                                                                                                                           Opinions of the United
2003 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


1-3-2003

USA v. Gambone
Precedential or Non-Precedential: Precedential

Docket 01-4424




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PRECEDENTIAL

       Filed January 3, 2003

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

Nos. 01-4424 and 01-4427

UNITED STATES OF AMERICA

v.

JOHN A. GAMBONE, SR.
a/k/a JACK

John A. Gambone, Sr.,
       Appellant in No. 01-4424

UNITED STATES OF AMERICA

v.

ANTHONY GAMBONE
a/k/a TONY

Anthony Gambone,
       Appellant in No. 01-4427

On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Crim. Nos. 00-00176-1 and 00-00176-2)
District Judge: Honorable John R. Padova

Argued October 17, 2002

Before: ROTH and GREENBERG, Circuit Judges,
and WARD, District Judge*
_________________________________________________________________

* Honorable Robert J. Ward, Senior Judge of the United States District
Court for the Southern District of New York, sitting by designation.




(Filed: January 3, 2003)

       Patrick L. Meehan
       United States Attorney
       Robert M. Falin (argued)
       Assistant United States Attorney
       Laurie Magid
       Deputy United States Attorney for
       Policy and Appeals
       Robert A. Zauzmer
       Assistant United States Attorney
       Senior Appellate Counsel
       Kristin R. Hays
       Assistant United States Attorney
       615 Chestnut Street, Suite 1250
       Philadelphia, PA 19106

        Attorneys for Appellee

       Donald J. Goldberg (argued)
       Eric W. Sitarchuk
       Meredith S. Auten
       Ballard, Spahr, Andrews & Ingersoll
       1735 Market Street, 51st Floor
       Philadelphia, PA 19103

        Attorneys for Appellant John A.
       Gambone, Sr.

       Thomas A. Bergstrom
       138 Davis Road
       Malvern, PA 19355

        Attorney for Appellant Anthony
       Gambone

OPINION OF THE COURT

GREENBERG, Circuit Judge.

I. FACTUAL AND PROCEDURAL HISTORY

This matter comes on before this court on appeals from
judgments of conviction and sentence entered in the district

                                 2


court on December 13, 2001. Defendants-appellants, John
A. Gambone, Sr. ("Jack") and Anthony Gambone ("Tony"),
are brothers who owned and operated a construction
business, known since 1983 as Gambone Brothers
Organization, Inc. ("Gambone Brothers"). The indictment
accused them of engaging in a three-part scheme over the
course of 20 years, the purpose of which was to file false
personal income tax returns and to aid and assist certain
of their employees and subcontractors in doing the same.
Although there are other Gambone defendants in this case,
we sometimes refer to Jack and Tony exclusively as the
Gambones as they are the only appellants.

The first prong of the conspiracy, called the "cash-
skimming" prong in the indictment, involved a systematic
plan to receive payment from home purchasers for certain
"extras" in cash, not to record those payments on Gambone
Brothers’ books, and to hide this additional income from
the IRS by buying United States savings bonds or simply by
holding the cash in a safe or a nightstand.1

Prong two of the conspiracy, called the "overtime/expense
reimbursement/ ‘off-payroll’ fraud" prong in the indictment,
charged that the Gambones used three methods to avoid
reporting to the IRS significant wages paid to their
employees with the intention that the employees would do
the same. The first and most common method was to pay
the employees "straight time" rather than time and one-half
for all work beyond 40 hours per week and to pay the
employees with two separate checks, one for 40 hours paid
from a payroll account and a second for overtime paid from
a nonpayroll account.2 The purpose of this scheme was to
avoid the requirements of the Fair Labor Standards Act and
to avoid paying the employer’s share of Social Security and
Medicare ("FICA") taxes by not reporting the overtime wages
to the IRS and by not withholding income or FICA taxes.
_________________________________________________________________

1. We point out that even though it might seem strange that a person
would buy United States savings bonds with unreported income, the
Gambones did so as the income from such bonds need not be reported
to the IRS until they are cashed or mature.

2. At least at certain times Gambone Brothers used an outside payroll
service to pay straight time wages.

                                3


The indictment also alleged that the Gambones, either
themselves or through their personnel employees, informed
new employees that Gambone Brothers would not report
overtime wages and encouraged those employees to do the
same. The second method used to avoid reporting wages
involved disguising certain employees’ raises as expense
reimbursements, which are not reported as income. The
third method involved paying some employees partially or
completely "off-payroll," that is, paying them from
nonpayroll, operating accounts rather than from payroll
accounts.

To conceal all three types of payments the Gambones had
their finance department prepare and file numerous
fraudulent tax documents, including false W-2 forms to be
attached to employees’ personal income tax returns
reporting regular wages but failing to report overtime
wages, expense reimbursements, and off-payroll wages. The
government estimated that the Gambones aided and
assisted their employees in failing to report at least $4.5
million in overtime wages and hundreds of thousands of
dollars in wages disguised as expense reimbursement and
off-payroll payments.

The third prong of the conspiracy, called the "unreported
subcontractor payments" prong in the indictment, charged
that the Gambones failed to issue and file IRS forms 1099
for millions of dollars worth of services rendered by
subcontractors. In doing so, the Gambones aided and
assisted some subcontractors in failing to report
substantial income.

A grand jury returned a 67-count indictment against the
Gambones and their co-defendants, Sandra Lee Gambone
("Sandy"), William Murdock, John Gambone, Jr. ("Johnny"),
and Robert Carl Meixner on April 6, 2000. In particular
Count One charged all defendants with the conspiracy to
defraud the United States as outlined above, in violation of
18 U.S.C. S 371. Murdock and Meixner were implicated,
however, only in the second prong of the conspiracy. Count
Two charged Jack and Sandy, who are married, with the
substantive offense of subscribing to their own false 1994
tax return, in violation of 26 U.S.C. S 7206(1). Count Three
against Tony, Count Four against Murdock, Count Five

                                4


against Johnny, and Count Six against Meixner similarly
charged each individual with subscribing to a false personal
tax return for either the 1993 calendar year (Johnny,
Murdock, and Meixner) or the 1994 calendar year (Tony).
Counts Seven through Sixty-Seven charged Jack and Tony
with aiding and assisting in the preparation of false
individual income tax returns for 61 employees, in violation
of 26 U.S.C. S 7206(2).

After the district court granted Sandy and Johnny a
severance, the case was tried against the other four
defendants.3 At the trial each of the defendants moved for
a judgment of acquittal on all counts against them
pursuant to Fed. R. Crim. P. 29(a) but the district court
reserved judgment on these motions pursuant to Fed. R.
Crim. P. 29(b). On November 17, 2000, the jury returned
guilty verdicts on all counts against the Gambones except
for counts Forty-Three and Fifty-Seven. In addition, it
found Murdock guilty on Counts One and Four and
Meixner guilty on Counts One and Six. Thus, the jury
found all defendants guilty on all counts except that it
found the Gambones not guilty of aiding and assisting two
of the 61 employees in preparing false individual returns.

