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United States v. Dehlinger

United States Court of Appeals, Fourth Circuit

January 23, 2014

UNITED STATES of America, Plaintiff-Appellee,
v.
Erik DEHLINGER, Defendant-Appellant.

Argued: Oct. 30, 2013.

Page 316

[Copyrighted Material Omitted]

Page 317

ARGUED:

Michael Louis Minns, The Minns Law Firm, Houston, Texas, for Appellant.

Kevin C. Lombardi, United States Department of Justice, Washington, D.C., for Appellee.

ON BRIEF:

Ashley Blair Arnett, The Minns Law Firm, Houston, Texas; Jack Bruce Swerling, Jack Swerling Law Office, Columbia, South Carolina, for Appellant.

William N. Nettles, United States Attorney, Office of the United States Attorney, Columbia, South Carolina; Kathryn Keneally, Assistant Attorney General, Frank P. Cihlar, Gregory Victor Davis, Tax Division, United States Department of Justice, Washington, D.C., for Appellee.

Before MOTZ, GREGORY, and DAVIS, Circuit Judges.

Affirmed by published opinion. Judge MOTZ wrote the opinion, in which Judge DAVIS joined. Judge GREGORY wrote a separate opinion concurring in the judgment.

DIANA GRIBBON MOTZ, Circuit Judge:

A jury convicted Dr. Erik Dehlinger of three counts of filing false income tax returns. He received a sentence of forty-two months imprisonment and one year of supervised release and was ordered to pay $363,207 in restitution and a fine of $5,000. Dehlinger appealed his conviction and sentence, and we affirmed. Dehlinger then moved for habeas relief, asserting that his trial counsel had labored under a prejudicial conflict of interest in violation of Dehlinger's Sixth Amendment rights. Following an extensive evidentiary hearing, in which Dehlinger, his trial counsel, and other witnesses testified, the district court, in a thorough and well-reasoned opinion, denied Dehlinger habeas relief. The court did, however, grant Dehlinger a certificate of appealability pursuant to 28 U.S.C. ยง 2253. For the reasons below, we affirm the judgment of the district court.

I.

Dehlinger's Sixth Amendment challenge rests on his trial counsel's relationships with three individuals— Tara LaGrand, Gary Kuzel, and Collis Redd— who were involved in the same fraudulent scheme that gave rise to his convictions. Dehlinger

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maintains that these relationships produced conflicts of interest that prevented his trial counsel from calling these individuals as witnesses to provide exculpatory testimony at his trial.

A.

Dehlinger's convictions arose from his involvement with Anderson's Ark and Associates (" AAA" ), which marketed programs enabling users to avoid current income tax liability and " recapture" taxes paid in the previous two years. Dehlinger began using the AAA tax programs in 1999. He first became involved with the AAA through George Benoit, an employee of an AAA affiliate called Guardian Management, and Richard Marks, an AAA " planner," i.e., an AAA employee who prepared client tax returns and other documents that formed the basis of the fraudulent tax schemes. Benoit prepared Dehlinger's 1998, 1999, and 2000 tax returns using AAA's tax schemes. Tara LaGrand, another AAA planner, prepared Dehlinger's 2001 and amended 2000 tax returns. Use of the AAA programs resulted in a substantial benefit to Dehlinger. In the three years he used the programs, he avoided $363,207 in tax liability and obtained annual refunds on his income taxes despite earning, as an emergency room doctor, between $250,000 and $300,000 per year.

In 2002, the Government began its investigation of Dehlinger. The Government offered Dehlinger a plea agreement, in which he would plead guilty to one felony and cooperate with the Government. During plea negotiations, Robert Stientjes and other lawyers represented Dehlinger. When Dehlinger rejected the plea, the Government indicted him in August 2006. Then, Dehlinger, relying on a recommendation from one of Stientjes's partners, retained Scott Engelhard as his trial counsel to work along with Stientjes at trial.

Dehlinger retained Engelhard based largely on Engelhard's relative success as court-appointed counsel for AAA planner Tara LaGrand in her 2004 trial in Seattle, Washington.[1] The jury deadlocked over the charges against LaGrand in that trial. Subsequently, LaGrand (still represented by Engelhard) accepted a guilty plea and was sentenced to twenty-four months imprisonment and one year of supervised release. In LaGrand's plea agreement, she admitted that she knowingly prepared false loan statements and tax deductions. This directly contradicted her trial testimony, in which she had claimed that she did not know the AAA programs were illegal. LaGrand's plea agreement contained a waiver of the right to appeal. Thus, Engelhard's representation of LaGrand at her trial effectively ended with her sentencing in September 2005.

One year after that representation ceased, and before undertaking his representation of Dehlinger, Engelhard obtained a conflict waiver from LaGrand. In that waiver, LaGrand identified Engelhard as her " former attorney" and stated that " [t]o the extent that there might be any apparent conflict of interest, I do hereby waive that conflict of interest so that Mr. Engelhard can represent Mr. Dehlinger at trial." Accordingly, when retained by Dehlinger in the autumn of ...


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