Brown v. Commonwealth

COURT OF APPEALS OF VIRGINIA

Present: Judge Bray, Senior Judges Duff and Overton

Argued at Alexandria, Virginia

LEWIS A. BROWN, JR.

OPINION BY

v. Record No. 2964-97-4 JUDGE CHARLES H. DUFF

JULY 27, 1999

COMMONWEALTH OF VIRGINIA

FROM THE CIRCUIT COURT OF WARREN COUNTY

Dennis L. Hupp, Judge

Thomas D. Logie for appellant.

Jeffrey S. Shapiro, Assistant Attorney

General (Mark L. Earley, Attorney General, on

brief), for appellee.

Lewis A. Brown, Jr., appellant, appeals his conviction for

grand larceny by false pretenses in violation of Code § 18.2-95.

He argues on appeal that the trial court erred in (1) denying

his motion to quash the indictment; and (2) denying his motions

to strike the evidence. Finding no error, we affirm the

conviction.

FACTS

With his 1994 state income tax return, appellant, an

accountant and owner of Front Royal Bookkeeping ("Front Royal"),

submitted W-2 forms claiming he was employed by Royal Cinemas

("Royal") and Tomorrow's Country Buffet ("Buffet") in 1994. The

W-2 forms indicated that appellant earned $15,500 in income from

Royal and $25,000 in income from Buffet in 1994. The W-2 forms

also indicated that Royal withheld $2,500 in state income tax

for appellant in 1994, and Buffet withheld $4,500 in state

income tax for appellant in 1994. As a result of these claims,

appellant received an additional $7,000 tax refund from the

Commonwealth of Virginia. Appellant was indicted for grand

larceny in violation of Code § 18.2-95.

At the trial, Francis Brooks, owner of Royal, a subsidiary

of B & B Enterprises ("B & B"), testified that, in 1993, Royal

filed for Chapter 11 bankruptcy and that appellant, Brooks'

friend, offered to help him in any way he could. Brooks said he

did not discuss compensation with appellant but assumed they

would "get to it later." Appellant was not on Royal's payroll,

and Royal did not receive a bill from appellant or pay appellant

or Front Royal for any services. Brooks testified that

appellant prepared tax documents and documents required by the

court for the bankruptcy proceedings.

In 1995, appellant attached a W-2 form to his state income

tax return indicating he had been paid $15,500 by Royal for his

services in 1994. Brooks testified that Royal did not pay

appellant $15,500 in 1994. Brooks first learned of a $15,500

debt allegedly owed appellant when a representative from the

Virginia Department of Taxation approached Brooks with questions

concerning appellant's 1994 W-2 form.

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Royal's 1994 payroll booklet did not list appellant as an

employee of Royal. Royal's quarterly tax report did not list

appellant as an employee. A proof of claim filed in bankruptcy

court indicated that Royal owed $5,541.50 to Front Royal, not

appellant individually.

Brooks also testified that, with the exception of a few

employees who were not compensated for their work in the last

week that Royal operated, all of Royal's employees were paid for

their work performed in 1994. Brooks also stated that, given

the financial condition of Royal in 1994, Royal could not have

afforded to pay someone $15,500 in 1994.

Ashrafullah Sayed, manager of Buffet, a/k/a Dinis Brothers

Restaurant, testified that, after filing for bankruptcy in early

1994, Buffet had a financial agreement with Front Royal for

accounting services. Buffet paid Front Royal monthly for

services. Buffet had no agreement with appellant personally.

Front Royal worked on "tax papers, payrolls, all of those" for

Buffet. Front Royal also prepared Buffet's W-2 forms.

Appellant attached a W-2 form to his 1994 state income tax

return indicating that Buffet paid him $25,000 in income in

1994. Sayed testified that Buffet did not pay appellant $25,000

in 1994. Buffet's 1994 W-4 forms, the withholding allowance

certificates for Buffet's employees, did not include a W-4 form

in appellant's name. Buffet's 1994 quarterly tax reports did

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not include appellant as an employee for whom state income tax

was withheld. Commonwealth's Exhibit No. 4 consisted of

Buffet's 1994 W-3 form, entitled "Transmittal of Wage and Tax

Statements 1994." Attached to the form were copies of Buffet's

employees' W-2 forms. A W-2 form in appellant's name indicated

that Buffet had paid appellant $10,000 in 1994, rather than the

$25,000 indicated on the W-2 form filed by appellant with his

1994 state income tax return. The withholding for state income

taxes on the W-2 form in Buffet's file was $2,000, rather than

$4,500, as indicated on the W-2 form filed by appellant with his

state income tax return.

