07-3958 | Omnilex

Gesamter Gesetzestext

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

August Term, 2008

(Argued: October 23, 2008

Decided: April 9, 2009)

Docket No. 07-3958-cr

UNITED STATES OF AMERICA,

Appellee,

\- V. -

RICHARD JOSEPHBERG,

Defendant -Appellant.

Before: KEARSE, SACK, and KATZMANN, Circuit Judges.

Appeal from a judgment of the United States District Court
for the Southern District of New York, Charles L. Brieant, Judge,
convicting defendant of various tax offenses in violation of 26
U.S.C. §§ 7201, 7203, 7206, and 7212 (a), and 18 U.S.C. § 371, and
health care fraud in violation of 18 U.S.C. §§ 1347 and 2.
Affirmed.

STANLEY J. OKULA, Jr., Assistant United States
Attorney, New York, New York (Michael J.
Garcia, United States Attorney for the
Southern District of New York, Katherine
Polk Failla, Assistant United States
Attorney, New York, New York, on the
brief) , for Appellee.

JARED J. SCHARF, White Plains, New York (Adam L.
Scharf, White Plains, New York, Michael T.
Sullivan, Riconda & Garnett, Valley Stream,
New York, on the brief) , for Defendant-
Appellant.

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KEARSE, Circuit Judge :

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Defendant Richard Josephberg appeals from a judgment
entered in the United States District Court for the Southern
District of New York following a jury trial before Charles L.
Brieant, Judge, convicting him on all counts of a seventeen-count
indictment, to wit: evasion of payment of personal income taxes
for the years 1977-1980 and 1983-1985, in violation of 26 U.S.C.
§ 7201 (Count 1); conspiracy to defraud the Internal Revenue
Service ("IRS") and, in violation of 18 U.S.C. § 1347, to defraud
Josephberg's health care insurer, all in violation of 18 U.S.C.
§ 371 (Count 2) ; evasion of personal income taxes for the years
1997 and 1998, in violation of 26 U.S.C. § 7201 (Counts 3 and 4) ;

subscribing false income tax returns for the years 1997 and 1998,
in violation of 26 U.S.C. § 7206 (1) (Counts 5 and 6) ; willful
failure to file timely personal income tax returns for the years
1999-2002, in violation of 26 U.S.C. § 7203 (Counts 7-10) ;
willful failure to pay income tax due for the years 1999-2003, in
violation of 26 U.S.C. § 7203 (Counts 11-15) ; obstructing and
impeding the due administration of the Internal Revenue Laws, in
violation of 26 U.S.C. § 7212 (a) (Count 16) ; and health care
fraud, in violation of 18 U.S.C. §§ 1347 and 2 (Count 17) .
Josephberg was sentenced principally to 50 months' imprisonment to
be followed by a three-year period of supervised release.

On appeal, Josephberg contends (a) that his convictions on
Counts 1-6, 16, and 17 should be reversed, and those counts
dismissed, on the ground of insufficiency of the evidence; (b)

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that his convictions on the remaining counts, 7-15, should be
reversed and those counts dismissed on the ground that they
violate his Fifth Amendment privilege against self-incrimination;
(c) that as to any counts not dismissed, he is entitled to a new
trial on grounds of prosecutorial misconduct and/or errors in the
district court's instructions to the jury; and (d) that there were
errors in the calculation of his sentence. For the reasons that
follow, we reject Josephberg's contentions.

# I. BACKGROUND

The present prosecution focused on the financial
activities of Josephberg, an investment banker and investment
advisor, during the period 1977-2004. At issue principally were
transactions generating losses that were not permissible tax
deductions because the transactions were entered into with no
profit motive and involved no market risk, and Josephberg's
conduct with respect to his personal tax liabilities resulting
from those transactions. At trial, the government presented,
inter alia, (a) documentary evidence such as IRS computer
printouts of Josephberg's tax activity showing, e.g., the dates on
which returns were filed or assessments were made or notices were
sent, IRS certificates of assessments stating Josephberg's tax
liability, IRS notices of deficiency, and financial records of
Josephberg and his children; and (b) testimony from numerous
witnesses, including Josephberg's former business partner Jeffrey

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Feldman, Josephberg's former accountant Hyman Fox, former clients
of Josephberg who were instructed by Josephberg to send his
compensation to accounts in the names of his children rather than
to Josephberg himself, and revenue agents and officers of the IRS.
The evidence, taken in the light most favorable to the government,
summarized here and discussed in greater detail as necessary in
Part II below, showed the following.

A. The Straddle, and Simulated Straddle, Transactions

In the late 1970s, a company owned by Josephberg and
Feldman, Cralin Associates, Inc. ("Cralin"), entered into an
agreement with a company owned by one Bernard Manko, pursuant to
which Josephberg and his Cralin business associates would
"syndicate" -- i.e., sell interests in (Trial Transcript ("Tr. ")
130-31) -- limited partnerships that were created to invest in tax
shelter "straddle" transactions involving United States Treasury
bills ("T-Bills") (collectively the "Manko tax shelters" or "tax
shelter partnerships"). A straddle is the simultaneous ownership
of a contract to buy a commodity for delivery in a future month
and a contract to sell the same amount of the same commodity in a
different future month, see generally United States v. Atkins, 869
F.2d 135, 137-38 (2d Cir.) ("Atkins"), cert. denied, 493 U.S. 818
(1989). As each Manko tax shelter partnership owned both
contracts to buy and contracts to sell, either the purchase
contracts or the sale contracts could be sold at a loss. Each
year the partnerships sold the category of contracts that had

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decreased in value, thereby realizing losses. As the losses (or
gains) realized by a partnership flow through to the individual
partners in proportion to their respective ownership interests,
see generally United States v. Helmsley, 941 F.2d 71, 84 n.5 (2d
Cir. 1991), cert. denied, 502 U.S. 1091 (1992) ; 26 U.S.C.

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§§ 701-04, the individual investors in a given Manko tax shelter
partnership claimed their shares of those losses as deductions on
their income tax returns for that year. The partnership's sale of
the offsetting profitable contracts was deferred until the
following year; but tax shelter straddle transactions were
repeated through 1980, with the amounts escalating each year (see
Tr. 142) in order to generate losses that would offset the gains
that had been rolled forward from the year before (see id. at
133-34). While an "ordinary straddle is not risk free because
there is no assurance that the gain on the second leg will be
equal in amount to the loss on the first leg, " Atkins, 869 F.2d at
137, Josephberg and his Cralin associates sought to structure
their straddles or simulated straddles in ways that would ensure
that "everything washe [d] out, " i.e., that "if there was a profit"
it was "the same amount as [the] loss" (Tr. 154) .

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In 1981, the accumulated deferred gains for Josephberg,
Feldman, and their tax shelter partners totaled some $140 million;
absent an offsetting loss, taxes on those gains would have been
owing in 1982. These gains could not be offset by further Manko
tax shelters, however, because of a provision in the Economic
Recovery Tax Act of 1981 requiring generally that a straddle owner

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claiming a straddle loss must recognize the gain in the offsetting
commodity contract in the same year as the claimed loss, even if
the gain was as yet unrealized. See 26 U.S.C. § 1092. In order
to obtain losses to offset the $140 million in gains rolled into
1981, Josephberg and his associates entered into an agreement with
a government bond dealer, New York Hanseatic ( "Hanseatic"), whose
principal was Charles Atkins, to generate tax losses in T-bill
transactions by using repurchase agreements (or "repos"), which
are "devices for financing the purchase or sale of securities, "
Atkins, 869 F.2d at 138. T-bills are purchased at a discount and
appreciate through the dates of their maturity. Repo transactions
were used by Josephberg and his associates to "simulate a
straddle" (Tr. 145) by deducting the financing expense in one year
and realizing the gain from the T-bills' appreciation in the
following year. In 1981 Cralin paid Hanseatic approximately
$1 million to purchase $140 million in T-bill repo losses
("without any physical securities being involved" (id. at 151) ),
and the individual investors claimed their shares of those losses
as deductions on their income tax returns to offset the tax-
shelter-deferred gains (see id. at 150) .

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The Manko tax shelter straddles had been designed to
create deductions amounting to four times the investor's capital
contribution. (See id. at 131-32.) Both the Manko and the
Hanseatic-related shelter transactions were "pre-arranged, "
"manipulated, " "rigged, " and "riskless" (e.g., id. at 150-51, 159,
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transactions not for the purpose of producing profits but solely
for the purpose of generating losses that investors could deduct
from income on their tax returns (see id. at 142-43, 147-55) .
Indeed, in 1981, when Cralin entered into its first transaction
with Hanseatic, Cralin could have made a profit of more than
$20 million at the second planned stage of the financing process,
due to an anomalous and precipitous decline in interest rates; but
instead of financing the repo expense at the lower rate, Cralin
chose to pay the originally planned, non-prevailing, higher
interest rate in order to achieve the desired $140 million loss.
(See id. at 146-50.)

