Decided: June 22, 2012
The Fourth Circuit Court of Appeals affirmed the convictions of Anthony and Harriet Jinwright, former co-pastors of Greater Salem Church (“GSC”) in North Carolina, for conspiracy to defraud the United States and tax evasion. Mr. Jinwright served as senior pastor of GSC; his wife, Mrs. Jinwright, played an active role in church life, but only began drawing a salary in 2000, 19 years into the Jinwright’s church leadership. Between 2001 and 2007, GSC provided Mr. Jinwright with benefits outside his salary including housing allowances of between $130,000 and $160,000 a year, travel allowances, payments for his children’s tuition, use of a luxury car leased by the church, and an additional vehicle allowance. He received annual bonuses of $35,000 to $50,000 and a separate Christmas bonus. Additionally, he was reimbursed for unsubstantiated business expenses. Mr. Jinwright’s total compensation for 2001 to 2007 totaled nearly $3.9 million. During the same timeframe, Mrs. Jinwright received similar compensation totaling nearly $1 million. The Jinwrights also established an organization known as A.L. Jinwright Ministries, Inc. (“ALJM”) purportedly to receive income for their outside speaking engagements. However, GSC paid the operating expenses and the defendants kept the income. The IRS Revenue Agent who investigated their case testified that the defendants understated their income by $2,486, 771 between 2002 and 2007, resulting in a tax deficiency of $664,352.
On appeal, the defendants challenged the jury instructions related to willful blindness. The doctrine of willful blindness permits the government to prove knowledge by establishing that the defendant “deliberately shield[ed] [himself] from clear evidence of critical facts that are strongly suggested by the circumstances.” Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060, 2068-69 (2011). Reviewing the evidence presented at trial, the court held the evidence supported the instructions even under the standard laid out by the Supreme Court in Global-Tech which was decided since the Jinwrights’ convictions.
The defendants also challenged the jury instructions regarding the tax treatment of payments from an employer to an employee. GSC employees testified that certain payments from the church to the Jinwrights were gifts. The court gave the jury a clarifying instruction that payments from employer to employee are income and such payments are not gifts under the IRS Code and limited the Jinwrights’ ability to cross-examine the witnesses about this subject. The Jinwrights contended that this impermissibly shifted the burden of proof to them. However, the Court of Appeals applied the principle used in other circuits that in criminal tax cases the burden is on the defendant to prove that he had deductions not in his return once the Government establishes unreported income. And, the decision to limit the cross examination was reasonable in light of potential confusion to the jury.
Mr. and Mrs. Jinwright also contended that the court erred in the calculation of the sentencing and restitution, but reviewing the relevant precedent, the court affirmed the sentence and amount of restitution.