                                                                                                                           Opinions of the United
1998 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


7-9-1998

United States v. Moses
Precedential or Non-Precedential:

Docket 96-3632




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Recommended Citation
"United States v. Moses" (1998). 1998 Decisions. Paper 152.
http://digitalcommons.law.villanova.edu/thirdcircuit_1998/152


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Filed July 9, 1998

UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT

No. 96-3632

UNITED STATES OF AMERICA

v.

JOSEPH P. MOSES
Appellant

ON APPEAL FROM THE
UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
(D.C. Crim. No. 95-00067-1)

Argued: January 26, 1998

Before: MANSMANN, COWEN, and ALITO, Circuit Judges

(Opinion Filed: July 9, 1998)

       J. ALAN JOHNSON (Argued)
       1550 Koppers Building
       436 Seventh Avenue
       Pittsburgh, PA 15219

       Counsel for Appellant

       LINDA L. KELLY
       United States Attorney

       JAMES Y. GARRETT (Argued)
       Assistant U.S. Attorney
       633 U.S. Post Office & Courthouse
       Pittsburgh, PA 15219

       Counsel for Appellee
OPINION OF THE COURT

ALITO, Circuit Judge:

Joseph Moses appeals his criminal convictions for
willfully failing to file corporate tax returns, willfully filing
false personal tax returns, and conspiring to defraud the
United States by obstructing the lawful functions of the
Internal Revenue Service (IRS). Moses assigns as error the
district court's denial of his post-trial motion for a
judgment of acquittal, as well as its admission of certain
hearsay statements. We affirm.

I

While Director of the Allegheny County Maintenance
Department, Joseph Moses accepted kickbacks from
Edmond Gaudelli, a commercial vendor who did business
with the County. These kickbacks were routed through
Catherine Jean Ronschke, an employee of the Department,
to conceal the source and nature of the payments. With the
aid of the kickbacks from Gaudelli, Moses was able to meet
the financial obligations of Sadies Place, Inc., a private
corporation he had formed in 1985. Between 1985 and
1993, Moses failed to file several corporate tax returns for
Sadies Place and failed to report his kickback income on
his personal tax returns. Meanwhile, Gaudelli deducted the
kickbacks as business expenses on his returns. When
called before a grand jury in May 1994 to discuss these
matters, Gaudelli and Ronschke both made false
statements regarding their financial dealings with Moses.

Based on these and other events, Moses, Gaudelli and
Ronschke were indicted for conspiring to defraud the
United States by obstructing the lawful functions of the
IRS. See 18 U.S.C. S 371. In addition, Moses was indicted
for willfully filing a false personal income tax return, in
violation of 26 U.S.C. S 7206(1), and willfully failing to file
four corporate tax returns for Sadies Place, in violation of
26 U.S.C. S 7203.

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At trial, Moses objected to the admission of several
hearsay statements made by Gaudelli and Ronschke. The
district court overruled these objections, concluding that
some of the statements were admissible because they were
against the declarant's penal interest, see Fed. Rule Evid.
804(b)(3), and others were admissible because they were
made in furtherance of the conspiracy. See Fed. Rule Evid.
801(d)(2)(E). After the jury convicted Moses on all counts,
he moved for a judgment of acquittal on the ground that
there was insufficient evidence to convict him of willfully
failing to file the Sadies Place returns. The district court
denied the motion, and Moses brought this appeal.

II

A

Moses's primary contention on appeal is that the district
court erroneously admitted out-of-court statements made
by Edmond Gaudelli. Gaudelli's statements, which
implicated Moses in the kickback scheme, were presented
through the testimony of Michael Tutro, a government
witness who had been a friend and colleague of Gaudelli's.
According to Tutro, Gaudelli said on several occasions that
he was "tak[ing] care" of Moses "moneywise." App. 434-37.
Tutro further testified that Gaudelli would tell him where
he was meeting with Moses to make these payments. The
district court concluded that Gaudelli's statements were
admissible under Federal Rule of Evidence 804(b)(3) as
statements against penal interest, and further held that
admission of Gaudelli's statements would not violate the
Confrontation Clause. Moses challenges both of these
rulings on appeal.

