                                                                     F I L E D
                                                               United States Court of Appeals
                                                                       Tenth Circuit
                 UNITED STATES COURT OF APPEALS August 1, 2006

                                 TENTH CIRCUIT                    Elisabeth A. Shumaker
                                                                      Clerk of Court


 U N ITED STA TES O F A M ER ICA,

          Plaintiff-Appellee,
                                                        No. 05-8017
 v.                                               (D.C. No. 03-CR-206-D)
                                                        (W yoming)
 ED W A RD B. LESO O N ,

          Defendant-Appellant.



                          ORDER AND JUDGMENT *


Before HA RTZ, SE YM OU R, and M cCO NNELL, Circuit Judges.


      Edward B. Lesoon appeals his conviction, following a jury trial, on four

counts of tax evasion in violation of 26 U.S.C. § 7201. M r. Lesoon also appeals

his sentence, claiming the district court erred by refusing to award him acceptance

of responsibility credit under U.S.S.G. § 3E1.1. W e affirm both his conviction

and his sentence.



      *
       After examining appellant’s brief and the appellate record, this panel has
determined unanimously that oral argument would not materially assist the
determination of this appeal. See Fed. R. App. P. 34(a)(2) and 10th Cir. R.
34.1(G). The case is therefore submitted without oral argument. This order and
judgment is not binding precedent, except under the doctrines of law of the case,
res judicata, or collateral estoppel. The court generally disfavors the citation of
orders and judgments; nevertheless, an order and judgment may be cited under the
terms and conditions of 10th Cir. R. 36.3.
      Evidence was presented at trial indicating that from 1965 to 1990, M r.

Lesoon filed tax returns and paid all federal taxes as required by law. M r. Lesoon

testified that his employer for many years w as an attorney who advised him to file

annual tax returns and pay federal taxes.

      In 1990, M r. Lesoon got into a dispute with the Internal Revenue Service

(IRS), after which he began researching the IRS and its authority. He consulted

numerous books, treatises and court opinions, read extensively in the tax code and

IR S manuals, and obtained the opinions of certain self-proclaimed tax experts.

As a result of his research, M r. Lesoon concluded, among other things, that the

IRS w as without authority to compel him to pay taxes and that, moreover, he was

not a “person” liable for the payment of federal taxes under the tax code.

Henceforth, M r. Lesoon’s relationship with the IRS became increasingly

contentious, and ultimately resulted in the criminal charges filed against him in

the instant case.

      From 1991 to 1998, M r. Lesoon contracted to provide janitorial services to

the M illion Dollar Cowboy Bar and Restaurant in Jackson, W yoming. The Bar

and Restaurant paid him every other week and reported those payments to the

IRS. M r. Lesoon did not file tax returns. M artin Sears, a special agent with the

IRS, testified at trial that the IRS sent M r. Lesoon numerous notices of

deficiency. Rather then paying the amounts due, M r. Lesoon filed petitions w ith

the United States Tax Court, which subsequently determined that he was, in fact,

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liable for payment. M r. Sears read a portion of the tax court’s 1994 opinion into

the trial record in which the court stated that M r. Lesoon’s petition “contain[ed]

tax-protestor-type arguments,” and that “all of the arguments [he] espoused . . .

have been uniformly rejected by this and other courts.” Aplt. App., vol. III at

244. M r. Sears also read into the record a portion of a 1997 opinion dismissing

M r. Lesoon’s second petition, stating that the petition “contained nothing but

frivolous arguments.” Id. at 268. In addition to dismissing his second petition,

the tax court ordered M r. Lesoon to pay a $1,000 penalty for filing frivolous

arguments.

      In November 1994, the IRS sent M r. Lesoon a final notice of deficiency

and advised him that failure to pay would result in the IRS placing tax liens on

his bank and investment accounts. Following receipt of the notice, M r. Lesoon

paid most, but not all, of his back taxes. The remaining amount due was obtained

by the IR S in M arch 1995 through a tax lien placed on a retirement account.

Shortly thereafter, M r. Lesoon withdrew the remaining balance of more than

$53,000 from the same account and filed an action in district court, which was

later dismissed, claiming among other things that the lien on his account

constituted an “illegal extraction.” Id. at 263, 274-76. M r. Lesoon also conveyed

all of his real and personal property to his wife. Id., vol. IV at 410-13; Aple.

App., doc. 1.

      In September 1997, the IRS notified M r. Lesoon that it might commence a

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criminal investigation regarding his continued failure to file tax returns. In

M arch 1998, the IRS again informed M r. Lesoon that his actions could subject

him to various penalties. Aplt. App., vol. III at 277-80, 283-285. M r. Lesoon

responded in a letter, which M r. Sears read into the record. Germane to this

appeal is a portion of the letter which states: “I have no intention now or ever to

file or pay the alleged income tax for years 1994/1995 since I am not at all liable

to do so.” Id. at 287. The letter also questioned the IRS’s authority.