With the exception of several employees who were not paid

in the last two weeks that Buffet operated, all of Buffet's

employees were paid in 1994 before the restaurant closed.

Invoices from Front Royal to Buffet for the months of July,

1994 through October, 1994 indicated that Buffet owed Front

Royal about $4,000 for accounting services. The invoices did

not indicate that Buffet owed any money to appellant,

personally.

John Hawse, an investigator for the Virginia Department of

Taxation, testified that independent contractors do not receive

W-2 forms from the place at which they perform services. Hawse

interviewed appellant about appellant's 1994 tax return.

Initially, Hawse did not mention anything about appellant's 1994

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W-2 forms. Appellant immediately volunteered that Hawse could

check with appellant's employers if he thought the W-2 forms

were "bogus." Appellant also told Hawse that he had worked as a

consultant for B & B (or Royal) and Buffet and that B & B should

have received an invoice from appellant for $15,500 in 1994.

Hawse also testified that appellant said he "had not been

paid the wages that were reported on the W-2's and that he

reported that in accordance with instructions from an IRS

agent." When questioned further by Hawse, appellant could not

recall the IRS agent's name, nor could he produce a tax ruling

or policy to support his actions.

Hawse interviewed appellant again at a later date. Hawse

advised appellant that both Sayed and Brooks had told Hawse that

they did not hire appellant as an employee. Appellant replied

that "they may be right" if they were referring to the fact that

they did not prepare appellant's W-2 forms. Appellant also told

Hawse that he thought he had filed a proof of claim with the

bankruptcy court in order to protect the $40,500 the two

companies allegedly owed him, but appellant never produced any

documents to support this claim.

Appellant also gave Hawse conflicting information on

whether he operated on a cash or accrual basis. In addition,

the withholding rate for state income taxes on appellant's filed

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W-2 forms was about 15% to 18%. Hawse testified that the

highest applicable withholding rate in Virginia is 5.75%.

Belinda Lang, office manager for Front Royal, testified

that she typed appellant's 1994 W-2 forms for Royal and Buffet

based on information she received from the businesses. Lang

could not explain why the W-2 form attached to Buffet's 1994 W-3

Transmittal of Wage and Tax Statements differed from the W-2

form attached to appellant's 1994 tax return. Lang testified

that she "usually" typed the W-2 forms, but that anyone in the

office had access to the forms. Lang stated that she prepared

the 1994 W-2 forms for Buffet's employees based on payroll

records provided to her by Buffet, with the exception of

appellant's W-2 form. She prepared appellant's W-2 form based

on information provided to her by the owner of Buffet. Lang did

not prepare bills for appellant for any consulting work he may

have personally performed, but she said that both Buffet and

Royal owed Front Royal money.

Ray Madaris, a manager with the Virginia Department of

Taxation, testified that as a result of appellant including the

alleged income and alleged withholding for state income taxes

that he claimed was paid by Royal and Buffet, appellant received

an additional state income tax refund of $7,000.

Appellant denied that he prepared the W-2 forms in

question. He testified that he did not know whether the

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companies actually paid the indicated withholding tax. He

denied that he personally performed bookkeeping services for

either Royal or Buffet. Appellant testified that he performed

"services as a bankruptcy consultant" for Buffet and that he was

an employee of the business. He stated that he assisted Royal

with marketing. Appellant testified that he never received cash

payment from either business, but that they partially paid him

with food, gas money, and "entertainment" expenses.

ANALYSIS

I. Motion to Quash the Indictment

Appellant argues that the trial court erred in denying his

motion to quash the indictment on the ground that his conduct of

allegedly filing a false state income tax return was punishable

only under Code § 58.1-348, and not Code § 18.2-95, the grand

larceny statute.

