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United States v. Pflum

United States District Court, D. Kansas

May 10, 2017

UNITED STATES OF AMERICA, Plaintiff,
v.
DAVID G. PFLUM (01), Defendant.

          MEMORANDUM AND ORDER

          Daniel D. Crabtree United States District Judge

         On January 26, 2017, a jury convicted defendant David G. Pflum of two charges: (1) attempting to evade and defeat the payment of income tax, a violation of 26 U.S.C. § 7201, and (2) corruptly endeavoring to obstruct and impede the due administration of the Internal Revenue laws, a violation of 26 U.S.C. § 7212(a). Doc. 179.

         Mr. Pflum has filed several post-trial motions that the court considers below. Through counsel, Mr. Pflum filed a Motion for Judgment of Acquittal. Doc. 182. This motion moves the court to set aside the jury's verdict under Fed. R. Crim. P. 29(c) because, Mr. Pflum contends, the government presented insufficient evidence for a rational jury to find him guilty beyond a reasonable doubt of the crimes charged. Mr. Pflum also has filed several pro se motions after the trial. Docs. 188, 196, 203. His pro se motions ask the court for various forms of relief. They include dismissal of the Indictment, an order releasing him from custody, and transfer of the case to another judicial district. The government has responded to some of Mr. Pflum's motions, filing Motions for Orders denying them. Docs. 197, 199.

         For reasons explained below, the court denies all of Mr. Pflum's post-trials motions and grants the government's motions. In sum, the government presented sufficient evidence for a rational jury to find Mr. Pflum guilty beyond a reasonable doubt of the two counts of conviction. And, as the court already has explained in other orders denying similar motions, Mr. Pflum's arguments for dismissal of the Indictment are meritless. The court repeatedly has rejected Mr. Pflum's assertion that the court lacks subject matter and personal jurisdiction. Mr. Pflum nonetheless makes the same assertions again in his pro se post-trial motions. But, he provides no reason why the court should reconsider or set aside its earlier rulings. The court explains its conclusions in greater detail below.

         I. Factual and Procedural Background

         On June 4, 2014, a grand jury returned a two-count Indictment charging Mr. Pflum with (1) attempting to evade and defeat the payment of income tax in violation of 26 U.S.C. § 7201; and (2) corruptly endeavoring to obstruct or impede the due administration of the Internal Revenue laws in violation of 26 U.S.C. § 7212(a). Doc. 1. On May 4, 2016, a grand jury returned a First Superseding Indictment against Mr. Pflum, charging the same offenses, but expanding the dates when he allegedly engaged in illegal conduct to include additional tax years. Doc. 100.

         After the grand jury returned the original Indictment in June 2014, Assistant Federal Public Defender Andrew J. McGowan entered his appearance for Mr. Pflum. Doc. 6. During Mr. McGowan's representation, Mr. Pflum asked several times for the court to discharge Mr. McGowan and allow the defendant to represent himself. See, e.g., Docs. 25, 53. On November 30, 2015, the court granted Mr. Pflum's request, allowed him to proceed pro se, and appointed Mr. McGowan as standby counsel. Doc. 55.

         On March 16, 2016, Mr. Pflum filed another motion asking the court to withdraw Mr. McGowan's representation as standby counsel. Doc. 76. But, at a hearing on the motion, Mr. Pflum reversed course yet again, announcing that he no longer wished to represent himself. Doc. 89. After conducting an extensive colloquy to discern whether Mr. Pflum understood the consequences of his decision, the court found that Mr. Pflum had waived his right to self-representation. Id. So, the court reappointed Mr. McGowan as counsel for Mr. Pflum. Id.

         Five days later, Mr. McGowan filed a motion to withdraw from this representation because Mr. Pflum had made serious allegations about Mr. McGowan's loyalties, including that he was conspiring with the prosecution to undermine Mr. Pflum's constitutional rights. Doc. 90 at 8. Mr. McGowan asked the court to grant his motion to withdraw because of this conflict of interest, irreconcilable differences, and a breakdown in communications. Id. The court granted Mr. McGowan's motion and allowed him to withdraw. Doc. 94. The court then appointed Robin Fowler to represent Mr. Pflum. Doc. 97.

         On November 17, 2016, Mr. Pflum filed a pro se motion asking the court to terminate Mr. Fowler's representation. Doc. 128. The court held a hearing on the motion and conducted yet another detailed colloquy with Mr. Pflum about his right to counsel. Doc. 131. The court again concluded that Mr. Pflum had waived his right to counsel, and it permitted Mr. Pflum to represent himself with Mr. Fowler serving as standby counsel. Id.

