On Appeal from the United States District CourtFor the Northern District of CaliforniaVaughn R. Walker, District Judge, PresidingArgued and SubmittedMarch 9, 1998--San Francisco, CaliforniaFiled May 27, 1998Before: John T. Noonan and Sidney R. Thomas, CircuitJudges, and Dean D. Pregerson*, District Judge.Opinion by Judge Noonan
______________________COUNSEL William A. Cohan, Esq., La Jolla, California, for defendant-appellant Phillip Marsh.Shari L. Greenburger, Esq., Serra, Perelson Law Firm, SanFrancisco, California, for defendant-appellant Marlene Marsh.Henry G. Wykowski, Esq., Henry G. Wykowski & Asso-ciates, San Francisco, California, for defendant-appellant JillSpencer.Michael Stepanian, Jai M. Gohel, San Francisco, California,for defendant-appellant Darrell Spencer.Arthur Pirelli, San Francisco, California, for defendant-appellant Douglas Carpa.George C. Boisseau, Santa Rosa, California, for defendant-appellant Joseph Coltrane.Albert S. Glenn, Assistant United States Attorney, Chief,Appellate Section, Sandra Teters, Thomas Carlucci, AssistantUnited States Attorneys, San Francisco, California; Frank P.Cihlar, Attorney, Tax Division, United States Department ofJustice, Washington, D.C., for plaintiff-appellee.
_____________________________OPINION NOONAN, Circuit Judge:Phillip Marsh and his five co-defendants appeal their con-victions of conspiring to defraud the United States by imped-ing the collection of federal income taxes and theirconvictions of related crimes. They also appeal their sen-tences, which, as to Phillip Marsh total a term of imprison-ment of 17 1/2 years, as to his wife Marlene a term of 14years, and as to the other defendants lesser but still substantialperiods of prison.FACTS AND PROCEEDINGSPhillip Marsh was the founder in 1990 of The Pilot Con-nection Society, often self-identified by its acronym TPCS.Marsh's enterprise offered its customers the elusive andenchanting prospect of untaxing themselves. The verb "untax"entered the language in political conflict in England over aformidable tariff on foreign grain and denoted political actionby the government ("Who will untax our bread? " E. Elliott,Corn-Law Rhymes, 1833). "Untax," as used in the presentcontext, means freeing oneself from any legal obligation topay any income tax, federal or state.To achieve this exceptional state, TPCS offered an "UntaxPackage." The package included Phillip Marsh's The Com-pleat Patriot, the Constitution of the United States, Psalm 91,and a photograph of Phillip and his wife suitable for framing.It also included "Very basic untax documents and theirinstructions." Among them were a form letter to be sent to theDistrict Director of the Internal Revenue Service stating thatthe quondam taxpayer had recently found out that the directorhad been "attempting to extort money" from him anddemanding that he justify his jurisdiction by a certified copyof the director's designation of authority from the Secretaryof the Treasury. The letter was not to be xeroxed and was tobe handwritten because "[i]t takes 3 to 5 times as long to readhand written material as it does to read typed material -- any-thing to slow the IRS down!" Another form letter, to be simi-larly copied by hand, informed the district director that thetaxpayer was not a person under the director's jurisdiction.The Untax Package included another form by which thetaxpayer revoked income tax returns previously signed by himand "cancelled" his signature on such returns. This form wasto be retyped by the taxpayer, eliminating the Pilot Connec-tion letterhead, and to be notarized. The theory of the revoca-tion and cancellation, as explained in the Untax Package, wasthat the IRS would use earlier returns to prove that the tax-payer was aware of his obligation to file and pay. The revoca-tion and cancellation would, so the Untax Package suggested,eliminate this easy evidence of the taxpayer's wilfulness innow refusing to file and pay. The reason that the taxpayercould so readily remove himself from the taxpaying rolls was,according to TPCS, that "income tax is voluntary. " (SER 32.)If you didn't want to pay it, you didn't have to.TPCS also advised its members to resort to "alternativebanking," that is, to pay everything by cash or postal moneyorder, or to join something called the National Commodityand Barter Association and use "warehouse banking," or tohave some trusted associate open an account for one in theassociate's name, or to establish, with TPCS's help, an"offshore trust." The reason for adopting one of these alterna-tive styles of money management was that if you opened achecking or savings account you agreed "that the moneybelongs to the bank from that moment on," with the implica-tion that the bank would surrender the money on levy by theIRS (SER 36.) Members were provided with forms, to berecopied and notarized, of revocation of bank signature cards.(SER 35.)Another practical precaution the TPCS member wasadvised to take, in order to assure that his emancipation fromtaxation was effective, was to file W-4s with his employersclaiming as many exemptions as he had thousands of dollarsof income. For example, if he earned $30,000, he was to filea W-4 claiming 30 exemptions. The member was assured byTPCS that there was no limit to the number of exemptions hecould lawfully claim. (SER 342.) No mention was made ofany duty to have a reason for claiming an exemption.Untax Packages, the contents sometimes different in unes-sential detail, were sold by TPCS for a price that varied forthe occasion. At the start the price was over $6,000. (SER 8.)The price announced in January 1993 was "$2,100 or 10% ofyour existing tax problem (if any), whichever is higher."