A hearsay statement made by an unavailable declarant
can be admitted pursuant to Rule 804(b)(3) if, at the time
of its making, "it so far tended to subject the declarant to
civil or criminal liability . . . that a reasonable person in the
declarant's position would not have made the statement
unless believing it to be true." Since there is no dispute
over Gaudelli's unavailability, the only question under Rule
804(b)(3) is whether the admitted statements were

                               3
sufficiently against Gaudelli's interest so as to be deemed
reliable. This determination must be made "by viewing [the
statement] in context" and "in light of all the surrounding
circumstances." Williamson v. United States, 512 U.S. 594,
603-604 (1994).

Moses contends that Gaudelli's statements are not
admissible under Rule 804(b)(3) because "statements
implicating another person in misconduct are not against
the interest of the declarant." Reply Br. at 1. While this
proposition holds true in many cases, it is not a per se rule.
As the Supreme Court explained in Williamson:

       There are many circumstances in which Rule 804(b)(3)
       does allow the admission of statements that inculpate
       a criminal defendant. Even the confessions of arrested
       accomplices may be admissible if they are truly self-
       inculpatory, rather than merely attempts to shift blame
       or curry favor.

512 U.S. at 603.

Under Williamson, the proper approach in cases involving
out-of-court statements implicating other people is to
examine the circumstances in which the statements are
made in order to determine whether they are self-
inculpatory or self-serving. In Williamson, where the
declarant implicated another person while in police custody
and after already having confessed to the crime, the Court
concluded that the naming of the defendant did little to
further implicate the declarant and may have been an effort
to secure a lesser punishment through cooperation. See
512 U.S. at 604 (opinion of O'Connor, J., in which Scalia,
J. joined); id. at 607-08 (opinion of Ginsburg, J., in which
Blackmun, Stevens, and Souter, J.J., joined). See also
United States v. Boyce, 849 F.2d 833, 836 (3d Cir. 1988)
(statement given in custody not reliable because
circumstances indicated that it may have been "motivated
by a desire to curry favor"). In the instant case, by contrast,
Gaudelli made his statements to a friend during lunch
conversations that took place long before Gaudelli was
arrested. Under these circumstances, there is no reason to
believe that Gaudelli was trying to avoid criminal
consequences by passing blame to Moses.1 Moreover, by
_________________________________________________________________

1. This conclusion is supported by the Notes of Advisory Committee to
Rule 804(b)(3):

                               4
naming Moses, as well as the place where he was meeting
Moses to make payments, Gaudelli provided self-
inculpatory information that might have enabled the
authorities to better investigate his wrongdoing. See
Williamson, 512 U.S. at 603 (explaining that a declarant's
statement as to where he hid a gun would be self-
inculpatory "if it is likely to help the police find the murder
weapon"). Given the context and content of Gaudelli's
statements to Tutro, we agree with the district court that
they were sufficiently self-inculpatory so as to satisfy the
requirements of Rule 804(b)(3).

Moses's Confrontation Clause argument presents a more
complicated question. The Supreme Court has held that an
out-of-court statement may be barred by the Confrontation
Clause even if it fits a hearsay exception. Idaho v. Wright,
497 U.S. 805, 814 (1990). The Wright Court explained that,
to be admissible under the Sixth Amendment, a hearsay
statement must either fall within a "firmly rooted" hearsay
exception or be "supported by a showing of particularized
guarantees of trustworthiness." Id. at 816-17 (citation
omitted). While the district court concluded that the
"statement against penal interest" exception is firmly
rooted, we decline to address that issue because we believe
that a hearsay statement that meets the requirements of
_________________________________________________________________

        [A] statement admitting guilt and implicating another person, while
        made in custody, may well be motivated by a desire to curry favor
        with the authorities and hence fail to qualify as against interest.
. . .
        On the other hand, the same words spoken under different
        circumstances, e.g., to an acquaintance, would have no difficulty
in
        qualifying.

28 U.S.C.A. Rule 804, p. 449 (1984). While the Supreme Court in
Williamson concluded that the Advisory Notes are"not particularly clear"
as to the admissibility of non-self-inculpatory statements that are
collateral to self-inculpatory statements, see 512 U.S. at 601-02, the
Notes are perfectly clear as to the difference between custodial and non-
custodial circumstances for purposes of determining whether a
statement is self-inculpatory in the first place.