Following the jury verdicts, each defendant renewed his
motion for a judgment of acquittal and, in the alternative,
moved for a new trial. On September 4, 2001, the district
court granted Jack’s motion for judgment of acquittal on
Count Two, Tony’s motion for judgment of acquittal on
Count Three, Murdock’s motion for judgment of acquittal
on Count Four, and Meixner’s Motion for Judgment of
Acquittal on Count One.4 The court denied all the
defendants’ motions on all other counts. See United States
v. Gambone, 167 F. Supp. 2d 803 (E.D. Pa. 2001). All
defendants except Meixner therefore were acquitted of the
_________________________________________________________________

3. The district court denied the defendants’ pretrial motion to dismiss
count one of the indictment. See United States v. Gambone, 125 F. Supp.
2d 128 (E.D. Pa. 2000).

4. Although the September 4 order accompanying the court’s opinion
mistakenly granted Murdock’s motion as to Count Three, in which he
was not charged, that error was corrected by order of September 6,
2001.

                                5
substantive offense of filing a false individual tax return in
either 1993 or 1994 but the court did not disturb any of
the convictions on the conspiracy count except Meixner’s
and did not disturb the Gambones’ convictions on 59
counts of aiding and assisting in the preparation of false
individual tax returns. Moreover, the court denied the
defendants’ motions for a new trial. The court subsequently
sentenced the Gambones to custodial terms of 37 months
on Count One and custodial terms of 36 months on all
other counts, all terms to run concurrently, ordered them
to pay fines of $75,000 and to pay the IRS $3,000,000. In
addition, the court imposed terms of supervised release
upon the Gambones’ completion of their custodial terms
and ordered them to pay certain costs of the prosecution.
They then appealed.5 We have jurisdiction under 28 U.S.C.
S 1291.

II. DISCUSSION

A. Sufficiency of the Evidence

1. Standard of Review

We review the "sufficiency of the evidence . . . in a light
most favorable to the Government following a jury verdict in
its favor." United States v. Antico, 275 F.3d 245, 260 (3d
Cir. 2001) (citing Glasser v. United States, 315 U.S. 60, 80,
62 S.Ct. 457, 469 (1942)). "We must sustain the verdict if
there is substantial evidence, viewed in the light most
favorable to the government, to uphold the jury’s decision.
. . . We do not weigh evidence or determine the credibility
of witnesses in making this determination." United States v.
Beckett, 208 F.3d 140, 151 (3d Cir. 2000) (citations
omitted). In making our review we examine the totality of
the evidence, both direct and circumstantial. See Antico,
275 F.3d at 260. We must credit all available inferences in
favor of the government. See United States v. Riddick, 156
_________________________________________________________________

5. According to the Gambones’ brief, Murdock and Meixner did not
appeal and, as of the time of the filing of the Gambones’ brief on this
appeal, the case against Sandy and Johnny had not been tried. The
Gambones challenge only their convictions and not their sentences on
this appeal.

                                 6


F.3d 505, 509 (3d Cir. 1998). Our review of the district
court’s interpretation of a statute is plenary. See United
States v. DeJulius, 121 F.3d 891, 893 (3d Cir. 1997).

2. Aiding and Assisting Convictions

We first address the Gambones’ convictions for aiding
and assisting their employees in the preparation of false
individual income tax returns in violation of I.R.C.
S 7206(2). Section 7206(2) provides:

       Any person who
       . . .

       (1) [w]illfully aids or assists in, or procures, counsels,
       or advises the preparation or presentation under, or in
       connection with any matter arising under, the internal
       revenue laws, of a return, affidavit, claim, or other
       document, which is fraudulent or is false as to any
       material matter, whether or not such falsity or fraud is
       with the knowledge or consent of the person authorized
       or required to present such return, affidavit, claim, or
       document . . .

       shall be   guilty of a felony and, upon conviction thereof,
       shall be   fined not more than $100,000 ($500,000 in
       the case   of a corporation), or imprisoned not more than
       3 years,   or both, together with the costs of prosecution.

The Gambones advance a two-part argument challenging
their convictions under section 7206(2). The first step in
their reasoning raises a purely legal question. Casting their
conduct as, at most, a scheme to provide false W-2s, they
argue that the Internal Revenue Code allowed the
government to prosecute them only under I.R.C. S 7204.
Section 7204 sets forth a misdemeanor offense for willful
furnishing of a false W-2 to an employee as follows:

       In lieu of any other penalty provided by law (except the
       penalty provided by section 6674) any person required
       under the provisions of section 6051 [governing an
       employer’s obligation to issue, inter alia, W-2 forms to
       employees] to furnish a statement who willfully
       furnishes a false or fraudulent statement or who
       willfully fails to furnish a statement in the manner, at

                                  7


       the time, and showing the information required under
       section 6051, or regulations prescribed thereunder,
       shall, for each such offense, upon conviction thereof,
       be fined not more than $1,000, or imprisoned not more
       than 1 year, or both.

The Gambones argue that this provision’s "in lieu of"
language indicates that section 7204 provides the exclusive
penalty for willfully furnishing a false W-2 to an employee.
They further note that the three-year statute of limitations
for prosecutions under section 7204 had expired by the
time the government initiated its case under section
7206(2).

The Gambones then argue that inasmuch as the
government may prosecute a defendant for the willful
furnishing of a false W-2 to an employee only under section
7204, the evidence was insufficient to sustain a conviction
under section 7206(2) as that section requires proof of
conduct beyond the mere furnishing of false W-2s. They
contend that they did not take affirmative action with
respect to their employees’ false tax returns beyond
furnishing the false W-2s, and that the jury could not
appropriately consider the furnishing of those W-2s or
other conduct facilitating it, such as paying money off
payroll and underreporting on employee time cards, in
connection with the section 7206(2) charges. The
Gambones argue that if we remove this evidence from the
equation there will not be an evidentiary basis for their
section 7206(2) convictions.

       a. Exclusivity of section 7204

As the district court noted, this case presents an issue of
first impression in this court as we have not interpreted
explicitly the "in lieu of" language of section 7204, and we
have not had the occasion to discuss the relationship
between sections 7204 and 7206(2). See Gambone , 167 F.
Supp. 2d at 820. The district court, relying primarily on
United States v. Hughes, Crim. A. No. CR 86-98, 1987 WL
33806 (N.D. Ohio Nov. 13, 1987), held that "conduct which
involves, but is not exclusively limited to, the provision of
false W-2s can be sufficient for a S 7206(2) violation. Thus,

                                8


the mere fact that the provision of false W-2s was a part of
the case does not mean that a S 7206(2) violation is not
possible." Gambone 167 F. Supp. 2d at 820. The court thus
rejected the Gambones’ contention that it should disregard
entirely the furnishing of the W-2s in assessing the
sufficiency of the evidence supporting the section 7206(2)
convictions. Nonetheless, when moving on to examine the
sufficiency of the evidence, the court found that the
evidence was sufficient to sustain the section 7206(2)
verdicts "even excluding consideration of the W-2s
themselves." Id. at 821.

