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United States v. Lahey

May 22, 1995

UNITED STATES OF AMERICA,

PLAINTIFF-APPELLEE,

v.

CHARLES W. LAHEY AND JOHN P. CURRENS,

DEFENDANTS-APPELLANTS.



Appeal from the United States District Court for the Northern District of Indiana, South Bend Division.

No. SCR 935-Allen Sharp, Chief Judge.

Before POSNER, Chief Judge, and BAUER and RIPPLE, Circuit Judges.

BAUER, Circuit Judge.

ARGUED FEBRUARY 13, 1995

DECIDED MAY 22, 1995

Charles W. Lahey and John P. Currens were convicted by a jury of conspiring to obstruct justice by agreeing that Currens would provide false testimony to a grand jury investigating Lahey. The defendants challenge their convictions on several grounds. We affirm.

I.

Lahey is an attorney who was licensed to practice law in the State of Indiana and whose practice was based in South Bend, Indiana. In June 1989, the Internal Revenue Service ("IRS") notified Lahey and his wife, Jennifer, that their tax returns for the years 1986 and 1987 had been selected for an audit. The IRS requested that the Laheys produce several records concerning Lahey's practice during those years. In their first meeting with IRS auditor Ruth Hoyt, accountants hired by Lahey informed Hoyt that Lahey had no records of the gross receipts from his practice in 1986 and in 1987.

Lahey applied for a position as an Assistant United States Attorney for the Northern District of Indiana in November 1989. Lahey was offered the position, but the offer was contingent upon Lahey successfully resolving his tax audit.

Hoyt indirectly reconstructed the Laheys' finances by comparing their actual expenditures with reported income. Her analysis revealed discrepancies between their expenditures and reported income in 1986 and in 1987. In a letter dated January 8, 1990, Hoyt informed the Laheys that the audit had been expanded to include 1988. Hoyt met with Lahey several times in January 1990. Lahey informed Hoyt that he needed to resolve the audit quickly and without penalties so that he could accept a position with the United States Attorney's office, and offered to pay $21,000 to resolve the audit. Hoyt, however, said that the audit could not be resolved quickly because she had no records of Lahey's gross receipts. Lahey told Hoyt that in 1986 and in 1987 he and his wife would have had approximately $150 in cash on hand from all sources at any one time. Lahey also told Hoyt that he received cash from clients eight to twelve times a year without recording the income. In a later meeting, Lahey claimed to have received various amounts of cash as gifts and loan repayments in 1986 and in 1987 from several family members. Hoyt then referred the matter to the Department of Justice as a criminal investigation.

In April 1992, Lahey destroyed several client files which contained records of fee payments. The IRS served Lahey with a grand jury subpoena on May 26, 1992. The subpoena requested all records concerning the receipt of payments from clients from 1986 through 1988. Although Lahey turned over several documents, he did not produce any receipt books, client ledgers, billing statements, files, or payment cards, which were specifically requested by the subpoena. Lahey destroyed additional client files in June 1992. The IRS executed a search warrant in Lahey's office on July 10, 1992, and found some records of fee payments. Lahey's receipt books from 1986 through 1988, and hundreds of client files and payment cards, were missing.

Currens, Lahey's brother-in-law, was interviewed by two IRS agents at Currens' place of employment in San Francisco, California, on February 19, 1993, in connection with the investigation of Lahey. Currens told the agents that the Laheys had loaned him $15,000 in 1992 in the form of a check. Currens was being charged interest on the loan at the rate the Laheys had been charged to obtain the funds, and he had not yet made any repayments. Currens also told the agents that he had made several cash loans to the Laheys after 1984, but the only specific loan Currens could recall was between $3,000 and $4,000. Currens said that this was his largest loan and it was made at least two years prior to the date of the interview.

Currens testified before a grand jury investigating Lahey on March 3, 1993. Currens testified that Lahey had loaned him $10,000 in 1976 by check. Currens did not repay any portion of this interest-free loan until 1986. Currens made several cash payments to the Laheys from 1986 to 1988 totaling $25,000, including a $10,000 payment to Jennifer Lahey, Currens' sister, in 1988. As a result of these payments, the Laheys owed Currens $15,000. Lahey repaid this loan by check in the fall of 1991 or in the spring of 1992. Currens testified that there were no documents reflecting the $10,000 loan to Currens in 1976, a claimed $5,000 cash repayment by Currens to the Laheys in 1986, or Currens' subsequent $15,000 loan to the Laheys. Currens denied telling the IRS agents that the $15,000 check from Lahey was a loan to Currens on which Currens would be paying interest. Currens also testified that he did not tell the IRS agents about these transactions because they had not asked him about anything from 1986 to 1988. Currens testified that he had spoken with Lahey the night before his appearance before the grand jury but did not discuss his testimony.

The grand jury returned an indictment against Lahey and Currens on April 8, 1993. Counts One through Three of the six-count indictment charged Lahey with filing false income tax returns for the years 1986, 1987, and 1988, respectively. 26 U.S.C. sec. 7206(1). Count Four charged Lahey with corruptly obstructing the due administration of the internal revenue laws. 26 U.S.C. sec. 7212(a). Count Five charged Lahey with obstructing the due administration of justice by failing to comply with the grand jury subpoena and by destroying subpoenaed records. 18 U.S.C. sec. 1503 (1988). Count Six charged Lahey and Currens with conspiring to obstruct the due administration of justice by agreeing that Currens would provide false testimony to the grand jury. 18 U.S.C. secs. 371, 1503 (1988).

At the close of the government's evidence, the district court granted Lahey's motion for judgment of acquittal on Counts One through Five of the indictment. Fed. R. Crim. P. 29(a). The district court denied the defendants' motion for judgment of acquittal on Count Six. The jury convicted Lahey and Currens on this count. The defendants filed ...


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