         The court set the case for trial beginning on Tuesday, January 17, 2017. The court held a limine conference on January 10, 2017. Mr. Pflum appeared in person at the conference, still representing himself with Mr. Fowler serving as standby counsel. Doc. 153. The following week, the court called the case for trial, as scheduled, on January 17, 2017, at 9:01 a.m. Doc. 156. Counsel for the government and Mr. Fowler appeared. Id. But Mr. Pflum did not. Id. The court directed the clerk to issue a warrant to the United States Marshal to secure Mr. Pflum's appearance for trial. Id. Mr. Pflum was arrested the next day, and he appeared for a status conference. Mr. Fowler again appeared as standby counsel. Doc. 165. Mr. Pflum changed course again, asking the court to reappoint Mr. Fowler so he could try the case and otherwise serve as his counsel going forward. Id. The court conducted another colloquy with Mr. Pflum and concluded that he had waived his right to represent himself in the case. Id. So, the court reappointed Mr. Fowler as counsel. Id. The court also scheduled the jury trial to begin on Friday, January 20, 2017, at 9:00 a.m.

         The jury trial began, as scheduled, on January 20. Mr. Fowler represented Mr. Pflum throughout the trial. Among other things, the government presented the following evidence at trial. In 2004, a jury convicted Mr. Pflum of multiple tax code violations, including three counts of failing to file income tax returns for the tax years 1997 through 1999. Judgment, United States v. David G. Pflum, No. 04-40008-01-SAC (D. Kan. Dec. 10, 2004), ECF No. 94. As a condition of supervised release, United States District Judge Sam A. Crow ordered Mr. Pflum to file “truthful and complete federal and state income tax returns in a timely manner, according to law, and cooperate with the Internal Revenue Service and state tax authorities regarding any manner related to the defendant's past or present tax liability during the term of supervision.” Id. at 5.[1]

         In 2008, the United States Probation Officer (“USPO”) asked Mr. Pflum to provide certain financial information as part of his efforts to comply with a condition of his supervised release. In response, Mr. Pflum submitted a net worth statement that listed his only asset as $472.75 in cash and claimed that he had no taxable income. After the USPO questioned the information provided, Mr. Pflum submitted a revised net worth statement that identified substantial monthly income and real estate holdings.

         On September 19, 2008, Judge Crow issued an order modifying Mr. Pflum's conditions of supervised release. Order Modifying Conditions of Supervised Release, United States v. David G. Pflum, No. 04-40008-01-SAC (D. Kan. Sept. 19, 2008), ECF No. 149. Among other conditions, Judge Crow ordered Mr. Pflum to “provide proof of filing a truthful and complete income tax return for tax years from 1997 to 2007, to the U.S. Probation Officer and U.S. Attorney's office prior to December 11, 2008.” Id. at 2.[2] Mr. Pflum later filed federal income and employment tax returns for tax years 1997 through 2007. These tax returns reported Mr. Pflum's total income as $7, 700, 494.00 and claimed he owed $2, 663, 854.23 in federal income and employment taxes. In 2008, the Internal Revenue Service (“IRS”) attempted to collect the taxes that Mr. Pflum owed the government but never had paid. As part of this effort, the IRS issued liens against Mr. Pflum's real estate holdings and levies against the income he was receiving.

         At trial, IRS Special Agent Henry Herron testified about his investigation into Mr. Pflum's tax filings and payments. Through Agent Herron's testimony, the government introduced an exhibit containing a two-page summary chart showing the information Mr. Pflum had provided on the tax returns he had signed and filed for tax years 1997 through 2007. The chart shows that the total amount of income reported by Mr. Pflum on those tax returns exceeds $7.7 million. The chart also includes Agent Herron's calculation that Mr. Pflum owed more than $2.6 million in federal taxes for those tax years.

         The government also presented evidence that Mr. Pflum sold his business, Coil Springs Specialties, to his son in 2006. The government introduced a purchase agreement dated October 12, 2006. This agreement provides that Mr. Pflum's son had agreed to purchase the business for $2, 280, 018.74. Under a separate secured promissory note, the business agreed to pay the purchase price to Mr. Pflum in monthly installment payments of $16, 321.93, beginning January 31, 2007. The government thus asserted that Mr. Pflum had received income from his ownership interest in Coil Spring Specialties until October 12, 2006, and maybe even as late as January 31, 2007. The government also asserted that Mr. Pflum has received more than $16, 000 each month in installment payments from the sale of his business. Indeed, Mr. Pflum identified proceeds that he received from the business sale in the revised net worth statement that he submitted to the USPO in 2008. On that statement, Mr. Pflum reported the sale of Coil Spring Specialties with a monthly payment of $15, 000.

