IN THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF TENNESSEE WESTERN DIVISION ------------------------------------------------------- UNITED STATES OF AMERICA, ) ) Plaintiff, ) ) VS. ) NO. 03-20111-Ml ) ) VERNICE KUGLIN, ) ) Defendant. ) ------------------------------------------------------- TRIAL PROCEEDINGS BEFORE THE HONORABLE JON PHIPPS MCCALLA, JUDGE AUGUST 7, 2003 VOLUME IV BRENDA PARKER OFFICIAL REPORTER SUITE 942 FEDERAL BUILDING 167 NORTH MAIN STREET MEMPHIS, TENNESSEE 38103 676 A P P E A R A N C E S Appearing on behalf of the Plaintiff: TERRELL L. HARRIS, ESQ. UNITED STATES ATTORNEY SUITE 800 FEDERAL BUILDING 167 NORTH MAIN STREET MEMPHIS, TENNESSEE 38103 By: JOSEPH MURPHY, ESQ. Appearing on behalf of the Defendant: LOWELL H. BECRAFT, JR. 209 LINCOLN STREET HUNTSVILLE, ALABAMA 35801 ROBERT G. BERNHOFT, ESQ. 207 EAST BUFFALO STREET MILWAUKEE, WISCONSIN 53202 677 1 THURSDAY MORNING & AFTERNOON 2 AUGUST 7, 2003 3 The trial in this case resumed on this date, 4 Thursday, August 7, 2003, at 9:00 o'clock a.m., when and 5 where evidence was introduced and proceedings were had as 6 follows: 7 8 ____________ 9 10 THE COURT: Everybody ready to proceed? 11 MR. MURPHY: The government is ready, Your 12 Honor. 13 MR. BECRAFT: Your Honor, I think we have got 14 two quick matters to take care of. Yesterday, we had, I 15 thought it was Exhibit 50, I don't know what the exhibit 16 number is, but he had the Code of Federal Regulations 17 book, and he substituted in lieu thereof some pages -- 18 THE COURT: Right. 19 MR. BECRAFT: Which the clerk has got. Second 20 point, I offered, but the court didn't admit those letters 21 from the lawyers, and I would like to make sure that 22 they're in the record. I gave them to her. 23 THE COURT: Okay. They will just be 24 collective, I think we have already got an A, I think it's 25 B as submitted. We could give them ID numbers now that 678 1 we're end at the end, it wouldn't make any difference 2 matter. It would just be Collective -- what's the next 3 number for identification only, not received? 4 MR. BECRAFT: Can I make one inquiry with the 5 court? Will you give the instructions to the jury when 6 they go back to deliberate as well, a copy? 7 THE COURT: Yes, sir. Right. 8 THE CLERK: Exhibit 58. 9 THE COURT: My sheet is missing. Maybe I can 10 find it. 11 That will be 59 for identification. 58 was the 12 1995 1040 form instructions, so 59. 13 THE CLERK: ID. 14 THE COURT: ID only, four letters. 15 (Exhibit Number 59 was marked. Description: 16 Four Letters.) 17 THE COURT: Anything else? 18 MR. MURPHY: Judge, you want us wearing the 19 mics this morning, the sound equipment? 20 THE COURT: I think it's probably a good idea. 21 You know, we all think we can be heard easily, but it's 22 not always -- I know you're pretty easy to hear actually, 23 Mr. Murphy, but I kind of have to get everybody to do the 24 same thing. 25 MR. MURPHY: Yes, sir. 679 1 COURT SECURITY OFFICER: Good morning, Your 2 Honor. 3 THE COURT: Good morning. We got everybody, 4 Mr. Tuggle? 5 COURT SECURITY OFFICER: Everybody is here. 6 THE COURT: I've found if we let people pick 7 and choose, people that need the mics don't want them. 8 All right. Is everybody set? 9 MR. MURPHY: The government is ready, Your 10 Honor. 11 THE COURT: Mr. Tuggle, we can bring everybody 12 in. 13 (Jury in at 9:02 a.m.) 14 THE COURT: You may be seated. And, Mr. 15 Murphy, is the United States ready to proceed with closing 16 argument? 17 MR. MURPHY: The government is ready to 18 proceed, Your Honor. 19 THE COURT: You may proceed. 20 21 22 23 24 25 CLOSING ARGUMENT BY MR. MURPHY 680 1 MR. MURPHY: Good morning, ladies and 2 gentlemen. 3 THE JURY: Good morning. 4 MR. MURPHY: We're at the end of the case as 5 far as the terms of presentation of proof. What we're 6 going to start with now is presentations of the argument, 7 and your real work will begin shortly when you go back 8 into the jury room and you make a decision regarding this 9 case. 10 I would like to thank you for your jury 11 service. I suspect nobody is looking forward to jury 12 service. It takes time out of everybody's schedule. It's 13 difficult. As busy as folks are today, it is difficult to 14 accommodate in your schedules, but it's important because 15 in the United States, the people, ordinary people, 16 ordinary citizens decide these cases, and the system 17 doesn't function without you, so everybody thanks you for 18 it. We appreciate it. 19 Now, this is a case about taxes. Obviously, 20 the question of taxes -- taxes is a pretty charged issue. 21 It goes without saying, taxes are always controversial. 22 Most folks would probably say they pay too much, but taxes 23 are part of the price we pay for living in the freest 24 wealthiest society in the world. And remember, this isn't 25 a case about whether taxes are good or bad; it's a case CLOSING ARGUMENT BY MR. MURPHY 681 1 about whether the defendant evaded the taxes in this case. 2 Now, she's charged with six counts of income 3 tax evasion. There are three counts -- there are three 4 elements to income tax evasion. That means there are 5 three things the government has to prove. The judge is 6 going to instruct you on this, but the government has to 7 prove an affirmative act of evasion, and I would submit to 8 you, ladies and gentlemen, that based on the evidence in 9 this case, that affirmative act of evasion was the filing 10 of the false W-4 forms where the defendant claims she was 11 exempt for the period of years throughout which the taxes 12 were not taken out of her check. The government has to 13 prove beyond a reasonable doubt willfulness and, again, 14 the government -- the judge will instruct you on that, but 15 that is the violation of a known legal duty. In this 16 case, the defendant has made a good faith defense, and the 17 government has to prove that the defendant did not act in 18 good faith. 19 Third, the government has to prove a tax 20 deficiency, so that -- beyond a reasonable doubt. Those 21 are the three things we have got to prove. So let's start 22 with the tax deficiency, and let's talk about the case -- 23 the facts of the case as we go through. 24 The proof in this case established, I would 25 submit to you, ladies and gentlemen, beyond a reasonable CLOSING ARGUMENT BY MR. MURPHY 682 1 doubt that the defendant was employed by Federal Express 2 Corporation as a pilot from sometime in the 1980s up until 3 the present. Now, the period we're dealing with in the 4 indictment is '96 through '97. The proof in this case 5 showed wages from FedEx of a 183,000, 172,000, $168,000 6 172,000 in '99, 200,000 -- I mean 191,000 in 2000 and a 7 190,000 in 2001. You heard the tax computation. The 8 taxable income is on this bottom line. For '96, it was 9 162,000, 147,000 in '97, '98 was a 137,000, it was a 10 146,000 in '99, it was a 164,000 in 2000 and a 161,000 in 11 2001. The tax due and owing $47,000 in 1996, $42,000 in 12 '97, $36,000 in '98, $41,000 in '99, $47,000 in 2000 and 13 $45,000 in 2001, tax due and owing. I would submit the 14 government proved that beyond a reasonable doubt. 15 Let's talk a little bit about the facts in the 16 case overall. In addition to being a pilot, the proof 17 showed that the defendant, and this is Exhibit 15, I would 18 urge y'all to look at it. You can take any of these 19 exhibits back in the courtroom you wish to take back. But 20 these are the W-2s. For 1998 or '88 rather, the defendant 21 claimed six exemptions. In 1990, she claimed ten. 22 Now, the proof in this case was that the 23 defendant had one child, and if you look at the '92 tax 24 return, it was actually submitted in that case, she had -- 25 her child was the only dependent she claimed. She claimed CLOSING ARGUMENT BY MR. MURPHY 683 1 10 exemptions, ladies and gentlemen. 2 Now, if you go forward to 1996, 1995, that 3 period of time, the defendant begins to submit W-4 forms 4 where she claims she is exempt from taxes. Now, she 5 didn't file in '93, she didn't file in '94. The IRS took 6 action against her in both years to collect that tax. She 7 admitted on the stand she didn't get a refund in '94, and 8 if you look -- if you look at the forms -- if you look at 9 all these forms, they basically say two important things 10 that you need to look at. I claim exemption from 11 withholding for 1997, and I certify that I am both -- that 12 I meet both the following conditions. Last year, I had a 13 right to refund of all federal income tax withheld because 14 I had no tax liability, and this year I expect a refund of 15 all taxable income withheld because I have no tax 16 liability. 17 If you go to this top portion, if you look at 18 this first paragraph there, it says no, you cannot claim 19 exemption from withholding if, one, your income exceeds 20 $650 and includes unearned income, interest and dividends, 21 and two, another person can claim you as a dependent on 22 their tax return. 23 Now, beginning with the '99 W-4 -- and the 24 language on most of these is the same. In later years, 25 they imposed a specific amount of unearned income, CLOSING ARGUMENT BY MR. MURPHY 684 1 interest income you had to have. '94, the IRS anyway, and 2 Ms. Kuglin knew about it, she didn't get a refund of all 3 her tax -- all her taxes. And the IRS levied against all 4 of it. Now, does that square up? You don't get the tax 5 money back. The IRS levies against you and you claim you 6 don't have any tax liability and you got a refund, you're 7 entitled to a refund. Well, that's not what the IRS said, 8 and she had notice of a lot of this stuff. We've got the 9 letters, we introduced approximately seven letters 10 beginning in '95. Also, her income, if you look at the 11 proof was more than $650 in 1996, and if you -- I would 12 also urge you, ladies and gentlemen, to look at these 13 documents called the IRP documents. For example, here is 14 one for 2000. If you go to the back page of it, it shows 15 the amount of interest income she got in dividends in 16 every case. What you're going to see, if you look at 17 those IRP documents, and those are Exhibits 3, 4, 5, 6, 7 18 and 8, I believe, if you look at those documents, you're 19 going to see that a lot of these years where the note on 20 the W-4 said do not claim exempt if you have more than 21 $650 in income and received unearned income, i.e. 22 interest. She had interest, she had more than $650 in 23 income and still she submitted the exempt certificate. I 24 would submit, ladies and gentlemen -- and we're going to 25 talk some about the good faith defense -- that that just CLOSING ARGUMENT BY MR. MURPHY 685 1 wasn't true, that was an act of evasion, that was an 2 untruth statement. 3 Now, one other thing that is kind of 4 interesting about these W-4 forms, if you look at them, 5 there's a statement down there that you have to sign, 6 under penalties of perjury, I certify that I am entitled 7 to the number of withholding allowances claimed on the 8 certificate or entitled to claim exempt status, and then 9 Ms. Kuglin, in every case but one, adds reserving all my 10 constitutional rights in this matter. 11 Well, ladies and gentlemen, if you're entitled 12 to it, why not sign it under penalty of perjury. I mean 13 if you're entitled to it and you think you're entitled to 14 it, and I would submit that that's an indication that she 15 didn't believe she was entitled to it, that she was trying 16 to limit her liability under that statement where she was 17 swearing under penalty of perjury that she was entitled to 18 those exemptions. 19 Now, let's talk -- we proved the acts of 20 evasion, I would submit to you, ladies and gentlemen, 21 beyond a reasonable doubt, and the proof establishes that. 22 Now, let's talk a little about the good faith defense. 23 Under the good faith defense, if the defendant has a good 24 faith belief, in other words, she really believes that she 25 wasn't violating the law, the judge is going to instruct CLOSING ARGUMENT BY MR. MURPHY 686 1 you, ladies and gentlemen, that you have to acquit her, 2 but that belief has got to be good faith. And I would 3 submit, ladies and gentlemen, this case turns on the 4 question of the defendant's good faith. 5 Now, the instruction the judge will give you 6 is -- and this is part of it, this isn't the whole 7 instruction -- however, you may consider whether the 8 defendant's belief was actually reasonable as a factor in 9 deciding whether she held that belief in good faith. It 10 should also be pointed out that neither the defendant's 11 disagreement with the law, nor her own belief that the law 12 is unconstitutional, no matter how earnestly that belief 13 is held, constitutes a defense of good faith. This case 14 turns on good faith. 15 Now, let's -- in talking about that, let's talk 16 about credibility. The judge is going to instruct you 17 about credibility. What credibility is, that's a lawyer's 18 way of saying you can decide whether you're going -- how 19 much of a person's testimony you're going to believe, are 20 you going to believe all, are you going to none of it, are 21 you going to believe some of it. As fact-finders, you 22 make that determination. In other words, is somebody 23 telling you the truth. And in this case, was this some 24 made-up deal to beat the tax system. And the reason I put 25 that question mark after good faith, that's what this case CLOSING ARGUMENT BY MR. MURPHY 687 1 turns on, her good faith. 2 Now, let's talk a little bit about the 3 defendant's contentions regarding the income tax that you 4 heard yesterday when she was testifying on the stand. I 5 would submit the testimony you saw yesterday was the 6 defendant claimed you can't tax ordinary occupations. 7 There's problems with the Paperwork Reduction Act. The 8 income tax is voluntary. There's no provision of the tax 9 law that imposes taxes on individuals, and there's 10 jurisdictional problems. That's more or less, I would 11 submit, what the proof showed she claimed her basis was 12 for not paying taxes and not filing returns. So the 13 question then is did she have a good faith belief, and, 14 ladies and gentlemen, again, if she doesn't have that good 15 faith belief, I would submit the proof in this case -- if 16 you determine she didn't have a good faith belief, I would 17 submit that the proof in this case indicates and 18 establishes that she ought to be convicted. 19 Now, what indicates she didn't have a good 20 faith belief? Well, first of all, let's talk about the 21 age of some of those cases and where those cases were 22 from. She talked about the Pollock case from the 1800s. 23 She talked about Brushaber which was a case prior to 1920. 