Cralin continued these simulated straddle transactions
13 until the IRS began an investigation of the transactions wi

with
Hanseatic. (See Tr. 155-56.) The last Hanseatic repo deal
occurred in 1984, with losses taken in that year and the gains
deferred into 1985. (See id. at 155.) Feldman, who described the
Manko and Hanseatic transactions at trial, and had pleaded guilty
to conspiring to commit tax fraud with respect to the purchase of
$140 million in tax losses from Hanseatic in 1981 (see id. at 158,
161), testified " [w]e didn't care about profits" (id. at 196) .

Among those claiming shares of the losses generated by
these tax shelter transactions on their individual tax returns
were Josephberg and other Cralin principals, who received
syndication fees for creating and marketing the Manko
partnerships. (See id. at 931-33.) Because of their roles as
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cash investments in the Manko tax shelter partnerships in order to
claim losses; Josephberg and his partners simply received "an
allocation of the losses in the structure of the transaction."
(Id. at 133.)

Because of the losses claimed, the tax returns of the
Cralin principals for the years in question generally showed no
tax liability. (See id. at 933.) In 1978, for example,
Josephberg reported more than $250,000 in wages and other income
on his personal income tax return; but, claiming more than
$260, 000 in losses attributable to the Manko-related transactions,
he paid nothing in taxes. For the period 1977-1985, Josephberg
earned more than $3,672, 000, a significant portion of which came
from his sales, through Cralin, of the Manko and Hanseatic-related
tax shelters; because of the tax shelter losses he claimed, he
paid a total of only $41,000 in taxes for those nine years. (See
GX JD-12.)

B. The IRS Investigation and Josephberg's Re-routing of Assets

In 1986, the IRS sent Josephberg a letter indicating that
it calculated he owed some $372, 000 in taxes for the years 1977-
1980, based on its rejection of losses generated by the Cralin tax
shelter partnerships in which Josephberg participated. (See
22 GX PW-1.)
The letter informed Josephberg of his right to
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challenge this calculation through the IRS appeals process.
Josephberg appealed these adjustments unsuccessfully, and the IRS
in 1993 issued a notice of deficiency to Josephberg with respect

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to this debt (see GX 152). Josephberg had also received a notice
of deficiency in December 1992 stating that he had an additional
tax liability of $548,592 for 1985. (See GX PW-6.) Josephberg
commenced tax court actions, petitioning for redeterminations of
these deficiencies. In the action challenging the calculations
for 1977-1980, Josephberg failed to answer, object to, or
otherwise respond to IRS requests for factual admissions; the
facts set forth in those requests were deemed admitted; and the
IRS motion for summary judgment against him was granted. See
Josephberg v. CIR, No. 496-94 (Tax Ct. Jan. 31, 1996) ("Tax Court
Judgment I") . Josephberg's action challenging the calculation of
his tax deficiency for 1985 was dismissed for lack of prosecution
after neither he nor anyone representing him showed up for trial.
See Josephberg v. CIR, No. 4824-93 (Tax Ct. Apr. 16, 1996) ("Tax
Court Judgment II") .

After the entry of these tax court judgments, the IRS
commenced efforts to collect Josephberg's tax debts for 1977-1980
and 1985, including accrued interest and penalties. In addition,
in 1997 it issued to Josephberg notices of deficiency for the tax
years 1983 and 1984, which Josephberg did not challenge. The
IRS's efforts to collect Josephberg's tax debts were impeded
because Josephberg repeatedly maintained, in the ensuing IRS
interviews and in his representations on IRS asset disclosure
forms, that he had no assets that had not already been seized by
the IRS.

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In fact, however, Josephberg was merely hiding his income.
On his IRS asset disclosure form dated June 4, 1997, Josephberg
represented that he owned only a 50 percent interest in his
investment banking firm, Josephberg Grosz & Co. Inc. ("Josephberg-
Grosz") (see GX 181-B), despite the fact that since 1993 he had
owned 100 percent of that firm (see Tr. 967-69) . In the fall of
1997, Josephberg created two new entities, JG Capital, Inc.
("JG Capital"), and JG Partners. (See GX 201-C.) JG Capital was
wholly owned by JG Partners, which in turn was 99-percent-owned by
Josephberg's three children, unbeknownst to them; Josephberg owned
the remaining 1 percent. (See Tr. 418-19.) On his subsequent IRS
asset disclosure form, Josephberg did not disclose the existence
of JG Capital or JG Partners. (See, e.g., GX 181-D.) He told
Fox, his accountant, that he created the two entities for the
purpose of placing his investment banking income beyond the reach
of the IRS, because any account in his name would undoubtedly have
been levied upon. (See Tr. 976-77.)

In addition, in or around 1993 (see id. at 1060), the year
in which he received the IRS notice of deficiency for 1977-1980,
Josephberg had created securities accounts in the names of his
children, likewise unbeknownst to them, which he alone managed
(see, e.g., id. at 754-55, 772, 782-83, 788). Josephberg then, as
compensation for his investment banking and other professional
services, had his clients issue stock in the names of JG Capital,
JG Partners, his wife, or his children. (See, e.g., id. at 328,
357-58, 698-700.) Josephberg did not disclose the existence or

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contents of these accounts, or his unfettered control over them,
to the IRS. (See GX JD-7, 181-B, 181-D.) For example, although
Josephberg stated in a May 1997 IRS interview that he lacked the
wherewithal to pay his bills and that he had not closed a deal as
an investment banker in two years (see Tr. 535-37), in fact within
that period Josephberg had raised capital for GK Intelligent
Systems ("GK") and had caused hundreds of thousands of dollars of
his fee to be paid in the form of stock and placed in the accounts
of his children. Although the stock was "restricted stock, " in
that it could not be sold for a period of time, when the
restrictions lapsed Josephberg used those assets at will.

In 1998 and 1999, for example, without the knowledge of
his daughter Kara, Josephberg sold shares of GK stock that had
been issued in her name as compensation for his services, and he
caused the gains resulting from those sales -- some $59,000 for 1998
and $30, 000 for 1999 -- to be reported on Kara's tax returns. (See
Tr. 779-81; GX 130, GX 131.) At trial, Kara testified that she
had never filed her own tax returns before 2001, that she had not
signed the returns showing the sales of the GK stock, and that she
had not even been aware that she owned GK stock. (See Tr. 774,
782.) In 2001, Kara filed an individual tax return for the year
2000, reporting income she had received for her work as a summer
associate at a law firm, and she expected a significant tax
refund. Instead of receiving a refund, she learned that she had a
personal tax liability of more than $10,000 resulting from

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Josephberg's sales of the GK stock he had had put in her name.
(See id. at 779-81.)

Josephberg also had some of his income placed in accounts
in the name of his younger daughter, Jessica; and in 1998, 1999,
and 2000, he sold shares of stock in her name for a total of more
than $148,000. (See GX 133, GX 134, GX 135.) The parties
stipulated that if Jessica were called as a witness at trial, she
would testify that she had no recollection of signing or filing,
and no role in preparing, tax returns; that she had never been
required to file a return and had not known that in fact returns
in her name were filed for the tax years 1998, 1999, and 2000 --
when she was 11-13 years of age. As a result of those returns,
Jessica's tax liability by the time of trial, including penalties
and interest resulting from nonpayment of taxes, was some $52,600.
(See Tr. 755-56.)

Josephberg told Fox that he caused stock to be issued in
his children's names because " [t]he IRS had levied all of his bank
accounts, [and] he had no place else to put it." (Tr. 976.) As a
result, while his tax debts remained outstanding, Josephberg used
the accounts of his children and the corporate accounts of
JG Capital and JG Partners to pay various personal expenses, such
as rent (totaling some $250,000), country club dues (totaling
nearly $300,000), and parties costing tens of thousands of
dollars. (See, e.g., GX JD-6; GX JD-13.)

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C. The Fraudulent 1997 and 1998 Returns, the Subsequent Failures
To File Timely and To Pay, and the Health Care Fraud

For the 20 years spanning 1979-1998, Josephberg claimed
and carried forward on his individual tax returns a substantial
net operating loss (or "NOL") stemming from Cralin's tax shelter
activities. The IRS's 1993 notice of deficiency informed
Josephberg that his claimed losses from the Cralin tax shelter
transactions were disallowed because they were "not bona fide
economic transactions, but rather were pre-arranged, manipulated,
fixed, rigged & risk-free transactions that generated artificial
tax losses" and because it had "not been shown that the partners
or the partnership entered into the transactions primarily for
profit." (GX 152.) Josephberg nonetheless continued to carry
the NOL forward and claimed it on his returns for tax years 1993
through 1998, signing and filing those returns under penalty of
perjury. (See Tr. 970-72, 988-89, 999-1000; GX 116, GX 117,
GX 118, GX 119, GX 120, GX 121.) The NOL carried over was
substantial. On Josephberg's 1997 return, for example, it was
more than $1.5 million (see GX 120) ; on his 1998 return, it was
more than $1.2 million (see GX 121) ; and on each such return,
except for his Social Security self-employment tax, the NOL
deduction resulted in a claimed tax liability of zero.

In addition, on his returns for 1997 and 1998, Josephberg
failed to pay withholding, Social Security, and Medicare taxes
(collectively "employment taxes") for Norma Grant, who resided
with the Josephbergs, was nanny for their daughter Jessica, and
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failed to file timely tax returns; and he made no payment of taxes
for the years 1999-2003.