         The government also introduced into evidence a Judgment that our court entered against Mr. Pflum on May 16, 2013. Judgment in a Civil Case, United States v. Pflum, No. 12-4115-JTM (D. Kan. May 16, 2013), ECF No. 21.[3] This Judgment reduced Mr. Pflum's unpaid federal tax liabilities to a judgment against him in the amount of $6, 408, 357.25.

         The government asserted at trial that Mr. Pflum had evaded and obstructed the payment of federal tax in five different ways. First, the government asserted that Mr. Pflum concealed his net worth when he provided inaccurate information to the USPO in 2008. Second, the government asserted that Mr. Pflum attempted to cloud property titles. To support this argument, the government introduced into evidence several deeds that clouded the title of property subject to government foreclosure. The government contended that Mr. Pflum had created and recorded the deeds. Third, the government asserted that Mr. Pflum had submitted false documents. The government introduced into evidence several documents created by Mr. Pflum, including documents showing purported tax payments to the IRS.[4] Fourth, the government asserted that Mr. Pflum had sent threatening and misleading letters and emails. The government supported this assertion by introducing several pieces of correspondence authored by Mr. Pflum.[5] Finally, the government asserted that Mr. Pflum sent altered IRS documents. To support this argument, the government presented Release of Levy forms that, it contended, Mr. Pflum had altered.[6]

         After the court submitted the case, the jury deliberated and returned guilty verdicts for both of the counts charged in the Indictment. Doc. 179. The jury completed a special verdict form for each charge. The jury agreed that Mr. Pflum had committed affirmative acts to evade the payment of income taxes by submitting false financial statements, instructing third parties to ignore IRS collection efforts, and threatening legal action against third parties who complied with the IRS's collection efforts. Id. at 2-3. The jury also agreed that Mr. Pflum committed affirmative acts to obstruct the due administration of the Internal Revenue laws by submitting false financial statements, filing a grant deed attempting to transfer ownership interest of property located at 500 MacDonald, San Juan, Washington, instructing third parties to ignore IRS collection efforts, and threatening legal action against third parties who complied with the IRS's collection efforts. Id. at 6-7.

         After trial, Mr. Pflum filed a Motion to Proceed Pro Se at Sentencing. Doc. 184. The court held a hearing on the motion on March 13, 2017. At that hearing, the court conducted yet another colloquy about the potential disadvantages of a defendant representing himself. The court granted Mr. Pflum's motion and so he is representing himself as the case proceeds into the sentencing phase. Doc. 187. The court also reappointed Mr. Fowler as standby counsel. Id.

         The court now turns to the post-trial motions that Mr. Pflum has filed, both through counsel and pro se.

         II.Motion for Judgment of Acquittal

         When Mr. Fowler still represented Mr. Pflum, he filed a Motion for Judgment of Acquittal. Doc. 182. The motion asks the court to set aside the jury's guilty verdicts on both counts and acquit Mr. Pflum under Fed. R. Crim. P. 29(c). This motion asserts that the government presented insufficient evidence to prove that Mr. Pflum actually earned income during the tax years alleged in the Indictment. And thus, Mr. Pflum argues insufficient evidence existed to support the jury's verdicts that he attempted to evade the payment of income taxes (as Count 1 charged) or that he corruptly endeavored to obstruct or impede the due administration of the Internal Revenue laws (as Count 2 charged).

         As described above, Mr. Pflum asked the court to terminate Mr. Fowler's representation after he had filed the Motion for Judgment of Acquittal on Mr. Pflum's behalf. At a hearing on March 13, 2017, the court granted Mr. Pflum's request, allowing Mr. Pflum to proceed pro se at sentencing and reappointing Mr. Fowler as standby counsel. Doc. 187. Also at this hearing, the court ordered Mr. Pflum to “file a statement stating whether he stands on the Motion for Judgment Notwithstanding Verdict (Doc. 182) or chooses to file a new motion by March 27, 2017.” Id. at 1. Mr. Pflum never filed any statement expressing his position on the already-filed Motion for Judgment of Acquittal.

         The government has filed a Motion for Order asking the court to deny Mr. Pflum's Motion for Judgment of Acquittal. Doc. 197. The government asserts that Mr. Pflum never has affirmed or incorporated the Motion for Judgment of Acquittal into the pro se motions he has filed after terminating Mr. Fowler's representation. The government thus argues that Mr. Pflum has abandoned the arguments raised in the Motion for Judgment of Acquittal. And, the government asks the court to issue an order denying the Motion for Judgment of Acquittal for this reason.

         The court agrees with the government that Mr. Pflum appears to have abandoned the arguments asserted in the Motion for Judgment of Acquittal. The court thus denies the motion for this reason. But the court also denies the motion for another reason: the government presented sufficient evidence for a reasonable jury to find Mr. Pflum guilty beyond a reasonable doubt of the crimes charged. The court thus ...


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