      M r. Sears’ trial testimony further indicated that M r. Lesoon appealed the

dismissals of his two tax court petitions to this court. Both appeals were

dismissed, and portions of the accompanying opinions were read into the record.

This court characterized M r. Lesoon’s arguments as “standard tax protestor . . .

refrains,” id. at 289, that did not require refutation “with somber reasoning and

copious citation of precedent. To do so might suggest that these arguments have

some colorable merit.” Id. at 290. Like the tax court, this court imposed

monetary sanctions against M r. Lesoon for filing frivolous arguments.

      In November 1999, M r. Sears notified M r. Lesoon that the IRS had

comm enced a criminal investigation against him. Shortly thereafter, M r. Lesoon

filed tax returns for 1996, 1997 and 1998 indicating that he ow ed no taxes,

despite his employers’ reports of the wages paid to him for each of those years.

He also filed an action against M r. Sears and the IRS seeking $55 million in

damages. The action was later dismissed.

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       In September 2003, M r. Lesoon was charged by indictment with four

counts of willfully evading payment of the federal income tax in violation of 26

U.S.C. § 7201. Id., vol. I, doc. 1. In April 2004, a jury returned guilty verdicts

on all four counts, and in February 2005, the district court sentenced M r. Lesoon

to twelve months incarceration, thirty-six months of supervised release and

restitution totaling $43,660.86. On appeal, M r. Lesoon claims he presented

evidence sufficient to show that his failure to file tax returns was not a willful

evasion of a known legal duty but was instead the result of a good faith belief that

he was not required to file tax returns. W e are not persuaded.

       M r. Lesoon was charged with violating 26 U.S.C. § 7201, which states in

pertinent part that “[a]ny person who willfully attempts in any manner to evade or

defeat any tax . . . or the payment thereof shall . . . be guilty of a felony. . . .”

Being a “specific intent crime,” the government was required to prove intent, in

this case willfulness. See Cheek v. United States, 498 U.S. 192, 194 (1991).

Accordingly, the government had “to prove 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.” Id. at 201. W hen, as here, the defendant is

claiming he in good faith believed he did not have a duty to file tax returns or pay

federal taxes, the government must negate the “defendant’s claim of ignorance of

the law or [his] claim that because of a misunderstanding of the law, he had a

good-faith belief that he was not violating any provisions of the tax laws.” Id. at

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202. Thus, the “failure to file an income tax return does not violate [the tax code]

if the failure resulted from a good faith misunderstanding of the law. . . . These

misunderstandings of the law, however, must be in good faith.” United States v.

Callery, 774 F.2d 1456, 1458 (9th Cir. 1985).

      M r. Lesoon contends that “the totality of the evidence in this case could not

overcome his good faith defense.” A plt. Br. at 9. “The standard of review, where

a defendant claims his conviction was based upon insufficient evidence, is that

evidence is sufficient if, view ed in the light most favorable to the government,

any rational trier of fact could have found the essential elements of the crime

beyond a reasonable doubt.” Callery, 774 F.2d at 1458. To make this

determination, we review the evidence de novo. United States v. M ounkes, 204

F.3d 1024, 1027 (10th Cir. 2000).

      The record is replete with evidence of both M r. Lesoon’s knowledge of his

obligation to file tax returns and his stubborn refusal to comply with that

obligation in the face of countless admonishments. Some of the evidence directly

demonstrated M r. Lesoon’s knowledge of his legal duties, such as the undisputed

fact that upon the advice of a trusted employer and attorney, he filed tax returns

and paid his taxes for more than twenty-five years. M ost of the evidence,

however, is circumstantial. Nevertheless,

      [t]he willfulness of one accused of tax crimes may be proved by
      circumstantial evidence. As a practical matter, such evidence is
      likely to be the only type available to . . . rebut a good faith defense

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       other than the w ord of the defendant himself. If the defendant’s
       mere claim of good faith is not to be the end of the case, a trier of
       fact must evaluate the “basis” for that claim in order to determine
       whether the claim is genuine.

United States v. Schiff, 801 F.2d 108, 111 (2d Cir. 1986) (citations omitted). For

example, the fact that M r. Lesoon was involved in a contentious dispute with the

IRS in 1990 constitutes circumstantial evidence supporting the reasonable

inference that his failure following the dispute to file tax returns was a result, not

of a misunderstanding of the law, but rather a deep-seated grudge against the IR S.

       Additional circumstantial evidence tending to show an absence of good

faith is the undisputed fact that M r. Lesoon sought only the discredited opinions

of so-called tax experts who supported his own beliefs while he failed to seek out

advice from neutral, mainstream professionals. Aplt. A pp., vol. IV at 405.