As to the charge of health care fraud, the record showed
that in the fall of 1998, Josephberg submitted to Oxford Health
Plans ("Oxford"), his health care provider, two false documents
designed to induce Oxford to provide coverage for Mrs. Josephberg
and to charge a group insurance rate to Josephberg's company.
(See Part II.B.4. below.) The documents were false tax forms
prepared by Fox, who testified that he prepared the first after
Josephberg "asked me to prepare a phony Schedule C" showing Mrs.
Josephberg as an employee of Josephberg-Grosz (Tr. 985) .
Josephberg had Fox prepare a second false tax form in response to
a request from Oxford for further documentation. (See id. at
986-88.)

Prior to trial, Fox had pleaded guilty to tax fraud with
respect to Josephberg's returns, to health care fraud with respect
to the documents submitted to Oxford, and to conspiring with
Josephberg to commit those frauds. (See id. at 922-23.)

## D. The Verdicts and Sentence

The jury found Josephberg guilty on all seventeen counts
of the indictment, to wit, income tax evasion for the years 1977-
1980 and 1983-1985, in violation of 26 U.S.C. § 7201 (Count 1) ;
evasion of tax assessments for the years 1997-1998, in violation
of id. § 7201 (Counts 3 and 4) ; subscribing fraudulent tax returns
for the years 1997-1998, in violation of id. § 7206 (1) (Counts 5

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and 6); willful failure to file timely tax returns and to pay
taxes due for the years 1999-2002, in violation of id. § 7203
(Counts 7-14) ; willful failure to pay taxes for the year 2003, in
violation of id. § 7203 (Count 15); attempting to obstruct the
IRS's investigation into his assets, in violation of id. § 7212 (a)
(Count 16); and health care fraud, in violation of 18 U.S.C.
§§ 1347 and 2 (Count 17). It found Josephberg guilty as well of
conspiring with Fox to defraud the IRS, to violate § 1347 by
defrauding Oxford, to evade assessment of his tax obligations for
the years 1994-1998, and to subscribe fraudulent tax returns for
those years, all in violation of 18 U.S.C. § 371 (Count 2) .

By the time of his trial in 2007, Josephberg's total tax
debt dating back to his tax year 1977, including interest and
penalties, was approximately $17,000,000. The district court
calculated Josephberg's sentence under the 2006 version of the
advisory Sentencing Guidelines ( "Guidelines") but imposed a non-
Guidelines sentence of, principally, 50 months' imprisonment.
(See Part II.F. below.) This appeal followed.

## II. DISCUSSION

On appeal, Josephberg contends principally (a) that the
government's evidence was legally insufficient to convict him on
Counts 1-6, 16, and 17, the tax evasion, tax fraud, obstruction,
and health care fraud counts, and that those counts should thus be
dismissed; (b) that Counts 7-15, the failure-to-file and

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failure-to-pay counts, should be dismissed because they violate
his Fifth Amendment privilege against self-incrimination; and (c)
in the alternative, that he is entitled to a new trial on grounds
of prosecutorial misconduct and/or errors in the court's jury
charge. He also challenges his sentence on the grounds that the
application of the 2006 Guidelines violated the Ex Post Facto
Clause and that the district court miscalculated the tax loss
attributable to his offenses. Finding no merit in these
contentions, we affirm.

## A. Standards of Review

In challenging the sufficiency of the evidence to support
his conviction, a defendant bears a heavy burden. See, e.q.,
United States v. Leonard, 529 F.3d 83, 87 (2d Cir. 2008)
("Leonard") ; United States v. Morgan, 385 F.3d 196, 204 (2d Cir.
2004) ; United States v. Hamilton, 334 F.3d 170, 179 (2d Cir.),
cert. denied, 540 U.S. 985 (2003). In reviewing such a challenge,
we are required to view all of the evidence in the light most
favorable to the government, see, e.g., United States v.
Eppolito, 543 F.3d 25, 45 (2d Cir. 2008) ("Eppolito"), cert.
denied, 129 S. Ct. 1027 (2009) ; Leonard, 529 F.3d at 87, crediting
every inference that could have been drawn in the government's
favor, see, e.g., Eppolito, 543 F.3d at 45; Leonard, 529 F.3d at
87, and we must affirm the conviction so long as, from the
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guilt beyond a reasonable doubt, see, e.g., Eppolito, 543 F.3d at
45-46; United States v. Jackson, 335 F.3d 170, 180 (2d Cir. 2003) .

The assessment of witness credibility lies solely within
the province of the jury, and the jury is free to believe part and
disbelieve part of any witness's testimony, see, e.q., United
States v. Gleason, 616 F.2d 2, 15 (2d Cir. 1979), cert. denied,
444 U.S. 1082 (1980). " [W]here there are conflicts in the
testimony, we must defer to the jury's resolution of the weight of
the evidence and the credibility of the witnesses. " United States
v. Miller, 116 F.3d 641, 676 (2d Cir. 1997), cert. denied, 524
U.S. 905 (1998) ; see, e.q., United States v. Morrison, 153 F.3d
34, 49 (2d Cir. 1998). "The weight of the evidence is a matter
for argument to the jury, not a ground for reversal on appeal."
United States v. Hamilton, 334 F.3d at 179; see, e.q., United
States v. Roman, 870 F.2d 65, 71 (2d Cir.), cert. denied, 490 U.S.
1109 (1989) . These principles apply whether the evidence being
reviewed is direct or circumstantial. See, e.g., Glasser v.
United States, 315 U.S. 60, 80 (1942). The conviction must be
upheld if "any rational trier of fact could have found the
essential elements of the crime beyond a reasonable doubt."
Jackson v. Virginia, 443 U.S. 307, 319 (1979) (emphasis in
original) .

In contrast, we review de novo claims of legal error such
as constitutional challenges to the indictment, see, e.g., United
States v. Ebbers, 458 F.3d 110, 125 (2d Cir. 2006), cert. denied,
549 U.S. 1274 (2007), and alleged errors in the trial judge's

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instructions, United States v. Masotto, 73 F.3d 1233, 1238 (2d
Cir.), cert. denied, 519 U.S. 810 (1996) ; United States v. Dove,
916 F.2d 41, 45 (2d Cir. 1990). We review for abuse of discretion
the district court's denial of a motion for a new trial. See,
e.g., United States v. Ferguson, 246 F.3d 129, 133 (2d Cir. 2001) ;
United States v. Autuori, 212 F.3d 105, 120 (2d Cir. 2000) ; United
States v. Sanchez, 969 F.2d 1409, 1414 (2d Cir. 1992). In
deciding such a motion, the district court must take care not to
usurp the role of the jury, and the ultimate consideration is
whether letting a guilty verdict stand would be a manifest
injustice. See, e.q., United States v. Ferguson, 246 F.3d at 134.

## B. The Sufficiency Challenges

In order to prevail on a charge of income tax evasion in
violation of 26 U.S.C. § 7201, the government must prove (1) the
existence of a substantial tax debt, (2) willfulness of the
nonpayment, and (3) an affirmative act by the defendant, performed
with intent to evade or defeat the calculation or payment of the
tax. See, e.g., United States v. Ellett, 527 F.3d 38, 40 (2d Cir.
2008) ; United States v. Helmsley, 941 F.2d at 83-84; United States
v. Romano, 938 F.2d 1569, 1571 (2d Cir. 1991) ; United States v.
Koskerides, 877 F.2d 1129, 1137 (2d Cir. 1989). Josephberg
contends principally that the government's evidence at trial was
insufficient to show (1) that he had any tax debt, (2) that he
made any material false statement in his returns for 1997 and
1998, and (3) that he engaged in any affirmative conduct to evade

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payment or obstruct collection of his tax debt. For the reasons
1
2
that follow, we disagree.

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1\. The Existence of a Substantial Tax Debt

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With respect to Counts 1, 3, and 4, Josephberg contends,
inter alia, that the government's evidence was legally
insufficient to support a finding of substantial tax due.
Josephberg conceded in the district court (see Defendant's
Requests for Jury Instructions at 16), that the IRS tax assessment
certificates for 1977-1985 introduced by the government,
reflecting relevant information pertaining to his personal
returns and the balance-due notices sent to him, constituted prima
facie evidence that Josephberg had a substantial tax debt. See
generally United States v. Silkman, 156 F.3d 833, 835-36 (8th Cir.
1998) ; id. at 836 ("The formal assessments were prima facie
evidence of tax deficiencies. ") ; United States v. Voorhies, 658
F.2d 710, 715 (9th Cir. 1981) ("A valid assessment is one method
of establishing tax liability
") ; United States v. England,

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347 F.2d 425, 430 n.10 (7th Cir. 1965) (approving jury charge that
included the instruction that "an assessment is prima facie
correct") . On appeal, Josephberg argues that the evidence was
insufficient because he "mounted a strong challenge" to the
certificates on the ground that the assessments against him were
based on the disallowance of his deductions of his shares of the
losses of the 139 tax shelter partnerships at issue and that the
government did not introduce evidence of audits and adjustments

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made to any of the partnerships themselves. (Josephberg brief on
appeal at 61.)