24 Prior to 1920, like 1914 or something, along those lines, 25 90 year-old case. She talked about cases from the Oregon CLOSING ARGUMENT BY MR. MURPHY 688 1 Supreme Court, the Arkansas Supreme Court and the 2 Tennessee Supreme Court, which through her own testimony 3 admitted that those were not -- that they were state court 4 cases, not federal cases, and that they did not deal with 5 the federal income tax laws. I would submit that that is 6 what the testimony was. 7 Now, ask yourself this: If you were going to 8 take a trip from Memphis to, say, Los Angeles -- well, 9 backing up a second, a lot of this -- the law she quotes, 10 for example, if you look at Exhibit 40, treasury decisions 11 from 1916, Jack Cole case, 1960. The Internal Revenue 12 investigation 19 -- Exhibit 28, 1953. Kind of out of 13 date, isn't it? If you were going to take an automobile 14 trip from Memphis to Los Angeles and somebody came up 15 today and they had a 1918 map, what would you think? 16 Would you think that's reasonable? Now, is that -- was 17 that a good -- does that constitute good faith? In her 18 own testimony, she had access to the Memphis State law 19 library over there at the law school. All kinds of books 20 over there. Does that constitute good faith? And you 21 talk about credibility, does the defendant have anything 22 to lose in this case? This is a defendant that over the 23 six-year period encompassed in the indictment made over a 24 million dollars and paid $1300 in tax is all, when the tax 25 due and owing was over a quarter of a million dollars. CLOSING ARGUMENT BY MR. MURPHY 689 1 Does she have a reason not to be truthful to you, ladies 2 and gentlemen? 3 Now, let's talk about the state cases. She 4 claims she relies on state cases. Ask yourself is that 5 reasonable. She admitted, I would submit the testimony 6 was, that those cases didn't deal with the income tax. If 7 you get stopped for speeding in the State of Tennessee and 8 the trooper comes up and says, sir, ma'am, you were 9 speeding, and you say, well, the speed limit is 80 miles 10 an hour over there in Germany on the Autobahn or it's 80 11 miles an hour in Iowa, does that sound like a good faith 12 excuse? Think about it. It's not -- I would submit that 13 is not good faith, ladies and gentlemen. 14 The W-4s, let's talk about that. Now, if Ms. 15 Kuglin really believed that she wasn't subject to tax, why 16 not pay your tax and contest it? You heard -- I would 17 submit the proof was Ms. Kuglin testified yesterday that 18 she has never filed a refund for all this tax money she 19 has paid in the past years. She filed for 25 years, at 20 least tax returns, but she has never filed a refund. She 21 claims to really believe this, but she hasn't filed a 22 refund. Does that sound like something that somebody that 23 good faith believed this was true would do. 24 The W-4s, is that true? Ask yourself that. I 25 would submit does that constitute good faith or does CLOSING ARGUMENT BY MR. MURPHY 690 1 that -- is that emblematical of somebody who is sneaking 2 around trying to beat the system? Does that constitute 3 good faith? Ask yourself about taking the money out of 4 the bank. We introduced the stuff from the bank. Pull 5 out any statement and what you're going to see, I submit, 6 ladies and gentlemen, if you examine it, is there's a 7 deposit from Federal Express to the defendant that same 8 day or at the next day, she goes and makes big cash 9 withdrawals, several thousand dollars. I would submit 10 that is emblematical or indicative of somebody who is 11 trying to beat the IRS out of tax money. Why do it -- if 12 you have got a good faith belief, what have you got to 13 worry about? And, again, if you have a good faith belief 14 that you're exempt, why not just sign the W-4 that you 15 certify under penalty of perjury that you're entitled to 16 it? Why not just sign it? Why add all this language 17 about reserving all my constitutional rights. If it is 18 the truth, just sign it, what do you have to be worried 19 about? 20 The defendant talked about the fact that -- and 21 so -- you know, I would submit, based on a lot of this 22 stuff, that first issue of I'm not subject to a tax on 23 occupations, look at the age of the cases. Look at what 24 they're talking about. 25 Now, let's talk about voluntariness. We CLOSING ARGUMENT BY MR. MURPHY 691 1 introduced several exhibits like the '95 and '93 1040, and 2 the defendant talked about using some of this material in 3 arriving at her conclusions regarding the income tax, 4 but -- that it didn't apply to her. 5 Judge, my mic is falling apart. I may blow 6 everybody out of their chairs. If you look -- go through 7 these books, the highlighted portions, it's clear there's 8 language about penalties, and, you know, she talked 9 about -- she talked about the OMB issues. But you want to 10 know something, the same section that they talk about the 11 OMB issues in here, they talk about penalties for not 12 filing. And there's also language in these books that 13 indicate if you have a certain amount of income, you have 14 to file. 15 Now, one thing that is striking about the 16 defendant's claimed study of the law, remember the old 17 song by Tiny Tim, Tiptoe through the Tulips, you have to 18 be a little older to remember that. Tiptoe through the 19 tulips with the garden with me. Well, she tiptoed through 20 the tulips. Stuff that helps her support her argument, 21 and I would submit it doesn't support her argument. Boy, 22 she can talk all about it, tell you all about that stuff, 23 tell you about a 1914 case, a 1916 Treasury Department 24 decision, tell you all about that. Now, doesn't know 25 anything about the modern law, hasn't read anything that CLOSING ARGUMENT BY MR. MURPHY 692 1 doesn't support her position, none of that. But a lot of 2 what she claims to be the law, there's stuff in the very 3 material that she used that disputes that fact. She is 4 tiptoeing through the tulips, ladies and gentlemen. If it 5 helps me, I'm going to pick it. If it doesn't help me, 6 I'm going to disregard that. Taxes are voluntary. She 7 got on the witness stand and told you, I would submit, 8 ladies and gentlemen, that there was no provision in the 9 law that required payment of the income tax. I asked her 10 are you familiar with Section 1 of Internal Revenue Code, 11 tax imposed? She turns to it in her book, said that she 12 had been -- knew about this section for years. Section 13 one, the first section of the Internal Revenue Code, 14 unmarried individuals other than surviving spouses and 15 heads of household, there is hereby imposed on the taxable 16 income of every individual, other than the surviving 17 spouse as defined in Section 2A or the head of a household 18 as defined in Section 2B1 who is not a married individual 19 a tax determined in accordance with the following table. 20 Now, ladies and gentlemen, could anybody read 21 that and say in good faith, well, I'm not required to pay 22 tax. And we went through all those other code provisions 23 yesterday, which she admitted she read that says shall 24 make returns, all that sort of language, y'all remember 25 that. Now, how could you read that stuff and say I'm not CLOSING ARGUMENT BY MR. MURPHY 693 1 required to pay, I'm not required to file? 2 You heard her talk about some of the materials 3 she used. Now, a lot of those materials were not 4 government materials and, specifically, there was 5 testimony about IRS code words, that wasn't government, 6 and you ought to ask yourself, does a reasonable person 7 say shall doesn't mean shall, is that reasonable? 8 The OMB argument, you know, the Paperwork 9 Reduction Act wasn't complied with. A couple of things 10 about that. There's an OMB number on all these tax forms. 11 It's right up here, it is highlighted, it's 1545-0074. 12 Now, Ms. Kuglin's claim, I would submit, that the evidence 13 has established is that the OMB -- the OMB requirement 14 hasn't been complied with and she can't determine what tax 15 form she is supposed to use. Okay. Now, this is somebody 16 that was able to go out and find an Internal Revenue 17 cumulative bulletin from 1985. This is the one for the 18 first half of the year. She can find that, find cases 19 from 1890s, 1914 or '13, can find Treasury Department 20 decisions from 1916, but in this index, well, I don't find 21 the reference to the 1040 form. Well, if you go over, if 22 you -- if you look at that number on the 1040 form, it's 23 all up -- in and out throughout this whole list. Okay. 24 It's right there. We circled it. And that code provision 25 or this regulation, Exhibit 56, I can tell I'm getting CLOSING ARGUMENT BY MR. MURPHY 694 1 older, I have trouble reading things close up, 1.6012-1, 2 it reads basically that except as provided in paragraph -- 3 in subparagraph two of this paragraph, an income tax 4 return must be filed by every individual before the 5 taxable year beginning January 1, 1973 during which you 6 received $600 or more of gross income and for each taxable 7 year beginning after December 31st of 1972, during which 8 you receive $750 if such individual is a citizen of the 9 United States. And her testimony, I would submit, ladies 10 and gentlemen, that she was a citizen of the United 11 States. Her testimony was also that she knew about this 12 regulatory provision. She had known about it for several 13 years. 14 If you flip over further, this says forms of 15 return, Form 1040 is prescribed for general use in making 16 the return required under this paragraph. Form 1040A is 17 an optional short form, which in accordance with paragraph 18 A7 of this section may be used by certain taxpayers. This 19 says you have got to file a 1040, but under the 20 defendant's explanation, somebody that has something to 21 lose and has had time to concoct all this stuff, who 22 selectively reads the IRS code, I would submit that the 23 defendant whose testimony was I can't find anything in the 24 code that says I have got to file a tax return or pay. 25 Her testimony is I know about it, but, you know, shall CLOSING ARGUMENT BY MR. MURPHY 695 1 doesn't mean shall. Isn't it odd that you can find 2 something like that? She can find something like this, 3 but she can't find anything that disagrees with her 4 position. And I would submit to you, ladies and 5 gentlemen, it was because she was selective. It wasn't 6 because she really believed it, it was because she was 7 selective. It was because she didn't like paying the tax. 8 She disagrees with the law, she doesn't really have a good 9 faith belief. However, you may consider whether the 10 defendant's good faith belief was actually -- was actually 11 reasonable as a factor in deciding whether she held that 12 belief in good faith. Is this stuff actually reasonable? 13 Ask yourself that. Remember, this case turns on good 14 faith. Ask yourself that. 15 Now, one other thing, we're not dealing with an 16 uneducated person here. We're dealing with somebody who 17 has got a pilot's license, that flies with FedEx, that is 18 a big income earner. 19 The defendant claims she didn't believe she had 20 to file a return. Well, the IRS, I would submit the proof 21 was, sure believed she did and kept sending her notices, 22 send her notice after notice, and those were introduced 23 into evidence. She admitted she got them. Where is your 24 1040? She claims she tried to get answers from the IRS. 25 Well, ladies and gentlemen, here is the thing: If you get CLOSING ARGUMENT BY MR. MURPHY 696 1 stopped for speeding, for example, and you ask the 2 officer -- he gives you a ticket and you say, well, I 3 don't think I should have gotten the ticket, do you think 4 you have got an obligation not to go to court that day or 5 go to the court appearance on that basis? Is that 6 reasonable? I would submit it's not. And that's really 7 what -- well, I wrote the IRS these letters, and look at 8 the letter, there's one letter, the only issue -- 9 initially what she raised was that OMB argument. She got 10 asked, how about cases that dealt with the OMB issue. 11 Well, I -- I don't know anything about those, don't know 12 anything about 1989 cases and, again, this is a woman that 13 can get up there and tell you about -- about a 258 14 Supreme -- page Supreme Court decision in the Pollock 15 case, but can't tell you -- who flies planes 16 internationally for FedEx, makes well over a hundred 17 thousand dollars a year, but she doesn't know anything 18 about any of these cases later on that might hurt her 19 position. Is that reasonable? Is that believable? Is 20 that credible? That is for you, ladies and gentlemen, to 21 decide, but I would submit that based on this evidence, 22 it's not. 23 You heard testimony. She knew that there were 24 penalties for failure to file. We asked her about that 25 from the code. Oh, yes, I know about that. It goes back CLOSING ARGUMENT BY MR. MURPHY 697 1 to the same thing, I'm not somebody liable for the tax. 2 Well, Section one, you didn't hear her testify indirectly 3 about Section one, did you? Because that cuts the legs 4 out from under her argument. 5 You heard the testimony from Mr. Scobey, and 6 that was short testimony, but I would submit it was 7 significant, and here is why. If you're not doing 8 anything wrong, what do you care whether somebody you have 9 a business relationship with cooperates with the IRS in an 10 investigation. What do you care? I'm not doing anything 11 wrong, haven't done anything wrong, I really believe this 12 stuff, or if you really didn't believe it, if it was all a 13 come on, if really what was going on was you disagreed 14 with the tax law, ask yourself would you not want the IRS 15 talking to somebody you had a business relationship with. 16 I would submit, ladies and gentlemen, that common sense 17 indicates you wouldn't. 18 Ladies and gentlemen, I have probably talked 19 too long now. Thank you for your participation in this 20 case. Thank you for listening to the evidence and the 21 lawyers. 22 In closing, I would like to say to you, ladies 23 and gentlemen, I submit that if you consider the proof in 24 this case, all the proof, you're going to come to the 25 conclusion -- and remember you don't -- the fact that the CLOSING ARGUMENT BY MR. MURPHY 698 1 defendant got up there, she has made the good faith 2 defense, the burden is on the government to rebut that 3 defense, to prove beyond a reasonable doubt that she 4 didn't believe it in good faith, but if you look at her 5 own testimony, look at her own testimony, what she 6 testified to on cross, I would submit that establishes she 7 didn't have a good faith belief. Look at the other things 8 she has done, like the false W-4s, like that little deal 9 with reservation of all my constitutional rights where she 10 is supposed to certify it's true, stripping the money out 11 of the bank, those are indicative of attempt to evade. 12 The fact that she had an opportunity to sit down with the 13 IRS and talk about, I would submit the proof was, her 14 taxes, not somebody else's, not some general kind of, 15 well, why does the code apply to me, but her taxes, ladies 16 and gentlemen, her situation, what she owed the IRS, what 17 she was required to file. She had that opportunity, she 18 didn't do it. I would submit there's a reason why. 19 In closing, ladies and gentlemen, I would 20 submit that the government has established beyond a 21 reasonable doubt that the defendant evaded income taxes as 22 charged in the indictment, and I would ask you, ladies and 23 gentlemen, based on that proof to return a verdict of 24 guilty as to all six counts of the indictment. Thank you, 25 ladies and gentlemen. 