Individual Urges Ninth Circuit to Reverse Obstruction Conviction

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

IN THE UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT

APPELLANT'S REPLY BRIEF

Jenny Louise Johnson Ware
MCDERMOTT WILL & EMERY LLP
444 West Lake Street, Suite 4000
Chicago, IL 60606
(312) 984-2130
jjohnsonware@mwe.com

Attorney for Defendant-Appellant Stephen Dougan

September 1, 2020

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TABLE OF CONTENTS

TABLE OF AUTHORITIES

ARGUMENT

CONCLUSION

TABLE OF AUTHORITIES

Cases

Am. Fedn. of Musicians of the United States v. Paramount Pictures Corp., 903 F.3d 968 (9th Cir. 2018

Burks v. United States, 437 U.S. 1 (1978)

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

Chia v. Cambra, 281 F.3d 1032 (9th Cir. 2002)

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

Security Alarm Financing Enterprises, LP v. Alarm Protection Technology, LLC, 743 Fed. Appx. 786 (9th Cir. 2018)

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

Terrovona v. Kincheloe, 852 F.2d 424 (9th Cir. 1988)

United States v. Adamson, 291 F.3d 606 (9th Cir. 2002)

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

United States v. Chung, 659 F.3d 815 (9th Cir. 2011)

United States v. Garcia-Villanueva, 855 F.2d 863, 1988 WL 86215 (Table) (9th Cir. Aug. 10, 1988)

United States v. Grajales, 450 Fed. Appx. 893 (11th Cir. 2012)

United States v. Haischer, 780 F.3d 1277 (9th Cir. 2015)

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

United States v. Ives, 609 F.2d 930 (9th Cir. 1979)

United States v. Miller, 874 F.2d 1255 (9th Cir. 1989)

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

United States v. Pang, 362 F.3d 1187 (9th Cir. 2004)

United States v. Pinson, 860 F.3d 152 (4th Cir. 2017)

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

United States v. Reilly, 33 F.3d 1396 (3d Cir. 1994)

United States v. Scully, 877 F.3d 464 (2d Cir. 2017)

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

United States v. Solorio-Soto, 300 Fed. Appx. 487 (9th Cir. 2008)

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

United States v. Town of Colorado City, 935 F.3d 804 (9th Cir. 2019)

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

United States v. Whitman, 771 F.2d 1348 (9th Cir. 1985)

United States v. Yagi, 2013 WL 10570994 (N.D. Cal. 2013)

Rules

Fed. R. Evid. 801(c)

Fed. R. Evid. 803(3)

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ARGUMENT

The Government lost Counts 1 and 2 at trial and only convinced the jury to find Stephen Dougan guilty of Count 3 by thwarting Dougan's effort to introduce exculpatory evidence and encouraging the jury to convict him for conduct that was not charged in the Indictment. The cumulative effect of those errors and the substantial prejudice Dougan would suffer if the Government were allowed to retry him using evidence it received in post-trial discovery can only be cured by dismissing the indictment.

I. The Government's Treatment of the Record is Misleading.

Attempting to cure material shortcomings in its trial record, the Government cites evidence gathered after trial as if it were presented to the jury, misstates evidence to attribute conduct of others to Dougan, and omits evidence that contradicts its prosecution theory.

A. The Government Relies on Evidence It Did Not Present to the Jury.

The Government chose to avoid the risk of calling Dougan's tax attorneys to testify at trial and instead secured a conviction by arguing to the jury that Dougan lied to his attorneys without any evidence. The Government now seeks to preserve that conviction by covertly relying on evidence it obtained in post-trial proceedings on Dougan's motion to dismiss for prosecutorial misconduct. In a misguided effort to enable the Government to prove the prosecutor's closing argument true in hindsight, the District Court allowed the Government to subpoena records from Dougan's attorneys and granted the Government significant leeway to question his attorneys at a post-trial evidentiary hearing. (F.E.R. 1-178.) Compounding rather than addressing its trial errors, the Government surreptitiously weaves into its statement of the case evidence it did not offer at trial and then wrongly argues that the prosecutor's closing was supported by evidence in the record.

The Government devotes a section of its statement of the case to the allegation that “Dougan approved a false protest letter.” (Govt. Br. 31-32 (Dkt. 18).) The Government did not introduce any such evidence at trial. The testimony the Government cites is from the post-trial hearing. (Govt. Br. 32; see S.E.R. 316, 320, 322.) Most troubling, the Government cites a document it received in response to the post-trial subpoena to Dougan's attorneys as if it were an exhibit entered into evidence at trial. To support the critical fact that “Dougan reviewed and approved the filing of the protest letter,” the Government cites S.E.R. 1455, which it identifies as one of the “Government's Trial Exhibits.” (Govt. Br. 32; S.E.R. table of contents.) It was not. The Government received S.E.R. 1455 in response to the post-trial subpoena issued to Dougan's attorneys. (F.E.R. 17:18-20:10; F.E.R. 28:8-63:11; F.E.R. 97-133; F.E.R. 135-177.)