This contention is meritless, amounting essentially to an
argument as to the weight of the evidence, which, as discussed in
Part II.A. above, is not a ground for reversal on appeal. As
Josephberg's brief concedes, if IRS certificates of assessments
"are challenged, then the issue is one for the jury." (Id. )
Here, the evidence was ample to permit a rational juror to
conclude that Josephberg had a substantial tax debt. First, the
certificates of assessments themselves showed that before the end
of 1996, the year in which the IRS collection efforts began,
Josephberg had tax debts, including interest and penalties, of,
for example, more than $1.3 million for the year 1979 and more
than $1 million for the year 1980. By the end of 1997,
Josephberg's tax debt, including interest and penalties, for 1985-
-the year into which all of the Cralin tax-shelter-deferred gains
were ultimately rolled -- was more than $8 million. (See GX 164-C,
GX 164-D, GX 164-I.)

Second, although Josephberg argues that the government
could not prove his tax deficiency on the basis of the
certificates "alone" (Josephberg brief on appeal at 60), we need
not address his legal premise because the government did not in
fact rest its case on the certificates alone. The government also
introduced the notices of deficiency sent to Josephberg informing
him of the amounts due (see, e.g., GX 152, GX 153, GX 155, GX 156,
GX 159) ; these notices included statements with respect to

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specified tax shelter partnerships that "the partnership is not
entitled to the claimed losses because it has not been shown that
the partners or the partnership entered into the transactions
primarily for profit" (e.q., GX 152 (emphasis added) ) .

In addition, the government introduced the tax court
judgments rejecting Josephberg's challenges to the assessments for
the years 1977-1980 and 1985. (See GX 400-B, GX 400-D. ) Although
Josephberg argues that "the Tax Court judgments against [him] were
not on the merits" (Josephberg brief on appeal at 46), we
disagree. The tax court actions were brought by Josephberg for
redetermination of the deficiencies calculated by the IRS; he had
the initial burden of showing that the IRS calculations were
erroneous, see Tax Court Rule 142 (a); see also 26 U.S.C.
§ 7491 (a) (1); and he plainly failed to carry that burden. As
described in Part I.B. above, in his action challenging the 1977-
1980 calculations, Josephberg failed to respond -- or object -- to the
IRS's requests for factual admissions, and the facts set forth in
the IRS requests were "deemed admission [s] of the facts set forth
in the request [s] for admissions, " Tax Court Judgment I, at 1; see
id. at 1-2. On the basis of those admissions, the tax court
granted summary judgment against Josephberg -- plainly a merits
decision. In his action challenging the 1985 calculations,
Josephberg and his attorneys failed to appear when the case was
called for trial, and the action was "dismissed for lack of
prosecution." Tax Court Judgment II. The Internal Revenue Code
(or "Code") provides that " [i]f a petition for a redetermination

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of a deficiency has been filed by the taxpayer, a decision of the
Tax Court dismissing the proceeding shall be considered as its
decision that the deficiency is the amount determined by the
Secretary. " 26 U.S.C. § 7459 (d) (emphasis added) . Thus, the tax
court decision in Josephberg's action challenging the 1985
calculations was likewise a ruling on the merits.

In sum, despite the absence of direct proof as to the
audits of the tax shelter partnerships themselves, the evidence
viewed as a whole was ample to permit a rational juror to find
beyond a reasonable doubt that Josephberg had a substantial tax
debt .

2\. False Statements in the Returns for 1997 and 1998

As to Counts 5 and 6, which charged Josephberg with
subscribing false income tax returns for the years 1997 and 1998,
Josephberg also contends that the certificates "alone"
(Josephberg brief on appeal at 60) were not sufficient to
establish that he made material misstatements in those returns;
but he makes no arguments in support of that contention other than
those he makes to challenge the sufficiency of the evidence to
show that he had a substantial tax debt. We reject his contention
in part for the reasons discussed in the preceding section.

In addition, we note that, as described in Part I.C.
above, the record included the testimony of Fox that Josephberg's
returns for 1997-1998 falsely claimed entitlement to deduct his
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spite of the fact that Josephberg had been expressly informed in
1993 that that loss was not allowed. The amounts claimed were
plainly material: $1,534,457 for 1997, and $1,280,222 for 1998.

### 3. Affirmative Acts of Evasion

Josephberg contends that, with respect to Count 1, the
government's evidence was also insufficient to prove that he
engaged in any affirmative act of evasion, arguing, in part, that
the witnesses on whose testimony the government relied to prove
this element "withdrew the essential points of their direct
testimony upon cross-examination" (Josephberg brief on appeal
at 63). This argument is doubly flawed. First, the witnesses
referred to by Josephberg in making this argument are IRS Revenue
Agent John Dennehy and IRS Revenue Officer Joseph Lewandoski, and
for the reasons discussed in Part II.D. below, we do not agree
with Josephberg's characterizations of the record. Second, as
discussed in Parts II.A. above and II.D. below, it is the province
of the jury as the appropriate arbiter of the truth to determine
what part, if any, of a witness's testimony to credit or
discredit.

Josephberg also asserts that "there was utterly no
evidence to prove that Josephberg concealed assets or income" (id.
at 63-64), and that the stock he caused to be issued in the names
of his children lacked economic value (see id. at 64). These
contentions border on the frivolous.

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"An affirmative act" of evasion "includes 'any conduct,
the likely effect of which would be to mislead or to conceal. '"
United States v. Klausner, 80 F.3d 55, 62 (2d Cir. 1996) (quoting
Spies v. United States, 317 U.S. 492, 499 (1943)). "Such conduct
includes 'false statements made to Treasury representatives for
the purpose of concealing unreported income. '" United States v.
Klausner, 80 F.3d at 62 (quoting United States v. Beacon Brass
Co., 344 U.S. 43, 45-46 (1952)); see also United States v.
Winfield, 960 F.2d 970, 973 (11th Cir. 1992) ("an affirmative act
constituting an evasion or attempted evasion of the tax occurs
when false statements are made to the IRS after the tax was due") .
Accordingly, "concealment of assets or covering up of sources of
income, [and] handling of one's affairs to avoid making the
records usual in transactions of the kind" are examples of conduct
sufficient to create an inference of evasion. Spies, 317 U.S. at
499.

As described in Part I.B. above, after the IRS began
trying to collect Josephberg's tax debt following the entry of the
tax court judgments, Josephberg in mid-1997 concealed the fact
that he was the sole owner of Josephberg-Grosz, stating that he
owned only 50 percent. In the fall of 1997, he set up JG Capital
and JG Partners in order to -- as he confided to his accountant Fox-
-place his investment banking income in accounts not bearing his
name so as to avoid having the IRS seize that income. In the
asset disclosure form he subsequently submitted to the IRS,
Josephberg did not disclose the existence of these two entities.

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Further, in 1993, the year in which Josephberg received
the IRS notice of deficiency with respect to the earliest years,
1977-1980, he established the stock accounts for his children into
which he thereafter had his investment banking income redirected.
Josephberg told Fox that he had caused the stock to be placed in
his children's names because " [t]he IRS had levied all of his bank
accounts, [and] he had no place else to put it." (Tr. 976.) Fox
testified on cross-examination that Josephberg had not been
putting such stock into his children's names prior to having
serious problems with the IRS. (See id. at 1060.)

Josephberg's contention that because the stock thus issued
in the names of his children was "restricted" stock it had no
value, is contrary to both the law (see Part II. E.1. below) and
the evidence. The jury was entitled to infer that the stock was
not worthless in light of the evidence as to its market value, as
well as the evidence that Josephberg was willing to accept it as
payment of his investment banking fees totaling hundreds of
thousands of dollars and that Josephberg later sold the stock for
hundreds of thousands of dollars.

# 4. Evidence of Health Care Fraud

Josephberg also challenges the sufficiency of the evidence
to show that he defrauded his health care insurer (Count 17). He
argues that "Mrs. Josephberg testified that she worked 20 hours a
week for Mr. Josephberg's business, and there was no evidence in

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the trial to prove otherwise." (Josephberg brief on appeal at
64-65.) The record is to the contrary.

The evidence was that in the fall of 1998, Josephberg,
seeking a group rate for health insurance and inexpensive coverage
for his wife, told Fox that he needed to supply his health care
insurer with "tax documents that showed his wife was an employee"
(Tr. 984; see id. at 1065-66), and he "asked [Fox] to prepare a
phony Schedule C" (id. at 985; see also id. at 1065-66), a
schedule designed to be attached to a taxpayer's federal income
tax form, Form 1040, to show his income from a business. Fox,
though "know [ing] it was wrong to do that, " immediately complied;
he "took the Schedule C and
added
a $12, 000 salary to
[Josephberg's] wife." (Id. at 985.) This document was submitted
to Oxford by Josephberg, bearing Fox's handwritten statement that
" [t]his form was included in Richard Josephbergs [sic] 1997 Form
1040" (GX 201-A; see Tr. 984-86). Fox testified that that
handwritten statement "was a lie" (id. at 986): In fact
Josephberg had not yet filed his 1997 tax return; and when he did
eventually file a 1997 return (in 1999), the accompanying
Schedule C bore no indication that Mrs. Josephberg was employed by
Josephberg's company (see GX 120) .