In Hughes, the district court concluded that"the simple
fact of providing, or helping to provide, an individual with
a fraudulent W-2 is not punishable under S 7206(2)
because of S 7204’s ‘in lieu of’ provisions." Hughes, 1987
WL 33806, at *4. The court found, however, that"[a]s long
as there are other actions violative of S 7206, the fact that
the defendant may also have provided an individual with a
false W-2 does not prevent a S 7206 conviction." Id. (citing
United States v. MacKenzie, 777 F.2d 811 (2d Cir. 1985);
United States v. Isaksson, 744 F.2d 574 (7th Cir. 1984);
United States v. Barnes, 313 F.2d 325 (6th Cir. 1963)).
Having so concluded, the court denied the defendant’s
motion for judgment of acquittal or for a new trial, finding
that, "[b]ased on the evidence presented, the jury could
have found beyond a reasonable doubt that [the defendant]
additionally counseled [an employee] to understate her
income on her income tax return, by reporting as income
only that amount shown on the W-2 and not the additional
income which she received as ‘expenses.’ " Id. In other
words, the defendant violated section 7206(2) by going
beyond merely providing false W-2s and, in fact, counseling
an employee to understate income.
The defendant appealed and the Court of Appeals for the
Sixth Circuit reversed even though it did not find that the
district court erred in its legal analysis. Rather, the court of
appeals held that there was insufficient evidence that the
defendant counseled the employee to understate her
income, noting that the employee had denied receiving such
advice. Hughes v. United States, 899 F.2d 1495, 1500-01
(6th Cir. 1990). The court of appeals did not clarify whether

                                9


section 7206(2) requires proof of actual counseling or
whether something more than furnishing false W-2s but
less than actual counseling would support a conviction.6

Our cases have not been more helpful with respect to the
issue here than that of the court of appeals in Hughes. In
a case not involving furnishing of false W-2s, we held that
"[t]o establish aiding and abetting the filing of a false tax
return ‘there must exist some affirmative participation
which at least encourages the perpetrator.’ " United States
v. Graham, 758 F.2d 879, 885 (3d Cir. 1985) (quoting
United States v. Buttorff, 572 F.2d 619, 623 (8th Cir. 1978)
(internal quotation omitted)). In Graham, we held that there
was sufficient evidence to affirm a defendant’s conviction
where the defendant, who was a member of a group that
opposed taxation, set up a Swiss bank account for another
member and advised him not to pay taxes on the interest
earned on that account "because the U.S. had no
jurisdiction over it." Id. Likewise, where a defendant had
provided false invoices to certain taxpayers as
documentation of business expenses and advised those
taxpayers to use those expenses as tax deductions
improperly, we found sufficient evidence to sustain his
conviction under section 7206(2). United States v. McCrane,
527 F.2d 906, 913 (3d Cir. 1975), vacated on other grounds,
427 U.S. 909, 96 S.Ct. 3197 (1976).

Finally, other courts of appeals, in cases involving similar
factual scenarios where defendant employers disguised
certain wages by issuing paychecks from nonpayroll
accounts, have affirmed convictions under section 7206(2)
where the defendants’ conduct included, but apparently
was not limited to, furnishing false W-2s. See, e.g.,
MacKenzie, 777 F.2d at 820; Isaksson, 744 F.2d at 577-78.
These courts, however, did not address specifically the
relationship between sections 7204 and 7206(2).

The legislative history of section 7204, cited by both
sides, clearly establishes that Congress intended the "in
lieu of" language to ensure that the section 7204 penalties
displaced the more severe penalties in other provisions of
_________________________________________________________________

6. The court of appeals affirmed in part and reversed in part on other
aspects of the appeal that we need not describe.

                                10
the Internal Revenue Code setting out both felonies and
misdemeanors. H.R. Rep. No. 2333, 77th Cong., 2d Sess. at
132 (1942); S. Rep. No. 1631, 77th Cong., 2d Sess. at 172
(1942) ("These penalties are prescribed in lieu of the penalty
imposed by S 145 of the Code, and are much less severe
than those displaced."). Beyond this point, which, in any
event, the "in lieu of" phrasing of section 7204 itself
adequately captures, the parties’ citations to section 7204’s
legislative history are largely inconclusive, inasmuch as
that history fails to address its relationship to section
7206(2).

On the other hand, the timeline of amendments to the
Code does lend some support to the government’s position
that evidence of the Gambones’ furnishing of false W-2s can
be used to support the section 7206(2) convictions.
Congress enacted section 7204 as I.R.C. S 470(a) in 1942.
Revenue Act of 1942, Pub. L. No. 77-753, 56 Stat. 798, 892.7
At that time section 7206(2) already was in place in the
form of I.R.C. S 3793(b) in the Internal Revenue Code of
1939, Congress having enacted it in 1924. See Revenue Act
of 1924, 26 U.S.C. S 1267 (1926). Conduct designed to
assist an employee in filing a false return therefore already
was punishable under section 3793(b), while failing to
furnish a statement required under the Code (although not
specifically applicable to the W-2 context, inasmuch as
employers were not yet required to withhold) was
punishable under I.R.C. S 145(a). Taking the legislative
history at its word, section 470(a), enacted as part of the
new withholding regime, was intended to displace the
penalties under section 145, which set out misdemeanors
in subsection (a), including for failing to furnish a
statement, and felonies in subsection (b). There is no
_________________________________________________________________

7. Congress first required employers to withhold employees’ income taxes
in 1942; the 5% World War II "Victory Tax" on most employees’ gross
wages was the first vehicle for doing so. Carolyn C. Jones, Class Tax to
Mass Tax: The Role of Propaganda in the Expansion of the Income Tax
During World War II, 37 Buff. L. Rev. 685, 694-99 (1989); Peter W. Colby,
Comment, Federal Withholding on Employee Fringe Benefits for Income
and Social Security Taxes, 70 Cal. L. Rev. 178, 180-81 & n.19 (1982).
The following year, Congress amended the Code to make withholding
applicable to all income tax. Id.

                                11


indication, however, that Congress intended section 470(a),
now section 7204, to displace the penalty under section
3793(b). The legislative history therefore lends some
support to the government’s argument that Congress did
not intend section 7204 to preclude felony prosecutions of
conduct involving, but not limited to, furnishing false
statements.

