United States of America v. Betty Phillips

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 12‐2532
U NITED STATES OF A MERICA ,
Plaintiff‐Appellee,
v.
BETTY P HILLIPS ,
Defendant‐Appellant.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 11 CR 34 — James B. Zagel, Judge.
____________________
A RGUED FEBRUARY 12, 2014 — D ECIDED MARCH 14, 2014
____________________
Before P OSNER , FLAUM, and HAMILTON, Circuit Judges.
FLAUM, Circuit Judge. Betty Phillips and her husband
Wayne perpetrated a tax fraud scheme in 2009 and 2010, in
which they filed tax returns claiming that they had overpaid
the IRS and were entitled to more than $800,000 in refunds.
In response to one of these tax returns, the IRS issued a re‐
fund check for about $350,000, which the couple cashed. A
jury convicted both of them. This appeal concerns only Betty
Phillips. She challenges her conviction, arguing that the dis‐

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2 No. 12‐2532
trict court improperly admitted evidence, and that the gov‐
ernment constructively amended the indictment and violat‐
ed her right against self‐incrimination. We affirm.
I. Background
In 2009 and 2010, Betty and Wayne Phillips perpetrated a
partly successful tax fraud scheme. For tax year 2008, they
submitted two tax returns to the IRS. They submitted the
first return in March 2009 on behalf of a Betty Jean Phillips
Trust. Mrs. Phillips signed this tax return, and she was listed
as the trustee. This trust claimed income of $47,997. The
couple filed the second return in April on behalf of a Wayne
Phillips Trust. Wayne Phillips signed this tax return, but Bet‐
ty Phillips was again listed as the trustee. This return report‐
ed income of $1,057,585. Both returns claimed that all of the
trusts’ income had gone to pay fiduciary or trustee fees,
which meant that the trusts had no taxable income. Accord‐
ingly, the returns claimed that the trusts had overpaid feder‐
al taxes and were entitled to refunds. For 2008, the Wayne
Phillips Trust claimed a refund of $352,528, and the Betty
Phillips Trust claimed $15,999. In May 2009, the IRS issued a
refund check for $352,528. The check was made out to
“Wayne Phillips, Betty Jean Phillips—TTEE.” (TTEE stands
for trustee.) That month, Mr. and Mrs. Phillips both en‐
dorsed the check and deposited it into a joint bank account.
These tax returns were fraudulent. The IRS had no record
of any taxes being paid by these trusts. On December 3, 2009,
the IRS served summonses on Mr. and Mrs. Phillips, requir‐
ing them to give testimony and produce documents. During
the rest of the month, the couple withdrew from their bank
account the $244,137 remaining from their refund proceeds
by making withdrawals from thirteen different locations.

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No. 12‐2532 3
The couple followed the same strategy for tax year 2009.
In April 2010, Wayne Phillips filed a 2009 tax return on be‐
half of the Wayne Phillips Trust, this time naming himself as
trustee. This return listed income of $1,056,000 and claimed a
$352,000 refund. Betty Phillips changed her name to Samara
Beth El Bey and submitted a return in April on behalf of the
Samara Beth El Bey Trust. She again listed herself as trustee.
(For simplicity, we will refer to both returns in her name as
“the Betty Phillips Trust returns.”) This return claimed in‐
come of $441,000 and sought a refund of $147,000.
The IRS never paid refunds to the Betty Phillips Trust for
2008 or 2009, nor to the Wayne Phillips Trust for 2009. The
IRS has no record of either Mr. or Mrs. Phillips inquiring in‐
to the status of the refunds when the checks were not sent.
Betty and Wayne Phillips were indicted in early 2011 and
both proceeded to trial pro se. A jury convicted Betty Phil‐
lips of conspiracy to defraud the government with respect to
claims in violation of 18 U.S.C. § 286, and of knowingly mak‐
ing a false claim to the government in violation of 18 U.S.C.
§ 287. 1 The district court sentenced her to forty‐one months’
imprisonment and ordered her to pay (jointly with her hus‐
band) $352,528 in restitution. She appealed.
II. Discussion
A. Constructive amendment
Betty Phillips argues that the government violated the
Grand Jury Clause of the Fifth Amendment by introducing
1 Wayne Phillips was also convicted of these two counts and of another
violation of 18 U.S.C. § 287. He appealed as well, but we dismissed his
appeal for failure to prosecute after he did not file an opening brief.