(SER 380.) As of January 31, 1990, TPCS had only three pur-chasers of the Untax Package. By December 31, 1993, TPCSrecorded 3,848 purchasers and income from them of$7,638,625. (SER 19.)TPCS had ordinary members who did not purchase theUntax Package but who did pay $45 for membership. By theend of 1993 there were 12,617 in this category. (SER 19.)They received TPCS's magazine, The Connector. The maga-zine carried the subtitle "The Voice of Freedom " and ran afacsimile of an American flag as its logo. Its pages repeatedat their foot the mantra of the Society, "Income Tax IsVoluntary!" The Connector informed its readers that therewas no law making anyone liable for income tax.TPCS had a cadre superior to that of mere members, consti-tuted by those admitted to the status of Associate Member. AnAssociate Member had the right to sell the publications ofTPCS. He paid $10,000 to acquire the franchise and the confi-dential instructions on marketing that accompanied the fran-chise. By December 31, 1993, there were 730 persons whohad been admitted to this advanced status. Apparently someassociates got a discount, for the total paid by them recordedin the Society's book was $5,281,010. (SER 19.)Phillip Marsh conceived the idea of TPCS. His wife Mar-lene joined him in marketing it. Together they traveled theUnited States soliciting the purchase of memberships andUntax Packages and speaking at seminars and conferencesintended to promote TPCS. Marlene's daughter, Jill Spencer,was an Associate Member and the office manager, in the lat-ter capacity opening and distributing mail sent to TPCS, log-ging cash received and responding to some customercomplaints. Her husband Darrell was also an Associate Mem-ber. He became TPCS's General Manager, overseeing staffand publications, revising the Untax Package, and writing inhis own name in The Connector, to explain why payingincome tax was optional.A family operation, TPCS was aided by Joseph Coltrane,alias John Campion, and by Douglas Carpa. Coltrane was theNational Coordinator of the TPCS sales force. Carpa was nota TPCS member but from approximately May 1991 to June1992 assisted the marketing of memberships in TPCS by put-ting together trusts in which TPCS members might hope tohide their assets from the IRS. He offered his drafts of trustinstruments only to those who purchased the Untax Package.He assured members that his trusts were "old and cold" andwould work to cure even preexisting problems with the IRSbecause the trusts would be predated to a time before an IRSlien.In its publications TPCS asserted that it was not a tax pro-tester movement, that it did not deny the constitutionality ofthe Internal Revenue Code, and that it did not maintain thatCongress lacked the power to tax income. TPCS simplytaught that Congress had not exerted that power and that theIRS was "a private corporation" engaged in lawless efforts toextract money from Americans not obliged to pay. TPCScharacterized its own teachings as educational and added thatthey were the exercise of free speech, protected by the FirstAmendment from prosecution.TPCS was aware that the IRS challenged its view of thelaw, an awareness reinforced by the rejection that TPCS'sUntax Package received when put into practice by members.The IRS by 1991 was aware of TPCS and alert to its raisond'etre. In February 1992 an affidavit filed by IRS SpecialAgent Diane Messer characterized TPCS as an "illegal taxprotester organization" and sought a search warrant authoriz-ing the seizure of documents pertaining to TPCS and to Phil-lip and Marlene Marsh. The search was to be carried out atthe Marshes' home, which they used as the Society's head-quarters. Pursuant to the warrant, a comprehensive seizurewas made of the correspondence, computers, and file cabinetsof the Society.Apparently as a response to the search, on August 12, 1992,in Stockton, California, Phillip and Marlene Marsh and JillSpencer signed two papers alleging that certain persons wereindebted to them in the amount of $350,000 each and seekingto place a commercial lien on the property of the debtors.These persons were Agent Messer and three other IRS agentsinvolved in the search; the United States Magistrates who hadauthorized the search; three United States attorneys in theEastern District of California and one United States attorneyin the Northern District; Lawrence Karlton, Senior DistrictJudge of the Eastern District; and California Superior CourtJudge Jeremy Fogel. The liens were filed in Nevada andWashington.A year later, in February 1993, a second affidavit executedby Agent Messer asserted that TPCS was "so permeated withinvolvement with illegal activities" that a comprehensivesearch could not separate the few innocent items "from thevast amount of material which will be relevant evidence of thecriminal violations." The Marshes then moved from Califor-nia to Colorado and from their home there continued theirenterprise under the name the Liberty Foundation. A thirdaffidavit executed by Messer led to the comprehensive searchof the Colorado office in December 1993.A grand jury had already, on November 29, 1993, indictedthe defendants for conspiracy to defraud the United States.The defendants moved unsuccessfully to suppress the materialseized by the government from their files. Phillip Marshsought with equal unsuccess to introduce a report by a psychi-atrist who evaluated him and found him to suffer from delu-sions; the psychiatrist's proffered testimony was excluded inlimine on the government's motion. Trial followed in the dis-trict court for Northern California running slightly over threemonths, from August 29, 1994 to November 30, 1994. Thejury was unable to agree on the principal counts.The United States obtained a superseding indictment charg-ing all six defendants with conspiracy to defraud the UnitedStates by obstructing the lawful functions of the IRS, in par-ticular by their operation and promotion of TPCS and theUntax Package. The two Marshes and the two Spencers werepersonally charged with tax evasion and failure to file areturn. The indictment also charged all defendants exceptCarpa with numerous counts of mail fraud in the sale of theUntax Package to over 3,000 persons. The two Marshes andJill Spencer were charged with endeavoring to impede theadministration of the tax laws by filing the commercial liensin Nevada and Washington against the government officialsnamed in them.The government announced in its Status Conference State-ment that it intended to introduce "as much of its evidence aspossible through `summary witnesses.' " The defendants fileda joint motion in limine opposing this procedure:"it appearsthat the government intends to avoid cross-examination of thealleged mail fraud victims by hearsay summaries. " The gov-ernment had proposed that IRS agents read excerpts from theTPCS files. The defendants objected that the material fromTPCS files -- complaint letters from persons saying that theyhad been deceived by TPCS -- fell within no exception to thehearsay rule. The defendants asserted that the procedurewould violate their Sixth Amendment right to confront theiraccusers. Citing Coy v. Iowa,
487 U.S. 1012