The Government then exacerbates these misrepresentations in its argument. Responding to Dougan's contention that the prosecutors made false statements during closing argument, the Government relies on evidence it did not offer at trial to argue that the “prosecutors made proper arguments based on evidence in the record.” (Govt. Br. 76-77.) Claiming that the “record” supported its closing argument, the Government cites S.E.R. 316, which is testimony from one of Dougan's tax attorneys at the post-trial evidentiary hearing, and S.E.R. 1455, which is the email the Government received in response to the post-trial subpoena issued to Dougan's attorneys. (Id.) Beginning the paragraph immediately following its citation to S.E.R. 1455 with the words “Moreover, after trial, . . .” the Government leaves the false impression that the preceding evidence was part of the trial record when it unequivocally was not. If the Government wants to argue that it can rely on evidence it discovered after trial to defend its conduct during trial, it should at least acknowledge that novel approach to the Court.

B. The Government Misstates the Evidence to Attribute Conduct of Others to Dougan.

A critical theme of Dougan's defense — which prevailed at trial on Counts 1 and 2 — was that his accountants made mistakes that caused the underreporting of income and then tried to cover up their errors during the audit. Distinguishing actions taken by Dougan from those taken by others is equally important for this court's review of Count 3. The Government, however, plays fast and loose with the evidence, routinely stating that Dougan himself committed a particular act even when there is no evidence of Dougan's involvement.

For example, the Government claims that “Dougan provided misleading, partial, and false documents to the IRS to substantiate his claimed income” and then pastes into its brief images of a redacted fee contract, a redacted final accounting, and a redacted fee check. (Govt. Br. 10-12.) The IRS auditor testified that she received those three documents at the initial appointment in October 2008. (E.R. 205:10-206:4.) CPA Darla Colson, not Dougan, met with the auditor and provided those documents to the IRS. (E.R. 567:2-11.) Colson, who first learned about the audit when she went through the accounting firm's files after the CPA who had previously been working on Dougan's tax returns, Corrine Hernandez, had a brain aneurysm, gathered documents from Hernandez's files to bring to the first meeting with the auditor. (E.R. 563:14-17; E.R. 565:20-566:3.) There is no evidence in the record that shows when or how those documents came to be in the accounting firm's files, who selected them as an appropriate sample to produce in the audit, or who redacted them. Not only is the Government's allegation that Dougan provided those documents to the IRS demonstrably false, but the Government failed to introduce any evidence that Dougan provided those documents to his accountants after learning of the audit or knew that his accountants were producing that sample to the IRS. Rather than acknowledge this notable weakness in its case, the Government pretends that Dougan provided the documents to the IRS.

The Government's pattern of attributing conduct to Dougan even when the evidence shows that Dougan did not commit the alleged act renders its statement of the case misleading and unreliable. For example, the Government claims that “Dougan told the IRS that he had been using this method of calculating his income 'since he opened his office in 1988,'” and that “Dougan continued to falsely claim that he 'generally charg[ed] 25.0% to 33.3% of any recovery as his fee.'” (Govt. Br. 3, 12 n.7.) A reader would assume that Dougan authored the cited exhibit and that the quoted words were his. Not so. The Government's support for those allegations is the protest letter authored by one of Dougan's tax attorneys in collaboration with Colson. (S.E.R. 753-759, E.R. 487, E.R. 488, E.R. 339:19-345:6.) The only indication that Dougan even saw that letter before it went to the IRS is an email first produced to the Government in post-trial discovery that says simply: “Doug: I like it.” (S.E.R. 1455; E.R. 76.) Although the Government could seek to hold Dougan responsible for actions taken by his attorneys and accountants if it had presented evidence of Dougan's involvement and knowledge at trial, it cannot skip over the step of proving Dougan's culpability to the jury by misrepresenting who did what to this court.

C. The Government Omits Evidence that Contradicts its Theory.

The Government's strategy of glossing over inconvenient facts also surfaces in its omission of material evidence of Dougan's state of mind during the alleged crime. The redacted checks submitted to the IRS in December 2008 are so critical to the Government's case that it pasted four pages of checks directly into its brief. (Govt. Br. 23-28.) The Government then skips ahead to a declaration Dougan signed in July 2009, alleging that Dougan lied when he said he redacted client names from those checks. (Id. at 30-31.) Rather than address events in the intervening seven months that directly contradict the nefarious intent the Government assigns to Dougan, the Government simply ignores them.

Dougan's accountant and the auditor exchanged case law regarding his concerns about client confidentiality and, on April 21, 2009, Dougan informed his tax attorney and his accountant that he “made the decision to provide the IRS the Account info” predicated on the case the agent provided. (E.R. 405.) Had Dougan's attorneys not intervened, the unredacted checks would have gone to the IRS in April of 2009. In June 2009, in an effort to provide the information to the IRS without breaching Dougan's duty of confidentiality to his clients, Dougan's professional responsibility attorney offered to provide unredacted checks for review by a special master. (E.R. 217:14-219:20; E.R. 225:24-226:12.) Dougan was again trying to produce the exact checks the Government accuses him of hiding and lying about. The spin the Government puts on the audit is only possible if these events did not occur, so the Government kept the April 2009 email away from the jury and omits a crucial seven months from the chronology it submits to this court.