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4 No. 12‐2532
evidence that invited the jury to convict her on different ba‐
ses than those set forth in the indictment. She neither object‐
ed below to any relevant statement by the government nor
raised the issue of constructive amendment to the indict‐
ment, so we review only for plain error. United States v. Pres‐
bitero, 569 F.3d 691, 698 (7th Cir. 2009). For Betty Phillips to
prevail on a constructive amendment argument on plain‐
error review, she must demonstrate that she probably would
have been acquitted if not for the amendment. Id.
A constructive amendment of an indictment occurs when
the evidence at trial “goes beyond the parameters of the in‐
dictment in that it establishes offenses different from or in
addition to those charged by the grand jury.” United States v.
Pigee, 197 F.3d 879, 886 (7th Cir. 1999) (citation omitted).
Such an amendment violates the Fifth Amendment and can
occur during the government’s presentation of evidence,
through faulty jury instructions, or both. Id. However, “not
all variations in proof that contradict or supplement verbi‐
age in the indictment rise to the level of constructive
amendments.” Id. (citation omitted). Instead, the crime
charged in the indictment must be “materially different or
substantially altered at trial, [so that] it is impossible to
know whether the grand jury would have indicted for the
crime actually proved.” United States v. Trenell, 290 F.3d 881,
888 (7th Cir. 2002) (citation omitted).
Mrs. Phillips was charged in counts one and two of the
indictment, which charged a conspiracy to defraud the gov‐
ernment and presenting a false claim, respectively. The first
count specifically mentioned the Wayne Phillips Trust re‐
turns from 2008 and 2009, and the second mentioned only
the 2008 Wayne Phillips Trust return. The indictment did not

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No. 12‐2532 5
mention the Betty Phillips Trust returns. The government
introduced all four tax returns during trial, however. And
during closing arguments, the government contended that
the conspiracy in count one included all four tax returns. The
government argued that the scheme inherent in all four re‐
turns was the same, and that the unusual similarities among
the four returns were proof of the conspiracy. Mrs. Phillips
argues that the indictment was too narrow to permit intro‐
duction of the returns for the Betty Phillips Trust, because it
specifically mentioned only the Wayne Phillips Trust.
This argument is unpersuasive because the indictment
can be read naturally to include all four tax returns. The first
sentence of the indictment describes a conspiracy to “submit
false, fictitious, and fraudulent claims” that lasted from
March 2009 to April 2010. These dates include the returns
submitted for both the Wayne Phillips Trust and the Betty
Phillips Trust. The fact that the Wayne Phillips Trust returns
are mentioned in the indictment does not preclude the gov‐
ernment from relying upon extremely similar evidence that
also falls within the charged dates and of which Betty Phil‐
lips clearly had notice. See Presbitero, 569 F.3d at 700 (empha‐
sizing importance of notice to defendant in constructive
amendment context). Therefore, this was not a situation
where “the proof at trial establish[ed] offenses different from
or in addition to those charged by the grand jury.” Pigee, 197
F.3d at 886. Indeed, “admission of evidence intricately relat‐
ed to the charged crimes … does not constructively amend
the indictment.” United States v. Alhalabi, 443 F.3d 605, 614
(7th Cir. 2006). This case is similar to Alhalabi, a wire fraud
case in which the government presented evidence about
wire transfers other than the ones charged in the indictment,
but which followed the same fraudulent pattern. Id. We

