United States v. Rozin

RECOMMENDED FOR FULL-TEXT PUBLICATION

Pursuant to Sixth Circuit Rule 206

File Name: 12a0005p.06

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

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Plaintiff-Appellee, -

UNITED STATES OF AMERICA,

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No. 11-3186

v.

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Defendant-Appellant. -

LEIF D. ROZIN,

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Appeal from the United States District Court

for the Southern District of Ohio at Cincinnati.

No. 05-00139-001—Susan J. Dlott, Chief District Judge.

Argued: October 13, 2011

Decided and Filed: January 6, 2012

Before: ROGERS, COOK, and McKEAGUE, Circuit Judges.

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COUNSEL

ARGUED: H. Louis Sirkin, SIRKIN, KINSLEY & NAZZARINE CO., LPA,

Cincinnati, Ohio, for Appellant. Deborah K. Snyder, UNITED STATES

DEPARTMENT OF JUSTICE, Washington, D.C., for Appellee. ON BRIEF: H. Louis

Sirkin, Scott Ryan Nazzarine, SIRKIN, KINSLEY & NAZZARINE CO., LPA,

Cincinnati, Ohio, for Appellant. Deborah K. Snyder, Frank P. Cihlar, Gregory Victor

Davis, UNITED STATES DEPARTMENT OF JUSTICE, Washington, D.C., for

Appellee.

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OPINION

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ROGERS, Circuit Judge. Taxpayer Rozin, along with others, took business and

individual tax deductions for the cost of so-called “Loss of Income” insurance policies,

although the insurance aspect of the policies was questionable and the policies allegedly

permitted Rozin to get back or maintain control of the premium funds. Rozin was

1

No. 11-3186 United States v. Rozin Page 2

convicted on three counts of tax-related crimes: subscribing a false tax return under

26 U.S.C. § 7206(1); attempting to evade taxes under 26 U.S.C. § 7201; and conspiracy

to defraud the Government under 18 U.S.C. § 371. These convictions must be upheld

because the Government presented sufficient evidence of the crimes, because Rozin’s

evidentiary argument regarding prior bad acts evidence is without merit, and because

there is no merit to Rozin’s argument that the Government was required by the nature

of the charges to forgo charging him under the general crime of conspiracy to defraud

the United States. Finally, the district court did not err in ordering Rozin to pay

restitution for the personal income taxes of his co-conspirator.

I.

The conspiracy in this case involved the corporate and personal income tax

returns filed on behalf of Rozin, Inc. and its co-owners, defendants Leif Rozin and

Burton “Buddy” Kallick. Through Rozin, Inc., Rozin and Kallick owned a multi-state

retail carpet chain in the 1990s. After two years of negotiations, Rozin and Kallick sold

Rozin, Inc. in 2000, resulting in potentially large taxable profits.

In 1998, while Rozin and Kallick were negotiating the sale of Rozin, Inc., their

long-time insurance broker, Milt Liss, was introduced to Bruce Cohen, another insurance

broker, at a general insurance agents meeting. At the time, Cohen was selling

purportedly tax-deductible “Loss of Income” (LOI) insurance policies offered by

Caduceus Life Insurance Company, a company licensed in the U.S. Virgin Islands. Liss

was unaware of the fact that, at the time that he met Cohen, Cohen’s license to sell

insurance had been revoked.

To market LOI and “return of premium” (“ROP”) insurance products, Cohen

gave Liss various promotional materials, including an opinion letter from a law firm

stating that premiums for the LOI policies were likely allowable deductions, and a two-

page flyer entitled, “Tax Court Settlement on ‘Loss of Income’ Policy.” The flyer

described Savage v. Commissioner, an alleged settlement between the IRS and a

Caduceus LOI policyholder.

No. 11-3186 United States v. Rozin Page 3

The LOI policies insured against loss of income due to certain circumstances,

including corporate downsizing, changes in technology, or employee layoffs arising

within one year from the date the policy was issued. The policies did not cover the

following: death; disability; voluntary termination; self-inflicted injuries; proven

criminal acts; negligent or willful misconduct; substance abuse; dishonesty or fraud;

insubordination, incompetence, or inefficiency; conflict of interest; or breach of

employment contract. Because the policies were allegedly tax deductible, they were

especially advantageous for individuals in the highest tax brackets. In 1998, Caduceus

also offered ROP riders in conjunction with the LOI insurance policy. If no claim was

filed on the policy, the rider would enable the purchaser to receive a significant portion

of the premium paid for the LOI policy. If the rider was purchased with the LOI, the

LOI premium would be invested for the policy owner and would be distributed to the

owner, taxable upon receipt, after ten years or at age sixty-five. If the insured died

before the ROP amount became payable, the individual lost his premium. According to

the promotional materials, the ROP rider was not tax-deductible, but the LOI premium

payments were deductible. However, the promotional materials also included a caveat

that if the IRS challenged the deduction, then the individual may owe past taxes due plus

interest.

Liss testified that he told Rozin that he had never seen anything like the LOI

policy before. During trial, Liss explained that Cohen’s LOI policy was different

because the ROP rider allowed the policy-holder to “take the money and self-direct it

into an investment or do other things.” In his experience, Liss did not know of any other

policy that allowed the individual to retain control over the funds.

After Liss presented the LOI and ROP policies to Rozin, Liss advised Rozin to

have someone look at the materials to assess the policies. Rozin had Alan Koehler, his

in-house counsel, analyze the legality of the policies. Rozin also asked Thomas Keehn,

a CPA who was the controller for Rozin, Inc., to review the Caduceus Tax Court flyer.

