Minnesota Court of Appeals affirms Beattie's tax fraud conviction, sentencing
Arguing insufficient evidence to support his convictions, Ronald W. Beattie sought relief from the Minnesota Court of Appeals.
Monday, the court affirmed Beattie’s conviction on tax evasion and determined the district court acted within its discretion in sentencing.
Beattie, 46, appealed his 35 counts of felony failure to file returns for or pay income, business withholding and sales taxes. He argued insufficient evidence to support his convictions.
Beattie also argued the district court erred in not sentencing the 35 counts as a “single behavioral incident.” Beattie argued abuse of the district court’s discretion in not granting a downward departure on sentencing.
In August 2005, Beattie was operating Risky Business Novelties and Videos in Brainerd. Beattie worked with a tax professional for assistance in payroll and filing his tax returns, communicating primarily by telephone and email.
Each pay period, Beattie provided the employee work hours and the tax professional calculated gross pay, withholdings and net pay. Beattie was also given documentation from which to prepare his taxes in 2006, 2009 and 2011.
In 2011, the Minnesota Department of Revenue was informed Risky Business was not submitting W-2 withholdings to the state. After investigating, the department of revenue found there was no record of any tax payments from Risky Business since it opened in 2005.
The court noted between 2005 and 2010, the revenue department mailed 21 notices to Beattie, including notifications to pay sales tax returns and demands to file sales tax returns. In December 2009, Beattie’s sales tax account was deactivated for failure to report sales tax to the state.
A search warrant was then obtained for a garage rented by Beattie. Agents seized documents concerning income and sales taxes. Investigators found a variety of business documents, including past-due sales tax notifications for 2006. Investigators had about seven boxes of receipts and Risky Business sales and bank slips. Receipts were recovered from 2006 through 2009 and some from 2011.
Beattie was initially charged with 26 counts of tax evasion.
The state obtained an order to freeze Beattie’s bank account. The state and Beattie later agreed funds in the account could be released to pay Beattie’s delinquent taxes.
In 2013, the state filed an amended complaint charging Beattie with 35 counts of felony tax evasion. After the charges were filed but before the trial began, a new person Beattie hired filed his past-due returns for 2005 through 2010.
The court reported a “felony violation requires that the nonfiling person have the specific intent to purposefully evade the obligation now and in the future.”
The appeals court noted the state relied on circumstantial evidence at trial to prove Beattie’s willfulness. “The district court instructed the jury on the meaning of ‘willfully,’ stating that appellant “knew he had a legal duty to file returns and/or pay taxes and that he voluntarily and intentionally failed to do so.
“The court defined ‘intentionally,’ stating that appellant ‘either had a purpose to do the thing or cause the results specified or believes that the act, if successful, will cause that results.’”
The appeals court noted there were no objections to the jury instructions and no error in that regard argued in the appeal.
In regard to willfulness, the appeals court noted Beattie did not file personal or business tax returns for the years 2005 through 2011 until after criminal charges were filed against him.
The appeals court looked to see if the evidence presented at trial was sufficient to support the guilty verdict. There was conflicting testimony at trail about Beattie’s willfulness.
At trail, Beattie’s tax professional testified Beattie never asked about the status of his returns or showed concerns for missing deadlines. On cross-examination the tax professional said Beattie had asked her to file personal and business taxes and gave her records she requested. She said she never talked to Beattie about preparing the sales tax but he did ask her to take care of everything for business and personal taxes.
A former girlfriend of Beattie’s and former employee, who was fired for leaving the store unattended, testified Beattie laughed and shrugged it off when she noticed there were no checks written to the state or federal government for taxes and he said “what are they going to do, fine me?”
At trial, Beattie said he contacted his tax professional multiple times about completing tax returns and sent her notices about delinquent taxes he received from the state.
A jury found Beattie guilty on all counts after a two-day trial. The district court sentenced him on 18 counts to run concurrently with the longest sentence of 20 months.
“Further,” the appeals court stated, “the record is consistent only with appellant having knowingly and intentionally withheld payroll deductions over many years, including taxes from his employees’ paychecks each pay period.
“He also charged his customers sales tax but did not remit the collected sales tax to the state until after these charges were filed. The unremitted sales tax alone accumulated in appellant’s business account to over $217,000.
“Appellant’s statement, ‘What are they going to do, fine me?’ not only strongly suggests appellant’s awareness of his tax obligations, but also his intention to continue to not pay these taxes. The only reasonable inference from that statement and the other circumstantial evidence believed by the jury is that appellant knowingly and intentionally failed to satisfy his tax obligations with the purpose of evading or defeating them.”
The appeals court noted the tax professional contradicted her own statements and the former girlfriend was impeached on cross-examination. If the other person Beattie hired to prepare tax returns once charges were pending was believed by the jury, the appeals court noted there could have been a different outcome.
“But, our review does not require or even allow us to reweigh the evidence,” the appeals court stated. “We must defer to the jury’s assessment of a witness’s credibility. We must assume that the jury believed the state’s witnesses and disbelieved any evidence to the contrary. We conclude that the evidence was sufficient to permit the jury to find appellant guilty of felony tax evasion.”
The appeals court determined the state met its burden of proving the offenses were not part of the same behavioral incident by establishing that the tax violations occurred on 18 different dates.
Beattie argued the district court abused its discretion in not considering his full repayment of taxes as compelling for a downward departure on sentencing. The appeals court noted the state found the repayment was not voluntary and was initially challenged.
“The district court acted within its discretion in concluding that the satisfaction of appellant’s tax obligations after being criminally charged is not a compelling circumstance justifying departure from the presumptive sentence upon conviction,” the appeals court found.
“The district court also rejected appellant’s argument that repayment should be used as a mitigating factor in this circumstance because defendants in the future will otherwise have no motivation to pay taxes that are owed to the state.
“We agree with the district court. Much of the unpaid tax here was deducted from employees’ wages and collected from retail customers as sales tax. A person deducting payroll taxes from employees’ paychecks and collecting sales tax from customers, then willfully failing to pay those taxes to the state, can hardly be said to have compellingly demonstrated mitigation when payment is made after his crime has been detected.”
The appeals court concluded the evidence was sufficient and the district court acted properly and within its discretion in sentencing.
Beattie is incarcerated in Stillwater Prison and scheduled for supervised release on July 24. He will then be on parole until Feb. 12, 2015.