Moreover, nothing in the language of either section 7204
or section 7206(2) or in the relevant legislative history,
suggests that a jury may not consider the furnishing of
false W-2s in deciding whether a defendant committed an
offense under section 7206(2). Read together, these
provisions stand for the less than remarkable proposition
that a person who merely furnishes false W-2s is only
culpable enough to deserve a misdemeanor conviction,
while a person who goes further and willfully causes a false
return to be filed is more culpable and is guilty of a felony.
Thus, although the "in lieu of" language suggests that proof
of the mere furnishing of false W-2s is insufficient as a
matter of law to support a section 7206(2) conviction,8 such
evidence plus any other evidence suggesting a defendant’s
intent to cause a false return to be filed form a proper
evidentiary basis for such a conviction. Indeed, MacKenzie
and Isaksson implicitly applied this principle.

Thus, the government may prosecute conduct involving,
but not limited to, furnishing false W-2s to employees
under section 7206(2). Under Graham, the relevant inquiry
is whether the defendant engages in "some affirmative
participation which at least encourages" the employee to
prepare or present a false return. Graham, 758 F.2d at 885.
Evidence of such affirmative participation that includes, but
is not limited to, furnishing false W-2s is sufficient to
sustain a conviction under that provision.9 Finally, such
_________________________________________________________________

8. Allowing the jury to infer intent to aid and assist from the mere
furnishing of false W-2s would subject a defendant who had engaged in
precisely the conduct prohibited by section 7204--no more and no less--
to a punishment other than that prescribed by that section, thus
ignoring the "in lieu of" language.

9. The Gambones also argue that other conduct ancillary to furnishing
false W-2s--details such as the preparation of employee time cards, the

                                12


affirmative participation need not rise to the level of actual
counseling, as the Gambones sometimes seem to suggest,
as long as it "at least encourages" the preparation or
presentation of a false return.

       b. Sufficiency of the Evidence

Given the foregoing framework, the government presented
sufficient evidence to sustain the 59 section 7206(2) aiding
and assisting convictions. To be sure, there was no direct
evidence that either of the Gambones explicitly counseled
any of the 59 employees to underreport their income. There
was, however, ample circumstantial evidence to allow the
jury to conclude that the Gambones aided and assisted
them in doing so by encouraging exactly that behavior.

The essential elements of an offense under section
7206(2) are (1) that defendant aided, assisted, procured,
counseled, advised or caused the preparation and
presentation of a return; (2) that the return was fraudulent
or false as to a material matter; and (3) that the act of the
defendant was willful. I.R.C. S 7206(2). See United States v.
La Haye, 548 F.2d 474, 475 (3d Cir. 1977); see also United
States v. Hooks, 848 F.2d 785, 788-89 (7th Cir. 1988).
_________________________________________________________________

use of separate, nonpayroll checks for overtime wages, and the extra
accounting necessary to accommodate a false W-2 scheme--should in
effect merge with the furnishing of false W-2s, so that evidence of such
conduct likewise would be insufficient on its own to sustain a section
7206(2) conviction. Because this position lacks any support in the
statutory text, legislative history, and applicable caselaw, we reject it. If
a defendant goes beyond merely furnishing false W-2s, and if the jury
finds his conduct to constitute affirmative participation that encourages
employees to file false returns, it may convict him of a felony under
section 7206(2). The Gambones suggest that, because"every
fraudulently understated W-2 opens the possibility" of such ancillary
conduct, in every section 7204 case the facts also would support a
section 7206(2) conviction. Joint Br. of Appellants at 26. Nevertheless we
are satisfied that persons who furnish false W-2s may avoid felony
convictions so long as they either eschew such ancillary conduct
altogether, or at least engage in such conduct in such a way that a jury
does not believe to constitute affirmative participation that willfully
encourages employees to file false returns.

                                13


There appears to be no dispute as to the falsity of the
employees’ returns and as to the materiality of the false
statements. The Gambones challenge the sufficiency of the
evidence only on the issue of whether they aided or assisted
the filing of those returns and whether their actions were
willful. Through the testimony of two controllers of
Gambone Brothers, Frank Ruser, who worked in that
position from 1972 to 1981, and Thomas Gaasche, who was
controller from 1985 until April 2000, the government
established that there was a scheme to pay employees’
overtime wages from nonpayroll accounts, paying"straight
time," and failing to withhold tax from the overtime wages
and to disclose those wages to the IRS. Thus, when Ruser
expressed his concerns about how overtime was paid, Tony
Gambone responded, "It’s my business, stay out of it." Id.
at 662. Similarly, Gaasche testified:

       I was probably only working there, you know, six to ten
       weeks when I--you know, looking at payroll, and I
       realized at that point everything going through payroll
       was just a flat 40 hours. And, you know, I thought it--
       I don’t like this, this seemed improper to me. And I
       went to Jack Gambone and I went in his office and I
       said, Jack, I don’t--I don’t think we’re handling payroll
       right, I don’t know why we’re doing this, why is it only
       showing 40 hours and then the other is on a separate
       check? And I don’t recall verbatim what he said, but
       basically he said, well, this is their mad money, you
       know, they take one check home and the old lady don’t
       have to know about the other one. And I said--at that
       time I said, well, I don’t know why you’d stick your
       neck out for them and help them hide money from
       their wives. I said, you know, if it gets audited you’re
       probably going to wind up paying both your share and
       their share of the social security and Medicare taxes.

Id. at 1731-32.

Notwithstanding the controllers’ concerns the practice
persisted. In 1995 the IRS audited Gambone Brothers
which then for a short time began paying overtime through
payroll. After some time, however, Gaasche confronted Tony
Gambone about what he suspected was a false expense
reimbursement, and Gambone responded, "[I]t’s my

                                14


company. I can pay whoever I want however I want and as
much as I want." Id. at 1828. The government also
produced the testimony of four employees who worked
under the controllers in the accounting department, a
receptionist who worked at Gambone Brothers for over 20
years, and 20 field workers and supervisors, all of whom
testified that they received overtime wages off payroll.
Moreover, the witnesses were aware that Gambone Brothers
neither withheld tax from nor reported those wages, and
they understood that they should not report those wages to
the IRS either. Many witnesses also testified that Gambone
Brothers gave employees who were to receive raises the
option of having the money paid on or off payroll.

The Gambones suggest that the testimony of these 25
employees is insufficient to prove that they willfully aided or
assisted the preparation of false returns because none of
the employees testified that the Gambones directly
counseled them to do so. As we discussed above, however,
the government did not have to prove that the Gambones
directly counseled employees to file false returns. Rather, it
was sufficient for the government to demonstrate that they
engaged in some affirmative conduct that at least
encouraged them to do so. The Gambones contend that
their role was limited to providing false W-2s and that they
had no interest in whether or not the employees reported
their overtime wages. The overwhelming weight of the
evidence, however, establishes that this is not an accurate
characterization of the Gambones’ conduct. Given the
testimony of all of the witnesses just mentioned, there
plainly was sufficient circumstantial evidence to support a
finding that the Gambones engaged in a long-running
scheme to encourage their employees to file false returns.
The Gambones not only furnished false W-2s to scores of
employees, but also created false employee time cards,
engaged in intricate and deceptive bookkeeping intended to
mask underreported income, and issued checks to
employees from nonpayroll accounts for unreported
overtime wages.