(1988), wherethe Supreme Court held it unconstitutional to place a screenshielding the accusers from the defendant, the defendants heresaid: "Agent Durrette would be the screen between the defen-dants and their alleged victims."A hearing was held the following week before the judgewho had presided at the first trial in order to schedule the timeallowed for trial. The court expressed dissatisfaction with theamount of time "wasted" by both sides in the first trial. Thecourt stated that the jury had heard the details of the untaxingscheme "ad nauseam." The government argued that the firstjury had been "affected by the government's inability to pres-ent the case in a way that educated them as to what our theoryof the case was, what our evidence meant, during the presen-tation of the evidence." The court asked, "What stoppedyou?" The government replied that the court had stopped itfrom having a witness read from the material seized in thesearches. The government went on to say that it had to provethe defendants' state of mind as to both the mail fraud countsand the tax evasion counts. The court: "It seems to me that isproved by the quality of the evidence as opposed to the quan-tity of the evidence." The court went on to say:"I thought thevictims were a disaster for the government . . . .[T]he victimswere particularly unsympathetic. They were people who werealready in serious trouble with the Internal Revenue Service,were essentially tax cheats themselves; and were put on thewitness stand with the representation that they were somehowvictimized by the defendants . . . . And I'm convinced thatyour case ran aground with that first group of witnesses." Thedistrict court never formally ruled on the defendants' inlimine motion to exclude the complaint letters; the govern-ment concluded that it had a green light.On November 9, the government offered Agent Durrette tosummarize material taken from the files of TPCS. The defen-dants stipulated that the material came from the files -- thegovernment would not have to prove where each piece of cor-respondence came from. The court described the stipulation.It was "that these TPCS client file documents would simplybe stipulated as to their admission into evidence without thenecessity of putting a witness on the stand to lay any founda-tion as to these documents. And the stipulation would be thatthese documents were found in one or the other of the facili-ties associated with the Pilot Connection Society. " The gov-ernment answered, "Yes." Agreeing, the defendants againvigorously objected to the government's presentation of thefiles through testimony about their contents by Durrette. Thegovernment replied that proof of the defendants' state of mindwas "the heart and soul" of its case.Durrette took the stand. The government had prepared anextensive file of material taken from TPCS with duplicates ofa number of letters to be given as handouts to the jury. Thematerial consisted substantially in statements of governmentofficials as to what the income tax law was, statements ofother persons including officers of the Church of Jesus Christof Latter Day Saints on the obligation to pay income taxes,and letters from purchasers of the Untax Package complainingthat the Package did not work or, worse, that they had beenfraudulently induced to buy it.The defendants objected repeatedly to the procedure -- toDurrette's reading of views on the law as argument by thegovernment, to Durrette's reading of selected passages fromthe correspondence as not summarizing but highlighting, andto the reading of the complaints as violative of the Confronta-tion Clause. Every objection was overruled by the trial court.The second trial was two months shorter than the first. OnDecember 13, 1995 the jury found all six defendants guilty ofviolating 18 U.S.C. S 371 by conspiring to defraud the UnitedStates in the collection of income taxes. Phillip and MarleneMarsh and Jill Spencer were convicted of two counts of viola-tion of 26 U.S.C. S 7212(a) by corruptly endeavoring toobstruct the administration of the income tax laws by filingthe liens. Both the Marshes and both the Spencers were con-victed of violating 26 U.S.C. S 7201 by tax evasion and vio-lating 26 U.S.C. S 7203 by failing to file tax returns. BothMarshes were acquitted of ten counts of mail fraud and con-victed of ten counts of mail fraud in violation of 18 U.S.C.S 1341. Both Spencers were similarly acquitted, Darrell offive, Jill of nine counts, and similarly convicted of nine mailfraud counts; and Coltrane was convicted of six mail fraudcounts. The court denied Rule 29 motions, including motionsby the Marshes and Jill Spencer to dismiss the obstructioncharges on the ground of lack of venue.On June 26, 1996 the court pronounced sentence. PhillipMarsh was sentenced to 5 years imprisonment for conspiracyto defraud the United States; 5 years imprisonment for eachof his ten mail fraud convictions; 5 years imprisonment oneach of two convictions of tax evasion; 3 years imprisonmentfor each his two endeavors to impede the administration of thetax laws; and 1 year imprisonment for each conviction of will-ful failure to file tax returns. The sentences for conspiracy, taxevasion and 9 of the 10 mail fraud counts were to be servedconcurrently with each other. The 3 year sentences for theendeavor to impede were to be were to be served consecu-tively to the other counts and to each other. The 1 year sen-tences for the two failures to file counts served consecutivelyto each other and the other counts. The sentence on the twotax evasion counts and two failure to file counts totals 7 years.The 5 year sentence for the tenth mail fraud