After referring to a handbook for accountants, which suggested this type of policy was

No. 11-3186 United States v. Rozin Page 4

deductible, Keehn shared his findings with Koehler. Keehn was never told anything else

about the policies.

After Koehler and Keehn conducted their research, Rozin, Kallick, and Koehler

met with Cohen to discuss the policies. Cohen assured them that the LOI policies were

tax-deductible, and that if they were not, “the worst thing that would happen would be

that they would have to pay the additional taxes owed plus interest.”

Despite the research conducted by Keehn and Koehler and the meeting with

Cohen, Rozin was still concerned about the legitimacy and viability of Caduceus. On

October 5, 1998, Rozin, Liss, Koehler, and Cohen traveled to St. Croix in the Virgin

Islands to visit Caduceus, meet with its principals, and see the company’s banking

operations.

Prior to the trip, Liss, Rozin, and Cohen discussed the three options available

when purchasing the LOI policy. The first option was to leave the funds with Caduceus,

allowing the company to invest the funds until the funds matured after ten years or after

Rozin and Kallick reached the age of sixty-five. The second option was to invest the

funds in a bank and then apply for a loan from that bank to gain access to a percentage

of the premium funds. The third option was to have the ROP funds transferred to Liss,

who would invest the money on behalf of Rozin and Kallick in a series of mutual funds.

Though Liss would be in charge of the account, the funds were left in Caduceus’s name.

Rozin and Koehler decided on the third option.

On October 6, 1998, while Rozin was still in the Virgin Islands, Rozin, Inc.

purchased two LOI policies and riders, with Rozin and Kallick named as the insured

individuals. The premium on each policy was $600,000 and the amount of coverage was

$720,000. If Rozin or Kallick qualified for coverage during the one-year policy period,

the maximum amount that they could receive under the LOI policy was $30,000 per

month for a period of twenty-four months. Rozin paid for the policies with a check

totaling $1,275,787.56. On October 7, 1998, $1,037,400 from the check was wired to

Liss’s corporate account. Both Liss and Koehler earned commissions for their role in

the LOI sale.

No. 11-3186 United States v. Rozin Page 5

Instead of leaving the funds in Caduceus’s name, Koehler used the money in

Liss’s account to open two grantor trust accounts—the Revolution Living Trust and the

Emperor Living Trust—with Koehler as trustee. By placing the funds in the trust,

Caduceus did not have access to the funds. The trusts were revocable by both Rozin and

Kallick.

At the end of 1998, negotiations were ongoing for the sale of Rozin, Inc. After

Rozin and Kallick entered into an agreement to sell Rozin, Inc. in July 1998, Rozin

asked Clark, Schaefer, Hackett & Company, an accounting firm, to advise him regarding

possible tax liabilities from the sale. John Parks, a CPA, determined that the tax liability

resulting from capital gains could be almost $2,200,000.

Around this time, Liss and Cohen presented Rozin and Kallick with Basis Boost,

another product intended to limit the owner’s tax liability. Basis Boost was developed

by Altheimer & Gray, a Chicago law firm, and acted as a tax shelter that artificially

raised a seller’s “basis” in his company for tax purposes and then created an artificial

loss that would be reported with the gain from the sale, reducing the amount of taxes

owed by the seller. At the end of December 1998, Rozin and Kallick gave Liss a check

for $625,000. Though Rozin disputes the purpose of the check, Rozin and Kallick

allegedly told Liss that if the 1998 sale of Rozin, Inc. went through, the money should

be used to purchase Basis Boost. If not, Liss was instructed to buy additional LOI

policies.

In early 1999, Rozin asked Keehn to prepare a tax projection including the

$625,000 expense, though no one told Keehn what that expense was. Keehn estimated

that with the additional $625,000 counted as income rather than as an expense, Rozin

and Kallick would each owe approximately $80,000 in additional federal taxes.

In July 1999, Keehn prepared a draft 1998 tax return for Rozin, Inc. During this

time, Rozin, Inc. labeled the October LOI payments as “general insurance” in the

company’s ledger and deducted those expenses in the tax returns. Though the

promotional materials explicitly stated that the ROP rider premiums were not tax-

deductible, the entire $1,275,787.56 was listed as a general insurance expense and

No. 11-3186 United States v. Rozin Page 6

treated as a tax deduction. The $625,000 given to Liss for either the Basis Boost or LOI

policies was also counted as a “professional fee.” Prior to filing, Koehler told Keehn to

categorize the $625,000 as an insurance expense. At trial, the Government presented

two balance sheets that showed that Keehn debited $625,000 from the professional fees

account and credited it to the general insurance account. Keehn also changed the federal

income tax return, moving $595,000 from the professional fees category to insurance.

Keehn left $30,000 in the professional fees category to account for the $30,000

commission.

When the sale of Rozin, Inc. negotiated in 1998 did not go through, Rozin and

Kallick instructed Liss to use the $625,000 to purchase additional LOI policies during

late July or early August 1999. Four policies, one each for John Downer, then President

of Rozin, Inc., Koehler, Rozin, and Kallick, were purchased. The policies were

backdated to December 1998 so that Rozin, Inc. could claim them as deductions for the

1998 tax year. Cohen, Liss, Rozin, Kallick, and Koehler split a $30,000 commission as

a result of the sale.

At the time Rozin and the others purchased the August 1999 LOI policies,

Caduceus had substituted the ROP riders with a new plan that allowed the premium

funds to be placed in grantor trusts established by Rozin and Kallick and then invested

in reinsurance companies in Nevis, an island in the Caribbean Sea. Under this scheme,

if no claim was made on the LOI policies Rozin and Kallick would be able to access the

funds after twelve months.