699 1 THE COURT: Does the defense wish to give a 2 closing argument? 3 MR. BECRAFT: Yes, Your Honor. 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 CLOSING ARGUMENT BY MR. BECRAFT 700 1 MR. BECRAFT: May it please the court, ladies 2 and gentlemen of the jury, you were picked, we went 3 through a jury selection process on Monday, you had a 4 bunch of questions asked of you, the lawyers got together 5 and we made a selection of the potential -- of the jurors 6 that would sit down and try this case. I have watched you 7 over the last several days, and it's clear to me, and I 8 know it's clear to Ms. Kuglin, I know it's clear to Ms. 9 White, and I know it's clear to Mr. Murphy, and I know 10 that Judge McCalla knows that this is the case that each 11 and every one of you have been attentive. You have 12 listened and you have diligently discharged the obligation 13 of being a juror. Being a juror is real important for 14 justice to be meted out here in America. Be it a civil 15 case or a criminal case, these controversies that we have 16 in our society are resolved only because people such as 17 yourselves, the people of a community acknowledge that we 18 have to have a way of resolving our controversies here in 19 America and they have a willingness to come in and decide 20 disputed cases such as this one. 21 And let me just tell you, ladies and gentlemen, 22 everybody on this side of the courtroom from the court on 23 down, we want to thank you for the service that you have 24 given in this case. As Judge McCalla -- and there is no 25 doubt -- there can be no doubt that this is a criminal CLOSING ARGUMENT BY MR. BECRAFT 701 1 case, and the way we try criminal cases here in America is 2 they are a little bit different from a civil case. You 3 know, we got -- picture in your mind, if you will, that 4 the lady, the lady of justice that holds the scales, the 5 balances. Well, the system of justice here in America 6 says that in a civil case, the party that prevails is the 7 one that has the preponderance of the evidence which is 8 the way it goes. Whose weighty evidence weighs just a 9 little bit more than the other side? If it tips and 10 balances this way in a civil case, that's the way you make 11 your decision, except here in America, in criminal cases, 12 we have a different standard, if you will. In criminal 13 cases, we require that the government prove its case 14 beyond a reasonable doubt. Now, I want to tell you a 15 little bit about reasonable doubt, give you some of the 16 things that I think are important. 17 You know, after all these lawyers sit down, the 18 court is going to give you some instructions, and I really 19 think that it is going to be beneficial, and I have no 20 doubt that you will do this, but the court is going to 21 read off these instructions right here, and he's going to 22 tell you the various things that you must consider in a 23 case such as this one. 24 Now, one of the points that he will cover with 25 you is this concept of reasonable doubt. Now, a CLOSING ARGUMENT BY MR. BECRAFT 702 1 reasonable doubt is a doubt based on reason and common 2 sense, and a lot of people really understand that in a 3 criminal case, the government has got to prove their case 4 beyond a reasonable doubt, but there is a real important 5 concept that I want you to remember, and it has direct 6 application to this case. Judge McCalla is going to tell 7 you that that doubt is the doubt that you would have when 8 you're considering the most important affairs of your 9 life. 10 Now, you have got to be -- that means that you 11 have got to look at the situation and conclude that what 12 are some of the most important affairs of people's lives. 13 Well, you know, buying a car is an important affair. 14 Getting a job is an important affair. Buying a house is 15 an important affair. Getting married. But may I suggest 16 to you what it takes, what is perhaps the most important 17 affair in a party's life. Let me give you an example. We 18 all have children, or most of us, and may I suggest to you 19 that important affairs are something like this: Suppose 20 your child is injured, is in the hospital and you have got 21 to go down to that hospital and make certain decisions. 22 You make a decision is an arm cut off, do you make a 23 decision to cut off an arm that has to be amputated. I 24 suggest to you that that is the caliber of things that are 25 most important in life. What if a child -- what if you CLOSING ARGUMENT BY MR. BECRAFT 703 1 have to make a decision about whether a child lives or 2 dies. That, ladies and gentlemen, those types of matters 3 are the most important in life. And so in this situation, 4 what you have to do is you have to look at the totality of 5 the evidence, weigh it, consider the burden that the 6 government has, must carry and make a determination. This 7 is one of those most important affairs of your life. Just 8 like making a decision for a child, and you have got to 9 weigh this case and determine has reasonable doubt been 10 proven in this most important affair in the life of Vernie 11 Kuglin. 12 Now, what is it that the government must prove? 13 Well, the court has permitted me to tell you a few things 14 in advance of what the court is going to tell you. Now, 15 perhaps this is a little light, I will try to improve it. 16 I have a copy here, I hope that you can see this good. 17 Now, in criminal cases -- you know, this is a tax evasion 18 case, as I told you in opening, lawyers can kind of 19 catalog, courts kind of catalog things, and we call them 20 elements. But what elements are, are facts. In order to 21 find Vernie Kuglin guilty of Count 1 or Count 6, the 22 government has got to go through for each count and prove 23 very specific facts. The first fact that must be proven 24 is a tax deficiency. Well, ladies and gentlemen, let's go 25 through this case, we didn't have any objections to this CLOSING ARGUMENT BY MR. BECRAFT 704 1 chart right here. Did you see Vernie Kuglin get up and 2 object when FedEx came in and said how much she made? Did 3 we have any questions when Ms. White got up and said, 4 well, gee, this is what she owed? No, ladies and 5 gentlemen, that is not really a disputed element of fact 6 in this case. 7 Let me tell you about the second element in 8 this case. The second element that the defendant 9 committed an affirmative act constituting tax evasion or 10 attempted tax evasion. Well, to a degree, that is a 11 disputed element, but what I want to discuss with you now 12 that I have this closing opportunity to kind of hit our 13 side of the case, is I want to discuss this last bottom 14 issue here, that the defendant acted willfully, meaning 15 Vernie Kuglin as to each count acted willfully. 16 Well, moments ago, Mr. Murphy got up here and, 17 you know, he has the right to do that, you know, he pulled 18 out an excerpt from the jury instructions and -- you know, 19 he pointed out, he kind of focused in on what the 20 government thinks is important. Well, let me kind of put 21 the whole thing into context and not just pull out a 22 little part. What the court will be telling you about 23 this defense of good faith is this: If the defendant 24 acted in good faith, that is to say she actually believed 25 the actions she took were allowable by law, then she is CLOSING ARGUMENT BY MR. BECRAFT 705 1 not guilty of the offense of tax evasion. It does not 2 matter whether the defendant was right or wrong in her 3 beliefs, nor does it matter if her beliefs make sense, 4 sound reasonable to you, the jury, or to me, as the judge. 5 The only thing that matters is whether or not the 6 defendant actually believed she was correct in her 7 actions. That, ladies and gentlemen, that's the standard 8 there for willfulness. Willfulness means, in essence, you 9 got to know, Vernie Kuglin has got to know she was 10 required to file an income tax return. She has got to 11 know that she had to pay income taxes, and with knowledge 12 of that duty, she deliberately and maliciously with evil 13 intent, no, I'm not going to do that. What the government 14 has done here with this illustration, that excerpt out of 15 the jury instructions, is this: He has focused in on a 16 point that we don't deny, that you can consider the 17 reasonableness of the defendant's belief in making a 18 determination as to whether or not she actually believed 19 them. 20 Well, we have some very, very specific defenses 21 that have been asserted in this case, and the judge will 22 be telling you about it, but I think to need to in advance 23 tell you about them right now. We contend Ms. Kuglin did 24 not act willfully, that she does, in fact, have a good 25 faith defense. And the reason why we say that is there CLOSING ARGUMENT BY MR. BECRAFT 706 1 are certain points of law that do support what she has 2 done. First and foremost, she has the right to rely on 3 government documents. Doesn't it make sense that that is 4 the law? I mean if you read something from the 5 government, shouldn't you be entitled to consider -- to 6 rely upon what the government has to say and even act upon 7 it, and then when the government comes along and says, oh, 8 you have done something wrong, are you to be deprived of 9 saying, well, the government said this? No, that is a 10 very reasonable, it's an acceptable defense. 11 Now, there's even another aspect of the defense 12 that we're asserting in this case is the species of this 13 overall good faith defense is this: The court will tell 14 you that Vernie Kuglin is not presumed to know the law, 15 meaning that, as she sits here clothed with the 16 presumption of innocence, as she sits here, you know, you 17 got to look at her, well, the law -- she really doesn't 18 have any knowledge of the law, but she engaged in times in 19 the fast, starting off in 1992 with this presumption that 20 she didn't know anything about the law, we know that 21 starting in 1992, she started a study of the law. 22 Now, that study of the law, I think, is 23 entirely reasonable. You can rely upon what you read in 24 the law and you can rely on what the government documents 25 have to say. Now, that, ladies and gentlemen, reliance on CLOSING ARGUMENT BY MR. BECRAFT 707 1 those government documents as well as, you know, don't 2 presume some other aspect of the law and clothe her with 3 that presumption that she knows such. The only thing she 4 can really know is what she told you about in this 5 courtroom. 6 Now, I want to -- I want to go, if I can, to 7 the particulars of her specific arguments. One was this 8 argument about liability. Is this some concocted, 9 something drawn out of the air argument? Well, I just 10 happened to grab real quick Exhibit Number 36, which 11 incidently is the 1975 federal income tax form. You know, 12 the front and the back of a Form 1040 instruction booklet 13 that belongs to her, but Ms. Kuglin, you know, she 14 testified during her testimony that she was reading, 15 she -- you know, she came to some knowledge, some 16 appreciation of this thing known as the Privacy Act, and 17 to her, you know, her belief about the Privacy Act is 18 this: It's a -- it sounds like it's a reasonable law if 19 it doesn't exist, but she thinks that it does exist. 20 Government agencies should tell people what laws requires 21 them to do something, particularly if it is submit 22 information. 23 Now, ladies and gentlemen, look at this big 24 thick thing. Nobody disputes this is the Internal Revenue 25 Code. And don't you know -- I think we can all CLOSING ARGUMENT BY MR. BECRAFT 708 1 appreciate, just from our own knowledge, common knowledge 2 that this is just the beginning, that there are manuals, 3 there are books, that there is everything else in the 4 world dealing with this incredibly complex law. 5 Now, Ms. Kuglin has this question, as does 6 every other American, what law requires her to do 7 something. Well, that's what is talked about in the 8 Privacy Act. And here we know for a fact that the 9 government, the IRS complies with the Privacy Act, because 10 in this Exhibit Number 36, there's a Privacy Act 11 notification. What does the IRS itself say about the laws 12 that require someone to submit a return? Let me kind of 13 blow this up a little bit. 14 MR. MURPHY: Judge, can we approach for a 15 minute? 16 THE COURT: You may. 17 (The following proceedings had at side-bar 18 bench.) 19 MR. MURPHY: Judge, I hate to interrupt defense 20 counsel's closing, but he's arguing the law. I'm not 21 hearing what Ms. Kuglin believed. He's arguing about what 22 the law is. I don't think he can get do that. 23 MR. BECRAFT: I was just getting ready to get 24 into a very specific exhibit. 25 THE COURT: I'm going to tell them what the law CLOSING ARGUMENT BY MR. BECRAFT 709 1 is. I think that's probably what we need to do. 2 MR. BECRAFT: Can I take care of it, Judge? 3 MR. MURPHY: Sure, sure. 4 MR. BECRAFT: I will do it. 5 (The following proceedings were had in open 6 court.) 7 THE COURT: Wait just a second. Thank you. 8 MR. BECRAFT: You know, I started off in this 9 case, and I said, I think I did in opening, and we did it 10 when Ms. Kuglin was on the stand, I want to restate it 11 right now, you know, we started off this case, and the 12 court said -- told y'all that what the witnesses say and 13 what the lawyers say is not the law, and what I'm telling 14 you right now is really the facts and beliefs about the 15 law. But don't take -- you know, if you were -- if I slip 16 up, like Ms. Kuglin did and say, oh, this is the law, 17 you're to get the law from the court rather than me, 18 you're to get the facts from her. 19 Now, that having been said, let me get back to 20 what the government said in this particular exhibit. Look 21 down there, it says -- page two, bottom left-hand 22 corner -- the Internal Revenue Code requires every person 23 liable for any tax imposed by the code to make a return or 24 statement according to the forms and regulations 25 prescribed by the Internal Revenue Service, Section 6001 CLOSING ARGUMENT BY MR. BECRAFT 710 1 and 6011 of their regulations. 