.) Similarly, after interviewing Youmans and Klomparens, the Government chose not to call them to testify at trial, but rather to argue in closing that Dougan lied to his attorneys about his fees without any evidence in the record to support that inference. Finally, the prosecutors argued that a false invoice to support advertising expenses was sufficient to convict Dougan on Count Three while knowing full well that such conduct was not charged in the indictment that they — and not the jury — had in their possession.

Had Dougan known before closing argument that the prosecutor would argue he lied to his attorneys, he could have called Youmans or Klomparens to testify to the contrary. It was not, however, Dougan's burden to anticipate that the prosecutor would make such a bald assertion after not calling the attorneys to testify. As the court noted in Reyes, it was not “the defense's burden to prove Reyes was innocent. It was the prosecutor's burden to prove he was guilty.” Reyes, 577 F.3d at 1077.

“[A] federal prosecutor has a special duty not to impede the truth” for good reason. Id. A “prosecutor's opinion carries with it the imprimatur of the Government and may induce the jury to trust the Government's judgment rather than its own view of the evidence.” United States v. Young, 470 U.S. 1, 18-19 (1985). At Dougan's trial, where complex evidence regarding tax liabilities and the detailed back-and-forth of an IRS audit were presented to the jury over the course of two full weeks, there was an especially high risk of the jurors trusting the prosecutors' misrepresentations regarding facts in the record and, even more so, the prosecutors' misrepresentation regarding what conduct was sufficient to convict Dougan on Count Three.

C. The Trial Court's Denial of Dougan's Motion to Dismiss Hinged on an Illogical Inference and an Inapplicable Legal Rule.

Denying Dougan's motion to dismiss, the trial court found no “misconduct on the part of the government in arguing that defendant lied to his tax lawyers by representing to them that the fees he charged to his clients was generally 25% to 33%.” (E.R.12:4-7.) In reaching that result, the court made no findings of fact regarding what the prosecutors learned from Youmans and Klomparens in the pretrial interview. Rather, the court found that Youmans and Klomparens had received incomplete information from Dougan and determined, based on posttrial testimony unknown to the prosecutors at the time of closing argument, that Dougan committed a lie of omission by failing to correct the misrepresentation in the protest letter. (E.R.12:18-24.) To reach the ultimate conclusion that the prosecutor did not commit misconduct, the court relied not on any evidence related to the prosecutor's knowledge at the time the unsupported argument was made to the jury, but rather on a false dichotomy:

More importantly, in the court's view, the only possible explanations of the inclusion of the 25-33% figure in the IRS protest letter is either (1) Dougan lied to his attorneys regarding what his normal fees were, or (2) the attorneys conspired with Dougan to mislead the IRS. The government attorneys were entitled to give the tax lawyers the benefit of the doubt and assume they were not knowingly participating in a scheme to obstruct an IRS investigation. As such, the government had a good faith basis to argue that Dougan lied to his tax lawyers.

(E.R. 13:8-17.)

The court's assertion that only two scenarios were possible — Dougan lied to his attorneys or conspired with them — incorrectly presumes Dougan's guilt. There are many other possibilities consistent with Dougan's claim of good faith, including: (1) the misrepresentation in the letter resulted from Colson providing inaccurate information to the attorneys based on her own misunderstanding or motive to defend Gilbert's work; (2) the misrepresentation resulted from the attorneys making an assumption and failing either to question Dougan to test their assumption or to request his careful review of each fact asserted in a lengthy letter; or (3) the misrepresentation resulted from a strategic decision by Colson and/or the attorneys to defend the way the return was prepared as part of the adversarial process with the IRS. The evidence admitted at the posttrial hearing was more closely aligned with any or all of these three scenarios than with the prosecutor's bald assertion in closing argument that Dougan lied to his attorneys. Yet the court ignored that evidence, substituted his own judgment for that of the jury, and created a false dichotomy without any grounding in fact or logic.

In faulting Dougan for providing incomplete information to his attorneys, the court also held him to an inapplicable legal standard that comes into play only when a taxpayer asserts an advice of counsel defense. The prosecutor's closing argument that Dougan lied to his tax attorneys had nothing to do with countering an advice of counsel defense. On the contrary, the Government charged Dougan with “filing a letter with the IRS” that contained a misrepresentation. (E.R.1:609-14.) Youmans, not Dougan, signed and submitted that letter. For the Government to hold Dougan criminally liable for the misrepresentation, the Government had to prove beyond a reasonable doubt that Dougan contributed in some way to the making of the misrepresentation and was acting corruptly to obstruct the audit when he did so. Failure to affirmatively disclose all potentially relevant facts to his attorneys is not criminal obstruction in violation of Section 7212(a).

With no factual findings from the district court on the central issue of what the prosecutor knew when she falsely represented that Dougan lied to his attorneys regarding his fee agreements, this Court need not give the district court's opinion any weight.

D. The Prosecutorial Misconduct at Dougan's Trial Justifies Dismissal of the Indictment with Prejudice.

An indictment may be dismissed with prejudice under either of two theories: (1) outrageous government conduct that amounts to a due process violation, or (2) under the court's supervisory powers. United States v. Chapman, 524 F.3d 1073, 1084 (9th Cir. 2008). Both theories support dismissal of the indictment against Dougan with prejudice.