After the four August 1999 LOI policies were purchased, $475,000 was wired

to Liss, who then deposited the money in the Revolution Living Trust and Emperor

Living Trust. Reinsurance companies were created, and after the LOI policies expired

Liss was supposed to invest the premium funds in those companies.

In December 1999, Rozin, Koehler, and Kallick purchased two more LOI

policies, for a total of eight policies; these two additional policies were backdated to July

1999. Rozin, Inc. paid almost $1,600,000 in premiums for these policies.

No. 11-3186 United States v. Rozin Page 7

Though the timing is unclear from the record, Rozin also spoke with friends, Dr.

Christopher Lawley and Richard Sparnell, about buying LOI policies and the Basis

Boost product. Rozin, Lawley, and Sparnell belonged to the same golf club. At Rozin’s

urging, Lawley bought a LOI policy, and Sparnell bought the Basis Boost product.

In early 2000, the insurance commission in the Virgin Islands audited Caduceus.

Caduceus told Cohen that the initial funds that had been returned to Liss should have

remained in Caduceus’s name, rather than being placed in the trusts. Caduceus asked

that the funds be placed under its name, or else Caduceus would be forced to unwind the

transactions; however, even under Caduceus’s name, Liss would still exercise

responsibility for the investment. In August 2000, Liss was instructed by Rozin and

Kallick to liquidate the funds and wire the money to an account set up for Caduceus at

a bank in Michigan. Afterwards, Caduceus was to wire the funds back to Liss, who

would then invest the funds in one of the reinsurance companies established by Rozin

and Kallick. However, during this time, the IRS began investigating Rozin, Inc. for

fraud. Liss turned over all information regarding the LOI policies to Martin Horwitz,

an attorney hired by Rozin. Liss testified that Horwitz told him that Rozin and Kallick

had made a claim under the LOI policies and that part of the liquidated funds would be

used to pay the $1,400,000 claim, while the remaining amount was to be invested in the

reinsurance company.

Shortly before this, in June or July of 2000, Keehn prepared a corporate tax

return for 1999, including a tax deduction for the LOI policies bought in December

1999. However, due to the IRS investigation, the 1999 return was never filed with the

IRS; instead, Keehn gave it to Horwitz.

In 2005, a federal grand jury returned an indictment charging Rozin and co-

defendants Kallick, Koehler, Liss, and Cohen with conspiracy to defraud the

Government under 18 U.S.C. § 371 (Count One). Rozin was also charged with one

count of subscribing a false tax return, in violation of 26 U.S.C. § 7206(1) (Count Two),

and one count of attempted tax evasion, in violation of 26 U.S.C. § 7201 (Count Six).

No. 11-3186 United States v. Rozin Page 8

Rozin moved to dismiss Count One on the ground that the Government was

precluded from charging Rozin under the general crime of conspiracy to defraud the

United States, where a more specific offense was available to be charged; Rozin relied

in this regard on our decision in United States v. Minarik, 875 F.2d 1186 (6th Cir. 1989).

The district court denied the motion, distinguishing Minarik and relying on United States

v. Damra, 621 F.3d 474, 507 (6th Cir. 2010).

Rozin, Koehler, and Kallick pled not guilty, but Kallick passed away prior to trial

and charges against him were dismissed. Cohen and Liss entered guilty pleas. Rozin

and Koehler were tried, and their trial took thirteen days. Liss was one of the

Government’s key witnesses; his testimony comprised nearly five days of the trial. The

jury convicted both Rozin and Koehler; Rozin was convicted of all three counts.

The district court subsequently denied Rozin’s properly presented motion for

judgment of acquittal. In doing so, the district court held that, examining the evidence

in the light most favorable to the Government, the Government provided sufficient

evidence that Rozin willfully subscribed to a false tax return and willfully attempted to

evade taxes. The district court relied on (1) the lack of a “true business purpose for

purchasing the various LOI policies,” (2) the “dubious nature” of the policies, including

the high premium to coverage ratio, as well as the practice of backdating, (3) Rozin’s

access to and control over the funds, (4) Rozin’s descriptions of the policies to Sparnell

and Lawley as “tax-savings product[s],” and (5) the differences between the policies

Rozin bought and those that were advertised in Cohen’s promotional materials. In

addition, the district court held that Rozin did not have a good faith reliance defense

because he withheld relevant information and had reason to suspect the motives of the

individuals on whom he supposedly relied. The district court also determined that “for

the same reasons [discussed above regarding willfully subscribing a false tax return and

evading taxes] . . . there [was] sufficient evidence that Rozin knew of and intended to

join in a conspiracy to defraud the IRS.”

Rozin was sentenced to one year and one day in prison, followed by three years

of supervised release, 2,000 hours of community service, a $30,000 fine, and $775,294

No. 11-3186 United States v. Rozin Page 9

in restitution. On Rozin’s timely appeal, he challenges the denial of the motion to

acquit. He also argues that the district court improperly admitted evidence of prior bad

acts under Fed. R. Evid. 404(b), that the Government improperly charged Rozin under

the defraud prong of 18 U.S.C. §371, and that the district court erred by ordering Rozin

to pay Kallick’s personal income taxes as restitution. None of these arguments warrants

reversal.

II.

A. Subscribing to a false tax return and attempting to evade taxes

The Government presented sufficient evidence of Rozin’s willful intent to

subscribe a false tax return and attempt to evade taxes. In considering insufficiency of

evidence claims following a guilty verdict, “the relevant question is whether, after

viewing the evidence in the light most favorable to the prosecution, any rational trier of

fact could have found the essential elements of the crime beyond a reasonable doubt.”