2 Now, we know that from this document what, 3 according to Ms. Kuglin, are the two laws that require her 4 to file a return. Did we not have in this case, I 5 think -- Mr. Murphy, correct me if I'm wrong, but I think 6 that Mr. Murphy and Ms. Kuglin were yesterday afternoon 7 engaged in reading of the code. And I recall that the 8 words that both of them spoke on that occasion were 9 something to this effect, that the law -- these two laws 10 right here or their beliefs about the law, you know, it 11 applies to persons liable just like that statement says, 12 those who are liable for tax. Now, let's step into Vernie 13 Kuglin's mind. She engaged in this study and she did not 14 find that when she looked at the laws that require the 15 submission of returns, it didn't say something like, you 16 know, everybody making so much money is required to file a 17 return. If you use these terms of art, I think the exact 18 testimony she gave, terms of art every person liable, and 19 that prompted her to engage in a study of the code, and 20 she went through here and, sure, she used this index, she 21 pulled out this book that she got in 1994, she told you 22 she studied the index, and she looked at the section of 23 the index that said liability for tax, and she starts 24 looking at all these other taxes and sees provisions in 25 the Internal Revenue Code, if you do something here, you CLOSING ARGUMENT BY MR. BECRAFT 711 1 know, you're liable for the tax or, you know, there's 2 other sections making someone liable, and so Vernie Kuglin 3 comes to the position, that, you know, I need to find the 4 sections of the code, the Internal Revenue Code in 5 reference to the income tax whereas Congress has used the 6 words somebody is liable for a tax. Because Vernie Kuglin 7 said you're only required to file a return if you are 8 liable. And so she sits down and she takes that index, 9 finds one section that makes somebody liable for the 10 filing of or makes somebody liable for the federal income 11 tax. nonresident aliens and foreign corporations. Now, 12 there wasn't any testimony that -- I didn't hear it, the 13 government had the opportunity to prove one other section 14 of the code what makes someone liable, that didn't happen. 15 And also, Ms. Kuglin, my recollection is, that during an 16 exchange with the government on cross examination, Ms. 17 Kuglin said, well, you know, I engaged in a search, a 18 computer search for the word liable in the income fax 19 sections of the code and I still only came up with that 20 one section. 21 Now, ladies and gentlemen, what we have right 22 here is a fundamental problem. You know, Vernie Kuglin, 23 presumed not to know anything about the law, starts her 24 studies by '93 and '94 and '95, and she has reached the 25 conclusion filing returns applies to those parties that CLOSING ARGUMENT BY MR. BECRAFT 712 1 are liable, and the only section I find is -- the only 2 section that I find of someone being liable is this 3 nonresident aliens or foreign corporations. 4 Now, there's nothing in this evidence that 5 shows that she didn't believe that. Now, we do have -- 6 the government wants to try to make a big point about 7 these letters coming from the government. You know, we 8 have got one letter here, if I can go ahead and address it 9 that the moment -- we have got this letter here in October 10 of 1995 when Ms. Kuglin got around to asking the 11 government some -- asking the government some questions. 12 Let me go ahead and flip it up on the screen. This is the 13 first letter that she wrote to the IRS. It is Exhibit 41. 14 It is dated October 18th, 1995. It sets forth some 15 positions down here, and let me just tell you, you read 16 these parts of this letter right here, you can see that 17 Ms. Kuglin didn't invent anything about this Paperwork 18 Reduction Act argument. You know, she is mentioning 0067. 19 You know, she is mentioning the Paperwork Reduction Act. 20 She is mentioning individual income tax 1.1-1, she knows 21 about this stuff. But what Ms. Kuglin did is she didn't 22 invent something here. We know that, you know, this 23 document right here shows that the IRS received this 24 letter, IRS, P. O. Box -- I can't read it, Memphis, 25 Tennessee. It was received November 13th, 1995, the IRS CLOSING ARGUMENT BY MR. BECRAFT 713 1 got this letter. It asks simple questions. I want to 2 know, says Ms. Kuglin, the statutes and implementing 3 regulations that require me to file a return, the statutes 4 and implementing regulations which specifically designate 5 the exact tax for which I am liable. You know, I think 6 here in America, American people have the right to ask the 7 government questions. You know, to say the American 8 people cannot -- you know, I think even the Bible says you 9 can ask God questions. And I don't think that the IRS is 10 greater than God. And I think it's perfectly logical -- 11 MR. MURPHY: Judge, can we approach? 12 THE COURT: You may. 13 (The following proceedings had at side-bar 14 bench.) 15 MR. MURPHY: Judge, I'm going to object. This 16 is an improper argument. That stuff about the IRS isn't 17 greater than God, he's just -- 18 MR. BECRAFT: Okay, I won't do it again. 19 MR. MURPHY: He's appealing to the prejudices 20 of the jury. 21 THE COURT: I think it is an appeal to 22 prejudice. I'm going to tell the jury it is an appeal to 23 prejudice and they have to disregard it. 24 (The following proceedings were had in open 25 court.) CLOSING ARGUMENT BY MR. BECRAFT 714 1 THE COURT: Ladies and gentlemen, there's some 2 subjects that are very sensitive in our society. One is a 3 reference to religion. It is inappropriate for an 4 attorney on any side to refer to a deity and to make 5 comparisons with any other entity in a negative or 6 positive way. We're here to decide this case on the facts 7 and the evidence and the law. I'm going to ask you to 8 disregard the comments by counsel about God and the IRS. 9 I say that in appropriate respect to our separation of 10 powers of the First Amendment. You shouldn't consider 11 that at all. 12 MR. BECRAFT: Thank you, Your Honor. 13 But it just makes sense that American people 14 ought to have the right to ask questions of government. 15 Now, the prosecution's position is that once 16 Ms. Kuglin asked these questions, about a month later -- 17 take a look at exhibit number -- 18 THE CLERK: Is your microphone on? 19 MR. BECRAFT: No, it's not. I turned it on 20 now. Take a look at Exhibit Number 42. Oh, that other 21 exhibit was October 18th of '95; this is -- what does it 22 say? November 25th of '95. Here again, Ms. Kuglin is 23 asking questions. I don't think we need to necessarily 24 look at them all right now, but, again, I direct your 25 attention to the second page, compare the questions she CLOSING ARGUMENT BY MR. BECRAFT 715 1 asked on the first exhibit and look at this one, and she 2 is again asking the same questions. I think this one has 3 a couple of more questions that are being asked. Well, 4 the government wants you to think that someone -- 5 certainly has the right to ask questions -- was -- 6 received a reply by means of this series of letters here 7 from the IRS. You know, I guess if you ask a question of 8 government and you get some paperwork back from them again 9 and it doesn't answer your questions, the government's 10 suggestion is that you're under some type of requirement 11 to fold, you know, you don't need to insist any more that 12 you get an answer to your question. Yet, Vernie Kuglin's 13 questions are critically important. Right or wrong, she 14 has the right to try to ask questions of government and 15 insist on an answer. 16 Now, examine -- you know, I don't know all the 17 exhibit numbers right here, but they're sitting right up 18 here, and those letters that you got back, does the IRS 19 answer a single question she posed? In November of 1995, 20 there was the opportunity for the government to come 21 along, the IRS to come along and answer those questions, 22 and if that had happened, ladies and gentlemen, may I 23 suggest -- 24 MR. MURPHY: Judge, Judge, he's speculating 25 now, and I submit he can't do that. CLOSING ARGUMENT BY MR. BECRAFT 716 1 THE COURT: That's beyond the scope of the 2 proof in the case. Objection has to be sustained. 3 MR. BECRAFT: The point I make, ladies and 4 gentlemen, is that you can examine those letters, and they 5 do not constitute a reply to the questions of Vernie 6 Kuglin. That happened back in 1995, and this controversy 7 has rolled on and Ms. Kuglin has gone through '96, '97, 8 '98, '99, 2000, 2001, 2002, maybe up throughout this trial 9 without having received a reply from the government. And 10 to say that in a situation like this that an American is 11 culpable, criminally culpable, that you have acted with an 12 evil intent, that you really didn't believe these things 13 and you acted willfully just simply does not match the 14 facts of this case. 15 Let me move on to a couple of other documents. 16 The government mentions some of these -- the age of some 17 of these cases, these documents that are used. You know, 18 the government casts aspersions upon a statement by a 19 government official appearing in Exhibit 28, Mr. Dwight 20 Avis, making a statement. You see where my finger is? 21 Let me point this out to you now. Your income tax is one 22 hundred percent voluntary tax and your liquor tax is one 23 hundred percent enforced tax. Now, ladies and gentlemen, 24 words, words, something like this, you present to an 25 ordinary American like her, an airline pilot, and it has a CLOSING ARGUMENT BY MR. BECRAFT 717 1 certain meaning, and Americans are not presumed, she is 2 not presumed to know the law, but you can't presume what 3 she -- what type of conclusion she is supposed to reach 4 from that. You know, the government makes much of the 5 fact that she's a pilot. Well, she is not a lawyer, 6 ladies and gentlemen. Well, I'm a lawyer. There's no way 7 I can climb into, I guess, a 757 and push down that 8 throttle and take off out here at the airport. I don't 9 think we need to compare Vernie Kuglin to a lawyer. I 10 think we need to take into consideration what the facts 11 are, that she is a pilot trying to learn a little bit 12 about the law. So, you know, Vernie Kuglin has told us 13 that this statement here has some significance for her. 14 She has told us that, you know -- and we're not saying, 15 and I don't think the evidence supports this proposition 16 that Vernie Kuglin was down there at Memphis State, down 17 there at the law library on Central spending oodles of 18 time going through those books. She told us that what she 19 was doing was she was getting references from cases from 20 the things that she read. She was talking to people and 21 finding documents, and while I don't think that there was 22 any specific testimony about -- you know, she did read 23 this document here Treasury Decision 2313, she read it 24 before April of 2000 -- April of 1996. But, you know, 25 it's a document that she did read. It is a document that CLOSING ARGUMENT BY MR. BECRAFT 718 1 comes from the government that had an impact upon her 2 belief. And there's -- its age doesn't mean anything. It 3 is offered to prove that she believed what the government 4 had to say. Read the document here. It is talking about 5 nonresident aliens filing Form 1040. 6 Ms. Kuglin went a step further. Let me kind of 7 roll into at this stage the Paperwork Reduction Act 8 argument. Let's take a look at a document right here that 9 she found very, very important. Look at this, this is 10 Form 2555, it is named foreign earned income, and it has 11 this OMB control number up here, you can take this back to 12 the jury room and look at it. Now, take a look at this 13 and ask yourself a question, can someone, from government 14 documents, reach a conclusion different from a lot of 15 people? Well, I suggest to you that that is not only 16 possible, it did here in this situation. Vernie Kuglin, 17 having a copy of the Internal Revenue Code, knows what 18 Section 1 of the Internal Revenue Code deals with. There 19 could be no question about that, because that was a matter 20 that Mr. Murphy covered with her specifically that read 21 from the code. What Ms. Kuglin was intrigued by is 22 something entirely different. She found that it seems 23 only logical to her -- and see this number right here, 24 this 1.1-1? You know, that's not an invention on the part 25 of Ms. Kuglin, because I think that she is especially CLOSING ARGUMENT BY MR. BECRAFT 719 1 stating it -- I'm going to refer back to Exhibit Number 41 2 right here, correct me if I am wrong, but I see that this 3 document says, flat out, it's talking about Form 2555, 4 foreign earned income, and she is talking about 1.1-1, and 5 this is no invention on her part because she mentions it 6 in a letter to the IRS dated October 18th of 1995. So to 7 explain to you, the jury, how she reached these 8 conclusions, we offer an official government document. 9 Now, there wasn't any testimony that Ms. Kuglin acquired 10 this document in any other way than what she has already 11 told you, people tell her things. She checks it out and 12 goes and gets information. She knows -- she said we had a 13 little -- we were wondering about how to express it in 14 clear language for the benefit of the jury yesterday, but 15 I think I asked a question, you know, I used the term 16 implementing regulations, but Ms. Kuglin, I think she 17 concludes, she said this is the regulation that matches 18 and supports Section 1 of the Internal Revenue Code. And 19 to her, the document that is required to be filed in 20 reference to meeting the requirements of Section 1 of the 21 Internal Revenue Code is this document that has that 0067 22 OMB control number on there, which is Form 2555. 23 Now, that's odd, people. It's real odd. But 24 the question I want to present to you is, where is it 25 shown that Vernie Kuglin did not believe that? Right or CLOSING ARGUMENT BY MR. BECRAFT 720 1 wrong, that's not really the issue in this case. The 2 question is did she believe it, right or wrong, and if she 3 believed it, it's your obligation to conclude that she did 4 not act with that criminal state of mind, which is 5 essential for you to convict her on any count in the 6 indictment. 7 I want to move on to -- I think I have covered 8 a lot of the points that need to be covered here, but 9 there's one final thing that I need to point out to you. 10 You know, Ms. Kuglin said she is a member of the 11 Libertarian party. I think it is kind of common knowledge 12 that the Libertarians, they believe in the rights -- 13 MR. MURPHY: Judge, I'm going to object to 14 counsel's comment. 15 MR. BECRAFT: I will withdraw that. 16 THE COURT: I think that is outside the proof. 17 We know she is a member, but that's about it. 18 MR. BECRAFT: There can no doubt, once you take 19 the totality of what she -- who she is, that she is 20 someone that really is committed to this proposition, you 21 know, I -- how many of us have sat down and listened to a 22 tape series on the Constitution, Democracy in America, 23 Common Sense, Text of the Constitution, Bill of Rights? I 24 think we all know what the Bill of Rights does is it 25 protects rights. We have got a lady here that listened to CLOSING ARGUMENT BY MR. BECRAFT 721 1 tapes on the Bill of Rights. Is it something that you 2 denigrate her for, for trying to protect rights? Well, 3 this gets back around to the most fundamental question in 4 this case. The most fundamental question in this case 5 centers upon what Ms. Kuglin learned regarding the -- you 6 know, the nature of the federal income tax here in 7 Tennessee. She read this case, Jack Cole against 8 McFarland, it had a direct relationship to her beliefs 9 about the federal income tax. You know, she testified 10 that she believed that the federal income tax was an 11 excise tax. Is that something that is concocted out of 12 thin air? I would suggest to you it is not concocted out 13 of thin air, and the reason for that is that if you take a 14 look at Exhibit Number 17, which is the 1995 Form W-4, you 15 will look through this documents, and one of the cases 16 that she talked about in her testimony was this Brushaber 17 case, an exhibit, document provided to her employer, 18 nobody doubts it was signed, you know, 12-30 of '95. The 19 attachments, the exhibits that are attached to this 20 document, it says there, it says Brushaber versus Union 21 Pacific. Read the sentence here. It says taxation of 22 income is in its nature an excise case. Right there. 