Further, when Oxford asked Josephberg for verification in
the form of a New York State tax return for Mrs. Josephberg to
show that she reported salary from Josephberg-Grosz, Fox prepared
a New York State tax form representing that Mrs. Josephberg was
employed by Josephberg-Grosz in 1997, which Josephberg then sent

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to Oxford. (See Tr. 986-88; GX 201-B. ) This form too was false.
(See Tr. 987.)

Mrs. Josephberg herself testified at trial that she had
not received any salary from Josephberg's company. (See Tr.
1882.) Indeed, the government introduced evidence that in 1997
Mrs. Josephberg commenced a personal bankruptcy proceeding in
which she, inter alia, said she was employed solely as a teacher
by Westchester County, and that she stated under oath that she
" ' ha [d] no knowledge of Richard Josephberg's business operations'"
(Tr. 1881 (quoting Mrs. Josephberg's response to Interrogatory 5
in her bankruptcy proceeding) ). Asked at trial if she had given
that answer, Mrs. Josephberg responded "that's true, I really
didn't know about his business operations." (Id. at 1882.)

The evidence that Josephberg had Fox prepare false
documents to indicate that his wife worked at his firm was itself
sufficient to permit an inference that she did not in fact work
there. And that inference was amply supported by Mrs.
Josephberg's sworn statements that she lacked any knowledge of
Josephberg's business operations.

# 5. Other Sufficiency Challenges

Although Josephberg's brief also lists Count 2
(conspiracy) and Count 16 (obstruction) in the heading of the
section challenging the sufficiency of the evidence, the ensuing
discussion contains no argument with respect to those counts. To
the extent that Josephberg means to imply that his convictions on

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those counts are flawed because of the insufficiencies he asserts
with respect to other counts, any such contention founders on our
rejection of his sufficiency challenges to those other counts.
Any other sufficiency challenges to Counts 2 and 16 are waived.

# C. The Fifth Amendment Challenge to Counts 7-15

Josephberg contends here, as he did in the district court,
that Counts 7-15 of the indictment, charging him with willful
failure to file timely income tax returns for the years 1999-
2002 and willful failure to pay tax for the years 1999-2003, must
be dismissed as violative of his Fifth Amendment privilege
against self-incrimination. He argues principally that because in
those years there was an ongoing investigation into the propriety
of his continued claims of net operating loss, the very filing of
returns for those years would tend to incriminate him, for if he
continued to claim the loss he would subject himself to
prosecution for those years as well, whereas if he did not claim
the loss it would be tantamount to an admission that his prior NOL
claims were impermissible. The district court properly rejected
this argument, based on long-standing Supreme Court precedent.

It is well settled that the Fifth Amendment does not
provide a blanket defense for a failure to file tax returns. See
California v. Byers, 402 U.S. 424, 434 (1971); United States v.
Sullivan, 274 U.S. 259, 263-64 (1927). Although a taxpayer may,
on his return, invoke his Fifth Amendment privilege selectively as
to any particular item of information solicited, see, e.g., id. at

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264; United States v. Barnes, 604 F.2d 121, 148 (2d Cir. 1979)
cert. denied, 446 U.S. 907 (1980), " [t]here is no constitutional
right to refuse to file an income tax return," Byers, 402 U.S. at
434. This principle has been applied even where there is an
ongoing investigation into the taxpayer's affairs. See, e.q.,
United States v. Poschwatta, 829 F.2d 1477, 1482 & n.3 (9th Cir.
1987) (" [e]ven assuming" that the IRS was known to be conducting
an ongoing criminal investigation, "defendant was required to file
his returns" (citing Sullivan) ), cert. denied, 484 U.S. 1064
(1988) , effectively overruled on other grounds by Cheek v. United
States, 498 U.S. 192 (1991), as noted in United States v. Powell,
936 F.2d 1056, 1064 n.3 (9th Cir. 1991); United States v.
Malquist, 791 F.2d 1399, 1401-02 (9th Cir.) (failure to file a
"tax return" within the meaning of § 7203 is not excused by Fifth
Amendment concerns over a pending investigation (citing
Sullivan) ), cert. denied, 479 U.S. 954 (1986) .

Although Josephberg contends that this Court in United
States v. Romano, 938 F.2d 1569 ( "Romano"), ruled that the Fifth
Amendment provides protection against a willful-failure-to-file
charge where there is an ongoing investigation into the taxpayer's
affairs, that contention is squarely contradicted by Romano
itself. The case involved a defendant who in November 1983
attempted to transport $359,500 in cash from the United States
into Canada. The cash was seized and held by United States
customs officials, and the IRS immediately served Romano with a
"termination assessment" of $169,973 as income tax due, an

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assessment that causes the resulting tax to be due immediately.
Romano, 938 F.2d at 1570. On the following day, the IRS filed a
lien to secure payment of the assessed tax. Thereafter the
government sought forfeiture of the entire $359,500. While the
forfeiture proceeding was pending, the government commenced a
criminal prosecution against Romano alleging various tax
violations; ultimately, all but a charge of tax evasion were
dismissed on consent; and after a bench trial on stipulated facts,
Romano was convicted of that offense.

On appeal, we held that the evidence was insufficient to
prove the affirmative-act element of tax evasion, despite several
theories advanced by the government. One of the theories we
rejected was that Romano's failure to file a tax return in April
1984 -- some five months after the border incident, the seizure of
the cash, and the IRS's filing of its lien -- constituted an attempt
to evade taxes. Although Josephberg states that " [t]his Court
reversed Romano's conviction, holding that by filing a tax return
Romano might have revealed the source of the currency and
incriminated himself, in violation of his Fifth Amendment
privilege" (Josephberg brief on appeal at 77), the Romano opinion
itself, far from supporting this imputation of a Fifth Amendment
rationale for the reversal, expressly noted that Romano was not
excused from filing the return. The offense of which Romano was
convicted was tax evasion, not failure to file. This Court
rejected the government's failure-to-file theory of evasion simply
because (1) a mere willful omission is not an affirmative act, see

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Romano, 938 F.2d at 1573, and (2) Romano's failure to file could
not logically be viewed as an act of evasion or attempted evasion
because, as Romano was well aware, before the tax return was due
the government already knew of the money and, indeed, had custody
of it, see id. at 1573-74. Notwithstanding the fact that the tax
return could have called for incriminating information as to the
source of the money, we stated that "Romano was, of course,
required to file a tax return, " id. at 1574; see also id. at
1570-71 ("The filing of a termination assessment does not relieve
the taxpayer of her obligation to prepare, sign, and file a true
and correct income tax return for that year. "). Citing Sullivan,
274 U.S. 259, we reasoned that the mere requirement that the tax
return be filed did not infringe Romano's Fifth Amendment
privilege because "Romano need only have filed a return reporting
this money as 'Sullivan case income -- $395, 500' ." Id. at 1573.

[W] hatever Romano's specific reasons may have been
for not filing the 1983 return, an attempt to evade
taxes was not one of them, for there was nothing for
Romano to gain, nothing to conceal from the IRS,
except possibly some incriminating information as to
the source of the income -- information that is
protected by the fifth amendment.

Romano was, of course, required to file a tax
return, and his failure to do so might have been a
basis for the lesser criminal charge of failure to
file, see 26 U. S.C. § 7203, one of the charges that
was dropped. However, given that Romano was required
to provide only the bare minimum of information under
Sullivan, to protect his fifth amendment rights,
information which the government already had and
which Romano knew the government had, we cannot
accept the government's claim that Romano's failure
to file under these circumstances has probative
weight in establishing the more serious crime of tax
evasion.

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Romano, 938 F.2d at 1574 (first emphasis in original; subsequent
emphases ours) .

We agree with the reasoning adopted in Romano.
The
pendency of a government investigation does not give a taxpayer a
Fifth Amendment option to fail to file his tax return. His
privilege against self-incrimination is protected by his right to
refuse, with a Sullivan citation, to answer the questions that
implicate that privilege. The district court correctly denied
Josephberg's motion to dismiss Counts 7-15.

# D. Allegations of Prosecutorial Misconduct

Josephberg contends that as to any counts against him that
are not dismissed, he is entitled to a new trial on the grounds
that the government made "knowing use of false testimony"
(Josephberg brief on appeal at 68), made "efforts to elicit false
and misleading testimony" from certain witnesses (id. at 72), and
made "improper prejudicial remarks in summation" (id. at 68). We
are unpersuaded.

In order to be granted a new trial on the ground that a
witness committed perjury, the defendant must show that " (i) the
witness actually committed perjury
(ii) the alleged perjury
was material
(iii) the government knew or should have known
of the perjury at [the] time of trial
and (iv) the
23 perjured testimony remained undisclosed during trial
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United States v. Zichettello, 208 F.3d 72, 102 (2d Cir. 2000)
(internal quotation marks omitted), cert. denied, 531 U.S. 1143

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(2001). Differences in recollection do not constitute perjury,
see, e.g., United States v. Sanchez, 969 F.2d 1409, 1415 (2d Cir.
1992), and when testimonial inconsistencies are revealed on cross-
examination, the "jury [i]s entitled to weigh the evidence and
decide the credibility issues for itself," United States v.
Mccarthy, 271 F.3d 387, 399 (2d Cir. 2001), abrogated on other
grounds by Eberhart v. United States, 546 U.S. 12 (2005) ; see also
United States v. Joyner, 201 F.3d 61, 82 (2d Cir. 2000) (" [C]ross-
examination and jury instructions regarding witness credibility
will normally purge the taint of false testimony. "). It is the
task of the jury as the "appropriate arbiter of the truth" to
"sift [] falsehoods from facts" and determine whether an
inconsistency in a witness's testimony represents intentionally
false testimony or instead has innocent provenance such as
confusion, mistake, or faulty memory. United States v.
Zichettello, 208 F.3d at 102 (internal quotation marks omitted) ;
see, e.g., United States v. Blair, 958 F.2d 26, 29 (2d Cir. 1992) .