Jackson v. Virginia, 443 U.S. 307, 319 (1979) (emphasis in original). In evaluating the

evidence, “[t]he government must be given the benefit of all inferences which can

reasonably drawn from the evidence, even if the evidence is circumstantial.” United

States v. Adamo, 742 F.2d 927, 932 (6th Cir. 1984) (citations omitted).

Contrary to Rozin’s argument, the Government presented sufficient evidence for

a rational trier of fact to find that Rozin acted willfully when he subscribed a false tax

return and attempted to evade paying taxes. Acting willfully in this context means that

Rozin undertook the “voluntary, intentional violation of a known duty.” Cheek v. United

States, 498 U.S. 192, 201 (1991). Willful intent is an element of both subscribing false

tax returns and attempted tax evasion. In relevant part, 26 U.S.C. § 7206(1) states that

an individual who “[w]illfully makes and subscribes any return, statement, or other

document, which contains or is verified by a written declaration that it is made under the

penalties of perjury, and which he does not believe to be true and correct as to every

material matter” shall be guilty of subscribing false tax returns. Similarly, 26 U.S.C.

§ 7201 states that “[a]ny person who willfully attempts in any manner to evade or defeat

any tax imposed by this title or the payment thereof shall . . . be guilty of a felony[.]”

No. 11-3186 United States v. Rozin Page 10

The Government provided sufficient evidence of willfulness under these

provisions, notwithstanding Rozin’s argument that there was not sufficient evidence that

he knew the corporate and personal tax form documents were false at the time that he

signed them. In rejecting this argument, the district court properly examined the

evidence in the light most favorable to the Government. The district court recognized

the suspicious or “dubious nature” of the LOI policies. Though peddled as “insurance,”

Liss admitted during testimony that the covered risks—corporate downsizing, employee

layoffs, and technological obsolescence—were unlikely to happen to Rozin because he

was an owner of a carpet company. Many of the most obvious causes of loss of income,

such as death, disability, voluntary termination, and breach of contract, were not

covered, and Rozin, Inc. was not under any immediate threat of bankruptcy. In addition,

unlike other legitimate insurance policies, Rozin maintained control of the funds; when

pitching the LOI policies to potential buyers, Rozin described them as “a way to lower

your taxes” while also receiving “a large percentage of that money back.” Finally, the

district court described the high premium-to-coverage ratio as suspect, suggesting

improper motives on the part of Rozin. Willfulness may be established by evidence that

is “entirely circumstantial.” United States v. Fawaz, 881 F.2d 259, 265 (6th Cir. 1989)

(citing United States v. Grumka, 728 F.2d 794, 797 (6th Cir. 1984) (per curiam)).

The district court also properly concluded that backdating the LOI policies

showed willfulness, because there was no reason for such backdating other than to claim

the improper tax deductions. The district court regarded the practice as highly

suspicious, noting at sentencing that “[a]t some point in time, [Rozin] should have

known something was wrong. Probably when there was the backdating.” According to

the testimony of Steve Rowe, an IRS Revenue Agent called by the Government, “[a]ny

evidence of backdating results in a badge of fraud, meaning the IRS would question the

validity of the policy itself and the deduction.” Though the district court did not

elaborate, the court found “ample evidence” that the policies were backdated and that

Rozin was instrumental in this decision. Liss testified that Rozin knew that the policies

were going to be backdated and that as a result he would receive “no economic benefit

for that period of time.” Backdating served no legitimate business purpose; when the

No. 11-3186 United States v. Rozin Page 11

policies were purchased in August 1999, but backdated to December 1998, only five

months were left on the policy coverage and Rozin had triple coverage during this time.

Though Rozin argues that businesses will backdate policies for a “myriad of legitimate

reasons,” he provides no viable rationale for his actions. Instead, Rozin refers to the

testimony of Mary Blanton, the former administrative assistant of Cohen Insurance, to

support his claim. However, none of the reasons mentioned in her testimony is

applicable to this case. Rozin’s backdating and moving up the policy date permitted

Rozin to have access to his funds even earlier than otherwise, and thus reflected

improper motivation on his part.

Though Rozin maintains that he considered the LOI policies to be a tax-deferred

IRA-type benefit plan, the record shows that he knew that he would have immediate

access to the funds because they were placed in revocable trusts. This further

undermines Rozin’s assertion that he did not know that the tax deductions were

improper. When selling the LOI policies to friends, Rozin stated outright that about

eighty-five percent of the money would “come back and be held in a trust” that the

individual would “have control over.” Evidence that Rozin knew that he would have

access to most of his money, while reaping the benefits of a large tax deduction, would

permit a rational trier of fact to find that he willfully utilized the LOI policies in order

to evade taxes. This conclusion is bolstered by the fact that none of the policies

described in Cohen’s promotional materials allowed individuals to retain control over

their funds.

Rozin argues that because he relied on the Savage opinion, three legal opinion

letters, and other promotional materials provided by Cohen, he should not be found to

have acted willfully. However, the materials relied upon by Rozin did not discuss

reinsurance schemes and none of the policies described in Cohen’s promotional

materials allowed individuals to retain control over their funds. In the Savage opinion,

the IRS had specifically “ensure[d] that Mr. Savage had not received his funds back

under the refund of premium clause.” All of the opinions also state that a legitimate

business purpose is needed to legally claim a tax deduction. As the record shows that

No. 11-3186 United States v. Rozin Page 12

the LOI policies were not legitimate insurance purchases, this undermines Rozin’s claim

that he did not know there was anything wrong with the deduction.

Rozin also argues that due to his reasonable reliance on the advice of others, the

Government was unable to negate his good faith belief that the tax returns were correct.

