U.S. v. WEST

EMILIO M. GARZA, Circuit Judge:

Defendant Bruce West, Sr. was tried before a jury and convicted of ten counts of bankruptcy fraud, in violation of 18 U.S.C. § 152 (1988), eleven counts of money laundering, in violation of 18 U.S.C. § 1956, and one count of conspiring to commit bankruptcy fraud, in violation of 18 U.S.C. § 371. West now appeals his conviction, contending both that the indictment did not properly charge violations of the bankruptcy fraud and money laundering statutes and that the district court's admission of and refusal to admit certain evidence deprived him of a fair trial. We affirm.

I

Bruce West, Sr., a Texas real estate developer, experienced serious financial problems as a result of the decline in the Texas economy during the mid- to late 1980s. West eventually filed a petition in bankruptcy on April 2, 1990. This criminal case emanates from West's bankruptcy filing, with many of the charges contained in the indictment based on three transactions that West participated in shortly before filing his bankruptcy petition.

A

In April 1989, West sold his homestead ("Dondi Farms") to Earlene Jett, as trustee for her son, Scott Mays. West received $75,000 in cash and a note signed by Jett in the amount of $277,500 ("the Jett note"). As part of the transaction, West leased, and held an option to purchase, a lakehouse owned by Jett. The Jett note was payable in quarterly installments of $8900; under the terms of the sale contract, however, West allowed Jett to deduct from the note payments the monies due Jett as a result of the lakehouse lease. West received ten payments on the Jett note, all of which are the basis of money laundering charges.1

In June 1990, West arranged for a third party to purchase Jett's lakehouse for an amount slightly exceeding its existing mortgage. After the sale had closed, Jett paid the excess—$2,613—to West, who subsequently gave the money to Betty Ruben and Jo Ann Johnson as compensation for finding the buyer. Jett also received a refund on her insurance escrow account, which she paid to West and he then paid to Johnson. West's involvement with the sale of the lakehouse and its proceeds forms the basis for a single count of bankruptcy fraud.

B

The second transaction at issue involved the 1989 purchase of two notes executed by West and held by the Federal Deposit Insurance Corporation ("FDIC"). In 1984, West purchased a building in Addison, Texas ("the Broadway building") for $650,000, financing $350,000 of the purchase price with a loan from Parkway Bank & Trust ("Parkway"). A deed of trust for the building secured West's promissory note. In 1988, Parkway failed, the FDIC was appointed as receiver, and West defaulted on the loan.2 The FDIC, through bank liquidation specialist Lawrence Greer, began negotiating with West to work out or liquidate the loans for the sum of $150,000. West informed Greer that although he did not have the funds to make payment on the Parkway notes, he had "arranged for and [had] an agreement from a company to make it possible to purchase the notes for $150,000." After receiving assurances from West that the transaction between West and North Star Funding ("North Star")—the corporation that had agreed to purchase the Parkway notes—occurred at "arms-length," the FDIC agreed to sell the notes to North Star. Unbeknownst to the FDIC, however, North Star had agreed to act as a nominee, or "straw," purchaser on West's behalf.3 Thus, West supplied the $150,000 needed to purchase the notes and later arranged for North Star to foreclose on the notes and sell the Broadway building to Exalter, his children's corporation.4

C

The third transaction at issue involves Exalter's purchase and subsequent sale to West of a house in Frisco, Texas ("the Frisco house"). In June 1989, Richard McCally sold the Frisco house and an adjacent vacant lot to Exalter in exchange for $125,000 in cash and the Broadway Building, which McCally valued at $545,000.5 West subsequently purchased the Frisco house, and used it as his homestead, from Exalter for $622,500, which included $312,524 in cash, a personal note in the amount of $277,500, which was secured by the Jett note, and a promissory note in the amount of $32,746, which was secured by a first lien deed of trust on the property. The cash portion of the purchase price consisted of "loans" previously made by West to Exalter. West's transfer of a security interest in the Jett note to Exalter forms the basis of a single bankruptcy fraud count.

D

West's failure to report his interest in two bank accounts forms the basis for two additional counts of bankruptcy fraud—Counts 24(a) and 26. In April 1989, Jack Franks wired $219,930 to Commonwealth National Bank in West's name. Because West did not have an account at Commonwealth, a bank employee opened an account in West's name into which the funds could be deposited. In May, West ordered the bank to close the account and disburse the funds as follows: a $150,000 cashier's check payable to the FDIC listing North Star Funding as the remittitur, which West subsequently presented to the FDIC in exchange for the Parkway notes; $50,000 deposited into a new account in Exalter's name;6 and the balance of $19,930 in cashier's checks payable to West.