The parade of employees testifying that they understood
the Gambones’ actions as a sign that they should not
report their overtime wages is evidence in itself that the

                                15
Gambones, through this pervasive, ongoing scheme, took
affirmative steps to encourage the employees to file false
returns.10 Furthermore, some witnesses testified that agents
of the Gambones, including John Zangari, a superintendent
involved in hiring new employees, and certain foremen
informed them more specifically that Gambone Brothers’
"straight-time" policy meant that they should not worry
about reporting overtime income. When pressed further,
Zangari told these employees that Gambone Brothers would
take care of any problems that might arise out of
employees’ failure to report overtime income. One employee
testified Zangari told him that he should quit if he did not
want to be paid under the "straight-time" system, and
Zangari testified that when he told Jack and Tony Gambone
about another employee’s request that taxes be withheld
from all of his pay, the Gambones told him the employee’s
only options were to receive a "straight-time" check, not to
work overtime at all, or to quit. Finally, Zangari, who, from
1989 to 1993, was the company’s "overall superintendent,"
overseeing all jobs performed during that time period,
testified that he informed all newly hired employees up-
front of the "straight-time" policy, and that he spoke daily
with Tony Gambone, mentioning in their discussions every
new employee hired.

Cumulatively, this evidence supports an inference that
the Gambones, either themselves or through their agents,
encouraged employees not to report overtime income.
Employees were informed that Gambone Brothers would
pay straight time for overtime, not report overtime income,
and take care of any problems that might arise. As a result,
some employees testified that they felt obligated not to
report overtime income for fear of blowing the whistle on
Gambone Brothers or on their fellow employees. The
evidence supports the inference that the Gambones
intended exactly that result, inasmuch as inconsistent
reporting would have pointed to their own underreporting,
_________________________________________________________________

10. Curiously, the Gambones appear to concede that there was evidence
supporting this inference. Joint Br. of Appellants at 26 ("There was also
evidence enough to conclude that the Gambones intended to make it
possible for their employees not to report all of their wage income by
issuing false W-2s, and that some employees so understood it.").

                                16


which they had taken great pains to hide by creating false
employee time cards and manipulating the company’s
books. In any event, although there was little evidence
suggesting that the Gambones explicitly advised employees
to file false returns, there is ample circumstantial evidence
showing that they took affirmative steps to encourage them
to do so. Accordingly, a reasonable jury could have
concluded that the Gambones knowingly aided and assisted
in the preparation of tax returns of 59 employees that
contained materially false statements and, thus, the
evidence supported the convictions for violations of section
7206(2).

3. Conspiracy Convictions

To sustain its burden of proof on the crime of conspiracy
to defraud the United States, the government had to prove:
(1) the existence of an agreement; (2) an overt act by one of
the conspirators in furtherance of the objective; and (3) an
intent on the part of the conspirators to agree as well as to
defraud the United States. See United States v. Rankin, 870
F.2d 109, 113 (3d Cir. 1989) (citing United States v. Shoup,
608 F.2d 950, 956 (3d Cir. 1979)). The indictment
described three ways in which the Gambones conspired to
defraud the United States by: skimming cash from
Gambone Brothers and failing to report it as income on
their own personal returns; paying and not reporting
employee income from overtime wages and aiding and
assisting those employees in filing false returns; and not
reporting payments to subcontractors and therefore aiding
and assisting those subcontractors in their failure to report
that income.

We will affirm the convictions as long as we find that
there was sufficient evidence with respect to one of the
three alleged prongs of the conspiracy. See United States v.
Syme, 276 F.3d 131, 144 (3d Cir. 2002) (citing Griffin v.
United States, 502 U.S. 46, 49-50, 112 S.Ct. 466, 469-70
(1991)). The evidence discussed above with respect to the
substantive convictions under section 7206(2) also
supports convictions under the second prong of the
conspiracy count. In particular, that evidence allowed a
jury to conclude that the Gambones (1) had an agreement,
the purposes of which were to avoid paying their share of

                                17


social security and Medicare taxes and to encourage
employees to go along with the scheme by filing false tax
returns, (2) committed a number of overt acts in
furtherance of those objectives by furnishing false W-2s,
falsifying employee timecards, paying overtime wages off-
payroll, and engaging in deceptive bookkeeping, and (3)
intended both to agree to defraud and to defraud the United
States. There was therefore sufficient evidence to sustain
the conspiracy convictions.

The evidence was sufficient to sustain convictions for the
cash skimming conspiracy as well. Gaasche testified that
Gambone Brothers received payments predominantly by
check, and that the largest of the infrequent cash payments
he recalled seeing when he was controller was
approximately $3300. Three home purchasers testified that
they delivered cash in payment for extras--respectively
$10,750 in 1995, $50,000 in 1994, and a total of $105,805
in 1994 and 1995. None of these cash payments were
recorded on Gambone Brothers’ books. Furthermore,
Robert Sylvester, Jack Gambone’s brother-in-law, testified
that he resided with the Gambones for 20 years and that he
frequently observed Jack Gambone in possession of sums
of cash. He testified that Jack would tell his wife, Sandra,
to hide the cash until she could use it to buy savings
bonds, which, Jack told Sylvester, were a good vehicle for
hiding cash inasmuch as the income from the bonds is not
reported to the IRS until they are cashed.

Sylvester also testified that he once saw Jack in
possession of $30,000 in cash, and that on another
occasion he accompanied Sandra to the bank, where she
purchased $60,000-70,000 in savings bonds. When
Pennsylvania state police officers executed a search warrant
at Jack’s house on August 25, 1994, they located $60,000
in a safe and $12,000 in Jack’s nightstand. When a federal
search warrant was executed on December 6, 1995,
$65,815 was seized from the safe, of which $30,000
belonged to Sylvester. Bank records revealed that Sandra
paid a total of $62,750 in cash to purchase savings bonds
between June 24, 1994, and July 21, 1995. Moreover,
Gaasche testified that in 1995 Jack told him that the FBI
had been "snooping around," and that he should record

                                18


$150,000, which Jack had received and split with Tony, on
the company’s records. Taken together, this evidence is
sufficient to sustain a finding by the jury that Jack and
Tony Gambone conspired to defraud the United States by
skimming cash from Gambone Brothers and failing to
report that cash on their personal income tax returns.

By discussing the evidence only on the first two prongs of
the conspiracy indictment we do not imply that the
evidence did not support a conviction on the basis of the
third prong. Rather, we do not find it necessary to discuss
that evidence. We do note, however, that there was
substantial evidence to support it.