II. Erroneous Exclusion of Important Exculpatory Evidence at Trial Requires Reversal of Dougan's Conviction.

A. The Government's Attempts to Justify Exclusion Contradict Established Law.

1. Dougan's April 2009 Email is Not Hearsay.

On April 21, 2009, Dougan sent an email to his tax attorney stating “I have made the decision to provide the IRS the Account info” and instructing her not to “worry about” additional research to support a contrary position. (E.R. 405.) The Government argues that this email was properly excluded as an assertion offered for its truth, “i.e., that he in fact decided to turn over account information to the IRS.” (Govt. Br. 41.) Dougan's email, however, has significance independent of the truth of any assertion within it because it is circumstantial evidence of his state of mind during the alleged crime and is, therefore, admissible non-hearsay under Fed. R. Evid. 801(c). “As the threshold evidentiary inquiry in this case is a legal and not a factual inquiry, namely, whether or not the statements constituted hearsay, a de novo standard controls.” United States v. Garcia-Villanueva, 855 F.2d 863, 1988 WL 86215 (Table) at *1 (9th Cir. Aug. 10, 1988).

Dougan's communication of his decision to produce is similar to the statements this Court found admissible as non-hearsay in Garcia-Villanueva. Accused of harboring illegal aliens in a house she co-owned with one of her sons, Garcia sought to introduce at trial testimony that she told her sons that they should not engage in smuggling, that it was dangerous, that they would get everyone in trouble, and that she did not want to hear about it. 855 F.2d 863 at *1. The district court found that these statements were hearsay admissible under the state-of-mind exception in Fed. R. Evid. 803(3), which allowed the prosecution to attack Garcia's credibility by introducing evidence of a previous felony conviction. Id. Garcia chose not to introduce the evidence under those conditions and was convicted. This Court reversed the conviction, finding that the statements were not hearsay and, as a result, Garcia was “entitled to the unburdened admission of the proffered testimony under Rule 801(c).” Id. at *3.

Evaluating the admissibility of Garcia's statements de novo, the Court noted that “[t]he theory that out-of-court statements may be admissible not for their truth, but instead as circumstantial evidence of the declarant's state of mind, has been accepted in this circuit and others.” Garcia-Villanueva, 855 F.2d 863 at *2 (citing cases). The Court recognized that Garcia's intent was the central issue at trial and held that “[t]he statements, because they are offered to rebut an inference of criminal intent which might otherwise have been drawn from Garcia's actions or presence in the house, were relevant verbal conduct independently admissible as circumstantial evidence of Mrs. Garcia's state of mind.” Id. Dougan's intent was likewise the central issue at trial and the April 2009 email was offered to rebut an inference of criminal intent which might otherwise have been drawn from his actions. Dougan's email informing his attorney of his decision to produce and instructing her that no further research was necessary was relevant verbal conduct independently admissible as circumstantial evidence of his state of mind.

Recent cases continue to support the Court's reasoning in Garcia-Villanueva and its application to Dougan's April 2009 email. This Court has repeatedly recognized that directives and instructions are not hearsay. See United States v. Town of Colorado City, 935 F.3d 804, 813 (9th Cir. 2019) (holding that instructions not to communicate with certain residents were admissible non-hearsay); United States v. Chung, 659 F.3d 815, 833 (9th Cir. 2011) (recognizing that a task list was admissible as non-hearsay because it was not offered for the truth of the matters asserted) (citing United States v. Reilly, 33 F.3d 1396, 1410 (3d Cir. 1994) (holding that “instructions to an individual to do something are . . . not hearsay . . . because they are not declarations of fact and therefore are not capable of being true or false.”)). Dougan's email informing his attorney of his decision to produce was a directive that was integrally related to his simultaneous instruction to stop doing research to support a contrary position.

This Court also recently reaffirmed that verbal conduct like Dougan's communication of his decision to produce is not hearsay because it is not an assertion offered for its truth. See Am. Fedn. of Musicians of the United States v. Paramount Pictures Corp., 903 F.3d 968, 976 (9th Cir. 2018) (statement contained in email was non-hearsay admissible as verbal act evidence to show that author communicated information to recipient). The Government's argument that verbal acts are only non-hearsay if they create legal rights and obligations is incorrect. (Govt. Br. 42.) The Court in United States v. Pang, 362 F.3d 1187, 1192 (9th Cir. 2004), recognized that “out-of-court statements that are offered as evidence of legally operative verbal conduct are not hearsay,” but did not require that a statement create legal rights and obligations to fall outside the definition of hearsay. The statements in Garcia-Villanueva, Town of Colorado City, Chung and American Federation of Musicians are all examples of verbal acts that, like Dougan's email, do not create legal rights or obligations but are not hearsay.