Count 26 charged West with fraudulently transferring and concealing funds in a second Commonwealth account, which was opened by Sandra Malmay, West's then-girlfriend, in September 1989. Malmay testified that West directed her to open the account in her name because he was afraid that any accounts held in his name would be garnished. Malmay further stated that checks drawn on the account "mostly" benefitted West and were paid with funds deposited by West. Moreover, West deposited several payments made pursuant to the Jett note into the account, the proceeds of which then were transferred to Exalter.

Count 31 charged West with money laundering. The transactions underlying this count involved two automobiles—a 1962 Mazda coupe and a 1935 Austin. West failed to list the Mazda on the appropriate bankruptcy schedules and erroneously indicated that he held only a one-half interest in the Austin. However, West subsequently conveyed the cars to Great Cars, Inc. ("Great Cars") in exchange for a dune buggy and $5,750 cash, which was deposited into the Malmay account.

II

West was convicted of several counts of bankruptcy fraud, in violation of 18 U.S.C. § 152.7 Three of these counts charged West with fraudulently transferring funds to Exalter during February and March 1989. West contends that transfers, which occurred more than one year prior to the filing of his bankruptcy petition, cannot provide the basis for a § 152 prosecution because the transfers were "outside the jurisdiction of the Bankruptcy Code." As support for his construction of § 152, West points to 11 U.S.C. § 548(a), which allows a bankruptcy trustee "to avoid any transfer of an interest of the debtor in property ... that was made ... on or within one year before the date of the filing of the petition." West submits that because the trustee lacked jurisdiction over the transferred funds, the government may not prosecute him for bankruptcy fraud.8

We disagree with West's interpretation of § 152. The plain language of § 152 certainly cannot be read to impose the requirement suggested by West. See United States v. Moody, 923 F.2d 341, 347 (5th Cir.1991) (noting that "words in a statute are to be given their plain and ordinary meaning"). Moreover, in light of the explicit intent requirements found in § 152, we will not transplant from the Bankruptcy Code the additional requirement that a fraudulent transfer, to be prosecutable as bankruptcy fraud, must be made within one year prior to the defendant's filing of his bankruptcy petition. A defendant may knowingly and fraudulently transfer property in contemplation of or with the intent to defeat the provisions of Title 11 without necessarily transferring the property within one year before filing a bankruptcy petition. Cf. Ralph C. McCullough, II, Bankruptcy Fraud: Crime Without Punishment, 96 Com.L.J. 257, 268 (1991) ("Theoretically, bankruptcy fraud could occur in contemplation of an apparently inevitable bankruptcy which the debtor later managed to escape."). Indeed, a knowledgeable defendant bent on pursuing a fraudulent course of action would effect a fraudulent transfer outside the one year period within which the bankruptcy trustee could rescind it. See United States v. Dandy, 998 F.2d 1344, 1348 (6th Cir.1993) (defendant convicted of bankruptcy fraud when he exercised power over the bankrupt corporation "for exactly one year and one day in order to prevent [the bankrupt] from declaring bankruptcy during the one-year period within which [the defendant's diversion of assets] could be rescinded as an avoidable transfer under bankruptcy law"); Stegeman v. United States, 425 F.2d 984, 986 (9th Cir.1970) (§ 152 "`attempts to cover all the possible methods by which a bankrupt ... may attempt to defeat the Bankruptcy Act through an effort to keep assets from being equitably distributed among creditors.'") (citation omitted). Consequently, we hold that the government may prosecute individuals under 18 U.S.C. § 152 for transfers of property occurring more than one year prior to the filing of a petition in bankruptcy if such transfers are made knowingly, fraudulently, and in contemplation of a case under title 11 or with intent to defeat the provisions of title 11.9 Cf. United States v. Grant, 971 F.2d 799, 805 (1st Cir.1992) (refusing to apply the "relation back" doctrine developed under the Bankruptcy Act in a criminal bankruptcy fraud case because the doctrine was not "designed to insulate bankruptcy fraud, either in the bankruptcy proceeding itself or in any related criminal proceeding").10

