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Keywords

contractdefendantappealtestimonycorporationcross-examinationjury instructions

contractcorporationjury instructions

Related Cases

U.S. v. Mikutowicz, 365 F.3d 65, 93 A.F.T.R.2d 2004-1948, 64 Fed. R. Evid. Serv. 1

Facts

John Mikutowicz, the sole shareholder of AGM Marine Contractors and Felix Management, sought help from psychologist Neil Carter for financial issues. Carter referred him to Paul Harris, who assisted in establishing offshore accounts to shield income from taxation. Mikutowicz's companies paid $1.3 million to a Turks & Caicos corporation, Ellis Engineering, for purported services, which were later deemed improper deductions, leading to his indictment on ten tax offenses.

Mikutowicz is the sole shareholder of AGM Marine Contractors ('AGM'), a sub-chapter S corporation located in Mashpee, Massachusetts. AGM is involved in marine construction projects, including dredging and building bridges.

Issue

Did the district court err in its jury instructions regarding 'ordinary and necessary business expenses,' and were the limitations on cross-examination and the refusal to investigate juror misconduct appropriate?

Mikutowicz first argues that the district court erred by instructing the jury on the definition of 'ordinary and necessary business expenses' under the Internal Revenue Code.

Rule

The court held that jury instructions should fairly state the issues and applicable law, and that expert testimony regarding tax consequences is admissible as long as it does not address the defendant's state of mind.

The purpose of jury instructions 'is to inform the jury of its function, which is the independent determination of the facts, and the application of the law, as given by the court, to the facts found by the jury.'

Analysis

The court found that the jury instructions on 'ordinary and necessary business expenses' were appropriate as they helped the jury determine whether the deductions claimed were false. The court also ruled that the limitations on cross-examination were within the district court's discretion and that the refusal to investigate juror misconduct was justified given the lack of substantial evidence.

Here, knowing the definition of 'ordinary and necessary business expenses' was helpful to the jury in applying the law to the evidence.

Conclusion

The Court of Appeals affirmed Mikutowicz's convictions but vacated the judgment for resentencing, determining that the district court had erred in granting a two-level reduction for acceptance of responsibility.

Convictions affirmed; judgment vacated and remanded for resentencing.

Who won?

The government prevailed in the case as the convictions were affirmed, although the judgment was vacated for resentencing due to errors in the sentencing process.

We affirm the convictions but vacate the judgment and remand for resentencing.

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