Moreover, it is widely accepted that a statement offered as circumstantial evidence of the defendant's state of mind is, by definition, not hearsay. See, e.g., United States v. Scully, 877 F.3d 464, 474-76 (2d Cir. 2017) (granting defendant a new trial because district court excluded evidence of out-of-court statements offered as circumstantial, non-hearsay evidence of his state of mind); United States v. Grajales, 450 Fed. Appx. 893, 902 (11th Cir. 2012) (reversing conviction where trial court erred in excluding statements offered as circumstantial evidence of the defendant's state of mind because the statements were not hearsay); United States v. Yagi, 2013 WL 10570994, at *3 (N.D. Cal. 2013) (allowing defendant to introduce his own prior out-of-court statements as non-hearsay circumstantial evidence of his state of mind). The April 2009 email communication between Dougan and his attorney was relevant verbal conduct admissible as circumstantial evidence of his state of mind and not excludable as hearsay.

2. Evidence of Dougan's Offer to Pay is Not Hearsay.

As described above, a statement is only hearsay if it is an assertion offered for its truth. An offer to pay asserts no facts and contains no truth. The Government claims that Dougan's offer to pay was actually an assertion that “he wanted to pay his taxes and did not act corruptly during the audit.” (Govt. Br. 43.) Dougan did not seek to introduce evidence of an out-of-court statement professing his lack of corrupt intent. On the contrary, he sought to introduce evidence of his verbal conduct during the alleged crime as circumstantial evidence of his lack of corrupt intent.

The Government's attempt to distinguish United States v. Montana, 199 F.3d 947, 950 (7th Cir. 1999), reveals a fundamental misunderstanding of the basic concepts underlying the hearsay rule. As the Seventh Circuit explained, illocutionary utterances “narrate, describe, or otherwise convey information, and so are judged by their truth value.” Id. Performative utterances, such as a promise, offer or demand, “are not within the scope of the hearsay rule, because they do not make any truth claims.” Id. In Montana, a marshal testified that he overheard a witness tell the defendant that “it's going to be $10,000” for the favorable testimony. Id. at 948. The court classified the overheard statement as a demand, which was a performative utterance and thus not hearsay, in contrast to a hypothetical out-of-court statement that “your father has promised me $10,000,” which would be hearsay “because its value as evidence would have depended on its being truthful, that is, on such a promise having actually been made.” Id. at 950.

Contrary to the Government's argument, Montana does not hold that testimony about someone else's promise to pay money is hearsay. (Govt. Br. 43.) It draws a line between testimony from a witness who observed an offer, demand or promise being made, as the marshal had, and testimony from a witness who heard an out-of-court declarant assert that a third person made an offer, demand or promise, as in the hypothetical posed by the court. In the former, the only credibility issue is whether the testifying witness is reporting what happened correctly and there is no hearsay. In the latter, the credibility of the out-of-court declarant is important because that person is conveying information, i.e. making an assertion that is only relevant if true. Dougan sought to introduce testimony of the IRS employees who received his offer to pay and the tax attorneys who observed his offer to pay. There is no hearsay in that testimony because Dougan's offer to pay was a performative utterance as opposed to an assertion that could be judged for its truth.

3. Excluding as Hearsay Statements that Reflect Dougan's Contemporaneous State of Mind Was an Abuse of Discretion.

Non-hearsay evidence is admissible regardless of whether it meets the requirements of an exception to the hearsay rule. United States v. Boulware, 384 F.3d 794, 807 (9th Cir. 2004) (recognizing that when a statement is admitted for a non-hearsay purpose, there is no need to resort to the hearsay exceptions). At the Government's urging, the trial court excluded Dougan's April 2009 email and August 2012 offer to pay on the grounds that Dougan had “too much time to reflect.” (E.R. 63:25-64:4.) This Court considers whether a declarant had time to reflect when applying the state of mind exception to the hearsay rule in Fed. R. Evid. 803(3). United States v. Miller, 874 F.2d 1255, 1264 (9th Cir. 1989). That inquiry has no bearing on the admissibility of a statement offered for the non-hearsay purpose of providing circumstantial evidence of the defendant's state of mind because the declarant's credibility is immaterial. The district court, therefore, applied an incorrect legal rule, and this court “must conclude it abused its discretion.” United States v. Hinkson, 585 F.3d 1247, 1262 (9th Cir. 2009) (en banc).

The Government's failure to recognize the distinction between offering evidence under the state of mind exception to the hearsay rule and offering it for the non-hearsay purpose of showing the declarant's state of mind undermines its entire argument. The Government contends that Dougan's statements were “unreliable” because he “had time to reflect on what he needed to say to suit his interests” and “fabricate a story.” (Govt. Br. 44, 46.) The excluded statements, however, contain no “story.” Dougan's April 2009 email and August 2012 offer to pay are not narrative or descriptive and his credibility as a declarant is immaterial.