                                5
Rule 804(b)(3) by definition possesses "particularized
guarantees of trustworthiness."2

Rule 804(b)(3) does not allow the admission of all
statements that could be interpreted as against the
declarant's penal interest. Rather, the rule permits the use
of a statement only if it "so far tended" to subject the
declarant to criminal liability "that a reasonable man in his
position would not have made the statement unless he
believed it to be true." Fed. Rule Evid. 804(b)(3). As
discussed above, this language requires courts to examine
"all the surrounding circumstances" in order to determine
whether a statement is "truly self-inculpatory." Williamson,
512 U.S. at 603-04. This examination parallels the inquiry
required under the Confrontation Clause. See Wright, 497
U.S. at 820 (courts must examine "the totality of
circumstances that surround the making of the statement"
to determine whether the declarant's statement is
"particularly worthy of belief ").3 Accordingly, we conclude
that a statement that meets the requirements of Rule
804(b)(3) also meets the requirements imposed by the
Confrontation Clause. Accord Williamson, 512 U.S. at 605
(opinion of O'Connor, J., in which Scalia, J., joined). Since
Gaudelli's statements were made under circumstances that
render them particularly worthy of belief for purposes of
Rule 804(b)(3), we affirm the district court's ruling that the
statements are not barred by the Confrontation Clause.
_________________________________________________________________

2. We note that there is disagreement among the circuits as to whether
the "statement against penal interest" exception is firmly rooted.
Compare United States v. Flores, 985 F.2d 770, 775-776 (5th Cir. 1993)
(not firmly rooted) with United States v. Saccoccia, 58 F.3d 754, 779 (1st
Cir. 1995) (firmly rooted); United States v. York, 933 F.2d 1343, 1363
(7th Cir. 1991) (same); United States v. Seeley, 892 F.2d 1, 2 (1st Cir.
1989) ("[T]he exception for declarations against penal interest would
seem to be `firmly rooted.' ").

3. In examining the totality of the circumstances, courts cannot rely on
corroborating evidence to conclude that a hearsay statement is
trustworthy for purposes of the Confrontation Clause. Wright, 497 U.S.
at 822-823. Moses correctly points out that the district court erred by
relying on corroborating evidence in the instant case. See App. at 425.
This error was harmless, however, given that the circumstances
surrounding the making of Gaudelli's statements are alone sufficient to
render them trustworthy.

                               6
B

Moses's next contention is that the district court
erroneously admitted the grand jury testimony of Jean
Ronschke and Edmond Gaudelli as non-hearsay under
Federal Rule of Evidence 801(d)(2)(E).4 That rule provides:

       A statement is not hearsay if . . . [t]he statement is
       offered against a party and is . . . a statement by a
       coconspirator of a party during the course and in
       furtherance of the conspiracy.

Moses argues that the statements made by Ronschke and
Gaudelli are not admissible under Rule 801(d)(2)(E) because
they were made after the object of the charged conspiracy
had been accomplished and, thus, were not statements in
furtherance of the conspiracy. In making this argument,
Moses relies on the Supreme Court's instruction that "after
the central criminal purposes of a conspiracy have been
attained, a subsidiary conspiracy to conceal may not be
implied from circumstantial evidence showing merely that
the conspiracy was kept a secret and that the conspirators
took care to cover up their crime in order to escape
detention and punishment." Grunewald v. United States,
353 U.S. 391, 401-02 (1957). Moses contends that the
central purpose of the instant conspiracy was to "avoid
declaring . . . additional income for the years 1985-88."
Appellant's Br. at 31. Since Gaudelli and Ronschke did not
provide their testimony until 1994, Moses argues that,
under Grunewald, it was improper to admit their
statements as being in furtherance of the original
conspiracy. However, contrary to Moses's characterization,
the conspiracy charged in the indictment was not limited to
the years 1985-1988. Rather, the indictment explicitly
charged a conspiracy to defraud the IRS lasting until June
30, 1994, App. at 26, and it alleged that the conspirators
engaged in more than 50 overt acts in furtherance of the
_________________________________________________________________

4. A review of the district court's order reveals that much of the grand
jury testimony was admitted because it did not meet the definition of
hearsay. See Supp. App. at 1-5 (holding that"some of the testimony is
not being offered to prove the truth of the matter asserted, and therefore
is not hearsay"). Moses has not appealed this portion of the district
court's ruling.

                               7
conspiracy between 1989 and 1994. App. at 37-43. Thus,
this case is wholly distinguishable from Grunewald, where
the main objective of the conspiracy was to obtain "no
prosecution" letters from the IRS in 1948 and 1949, but the
government sought to imply a subsidiary conspiracy to
conceal in the 1950s. 353 U.S. at 398.