It is true that a defendant who “ha[d] a good faith belief that he was not violating tax law

. . . cannot be found guilty of a tax violation, even if the good faith belief [wa]s

unreasonable[.]” United States v. Abboud, 438 F.3d 554, 581 (6th Cir. 2006). This

argument is however not supported by the record in this case. The elements of a

“reliance defense” include: “(1) full disclosure of all pertinent facts, and (2) good faith

reliance on the accountant’s advice.” United States v. Duncan, 850 F.2d 1104, 1116 (6th

Cir. 1988), abrogated on other grounds, Schad v. Arizona, 501 U.S. 624 (1991); United

States v. Bugai, No. 97-1280, 1998 WL 553168 at *3 (6th Cir. Aug. 21, 1998) (per

curiam). Because Rozin either did not provide full information to those he supposedly

relied upon, or he had reason to believe that the advice provided by these individuals was

incorrect, the district court correctly held that Rozin could not mount a credible good

faith reliance defense. Viewed in the light most favorable to the Government, the record

supports a finding by a rational trier of fact that Rozin did not rely in good faith on the

advice of Keehn, Liss, Cohen, or Koehler.

Because Keehn was not aware of the full facts regarding the LOI policies, Rozin

cannot claim that he relied on Keehn’s advice in good faith. As we explained in United

States v. Garavaglia, 566 F.2d 1056, 1060 (6th Cir. 1977), a defendant who relies on

others to prepare his tax returns “may not withhold information from those persons

relative to taxable events and then escape responsibility for the false returns which

result.” During his testimony, Keehn admitted that he is not a tax specialist, and that he

never discussed the LOI policies with Rozin. In addition, Keehn was never told about

the reinsurance schemes or the trusts, and thus could not have provided an adequate

assessment of the legality of the product. Keehn never attended a meeting about the

scheme and never examined the LOI policy. As Keehn was not fully informed, Rozin’s

claim that he relied on Keehn in good faith does not negate willfullness.

No. 11-3186 United States v. Rozin Page 13

Similarly, Rozin cannot claim good faith reliance on the advice of Liss. In his

testimony, Liss clearly stated that his role was not to provide Rozin with tax advice. In

addition, because Liss received commissions from the sale of LOI policies, his motives

were questionable. Finally, and most importantly, Liss expressed doubt from the outset

and told Rozin that “I don’t know anything about this. I’ve never heard of this kind of

coverage.” Therefore, Rozin should have realized that it would be unwise to rely on

Liss, and a rational trier of fact could have found that any such reliance would not have

been in good faith.

The record also suggests that Rozin did not rely on Cohen, let alone rely on

Cohen in good faith. There is evidence that Rozin did not trust Cohen; for instance,

despite Cohen’s assurances, Rozin was concerned that the company, Caduceus, might

not even exist. Cohen also told Rozin that if the IRS did “challenge the deduction,” the

worst thing that Rozin would have to do would be to pay the taxes owed plus interest.

Noting the possibility that the IRS could challenge the deduction should have raised a

red flag for Rozin, giving him reason to suspect that the information Cohen provided him

was incorrect. In addition, as with Liss, Cohen’s motivations were at least suspect

because he received commissions from the sale of the LOI policies.

Though the district court admitted that Rozin’s relationship with Koehler, his in-

house counsel, was a closer call, the evidence supports a finding by a rational trier of fact

that Rozin did not rely on Koehler in good faith. Like the others, Koehler received a

commission from the sale of the LOI policies. There is also evidence that Koehler and

Rozin were part of a scheme to sell illegal tax products, similar to the LOI policies.

Finally, the district court noted that Koehler, as Rozin’s employee, was “dependent” on

Rozin. Accordingly, the district court correctly found that there was enough evidence

for a rational juror to determine that Rozin did not rely on Koehler in good faith.

There is also no merit to Rozin’s argument that the Government “conce[ded]”

that “purchasing and deducting the LOI policies on the advice of qualified professionals

does not constitute willful tax evasion or the willful filing of a false tax return” because

others who purchased the policies were not prosecuted. First, it is not possible to tell

No. 11-3186 United States v. Rozin Page 14

from the record whether the individuals mentioned by Rozin—Lawley, Sparnell, and

Cohen’s daughter—could have legitimately claimed good faith reliance. Just because

Rozin was not able to meet the standard for a good faith defense does not mean that

others might not meet it. Second, the facts undermine Rozin’s allegations. For instance,

Rozin claims that Lawley, an individual to whom Rozin marketed the LOI policies,

bought the policies but was never prosecuted. However, Lawley never claimed a

deduction on his 1999 tax return, and thus did not partake in an illegal activity. Though

Rozin tries to argue that he also did not claim a tax deduction on his 1999 tax return,

Count Two and Count Six of the Indictment were for the deductions taken during the

1998 calendar year. Rozin’s situation was not analogous to Lawley’s.

Beyond his good faith reliance defense, Rozin provides virtually no other

evidence that he was operating under a misunderstanding of the law or that he made a

mistake. Rozin points to two comments made by the district court during sentencing,

but neither provides much support for his argument that the district court believed that

Rozin made a “mistake” that would negate willfulness. While the district court did state

that Rozin was “a good pe[rson] who just made very, very bad mistakes,” this comment

was likely in reference to Rozin’s alleged decision to partake in an illegal activity.

Similarly, the statement that Rozin is “a good person who just made a very bad

decision,” cannot be read as a dispositive finding that Rozin made a mistake; rather, the

use of the word “decision” indicates a level of knowledge and willingness on the part of

Rozin. These comments do not constitute a finding of lack of willfulness under 26

U.S.C. §§ 7206(1) and 7201.