Even if the portion of Dougan's April 2009 email that states “I have made the decision to provide the IRS the Account info” could be considered an assertion offered for its truth as opposed to verbal conduct, it fits squarely within the state of mind exception in Rule 803(3), and the entire email remains admissible. When considering admissibility under Rule 803(3), this court evaluates “three factors: contemporaneousness, chance for reflection, and relevance.” United States v. Ponticelli, 622 F.2d 985, 991 (9th Cir. 1980). The Government argues that the opening brief focused on the “wrong factor” — contemporaneousness — when the “issue here is the chance-for-reflection factor.” (Govt. Br. 47.) The Government thus concedes that this situation is unlike Miller, where the statement at issue “reflected Miller's then existing state of mind as to a past fact [ ] rather than as to a present fact.” Miller, 874 F.2d at 1264. Dougan's April 2009 email informs his attorney of his contemporaneous decision to act in a certain manner.

Although it seems that the chance-for-reflection factor is only meaningful when contemporaneousness is lacking, it is unnecessary to debate that point because the ultimate issue is reliability under the circumstances. Security Alarm Financing Enterprises, LP v. Alarm Protection Technology, LLC, 743 Fed. Appx. 786, 788 (9th Cir. 2018) (“Ultimately, it is the reliability of the statement as evidence of the declarant's state of mind that determines admissibility.”); Ponticelli, 622 F.2d at 991 (“The greater the circumstances for misrepresentation, the less reliable is the declaration.”). The notion that Dougan would, in the midst of an IRS audit, misrepresent to his tax attorney his present intention to produce documents to the IRS is illogical, implausible, and without any support in inferences that that may be drawn from facts in the record. The trial court, therefore, abused its discretion in excluding Dougan's exculpatory evidence at trial. Hinkson, 585 F.3d at 1262.

4. Rule 403 Does Not Support Exclusion of Dougan's Email.

In its brief to this Court, the Government contends that Dougan's April 2009 email “had no probative value and was properly excluded under Rule 403.” (Govt Br. 48.) The Government sang a different tune at trial, where the prosecutor asked the court to exclude the email because “this is going to be the crux of their defense” and thus “will be prejudicial to the Government.” (E.R. 59:25-60:3.) The Government has never identified any “prejudicial effect” of the email other than its high probative value in favor of the defense. Rule 403 allows a court to exclude relevant evidence only if its probative value is substantially outweighed by unfair prejudice and relying on it to exclude “evidence offered by the defendant in a criminal prosecution” is “an extraordinary remedy to be used sparingly.” United States v. Haischer, 780 F.3d 1277, 1281 (9th Cir. 2015). Excluding evidence of a defendant's state of mind under Rule 403 is reversible error. Scully, 877 F.3d at 474-75 (reversing conviction where trial court incorrectly balanced the probative value of the evidence of defendant's state of mind against prejudice allegedly caused by risk that the evidence was not credible).

5. Dougan's Offer to Pay Was Relevant.

The Government's contention that Dougan's offer to pay was properly excluded as irrelevant is similarly perverse. The Government charged Dougan with corruptly obstructing the administration of the Internal Revenue laws between October 3, 2007 and November 28, 2012. (E.R. 611-12.) The Indictment specifically alleges that Dougan responded “to questions and inquiries from IRS employees with false statements, both oral and written.” (E.R. at 612.) Dougan had one interaction with IRS employees — a meeting on August 22, 2012. (E.R. 212:5-214:1; E.R. 241:5-243:25.) To defend against the allegation that he was acting corruptly in that sole interaction with IRS employees, Dougan sought to introduce evidence that he offered, during that meeting, to pay whatever tax he owed. (E.R. 37:14-22; E.R. 41:4-11; E.R. 534:16-583:10.) The Government, however, seeks to deprive Dougan of his right to disprove the allegations against him by arguing that he had already completed the crime in other ways, many of them not charged in the Indictment, prior to that date. (Govt. Br. 48-51.) Dougan had a right to defend himself against all allegations in the indictment. Exculpatory evidence that shows the defendant's state of mind during the alleged crime does not somehow become irrelevant and inadmissible because the Government believes it proved him guilty in other ways.

B. All Factors Support the Conclusion that Excluding Dougan's Decision to Produce and Offer to Pay Violated His Right to Present a Defense.

The Government grounds its argument in factors this Court uses to “assess the constitutional implications of the exclusion of relevant evidence pursuant to the correct application of an evidentiary rule.” United States v. Stever, 603 F.3d 747, 755-76 (9th Cir. 2010). Although those factors provide “[s]ome limited guidance” in this situation, “erroneous exclusion of important evidence will often rise to the level of a constitutional violation” that “requires reversal of a guilty verdict unless the Government convinces [the court] that the error was harmless beyond a reasonable doubt.” Id. at 755-57.