III

West next challenges the sufficiency of Counts IX through XVIII and Count XXXI of the indictment, arguing that the government failed to adequately allege the elements of the charged offenses—money laundering, in violation of 18 U.S.C. § 1956.11 "Whether an indictment sufficiently alleges the elements of an offense is a question of law to be reviewed de novo." United States v. Shelton, 937 F.2d 140, 142 (5th Cir.), cert. denied, ___ U.S. ___, 112 S.Ct. 607, 116 L.Ed.2d 630 (1991). To obtain a conviction for money laundering, the government must prove "[t]hat the defendant 1) conducted or attempted to conduct a financial transaction, 2) which the defendant knew involved the proceeds of unlawful activity, 3) with the intent [either] to promote or further unlawful activity" or to conceal or disguise the nature, location, source, ownership, or control of the proceeds of unlawful activity. United States v. Ramirez, 954 F.2d 1035, 1049 (5th Cir.), cert. denied, ___ U.S. ___, 112 S.Ct. 3010, 120 L.Ed.2d 884 (1992); see 18 U.S.C. § 1956(a)(1)(A)(i) & (B)(i). The government submits that West violated the money laundering statute by accepting and depositing payments received pursuant to the Jett note and his sale of the two automobiles to Great Cars, Inc., acts that constitute bankruptcy fraud.12

West contends that the crime of money laundering "must always have at its core [the] act of taking `dirty money' and making it `clean.'" In contrast, West submits that "[t]he act at the core of this case ... was the taking of `clean money' and making it dirty.'" In other words, West contends the monies he received from Jett and Great Cars were not proceeds of some unlawful activity, but instead constituted the proceeds of lawful activities—namely, Jett's purchase of Dondi Farms and Great Cars' purchase of the two automobiles. We disagree. The mere fact that Jett and Great Cars were innocent third parties—i.e., they did not conspire with West to commit bankruptcy fraud—does not preclude West's conviction for money laundering. Instead, the checks that Jett and Great Cars gave to West involved the proceeds of unlawful activity—West's attempts to fraudulently conceal assets, in contemplation of a case under title 11 or with intent to defeat the provisions of title 11. Had West not undertaken such a course of action, he would not have received any funds from Jett or Great Cars. Consequently, the checks at issue resulted from West's concealment of assets and, therefore, constituted the proceeds of West's bankruptcy fraud.13 See Cavalier, 17 F.3d at 92-93. Accordingly, we conclude that West was properly charged with and convicted of money laundering.14

IV

West also challenges several evidentiary rulings made by the district court. We review the district court's determinations as to the admissibility of evidence using the abuse of discretion standard. See United States v. McAfee, 8 F.3d 1010, 1017 (5th Cir.1993) (exclusion of evidence); United States v. Loney, 959 F.2d 1332, 1340 (5th Cir.1992) (admission of evidence).

A

West first contends that the district court erred in refusing to allow him to introduce evidence that "it was a routine practice of the FDIC to sell notes held by a failed institution at a discount, and that the FDIC frequently allowed parties to purchase their own discounted note through third parties who were ... `straw purchasers.'" West argues that such evidence was both relevant to the issue whether the FDIC knew that West was using North Star as a straw purchaser in the Parkway notes transaction and admissible as a "routine practice" of the FDIC.15

Rule 406 provides that "[e]vidence of the habit of a person or of the routine practice of an organization ... is relevant to prove that the conduct of the person or organization on a particular occasion was in conformity with the habit or routine practice."16 Fed. R.Evid. 406. Although "[t]here is no precise formula for determining when a practice becomes so consistent as to rise to the level of routine," "adequacy of sampling and uniformity of response are controlling considerations." G.M. Brod & Co. v. U.S. Home Corp., 759 F.2d 1526, 1533 (11th Cir.1985) (internal quotations omitted); see also Reyes v. Missouri Pacific R.R., 589 F.2d 791, 795 (5th Cir.1979).

After reviewing the record, we conclude that the evidence offered by West to prove the FDIC's routine practice, when considered in light of the FDIC's dealings with literally thousands of debtors during the mid-to late 1980s, "falls far short of the adequacy of sampling and uniformity of response which are the controlling considerations governing admissibility."17 G.M. Brod, 759 F.2d at 1533. In fact, West has not attempted to make a comparison of the number of transactions in which the FDIC allegedly allowed straw purchasers with the number in which the FDIC did not. See Simplex, Inc. v. Diversified Energy Sys., Inc., 847 F.2d 1290, 1294 (7th Cir.1988) (noting the "the Rule 406 inquiry also necessitates some comparison of the number of instances in which any such conduct occurs with the number in which no such conduct took place") (internal quotation omitted). Finally, we note that both FDIC officials involved in the negotiations with West testified that they did not direct West to utilize a straw purchaser.18 See United States v. Newman, 982 F.2d 665, 669 (1st Cir.1992) ("[W]e are aware of no case, and the appellant cites none, in which the routine practice of an organization, without more, has been considered probative of the conduct of a particular individual within the organization."). Consequently, the district court did not abuse its discretion in finding Rule 406 inapplicable to the evidence presented by West.19