The Government accordingly provided sufficient evidence that Rozin willfully

subscribed to a false tax return and willfully attempted to evade taxes, and Rozin is

unable to mount a credible good faith reliance defense.

No. 11-3186 United States v. Rozin Page 15

B. Conspiracy to defraud the Government

When viewed in the light most favorable to the Government, a rational trier of

fact could also have found that Rozin willfully participated in a conspiracy to defraud

the Government under 18 U.S.C. § 371. Rozin’s argument that he was a victim rather

than a member of Cohen and Liss’s conspiracy is not supported by the record. Rozin

and Kallick received the greatest benefit from the purchase of the LOI policies and ROP

riders, and Rozin admits that the activity that he participated in was an illegal conspiracy

and “[i]n retrospect, [he] should not have purchased the policies nor signed and filed the

tax returns as they were presented to him.” Once the Government establishes that there

is a conspiracy, “only slight evidence is necessary to connect a defendant with the

conspiracy.” United States v. Hitow, 889 F.2d 1573, 1577 (6th Cir. 1989); United States

v. Betancourt, 838 F.2d 168, 174 (6th Cir. 1988). The Government is only required to

prove that the defendant “knew the object of the conspiracy and voluntarily associated

himself with it to further its objectives.” United States v. Crossley, 224 F.3d 847, 856

(6th Cir. 2000) (internal quotation marks omitted). In this instance, Rozin admitted that

there was a conspiracy, that he should not have participated in it, and that he voluntarily

signed and filed illegal tax returns.

The Government provided enough evidence for a rational trier of fact to find that

Rozin knew of and willingly participated in the conspiracy to defraud the Government.

On this matter, both Rozin and the Government rely heavily on the arguments that they

made under the previous willfulness analysis. Rozin again argues that he thought he was

buying a “super IRA,” which would have been lost if he had died within ten years, and

thus he did not knowingly participate in the conspiracy to defraud the Government.

However, as discussed under II.A, the Government provided sufficient evidence that

Rozin knew that he could exercise control over the funds, and he marketed the LOI

policies on this basis. Similarly, Rozin reprises his good faith reliance defense to

maintain that he could not be a participant in the conspiracy; however, the evidence

shows that Rozin chose to participate in the purchase and backdating of the LOI policies

No. 11-3186 United States v. Rozin Page 16

of his own accord. As Liss testified, “Nobody ever pushed [Rozin] to do anything. . . .

He made his own decisions.”

Rozin’s argument that he did not recognize the criminality of his activities, and

thus could not have willfully engaged in the conspiracy, is similarly unconvincing.

Based on Rozin’s actions discussed under II.A, including the purchase of LOI policies

that had no legitimate insurance purpose, backdating those policies, and setting up a

reinsurance scheme to access his funds more easily, a rational juror could have found

that Rozin both knew of and willingly participated in the conspiracy.

Rozin also asserts that he was not a conspirator because on his tax returns he

listed all expenses related to the LOI policies as well as commissions from the sales.

However, this argument does not help Rozin because whether or not Rozin listed some

smaller expenses on his tax returns is unrelated to whether or not he improperly claimed

the larger tax deductions.

Because a rational juror could have found that Rozin willfully participated in the

conspiracy to defraud the IRS, on the basis of many of the same facts discussed under

II.A, the district court correctly found that the Government provided sufficient evidence

to uphold the jury’s guilty verdict on the conspiracy count.

C. Evidence issues

Though Rozin objects to the trial court’s admission of a wide range of

evidence—including events related to the Basis Boost purchases, “nearly everything

about Rozin’s 1999 taxes,” the commissions received by Rozin, the testimonies of

Sparnell and Lawley, the return of the settlement money from Caduceus, and “essentially

all activities that occurred after the filing of the 1998 tax return,”—the trial court

properly admitted all of these facts as evidence of the crimes charged. Because Rozin

did not object at trial, we review the majority of these claims only for plain error. United

States v. Treadway, 328 F.3d 878, 883 (6th Cir. 2003) (stating standard). However, to

the extent that the disputed evidence was raised by Rozin in a motion in limine, and the

motion was explicitly decided by the district court, Rozin preserved his appeal. United

No. 11-3186 United States v. Rozin Page 17

States v. Brawner, 173 F.3d 966, 970 (6th Cir. 1999). Where Rozin preserved his

appeal, we review the district court’s decision for abuse of discretion. United States v.

Finnell, No. 07-5258, 2008 WL 1976609, at *4 (6th Cir. May 5, 2008). Because the

district court only explicitly ruled on one relevant motion in limine, application of the

abuse of discretion standard is limited to the testimony presented by co-defendant

Koehler. However, it is unnecessary to parse the disputed evidence, as all of Rozin’s

claims fail under both the plain error and the abuse of discretion standards of review.

Though Rozin claims that the district court erred by admitting “prior bad acts,”

this argument fails because the contested evidence was not within the scope of Fed. R.

Evid. 404(b). Rule 404(b) does not apply when “the challenged evidence is ‘inextricably

intertwined’ with evidence of the crime charged,” United States v. Everett, 270 F.3d 986,

992 (6th Cir. 2001), or when the acts are “intrinsic,” or “part of a continuing pattern of

illegal activity.” United States v. Barnes, 49 F.3d 1144, 1149 (6th Cir. 1995). Because

the disputed evidence directly addressed charges in the indictment and elements of the

crimes with which Rozin was found guilty, Rule 404(b) does not apply and thus the

district court correctly found that the evidence was admissible.

