United States of America v. John J. Lavoie

Of the District of New Hampshire, sitting by designation. *
United States Court of Appeals
For the First Circuit
No. 04-1982
UNITED STATES OF AMERICA,
Appellee,
v.
JOHN J. LAVOIE,
Defendant, Appellant.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Joseph L. Tauro, U.S. District Judge]
Before
Torruella and Lipez, Circuit Judges,
and DiClerico, Jr., District Judge. *
Elizabeth L. Prevett, Federal Defender Office, for appellant.
John M. Hodgens, Jr., Assistant United States Attorney, with
whom Michael J. Sullivan, United States Attorney, were on brief,
for appellee.
December 22, 2005

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TORRUELLA, Circuit Judge. A jury convicted defendant
John J. Lavoie of willfully evading federal income taxes. Lavoie
appeals, contending that the evidence was insufficient for a jury
to find that he acted willfully. For the reasons presented herein,
we affirm.
I.
John J. Lavoie ("Lavoie") was the sole proprietor of a
business engaged in the installation and repair of heating and air
conditioning systems. As a business owner, he was required to file
with his income tax return a Schedule C form containing the details
of his business profits and losses. As of 1993, Lavoie had yet to
file his 1990, 1991, and 1992 tax forms. After being contacted by
the Internal Revenue Service ("IRS"), Lavoie hired Robert Reed
("Reed"), an accountant, to complete his tax forms.
Reed asked Lavoie either to supply him with his business
records or to create a summary of his business profits and losses.
Because his business records were not organized, Lavoie chose the
latter and created a one-page summary sheet. On the first six
lines, Lavoie listed gross receipts and costs of goods sold for the
years 1990, 1991, and 1992. For the three tax years, Lavoie
reported gross receipts of $33,105, $39,342, and $43,531; and he
reported costs of goods of $32,598, $38,863, and $36,452. The rest
of the sheet listed deductible business expenses such as rent,

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truck repairs, and advertising. Lavoie discussed this sheet with
Reed, and Reed made notes on the sheet.
From this one-page summary sheet, Reed prepared Lavoie's
tax forms. Reed sent only the signature pages of the tax forms to
Lavoie, who signed and returned them to Reed. Reed filed the forms
with the IRS. The IRS then contacted Reed, requesting an audit of
Lavoie's 1992 return. Lavoie provided Reed his business records,
and Reed discovered that Lavoie had substantially underreported his
gross receipts.
While the audit was pending, Lavoie retained a second
accountant, Michael O'Malley ("O'Malley"), to prepare tax forms for
1991 and 1992. Lavoie told O'Malley that he was being audited but
did not tell him that Reed had previously filed tax forms for those
years. Lavoie provided O'Malley with a more complete accounting of
his gross receipts and business expenses than he had provided to
Reed. O'Malley prepared tax forms for Lavoie, but Lavoie did not
file them.
The IRS found that Lavoie had substantially underreported
his gross receipts on his 1990, 1991, and 1992 tax returns. The
government and Lavoie stipulated at trial that Lavoie's gross
receipts for the three years were $79,034, $97,561, and $85,301.
For each of the three years, the IRS's computation of the gross
receipts was about double what Lavoie had reported. The government
and Lavoie also stipulated at trial that Lavoie's costs of goods

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sold for the three years were $32,598, $72,324, and $71,388.
Because Lavoie did not have accurate records for 1990, the
stipulated value for the cost of goods sold for that year was the
same that Lavoie had reported to Reed. For the other two years,
the stipulated costs of goods sold were computed from Lavoie's
records and were about double what Lavoie had reported. At trial,
a government witness testified that for the three tax years Lavoie
had underpaid his taxes by $11,326, $5,584, and $1,817.
A jury convicted Lavoie of three counts of tax evasion.
The court sentenced him to twenty-eight months probation including
four months of home detention. At the close of the government's
case and then again after the verdict, Lavoie moved for a judgment
of acquittal for insufficient evidence of willfulness. The court
denied both of his motions. Lavoie now appeals, again arguing
insufficient evidence of willfulness on his part.
II.
In order to convict Lavoie for tax evasion, the
government must show (1) the existence of a tax deficiency, (2) an
affirmative act constituting an evasion or attempted evasion of the
tax, and (3) willfulness. Sansone v. United States, 380 U.S. 343,
351 (1965); 26 U.S.C. § 7201. On appeal, Lavoie argues only that
there was insufficient evidence for a jury to find willfulness.
We review the trial judge's finding of sufficient
evidence de novo. United States v. Carucci, 364 F.3d 339, 343 (1st

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Cir. 2004). We will affirm if "after assaying all the evidence in
the light most amiable to the government, and taking all reasonable
inferences in its favor, a rational factfinder could find, beyond
a reasonable doubt, that the prosecution successfully proved the
essential elements of the crime." United States v. O'Brien, 14
F.3d 703, 706 (1st Cir. 1994).
In order to prove that Lavoie acted willfully, the
government must show more than just that he acted in "careless
disregard for the truth." United States v. Pomponio, 429 U.S. 10,
12 (1976). A mere underreporting of income does not require a
finding of willfulness as the underreporting could be caused by
inadvertence or negligence. See Holland v. United States, 348 U.S.
121, 139 (1954); United States v. Olbres, 61 F.3d 967, 972 (1st
Cir. 1995). Willfulness requires the "intentional violation of a
known legal duty." Pomponio, 429 U.S. at 12. Willfulness can be
established by showing that Lavoie "fil[ed] returns with knowledge
that he should have reported more income than he did." United
States v. Zanghi, 189 F.3d 71, 81 (1st Cir. 1999).
"[C]ircumstantial evidence of willfulness can be sufficient to
sustain a conviction." United States v. Boulerice, 325 F.3d 75, 80
(1st Cir. 2003).
The government asserts that Lavoie willfully evaded taxes
when he underreported both his gross receipts and his costs of
goods by about a factor of two. In defense, Lavoie primarily