We agree with the district court that this case is
controlled by Forman v. United States, 361 U.S. 416 (1960),
overruled in part on other grounds by Burks v. United
States, 437 U.S. 1, 18 (1978). In Forman, the defendant
was charged with conspiracy to evade income taxes that
were owed for the period of 1942-45. Id. at 417-19.
Although the last false income tax form was filed in 1946,
the government contended that the conspiracy embraced
"subsequent efforts . . . to evade those taxes." Id. at 420.
The Supreme Court agreed, noting that "the indictment
specifically alleged that the conspiracy extended from 1942
to 1953" and charged overt acts "committed as late as
1953." Id. at 423. The Court continued:

       The correct theory, we believe, was indicated by the
       indictment, i.e., that the conspiracy was a continuing
       one extending from 1942 to 1953 and its principal
       object was to evade the taxes of [the defendant] and his
       wife for 1942-1945, inclusive, by concealing their
       `holdout' income. This object was not attained when the
       tax returns for 1945 concealing the `holdout' income
       were filed. . . . The concealment of the`holdout' income
       must continue if the evasion is to succeed. It must
       continue until the action is barred and the evasion
       permanently effected.

Id. at 423-24. Like the indictment in Forman, the
indictment in this case specifically alleges a continuing
conspiracy to evade taxes that included overt acts of
concealment after the taxes were due. In order for this
conspiracy to succeed, Moses and his co-conspirators had
to conceal his failure to pay taxes until any action was
barred and the evasion was "permanently effected." Id. at
424. Since this object had not yet been achieved when
Gaudelli and Ronschke testified before the grand-jury,5 the
_________________________________________________________________

5. We take as accurate the government's statement that "Moses' liability
for taxes owed on unreported kickbacks . . . remained open" at the time
of the grand jury testimony. Appellee's Br. at 41. Moses did not dispute
this factual assertion.

                               8
district court was entitled to conclude that Gaudelli and
Ronschke made their statements in furtherance of the
conspiracy. Accordingly, we affirm the order of the district
court admitting the statements of Edmond Gaudelli and
Jean Ronschke under Rule 801(d)(2)(E).

C

Moses's final contention is that the government presented
insufficient evidence to demonstrate that he willfully failed
to file tax returns for the Sadies Place business in violation
of 26 U.S.C. S 7203. To prove willfulness in a criminal tax
case, the government must show "that the law imposed a
duty on the defendant, that the defendant knew of this
duty, and that he voluntarily and intentionally violated that
duty." Cheek v. United States, 498 U.S. 192, 201 (1991).
Viewing the evidence in the light most favorable to the
government, we agree with the district court that a
reasonable juror could have concluded that Moses acted
willfully.

The evidence presented at trial revealed that Moses was
the sole owner of the Sadies Place business and exercised
complete control over the business. The evidence also
revealed that Moses was aware of his obligation tofile tax
forms for Sadies Place as he hired an accountant, Joseph
Jacobs, to complete tax forms for Sadies Place and submit
them to a lending institution. Nevertheless, Moses never
signed any of the Sadies Place tax forms during the years
in question and did not cause the forms to be submitted to
the IRS until after he was indicted. Moreover, the
government demonstrated that Moses had a motive to
withhold the Sadies Place tax forms from the IRS. At the
time the Sadies Place forms were due, Moses was trying to
settle a previous liability to the IRS on favorable terms. This
effort might have been jeopardized, however, had the IRS
learned from the Sadies Place returns that Moses possessed
additional assets. Under these circumstances, a reasonable
juror could conclude that Moses knew of his duty tofile the
Sadies Place returns and intentionally refrained from doing
so.

Notwithstanding this strong circumstantial evidence,
Moses contends that his conviction was unreasonable in

                               9
light of Jacobs' testimony. Jacobs, who appeared as a
government witness, testified that Moses insisted the
Sadies Place returns be filed. After reviewing the record, we
agree with the district court that "the jury was not obligated
to accept Jacobs' testimony . . . and in light of Jacobs'
demeanor as a witness and his close association with
Moses personally, professionally and in the criminal
scheme, obviously had abundant reason to disregard it."
Supp. App. at 25. Accordingly, we affirm the district court's
denial of Moses's motion for acquittal on Counts Five, Six,
Seven and Eight of the indictment.

A True Copy:
Teste:

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

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