B

West next contends that the district court erred in allowing the government to impeach Jack Franks, a prosecution witness, by means of Franks' prior convictions for mail fraud and two other felonies. Fed. R.Evid. 607 provides that "[t]he credibility of a witness may be attacked by any party, including the party calling the witness."20 However, the government may not introduce evidence of prior conviction "`under the guise of impeachment for the primary purpose of placing before the jury substantive evidence which is not otherwise admissible'" United States v. Hogan, 763 F.2d 697, 702 (5th Cir.1985) (quoting United States v. Miller, 664 F.2d 94, 97 (5th Cir.1981), cert. denied, 459 U.S. 854, 103 S.Ct. 121, 74 L.Ed.2d 106 (1982)). West argues that the government introduced evidence at trial regarding Franks' prior convictions for just such a prohibited purpose—namely, to prove West's guilt by his association with Franks.

West contends that the sole purpose behind Rule 607 is to allow the government to "pull the sting" of impeachment—i.e., to allow the government on direct examination to elicit the fact of conviction so as to prevent the defendant from exposing the conviction during cross-examination, thereby giving the jury the impression that the government was concealing a relevant fact about its witness. West submits that the government's intent to use Franks' convictions as substantive evidence of West's guilt is clear because West "guaranteed" that he would not impeach Franks using Franks' three prior felony convictions. Over West's objections and in spite of West's "guarantee," however, the district court ruled that the government could introduce evidence of the prior convictions during direct examination.21

After reviewing the record, we conclude that the government's primary purpose in calling Franks was not to establish West's guilt by his association with Franks. Indeed, West admits that Franks' testimony "played a critical role in several facets of the case." Moreover, the government neither emphasized nor urged the jury to consider Franks' convictions as evidence of West's guilt. Cf. United States v. Hernandez, 921 F.2d 1569, 1582-83 (11th Cir.1991) (despite the absence of a cautionary instruction, the district court did not abuse its discretion in allowing the government to introduce a codefendant's guilty plea when the government did not emphasize it or urge the jury to consider it); United States v. Gorny, 732 F.2d 597, 604 (7th Cir.1984) (government's impeaching its own witness was not reversible error where it did not call the witness "merely for the purpose of introducing irrelevant evidence or of establishing the defendant's guilt by association with the witness"). Finally, the district court instructed the jury that it was to consider the evidence of Franks' prior convictions "solely in judging the credibility of the witness" and not to consider the evidence "for any purpose in judging the innocence or guilt of" West. See Zafiro v. United States, ___ U.S. ___, 113 S.Ct. 933, 939, 122 L.Ed.2d 317 (1993) (noting that juries are presumed to follow their instructions). Accordingly, the district court did not abuse its discretion in allowing the government during direct examination to inquire about Franks' prior convictions.

C

Prior to trial, West moved in limine for an order directing the government to refrain from offering evidence pertaining to (1) West's fluctuating, and generally declining, net worth, (2) West's purchase and use of cashier's checks during December 1987 and January 1988, (3) West's participation in cash transactions involving amounts of $9,500 during December 1987, January, May and June 1988, and February 1989, and (4) West's rental or use of one or more safe deposit boxes. The district court refused to consider the issue until the government sought to offer the evidence at trial. When the government did offer the evidence, West argued that the court should exclude it as evidence offered by the government merely to prove that he was a person of bad character.22 Alternatively, West contended that the probative value of the evidence was substantially outweighed by the danger of unfair prejudice.23 The district court overruled West's objections. On appeal, West offers the same arguments to convince us that the district court erred in admitting the challenged evidence.24 The government, on the other hand, contends that the challenged evidence is relevant both to West's intent—i.e., whether he acted in contemplation of bankruptcy or with the intent to defeat the provisions of title 11—and to plan—his scheme to deter and prevent creditors from tracing funds to which he had access.