Rozin mischaracterizes this case as a “one-year, one-item case,” and then argues

that all of the evidence regarding activities that occurred after the filing of the 1998 tax

return should have been excluded. However, because the indictment alleged an

extensive conspiracy, including events that occurred in 1999 and 2000, this evidence was

central to proving Rozin’s role and thus was properly admitted. Activities after the filing

of the 1998 tax return that were pertinent to proving the conspiracy included, among

other things, purchasing LOI policies in December 1999 and then backdating them to

1998, establishing the reinsurance schemes in 1999 and 2000, and preparing and signing

tax return forms for 1999 that reported $1.7 million spent on fraudulent LOI policies.

Rozin also claims that the 1999 tax return was never filed with the IRS, and

therefore should not be admitted. This argument is unpersuasive. As the Government

points out, Rozin, Inc. was visited by IRS criminal investigators in August 2000, prior

to the filing of the 1999 return. Therefore, the decision not to file a 1999 tax return

No. 11-3186 United States v. Rozin Page 18

claiming the LOI deductions, though one such form had already been prepared, was

likely the result of the IRS investigation and is probative of the ongoing conspiracy.

Rozin also mischaracterizes the district court’s decision to exclude testimony discussing

how much Rozin would have saved if the 1999 tax return had been filed. Rozin alleges

that this proves that “all evidence regarding [the 1999] tax return was irrelevant and

speculative.” However, the district court admitted other information surrounding the

preparation and signing of the 1999 tax return as evidence of the continuing conspiracy,

and the “speculative” nature was limited to the testimony of one witness on this narrow

question.

The decision to admit evidence of the Basis Boost product was also not plain

error or an abuse of discretion. Rozin argues that because he reported all commissions

from the sale of Basis Boost on his tax returns, evidence related to these sales was not

part of the conspiracy charge. However, the indictment describes the sale of these

products as a scheme to “make it appear that the LOI policies . . . were legitimate

insurance policies.” Because these sales were part of the continuing pattern of illegal

activity alleged by the Government, evidence regarding these transactions was

admissible as not within the scope of Rule 404(b). In addition, the Government had the

right to argue that Rozin intended to purchase Basis Boost but then bought four LOI

policies instead, as evidence of backdating. Because the backdating supported a finding

of Rozin’s willfulness, as discussed in II.A, it was not an error for the district court to

admit this evidence.

Finally, as discussed under II.A, the testimony of Lawley and Sparnell was also

properly admitted as evidence of Rozin’s intent to subscribe false tax returns and evade

paying taxes. Rozin’s conversations with both witnesses indicated that he marketed the

LOI policies as a tax-saving device and knew that the policies allowed the holder to

retain access to their funds. As this evidence goes directly to Rozin’s understanding of

the fraudulent nature of the products, and thus the “willful” element of both 26 U.S.C.

§§ 7206(1) and 7201, this evidence was admissible.

No. 11-3186 United States v. Rozin Page 19

However, even if Rule 404(b) should have been applied as Rozin contests, the

evidence of “other bad acts” would still have been admissible because this evidence was

relevant, used for a proper purpose, and not “substantially more unfairly prejudicial than

probative,” under Fed. R. Evid. 403. United States v. Stout, 509 F.3d 796, 799 (6th Cir.

2007). For the reasons discussed above, the evidence Rozin disputes was highly relevant

to this case and probative of Rozin’s intent. Rozin also makes no substantive argument

that he was unfairly prejudiced as a result of its admission. Though indicative of the

ongoing conspiracy, much of the disputed evidence was also incidental to the improper

filing of the 1998 tax return. Thus it is unlikely that the jury was unfairly swayed or that

it convicted Rozin on the basis of the contested evidence alone, as he claims. See United

States v. Henderson, 626 F.2d 326, 339 (6th Cir. 2010).

D. General charge of “conspiracy to defraud the United States”

The Government could properly charge Rozin with “conspiracy to defraud the

United States,” under 18 U.S.C. § 371 despite Rozin’s argument that such a charge could

not be made if conspiracy to commit a more specific crime was available to the

Government. Section 371 criminalizes two categories of conduct: (1) conspiracies to

commit offenses specifically defined elsewhere in the federal criminal code, and

(2) conspiracies to defraud the United States. Rozin argues that because a single

underlying offense, 26 U.S.C. § 7206(2), existed, he should have been charged under

conspiracy to commit this offense instead of the more general “conspiracy to defraud”

prong. The argument relies entirely on our holding in United States v. Minarik, 875 F.2d

1186 (6th Cir. 1989). The holding of Minarik, however, was quite limited:

where the duties of a citizen are as technical and difficult to discern as

they are when a taxpayer, before levy, engages in otherwise legitimate

activities that may make ultimate collection more difficult, we hold that

a Congressional statute closely defining those duties takes a conspiracy

to avoid them out of the defraud clause and places it in the offense

clause.

Id. at 1196. Minarik involved the defendant’s structuring of home sale receipts in

amounts less than $10,000 so as to avoid bank reports of cash transactions and thereby

No. 11-3186 United States v. Rozin Page 20

make it harder for the IRS to find and levy upon funds already owed to the Government.

The fraud alleged in this case, in contrast, involves efforts to reduce taxes reported and

paid to the Government.

In upholding the continued viability of the crime of conspiracy to defraud the

United States, we have repeatedly recognized that our court in Minarik “inten[ded] to

limit its holding to the particular facts of that case.” United States v. Mohney, 949 F.2d

899, 902 (6th Cir. 1991). Unless narrowly limited, Minarik would have amounted to a

sharp change in the law theretofore allowing prosecution under the defraud clause

despite the availability of a separate applicable substantive offense. Id. at 902-03. As

we have subsequently explained, Minarik only applies “when the defendant receives no

specific notice of the crimes charged, the violation was too isolated to comprise a

conspiracy to defraud, and the taxpayer’s duties are technical[.]” Damra, 621 F.3d at

507.