charge was to beserved consecutively to the extent necessary to produce a totalsentence of 17 1/2 years.Marlene Marsh was sentenced to 5 years imprisonment forconspiracy to defraud the United States; 5 years each for the10 mail fraud counts, 5 years each for the two tax evasioncounts, 3 years on each of the 2 counts of endeavor to impede,1 year on each of the 2 convictions of willful failure to file.The 3 year sentences for endeavor to impede were to beserved concurrently with each other and consecutively to theother sentences, the 1 year sentences for failure to file wereto be served consecutively to each other and to the other sen-tences, and the 5 years for the two tax evasion counts and 10mail counts were to be served concurrently to each other andconsecutively to the other sentences to the extent necessary toproduce a total sentence of 14 years. The sentence on the twotax evasion counts and two failure to file counts totals 7 years.Darrell Spencer was sentenced to 5 years imprisonment forconspiracy to defraud the United States, 5 years on each of 9mail fraud convictions, 5 years on each of 2 tax evasion con-victions, and 1 year on each of 2 failure to file convictions.The sentence for conspiracy, the 2 tax evasion sentences, and8 of the 9 mail fraud sentences were to be served concur-rently, as were the sentences for failure to file. The sentenceon the two tax evasion counts and two failure to file countstotals 5 years. The ninth mail fraud sentence was to be servedconsecutively to the other sentences to the extent necessary toproduce a total of 7 1/4 years.Jill Spencer was sentenced to 5 years of imprisonment forconspiracy to defraud the United States, 5 years on each of 9mail fraud convictions, 5 years on each of 2 tax evasion con-victions, 1 year on each of 2 failure to file convictions, and3 years on each of 2 convictions to impede. The sentences forconspiracy, tax evasion and the 9 mail fraud counts were tobe served concurrently, as were the sentences for failure tofile. The sentence on the two tax evasion counts and the twofailure to file counts totals 5 years. The two 3 year sentencesfor corrupt endeavor to impede were to be served concur-rently to each other but consecutively to the other sentencesto the extent necessary to produce a total sentence of 7 1/4years.Coltrane was sentenced to 5 years for a conspiracy todefraud the United States and 1/4 year imprisonment on onecount of mail fraud, the sentences on the other counts of mailfraud to be served concurrently. Carpa was sentenced to 4 3/4years on conviction of conspiracy to defraud the UnitedStates.The defendants appeal.ANALYSISAll defendants contend that they were denied the right toconfront the witnesses against them when Agent Durrette readto the jury excerpts from material found in the defendants'files.The following are from the excerpts read aloud to the juryby Agent Durrette: (The excerpts are exact, but not given infull; the authorships and dates are as read.)1. "Some so-called tax protesters are making speeches and offering seminars around the country at which serious misrepresentations about the tax laws are being presented to the public as fact." Fact Sheet.2. "Indeed, it is strange how the mind justifies things. For example, the way you justify `untaxing' people by bla- tantly misrepresenting the truth about your so-called `untaxing' program for the sole purpose of lining your pockets with unsuspecting victim's hard earned money while you sit idly by and watch the Franchise Tax Board and Internal Revenue Service come in and steal every- thing they have -- knowing full well that this will be the outcome." Letter from Shawn O'Connor, 7/6/92.3. "Why would I sent you a check for $8,745 when you have not got the lien off my home?" Letter from Curtis Howard 5/29/91.4. "To date, the Pilot Connection System has not given any relief and has only compounded my tax problems. On the basis of fraud, I herewith demand the return of my $2,000 plus $499." Letter, 6/3/91.5. "[The failure to succeed in not paying taxes] makes our statement, `stop paying taxes permanently and legally' far from being the truth." Letter from Hugh Bodey, 7/6/91.6. "You did not `untax me legally and permanently' as promised -- and, I am confident, that and if and when I have to go to court, you would drop me as you have oth- ers that I am hearing about." Letter from Hugh Bodey, 8/10/91.7. "The program was sold to me under, what I now consider false pretenses. In fact, I would go so far as to say it was out and outright fraud." Letter from Roger Hawks, 8/12/91.8. "Due to the facts provided to us by you, some of which we now know to be out and out lies, we signed on with your organization." Letter from Arthur and Donna Fuller, 8/15/91.9. "Bob Kane [a lawyer] told our company attorney (see memo) that I had a zero percent chance of ever eventually winning against the IRS." Letter 8/16/91.10. "Despite all the Pilot Connection's and Greg Galaski's efforts, I was given two options by a federal judge: I could comply with the court's order in person or at the IRS office, or I could comply from the adult detention center in downtown Los Angeles." "I am asking nothing of the Pilot Connection now, Dar- rell, because I don't believe in it anymore. The only thing I have asked is that Don Held make good on his promise to give me back the money I paid him if the untax program didn't work." Letter from Dan Barwick, 8/3/91.11. "When I joined the Connection I thought they had found that simple key to avoid taxes and a `voluntary' part of the IRS system, if people qualified. As it appears now it doesn't work so I have decided to look for work elsewhere." Letter from Ogden Kraut, 8/15/91.12. "When I joined the Pilot Connection, I believed what I was told and being naive about patriot issues didn't have the knowledge to spot defects and lies in your program." Letter, 10/14/91.13. "I am in a situation now that I have no income and I had to borrow the $4,000 that I paid to the Pilot Connection and I've received nothing but broken promises and lies." Letter, 11/1/91.14. "When I first became involved with your group I believed what you were saying was true and factual. But