Submitted: April 11, 2013
Appeal from United States District Court for the Eastern District of Arkansas - Little Rock
Before COLLOTON, MELLOY, and SHEPHERD, Circuit Judges.
SHEPHERD, Circuit Judge.
James and Karen Morris (collectively, "Appellants") were charged with 44 counts of fraudulent behavior relating to theft of government funds, filing of their personal taxes, and actions they took as paid tax preparers. After a jury trial, Appellants were convicted of all charges. They now appeal their convictions and sentences. We affirm.
James Morris entered the United States Army in 1966 but was hospitalized with meningitis during the first six months. He did not return to active duty and was honorably discharged in 1968. Later in life, James developed a variety of health problems—including temporal lobe epilepsy, occipital headaches, depression, and hearing loss—as a result of his service-related illness. Based on these health problems, James applied for various government benefits in the mid-1980's, including unemployability benefits from the Veterans Administration ("VA") and disability benefits from the Social Security Administration ("SSA"). In his initial applications, James told both agencies that he had not worked since 1983 or 1984 and that he remained unable to work. Both the VA and the SSA approved James for benefits. During intermittent reviews of his continuing eligibility for benefits over the next 20 years, James made additional representations to both agencies that he could not and did not work. From the 1980's through the 2000's, James received more than $450, 000 in VA and SSA benefits that were contingent on his inability to obtain or maintain employment.
During roughly the same time period, however, James sought and obtained designation as a public accountant ("PA") in the state of Arkansas. In his application for the PA title in 1987, James reported to the Arkansas State Board of Public Accountancy ("Board") that he had been continuously employed as an accountant since 1974. The Board granted James a PA license in December 1987, and he maintained this license through at least 2007. Further, in order to maintain his PA title, James was required to annually certify that he participated in continuing education hours and was involved in accounting. From 2002 through 2007, the years for which records of certification were available, James represented to the Board that he completed the necessary professional education hours and was still working as an accountant.
Beginning in at least 1997 and extending through 2007, James owned a company called B. Morris Limited ("BML"), which provided accounting, payroll, and tax preparation services. Karen Morris, whom James married in 2002, also worked at BML. Between 2005 and 2007, IRS records indicate Appellants each filed hundreds of tax returns. Appellants both reported to an IRS agent in 2007 that they were the principal tax return preparers at BML. Appellants also prepared and filed their own taxes between 2002 and 2005.
In addition to James's receipt of VA and SSA benefits, Appellants also obtained federal funds from the Department of Education ("DOE") in the form of Pell Grants for Karen's two daughters, Angela and Megan. Pell Grants are need-based grants to low-income students that, unlike loans, do not have to be repaid. Between 2005 and 2007, Karen and her daughters annually completed the Free Application for Federal Student Aid, which collects information regarding the student's household—including who lives in the household and the annual household income—in order to calculate eligibility for federal student aid. In total, Karen's daughters received $28, 870 in Pell Grant disbursements.
In 2011, Appellants were charged via superseding indictment with 44 counts of fraudulent conduct. The indictment charged Appellants, either individually or jointly, with theft of government funds from the VA and SSA, 18 U.S.C. §§ 2, 641; conspiracy to defraud the government, 18 U.S.C. § 371; concealment of a material fact as to SSA funds, 42 U.S.C. § 408(a)(4); obtaining Title IV funds by fraud and false statements, 20 U.S.C. § 1097(a), 18 U.S.C. § 2; filing false tax returns, I.R.C. § 7206(1), 18 U.S.C. § 2; and causing another to file a false tax return, I.R.C. § 7206(2), 18 U.S.C. § 2.
The Appellants were joined for jury trial. During the trial, the district court prohibited one of Appellants' witnesses from discussing the standard of care for tax preparers. Appellants moved for a judgment of acquittal at the close of the Government's case and again at the close of all evidence. The district court denied both motions, finding that the Government had presented sufficient evidence—including inconsistent representations by Appellants—of the charged conduct. The jury returned guilty verdicts on all 44 counts.
James was sentenced to 48 months imprisonment for each count (to run concurrently), followed by 3 years supervised release, and ordered to pay $3, 700 in special penalty assessments and $668, 647.87 in restitution. Karen was sentenced to 24 months imprisonment on each count (to run concurrently), followed by 3 years supervised release, and ordered to pay $2, ...