Josephberg's arguments fall far short of meeting the
criteria for showing perjury. His principal allegations of
perjury focus on the testimony of IRS Revenue Agent Dennehy. In
the background section of his brief, Josephberg asserts that

Dennehy attempted to bolster his reliance on the
[assessment certificates] by testifying (for a time)
that he "verified" ( [Tr. 1528]) and he "reviewed"
( [Tr. 1614] ) the audit reports (RARs) showing the
audit adjustments for the 139 partnerships and that
he had spoken with the revenue agents who had
performed the partnership audits and written the RARs
in the 1980s. ( [Tr. 1637] . )

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Dennehy's testimony that he reviewed and
verified the partnership RARs and spoke[] to the
agents was false.

Dennehy's claims that he had verified and
reviewed the RARs for the 139 partnerships on
Josephberg's tax returns were proven false.

(Josephberg brief on appeal at 15, 19 (emphases added) .)

The trial transcript, however, demonstrates that these are
mischaracterizations of Dennehy's testimony. First, there were
two groups of RARs, i.e., revenue agent reports: one for
Josephberg's individual tax returns, and the other for the tax
shelter partnership returns. At the transcript page cited by
Josephberg for the proposition that Dennehy testified "I verified
the RARs" (Tr. 1528), Dennehy was being cross-examined about the
top line of a chart he had prepared, which was in evidence as
GX JD-2, of Josephberg's taxable income for the years 1983-1989 as
corrected for the disallowance of Josephberg's net operating loss
carryovers; the RARs that Dennehy testified he had used to prepare
this chart were the RARs for Josephberg's individual returns, not
for the returns of the partnerships. (See id. at 1523-28; see
also id. at 1593-94 (in discussing "the RARs [that] were the basis
for adjusting the top line, " defense counsel asked, " [t]hese RARs
that you're referring to, these are the revenue agent reports
prepared by the revenue agents who [audited] Richard Josephberg's
tax returns?" Dennehy responded "Yes. ") ; id. at 1613 (again
discussing GX JD-2: "Q. Now these revenue agent reports that you
relied on, they're all in regard to audits of Richard Josephberg's

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1040s? A. Well, yes, and there were additional revenue agent
reports with regard to the partnerships. Q. But you relied on
the ones regarding the 1040s, correct? A. Correct. ") .)

Second, at the transcript page cited by Josephberg for the
proposition that Dennehy testified "that he had verified and
reviewed the RARs for the 139 partnerships" (Josephberg brief on
appeal at 19 (emphasis added) ; see also id. at 15), Dennehy
testified as follows :

"Q. Did you review the RARs concerning the
partnerships?

A. Yes, I think I indicated that. I looked at
some of those RARs.

(Tr. 1614 (emphasis added) .) Defense counsel plainly understood
Dennehy to mean he had looked at only some, not all 139. He
asked :
"So which of the partnership RARs that are listed on
Richard Josephberg's Schedules E for those nine years did you
read?" (Id. at 1636 (emphases added) . )

Nor did Dennehy testify that he had spoken with all of the
revenue agents who had prepared those partnership RARs. Rather,
he testified that he "did locate one who was working on one of the
Cralin partnerships" (id. at 1611; see also id. at 1742 ("when I
became aware of the partnership aspect of the case, I made contact
with whoever and wherever I could"; "I found one particular agent
who I thought may be of some help") ) .

In the perjury section of his brief, Josephberg's only
argument with respect to Dennehy is that

Dennehy was an integral part of the prosecution since
2002. He claimed that he did not review the 139 RARs

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until October 2006, after the court ordered that all
partnership audit records be provided to the defense.
Thus, Mr. Okula [an assistant United States Attorney]
knew that the government did not even possess the
RARs Dennehy claimed he reviewed.

(Josephberg brief on appeal at 70-71.) On its face, the logic of
this assertion, even if it were accurate in its details, is hardly
clear; and as an allegation of perjury, it is incomprehensible.

Josephberg also points to varying statements in the
testimony of IRS Revenue Officer Lewandoski :

Lewandoski testified on direct examination that
Josephberg told him on May 28, 1997, that he has "no
deals going," and "no income coming in at the time."
( [Tr. 534, 539, 542-43, 553, 562, 566-67].)

However, on cross-examination, Lewandoski
admitted that Josephberg actually had told him on May
28, 1997 that he had six deals pending at the time.
( [Tr. 583-84].) Lewandoski then amended his
testimony and said that Josephberg had told him in
December 1996 that he had no deals pending. ( [Tr.
584-85].) But then Lewandoski amended that testimony
and admitted that Josephberg had not told him in
December 1996 that he had no deals pending. ( [Tr.
585].) In the end, it was clear to Lewandoski that
Josephberg informed him on May 28, 1997 that he had
six deals pending. ( [Tr. 585-87] . )

(Josephberg brief on appeal at 12.) But Lewandoski's testimony
that Josephberg said he had no pending deals and no income, which
appears on only two of the eight pages cited by Josephberg (i. e.,
Tr. 534 and 567), and which obviously was thoroughly explored on
cross-examination, was not shown to be false. Testifying a decade
after his dealings with Josephberg, Lewandoski refreshed his
recollection by reviewing his notes of his various conversations
with Josephberg; he testified that an entry in his May 28th notes
"show [ed] that [Josephberg] said that he has no deals imminent, "

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and that another entry showed that Josephberg "did say later in
the interview" that he was working on "six deals" (id. at 586) .
Thus, while Lewandoski acknowledged that on May 28, 1997,
Josephberg had said he had six deals pending, his testimony that
Josephberg had also said he had "no deals imminent" (id. at 534,
586) was not shown to be untrue.

In essence, Josephberg's attacks on the testimony of
Dennehy, Lewandoski, and other witnesses amount only to arguments
that the testimony unfavorable to Josephberg should not have been
credited. As discussed in Parts II.A. and II.B. above, however,
witness credibility and the weight of the evidence were matters
for argument to the jury; they are not bases for reversal on
appeal; and the evidence was legally sufficient to support the
jury's verdicts.

Josephberg's further suggestions that the government may
have denied him a fair trial by coercing favorable testimony from
witnesses, such as Grant by threatening deportation, or Fox by
threatening a perjury prosecution if his trial testimony were
inconsistent with his prior plea allocution, were rejected by the
district court :

There is no evidence in the trial record which could
support a finding that Norma Grant was coerced in any
way by the Government or that her testimony was
altered. If efforts were made to do so, such efforts
were ineffectual. The same is true with respect to
Jeffrey Feldman.

District Court Memorandum and Order dated May 30, 2007, at 4. Our
review of the record persuades us that there was no error in that
decision.

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Finally, Josephberg's contention that the government made
prejudicially improper remarks in summation was likewise rejected
by the district court, stating in part as follows:

[I]t is noteworthy that the defense did not object
contemporaneously with respect to the rebuttal
summation and made no . . . request [for
surrebuttal]. The rebuttal was in fact somewhat
lengthy and tedious. However, the propriety of the
Government's conduct has to be measured in relation
to the closing arguments asserted by the defense.
The defense tendered a free-ranging diatribe taking
two and three-quarters hours, not counting
interruptions for recesses. Much of the closing
argument was not directed to the charges themselves
nor was there much concession to common sense.
Defendant argued, among other things, that the
Internal Revenue Service was "arrogant," which it
probably is, and that because of this, Defendant
should be acquitted. This Court with great self-
restraint refrained from interrupting and telling the
jury that "if you think the Government is arrogant,
write your Congressman, and if you think the
Defendant is guilty beyond a reasonable doubt, enter
a judgment of conviction." See United States v.
Cheung, 555 F.2d 1069, 1073-74 (2d Cir. 1977) .

This Court is convinced that the trial viewed as
a whole was a fair trial directed towards the
merits, and that at least with respect to most of the
counts of conviction, the proof of guilt was
overwhelming. To the extent some of the prosecutor's
comments may in hindsight be regarded as somewhat in
excess, they did not distort the trial, and
constituted at most harmless error, which may not be
a basis for relief, particularly in the absence of a
contemporaneous objection. See United States v.
Elias, 285 F.3d 183, 190 (2d Cir. 2002). The comment
presently being criticized concerning the effect of
Feldman's plea and his later motion to withdraw the
plea, was a fair response to a defense argument. The
jury was clearly told by this Court that guilt is
personal and a plea of guilty by a Josephberg
accomplice is not evidence of Josephberg's guilt.