the longer I used the Pilot Connection's system the more it becomes evident the system does not work." "You have been dishonest in your allegations and letter process and I feel that I cannot do business with anyone or any company or group that is deceitful." "You have fraudulently taken money from me and at this time I wish to have all monies returned to me. " Let- ter, 11/29/91,15. "I cannot sell a bill of goods to someone that I can't even deliver for myself and my wife. We did not have a problem when we started this program, but we seem to be developing one and my wife is really scared, because she is afraid of going to jail and losing her job where she has 26 years service and has only 4 years to go before retirement." Letter from Darrell Hoover, 12/18/91.16. "We have found, in doing further research, at the law library, that your organization is teaching incorrect prin- ciples dealing with some very serious legal matters." Letter from Robert and Leah Aycock, 12/18/91.17. "I don't think you realize the sad situations a lot of us are in. You talk a good line over the phone, but where's the beef?" Letter to Pilot Connection/Phil Marsh.18. "We have done everything in the pamphlet plus every step Jim Caler said and still problems. Federal and state has attached both of our wages again, but this time the interest and penalties are even higher . . . Take us off the Pilot Connection." Letter, 1/22/92.19. "This is our letter of resignation due to the fact that I believe your material and system of removing people from state and federal taxes is fraudulent." Letter, 3/2/92.20. "I paid you $15,000 to take care of my liens and levies and I expect to see this accomplished. I have become very insecure with the lack of performance." Letter, 2/5/92.21. "Now I don't know what I have to do. I still have a lien against me. They still did not remove the lien." Letter, 2/25/92.22. "Everything we have been told has been wrong and we no longer have any confidence with you and your organization." Letter 5/16/92.23. "I learned that the rest of your stupid arguments are `frivolous' arguments. I call them `stupid' because the courts are getting pissed off. They told us [patriots] over and over that these are frivolous arguments that they don't want to hear any more. They take the attitude, and rightly so, that we are wasting their time, and the tax- payers' money, with arguments that have repeatedly lost. They have no patience with people using these stu- pid arguments." Letter from Roy Buchanan.24. "I am writing to express my disappointment in your `untaxing' program . . .. I also followed your lien and levy procedures, but to no avail. I still have a tax lien on file and levy notices still follow me." Letter from Les Johnson 8/11/92.25. "[My attorney said] that the package was not legally sound for me." Letter from Michael Hutton 9/9/92.26. "According to this final notice, I do not believe that I have been untaxed by the Pilot Connection." Letter dated 9/28/92.27. Your untax program costs me $1,100 and was absolutely worthless . . .. Thanks a lot for wasting my hard-earned retirement savings." Letter from David Mayo.28. "Upon further investigation and study I have found your information to be incomplete and misleading. The dam- age done as a result of placing my hope and trust in you has created a complexity of criminal violations that could cost me my family, home, business and, most importantly, my personal freedom." Letter from Ina Gregory 10/1/92.29. "He inferred that the IRS does not pay attention to the notice of revocation and other strategies used by the Pilot Connection. That I might end up paying the IRS and the P.C., that the Pilot Connection was a scam and Phil is mainly out to get people's money." Letter 10/28/92.30. "What kind of people are you anyway? You take my money and your organization does not perform what you promise and then become abusive and threatening to me? . . . I also want my $3,500 back A.S.A.P. " Letter dated November 1992.31. "I have talked at length with people in my town about all that I read in your book. And most of the response I have gotten is -- `sure, I know someone honest tried this and they are serving time in Leavenworth.' " Letter 11/1/9232. "Pilot Connection Society has made false claims to its untaxed members, which has misled them and also places them and their families in jeopardy of being con- victed of tax evasion." Letter dated 11/18/92.33. "They levied my wages anyway. What kind of bull is this? I would like my $1,500 refunded. How can you folks in good conscience keep on with this crap? Like I said, I do want a refund. Because you did nothing at all to earn the $1,500. It seems to be a big joke. " Letter from Chris Yost.34. "This letter will serve as my formal resignation from the Pilot Connection Society; effective upon receipt. My decision to enter into an agreement with your organiza- tion was based on misrepresentations made by you and your employees. The assistance and services I was led to believe I would receive was never provided. I have witnesses and proof of this fraud." Letter from Ed Max- ime.35. "In today's trial, the judge looked at the P.C. material I had included in my brief. . . . The judge ridiculed it; said that all of those types of approaches had long since been tried and rejected." Letter from Albert Baxter 12/8/92.36. "You have claimed to have `untaxed' in excess of 17,000 people of which surely 1 percent would have received the letters from the IRS . . .. I am not asking for even 1 percent of documented proof of these letters but only of 1/2 percent of documented proof which would be 85 letters. (I don't even believe that you can provide 10 percent of that)." Letter 1/13/93.37. "We trusted Liberty Foundation (Pilot Connection) only to realize that our 3 and a half year battle with the IRS was all for nothing. It disrupted our lives. During wage garnishments we had no money. Try explaining to the children why there won't be any Christmas. Sob stories to you, real life to us. We lost a lot of money by trusting in the Liberty Foundation. Worse than that, we lost our liberty, the very thing your company offers." Letter 11/3/93.