Free Order - District Court of California - California

Case 3:07-cr-00325-PJH

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Filed 05/09/2008

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1 2 UNITED STATES DISTRICT COURT 3 NORTHERN DISTRICT OF CALIFORNIA 4 5 6 7 8 9 10 v. DIANA HOJSAK, a.k.a. DIANA LU, Defendant. _______________________________/ This matter came before the court for a pretrial conference on May 7, 2008. At the 14 hearing, the court ruled on several motions and other pretrial issues as stated on the record 15 and summarized below. Additionally, the court rules on the motion in limine that it took 16 under submission as set forth below. 17 I. 18 A. 19 Period of the Indictment 20 Defendant's motion to exclude evidence pertaining to tax years 1999, 2000, and 21 2004 under Federal Rules of Evidence 401, 403, and 404(b) is DENIED as the evidence is 22 relevant to defendant's knowledge and willfulness, is not prohibited as "other bad acts" 23 evidence, and is not unduly prejudicial. 24 B. 25 At the hearing, defendant clarified that she was seeking the special agent report or 26 "SAR" under Brady v. Maryland, 373 U.S. 83 (1963), which the government refused to 27 disclose, contending that the SAR is privileged and also that it does not contain any 28 Defendant's Motion for Brady Material Defendant's Motion to Exclude Evidence of Other Acts Outside the Time Defendant's Motions in Limine FINAL PRETRIAL ORDER UNITED STATES OF AMERICA, Plaintiff, No. CR 07-0325 PJH

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Brady material. Following the hearing, the court conducted an in camera review of the SAR and concludes that it does not contain exculpatory or impeachment material, and therefore need not be disclosed to the defendant under Brady. The court also finds, though, that the government has not established a claim of privilege sufficient to overcome defendant's need for the report under Brady in the event that the SAR had indeed contained exculpatory or impeachment material. Furthermore, having reviewed the SAR, the court is at a loss as to why the government has refused to disclose the seemingly innocuous report, which appears to be the agent's simple summary of the underlying evidence already produced to defendant. Nevertheless, because the SAR does not contain Brady material, defendant's motion for disclosure is DENIED. II. Pretrial Conference Statements As noted on the record, in their pretrial statements, the parties appear to disagree regarding the admissibility of an unreported deduction or an alternative theory of tax liability in conjunction with the tax deficiency element to be proved under 26 U.S.C. § 7201. See Govt's Pretrial Conf. Statement at 6; Def. Pretrial Conf. Statement at 3-4. The authority cited by the government, two Ninth Circuit cases, United States v. Miller, 545 F.2d 1204 (9th Cir. 1976) and United States v. Boulware, 470 F.3d 931, 934 (9th Cir. 2006), were overruled and reversed, respectively, by the United States Supreme Court on March 3, 2008, after it granted certiorari in Boulware. See United States v. Boulware, 128 S.Ct 1168 (2008). In Boulware, the Supreme Court held that a controlling shareholder accused of criminal tax evasion could argue for nontaxable return-of-capital treatment for corporate distributions without producing evidence that when the distributions occurred, either he or the corporation had intended a return of capital. Id. at 1177-78. Additionally, in United States v. Kayser, the Ninth Circuit held that a defendant could negate the element of tax deficiency in a tax evasion case with evidence of unreported deductions. 488 F.3d 1070, 1073 (9th Cir. 2007). Accordingly, the court concludes, contrary to the government's argument otherwise, 2

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that Hojsak is entitled to introduce evidence regarding the admissibility of an unreported deduction or an alternative theory of tax liability to rebut the government's evidence of a tax deficiency under 26 U.S.C. § 7201. III. Jury Instructions The court approves and will give the following instructions at trial: · · · · · · Govt. 1, Superceding Indictment Govt. 2, Income Tax Evasion Govt. 6, Material Matter Def. 2, Evidence of Other Acts Def. 3, Consider Each Count Separately Def. 4, Consider Only Crime Charged

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The court will give the following instructions only if supported by the evidence: · · · Def. 5, Testimony under Grant of Immunity Def. 6, Testimony of Informer Def. 8, Testimony of Accomplice

The court DECLINES to give the following instructions because the supporting authority relied on by the proffering party is outdated and/or the parties are relying on authority outside the Ninth Circuit: · · · · · · · · Govt. 5, Subscribing Defined and Proof Signing Return Govt. 7, Omission of Material Matter Govt. 8, Willfulness - Retroactivity and Prospectivity Govt. 9, Attempts in Any Manner to Evade or Defeat any Tax Govt. 10, Proof of Precise Amount of Tax Owed not Necessary Govt. 11, Gross Income Govt. 13, "On or about" Proof Def. 1, Reasonable Doubt

Additionally, the court DECLINES to give Def. 7, Special Instruction re: Informants, because it is not a proper jury instruction, and Def. 12, Burden of Proof. 3

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The parties are required to meet and confer regarding the following instructions as set forth on the record: · Willfulness Instructions (Govt. 14, Govt. 15, Def. 11) - The parties are ORDERED to meet and confer and agree upon one willfulness instruction, based upon Ninth Circuit authority. As currently submitted, the court finds defendant's proffered instruction no. 11 preferable to either instruction submitted by the government. · Govt. 12, Specific Method of Proof; Def. 9, Proof of Tax Deductions; Def. 10, Proof of Tax Deficiency - As stated on the record, the parties disagree as to the above instructions, and the court will reserve ruling on them until the parties have met and conferred and submitted joint instructions. Finally, the government is required to combine its proffered instructions 3 and 4, False Statement or Document (Statute Involved) and Making or Subscribing a False Statement or Documents, respectively. The court is inclined to give the Ninth Circuit model instruction, and fails to understand the need for an additional instruction based on the statute. As noted on the record, the parties are ORDERED to meet and confer in accordance with the guidance set forth above and submit an amended JOINT set of instructions no later than Wednesday, May 14, 2008. IV. Voir Dire The court will utilize the voir dire submitted by the government with a couple of exceptions, and will incorporate the additional voir dire question proffered by the defendant on the record at the pretrial hearing. V. Additional Rulings A. The government noted on the record that it would be seeking leave to file an

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additional motion in limine to exclude the declarations of Jon Michael Yell submitted in conjunction with the parties' motions to depose Yell. However, because the defendant represented that she does not seek to admit the Yell declaration, no motion in limine will be 4

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necessary. B. The government also noted that it will seek to have defendant's deposition

from a prior civil case admitted at trial as a prior admission. The defendant represented that she has no objection. Accordingly, no additional motion on the issue is necessary. IT IS SO ORDERED.

Dated: May 9, 2008 ______________________________ PHYLLIS J. HAMILTON United States District Judge

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