23 Brushaber, Union Pacific, an excise. That's what Vernie 24 Kuglin believes. She described for you about her beliefs 25 about what the Constitution of the United States provides CLOSING ARGUMENT BY MR. BECRAFT 722 1 for with reference to powers of taxation. She told you 2 about the old -- the history of the taxing provisions of 3 the United States Constitution. She told you about that 4 Pollock case. She told you about the 16th Amendment. She 5 told you about the Brushaber case. The Brushaber case 6 says, oh, in a constitutional sense, the federal income 7 tax is an excise tax. 8 Now, ladies and gentlemen, I think when a court 9 is talking about, you know, constitutional things, those 10 are kind of permanent, and, you know, the mere fact that 11 long ago in legal history there was this case before 1920 12 that described in a constitutional sense the federal 13 income tax as being an excise tax, I don't suggest that 14 its ages makes it irrelevant like the government does. I 15 would suggest that the age of a case is indicative of its 16 wisdom. 17 Let me talk about this one case here that Ms. 18 Kuglin found real important, Jack Cole versus McFarland, 19 here you can see it on the screen, it is Exhibit Number 20 35. I merely direct your attention to what I -- what 21 appears to be a very important point made by the Tennessee 22 Supreme Court in 1960. Realizing and receiving income or 23 earnings is not a privilege that can be taxed. Now, when 24 you're dealing with constitutional questions, as Ms. 25 Kuglin did, you know, it -- it just seems natural that you CLOSING ARGUMENT BY MR. BECRAFT 723 1 would accept without question, well, the Supreme Court of 2 the United States says it's an excise tax, and it just 3 seems so natural for someone to have the United States 4 Supreme Court -- I mean the Tennessee Supreme Court say an 5 excise tax, can't be used to tax -- or you have a natural 6 right of receiving and realizing income, and cannot an 7 American like her read these documents? She is not a 8 lawyer that's going to go down and do tons and tons of 9 research. She is going to read these basic things and 10 reach certain conclusions. Is she not entitled to rely on 11 these documents? I would suggest that she is. 12 Now, one final point that I think I need to 13 address right here is Mr. Murphy brought in -- he held up 14 a big thick book yesterday. He pointed out in his 15 arguments in closing, he points to this Section 56 -- I 16 mean Exhibit 56, 1.6012-1, you know, which I guess the 17 jury probably knows enough about this to determine that 18 this is an income tax regulation. Look at it from Ms. 19 Kuglin's viewpoint. She looked at these provisions of the 20 code. She has looked at these things like this, and what 21 she is looking for is what makes me liable. I want to see 22 where Congress has made me liable. Congress knows how to 23 make someone liable. They did so with that Section 1461, 24 according to her beliefs. Nonresident aliens and foreign 25 corporations. She is looking for one -- that was her CLOSING ARGUMENT BY MR. BECRAFT 724 1 question to the government, what makes me liable for the 2 federal income tax. She did a computer search looking for 3 the word liable or tried to find a statute liable. Well, 4 the only thing that you can surmise from all of this is 5 that, well, gee, the law appears to -- or at least her 6 belief is that the law appears to impose a requirement on 7 people who are liable, and then just kind of have this 8 Section 6012 dangling out here and having no connection to 9 being made liable. Now, that's -- that's Vernie Kuglin's 10 beliefs. 11 Now, she is a pilot. She is not a tax law 12 professor. She is not a lawyer. She has just simply 13 honestly sat down and examined the tax laws, found some 14 conflicting things. She has read certain information that 15 reaches her -- that causes her to reach certain 16 conclusions, and the government hasn't really established 17 any type of a case that she did not believe these things. 18 In closing arguments, there has been 19 indications from the government or suggestions that all of 20 this stuff was recently invented, which is simply not the 21 case, because the very documents that have been offered 22 into evidence show that she was talking about this stuff 23 before the years covered by the indictment. It's not an 24 invention. The totality of this case is this: Vernie 25 Kuglin does her studying. In the fall of '95, she writes CLOSING ARGUMENT BY MR. BECRAFT 725 1 two letters to the IRS. I think they're Exhibits 41 and 2 42, get them and read them, poses the questions to the 3 IRS, what statute makes me liable, and gets no direct 4 answer. Presume her to be wrong, is being wrong criminal? 5 And I want to get back to what I did when I had my opening 6 statement up here, I just want to grab this and throw this 7 down one more time. Tax evasion is not committed by 8 reading the law and relying on the government. This is 9 good faith. 10 Ladies and gentlemen, that right there is the 11 reason why I contend that Vernie Kuglin is not guilty of 12 tax evasion. 13 Now, I want to address one final point that 14 relates to your duties as jurors. You know, we're all 15 familiar with the fact that in America, we have got three 16 branches of government. May I make a suggest that the 17 truth of the matter is that there are four branches of 18 government? 19 MR. MURPHY: Judge, can we approach? 20 THE COURT: You may. 21 (The following proceedings had at side-bar 22 bench.) 23 MR. MURPHY: Judge, it sounds like we're 24 heading into a nullification argument, and I object that 25 there are not four branches of government, there's three. CLOSING ARGUMENT BY MR. BECRAFT 726 1 MR. BECRAFT: I'm going to tell the jury that 2 the jury is the fourth branch of government that makes the 3 decisions in criminal case -- 4 MR. BERNHOFT: Basic civics. 5 MR. BECRAFT: It's not a nullification 6 argument, Your Honor. 7 MR. MURPHY: Oh, yes, it is, Judge. 8 MR. BECRAFT: I'm going to say you represent 9 the judiciary, he represents the executive branch, that 10 code is the work product of Congress, but there is a 11 fourth branch of government, it's them. 12 THE COURT: There's not a fourth branch of the 13 government. If there is, it's not the jury. The jury is 14 part of the judicial system, so they're part of the -- if 15 they're part of any branch, they probably -- they're part 16 of the third branch. 17 MR. BECRAFT: I won't call them the fourth 18 branch. 19 THE COURT: The fourth branch is the press and 20 media, if we wanted to talk about sort of -- have a 21 discussion about how things work, but the jury is part -- 22 I will tell them right now if you want me to, they're part 23 of the function of the judicial branch. I think that's 24 right. 25 MR. BECRAFT: I won't get into that, Judge, and CLOSING ARGUMENT BY MR. BECRAFT 727 1 I won't label them a branch of government. What I'm 2 leading up to is what their function is. They're going to 3 take this contested case. 4 THE COURT: They're part of the functioning of 5 the judicial branch in administering the law. I mean 6 they're paid by the judicial branch. They're drawn by the 7 judicial branch. I mean they are part of the judicial 8 branch. 9 MR. BECRAFT: I'm not unaware. I was 10 colloquially expressing them as being the fourth branch of 11 government. 12 THE COURT: I think -- I think it is an area 13 that we best avoid. 14 MR. BECRAFT: Okay. 15 (The following proceedings were had in open 16 court.) 17 THE COURT: We're going to take a restroom 18 break, and it will be -- we're going to take our 15-minute 19 break at this time. When we come back, we will conclude 20 the argument from defense counsel, we will have a short 21 rebuttal argument, and then we will have the instructions. 22 Thank you. 23 (Recess taken at 10:30 until 10:45 a.m.) 24 THE COURT: Bring the jury in. 25 They should be here in just a second. You can CLOSING ARGUMENT BY MR. BECRAFT 728 1 have a seat until they come out. 2 (Jury in at 10:46 a.m.) 3 THE COURT: You may be seated. Mr. Becraft, 4 you may proceed. 5 MR. BECRAFT: May it please the court, ladies 6 and gentlemen, I've just about wrapped everything up. 7 I've got a few concluding remarks. You know, in a 8 criminal case here in America, what we do is -- and I 9 talked about that burden that is imposed upon the 10 government. Well, to enable the government to meet its 11 burden, in closing arguments, this is the structure, the 12 government gets to open, the defense gets up to give its 13 say, and then there is -- what's left over is the rebuttal 14 argument that the government can make. In a few moments, 15 Mr. Murphy is going to get up here and address some of the 16 things that I said, but please remember that I won't have 17 any opportunity to get up here and engage in surrebuttal 18 and point out some of the things that he points out to you 19 in a few moments. I simply ask something of you, you 20 know -- 21 MR. MURPHY: Judge, Judge, I'm going to object. 22 All the jury has got to be asked to do is follow the law. 23 THE COURT: Well, I think the normal thing to 24 ask is that they think about what the counter position has 25 been. I think that's all you're going to say, is that CLOSING ARGUMENT BY MR. BECRAFT 729 1 right, Mr. Becraft? 2 MR. BECRAFT: You anticipated where I was 3 going, Your Honor. 4 THE COURT: I have been here before, and that's 5 a pretty -- we ought to let you make that argument, so I 6 understand the reason for the objection, but I think we 7 have resolved it by the discussion. 8 MR. BECRAFT: When you get back there in that 9 jury room, let me tell you when Mr. Kuglin's presumption 10 of innocence will leave. You know, during a trial, the 11 parties can look at the jurors, and you don't know what is 12 going through their minds, maybe somebody is accepting our 13 position, maybe somebody is not accepting our position. 14 You know, it's obvious that jurors in any type of case, 15 and particularly a criminal case, there's going to be 16 differences of opinion, and you may have certain leanings 17 at this stage one way or the other, I don't know what they 18 are, but I think that's a fair statement to make. What 19 will happen from this point forward is that after he gets 20 the rebuttal and after the court gives you the applicable 21 jury instructions in this case, which since I mentioned 22 it, I do want to tell you, please listen very closely, 23 once you go back in that jury room, then what you will be 24 about is making a collective judgment, 12 of you will get 25 together and you'll express your opinions, you'll talk CLOSING ARGUMENT BY MR. BECRAFT 730 1 about the facts, and what you do when you come back into 2 this jury room is to tell us what your collective judgment 3 is. 4 And I want to make this one final comment about 5 what you do when you exercise this activity of 6 deliberations in trying to reach that collective judgment, 7 please consider the facts. Please consider that the 8 government has the burden of proving beyond a reasonable 9 doubt. Please consider that the decision that you make is 10 one of the most important that you make in your life, and 11 it is the most important you're making in the life of 12 Vernice Kuglin. So when you get back there, please 13 consider the evidence. 14 If you hear something from Mr. Murphy, also 15 take into consideration the facts that support our side of 16 the case. Here in America, our criminal justice system is 17 dependent upon us bringing in 12 people to try the true 18 members of our community and to decide disputed facts. 19 There are disputed facts in this case. But I would 20 suggest to you that once you weigh those disputed facts, 21 take into consideration the old scales of justice, take 22 into consideration the government's burden of proof beyond 23 a reasonable doubt. And consider it as the most important 24 thing that you do in your life. When you take that into 25 consideration and consider all the facts in this case, CLOSING ARGUMENT BY MR. BECRAFT 731 1 there is but one conclusion that can be reached, Vernie 2 Kuglin did not willfully commit tax evasion for the years 3 '96, '97, '98, '99, 2000 and 2001, and the only fair and 4 just verdict to return in this case is not guilty on all 5 of those counts. Thank you, ladies and gentlemen. 6 THE COURT: Mr. Murphy. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 REBUTTAL ARGUMENT BY MR. MURPHY 732 1 MR. MURPHY: Thank you, Your Honor. 2 Ladies and gentlemen, at this point, I'm 3 allowed a brief period of time for rebuttal. We get back 4 to the same thing. This case turns on the good faith 5 defense and what constitutes good faith. 6 Now, just a couple of things. In the proof 7 yesterday, Ms. Kuglin said she went to the Memphis State 8 library, law library, had access to all this stuff. There 9 are several important things, the Jack Cole case, it's in 10 evidence, you can read it. I urge you to look through it, 11 see if there's one mention of the federal income tax code. 12 You're going to -- the judge is going to tell you that you 13 can rely on the decisions of the U. S. Supreme Court. 14 This is not a United States Supreme Court case. This is 15 another example of tiptoeing through the tulips. This 16 helps her. Look at all this material she submitted on 17 voluntariness, you're going to see references in there, 18 and in every case the collection efforts, enforcement 19 efforts, she goes in and she picks out a sentence and 20 takes it out of context, tiptoeing through the tulips. 21 The form books we put in, look there. They got 22 requirements about paying the tax, filing returns. They 23 talk about penalties, tiptoeing through the tulips, the 24 stuff about the OMB, you know, I was reading it for that, 25 not this other stuff. She ignores anything that REBUTTAL ARGUMENT BY MR. MURPHY 733 1 undermines her argument. Now, we're not claiming that 2 this was recently invented. She has been doing this for 3 years. What our position is, ladies and gentlemen, is 4 that it is not in good faith. Ask yourself, a good faith 5 belief, what is it based on? No federal cases other than 6 that Flora case prior to maybe 1914. Just because a case 7 is old doesn't make it wise. That just means it is an old 8 case. Didn't do any recent research, evidently. But now 9 she knows the tax code, and the defendant stood up here 10 and told you about her belief that she couldn't find 11 anything that required her to file a 1040 or file a tax 12 return or pay tax. Well, section one, which she admitted 13 she knew of years ago was aware of it, says, according to 14 her testimony, there is hereby imposed on the taxable 15 income of every individual a tax determined in accordance 16 with the following table. Tiptoe through the tulips, 17 ignore that. You got a copy of 26 Code of Federal 18 Regulations 601-21-1, individuals required to make return 19 of income. She knew about this for several years. This 20 document says you got to make a return on a 1040 if you 21 have more than certain income. Tiptoe through the tulips, 22 this doesn't apply to her. 23 Now, is it reasonable to believe that she 24 concluded she didn't have to pay income tax or file income 25 tax returns? Look at the letters they submitted. You REBUTTAL ARGUMENT BY MR. MURPHY 734 1 know, Mr. Becraft makes this lady that's an airline pilot 2 sound like some kind of innocent -- she is not a lawyer, 3 she is not a lawyer. Well, look at those letters. 