When extrinsic offense evidence is offered, Rule 404(b) calls for a two-step approach. First, evidence of prior extrinsic acts must be "relevant to an issue other than the defendant's character." United States v. Beechum, 582 F.2d 898, 911 (5th Cir.1978) (en banc), cert. denied, 440 U.S. 920, 99 S.Ct. 1244, 59 L.Ed.2d 472 (1979). Evidence is relevant when it has "any tendency to make the existence of any fact that is of consequence to the determination of the action more or less probable than it would be without the evidence." Fed.R.Evid. 401. "Second, the evidence must possess probative value that is not substantially outweighed by its undue prejudice and must meet the other requirements of Rule 403." Beechum, 582 F.2d at 911.

1

Evidence of prior extrinsic acts is admissible to prove "plan" where the existence of a plan is relevant to some ultimate issue in the case. United States v. Krezdorn, 639 F.2d 1327, 1331 (5th Cir.1981). For example,

Id. (quoting 22 Wright & Graham, Federal Practice & Procedure § 5244, at 500 (1978) (footnotes omitted)).

Evidence of prior extrinsic acts also is allowed by Rule 404(b) to establish that the defendant acted with the requisite criminal intent. See United States v. Goodstein, 883 F.2d 1362, 1370 (7th Cir.1989) ("Fraudulent intent may be proved by circumstantial evidence."). "Persons whose intention is to shield their assets from creditor attack [using the bankruptcy laws] while continuing to derive the equitable benefit of [their] assets rarely announce their purpose. Instead, if their intention is to be known, it must be gleaned from inferences drawn from a course of conduct." In re May, 12 B.R. 618, 627 (N.D.Fla.1980). Consequently, to prove intent, the government may introduce evidence relevant to establishing that a defendant engaged in a course of conduct designed to defraud his creditors or the bankruptcy trustee.

We conclude that the district court did not err in finding that the evidence offered by the government was relevant to whether West acted with the requisite intent or whether he acted pursuant to a plan to defeat the rights of his creditors. For example, the financial statements prepared on West's behalf indicate that West's net worth fell dramatically after 1985. Because the deterioration of West's financial situation bears strongly on both his incentive and need to seek bankruptcy protection, such evidence is relevant not only to West's motive for hiding assets from creditors, but also indicated that it was very probable that he knew that he was going to file a petition in bankruptcy long before March 1990.25 See 18 U.S.C. § 152 ¶ 7 (noting that the transfer or concealment of property must occur "in contemplation of a case under title 11" or "with intent to defeat the provisions of title 11" to constitute bankruptcy fraud); see also United States v. Lerch, 996 F.2d 158, 162 (7th Cir.1993) (admission of tax court and bankruptcy court opinions from prior proceedings was proper under Rule 404(b) because they demonstrated the defendant's "motive for hiding assets"). Moreover, the financial statements generally were consistent with West's testimony that his net worth reached its peak of between seventeen and nineteen million dollars in 1985 and declined precipitously thereafter.26 Finally, we note that the district court gave the appropriate limiting instruction.27 Consequently, the district court correctly found that the financial statements were relevant to the issue of intent. See United States v. Haymes, 610 F.2d 309, 311-12 (5th Cir.1980) (in bankruptcy fraud case, testimony given by the defendant's secretary that he was concerned about his company's "grave financial condition and the likelihood it would fall into bankruptcy" was relevant to intent; when determining when the defendant began acting with the requisite intent, "[a] jury must be allowed to put two and two together").

The evidence regarding West's purchase and use of cashier's checks during December 1987 and January 1988 also was relevant to the issue whether West acted with the requisite intent. Miriam Lewis, West's secretary, testified as to why West directed her to cash various checks and obtain cashier's checks:

Moreover, the pattern of check use is similar and relatively close in time to the transactions undergirding the instant case, and the district court cautioned the jury not to use the evidence improperly.28 See Lerch, 996 F.2d at 162 (admission of tax court and bankruptcy court opinions from prior proceedings proper under Rule 404(b) because the "events underlying both opinions are ... similar and close in time to the instant case").