1. The Probative Value of the Evidence on the Central Issue of Dougan's Intent was High.

The Government sought to exclude Dougan's April 2009 email at trial precisely because its probative value was high: “this is going to be the crux of their defense.” (E.R. 59:25-60:3.) On appeal, the Government claims the proffered evidence had limited probative value because Dougan knew he was under investigation when he made the statements, because Dougan was supposedly guilty of obstructive acts that chronologically preceded his statements, and because the Government could have used Dougan's offer to pay to argue an inference supporting guilt instead of innocence. (Govt. Br. 55-56.) These arguments miss the point entirely — the excluded evidence is unquestionably probative on the issue of Dougan's intent during the charged crime and Dougan had a right to have the jury weigh that evidence. United States v. Solorio-Soto, 300 Fed. Appx. 487, 490 (9th Cir. 2008) (reversing conviction where trial court limited cross-examination intended to counter government's arguments regarding the defendant's intent by offering a competing inference); United States v. Whitman, 771 F.2d 1348, 1351 (9th Cir. 1985) (reversing conviction where trial court excluded evidence that contradicted prosecution's theory of motive).

2. The Evidence was Reliable.

The Government's contentions with respect to reliability are equally misguided. For the April 2009 email, the relevant fact is that the email communication happened. The reliability of the electronic record, produced to the Government by the accounting firm, is not in doubt. Moreover, even if Dougan's statement regarding his decision to produce was hearsay, this court recognizes that a declaration that falls within a deeply rooted hearsay exception meets the indicia of reliability. Terrovona v. Kincheloe, 852 F.2d 424, 427 (9th Cir. 1988).

For the offer to pay, Dougan sought to question the IRS employees who participated in the August 2012 meeting about the offer and was precluded from doing so. (E.R. 37.) The Government asserts that the “summaries of the interview written by Langston and Yu did not reflect that Dougan made an offer to pay” and surmises that such an offer “would have been of major interest to the revenue agents, and would likely have been recorded.” (Govt. Br. 54-55.) There is no evidence to prove or disprove this supposition because the Government objected to defense counsel's questions instead of allowing the jury to hear the answers from its own witnesses. (E.R. 37.) The Government also criticizes Dougan for not calling his tax attorneys to testify about the offer and attacks the credibility of those attorneys based on post-trial testimony about other topics. (Govt. Br. 53-54.) The jury had no opportunity to weigh the credibility of Dougan's tax attorneys or the Government's witnesses regarding the offer to pay because the Government objected to the entire line of questioning. Where, as here, the court is “disadvantaged by not having the actual testimony,” it must rely on the defendant's offer of proof and “accept it at face value.” Garcia-Villanueva, 855 F.2d 863 at *2. The Government effectively prevented Dougan from introducing evidence of his offer to pay at trial and may not now make the circular argument that a lack of reliable evidence precludes Dougan's argument that the trial court deprived him of his right to present a defense.

3. The Evidence was Capable of Evaluation by the Trier of Fact.

The Government does not address this factor, apparently acknowledging that the jury was capable of evaluating this straightforward evidence of Dougan's state of mind during the charged crime.

4. The Evidence was Not Cumulative.

The Government erroneously claims that the excluded evidence was cumulative because Dougan could have testified to his own state of mind or called his attorneys to testify on his behalf. But “cumulative evidence replicates other admitted evidence.” United States v. Ives, 609 F.2d 930, 933 (9th Cir. 1979) (emphasis added). Dougan's exercise of his right not to testify himself or call his attorneys to testify does not render other evidence of his state of mind cumulative. Chia v. Cambra, 281 F.3d 1032, 1038 (9th Cir. 2002) (finding cumulative evidence factor favored defense where defendant, “as was his right,” declined to take the stand and instead attempted to establish his explanation of events on cross examination); Scully, 877 F.3d at 475-76 (recognizing that defendant was not required to call his attorney to testify); see also Boulware, 384 F.3d at 808-09 (reversing conviction because court excluded state court judgment that would have been key corroborative evidence supporting defendant's testimony).

5. The Evidence Constituted a Major Part of Dougan's Defense.

The Government acknowledges that “Dougan's defense was to blame others,” but then draws the incongruous conclusion that “his alleged offer to pay and his April 2009 email were of little moment.” (Govt. Br. 57-58.) In blaming others, Dougan's defense focused on his own lack of culpable intent. The excluded April 2009 email exchange between Dougan and his attorney directly undermines the Government's core allegation that Dougan was acting corruptly with respect to his account information and was central to the defense. Moreover, evidence that Dougan offered to pay when he learned that his accountants made mistakes is an integral part of the defense theory that his accountants were to blame and Dougan was acting in good faith. Contemporaneous evidence of Dougan's state of mind in April 2009, when he decided to produce his account information to the IRS, and in August 2012, when he offered to pay any taxes he owed, was a major part of his defense.

III. Constructive Amendment of the Indictment Requires Reversal of Dougan's Conviction.

A. It Was Impossible for the Jury to Consider What the Indictment Charged in its Deliberations.

The Government contends that limiting instructions the District Court gave the jury ensured that Dougan was convicted based on conduct charged in the indictment without acknowledging that the jurors did not have a copy of the indictment and had only heard it read once, fourteen days prior to beginning deliberations, when the District Court explained that “the only reason we're reading it to you now is so that you'll know something about the charges in the case so that you're better able to answer the questions that I will ask to you in a few moments” in voir dire. (S.E.R. 141.) The likelihood that jurors recalled the details of the indictment well enough to obey a limiting instruction during deliberations is negligible and most certainly insufficient to protect Dougan's constitutional rights.

