United States of America, Plaintiff, v. Stephen
M. Kerr, et al., Defendants.
No. CR-11-02385-002-PHX-JAT
UNITED STATES DISTRICT COURT FOR THE DISTRICT OF
ARIZONA
2014 U.S. Dist. LEXIS 67589
May 16, 2014, Decided
May 16, 2014, Filed
PRIOR HISTORY: United States
v. Kerr, 2012 U.S. Dist. LEXIS 98836 (D. Ariz., July 16, 2012)
CORE TERMS: intentionally,
defraud, notice of appeal, tax returns, foreign bank, inherent authority,
inherent powers, misstatement, misstated, forwarded, Notice, bank accounts,
failing to file, jury acquitted, conspiring, willfully, convicted, omitting,
joined, box
COUNSEL: [*1] For USA, Plaintiff: Monica B
Edelstein, LEAD ATTORNEY, US Attorneys Office - Phoenix, AZ, Phoenix, AZ;
Timothy J Stockwell, LEAD ATTORNEY, US Dept of Justice - Tax Division Criminal Enforcement,
Washington, DC.
JUDGES: James A. Teilborg, Senior United States District Judge.
OPINION BY: James A. Teilborg
OPINION
ORDER
Pending
before the Court is Defendant Quiel's Motion to
Supplement the Record (Doc. 394), Defendant Kerr's Notice of Joinder to
Defendant Quiel's Motion to Supplement the Record
(Doc. 395), Defendant Quiel's Motion to Supplement
the Record (Doc. 396), and Defendant Kerr's Notice of Joinder to Defendant Quiel's Second Motion to Supplement the Record (Doc. 397).
The Court now rules on the motions.
I. Background
The Court has
previously recounted the facts of this case:
In the
Indictment (Doc. 3), Kerr was charged with Conspiracy to Defraud the United
States (Count 1), Willful Subscription to False Individual Tax Returns for 2007
and 2008 (Counts 2 and 3), and Failure to File Foreign Bank and Financial
Accounts (FBARs) for 2007 and 2008 (Counts 6 and 7). Count 1 charged
Kerr, Quiel, and Christopher Rusch
("Rusch"), their former attorney, with conspiring
to establish companies and bank accounts in Switzerland [*2] to move money out of the
United States and defraud the IRS. Counts 2 and 3 charged Kerr with
intentionally omitting income from the foreign accounts on his 2007 and 2008
tax returns and intentionally failing to mark the box in Schedule B indicating
an interest in a foreign bank account. Counts 6 and 7 charged Kerr with
willfully failing to file FBARs to report his interest in the foreign
accounts. On April 11, 2013, a jury acquitted Kerr of Count 1, and convicted
him of Counts 2, 3, 6, and 7. . . .
Quiel was charged
with Conspiracy to Defraud the United States (Count 1), Willful Subscription to
False Individual Tax Returns for 2007 and 2008 (Counts 4 and 5), and Failure to
File FBARs for 2007 and 2008 (Counts 8 and 9). Count 1 charged Kerr, Quiel, and Rusch with conspiring
to establish companies and bank accounts in Switzerland to move money out of
the United States and defraud the IRS. Counts 4 and 5 charged Quiel with intentionally omitting income from the foreign
accounts on his 2007 and 2008 tax returns and intentionally failing to mark the
box in Schedule B indicating an interest in a foreign bank account. Counts 8
and 9 charged Quiel with willfully failing to file FBARs
to report [*3] his interest
in the foreign accounts. On April 11, 2013, a jury acquitted Quiel of Count 1, and convicted him of Counts 4 and 5.
(Doc. 346 at
1-2).
On September 24, 2013, Quiel and Kerr
("Defendants") appealed their convictions to the Ninth Circuit Court
of Appeals ("Court of Appeals") (Doc. 372; Doc. 375). Quiel filed his first motion to supplement the record on
October 18, 2013, and his second motion on October 22, 2013. (Doc. 394; Doc.
396). Kerr has joined in both motions. (Doc. 395; Doc. 397).
II. Motions to
Supplement the Record
Quiel and Kerr ask
this Court to supplement the record with documents that they allege tend to show
that the third defendant in the case, Christopher Rusch,
entered into secret agreements with the government by which Rusch
could continue to provide international tax advice. (Doc. 394 at 2-4; Doc. 396
at 1-5). The legal basis for their request is the Court's inherent authority to
supplement a record, or alternatively Federal Rule of Appellate Procedure
("FRAP") 10(e). (Doc. 394 at 4; Doc. 396 at 5).