Code § 58.1-348 is entitled "Criminal prosecution for

failure or refusal to file return of income or for making false

statement therein; limitation." The statute provides, in

pertinent part:

Notwithstanding any other provisions of

this title and in addition to any other

penalties provided by law, any individual or

fiduciary required under this chapter to

make a return of income, who willfully fails

or refuses to make such return, at the time

or times required by law, or who, with

intent to defraud the Commonwealth, makes

any false statement in any such return,

shall be guilty of a Class 1 misdemeanor.

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(Emphasis added.)

"Well established 'principles of

statutory construction require us to

ascertain and give effect to the legislative

intent.'" Legislative intent is to be

determined by the words in the statute.

Absent ambiguity, "the manifest intent of

the legislature clearly expressed in its

enactments should not be judicially thwarted

under the guise of statutory construction."

Herrell v. Commonwealth, 28 Va. App. 579, 584, 507 S.E.2d 633,

636 (1998) (citations omitted).

In light of these principles, we hold that the language in

the first sentence of Code § 58.1-348 is not ambiguous. This

language clearly provides that the statute is not the exclusive

avenue for punishment for filing a false state income tax

return. Further, "[i]t is well established that the choice of

offenses for which a criminal defendant will be charged is

within the discretion of the Commonwealth's Attorney."

Kauffmann v. Commonwealth, 8 Va. App. 400, 410, 382 S.E.2d 279,

284 (1989). "[I]t is a matter of prosecutorial election whether

the Commonwealth proceeds under the misdemeanor statute or the

felony statute against an accused . . . ." Mason v.

Commonwealth, 217 Va. 321, 323, 228 S.E.2d 683, 684 (1976).

"Where the circumstances surrounding an offense permit

prosecution under either of two statutes, the selection of the

statute under which to proceed is a matter of prosecutorial

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election." Smith v. Commonwealth, 17 Va. App. 37, 41, 434

S.E.2d 914, 916 (1993).

The Commonwealth charged appellant with unlawfully taking

$7,000 from it as a result of filing a false state income tax

return. It was within the Commonwealth's Attorney's discretion

whether to prosecute appellant under Code § 18.2-95, the grand

larceny statute, or to prosecute him under Code § 58.1-348.

Accordingly, appellant's argument is without merit.

II. Sufficiency of the Evidence

"On appeal, 'we review the evidence in the light most

favorable to the Commonwealth, granting to it all reasonable

inferences fairly deducible therefrom.'" Archer v.

Commonwealth, 26 Va. App. 1, 11, 492 S.E.2d 826, 831 (1997)

(citation omitted). "'[W]hat inferences are to be drawn from

proved facts is within the province of the jury and not the

court so long as the inferences are reasonable and justified.'"

Higginbotham v. Commonwealth, 216 Va. 349, 352-53, 218 S.E.2d

534, 537 (1975) (citation omitted).

"To sustain a conviction of larceny by false pretenses, the

Commonwealth must prove: (a) that the accused intended to

defraud; (b) that a fraud actually occurred; (c) that the accused

used false pretenses to perpetrate the fraud; and (d) that the

false pretenses induced the owner to part with his property."

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Wynne v. Commonwealth, 18 Va. App. 459, 460, 445 S.E.2d 160, 161

(1994) (en banc).

The evidence showed that neither Royal nor Buffet considered

appellant to be an employee. No tax records, payroll reports, or

other paperwork from Royal suggested that appellant was on

Royal's payroll. In fact, Brooks testified that he never

discussed a fee arrangement with appellant concerning work

appellant performed for Royal.

Buffet had no payroll report, W-4 form, or quarterly tax

report indicating that appellant was an employee. Buffet's

records contained a copy of a 1994 W-2 form in appellant's name

that indicated a lower amount of income paid and a lower amount

of withholding for state income tax than the W-2 form filed by

appellant with his 1994 state income tax return. Sayed testified

that Buffet had an arrangement with Front Royal to pay by the

month for services, but that it had no such agreement with

appellant individually.

Both companies were in bankruptcy proceedings when they

began working with appellant, and both companies were unable to

pay some of their employees during their last weeks of

operations. Furthermore, appellant admitted that he did not

receive the income from Buffet and Royal as indicated on his 1994

W-2 forms. Moreover, given the financial status of Buffet, the

jury could reasonably infer that Buffet did not contract with

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appellant for $25,000 worth of accounting services as indicated

on appellant's filed 1994 W-2 form. Likewise, given the

financial status of Royal, the jury could infer that Royal did

not contract with appellant for over $15,000 worth of accounting

services as claimed on appellant's filed 1994 W-2 form.