B. Improper Remarks During Rebuttal

1. Standard of Review

The Gambones argue that they are entitled to new trials
by reason of the prosecutor’s improper statements in her
rebuttal closing argument. We make a harmless error
analysis when deciding whether a new trial is warranted
because of improper remarks made by the prosecutor
during closing arguments. See United States v. Zehrbach,
47 F.3d 1252, 1265 (3d Cir. 1995) (en banc). "The harmless
error doctrine requires that the court consider an error in
light of the record as a whole, but the standard of review
depends on whether the error was constitutional or non-
constitutional. . . . [N]on-constitutional error is harmless
when ‘it is highly probable that the error did not contribute
to the judgment.’ . . . ‘High probability’ requires that the
court possess a ‘sure conviction that the error did not
prejudice’ the defendant." Id. (citations omitted). If the error
was constitutional, the court may affirm "only if the error is
harmless beyond a reasonable doubt." United States v.
Molina-Guevara, 96 F.3d 698, 703 (3d Cir. 1996).
2. Analysis

In opening statements, the prosecutor set forth the
evidence the government planned to introduce to
corroborate Sylvester’s testimony regarding the Gambones’
plot to skim cash from the company and to hide that cash
by purchasing savings bonds:

                                19


       And later, based on . . . information [provided by
       Sylvester], search warrants were executed, . . . and
       guess what, they corroborated what Mr. Sylvester said.
       A year later in ‘95 . . . over $65,000 cash and almost
       a million dollars face value savings bonds were found
       in a safe in Jack Gambone’s house. And you’ll hear
       how many of those savings bonds were purchased with
       cash from a bank representative.

J.A. at 184. Later in the trial, however, the court excluded
evidence of the bonds because the government was unable
to lay a foundation for admission of any but a small
fraction of the bonds ($62,750, as discussed above) by
showing that they were purchased with cash.

In his closing, Thomas A. Bergstrom, counsel for Tony
Gambone, after reviewing impeachment evidence
concerning Sylvester’s incentive to lie to obtain a lesser
sentence for a drug conviction, raised the bond issue:

       And I’m going to tell you this because part of me says
       stay away from it, Bergstrom, but part of me says
       you’ve got to know, because you heard it in the
       Government’s opening argument. They came in front of
       you and argued to you, three and a half weeks ago,
       that there’s a million dollars in bonds. Well, guess
       what? There isn’t a million dollars in bonds. They
       didn’t show you a million dollars in bonds at all. They
       showed you some bonds that were purchased between
       June of ‘94 and July of ‘95. My recollection tells me
       those bonds totaled about $65,000. . . . So, you know,
       the Government had their moment here. They . . .
       opened with, the million dollars in bonds that they
       opened with, and that they haven’t been able to prove
       . . . .

Id. at 3143-44. In rebuttal, the prosecutor, discussing the
cash-skimming allegation, responded:

       It’s all the money over all those other years. And again,
       they want to hide behind the fact that there’s not a
       paper trail of cash. And they want to point their finger
       at Mr. Sylvester and they want to bring up that whole
       thing about the bonds. Well, you know, ladies and
       gentlemen, Judge Padova told you before Ms. Winters’

                                20
       opening that openings were about what the
       Government expected the evidence to show. And you
       saw that throughout this trial, various objections were
       made and Judge Padova would rule on them as he saw
       fit and you saw that evidence was excluded. So, if
       there’s things we’ve said we were going to prove that we
       didn’t, don’t hold it against us. You heard the
       objections they made.

Id. at 3163-64.

At that point, Bergstrom objected. The court overruled
the objection, stating that he would charge the jury"on
that subject." The jury instructions, however, included only
general statements as to the burden of proof, the fact that
the defendants need not produce any evidence, the manner
of ruling on objections according to the rules of evidence,
and the fact that statements and arguments of counsel are
not evidence. The court did not give a specific curative
instruction with respect to the prosecutor’s remarks.

The parties do not dispute that the prosecutor’s remarks
were improper.11 In United States v. Mastrangelo, we
outlined three factors to consider in determining whether
improper comments are prejudicial: the scope of the
comments within the context of the entire trial, the effect of
any curative instructions given, and the strength of the
evidence against the defendant. 172 F.3d 288, 297 (3d Cir.
1999); see also United States v. Zehrbach, 47 F.3d at 1265.
_________________________________________________________________

11. The government appears to have abandoned an argument it raised in
the district court, that the "invited error" doctrine should apply. That
doctrine "teaches that where a prosecutorial argument has been made in
reasonable response to improper attacks by defense counsel, the unfair
prejudice flowing from the two arguments may balance each other out,
thus obviating the need for a new trial." United States v. Pungitore, 910
F.2d 1084, 1126 (3d Cir. 1990) (citing United States v. Young, 470 U.S.
1, 12-13, 105 S.Ct. 1038, 1045 (1985)). The doctrine does not apply,
however, where defense counsel’s attacks are proper,"vigorous
advocacy." Molina-Guevara, 96 F.3d at 705. As the district court found,
defense counsel did nothing improper by pointing out that the
government did not prove every fact alleged in the indictment or raised
in opening statements. The government has not advanced the invited
error theory on appeal.

                                21


The third factor, the strength of the evidence against the
Gambones, weighs in favor of the government. It should be
noted at the outset that the substance of the prosecutor’s
remarks establishes at most the purchase of bonds, not
illegal bond acquisition. Nevertheless, any prejudicial effect
from the prosecutor’s remarks would go to evidence of
cash-skimming, the first prong of the conspiracy count. The
government needed to prove only one prong in order to
establish a conspiracy, and the district court found that
two other prongs were proven. Further, the jury had the
witness testimony of Robert Sylvester upon which to base
a prong one verdict, and we have held that probative
evidence on the same issue as improper remarks may
mitigate prejudice stemming from those remarks. Gambone,
167 F. Supp.2d at 827; see United States v. Helbling, 209
F.3d 226, 242 (3d Cir. 2000) ("[A]lthough the prosecutor’s
comments may have been a pointed assertion of Helbling’s
guilt, the characterizations were related to the charges
contained in the indictment which the evidence presented
later did in fact establish. Accordingly, we find prejudice to
be lacking.").

Similarly, the first factor, the scope of the improper
comments within the context of the whole trial, weighs in
favor of the government. Not only was the Sylvester
testimony presented as evidence of cash-skimming, the
government successfully introduced evidence concerning
approximately $65,000 in bonds to corroborate Sylvester’s
testimony.12 Although this amount falls short of a million,
_________________________________________________________________

12. The Gambones argue that the effects of the prosecutor’s comments
seeped well beyond the confines of the cash-skimming prong, infecting
the entire trial with unsupported, "jury-arousing" allegations. They argue
that the prosecutor’s use of the word "objections" was meant to refer to
the over 200 defense objections sustained during the trial: "[T]he jury
simply could not have understood the government’s egregious remarks
as restricted to the prong 1 conspiracy. The explicit references to other
excluded evidence could only lead the jury to conclude that there was all
sorts of evidence of the defendant’s guilt which was being kept from
them by the defense objections." Joint Br. of Appellants at 42-43. We
reject this argument, which makes ambitious use of the prosecutor’s
pluralization of the word "objection" when we consider it in the context
of the rebuttal argument as a whole. Defense counsel only mentioned the
bonds when discussing Sylvester’s credibility and testimony concerning
the cash-skimming scheme, and the government only referred to defense
"objections" while discussing this same point.