The argument that the defense had a chance to
investigate prior wrongdoing by Hyman Fox was a fair
response to defense's claims that Fox's testimony was

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incredible in that he claimed Josephberg was the only
person he knowingly aided in preparing false tax
returns. The argument that Josephberg took no legal
action against [the attorney who had represented him
in the tax court actions] is inaccurate but in this
Court's opinion was, at most, harmless error. It was
reasonable for the Government to argue that there
were many other lawyers available in New York City to
litigate the civil side of the issues which
Josephberg had with the Tax Court and the Treasury.
The Court finds no error in the Government's rebuttal
argument which would justify granting a new trial or
any other relief to Defendant.

District Court Memorandum and Order dated May 30, 2007, at 2-3.
We see no error in these rulings.

## E. Challenges to the Jury Instructions

Josephberg also contends that he should be given a new
trial because of the district court's refusal to give jury
instructions he requested as to the proper valuation of restricted
stock, the employment status of Grant, and the permissible
inferences from IRS certificates of assessments. We find no basis
for reversal, and only the last of these causes us any concern.

### 1. Valuation of Restricted Stock

Josephberg asked the district court to instruct the jury
that market value is an inappropriate indication of the value of
restricted stock, and that the jury could find that because the
stock he caused his clients to place in the accounts of his
children was restricted stock, it had no value. His theory was
that if that stock had no value or only nominal value, it could

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not be considered concealed "assets. " (Josephberg brief on appeal
2 at 51-52. )

The court properly refused to give the requested
instruction. The Internal Revenue Code provides that " [i]f, in
connection with the performance of services, property is
transferred to any person other than the person for whom such
services are performed,
the fair market value" of the
property transferred is to be "determined without regard to any
restriction other than a restriction which by its terms will never
lapse
11
26 U.S.C. § 83 (a) . Thus, although " [t]he actual
value of the stock arguably may be less than the value of stock
readily transferable on the open market because of restrictions
imposed
these restrictions, other than permanent, nonlapsing
restrictions, may not be considered in determining fair market
value. " Sakol v. CIR, 574 F.2d 694, 696 (2d Cir.), cert. denied,
439 U.S. 859 (1978) (emphases added) .

The restrictions on the stock that Josephberg caused to be
issued to his children were not permanent. And when they lapsed,
Josephberg sold the stock. The instruction he requested would
have been contrary to law.

### 2. "Statutory Nonemployees"

Contending that he believed that Grant was not his
employee, but rather was an independent contractor for whom an
employer is not required to pay employment taxes, Josephberg asked
the district court to read to the jury an excerpt from an IRS

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publication stating, inter alia, that "individuals who furnish
personal attendance, companionship, or household care services to
children" and who are not employees of a placement service "are
generally treated as self-employed for all federal tax purposes, "
I. R.S. Publication 15-A, Employer's Supplemental Tax Guide ( "Pub.
15-A" or "IRS Pub. 15-A"), at 5. Josephberg argued that even if
this excerpt did not represent the law governing the relationship
between the individual who furnishes services and the family using
her services, it should be included in the instructions because
Josephberg's reliance on the publication's language would show
that his nonpayment of employment taxes for Grant was not willful.
(See Tr. 2376.) The district court properly refused to give the
requested instruction.

IRS publications, though "aimed at explaining existing tax
law to taxpayers, " do not have the force of law. Taylor v. United
States, 57 Fed. Cl. 264, 266 (2003). "The authoritative sources
of Federal tax law are the statutes, regulations, and judicial
decisions; they do not include informal IRS publications." Miller
V. CIR, 114 T.C. 184, 195 (U.S. Tax Ct. 2000) .

The Code itself defines "employee" to include "any
individual who, under the usual common law rules applicable in
determining the employer-employee relationship, has the status of
an employee." 26 U.S.C. § 3121 (d). IRS regulations provide
detailed guidance for determining whether a person providing
services to an individual is an employee of that individual rather
than an independent contractor, see 26 C.F.R. § 31.3121 (d) -1 ( "Who

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are employees") ; id. § 31.3121 (d) -2 ("Who are employers"), and
official IRS interpretations set out 20 factors to be considered
in making that determination, see IRS Rev. Rul. 87-41; 26 C.F.R.
§§ 31.3306 (i) -1, 31.3401 (c) -1.

The paragraph of Pub. 15-A invoked by Josephberg, which is
titled "Companion sitters, " appears in a section of that
publication entitled "Statutory Nonemployees" and is drawn from
26 U.S.C. § 3506 (a), a section that simply describes the
circumstances under which an employment agency, conducting the
business of putting sitters in touch with individuals who wish to
employ them, is not to be considered the sitter's employer. The
regulations interpreting § 3506 of the Code, after paraphrasing
the terms of § 3506 (a), see 26 C.F.R. § 31.3506-1 (b), and defining
"sitters" and "companion sitting placement service, " see 26 C.F.R.
§§ 31.3506-1 (a) (2) and (a) (1), state that

[a]ny individual who, by reason of this section, is
deemed not to be the employee of a companion sitting
placement service shall be deemed to be self-employed
for purposes of the tax on self-employment income,

26 C.F.R. § 31.3506-1 (c) (emphasis added) , and that

[t]he rules of this section operate only to remove
sitters and companion sitting placement services from
the employee-employer relationship when, under
§§ 31.3121 (d) -1 and 31.3121 (d) -2, that relationship
would otherwise exist.
[I]f, under

§§ 31. 3121 (d) -1 and 31. 3121 (d) -2, a sitter is
considered to be the employee of the individual for

whom

the

sitting

is performed

rather

than the

employee of the companion sitting

placement service,

this section has no effect upon that

employee-employer relationship.

26 C.F.R. § 31.3506-1 (d) (emphases added) . Thus, the statement in
IRS Pub. 15-A that a sitter who is not an employee of the agency

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is "generally treated as self-employed for all federal tax
purposes, " IRS Pub. 15-A, at 5 (emphases added), could not
reasonably be taken at face value.

The district court here properly instructed the jury that
as to "the willfulness element of the offense of tax evasion under
Section 7201 and subscribing a materially false return, Section
7206 (1),"

[b]efore you may conclude beyond a reasonable doubt
that Mr. Josephberg owed employment taxes for Ms.
Grant . . . you must be convinced beyond a reasonable
doubt that Mr. Josephberg was aware that Norma Grant
was his employee, as the law defines that term, as
opposed to being an independent contractor for whom
such tax payments are not required.

(Tr. 2330.) The court added:

You may not conclude that he knowingly and willfully
failed to pay employment taxes unless the government
proves to your satisfaction beyond a reasonable doubt
that he knowingly and willfully acted in violation of
the law as opposed to relying on a good-faith belief
that Miss Grant was an independent contractor.

(Id. at 2331.) The district court then described for the jury
each of the 20 factors set out in the pertinent IRS Revenue
Ruling, Rev. Rul. 87-41 (see Tr. 2331-37). The court properly
refused to add the overly broad Pub. 15-A language, which would
have been confusing and erroneous.

### 3. . Permissible Inferences from the Assessments

Finally, Josephberg asked the district court to instruct
the jury that an IRS certificate of assessments "is only prima
facie proof of a deficiency and is not conclusive proof, or proof
beyond a reasonable doubt, in a criminal trial that taxes were in

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fact owing." (Defendant's Requests for Jury Instructions at 16.)
After the court gave instructions that included the statement
"that assessments by the IRS constitute prima facie -- that's a
Latin word which means [']on its face['] -- constitute sufficient
evidence of the asserted tax deficiencies" (Tr. 2318), Josephberg
asked the court to amend its instruction and tell the jury "that
the assessments may be prima facie evidence, may constitute" (id.
at 2379 (emphases added) ). The district court declined, and
9 Josephberg contends on appeal that this was error. Quoting only
the phrase "constitute sufficient evidence" from the instruction,
he argues that the charge as given "amount [ed] to an improper
conclusive presumption that took away from the jury the ability to
determine on its own whether the government proved the requisite
element of a substantial additional tax." (Josephberg brief on
appeal at 65.) We disagree.

In determining whether the district court properly
instructed the jury, we must not judge any instruction in
isolation but must instead view the charge as a whole. See, e. q.,
Cupp v. Naughten, 414 U.S. 141, 146-47 (1973) ; United States v.
Carr, 880 F.2d 1550, 1555 (2d Cir. 1989). Thus, we will not make
our determination "on the basis of excerpts taken out of context. "
United States v. Zvi, 168 F.3d 49, 58 (2d Cir.) (internal
quotation marks omitted), cert. denied, 528 U.S. 872 (1999) .
Here, although we question the wisdom of instructing a jury in
terms of procedure-driving concepts such as the prima facie case,

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we see no error in the court's instructions as a whole or in its
rejection of Josephberg's requested modifying language.

Our concern for the inclusion of reference to "prima facie
evidence" in a jury charge is that it may tend to confuse rather
than enlighten the jury. See, e.g., L. Sand et al., Modern
Federal Jury Instructions -- Criminal | 32.01, Comment (rev. Nov.