M orever, when the IRS placed liens on his accounts, M r. Lesoon responded by

emptying those accounts and transferring all of his assets to his wife. Such action

suggests an intent to deliberately frustrate the IRS, and is inherently at odds w ith

M r. Lesoon’s assertion of good faith. Although M r. Lesoon testified that he acted

for proper reasons, the jury was clearly not persuaded. Such a credibility

determination “is the exclusive task of the fact trier. . . [I]t is for the jury to

decide which witnesses to believe and which not.” United States v. Youngpeter,

986 F.2d 349, 352-53 (10th Cir. 1993).

       Finally, the government presented evidence that on at least five occasions,



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courts considered M r. Lesoon’s arguments as to why he should not have to file

tax returns and forcefully rejected those arguments as groundless, improper and

frivolous. Nonetheless, despite these repeated reprimands, M r. Lesoon persisted

in asserting he was not liable for the payment of taxes. In his brief, M r. Lesoon

concedes that he may be both “foolish” and “obstinate” in his persistence, but

argues that foolishness and obstinance do not constitute criminal intent. Under

the circumstances of this case, we disagree. Although “[i]t is well established

that the good faith defense encompasses misunderstanding of the law,” it does not

encompass “disagreement with the law.” Schiff, 801 F.2d at 112.

      The distinction [between misunderstanding and disagreement] is
      necessary to the functioning of the tax system. W ithout it, any
      taxpayer could evade tax obligations simply by stubbornly refusing
      to admit error despite the receipt of any number of authoritative
      statements of the law. At some point, such stubbornness becomes
      unreasonable; the line is crossed between misunderstanding and
      disagreement and the taxpayer can no longer successfully assert a
      defense of good faith.

Id. In the present case, the evidence can reasonably be interpreted as showing

M r. Lesoon crossed that line years ago. The jury’s determination that he willfully

evaded his tax obligations in violation of 26 U.S.C. § 7201 is clearly supported by

sufficient evidence.

      M r. Lesoon also appeals his sentence, claiming the district court erred by

refusing to award him credit for acceptance of responsibility under U .S.S.G. §

3E1.1. Specifically, he asserts he demonstrated acceptance of responsibility by



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admitting his “factual guilt” when he did not dispute that he failed to file tax

returns.

      “W e review under a clearly-erroneous standard a district court’s finding

that a defendant is not entitled to an [acceptance of responsibility] adjustment.

The district court’s refusal to grant [a] downward adjustment is entitled to great

deference on review.” United States v. Herron, 432 F.3d 1127, 1138 (10th Cir.

2005) (internal citation and quotation marks omitted). “Under the Sentencing

Guidelines the acceptance-of-responsibility adjustment is to be granted if the

defendant clearly demonstrates acceptance of responsibility for his offense.” Id.

(citation and internal quotation marks omitted). Application Note 2 following

U.S.S.G. § 3E1.1 states that the “adjustment is not intended to apply to a

defendant who puts the government to its burden of proof at trial by denying the

essential factual elements of guilt, is convicted, and only then admits guilt and

expresses remorse.” U.S.S.G. § 3E1.1 cmt. n.2. Only in “rare situations” may the

adjustment be granted even though a defendant has gone to trial. Id. Such a

situation may arise when a defendant does not dispute his factual guilt, but

instead challenges, for instance, the constitutionality of a criminal statute. Id.

      Although he may have dearly wished to, M r. Lesoon did not and cannot

challenge the constitutionality of the IRS or the federal tax statutes. Such

arguments have been addressed by courts too numerous to mention, and have been

rejected as unfounded and frivolous. See Lonsdale v. United States, 919 F.2d

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1440, 1448 (10th Cir. 1990) (listing tax protestor arguments that have been

repeatedly rejected by the courts). Instead, the entire focus of M r. Lesoon’s trial

addressed his factual guilt, specifically, whether he knew of his duty to file tax

returns. As already stated, the government had the burden of proving knowledge.

Cheek, 498 U.S. at 201. M r. Lesoon’s good faith misunderstanding defense went

directly to this essential element, and the government was required to present

sufficient evidence to negate it. Id. at 202. Accordingly, the only material

dispute in this case involved M r. Lesoon’s knowledge, an issue of factual guilt if

ever there was one.

      Finally, we note that M r. Lesoon has never admitted guilt or expressed

remorse for his actions, during sentencing or at any other time. It is hard to

imagine, therefore, how the district court could have found he accepted

responsibility for his crimes. Accordingly, we AFFIRM M r. Lesoon’s conviction

as well as his sentence.

                                                ENTERED FOR THE COURT

                                                Stephanie K. Seymour
                                                Circuit Judge




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