First, unlike in Minarik, Rozin was adequately informed of the charges against

him. In Minarik, “there was a great deal of confusion” due to “the Government’s

shifting theories” and “failure to clearly define the intent element in the indictment.”

United States v. Khalife, 106 F.3d 1300, 1304 (6th Cir. 1997). That was not the case

here. In this case, the indictment painstakingly detailed the conspiracy charge against

Rozin, and like in Mohney, 949 F.2d at 904, outlined the conspiracy’s objective, manner

and means, and the overt actions taken by the conspirators. The Government has also

consistently maintained its theory of the case that Rozin was involved in a widespread

and ongoing conspiracy to evade taxes and defraud the Government.

Second, the broad nature of the conspiracy with which Rozin was charged

distinguishes this case from Minarik. United States v. Kraig, 99 F.3d 1361, 1367 (6th

Cir. 1996). In Minarik, the conspiracy was limited to a single event—the sale of a

house—and focused on the “concealment of assets upon which the IRS was empowered

to levy.” Id. Here, as in Kraig, in which we upheld a conviction under the “defraud”

prong of § 371, the conspiracy involved the defendant’s “ongoing involvement in sham

transactions over a number of years.” Id. at 1368.

No. 11-3186 United States v. Rozin Page 21

Third, Rozin’s duties were not as “technical and difficult to discern” as in

Minarik, and thus does not warrant the specific notice provided by a singular offense

charge. See Khalife, 106 F.3d at 1304. Unlike the defendant’s duties in Minarik, which

included “disclosure requirements pre- and post-levy,” Mohney, 949 F.2d at 905, this

court has held that the duty “to file tax returns and not file false returns [is] not ‘technical

and difficult to discern.’” Khalife, 106 F.3d at 1305.

Our limited holding in Minarik does not require the reversal of the conspiracy

count in this case.

E. The restitution award determined by the district court was proper

Finally, Rozin argues that he should not be ordered to pay restitution for co-

defendant Kallick’s personal income taxes of $384,647 because: (1) there was

insufficient evidence that Rozin conspired with Kallick to defraud the Government,

(2) there was insufficient evidence that Kallick’s tax returns were not proper or not paid,

and (3) it violates Rozin’s due process rights to pay another’s taxes when that money

could be taken from the person’s estate. Because Rozin did not object to the restitution

order at sentencing, we review these claims only for plain error. United States v.

Sosebee, 419 F.3d 451, 457 (6th Cir. 2005) (quoting United States v. Hall, 71 F.3d 569,

573 (6th Cir. 1995)).

Rozin argues that because Kallick passed away prior to the start of trial, there

was insufficient evidence that Rozin participated in a conspiracy with Kallick under

18 U.S.C. § 371. However, this argument fails because under federal conspiracy law,

“even . . . ‘if charges are dismissed against all other coconspirators,’” the remaining

coconspirator can still be convicted. United States v. Kennedy, No. 06-3029, 2007 WL

869259, at *2 (6th Cir. March 21, 2007) (quoting United States v. Sachs, 801 F.2d 839,

845 (6th Cir. 1986)). This is because a dismissal is not the same as an acquittal. United

States v. Suggs, No. 93-5357, 1994 WL 6811, at *6 (6th Cir. Jan. 10, 1994). Thus, even

though the charges were dismissed against Kallick prior to trial, this does not mean that

Rozin could not be found guilty of conspiracy. As discussed above in II.B, there was

sufficient evidence for a rational trier of fact to find that Rozin willingly participated in

No. 11-3186 United States v. Rozin Page 22

a conspiracy to defraud the Government. Once Rozin was found guilty of conspiracy,

under 18 U.S.C. § 3664(h), the district court may make each defendant liable for

payment of the full amount of restitution when multiple defendants contributed to a

victim’s loss. United States v. Williams, 612 F.3d 500, 510 (6th Cir. 2010). Therefore,

upon finding Rozin guilty of conspiracy under Count One, the district court could hold

Rozin jointly and severally liable for the entire restitution amount, including Kallick’s

income taxes.

In addition, the Government provided ample evidence to prove that Rozin could

reasonably foresee that Kallick, Rozin’s partner and co-owner of Rozin, Inc., would

claim his share of the fraudulent LOI policy premium deductions on his tax returns.

Once a defendant has been convicted of conspiracy, that individual is liable not only for

his own acts, but also for “the reasonably foreseeable acts of his co-conspirators.” United

States v. Bogart, 576 F.3d 565, 576 (6th Cir. 2009) (quoting United States v. Collins, 209

F.3d 1, 4 (1st Cir. 1999)). Because Rozin and Kallick jointly decided to purchase the

LOI policies, established trusts in their names, and agreed to the offshore reinsurance

scheme, we cannot gainsay under plain error review that Rozin should have known that

Kallick would also benefit from the conspiracy.

Lastly, Rozin’s argument that there is insufficient evidence that Kallick’s taxes

have not been paid does not affect his substantial rights under plain error review.

Restitution statutes “do not permit victims to obtain multiple recoveries for the same

loss.” United States v. McDaniel, 398 F.3d 540, 555 (6th Cir. 2005). Therefore, to the

extent that any of Kallick’s taxes have already been paid, the IRS will not be able to

collect and Rozin will not be held liable for them.

III.

The judgment of the district court is affirmed.