In addition, Front Royal, appellant's accounting business,

filed a proof of claim against Royal in the bankruptcy court for

only $5,541 worth of unpaid services, not $15,500. Appellant

personally filed no proof of claim for any unpaid services

rendered to either Royal or Buffet.

Neither the businesses nor appellant produced invoices from

appellant or Front Royal indicating that the bankrupt businesses

owed appellant the sums of money indicated on the filed W-2

forms. Indeed, invoices from Front Royal to Buffet indicated an

outstanding balance of only about $4,000 for the months of July,

1994 through October, 1994.

From the evidence presented, the jury could conclude beyond

a reasonable doubt that appellant was not an employee of either

Buffet or Royal. Furthermore, appellant admitted that he was not

paid the income indicated on the W-2 forms. Although Lang

testified that she "usually" prepared the W-2 forms for Front

Royal, she was unable to explain the discrepancy between the

amount shown on appellant's filed W-2 form from Buffet and the

amount shown on the W-2 form from Buffet's records. Lang further

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testified that anyone in Front Royal's office had access to the

W-2 forms and could have completed one without her knowledge.

Moreover, the W-2 forms filed by appellant were suspect because

the withholding amount for state income taxes on those forms was

15% to 18%, whereas the evidence proved that the highest

applicable withholding rate in Virginia is 5.75%. Thus, the jury

could infer beyond a reasonable doubt that appellant falsified

the filed W-2 forms, despite appellant's claim that he did not.

"In its role of judging witness credibility, the fact finder is

entitled to disbelieve the self-serving testimony of the accused

and to conclude that the accused is lying to conceal his guilt."

Marable v. Commonwealth, 27 Va. App. 505, 509-10, 500 S.E.2d

233, 235 (1998).

Therefore, from the evidence presented, the jury could

conclude beyond a reasonable doubt that appellant knowingly and

falsely represented his status as an employee of Royal and Buffet

and that he knowingly and falsely represented the information on

his filed 1994 W-2 forms concerning Buffet and Royal. In

addition, the jury could infer beyond a reasonable doubt that

appellant filed his falsified 1994 tax return with the intent to

defraud the Commonwealth of Virginia of money by obtaining a

greater state income tax refund than that to which he was

entitled. The evidence proved that appellant received an

additional $7,000 state income tax refund from the Commonwealth

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as a result of the false information he filed concerning Buffet

and Royal. Therefore, the evidence was sufficient to prove

beyond a reasonable doubt that appellant committed grand larceny

by false pretenses.

Appellant also contends that, in order to prove that he

received something to which he was not entitled, the

Commonwealth had to prove that Royal and Buffet did not pay to

the Commonwealth the sums of state income withholding tax

indicated on the filed W-2 forms. Appellant argues that the

Commonwealth did not research all of the names under which the

two businesses operated during the time in which the withholding

tax could have been paid by the businesses. However, on the

record before us, nothing in the documents from Royal indicated

that appellant was employed by Royal in 1994 or that Royal paid

any withholding state income taxes for appellant in 1994.

Although Buffet's records contained a copy of a W-2 form in

appellant's name for 1994, the amount of income and withholding

tax on Buffet's copy of the W-2 form were less than the amounts

indicated on the W-2 form filed by appellant. Furthermore,

Buffet's payroll records did not indicate that appellant was an

employee. Thus, the evidence excludes any reasonable hypotheses

of innocence. "[T]he Commonwealth need only exclude reasonable

hypotheses of innocence that flow from the evidence, not those

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that spring from the imagination of the defendant." Hamilton v.

Commonwealth, 16 Va. App. 751, 755, 433 S.E.2d 27, 29 (1993).

The evidence proved that appellant intentionally filed a

falsified 1994 state income tax return and falsified W-2 forms

and that he received a state income tax refund in excess of $200

from the Commonwealth of Virginia to which he was not entitled.

These circumstances are sufficient to prove beyond a

reasonable doubt that appellant committed the charged offense.

For these reasons, we affirm the conviction.

Affirmed.

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