B. Admissibility of the Government's Evidence is Immaterial.

Count 3 of the Indictment charged Dougan with committing four specific obstructive acts. At trial, the Government introduced evidence of two obstructive endeavors not listed in the indictment, suggesting Dougan had provided a falsified invoice to substantiate advertising expenses and had withheld information from the IRS, particularly bank statements regarding a CD account. The Government spends pages of its brief arguing that the advertising invoice and evidence related to the CD account “properly supported” the various counts in the indictment. Gov. Br. 65-73. Admissibility of the evidence has no bearing on whether Count 3 was constructively amended. The question is whether Dougan's conviction “could be based on conduct not charged in the indictment.” United States v. Ward. 747 F.3d 1184, 1191 (9th Cir. 2014). Dougan objected to the admission of the evidence at issue because it would “create[ ] confusion on what the government is required to prove,” which is precisely what happened. E.R. 600. The Government then deepened that confusion by arguing in rebuttal that the advertising invoice “standing alone is sufficient . . . to return a guilty verdict.” E.R. 179:23-180:3. And the District Court failed to cure the problem when instructing the jury. Together, the admission of evidence of uncharged conduct, misleading argument to the jury, and ineffective jury instructions resulted in a constructive amendment of the indictment that requires reversal.

C. The Government Incorrectly Recasts its Indictment.

1. The Indictment Alleged Specific Conduct the Government was Obligated to Prove.

The Government asks the Court to construe the indictment “broadly,” repeatedly calls the indictment “broad,” and claims that “Dougan's reliance on cases where the government charged narrowly is misplaced because here, the government charged broadly.” Gov. Br. 62, 64, 65, 69, 71. The court need only read Count 3 to see the specificity that undermines the Government's contention. “Importantly, the government is bound by the phrasing it uses in the indictment, even if it chooses to use more specific language than necessary.” United States v. Pinson, 860 F.3d 152, 171 (4th Cir. 2017). See also, e.g., Stirone v. United States, 361 U.S. 212, 218 (1960) (holding that when an indictment charges specific acts that allegedly violated the relevant statute, “a conviction must rest on that charge and not another”). Moreover, before recasting its indictment as “broad” for purposes of this appeal, the Government argued to the trial court that it should exclude evidence of Dougan's offer to pay because, in Count 3, “the indictment focuses on specific acts that the defendant took to obstruct the audit.” E.R. 578:10-19. The Government cannot ask the trial court to exclude exculpatory evidence by arguing that Count 3 focuses on specific acts and then ask this court to preserve Dougan's conviction by arguing that the Government “charged broadly.”

Furthermore, even if the Government had charged broadly, the district court was required to ensure that the jury consider only conduct charged with sufficient specificity to comply with the Sixth Amendment. In United States v. Shipsey, 190 F.3d 1081, 1087 (9th Cir. 1999), the government argued that “the district court was not required to limit its instructions to a single theory because the theft counts broadly allege that Shipsey did 'embezzle, steal . . ., abstract and convert monies.'” The court disagreed. Because the indictment did not include a statement of facts and circumstances to support any other theory, “Shipsey had notice only of the theory of theft by fraudulent pretenses and the government was obligated to prove this theory of theft.” Id. The possibility that Shipsey was convicted for conduct that fell within the broad umbrella of the charged crime but was not alleged with specificity in the indictment required reversal of his conviction under plain error review. Id.

2. The Indictment Did Not Inform Dougan of Charges Related to False Advertising Expenses or a Hidden CD Account.

Faced with the obvious mismatch between the indictment and the trial evidence it relied on in arguing for Dougan's conviction on Count 3, the Government tries to shoehorn the advertising invoice and CD account into the specific language of Count 3. Gov. Br. at 65. First, the Government contends that the advertising invoice is covered by Act 9 of Count 3, accusing Dougan of “Responding, directly  and 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. 612; see Gov. Br. 67. But the advertising invoice is an expense, not income. The Government reaches too far in arguing that a fair reading of “income” includes any and all expenses incurred by a Schedule C filer, especially when the indictment separately and specifically alleges falsification of clerical expenses. Had the grand jury considered and approved an allegation involving the advertising invoice, the indictment likely would have included wording similar to the allegation in Act 7: “Providing his IRS audit representatives with false information to substantiate his 2006 expense for 'clerical services.'” E.R. 612. Indeed, having such a specific allegation regarding clerical expenses in the indictment and no allegation regarding advertising expenses only serves to intensify the constitutional error. See United States v. Adamson, 291 F.3d 606, 616 (9th Cir. 2002) (reversing conviction where “[h]aving specified a different particular misrepresentation, [ ], the indictment not only failed to inform the defendant of the actual misrepresentation that would be shown at trial, but it also affirmatively misled the defendant and obstructed his defense at trial.”).