4 There's a jillion legal citations in there, ladies and 5 gentlemen. You know, she knows enough law to say -- to 6 form a belief that she doesn't have to file because of the 7 problem with the OMB number, but there's an OMB number on 8 the 1040, and it's in that list she talks about. What is 9 kind of interesting about the list is here is another 10 example of tiptoeing through the tulips. You go to the 11 list, she goes to the first one, and she says I don't -- I 12 don't see the number. Well, that number for the 13 individual tax income return, the 1040, it's on this whole 14 list all over the place. And this doesn't say citation of 15 the tax code up here. It says 26 CFR part of section, not 16 tax code, not United States Code, CFR. Tiptoe through the 17 tulips. Well, you know, I read this. Is this good faith? 18 Does this sound like good faith? I would submit it is 19 not, ladies and gentlemen. 20 One other thing, and I'm going to sit down. 21 Look at all these letters she got from the IRS. Now, how 22 could you say in good faith that after you got all these 23 letters that I didn't believe, you know, I had to file? 24 After they're levying against you. If she believed this 25 in good faith, why the bogus W-4s, why did she never ask REBUTTAL ARGUMENT BY MR. MURPHY 735 1 for a return of the prior taxes? That was the defendant's 2 testimony. She has never asked for a refund of those tax 3 monies. Never. Now, if you believe it in good faith, why 4 not, why wouldn't you want to do that? Why would you 5 strip the money out of your bank account every payday? I 6 submit you do that because you know you violated the law 7 and you know that the IRS is going to come after your 8 money. This case turns on your estimation of the good 9 faith. I would submit, ladies and gentlemen, that there 10 isn't good faith. They can't have it both ways. She 11 can't be an airline pilot that makes -- that in six years 12 has made over a million dollars, in six years has beat the 13 government out of $259,507.64 in income tax, but she's an 14 idiot when it comes to the law. The question is not 15 whether she was a lawyer, but did she have good faith, and 16 what you saw through her testimony, and we can -- the 17 government can rely on her testimony in order to meet its 18 burden of proof beyond a reasonable doubt was somebody who 19 selectively ignored things that hurt her position, that 20 undermined her position. Tiptoe through the tulips. If 21 it helps me, if it is a 1916 decision that helps me, I 22 found it, that's the law. If it is the code, if it is the 23 instruction booklet, the most basic thing that hurts me, 24 well, no, I didn't know about that or it doesn't apply to 25 me. It is like a dog chasing its tail. Well, what about REBUTTAL ARGUMENT BY MR. MURPHY 736 1 this section? Oh, it doesn't appear to me. The section 2 that says you shall pay your tax, it doesn't apply to me. 3 What about this section where it says you shall make a 4 return? Well, it doesn't apply to me because shall 5 doesn't mean shall. Does that sound reasonable? 6 I would submit that based on the evidence that 7 the defendant's position is so ridiculous that it can't 8 constitute a reasonable position. And you can determine 9 the reasonableness of it in making your judgment about 10 good faith. 11 Ladies and gentlemen, I'm going to sit down 12 now, but I submit that if you go back in that jury room 13 and you look at all the evidence and you consider her 14 position that you're going to come to the conclusion that 15 this was a scheme to evade tax, that she didn't like 16 paying tax, she didn't like the way the code was written 17 and that she is guilty of each count of this indictment. 18 Thank you, ladies and gentlemen. 19 20 21 22 23 24 25 JURY INSTRUCTIONS 737 1 THE COURT: Now, ladies and gentlemen, it is 2 now my duty to instruct you on the law that applies in 3 this case. When I finish, you will go to the jury room 4 and begin your discussions, what we call your 5 deliberations. Of course, you're going to have a full set 6 of these statements, so you won't really need to take any 7 notes now. You will have all of the materials in front of 8 you. 9 It will be your duty to decide whether the 10 government has proved beyond a reasonable doubt the 11 specific facts necessary to find the defendant guilty of 12 the crimes charged in the indictment. You must make your 13 decision only on the basis of the testimony and other 14 evidence presented here during the trial, and you must not 15 be influenced in any way by either sympathy or prejudice 16 for or against the defendant or the government. 17 You must also follow the law as I explain it to 18 you whether you agree with that law or not, and you must 19 follow all of my instructions as a whole. You may not 20 single out or disregard any of the court's instructions on 21 the law. 22 The indictment or formal charge against the 23 defendant is not evidence of guilt. Indeed, the defendant 24 is presumed by the law to be innocent. The law does not 25 require the defendant to prove her innocence or produce JURY INSTRUCTIONS 738 1 any evidence at all. The government has the burden of 2 proving the defendant guilty beyond a reasonable doubt as 3 to each charge in the indictment, and if it fails to do 4 so, you must find the defendant not guilty of the charge 5 that you are considering. 6 While the government's burden of proof is a 7 strict or heavy burden, it is not necessary that a 8 defendant's guilt be proved beyond all possible doubt. It 9 is only required that the government's proof exclude any 10 reasonable doubt concerning a defendant's guilt. 11 A reasonable doubt is a real doubt based upon 12 reason and common sense after careful and impartial 13 consideration of all of the evidence in the case. 14 Proof beyond a reasonable doubt, therefore, is 15 proof of such a convincing character that you would be 16 willing to rely and act upon it without hesitation in the 17 most important of your own affairs. If you are convinced 18 that the defendant has been proved guilty beyond a 19 reasonable doubt, say so. If you are not convinced, say 20 so. 21 As stated earlier, you must consider only the 22 evidence that I have admitted in the case. The term 23 evidence includes the testimony of the witnesses, the 24 exhibits admitted in the record and any facts of which the 25 court has taken judicial notice. Remember, that anything JURY INSTRUCTIONS 739 1 the lawyers say is not evidence in the case. It is your 2 only recollection and interpretation of the evidence that 3 controls. What the lawyers say is not binding upon you. 4 In considering the evidence, you may make 5 deductions and reach conclusions which reason and common 6 sense lead you to make, and you should not be concerned 7 about whether the evidence is direct or circumstantial. 8 Direct evidence is the testimony of one who asserts actual 9 knowledge of a fact, such as an eyewitness. 10 Circumstantial evidence is proof of a chain of facts and 11 circumstances indicating that the defendant is either 12 guilty or not guilty. The law makes no distinction 13 between the weight that you may give to either direct or 14 circumstantial evidence. 15 Also, you should not assume from anything that 16 I may have said or done that I have any opinion concerning 17 any of the issues in this case. Except for my 18 instructions to you, you should disregard anything that I 19 have said in arriving at your own decision concerning the 20 facts. 21 The defendant has been charged with six crimes. 22 The number of charges is no evidence of guilt, and this 23 should not influence you in your decision in any way. It 24 is your duty to separately consider the evidence that 25 relates to each charge and to return a separate verdict JURY INSTRUCTIONS 740 1 for each one, for each charge. You must decide whether 2 the government has presented proof beyond a reasonable 3 doubt that the defendant is guilty of that particular 4 charge. 5 In reaching your decision on one charge, 6 whether it is guilty or not guilty, you should not be 7 influenced by your decision on any of the other charges. 8 You are instructed that the court has taken 9 judicial notice of the fact that Memphis, Shelby County, 10 Tennessee is located in the Western District of Tennessee. 11 Since you are the fact-finders in this case, you may, but 12 you are not required to accept even this fact as 13 conclusively established. 14 Now, in saying that you must consider all of 15 the evidence, I do not mean that you must accept all of 16 the evidence as true or accurate. You should decide 17 whether you believe what each witness had to say and how 18 important that testimony was. In making that decision, 19 you may believe or disbelieve any witness in whole or in 20 part. Also, the number of witnesses testifying concerning 21 any particular dispute is not controlling. You may decide 22 that the testimony of a smaller number of witnesses 23 concerning any fact in dispute is more believable than the 24 testimony of a larger number of witnesses to the contrary. 25 In deciding whether you believe or do not JURY INSTRUCTIONS 741 1 believe any witness, I suggest that you ask yourself a few 2 questions. Did the person impress you as one who was 3 telling the truth? Did the witness have a particular 4 reason not to tell the truth? Did the witness have a 5 personal interest in the outcome of the case? Did the 6 witness seem to have a good memory? Did the witness have 7 the opportunity and ability to observe accurately the 8 things the witness testified about? Did the witness 9 appear to understand the questions clearly and answer them 10 directly? Did the witness' testimony differ from the 11 testimony of other witnesses? 12 You should also ask yourself whether there was 13 evidence tending to prove that the witness testified 14 falsely concerning some important fact or whether there 15 was evidence that at some other time the witness said or 16 did something or failed to say or do something which was 17 different from the testimony the witness gave before you 18 during the trial. 19 You should keep in mind, of course, that a 20 simple mistake by a witness does not necessarily mean that 21 the witness was not telling the truth as the witness 22 remembers it, because people naturally tend to forget some 23 things or remember other things inaccurately. So if a 24 witness has made a misstatement, you need to consider 25 whether that misstatement was simply an innocent lapse of JURY INSTRUCTIONS 742 1 memory or an intentional falsehood, and that may depend on 2 whether it has to do with an important fact or with only 3 an unimportant detail. 4 You have heard the defendant testify. I just 5 talked with you about the credibility or believability of 6 the witnesses, and I suggested some things for you to 7 consider in evaluating each witness' testimony. 8 You should consider the same things in 9 evaluating the defendant's testimony. 10 You have heard the testimony of law enforcement 11 officials. The fact that a witness may be employed by the 12 government as a law enforcement official does not mean 13 that his or her testimony is necessarily deserving of more 14 or less consideration or greater or lesser weight than 15 that of an ordinary witness. 16 It is your decision after reviewing all of the 17 evidence whether to accept the testimony of the law 18 enforcement witnesses and to give to that testimony 19 whatever weight, if any, that you find that it deserves. 20 I told you at the outset that this case was 21 initiated through an indictment. An indictment is but a 22 formal method of accusing a defendant of a crime. It 23 includes the government's theory of the case, and I'm 24 going to read the entire indictment again to you in just a 25 moment. The indictment is not evidence of any kind JURY INSTRUCTIONS 743 1 against an accused. 2 The defendant has pled not guilty to the 3 charges pled in the indictment. This plea puts in issue 4 each of the essential elements of the offenses as 5 described in these instructions and imposes upon the 6 government the burden of establishing each of these 7 elements by proof beyond a reasonable doubt. 8 I'm going to read to you the indictment at this 9 time. Of course, you will have the indictment along with 10 the instructions with you in the jury room. 11 Count 1. That during the calendar year, 1996, 12 the defendant Vernice B. Kuglin, had and received taxable 13 income in the sum of approximately $162,883.75, that well 14 knowing and believing the foregoing facts, the defendant 15 on or about April 15, 1995, in the Western District of 16 Tennessee, did willfully attempt to evade and defeat the 17 said income tax due and owing by her to the United States 18 of America for said calendar year by failing to make an 19 income tax return on or before April 15, 1997, as required 20 by law, to any proper officer of the Internal Revenue 21 Service and by failing to pay the Internal Revenue Service 22 the said income tax, in violation of Title 26, United 23 States Code, Section 7201. 24 Count 2. That during the calendar year, 1997, 25 the defendant, Vernice B. Kuglin, had and received taxable JURY INSTRUCTIONS 744 1 income in the sum of approximately $147,999.60, that well 2 knowing and believing the foregoing facts, the defendant 3 on or about April 15, 1998, in the Western District of 4 Tennessee, did willfully attempt to evade and defeat the 5 said income tax due and owing by her to the United States 6 of America for said calendar year, by failing to make an 7 income tax return on or before April 15, 1998, as required 8 by law, to any proper officer of the Internal Revenue 9 Service, by failing to pay the Internal Revenue Service 10 said income tax and by filing a false Form W-4 in 1997, in 11 violation of Title 26, United States Code, Section 7201. 