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6 No. 12‐2532
found that no constructive amendment occurred because
“[t]he government simply supplied more technical details
that easily fit with the allegations in the indictment.” Id.
Here, Betty and Wayne Phillips each submitted two returns
that followed the same fraudulent pattern, and the Betty
Phillips Trust returns merely supplied “more technical de‐
tails” about the mechanics and depth of the conspiracy. Ac‐
cordingly, we reject Mrs. Phillips’ argument that the gov‐
ernment constructively amended the indictment.
B. Admission of the Betty Phillips Trust tax returns
The government moved in limine to admit the Betty Phil‐
lips Trust returns. It argued that the returns were direct evi‐
dence of the conspiracy, or in the alternative, that they were
admissible pursuant to Federal Rule of Evidence 404(b),
which prohibits evidence of a defendant’s other acts to show
her propensity for bad behavior, but permits such evidence
when offered to show motive, intent, knowledge, etc. Mrs.
Phillips objected to the admission of the returns at trial, but
the district court summarily overruled her objection.
We review evidentiary decisions for abuse of discretion
and reverse only for harmful errors. United States v. Vargas,
689 F.3d 867, 873, 875 (7th Cir. 2012). The Betty Phillips Trust
returns were direct evidence of the conspiracy. As noted
above, the indictment charged a conspiracy between March
2009 and April 2010. It does not matter here that the Betty
Phillips Trust returns were not mentioned in the indictment,
because they still pointed directly towards the existence of a
conspiracy by virtue of their similarities to the Wayne Phil‐
lips Trust returns. “Evidence of overt acts which occurred
after a conspiracy was formed and which were related to the
object of the conspiracy is admissible regardless of whether

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No. 12‐2532 7
the overt acts are charged in the indictment.” United States v.
Harris, 542 F.2d 1283, 1300 (7th Cir. 1976); accord United States
v. Elizondo, 920 F.2d 1308, 1319 (7th Cir. 1990). Of course, di‐
rect evidence is almost always admissible, and Betty Phillips
does not make the Rule 403 argument that would be re‐
quired to exclude direct evidence. Thus, she could prevail
only if we found—contrary to our conclusion above—that
the Betty Phillips Trust returns were exclusively 404(b) evi‐
dence and not direct evidence at all.
Finally, Mrs. Phillips objects to the district court’s failure
to give a limiting instruction. This argument is unpersuasive
for multiple reasons. Most elementally, she did not request a
limiting instruction below, and limiting instructions are not
required until they are requested. United States v. Akinrinade,
61 F.3d 1279, 1284 (7th Cir. 1995). In sum, the district court
did not abuse its discretion in admitting the tax returns.
C. Betty Phillips’ right against self‐incrimination
IRS Special Agent Gregory Howard served a summons
on Wayne Phillips on December 3, 2009, requesting records
and documentation. Agent Howard testified that he asked
two other IRS agents to serve a summons on, and interview,
Betty Phillips. Both summonses were returned in the same
envelope on December 8, he testified. These dates corre‐
sponded to the couple’s dash to drain their joint bank ac‐
count. During closing arguments, the government contend‐
ed that Betty and Wayne Phillips would not have made rap‐
id withdrawals if they had had nothing to hide.
Mrs. Phillips claims that the government’s questioning of
Agent Howard commented on her silence in violation of her
Fifth Amendment right against self‐incrimination. She ar‐

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8 No. 12‐2532
gues that Agent Howard spoke of sending agents to “at‐
tempt” to interview her, which Mrs. Phillips claims subtly
implied that she had refused to speak. She did not object to
Howard’s testimony or to the prosecutor’s statement at clos‐
ing, so we review only for plain error. United States v. Della
Rose, 403 F.3d 891, 906 (7th Cir. 2005). Of course, a defendant
has “a constitutional right to say nothing at all about the al‐
legations.” United States ex rel. Savory v. Lane, 832 F.2d 1011,
1017 (7th Cir. 1987). But the government violated her right
only if it “manifestly intended to refer to [her] silence, or …
[if] the remark was of such a character that the jury would
naturally and necessarily take it to be a comment on [her]
silence.” United States v. Andreas, 216 F.3d 645, 674 (7th Cir.
2000) (citation and internal quotation mark omitted).
In light of what happened at Mrs. Phillips’ trial, her ar‐
gument is unconvincing. The government’s explanation for
Agent Howard’s testimony—to establish that the couple
started withdrawing cash as soon as they became aware of
the IRS investigation—is logical and is reflected in the gov‐
ernment’s closing argument. The government intended to,
and did, point out suspicious conduct and timing, rather
than comment on Mrs. Phillips’ invocation of her right
against self‐incrimination. Nor would a jury be likely to
view Agent Howard’s testimony as commenting on her si‐
lence. Indeed, the evidence does not even tell us whether the
agents actually spoke to Mrs. Phillips, and if they did, what
she did or did not say. Nor did the record clearly suggest
that she was silent. We therefore conclude that the govern‐
ment did not violate her right against self‐incrimination.
III. Conclusion
We A FFIRM Betty Phillips’ conviction.

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