                                22


as a legal matter the value of the bonds is not a critical
factor in determining whether there was an unlawful
conspiracy. Further, the prosecutor’s objectionable
comment amounts to less than half of a page out of over
3200 pages of trial transcript prior to jury deliberations. It
represented only a fleeting moment in a four-week trial, in
which the court sustained more than 200 objections by the
defendant.

Thus, the district court was correct to distinguish this
case from United States v. Mastrangelo, 172 F.3d 288, and
Molina-Guevara. In Mastrangelo, the parties had stipulated
that the defendant "had the chemical background to know
the ingredients and equipment necessary to make
methamphetamine," although the defendant had refused to
stipulate that he knew how to make the drug. Id . at 295. In
his closing, the prosecutor remarked both that the
stipulation suggested that the defendant "knew . . . how to
make methamphetamine" and that there was no evidence of
anyone else in the conspiracy knowing how to make
methamphetamine. Id. at 296. We held that these
statements were improper because they mischaracterized
the evidence in the record and impermissibly shifted the
burden to the defendant to produce exculpatory evidence,
influencing the case outcome. Id. at 296-97.

The Gambones argue that the prosecutor’s statements
impermissibly shifted the burden of proof by "telling the
jury to hold any gaps in the evidence against the
defendants." Joint Br. of Appellants at 41. We reject this
argument as the court made clear in its charge that the
burden of proof throughout the case remained with the
government and, in any event, even without the court’s
charge we are satisfied that the prosecutor’s statements
would not have had the effect that the Gambones suggest.
In this regard, we point out that Mastrangelo is
distinguishable as the prosecutor’s remarks here at most
explained the reason for the government’s failure of proof
and thus did not imply that the Gambones had any
obligation to produce exculpatory evidence. Moreover, there
was substantial evidence to support all the prongs of the
conspiracy count including witness testimony about cash-
skimming to which the prosecutor’s statements did not
relate.

                                23


Similarily, Molina-Guevara is distinguishable from this
case. In Molina-Guevara the government called one customs
agent to testify to the defendant’s involvement in a drug
conspiracy but chose not to call a second agent who also
had questioned the defendant. After counsel for the
defendant challenged the witness’ credibility during his
closing argument, the prosecutor suggested during rebuttal
that counsel for the defendant did not call the second agent
to testify because that agent would have corroborated the
testimony of the first agent. 96 F.3d at 703. In Molina-
Guevara, the prosecutor’s comments about the credibility of
government agents was influential of case outcome, as it
determined the crucial issue of whether defendant was
involved in a drug conspiracy. Id. at 705. In this case, other
evidence established the conspiracy.

Thus, the first and third factors weigh very strongly in
the government’s favor. As a result, even though no specific
curative instruction was provided to the jury, we hold that
the error was harmless beyond a reasonable doubt, and the
Gambones are not entitled to a new trial by reason of the
prosecutor’s comments. Accordingly, we need not determine
whether the comments constituted constitutional or
nonconstitutional error, as the higher standard is met.

C. Prejudicial Spillover

"Generally, invalidation of the convictions under one
count does not lead to automatic reversal of the convictions
on other counts." United States v. Pelullo , 14 F.3d 881, 897
(3d Cir. 1994). "[P]rejudicial spillover analysis under Pelullo
begins by asking whether any of the evidence used to prove
the reversed count would have been inadmissible to prove
the remaining count (i.e., whether there was any spillover of
inadmissible evidence). If the answer is ‘no,’ then our
analysis ends, as the reversed count cannot have
prejudiced the defendant." United States v. Cross, 308 F.3d
308, 318 (3d Cir. 2002). If there was any spillover, we must
ask whether the error was harmless, that is, whether it is
highly probable that the error did not prejudice the jury’s
verdict on the remaining counts. Id. at 318-19.

The Gambones’ arguments on this issue center on the
assertion that they also advanced with respect to their

                                24


insufficient evidence argument on the conspiracy count,
that the government failed to prove that they "engaged in a
colossal 20 year tax fraud scheme whereby enormous
amount of cash were skimmed from their business and
omitted from their tax returns each year from 1975 to
1995." Joint Br. of Appellants at 49. They argue that the
evidence of such a plot was "non-existent," a position belied
by the evidence already summarized. The Gambones
further suggest that any evidence that was admitted in
support of the personal tax evasion counts (not only the
conspiracy count, but also the substantive counts as to
which the district court granted judgments of acquittal)
amounted to nothing more than unsupported "jury-
arousing" accusations that portrayed the defendants as
massive tax evaders who wished, in the words of the
prosecutor, "to cheat the IRS in as many ways as they
could." J.A. at 3050. The Gambones conclude that, because
those characterizations were, in their eyes, proven to be
inaccurate, the spillover effect of the jury-arousing
statements tainted the entire trial, requiring that we reverse
their convictions on the counts that survived the district
court’s order partially granting their motions for judgments
of acquittal.

As we discussed above in detail, there was sufficient
evidence to sustain the conspiracy conviction on
either of the government’s first two theories, that is,
on the cash-skimming prong and the "overtime /
expense reimbursement / ‘off-payroll’ fraud" prong. The
unsubstantiated counts are therefore Counts Two and
Three charging the Gambones with the substantive offenses
of subscribing to false personal tax returns for the year
1994.13 The district court granted the Gambones’ motions
_________________________________________________________________

13. We recognize that the jury found the Gambones not guilty on two of
the 61 counts charging them with aiding and assisting in the
preparation of their employees’ false individual income tax returns. It is
clear, however, that inasmuch as the jury convicted the Gambones on
the remaining 59 of these counts and the court denied their motions for
acquittal on those counts, there could not possibly have been a spillover
effect from the evidence on the two counts on which they were acquitted,
and the Gambones do not contend otherwise. Rather, they contend that
reversal of the remaining 59 counts "for insufficiency will also require
[us] to assess the spillover effect of those invalidated counts." Joint Br.
of Appellants at 50 n.9. Of course, inasmuch as we are affirming the
convictions on these counts we need not make the analysis that the
Gambones believe might be necessary.