12 Count 3. That during the calendar year 1998, 13 the defendant, Vernice B. Kuglin, had and received taxable 14 income in the sum of approximately $137,197.93, that while 15 knowing and believing the foregoing facts, the defendant 16 on or about April 15, 1999, in the Western District of 17 Tennessee, did willfully attempt to evade and defeat the 18 said income tax due and owing by her to the United States 19 of America for said calendar year by failing to make an 20 income tax return on or before April 15, 1999, as required 21 by law, to any proper officer of the Internal Revenue 22 Service, by failing to pay the Internal Revenue Service 23 said income tax and by filing a false Form W-4 in 1998, in 24 violation of Title 26, United States Code, Section 7201. 25 Count 4. That during the calendar year 1999, JURY INSTRUCTIONS 745 1 the defendant, Vernice B. Kuglin, had and received taxable 2 income in the sum of approximately $146,571.66, that well 3 knowing and believing the foregoing facts, the defendant 4 on or about April 15, 2000, in the Western District of 5 Tennessee, did willfully attempt to evade and defeat the 6 said income tax due and owing by her to the United States 7 of America for said calendar year by failing to make an 8 income tax return on or before April 17, 2000, as required 9 by law, to any proper officer of the Internal Revenue 10 Service, by failing to pay the Internal Revenue Service 11 said income tax and by filing a false W-4 -- Form W-4 in 12 1999, in violation of Title 26, United States Code, 13 Section 7201. 14 Count 5. That during the calendar year, 2000, 15 the defendant, Vernice B. Kuglin, had and received taxable 16 income in the sum of approximately $164,224.28, that well 17 knowing and believing the foregoing facts, the defendant, 18 on or about April 15th, 2001, in the Western District of 19 Tennessee, did unlawfully attempt to evade and defeat the 20 said income tax due and owing by her to the United States 21 of America for said calendar year by failing to make an 22 income tax return on or before April 16, 2001, as required 23 by law, to any proper officer of the Internal Revenue 24 Service, by failing to pay the Internal Revenue Service 25 said income tax and by filing a false Form W-4 in 2000, in JURY INSTRUCTIONS 746 1 violation of Title 26, United States Code, Section 7201. 2 Count 6. That during the calendar year, 2001, 3 the defendant, Vernice B. Kuglin, had and received income 4 tax or taxable income in the sum of approximately 5 $161,189.07, that well knowing and believing the foregoing 6 facts, the defendant on or about April 15 of 2002, in the 7 Western District of defendant, did willfully attempt to 8 evade and defeat said income tax due and owing by her to 9 the United States of America for said calendar year by 10 failing to make an income tax return on or about April 11 15th, 2002, as required by law, to any proper officer of 12 the Internal Revenue Service, by failing to pay the 13 Internal Revenue Service said income tax and by filing a 14 false Form W-4 in 2001, in violation of Title 26, United 15 States Code, Section 7201. 16 Simply put, the indictment alleges that the 17 defendant violated Section 7201 of Title 26 of the United 18 States Code, which provides in relevant part: 19 Any person who willfully attempts in any manner 20 to evade or defeat any tax imposed by the Internal Revenue 21 Code shall be guilty of a crime. 22 The tax -- the system of tax collection in the 23 United States relies upon the honesty of taxpayers. The 24 government needs taxpayers to report timely, completely 25 and honestly all taxes they owe so that it can collect the JURY INSTRUCTIONS 747 1 taxes due. Congress, therefore, has made it a criminal 2 offense for a taxpayer to evade taxes, to file false 3 returns or to file no return under certain circumstances. 4 In order for the crime of income tax evasion to 5 be proved, the government must establish beyond a 6 reasonable doubt each of the following elements: 7 First, that there was a tax deficiency. 8 Second, that the defendant committed an 9 affirmative act constituting tax evasion or attempted tax 10 evasion. 11 And, third, that the defendant acted willfully. 12 The first element of the offense which the 13 government must prove beyond a reasonable doubt is that 14 there was a tax deficiency, that is that the defendant 15 owed federal income tax for the years specified in the 16 indictment as to the count that you're considering. The 17 government does not have to prove the exact amount of the 18 taxes the defendant owes, nor must the government prove 19 that the defendant evaded all of the tax that she owed. 20 The second element that the government must 21 prove beyond a reasonable doubt as to each count is that 22 the defendant committed an affirmative act constituting 23 tax evasion. 24 The Internal Revenue Code makes it a crime to 25 attempt, in any manner, to evade or defeat any income tax JURY INSTRUCTIONS 748 1 imposed by law. There are many different ways in which a 2 tax may be evaded or an attempt may be made to evade it. 3 For example, in this case, the government asserts that Ms. 4 Kuglin attempted to evade or defeat the income tax due by 5 filing false Form W-4s for application as to each tax year 6 alleged in the counts in the indictment. 7 There has been evidence in this case that the 8 defendant failed to file a tax return for the years 1996, 9 1997, 1998, 1999, 2000 and 2001. I instruct you that 10 failure to file a tax return is not sufficient by itself 11 to satisfy this element. Indeed, the government must 12 prove beyond a reasonable doubt an act of evasion. 13 Specifically, the government must prove that the defendant 14 committed an affirmative act constituting evasion. This 15 must be a positive act of commission designed to mislead 16 or conceal. A willful act of omission is insufficient to 17 satisfy this requirement, therefore, neither the failure 18 to file a return nor the failure to pay income tax can be 19 the basis for conviction. 20 The Supreme Court of the United States has 21 defined this element as requiring proof of conduct the 22 likely effect of which would be to mislead or conceal. In 23 other words, any act which is likely to mislead the 24 government or conceal funds satisfies this element. Thus, 25 filing a false form, for example, a W-4 withholding form JURY INSTRUCTIONS 749 1 or a false tax return is sufficient, as are false 2 statements made to the Internal Revenue Service after the 3 return was due or filed. Large cash transactions may also 4 be evidence of an affirmative act of evasion. 5 It is not necessary to prove a separate act 6 constituting evasion for each tax year which was the 7 subject of the prosecution; thus, filing a false W-4 8 withholding form satisfies this element as to each year 9 for which it was in effect. 10 The third element of the offense which the 11 government must prove beyond a reasonable doubt is that 12 the defendant acted knowingly and willfully. 13 Whether or not the defendant acted knowingly 14 and willfully is a question of fact to be determined by 15 you based upon all of the evidence in this case. An act 16 is done knowingly if it is done purposefully and 17 deliberately and not because of mistake, accident, 18 negligence or any other innocent reason. 19 The government must also prove beyond a 20 reasonable doubt that the defendant acted willfully. A 21 willful act is defined as a voluntary and intentional 22 violation of a known legal duty. Thus, the government 23 must prove beyond a reasonable doubt that the defendant 24 possessed the specific intent to defeat or evade the 25 payment of income tax the defendant knew it was her duty JURY INSTRUCTIONS 750 1 to pay. 2 The word willfully in the criminal tax statutes 3 requires a voluntary, intentional violation of a known 4 legal duty. The requirement of willfulness, therefore, 5 means an act undertaken with bad faith or evil intent or 6 evil motive and want of justification in view of all of 7 the financial circumstances of the taxpayer. 8 In our complex tax system, uncertainty often 9 arises even among taxpayers who earnestly wish to follow 10 the law. It is not the purpose of the law to penalize 11 frank differences of opinion or innocent errors made 12 despite the exercise of reasonable care. Degrees of 13 negligence give rise in the tax system to civil penalties. 14 The requirement that an offense be committed willfully is 15 not met, therefore, if a taxpayer has relied in good faith 16 on a prior decision of the Supreme Court, that's the 17 United States Supreme Court, the Internal Revenue Code or 18 the regulations and instructions published by the Internal 19 Revenue Service. Thus, the word willfully under 26 United 20 States Code, Section 7201 includes the concept of bad 21 faith or evil intent that separates the purposeful tax 22 violator from the well-meaning, but sometimes confused, 23 mass of innocent taxpayers. 24 Willfulness is negated by the defense of good 25 faith mistake of the law's requirements. To make such a JURY INSTRUCTIONS 751 1 determination, you must inquire into the defendant's mind, 2 her mental attitude and her approach to the situation 3 which she believed the law required. If you find that the 4 defendant subjectively in her own mind believed that she 5 was not required by the law to file the returns in 6 question, it will be your duty to find her not guilty. 7 A defendant does not act willfully if she 8 believes in good faith that her actions comply with the 9 law. Therefore, if the defendant actually believed that 10 what she was doing was in accordance with the tax 11 statutes, she cannot be said to have the criminal intent 12 to willfully evade taxes. Thus, if you find that the 13 defendant honestly believed that she owed no taxes, even 14 if that belief was unreasonable or irrational, then you 15 should find her not guilty. However, you may consider 16 whether the defendant's belief was actually reasonable as 17 a factor in deciding whether she held that belief in good 18 faith. It should also be pointed out that neither the 19 defendant's disagreement with the law nor her own belief 20 that the law is unconstitutional, no matter how earnestly 21 that belief is held, constitutes a defense of good faith. 22 It is the duty of all citizens to obey the law regardless 23 of whether they agree with it. 24 If the defendant acted in good faith, that is 25 to say she actually believed the actions she took were JURY INSTRUCTIONS 752 1 allowed by the law, then she is not guilty of the offenses 2 of tax evasion. It does not matter whether the defendant 3 was right or wrong in her beliefs, nor does it matter if 4 her beliefs make sense or sound reasonable to you, the 5 jury, or to me, as the judge. The only thing that matters 6 is whether or not the defendant actually believed she was 7 correct in her actions. Also, it is not the defendant's 8 burden to prove that she did not believe her actions 9 were -- excuse me, it is not the defendant's burden to 10 prove that she did believe her actions were correct. She 11 doesn't have the burden, but rather it is the government's 12 burden to prove that she did not. 13 It is for you, the jury, to decide whether the 14 government has proved that the defendant willfully 15 committed tax evasion by proving beyond a reasonable doubt 16 that she did not actually believe her actions were correct 17 and by proving all the other elements that I have 18 explained to you in these instructions, or whether the 19 defendant believed her actions were proper. If you find 20 that the government has failed to meet its burden, then 21 you must find the defendant not guilty of these offenses. 22 If there's a reasonable doubt in your mind as to this 23 issue or even if you conclude that the defendant could 24 only have believed her actions were proper by abysmal 25 ignorance and the rankest kind of stupidity, yet you find JURY INSTRUCTIONS 753 1 that she believed that she was correct, and by correct, I 2 mean in conformance with the law, you must find the 3 defendant not guilty. 4 The burden of establishing lack of good faith 5 and criminal intent rests upon the prosecution. A 6 defendant is under no burden to prove her good faith. The 7 prosecution must prove bad faith or knowledge of falsity 8 beyond a reasonable doubt. 9 In this case, the defendant is not presumed to 10 know the law. I instruct you, however, that the law is 11 that wages are income and must be included in gross income 12 when determining income tax liability. 13 As a part of defendant's good faith defense to 14 the charge in this case, the defendant asserts that she 15 did not file income tax returns or pay income taxes 16 because she had a good faith belief based upon the use of 17 the word voluntary and various Internal Revenue Service 18 publications that the filing of tax returns and the 19 payment of income taxes was voluntary. Regarding this 20 matter, I instruct you that the word voluntary is not the 21 equivalent of optional. To the extent that income taxes 22 are said to be voluntary, they are only voluntary in that 23 one files the return and pays the taxes without the 24 Internal Revenue Service first telling each individual the 25 amount due and then forcing payment of that amount. The JURY INSTRUCTIONS 754 1 payment of taxes is not optional. 2 As part of the defendant's good faith defense 3 to the charges in this case, she asserts that she did not 4 file income tax returns or pay income taxes because she 5 had a good faith belief based upon her reading of the 6 Paperwork Reduction Act that she was not required to 7 comply with the tax laws because the fax forms and 8 instructions did not comply with the provisions of the 9 Paperwork Reduction Act. Regarding this matter, I am 10 instructing you as a matter of law, the Paperwork 11 Reduction Act does not apply to the statutory requirement 12 that an individual file a tax return, but applies only to 13 the forms themselves which contain the appropriate number. 14 Finally, I want to explain further something 15 about proving a defendant's state of mind. Ordinarily, 16 there is no way that a defendant's state of mind can be 17 proved directly because no one can read another person's 18 mind and tell what that person is thinking. 19 But a defendant's state of mind can be proved 20 indirectly from the surrounding circumstances. This 21 includes things like what the defendant said, what the 22 defendant did, how the defendant acted and any other facts 23 or circumstances in evidence that show what was in the 24 defendant's mind. 25 You may also consider the natural and probable JURY INSTRUCTIONS 755 1 results of any acts that the defendant knowingly did or 2 did not do and whether it is reasonable to conclude that 3 the defendant intended those results. This, of course, is 4 all for you, the jury, to decide. 5 If you find that the government has proved 6 beyond a reasonable doubt each of the elements of the 7 offense set out under these instructions, then as to the 8 count that you are considering, you must return a verdict 9 of guilty as to that count. If you find that the 10 government has not proved beyond a reasonable doubt each 11 of the elements of the offense as set out in these 12 instructions, then as to the count that you are 13 considering, you must return a verdict of not guilty as to 14 that count. 