The prosecutors subverted Dougan's due process right to a fair trial by excluding reliable evidence damaging to their case, strenuously arguing facts directly contrary to the evidence they fought to keep away from the jury, misrepresenting to the jury that Dougan lied to his attorneys without any factual basis, and encouraging the jury to convict Dougan based on conduct not charged in the indictment. This outrageous conduct amounts to a due process violation that cannot be cured any way other than dismissal of the indictment. As both this Court and the Supreme Court have recognized, after a defendant is tried once, “a subsequent retrial will increase the emotional and financial burden on the defendant, and may give the state an unfair opportunity to tailor its case based on what it learned the first time around.” Chapman, 524 F.3d at 1081 (citing Arizona v. Washington, 434 U.S. 497, 503-4 & n. 14 (1978)). That is especially true in this case, where the Government presented no evidence connecting Dougan to the protest letter at trial but got a free shot at cross-examining his attorneys at the posttrial hearing not only on the preparation of the protest letter but also on wide-ranging topics related to their representation of Dougan. There is no way to un-ring that bell and put Dougan back in the position he would have been in had the prosecutors upheld their “special duty not to impede the truth” at his trial. Reyes, 577 F.3d at 1077.

In addition, “[a] district court may exercise supervisory power 'to implement a remedy for the violation of a recognized statutory or constitutional right; to preserve judicial integrity by ensuring that a conviction rests on appropriate considerations validly before a jury; and to deter future illegal conduct.” Chapman, 524 F.3d at 1085 (quoting United States v. Simpson, 927 F.2d 1088, 1090 (9th Cir. 1991)). Although dismissal with prejudice is permitted as a sanction only where the misbehavior is “flagrant” as opposed to “accidental or merely negligent,” id., “[d]eliberate false statements by those privileged to represent the United States harm the trial process and the integrity of our prosecutorial system.” Reyes, 577 F.3d at 1078. Because the prejudicial error committed at Dougan's trial is “one of prosecutorial misconduct,” this Court “must take into account considerations beyond this case.” United States v. Kojayan, 8 F.3d 1315, 1324 (9th Cir. 1993). “Quite as important as assuring a fair trial to the defendants now before us is assuring that the circumstances that gave rise to the misconduct won't be repeated in other cases.” Id.

Because “[m]uch of what the United States Attorney's office does isn't open to public scrutiny or judicial review,” it is “particularly important that the government discharge its responsibilities fairly, consistent with due process.” Id. As this Court well knows:

The overwhelming majority of prosecutors are decent, ethical honorable lawyers who understand the awesome power they wield, and the responsibility that goes with it. But the temptation is always there: It's the easiest thing in the world for people trained in the adversarial ethic to think a prosecutor's job is simply to win.

Id. The prosecutors in Dougan's trial let their desire to win trump their “duty to refrain from improper methods calculated to produce a wrongful conviction.” Berger v. United States, 295 U.S. 78, 88 (1935). Dismissal is necessary as a reminder that “[t]he prosecutor's job isn't just to win, but to win fairly, staying well within the rules.” Kojayan, 8 F.3d at 1323. This Court, therefore, should remand with instructions for the district court to dismiss the indictment with prejudice.

IV. THE CUMULATIVE EFFECT OF THE INTERRELATED ERRORS AT DOUGAN'S TRIAL COMPELS REVERSAL.

A. Standard of Review

This Court has repeatedly recognized that “'a balkanized, issue-by-issue harmless error review' is far less effective than analyzing the overall effect of all the errors in the context of the evidence introduced at trial against the defendant.” United States v. Frederick, 78 F.3d 1370, 1381 (9th Cir. 1996) (quoting United States v. Wallace, 848 F.2d 1464, 1476 (9th Cir. 1988)). In deciding whether the combined effect of multiple errors prejudiced a defendant, the court considers “whether the errors stand in 'unique symmetry . . . such that [they] amplify each other in relation to a key contested issue in the case.'” United States v. Preston, 873 F.3d 829, 835 (9th Cir. 2017) (quoting Ybarra v. McDaniel, 656 F.3d 984, 1001 (9th Cir. 2011). Moreover, if any error is constitutional, then aggregate error should be reviewed under the harmless beyond a reasonable doubt standard. United States v. Necoechea, 986 F.2d 1273, 1283 (9th Cir. 1993) (citing United States Riviera, 900 F.2d 1462, 1470 n.6 (10th Cir. 1990)).

B. The Interrelated Errors at Dougan's Trial Amplified Each Other in Relation to the Key Issue of Dougan's Intent.

The trial court's error in excluding evidence of Dougan's April 2009 decision to produce was inextricably linked to the prosecutor's misconduct in making a false argument to the jury that was directly contrary to the evidence he successfully excluded. Those two errors amplified each other by misleading the jury regarding Dougan's state of mind during the audit he allegedly obstructed. The trial court's exclusion of Dougan's 2012 offer to pay and the prosecutor's misconduct in arguing to the jury that Dougan lied to his attorneys also contributed to a false impression of Dougan's state of mind during the audit. Moreover, the prosecutor's misconduct in arguing that Dougan lied to his attorneys worked in concert with the constructive amendment of the indictment to keep additional exculpatory evidence away from the jury because Dougan would have introduced evidence to defend himself against those allegations had he known they were coming. The combined effect of these errors violated Dougan's fundamental right to a fair trial and cannot be considered harmless under any standard of review

CONCLUSION

For the foregoing reasons, this Court should reverse Dougan's conviction and remand to the district court with instructions to dismiss the indictment with prejudice.

Date: January 14, 2020

Respectfully submitted,

Jenny Louise Johnson Ware
Johnson Moore LLC

Attorney for Appellant Stephen Dougan

STATEMENT OF RELATED CASES

In accordance with Ninth Circuit Rule 28-2.6, Appellant knows of no related case pending in this Court.

Date: January 14, 2020

Jenny Louise Johnson Ware
Johnson Moore LLC

Attorney for Appellant Stephen Dougan