2008\) (even where the relevant statute specifies what constitutes
"prima facie evidence," instructions to the jury using the term
"prima facie" may be "'needlessly confusing'" (quoting United
States v. Martorano, 557 F.2d 1, 7 (1st Cir. 1977) ) ). That a
prima facie case was established, in this context, means, in
theory, simply that the government presented enough evidence to
have the case submitted to the jury. In practice, of course, the
judge may, in the interests of justice, submit the case to the
jury even if he believes that a prima facie case was not
established, planning to enter a judgment of acquittal if the jury
returns a verdict of guilty and preserving the sufficiency issue
for appeal. See generally United States v. Martin Linen Supply
Co., 430 U.S. 564 (1977) (Double Jeopardy Clause of the
Constitution protects a defendant against an appeal by the
government from a judgment of acquittal entered prior to a jury
verdict) . But in instructing the jury on the law, in preparation
for submitting the case to it, the trial court has no need to tell
the jury that there is sufficient evidence for the case to be
submitted to the jury. The risk is that the jury may be confused

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by the announcement of such a self-evident proposition and believe
that it has some other meaning.

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Further, we reject Josephberg's contention that the court
should have instructed only that the IRS tax assessments "may" be
"prima facie" evidence of Josephberg's tax debts. As a matter of
law, given a defendant's right to a jury trial, the assessments
could not be conclusive, see, e.g., United States v. Silkman, 156
F.3d at 835-36; see generally Martin Linen Supply Co., 430 U.S. at
572-73 ("a trial judge is prohibited from entering a judgment of
conviction or directing a jury to come forward with such a
verdict, . . . regardless of how overwhelmingly the evidence may
point in that direction"); but the assessments were, as a matter
of law, see Part II.B.1. above, prima facie evidence of those
debts. The equivocal language suggested by Josephberg could only
have served to confuse.

Finally, we reject Josephberg's contention that the phrase
"constituted sufficient evidence" created a "conclusive
presumption" (Josephberg brief on appeal at 65) that the
government had proven that Josephberg had a substantial tax debt.
The challenged snippet was part of the following instruction:

You are instructed that assessments by the IRS
constitute prima facie -- that's a Latin word which
means on its face -- constitute sufficient evidence of
the asserted tax deficiencies. You may, however,
consider whether there is evidence from which it can
be concluded that the IRS improperly or incorrectly
assessed the taxes in determining whether Mr. Richard
Josephberg owed additional taxes for any of those
years. And you must consider all the evidence in the
case and consider and decide whether the government
has proved beyond a reasonable doubt that Mr.

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Josephberg owed substantial additional income tax for
the tax year or years that you're then considering.

As I mentioned earlier, the government does not
have to prove the precise amount owed so long as it
proves beyond a reasonable doubt that it is
substantial for the count of the indictment you are
then considering.

It is for you to decide whether a substantial
tax deficiency exists for the years in issue, and in
making that decision, you should consider all the
evidence in the case.

(Tr. 2318-19 (emphases added) ; see also id. at 2320 ("You should
decide, based on all relevant factors, whether the tax owed, if
any, was substantial or merely trivial. ") .) Plainly, the court
did not indicate that the assessments were conclusive.

## F. Challenges to the Sentence

In sentencing Josephberg, the district court began by
calculating the range of imprisonment recommended by the 2006
version of the advisory Guidelines -- the version then in effect --
focusing particularly on Josephberg's tax offenses, the loss from
which dwarfed that caused by his health care fraud. Section
2T1.1 (c) (1) of that version provided, in pertinent part, that

[i]f the offense involved tax evasion or a fraudulent
or false return, statement, or other document, the
tax loss is the total amount of loss that was the
object of the offense (i.e., the loss that would have
resulted had the offense been successfully
completed) .

Guidelines § 2T1.1 (c) (1) . The commentary to this section provided
30 that

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tax loss does not include interest or penalties,
except in willful evasion of payment cases under 26

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U. S.C. § 7201 and willful failure to pay cases under
26 U.S.C. § 7203.

Id. Application Note 1 (emphasis added) . Applying this guideline,
which had been amended in 2001 by the addition of the "except"
clause to Application Note 1, the district court found that the
aggregate tax loss resulting from Josephberg's offenses, including
interest and penalties, exceeded $7 million but not $20 million,
making his base offense level 26, see Guidelines § 2T4. 1 (K) .
Finding, ultimately, that Josephberg's total offense level was 26
and his criminal history category was I, the court concluded that
the advisory-Guidelines recommended range of imprisonment was
63-78 months. After considering the sentencing factors set out in
18 U.S.C. § 3553 (a) , the court elected to impose a non-Guidelines
sentence of, principally, 50 months' imprisonment.
(See

Sentencing Transcript, September 5, 2007 ("S.Tr. "), at 46-48.) We

review Josephberg's sentence for abuse of discretion, see, e.g.,
Gall v. United States, 128 S. Ct. 586, 600-02 (2007), i.e., for an
error of law, or clearly erroneous findings of fact, or a decision
that cannot be located within the range of permissible decisions,
see, e.q., United States v. Williams, 475 F.3d 468, 474 (2d Cir.
2007) , cert. denied, 128 S. Ct. 881 (2008); United States v.
Brady, 417 F.3d 326, 332-33 (2d Cir. 2005) .

Josephberg makes two challenges to the court's Guidelines
calculations. First, arguing that his tax evasion offenses were
completed by mid-December 1998 (when he made disclosures in his
wife's bankruptcy proceeding), Josephberg contends that
calculations under the 2006 version of the Guidelines violated the

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Ex Post Facto Clause because they included § 2T1.1 (c) (1) as
amended in 2001. Prior to that amendment, the Guidelines
provided, without exceptions, that " [t]he tax loss does not
include interest or penalties," Sentencing Guidelines § 2T1.1,
Application Note 1 (2000). Second, Josephberg contends that in
determining the loss resulting from his tax offenses, the district
court erred in using the amount of taxes, interest, and penalties
that were assessed and unpaid, instead of the value of the assets
he concealed. These contentions need not detain us long.

"Generally, a sentencing court must use the version of the
[G]uidelines in effect at the time of defendant's sentencing, not
that extant at the time of the offense" unless use of the later
version would create an ex post facto problem. United States v.
Keller, 58 F.3d 884, 889 (2d Cir. 1995). The ex post facto
prohibition is concerned in part with "lack of fair notice and
governmental restraint when the legislature increases punishment
beyond what was prescribed when the crime was consummated."
Miller v. Florida, 482 U.S. 423, 430 (1987) (internal quotation
marks omitted) . A crime is consummated when it is completed, and
as to a continuing offense that was begun prior to the effective
date of a Guidelines amendment and completed after that date,
application of the amendment does not violate the Ex Post Facto
Clause. See, e.g., United States v. McCall, 915 F.2d 811, 816 (2d
Cir. 1990) .

In the present case, Josephberg was convicted of, inter
alia, tax evasion for the years 1977-1980, 1983-1985, and 1997-

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1998, in violation of § 7201, and of willful failure to file
timely tax returns for the years 1999-2002, in violation of
§ 7203. The district court rejected Josephberg's contention that
application of the 2006 version of the Guidelines would violate
the Ex Post Facto Clause on his theory that "nothing was concealed
after December 16th, 1998" (S.Tr. 38). The court responded: "I
don't think that's a correct analysis of it. I think the issue is
whether there is a continuing offense which straddled the dates of
the guidelines. That's the argument, and I think you have an
uphill road. " (Id. ) The court ultimately concluded that although
some of Josephberg's acts occurred before the effective date of
the 2001 amendment to § 2T1. 1 (c) (1), "all" of Josephberg's acts
"are part of the general single offense behavior." (S.Tr. 40.)

We see no abuse of discretion in this decision.
Josephberg's evasions for the years 1977-1980 and 1983-1985 gave
rise to a substantial tax debt, the payment of which he attempted
to avoid by claiming, on his returns through 1998, a net operating
loss that he knew as early as 1993 was disallowed. The
correctness of the district court's view of the relatedness of
Josephberg's tax offense behavior is most clearly shown by the
fact that after 1998 Josephberg elected not to file timely income
tax returns for the years 1999-2002 because in part -- according to
his own arguments, see Part II.C. above -- he was attempting to
avoid taking a stance on returns for 1999-2002 that would assist
in prosecuting him for having claimed net operating losses through
1998. We thus agree with the district court that Josephberg's

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later tax offenses were closely related to the earlier offenses
and were properly viewed as part of the same scheme or plan.

Finally, here, as in the district court, Josephberg
contends that the district court should have ruled that the losses
attributable to his tax offenses were limited to the value of the
assets he concealed. Such a view is contrary to the Guidelines,
which, as to an offense involving tax evasion or the filing of a
false or fraudulent return, state that "the tax loss is the total
amount of loss that was the object of the offense, " Guidelines
§ 2T1.1 (c) (1). The district court thus concluded, "what's being
evaded is what's owed. " (S. Tr. 41.) We see no abuse o
discretion in this conclusion.

# CONCLUSION

We have considered all of Josephberg's arguments in
support of his appeal and have found them to be without merit.
The judgment of the district court is affirmed.

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August Term, 2008 Argued: October 23, 2008 Decided: April 9, 2009 Docket No.… v. - Richard Josephberg

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