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claims that he confused the terminology of gross receipts and net
receipts and notes that his reported gross receipts were close in
value to his actual net receipts. Lavoie does not explain why he
underreported his costs of goods by a factor of two, even though
this would have erroneously increased his tax burden. The
government put forth five factors in arguing that the evidence was
sufficient for a reasonable jury to find that Lavoie acted
willfully, and we consider them in turn.
The government first argues that the substantial
understatement of gross receipts shows that Lavoie acted willfully.
In response, Lavoie argues that a mere understatement is not
sufficient to show willfulness. Depending on the specific facts,
an understatement could suggest willfulness or could suggest a
mistake through inadvertence, negligence, or gross negligence. The
amount of the understatement is certainly probative as to whether
an understatement is a mistake or willful. Olbres, 61 F.3d at 971-
72. For the years 1990, 1991, and 1992, Lavoie reported gross
receipts and costs of goods that were underreported by about a
factor of two. The substantial understatements for three separate
years strongly suggest that any arithmetic error was willful and
not a mistake. Thus, absent another explanation it suggests that
Lavoie willfully underreported his gross receipts and costs of
goods. Lavoie asserts that he confused the terminology of gross
receipts with net receipts and notes that what he reported as gross

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receipts was close to his actual net receipts. Because the mistake
in terminology and the substantial underreporting of gross receipts
are consistent with each other, even a substantial underreporting
of gross receipts does not necessarily indicate willfulness.
However, this mistake in terminology does not explain why he also
underreported his costs of goods by about a factor of two.
Second, the government contends that Lavoie engaged in a
three-year pattern of understatement and that this provides further
evidence of willfulness. Lavoie rebuts this by arguing that his
tax calculations for the three years were computed at one time and
thus there is no pattern. Without deciding whether Lavoie's
actions can be properly categorized as a pattern, we simply
consider what reasonable inferences can be drawn from the
underlying facts. The analysis here is no different than for the
previous factor. Lavoie's substantial underreporting of gross
receipts for the three tax years is consistent with Lavoie's
asserted error in terminology between gross receipts and net
receipts, but Lavoie's substantial underreporting of costs of goods
is not explained by this error in terminology.
Third, the government argues that the one-page summary
sheet that Lavoie provided to his accountant Reed provides further
evidence of willfulness. Under Lavoie's theory, he computed his
net receipts by subtracting his costs of goods from his gross
receipts and then mistakenly indicated this figure as "gross

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receipts" on the summary sheet. Although under this theory, the
costs of goods had already been incorporated into the mistakenly
labeled gross receipts, he listed the costs of goods separately.
There is no apparent explanation for the additional mistake of
underreporting his costs of goods by a factor of two. These
mistakes would have persisted despite the fact that Lavoie and Reed
discussed the summary sheet and that Reed suggested additional
deductions. Under the government's theory, Lavoie simply
underreported his gross receipts and costs of goods in order to
evade taxes. Both of these arguments were presented to the jury,
and a reasonable jury could credit the government's theory over
Lavoie's.
The government also notes that Reed gave Lavoie the
option of creating a summary sheet or giving Reed the underlying
business records, and that Lavoie opted to create a summary sheet
as part of his plan to avoid taxes. Lavoie argues that he created
the summary sheet because his records were in disarray, which is
supported by other evidence. Lavoie's creation of a summary sheet
is consistent with a plan to avoid income taxes and thus provides
some further evidence of willfulness, but given the plausible
innocent alternative, this evidence is not highly probative.
Fourth, the government argues that Lavoie's maintenance
of detailed business expense records shows that he understood the
difference between gross receipts and net receipts. While there is

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some merit to this argument, we do not find it highly persuasive.
The fact that Lavoie knew that he could deduct business expenses
suggests that he knew the difference between gross and net
receipts, but Lavoie could have grasped the concept of business
deductions and still confused the terminology.
Finally, the government finds fault with Lavoie's
retention of a second accountant to complete his 1991 and 1992
returns while he was being audited. The government notes that
Lavoie did not fully explain the circumstances to O'Malley and
posits that Lavoie acted to "mitigate his earlier fraud with
correct returns, or to off-set his prior underreporting of gross
receipts by coming up with previously unclaimed expenses." We find
this argument wholly unpersuasive. Lavoie had no need or reason to
explain to O'Malley the prior history of the 1991 and 1992 tax
filings. Further, Lavoie can only be commended for seeking a more
accurate accounting of his tax obligations.
Lavoie argues that the only piece of evidence the
government offered to show he acted willfully was the one-page
summary sheet. We agree with Lavoie that nearly all of the
evidence of willfulness derives from the summary sheet, but we do
not think that this necessarily makes the evidence of willfulness
insufficient. Convictions are based on the weight of the evidence
and not the number of evidentiary submissions. Finally, Lavoie
notes that he only saw the signature page of his completed tax

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returns and thus could not have known that the figures were
incorrect. Because Reed prepared the returns based entirely on the
one-page summary sheet prepared by Lavoie, we find this argument
meritless.
III.
The evidence of Lavoie's willfulness in evading taxes is
not overwhelming. From the evidence presented at trial, inferences
could be drawn in favor of willful tax evasion or in favor of a
misunderstanding of the difference between gross receipts and net
receipts. Taking all inferences in favor of the government, we
believe that a reasonable jury could find beyond a reasonable doubt
that Lavoie willfully evaded taxes.
Affirmed.

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