Argued: September 13, 2013.
Appeal from the United States District Court for the Eastern District of Wisconsin. No. 10-CR-288 -- Charles N. Clevert, Jr., Judge.
For United States of America, Plaintiff - Appellee: Matthew L. Jacobs, Attorney, Mel S. Johnson, Attorney, Office of The United States Attorney, Milwaukee, WI.
For James A. Stuart, Jr., Defendant - Appellant: Michael E. Scholl, Attorney, Scholl Law Firm, Memphis, TN.
Before BAUER, FLAUM, and ROVNER, Circuit Judges.
Rovner, Circuit Judge.
After a three-day trial, jurors found James Stuart guilty of three counts of tax evasion for failing to pay almost $239,400 in income tax between 2005 and 2007. See 26 U.S.C. § 7201. Stuart moved for a new trial and judgment of acquittal because, he argued, his trial counsel inadequately defended him. The district court denied the motions, and on appeal Stuart maintains that his trial counsel performed deficiently. Ordinarily it is imprudent to raise on direct appeal a claim of ineffective assistance if, as is usually the case, the record is not developed. United States v. Flores, 739 F.3d 337, 341 (7th Cir. 2014). But the district court allowed Stuart's new counsel to develop a record on his claim, so we consider it. Because nothing in that record demonstrates constitutionally ineffective assistance, we affirm.
During opening statements Stuart's trial counsel asserted the theory of Stuart's defense: Stuart believed that he owed no taxes. He explained that Stuart thought that the money he earned from his family business, New Age Chemical, was not income and that the United States had no authority to tax income. Stuart had adopted these views after reading a book called " Cracking the Code," which urges
people to resist paying income taxes, but his counsel told the jury that Stuart learned his ideas from his fellow church patrons. Counsel described Stuart as a curious, determined, and " kooky, not criminal" person. Only after he received no response to his inquiries from the IRS, the Secretary of the Treasury, or his accountants about his tax ideas, counsel mused, did Stuart begin to refrain from paying income tax.
The prosecution opened its case with witnesses who testified that Stuart had wilfully defied his obligation to pay taxes for 2005 to 2007. Beverly Schlipp, Stuart's sister and co-owner and vice president of New Age Chemical, stated that beginning around 2004, Stuart told her that he was not lawfully required to pay income taxes. He therefore directed her to stop withholding tax from his salary. She added that a couple of years later Stuart repeated that he wished not to pay income taxes, so New Age Chemical continued not to withhold taxes. Three of Stuart's accountants also testified that Stuart did not want to pay income taxes and referred to Stuart's tax-resistor emails about " Cracking the Code." Two IRS special agents furnished inculpatory communications from Stuart. They submitted: (1) several letters that Stuart mailed to the IRS declaring that he was not liable for taxes; (2) a letter that Stuart sent to a local newspaper proclaiming that only a few people had income-tax obligations and that accountants and lawyers fail to give valid tax advice; and (3) a letter he wrote to the IRS and the Secretary of the Treasury in which, to evade taxes, he renounced his United States citizenship. Finally an IRS investigator testified that Stuart routinely paid income tax before 2004, but when, in 2007, Stuart requested tax refunds, the IRS told him then that his wages were taxable and his tax protest had no basis in law.
After the prosecution rested, Stuart's trial counsel did not put on any case in defense, so the trial moved to closing arguments. Before those arguments began, in a colloquy with Stuart, the judge asked him whether he knew that he had the right to testify on his own behalf. Stuart answered that he understood this right and that he nonetheless knowingly and voluntarily waived it. During closing arguments his counsel repeated the defense theory that Stuart believed that he owed no income tax between 2005 and 2007. Referring to evidence that the prosecution had used (Stuart's emails, letters, and conversations with the IRS and his accountants), counsel argued that Stuart was a curious, passionate, and possibly crazy person who simply was earnestly trying to understand the tax code. He was not, counsel urged, a conniving criminal thwarting tax responsibility.
The jury rejected Stuart's defense and convicted Stuart of three counts of tax evasion. But the case was not over. Stuart hired a new attorney to represent him at sentencing, and he asked for a new trial or judgment of acquittal based on ineffective assistance of his trial counsel. The district court held a hearing on that claim and received testimony from three witnesses. First Stuart testified that his decision not to testify was involuntary because he did not believe that his trial attorney was prepared. He acknowledged, however, that his counsel had received from him before trial his written synopsis of his version of events, which set forth his tax-protester beliefs. Second his daughter, Erin, testified that when she worked at New Age Chemical in 2009, ...