Contrary to
Defendants' contention, the Court has no inherent authority to supplement the
record after the filing of a notice of appeal. "As a general rule,
the [*4] filing of a notice
of appeal divests a district court of jurisdiction over those aspects of the
case involved in the appeal." Stein v. Wood, 127
F.3d 1187, 1189 (9th Cir. 1997). There are a limited number of
exceptions to this general rule, namely to correct clerical errors or clarify a
judgment pursuant to Federal Rule of Civil Procedure 60, supervising the status
quo during the pendency of an appeal, or when specified by statute. Id.
No such exception applies in this case. Defendants' filings of notices of
appeal on September 24, 2013 divested the Court of jurisdiction with respect to
"those aspects of the case involved in the appeal." See Stein,
127 F.3d at 1189. Courts' inherent powers "are those which 'are necessary
to the exercise of all others.'" Roadway Express,
Inc. v. Piper, 447 U.S. 752, 764, 100 S. Ct. 2455, 65 L. Ed. 2d 488 (1980)
(quoting United States v. Hudson, 11 U.S. (7 Cranch)
32, 34, 3 L. Ed. 259 (1812)). Because the Court has no jurisdiction over
this case, it has no inherent powers to supplement the record.
Defendants'
alternative reliance upon FRAP 10(e) is unpersuasive. The rule provides two
narrow methods by which a district court may correct the record transmitted to
the Court of Appeals:
(1) If any
difference [*5] arises about
whether the record truly discloses what occurred in the district court, the
difference must be submitted to and settled by that court and the record
conformed accordingly.
(2) If
anything material to either party is omitted from or misstated in the record by
error or accident, the omission or misstatement may be corrected and a
supplemental record may be certified and forwarded: . . . (B) by the district
court before or after the record has been forwarded; . . . .
Fed. R. App. P. 10(e).
"All other questions as to the form and content of the record must be
presented to the court of appeals." Id. 10(e)(3).
"It is a
basic tenet of appellate jurisprudence . . . that parties may not unilaterally
supplement the record on appeal with evidence not reviewed by the court
below." Lowry v. Barnhart, 329 F.3d 1019, 1024-25
(9th Cir. 2003). As FRAP 10(e) clearly states, only the Court of Appeals
has the authority to consider a request to supplement the record with evidence
not presented to the district court. See Nat'l Ass'n
for Advancement of Multijurisdiction Practice v.
Ariz. Supreme Court, 2013 U.S. Dist. LEXIS 150190, 2013 WL 5718962, at *2
(D. Ariz. 2013) (holding that a request to supplement the record with [*6] materials not reviewed by
the court "should be directed to the Ninth Circuit Court of
Appeals"). Defendants have not shown that their proposed evidence was
"omitted from or misstated in the record by error or accident." See
Fed. R. App. P. 10(e)(2). Indeed, Defendants' stated purpose in seeking to add
this evidence to the record is precisely because it was not before the Court at
the time of trial or sentencing. See (Doc. 394 at 3). This request is
appropriately directed to the Court of Appeals, and this Court lacks
jurisdiction to consider it.1
1 Defendants
cite several cases in support of their contention that this Court has authority
to supplement the record. (Doc. 394 at 4; Doc. 396 at 5). Each of these cases are distinguishable. See Cruz v. Astrue,
2012 U.S. Dist. LEXIS 102027, 2012 WL 3011491, at *1 (D. Ariz. July 23, 2012)
(remarking that 42 U.S.C. § 405(g) provided the court with the authority to
order the Commission of Social Security to supplement the record); LimoStars, Inc. v. N.J. Car & Limo, Inc.,
2011 U.S. Dist. LEXIS 87771, 2011 WL 3471092, at *3 n.5 (D. Ariz. Aug. 8, 2011)
(noting that a district court may order the record supplemented for the purpose
of obtaining accurate information when ruling on pending motions); Mangini v. United States, 314 F.3d 1158,
1160-61 (9th Cir.) [*7] (noting that the Court of Appeals had in a separate order
granted a motion to supplement the record on appeal "to correct a material
misstatement in the record"), amended by 319 F.3d 1079 (9th Cir.
2003).
III. Conclusion
For the
foregoing reasons,
IT IS ORDERED that
Defendant Quiel's Motion to Supplement the Record
(Doc. 394) and Defendant Quiel's Motion to Supplement
the Record (Doc. 396) are denied.2
2 Because
Kerr joined in these motions, they are denied with respect to Kerr as well.
Dated this
16th day of May, 2014.
/s/ James A. Teilborg
James A. Teilborg
Senior United
States District Judge