[1] The government argues vigorously that this mass ofaccusations was admissible because the jury was instructedthat the accusations were admitted not for the truth of thestatements but to show the state of mind of the defendants.That was certainly the government's rationale. The difficultywith the government's position is that the jury was notinstructed to limit its consideration to the defendants' state ofmind. In its brief on appeal the government points to a state-ment of the court made on November 20 in reference to a doc-ument then read to the jury. This instruction has no apparentrelevance to the documents read to the jury on November 9.An examination of the record on November 9 shows that,after being reminded of the defendants' in limine motion, thetrial court told the government to proceed. At this time, at thestart of Durrette's reading, the jury was given no instructionwhatsoever as to its purpose or limits.Both the prosecution and defense counsel stated that theyhad "cautionary instructions" to offer. The government saidits was the instruction that the court had given during the ini-tial jury instructions. The court, in fact, gave no instruction,so we are uncertain what was offered on November 9. How-ever, we have reviewed the preliminary jury instructions tosee if they did contain relevant cautionary words. The mostrelevant of these instructions are as follows: Evidence may be introduced for the limited pur- pose of establishing that the defendants were aware of materials that expressed opinions in conflict with those expressed by the Pilot Connection Society regarding the success of a tax-related program mar- keted by the tax --by the Pilot Connection Society. Before you may consider any such evidence against a particular defendant, you must find that the defen- dant knew of the existence of these materials or their contents. (Tr. 11/2/95, vol. 2, at 143.) An intent to defraud may be demonstrated by the scheme itself. Similarly, the defendant's knowledge of a false statement or his or her reckless indiffer- ence to the truth or falsity of that statement can dem- onstrate an intent to defraud. (Id. at 149.) In determining whether or not the government proves that a defendant acted with an intent to defraud and to obtain money or property by means of false promises or statements or whether defendant acted in good faith, you must consider all of the evi- dence in the case bearing on defendant's statement. (Id. at 150.)None of these instructions limit the jury's consideration ofmaterial from the files for the truth of what is contained inthem.The first time that the court told the jury why the docu-ments were being read -- sometime into the reading -- thecourt said, "And it's clear from the court's instructions to thejury -- and, ladies and gentlemen, if any of you have anyquestions, please let me know. But it's clear that the docu-ments themselves are the evidence. And they are being intro-duced to show what documents were at the various locationsat the various times that the witness testified about." A littlelater in response to another objection from the defendants, thecourt said: "This is a document in the files of the Pilot Con-nection Society found on the date indicated, and that's whatthe document is being offered for. Again, is there any ques-tion that any juror has that that is the evidence which is beingoffered?" Neither of these instructions tells the jury not toconsider the truth of the matters read.The first time an instruction on the defendants' state ofmind was given was in reference not to accusations againstTPCS but to an objection to Durrette reading from an IRS taxmanual found in the files: "The court is permitting the govern-ment to argue cases that have been overruled as a matter oflaw and citing legal principles that are no longer valid as ifthat's notice of anything, and to that I most strenuously objectand move to strike." The court responded: "Well, the objec-tion is overruled. This is clear this is an IRS tax manual. Theexact current status of the propositions of law referred to inthe manual are not issues for the jury to decide. They are notnecessarily part of the instructions. What this is being offeredfor is a document that was in the files at the place and at thetime indicated by Mr. Durrette. And that bears on it beingoffered with respect to the intent issues in this case vis-a-visthe present defendants. But we are not here to argue the law."(Tr. 11/9/95 at 78-79.) This instruction only indicates the pur-pose of the reading of material on the tax laws.To the next objection by defendants the court said:"Counsel, I have been very patient this morning. Perhapsthat's a change in my attitude, but I am beginning to losepatience. You have made a number of objections to this evi-dence. I have ruled on these. It's clear what the evidence isbeing offered for. The jury has been repeatedly instructed onthis. The jury has been told that what they are receiving areexcerpts of documents that are being admitted into evidence,and for illustrative purposes Ms. Teters and the witness aregoing through and pointing out certain things that the govern-ment contends are of significance. Now, it's quite clear whatis going on, and it need not be a process that is periodicallypunctuated by speechifying by lawyers. Your objections arepreserved, and so there isn't any need for undue interruptionand prolongation of this process."The first time any instruction regarding complaint letters orsimilar materials was given was much later in Durrette's testi-mony when he read from a Clarion Ledger, Jackson, Missis-sippi, editorial dated March 28, 1990, which stated:"Taxprotesters become a part of the con job that is played on theAmerican people." Counsel for the defendants objected: "I amat a loss as to exactly what these editorial comments are pro-viding notice of except the opinion of someone who wrote aneditorial." The court responded: "This is simply being offeredfor the state of mind of the defendants." (Id. at 111-12.) Muchlater in Durette's reading, a letter of Rudy and Gloria Medinaresigning from TPCS was read followed by a complaint letterdated September 3, 1991. The defense again objected to theseletters as hearsay. The court stated again: "Well, as we dis-cussed in the past, this is being offered for the state of mindof the defendants." (Id. at 185.)