USA v. Carney, et al

OCR transcription for search; preserved printed pages are authoritative

Case 5:25-cr-50005-TLB Document169 ~ Filed 05/13/26 Page 1 of 3 PagelD #:
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IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS

FAYETTEVILLE DIVISION
UNITED STATES OF AMERICA PLAINTIFF
V. CASE NO. 5:25-CR-50005-001 & -002
JASON BOYD CARNEY and
LACEY CHRISTINA CARNEY DEFENDANTS
ORDER

Now before the Court is the Government’s Sixth Motion in Limine (Doc. 101)
seeking the admission of evidence as intrinsic to the crimes charged in the Third
Superseding Indictment (Doc. 148) or, in the alternative, as proof of “motive, opportunity,
intent, preparation, plan, knowledge, identity, absence of mistake, or lack of accident”
under Federal Rule of Evidence 404(b). In particular, the Government intends to introduce
evidence of: (1) certain tax filings, omissions, and irregularities pertaining to 2nd Milk,
Inc., the Carneys’ non-profit organization; and (2) the absence of personal tax returns for
the Carneys in tax years 2021—23.' For the reasons explained below, the Motion is
GRANTED.

The Court first considers the admissibility of 2nd Milk’s tax filings (or the lack
thereof). The Government seeks to inform the jury that 2nd Milk did not provide its
contractors with 1099 forms, did not remit W-2 forms to its employees, failed to disclose

its contributors on form 990 Schedule B, and neglected to keep records in compliance

' The Motion also discusses Mr. Carney’s 2024 tax return. At the time the Motion was
filed, Mr. Carney had not been charged with tax fraud in 2024. That changed upon the
filing of the Third Superseding Indictment. See Doc. 148, Count 20. Therefore, the 2024
return is relevant to the crimes Mr. Carney is accused of committing, and any objection
to its introduction is OVERRULED.

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with federal law from 2016 to 2022. Though Mr. Carney contends that 2nd Milk’s “alleged
failure to comply with various tax laws” does not “have any bearing on the conspiracy
alleged in the Indictment,” (Doc. 135, p. 3), the Court disagrees. The Government has
accused the Carneys of abusing and attempting to abuse the non-profit, tax-exempt
status of their company to confer unwarranted tax benefits on themselves, on 2nd Milk’s
board members, and on other individuals—for reasons unrelated to the charity's stated
mission and purpose. See Doc. 148, J 23. Therefore, evidence that would tend to show
that the Carneys failed to keep and file accurate tax records of 2nd Milk’s financial
transactions is intrinsic to the fraud scheme charged in the Third Superseding Indictment.
See United States v. Swinton, 75 F.3d 374, 378 (8th Cir. 1996) (“Where the charged
offenses were . . . part of the series of transactions involving the same principal actors, in
the same roles, and employing the same general modus operandi, the various acts may
be considered to constitute a single scheme .. . . [and] ‘intrinsic’ to the charged
counts ....”). In the alternative, this evidence is admissible under Rule 404(b) as
probative of the Carneys’ criminal intent, knowledge, and lack of mistake with respect to
their alleged conspiracy to defraud 2nd Milk’s donors.

Next, the Court turns to the admissibility of evidence that the Carneys failed to file
personal tax returns in 2021, 2022, and 2023. The Government has charged Mr. Carney
with tax fraud in 2018, 2019, 2020, and 2024, as detailed in Counts 16, 17, 18, and 20 of
the Third Superseding Indictment. The absence of tax filings from 2021 to 2023 fills in the
temporal gap between the tax fraud alleged in 2020 and the fraud alleged in 2024.

Accordingly, the absence of returns from 2021 to 2023 is res gestae to the charged crimes

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and is admissible. See United States v. Parks, 902 F.3d 805, 813 (8th Cir. 2018) (defining
intrinsic evidence).?

IT IS THEREFORE ORDERED that the Government's Sixth Motion in Limine (Doc.
101) is GRANTED. th

IT IS SO ORDERED on this |? day of

TAY L. BROOKS
CHIER UNI STATES DISTRICT JUDGE

2 Upon request, the Court would be agreeable to issuing a limiting instruction to the jury
that clarifies that the Carneys are not charged with tax fraud for tax years 2021 to 2023.