Next, the Government argues that Act 6 of Count 3, charging Dougan with “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,” and Act 8 of Count 3, charging Dougan with “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,” are both sufficiently elastic to encompass the CD account information. E.R. 612; see Gov. Br. 69-70. But the tortured explanation the Government offers in support of this argument illustrates just how incompatible the CD account evidence is with either of the two charged acts. Withholding information about a CD account — which is what the Government alleges Dougan did — is not consistent with an act premised on providing misleading documents to the IRS about cost of goods sold, and the language of Act 6 does nothing to put Dougan on notice regarding the CD account. The CD account information is even more remote from Act 8, accusing Dougan of filing a letter that understated his gross income as derived from his IRS Form 1099s. The Government spends three paragraphs trying to construct a chain linking this allegation to the CD account, Gov. Br. 70-71, but the CD account has nothing to do with the obstructive act of filing a misleading letter.

Nothing in Count 3 put Dougan on notice that he would be forced to defend against allegations that he falsified his advertising expenses or withheld information about his CD account. The Government claims that Dougan nevertheless had sufficient notice of the evidence against him through pretrial proceedings in the weeks leading up to trial. (Gov. Br. 74-75.) “But it is a settled rule that a bill of particulars cannot save an invalid indictment.” Russell v. United States, 369 U.S. 749, 770 (1962). A trial brief provided three weeks before trial surely cannot do more than a bill of particulars to cure this constitutional violation.

IV. The Cumulative Effect of the Interrelated Errors at Dougan's Trial Compels Reversal.

The Government does not dispute that this court should aggregate interrelated errors in determining whether the Government is able to prove that the cumulative effect of those errors was harmless beyond a reasonable doubt or that the errors identified in this appeal amplify each other with respect to the critical issue of Dougan's intent. The Government contends only that the district court did not err and that its case was “overwhelming.” (Govt. Br. 80-81.) A fair reading of the trial record, combined with the jury's split verdict, belies that contention. It is impossible to conclude that the exclusion of exculpatory evidence, constructive amendment of the indictment, and misleading arguments from the prosecutors, collectively, “did not contribute to” Dougan's conviction. Chapman v. California, 386 U.S. 18, 26 (1967). “Such a machine-gun repetition of a denial of constitutional rights, designed and calculated to make petitioners' version of the evidence worthless, can no more be considered harmless than the introduction against a defendant of a coerced confession.” Id.

V. Allowing the Government to Retry Dougan Would Violate Due Process.

Having failed to introduce evidence at trial to support the prosecutor's argument that Dougan lied to his attorneys, the Government relies on a document it received from Dougan's attorneys in response to a post-trial subpoena and testimony of those attorneys at a post-trial hearing to argue that its accusation “ultimately proved to be correct.” (Govt. Br. 77-78.) Over Dougan's privilege objection, the district court allowed the Government to issue a broad subpoena to Dougan's attorneys after trial. (F.E.R. 17:18-21:15; F.E.R. 29:6-63:11; F.E.R. 97:6-104:11.) The court also allowed the Government to pursue discovery from Dougan's attorneys on a wide range of topics at the post-trial evidentiary hearing, overruling repeated objections by defense counsel. (F.E.R. 97-133; F.E.R. 135-177.)

The Government's brief reveals its heavy reliance on the fruits of its post-trial discovery as evidence of Dougan's guilt. For instance, the Government relies on S.E.R. 1455, a document produced in response to the post-trial subpoena, and S.E.R. 312-335, which is testimony from the post-trial hearing, to support its case on pages 6, 13, 32, 70, and 77. Indeed, without the post-trial discovery, the Government would have no evidence that Dougan ever saw the letter he is accused of filing with the IRS in one of the four obstructive acts charged in the Indictment (Act 8 of Count 3).

Allowing the Government to try Dougan a second time would implicate the same concerns as a retrial after reversal for insufficiency of the evidence. It is settled law that the “Double Jeopardy Clause forbids a second trial for the purpose of affording the prosecution another opportunity to supply evidence which it failed to muster in the first proceeding.” Burks v. United States, 437 U.S. 1, 11 (1978). Allowing the Government a second bite at the apple, with the benefit of discovery obtained over Dougan's privilege objections and only because Dougan filed declarations from his attorneys to support his argument that the prosecutor knowingly lied to the jury, would trigger serious due process concerns. The Government would be in a materially better position at the second trial as a result of the misconduct of its prosecutors in the first trial and Dougan would suffer substantial prejudice that cannot be relieved by any remedial measures short of dismissal.

CONCLUSION

For all of the foregoing reasons and those in Appellant's Opening Brief, this Court should reverse Dougan's conviction and remand to the district court with instructions to dismiss the indictment with prejudice.

Respectfully submitted,

Jenny Louise Johnson Ware
MCDERMOTT WILL & EMERY LLP
444 West Lake Street, Suite 4000
Chicago, IL 60606
(312) 984-2130
jjohnsonware@mwe.com