[2] It is apparent from this review that on three occasionsthe jury was told that particular documents being read relatedto the defendants' "intent" or the defendants'"state of mind."At no time was the jury instructed that they were not to con-sider the accusations as conveying truth about the factsalleged in them. At no point was the jury told that these werelimiting instructions which confined the way they must lookat the evidence.[3] In the first of the rulings that responded to defenseobjections, twice repeated, the court told the jury merely thatthe documents being read had been found at TPCS headquar-ters. The court assumed that instructing the jury that what wasbeing established by the reading was that the documents werefound at TPCS headquarters operated as a restraint on thejury's use of the documents. But for all the jury wasinstructed, it could do whatever it wanted with what wasfound at TPCS headquarters.[4] If these accusations were to be admitted, it was incum-bent on the court to give clear instruction to the jury distin-guishing what they could treat as showing the knowledge ofdefendants and what they could not treat as evidence of crime.Aside from the three brief and particular references citedabove, no instructions at all were given on this vital point.The three brief references were entirely insufficient to clarifya concept that even for lawyers is not an easy one -- the dif-ference between taking a statement for its truth value and lim-iting it simply to the effect of the statement on the mind of theperson exposed to it. Even to a person trained in the law ittakes a mental effort of some magnitude to hear a letterstrongly manifesting the mind of the letter-writer as to thetruth of events the letter-writer says have happened and to dis-tinguish between the asserted truth and the effect of the com-munication on the mind of the recipient of the letter. There arecases in which such letters have been admitted to show theknowledge of the recipient, See e.g. United States v. Lasky,600 F.2d 765, 769 (9th Cir. 1979); United States v. Farkas,935 F.2d 962, 965 (8th Cir. 1991), but always with a clearinstruction that the letters should not be considered for thetruth of the matters contained therein. Without such limitationthe accusations act as testimony against the defendants.[5] The instructions ultimately given the jury as it retireddid not cure the omission. The jury was told that only defen-dants who knew or "should have known" of the documentsshould be charged with notice of their contents. This instruc-tion in no way limited the jury in considering the truth of thecontents. The jury was also told that it should observe anylimiting instructions that had been given in the course of thetrial. No instructions had been given telling the jury that itcould not take the truth of the 37 accusations enumeratedabove into account.The government does not argue that the defendants waivedtheir Confrontation Clause objection by not raising it againwhen the final instructions were prepared. The defendantswere not obliged to object again when they had made their inlimine motion and formally presented it to the court whichdisregarded it and which rebuked the defendants with someasperity when they raised the objection again during Durret-te's testimony. The defendants did not have to perform a vainact.[6] As Durrette read material into the record unlimited inits bearing, abundant hearsay was presented to the jury. Theright secured to the defendants by the Sixth Amendment wasviolated. The right to cross-examine one's accusers is funda-mental in our system of justice. Olden v. Kentucky, 488 U.S.227, 231 (1988). Cross-examination is "the principal meansby which the believability of a witness and the truth of his tes-timony are tested." Davis v. Alaska,
415 U.S. 308
, 316(1974).[7] When a constitutional right is violated by trial rulings,we are bound to determine whether the error was harmlessbeyond a reasonable doubt. Chapman v. California, 386 U.S.18, 24 (1967). The government here had a strong case basedon the contents of the Untax Packages that the defendants puttogether and promoted. The defendants had a not very plausi-ble defense that TPCS was an educational enterprise exercis-ing its right to free speech. If that defense was to have anychance of creating a reasonable doubt in the jurors' minds, thejurors had to credit the defendants with honesty. The hearsayaccusations destroyed that chance. Taken as true, as the jurywas allowed to take them, the accusations established that thedefendants were hypocrites, liars, callous exploiters of theirvictims, operators of a major scam.[8] The 37 accusations were overwhelming evidence of thescheme of mail fraud charged in the indictment and exempli-fied in the particular mail fraud counts. The three live wit-nesses to mail fraud that the government produced wereDavid Anderson, who admitted to having embezzled taxes hewithheld from his employees before he had any contact withTPCS; Debbie Long, whose disillusionment with TPCS camewhen the State of California levied on her wages; and CliffordKoeper, who believed that Untax Package did not work butbecame an Associate Member of TPCS and sold the UntaxPackage to two others. The burden of the government's mailfraud case was carried largely by the accusations read into therecord. When the government on appeal states there was"ample evidence the TPCS members did not get what theypaid for," (Appellee Br. at 46.) (italics in original), and that"there is no better proof of the fact that TPCS members didnot get what they paid for than the testimony of the victims,"(Id. at 47), the government does not cite the testimony ofAnderson, Longer, and Koeper, but appears to invoke all theaccusations that become part of what the jury had before it.