15 I caution you, members of the jury, that you 16 are here to determine from the evidence in this case 17 whether the defendant is guilty or not guilty of Counts 1, 18 2, 3, 4, 5 and 6 of the indictment. The defendant is on 19 trial only for the specific offenses alleged in the 20 indictment. 21 Also, the question of punishment should never 22 be considered by the jury in any way in deciding the case. 23 If the defendant is convicted, the matter of punishment is 24 for the judge, and actually for the law to determine. 25 You are here to determine the guilt or JURY INSTRUCTIONS 756 1 innocence of the accused defendant from the evidence in 2 this case. You are not called upon to return a verdict as 3 to the guilt or innocence of any other person or persons. 4 You must determine whether or not the evidence in this 5 case convinces you beyond a reasonable doubt of the guilt 6 of the accused regardless of any belief you may have about 7 the guilt or innocence of any other person or persons. 8 You have no right to find the defendant guilty 9 only for the purpose of deterring others from committing 10 crime. 11 There is a distinction between the civil 12 liability of a defendant and a defendant's criminal 13 liability. Remember, this is a criminal case. 14 The defendant is charged under the law with the 15 commission of a crime, and the issue of whether the 16 defendant has or has not settled any civil liability for 17 the payment of taxes is not to be considered by you in 18 reaching a verdict. Your verdict in this case has no 19 effect on the government's ability to collect any back 20 taxes and penalties in a civil case. 21 Any verdict that you reach in the jury room, 22 whether guilty or not guilty, must be unanimous. In other 23 words, to return a verdict, all of you must agree. Your 24 deliberations will be secret. You will never have to 25 explain your verdict to anyone. JURY INSTRUCTIONS 757 1 It is your duty as jurors to discuss the case 2 with one another in an effort to reach agreement, if you 3 can do so. Each of you must decide the case for yourself, 4 but only after full consideration of the evidence with the 5 other members of the jury. While you are discussing the 6 case, do not hesitate to re-examine your own opinion and 7 change your mind if you become convinced that you were 8 wrong. But do not give up your honest beliefs solely 9 because the others think differently or merely to get the 10 case over with. 11 Remember, that in a very real way, you are 12 judges, judges of the facts. 13 When you go to the jury room, you should first 14 select one of your members to act as your presiding juror. 15 The presiding juror will preside over your deliberations 16 and will speak for you here in court. 17 A verdict form has been prepared for your 18 convenience. The verdict form will be placed in a folder 19 and handed to you by the court security officer. At any 20 time that you're not deliberating, that is when you are at 21 lunch or during any break, the verdict folder and verdict 22 form should be delivered to the court security officer who 23 will deliver it to the courtroom deputy clerk for 24 safekeeping. 25 The verdict form in this case provides as JURY INSTRUCTIONS 758 1 follows: 2 We the jury, on the charges in the indictment 3 for our verdict say: 4 1. We find the defendant, Vernice B. Kuglin, 5 as to Count 1, and there's a blank line. Underneath that 6 line are these words, guilty or not guilty. And I will 7 tell you they are in alphabetical order, certainly no 8 preference, just in alphabetical order. 9 Count 2. We find the defendant, Vernice B. 10 Kuglin, as to Count 2, and there's another blank line with 11 the choices underneath those -- that line. 12 Count 3. We find the defendant, Vernice B. 13 Kuglin, as to Count 3, and there's a blank line with those 14 choices. 15 We find the defendant, Vernice B. Kuglin, as to 16 Count 4, another blank line with those choices. 17 5. We find the defendant, Vernice B. Kuglin, 18 as to Count 5, another blank line with those choices. 19 Count 6, we find the defendant, Vernice B. 20 Kuglin, as to Count 6, another blank line with those 21 choices. 22 There's then a line on the bottom left with the 23 word date underneath and a line on the bottom right which 24 is supposed to have presiding juror underneath it. 25 You will take the verdict form to the jury JURY INSTRUCTIONS 759 1 room, and when you have reached unanimous agreement, 2 you'll have your presiding juror fill in the verdict form 3 and sign and date it and then return to the courtroom. 4 If you should desire to communicate with me at 5 any time, please write down your message or question and 6 pass the note to the court security officer who will then 7 bring it to my attention. I will then respond as promptly 8 as possible after consulting with the parties and counsel. 9 And I will respond either in writing or by having you 10 return to the courtroom so that I can address you orally. 11 I caution you, however, that with regard to any 12 message that you might send that you should not tell me 13 your numerical division at any time. In other words, you 14 can never tell me the results of a vote of the jury, only 15 that you have reached a verdict or not reached a verdict. 16 If you a feel to see the exhibits, and they're 17 not being sent back right now, simply advise the court 18 security officer and, frankly, we will let you have 19 whichever exhibits you would like. You can have them all, 20 if you would like. 21 Let me see counsel at side bar. 22 (The following proceedings had at side-bar 23 bench.) 24 THE COURT: Objections by the United States? 25 MR. MURPHY: No, sir, Your Honor. JURY INSTRUCTIONS 760 1 MR. BECRAFT: None, Your Honor. What was at 2 the charge conference, that was it. 3 THE COURT: Okay. I'm going to let the 4 alternates go at this time. Of course, once they're 5 excused, they cannot return. 6 (The following proceedings were had in open 7 court.) 8 THE COURT: We have two alternates in the case, 9 Ms. Sanders and, of course, Mr. Stewart, and in a moment, 10 I will excuse them, and then they will be discharged in 11 the case and they cannot return, so I need to be sure that 12 everybody is okay, that you don't have any crisis that is 13 going to cause you not to be available or that you're ill, 14 I certainly want to know those things. If anybody is not 15 well or has a problem that is, they think, going to take 16 them away from the deliberative process, then this is your 17 chance to tell me. I don't see any problems in that 18 regard. Well, Ms. Sanders, we appreciate your service, 19 we're going to let you be discharged. And Mr. Stewart, I 20 will actually let both of you go out through the jury room 21 first, and you can actually come around so you don't have 22 to walk in front of everybody. Thank you for serving on 23 the panel, and we appreciate it. Thank you very much. 24 You want to come back and watch? Sure. But you can't 25 talk to anybody. Okay. All right. That's no problem. JURY INSTRUCTIONS 761 1 All right. I made a couple of very minor 2 changes, and I still may not have caught every little 3 grammatical matter or misspelling, but I'm going to make 4 those before I send the instructions back to you. I am 5 going to hand the folder with the indictment and the 6 verdict form in it, and we will probably have these very 7 quickly, it is very minor changes. But we will -- I will 8 make those changes before I send them back. Mrs. Saba, I 9 think I'm going to go ahead and hand the folder to you. 10 Mr. Tuggle is there, of course, already. 11 Ladies and gentlemen, if you want to take your 12 lunch break at the regular time, all you have to do is 13 return the folder to the court security officer, and 14 that's our signal that you're taking your lunch break. If 15 you do take a lunch break, I suggest that you make it not 16 terribly long, probably an hour, or if you want to make it 17 less, it is up to you, you have control of that at this 18 point in time. We will not be staying particularly late, 19 that's usually not a good idea, but if the jury asks me to 20 stay late, we will, but typically we usually let you go 21 home about 5:00 or a little after 5:00 and you come back 22 at your regular time tomorrow. And you can take breaks, 23 as I indicated in the afternoon. If you want to take a 24 break, then again hand the folder back to the court 25 security officer, and that's an indication that you're on JURY INSTRUCTIONS 762 1 break. 2 All twelve of you do have to be together at the 3 same time for any deliberations to occur. If somebody 4 does take a restroom break, you should stop your 5 deliberations at that time and resume when everybody is 6 reassembled. 7 All right. Mr. Tuggle, we're going to hand to 8 you the folder, and ladies and gentlemen, you are excused 9 to begin your deliberations. Thank you very much. 10 (Jury out to begin deliberations at 11:50 11 a.m.) 12 THE COURT: I did assume that we now have all 13 of the exhibits in order. I think we do. I didn't 14 actually look at the one that was the modified CFR 15 material, but I take it everybody has looked at that. And 16 I did indicate to the jury that they could retrieve them 17 all. Does anybody have any objections to them having the 18 exhibits if they request them? 19 MR. MURPHY: Judge, I don't have any objection. 20 MR. BECRAFT: No, Your Honor. 21 THE COURT: And defense has no objection also. 22 MR. BECRAFT: No objections, Your Honor. 23 THE COURT: All right. I think that takes care 24 of everything. By the way, if we do not hear from the -- 25 I will ask you to make sure that Mrs. Saba has a pager 763 1 number and so forth, cell phone, whatever is necessary to 2 be in touch with everybody, and if you have not heard from 3 anybody at all, and this could happen by, say, quarter of 4 5:00, you should be back here at that time anyway because 5 we will be letting the jury go home, and you probably will 6 want to be back when we let the jury go home. 7 MR. BECRAFT: We will probably camp out 8 downstairs in the snack bar, Your Honor. 9 THE COURT: Wherever you want to be is fine. 10 Okay. 11 THE CLERK: All rise. 12 (Recess taken at 11:51 a.m.) 13 (The following proceedings were had at 4:45 14 p.m.) 15 THE COURT: We have a note from the jury, and 16 the jury note reads: We, the jury, cannot reach a 17 decision on this case at this time. Signed by the 18 foreman. I'm trying to -- his name is a little hard to 19 read, Joseph Schingle is in seat -- the last seat. I'm 20 not sure. 21 Well, it's actually been a fairly short period 22 of time to deliberate, frankly, and normally, simply tell 23 them that it has not been very long and that they need to 24 deliberate some more. 25 MR. MURPHY: Judge, I don't have any objection 764 1 to that, I think that makes sense. 2 MR. BECRAFT: Neither do I. If the court wants 3 to kind of move in the direction of maybe a weak Allen 4 charge, is that a suggestion? 5 THE COURT: Well, we could do that. Let's see, 6 there is a -- the modified Allen -- 7 MR. MURPHY: Judge, I think it's kind of early. 8 THE COURT: I think it is too. I was just 9 looking at 9.04. Normally, what I do is just tell people 10 that, you know, it's just not been really very long in a 11 six-count case, frankly, and I'm going to ask them to go 12 home now since it is almost 4:00 o'clock, come back 13 tomorrow at 8:30 and resume deliberations when they're 14 ready tomorrow and see how things go, and that's what I 15 think we ought to do, and I think that's about all I'm 16 going to say now. 17 MR. BECRAFT: No objection. 18 THE COURT: Any objection? 19 MR. MURPHY: No objection, Your Honor. 20 THE COURT: Well, let the jury come in and let 21 them go home. 22 (Jury in at 4:47 p.m.) 23 THE COURT: I have a note from the jury -- and 24 I will let everybody be seated. The procedure is the same 25 in every note, and that is that I first talk with the 765 1 parties, and then we decide -- actually, I get to decide 2 what the response is after input from them, but we always 3 read the note out loud first. The note says, August the 4 7th of 2003 at 4:32 p.m. We, the jury, cannot reach a 5 decision on this case at this time. Signed by Joseph 6 Schingle, the foreperson in the case. I hope I got the 7 name right. 8 JUROR SCHINGLE: Yes, sir. 9 THE COURT: Well, let me tell you what I think 10 we ought to do. It is not uncommon for jurors to send me 11 a note like that fairly early in deliberations. You have 12 actually not been deliberating that long. It may seem 13 like a long time to you, it probably does, but you have 14 not really been deliberating that long. And the thing we 15 ought to do is, pretty straightforward, I'm going to let 16 you go home at 5:00 o'clock today anyway and ask you to 17 come back at 8:30 tomorrow like you have been doing every 18 day. When you're all together and you have had your cup 19 of coffee and snack and you're ready to begin your 20 deliberations, simply knock on the door, and Mr. Tuggle 21 will probably -- you will be here tomorrow? 22 COURT SECURITY OFFICER: Yes. 23 THE COURT: Mr. Tuggle will be here tomorrow, 24 and he will hand you the verdict folder with the 25 enclosures and let you resume your deliberations. Just 766 1 say that you have not really been deliberating that long, 2 and it's not uncommon for juries to have to deliberate 3 significantly longer to reach agreement. You can always 4 communicate with me. You know how to communicate with me, 5 and I'm not trying to be indifferent to your note, but I 6 think that's what we ought to do at this time. 7 So I think a good night's sleep would be good, 8 let everybody rest up and come back fresh tomorrow. Mr. 9 Tuggle asked me if the Red Birds were playing, and I don't 10 have tickets for every game, so I'm not sure if they're 11 playing tonight. Do something else, don't think about the 12 case, and when you come back tomorrow and you're all 13 together, we will let you resume your discussions. So 14 have a -- the temperature has been nice today, it has not 15 been very hot, you get to get out a little early. Have a 16 nice afternoon. We will see you at 8:30 tomorrow. Don't 17 discuss the case with anybody, don't let anybody talk with 18 you about it, the same instructions that you have had in 19 the past. We will see you tomorrow at 8:30. Thanks very 20 much. 21 (Jury out at 4:50 p.m.) 22 THE COURT: Y'all can be seated. I do need to 23 ask, any objection to the instruction by the United 24 States? 25 MR. MURPHY: No, sir, Your Honor. 767 1 THE COURT: Any objection from the defense? 2 MR. BECRAFT: None, Your Honor. 3 THE COURT: All right. Gentlemen and ladies, 4 you really don't have to be here at 8:30 at all tomorrow. 5 And I know you have things to catch up on. You're welcome 6 to be here. I'm glad to have you here if you would like 7 to be. We have something at 9:00. It's really a light 8 day. I do have a few things in and out of here during the 9 day, but make sure Mrs. Saba has a number where we can 10 reach you. We will see you tomorrow. 11 THE CLERK: All rise. 12 (Court adjourned at 4:50 p.m.) 13 14 15 16 17 18 19 20 21 22 23 24 25