                                25


for judgment of acquittal on these charges because the
government had not introduced evidence that would allow
the jury accurately to pinpoint exactly when they received
cash from the company that may have gone unreported.
Gambone, 167 F. Supp. 2d at 815-17. Nevertheless, the
district court reasonably found that evidence was presented
to suggest that the business received substantial amounts
of cash and that the Gambones received distributions of
this cash at some point, though it ultimately found that
there was not evidence suggesting that the Gambones
received the cash in 1994. Id.

The evidence introduced to prove Counts Two and Three
also would have been admissible at a trial limited to the
remaining valid counts. That evidence, which focused on
the allegedly false personal tax returns for the year 1994,
was merely a subset of the evidence supporting the
government’s allegation that the Gambones engaged in a
long-running conspiracy to defraud the United States by
skimming cash and failing to report that cash on their
personal income tax returns. The Gambones seek to
characterize that evidence of the false 1994 returns as jury-
arousing. If that evidence contributed to a picture of the
Gambones as major tax evaders over the course of 25
years, however, it is for good reason; that is exactly what
was alleged in Count One, on which the jury convicted the
Gambones. Thus, although the evidence introduced to
support Counts Two and Three, according to the district
court, would not have allowed a reasonable jury to pinpoint
the exact year in which the Gambones skimmed cash that
may have gone unreported, that evidence would have been
admissible at a trial on the cash-skimming conspiracy
charge. Our analysis need continue no further.
Nonetheless, we also note that, inasmuch as there was very
strong evidence to sustain a conviction under the second
prong of the conspiracy count, i.e., the underreporting of
employees’ wages, and to sustain the convictions on the 59
counts of aiding and assisting in the preparation of
employees’ false returns, even if there had been
impermissible spillover, any error would have been
harmless. Thus, we are satisfied that the Gambones are not
entitled to new trials predicated on an adverse spillover
effect from the counts on which they were acquitted.

                                26


D. Jury Instructions

1. Standard of Review
The Gambones contend that they are entitled to reversals
and new trials on the aiding and assisting counts because
the court’s instructions on those counts were erroneous.
Inasmuch as they did not object to the instructions at trial,
we examine the charge for plain error. See United States v.
Retos, 25 F.3d 1220, 1228 (3d Cir. 1994). Thus, for us to
grant them relief "[t]here must be an ‘error’ that is ‘plain’
and that ‘affects substantial rights.’ Moreover,[Fed. R.
Crim. P.] 52(b) leaves the decision to correct the forfeited
error within the sound discretion of the Court of Appeals,
and the court should not exercise that discretion unless the
error ‘seriously affect[s] the fairness, integrity or public
reputation of judicial proceedings.’ " Id. (quoting United
States v. Olano, 507 U.S. 725, 732, 113 S.Ct. 1770, 1776
(1993)). "[I]t is a rare case in which an improper instruction
will justify reversal of a criminal conviction when no
objection has been made in the trial court." United States v.
Gordon, 290 F.3d 539, 545 (3d Cir. 2002) (internal
quotation marks omitted).

2. Analysis

The Gambones challenge the portion of the jury charge
relating to the aiding and assisting counts in which the
district court stated: "I instruct you as a matter of law that
if you find beyond a reasonable doubt that a defendant
willfully furnished, prepared or caused to be prepared false
and fraudulent documents which the defendant knew
would be relied on in the preparation of income tax returns
and would result in returns which were materially false
. . . then the Government has met its burden of proof in
this element . . . ." J.A. at 3257.

When reviewing a jury instruction for plain error, the
"analysis must focus initially on the specific language
challenged, but must consider that language as part of a
whole." Gordon, 290 F.3d at 544. We recognize that if taken
in isolation the challenged instruction would be erroneous
as a juror reasonably could interpret it as allowing a
conviction even though the Gambones merely had provided
employees with false W-2s without further encouraging

                                27


them to file false tax returns. In context, however, the error
is not plain. The instruction on this point began:

       Okay. Now let’s focus on aiding and abetting. What is
       it, what can it be? Where should your focus be with
       respect to whether there has been aiding and abetting?

       First let me state that it is not enough, it is not enough
       for the Government to establish only that the individual
       taxpayers listed in Count 7 through 67 received a Form
       W-2 that did not include all of their income. That’s not
       enough to make the charge. If that’s all there is, it’s not
       enough to make the charge.

       In order for the Government to establish that
       Anthony Gambone or John Gambone aided and abetted
       those individuals in filing a false return, you must find
       first that the return they filed was indeed false.
       Secondly, that the individual taxpayer in fact had
       income from Gambone Brothers that was not reported
       on this tax return; thirdly, that the failure to report was
       the cause of the unlawful assistance of the defendant;
       and fourthly, that besides giving the taxpayer an
       incorrect Form W-2, Anthony or John Gambone did
       something else to aid that particular taxpayer in filing
       [a] false return, besides proving an incorrect Form W-2
       or transmitting an incorrect W-2.

       And as to each taxpayer, members of the jury, you
       must affirmatively decide that the Government has
       proven beyond a reasonable doubt that the defendant
       did something to aid and assist that taxpayer besides
       simply and only providing an incorrect W-2 form. And
       you have heard all of the evidence with respect to
       everything that was going on. You don’t have to
       determine what was going on, and then determine
       whether there was aiding and assisting under the
       definition as I’ve just given it to you.

J.A. at 3255-56 (emphasis added). After an additional
paragraph the court gave the challenged portion of the
charge.

In the four paragraphs of the charge that we have
quoted, the district court made abundantly clear that the

                                28


jury could not convict the Gambones on the aiding and
assisting counts unless the jury found that they engaged in
conduct beyond simply providing false W-2s. Thus, even
though the challenged portion of instruction in itself is not
consistent with four paragraphs we have quoted, 14 and the
court’s use of the phrase "as a matter of law," was
erroneous, in the context of the charge as a whole this
statement was not prejudicial. Indeed, it is probably for
exactly that reason that the Gambones’ attorneys did not
object to the charge at the trial. Furthermore, given the
substantial evidence pointing to the Gambones’ guilt and
the overall fairness of the proceedings, any error clearly did
not affect substantial rights. See Retos, 25 F.3d at 1229
(stating that, under plain error analysis, the court of
appeals will exercise its discretion to order correction where
the defendant is actually innocent or where the error
seriously affects the fairness, integrity, or public reputation
of judicial proceedings). The instruction was therefore not
plainly erroneous and the Gambones are not entitled to
new trials by reason of it.

III. CONCLUSION

For the foregoing reasons the district court properly
denied the Gambones’ motions for new trials and acquittals
and the judgments of convictions and sentence entered
December 13, 2001, will be affirmed.

A True Copy:
Teste:

       Clerk of the United States Court of Appeals
       for the Third Circuit

_________________________________________________________________
14. The contradiction, however, is not as flat as the Gambones suggest.
The challenged instruction refers to "false and fraudulent documents"
rather than specifically to W-2s, the only inappropriate document to
consider without additional proof of encouragement.
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