[9] The evidence proving the existence of a scheme to com-mit mail fraud was linked to the evidence proving the conspir-acy to defraud the United States. Count One of the indictmentlisted the fraudulent recruitment of taxpayers by TPCS asovert acts carrying out the conspiracy. Addressing the jury inclosing arguments, the government specifically urged that thedefendants' deceitful recruiting of TPCS members was proofof the conspiracy to defraud the United States ("they lie as tohow many people have been successfully untaxed, they lie asto the numbers of people in the organization, and the effec-tiveness of their methods"). The government immediatelyadded: "The instructions that the judge has given you are thatyou need only find that one overt act, as listed in the indict-ment, was committed in furtherance of the conspiracy that'salleged there."[10] The accusations of fraud on the TPCS membersproved, or could have been taken by the jury as proving, boththe mail fraud counts and the conspiracy count. It is difficultfor us to determine beyond a reasonable doubt that they didnot function in this way. When you hear that defendants havetold out-and-out lies, run a scam, and used false pretenses,and you are not limited how you can use this evidence, itwould be entirely natural to credit the accusations so vigor-ously advanced as true. In confirmation of this conclusion isthe difference in the outcome of the two trials. When the gov-ernment had to produce a number of live witnesses who werethemselves tax cheats, the jury hung. With these inconvenientwitnesses eliminated, the jury convicted. The palpable differ-ence in result makes likely that the change of evidence to thepresentation of hearsay tipped the scales. We cannot saybeyond a reasonable doubt that the violations of the Confron-tation Clause did not produce result. The convictions of theMarshes, the Spencers and Coltrane of mail fraud and of con-spiracy to defraud the United States must be set aside.[11] Carpa presents a different case. The jury was explicitlyinstructed not to consider against him the letters read from thefiles. The jury is presumed to have obeyed this instruction.However, the letters went very far to show that TPCS was acriminal conspiracy, and the existence of this conspiracy hadto be proved in order to make Carpa a conspirator. The rever-sal of the convictions of the Marshes, Spencers, and Coltranefor conspiracy leaves Carpa without other convicted conspira-tors and with proof of his part in a conspiracy dependent onthe evidence showing TPCS to be a conspiracy. Under thesecircumstances, Carpa's conviction of conspiracy must also bereversed.The Commercial Liens. The filing of baseless liens toharass government officials has become a standard tax prote-stor ploy. The liens are easy to file and not easy to remove.No judge or other officer of the government would like tohave them filed on his or her property. They bear the mark ofmalice, as they do in the case where they appear as a meanresponse to a lawfully authorized search. Nonetheless, thecrime can be punished only in accordance with law.[12] The indictment charged that the Marshes "did cor-ruptly endeavor to intimidate and impede" certain officers ofthe United States by the filing of the liens in Nevada andWashington. The officers were located in the Eastern andNorthern Districts of California. None were in Nevada orWashington. The liens were mailed for filing from the EasternDistrict of California. The question was put to the jurywhether venue for the crime could be found in the NorthernDistrict. The jury's verdict of guilty so found. The affecteddefendants challenge the finding.[13] The government's argument is that an effect of the fil-ing of the liens was an impact on the IRS officers in San Jose,California, who were conducting a criminal investigation ofthe defendants. The government invokes United States v.Angotti, 105 F.3d 539 (9th Cir. 1997) (venue for the prosecu-tion of the crime of making a false statement in violation of18 U.S.C. S 1014 lies where the crime is completed by thestatement having effect). The problem with Angotti as anal-ogy is that the crime of endeavoring to impede the IRS iscomplete when the endeavor is made. The government did nothave to show that its agents abandoned their investigation oreven that the agents were anxious about the effect of the lienson their credit. No effect need be proved. The filing of the lienis the crime. The government itself presented this exactdescription of the crime to the jury in its closing argument:"All you have to find is that there was an attempt. Becausethat's what a corrupt endeavor is." (Tr. 12/8/95 at 11) Thejury could not find that any step to complete the crime wastaken in the Northern District of California when the criminaldeeds had already been committed. Venue as required by theSixth Amendment was lacking. The convictions on thesecounts must be set aside.[14] Waivers. Two issues now raised by the defendantswere waived at trial. On the face of the indictments the venueof the tax counts was wrong: the Marshes and Spencers hadbeen residents of the Eastern District of California, but theywere being tried in the Northern District. The defendants saidnot a word about the venue until they were convicted. Theynow contend that the government might have proved some actin the Northern District that would have related to the taxcourts and justified the venue; they could not know till thetrial was over. The defendants waited too long. They cannotsandbag the government after the verdict is in. United Statesv. Powell, 498 F.2d 890, 891-92 (9th Cir. 1974).Phillip Marsh earnestly urges that the exclusion of the evi-dence of his psychological state was error in the light of ouren banc decision in United States v. Morales, 108 F.3d 1031(9th Cir. 1997), which he characterizes as establishing a newconstitutional rule that should be applied retroactively.Griffith v. Kentucky,
479 U.S. 314
(1987). Morales did notannounce new constitutional doctrine but applied the FederalRules of Evidence. Marsh cannot benefit from the case retro-actively. He waived his right to introduce the psychiatrist'stestimony by not seeking to introduce it in the second trial.We find no plain error.Other issues raised by the defendants need not be consid-ered in view of our ruling on the principal counts.SUMMARY the end