The government next introduced evidence pertaining to West's participation during December 1987, January, May and June 1988, and February 1989 in cash transactions involving amounts of $9,500. Lewis testified that starting in 1987, the amount of cash West obtained from various accounts that he had access to increased dramatically.29 Prior to 1987, Lewis would cash checks only for travel expenses and petty cash. After a conversation with West during which they discussed the federal law requiring banks to report certain cash transactions to the Internal Revenue Service,30 however, West directed Lewis to cash several checks in amounts of $9,500, thereby avoiding the reporting requirements. Thus, this evidence is relevant to whether West acted with the intent to defeat the provisions of the Bankruptcy Code and whether he acted pursuant to a plan to defeat the rights of his creditors. Consequently, the evidence was admissible under Rule 404(b).31

Finally, we conclude that the district court did not err in admitting the evidence regarding West's rental or use of various safety deposit boxes. Lewis testified that during or after March 1989, as part of the duties relating to her employment with West, she went with West's daughter to First City Bank, where the daughter removed cash from a safety deposit box. Lewis and the daughter then proceeded to "several different banks and got cashier's checks." Lewis mailed the cashier's checks to Jack Franks, one of West's business associates. This evidence was relevant to the issue of intent because it indicated the existence of a plan to hide West's assets and avoid attachment of his bank accounts, thereby defrauding his creditors.

2

West next contends that even if the challenged evidence was relevant under Rule 404(b), the district court should have excluded the evidence pursuant to Rule 403 because its probative value was substantially out-weighed by the danger of unfair prejudice. We must determine "whether the danger of undue prejudice outweighs the probative value of the evidence in view of the availability of other means of proof and other facts appropriate for making decisions of this kind under Rule 403." Fed.R.Evid. 404(b) advisory committee's note. "The exclusion of evidence under Rule 403," however, "should occur only sparingly." United States v. Pace, 10 F.3d 1106, 1115 (5th Cir.1993); see also United States v. McRae, 593 F.2d 700, 707 (5th Cir.) (noting that Rule 403's "major function is limited to excluding matter of scant or cumulative probative force, dragged in by the heels for the sake of its prejudicial effect"), cert. denied, 444 U.S. 862, 100 S.Ct. 128, 62 L.Ed.2d 83 (1979).

At trial, the only real issue in dispute involved West's intent—i.e., whether he acted in contemplation of declaring bankruptcy or with intent to defeat the Bankruptcy Code. Direct means of proof tending to make the existence of criminal intent on West's part more probable than it otherwise would be is generally unavailable in bankruptcy fraud prosecutions. See In re May, 12 B.R. at 627. Consequently, Rule 404(b) evidence indicating that West acted with the requisite intent was extremely important to the government's case. Furthermore, the prior acts occurred relatively close in time to the conduct charged in the indictment, thereby increasing the probative value of the 404(b) evidence. See United States v. Rubio-Gonzalez, 674 F.2d 1067, 1075 (5th Cir.1982) (upholding trial court's decision pursuant to Rule 404(b) to admit evidence of 10-year-old acts). Finally, the district court properly instructed the jury on four occasions as to the limitations on consideration of the extrinsic offense evidence.32 See United States v. Elwood, 999 F.2d 814, 817 (5th Cir.1993) (no Rule 403 breach where the trial court instructed the jury on three occasions of the limitations in the consideration of extrinsic offense evidence). Consequently, we conclude that the district court did not breach Rule 403 by admitting the Rule 404(b) evidence.

D

West's final assertion is that his trial was rendered fundamentally unfair because the district court refused to allow two bankruptcy experts—Philip Palmer and William H. Brister—to testify regarding the relationship between the Texas Homestead Act33 and federal bankruptcy law. West contends that such testimony would have demonstrated that he at all times acted in good faith, and thus was relevant to the issue of his intent.34 Here, West's good faith defense was centered upon his asserted reliance on the advice of his bankruptcy counsel—Philip Palmer—and his accountant—Nathan Reeder. Although both Palmer and Reeder testified they advised West to structure the Dondi Farms, Broadway building, and Frisco house transactions as he did and that the transactions were lawful, West contends that the district court erred in not allowing him to demonstrate "that it was reasonable to follow [the advice supplied by Palmer and Reeder]—a showing that of necessity would include some explanation of ... what a Texas homestead exemption was, and how one could lawfully preserve it, under bankruptcy law."35

Under Fed.R.Evid. 702, "[i]f scientific, technical, or other specialized knowledge will assist the trier of fact to understand the evidence or to determine a fact in issue, a witness qualified as an expert by knowledge, skill, experience, training, or education may testify thereto in the form of an opinion or otherwise." Here, the critical issue at trial was whether West acted in good faith and relied upon the advice of counsel. Thus, the district court correctly allowed West to testify that he at all times relied in good faith upon the advice of experts and both Palmer and Reeder to testify that they advised West to structure the transactions as he did.36 Cf. Miller v. United States, 120 F.2d 968, 970 (10th Cir.1941) (stating that the defendant may buttress his testimony of lack of intent "with testimony of relevant circumstances, including conversations had with third persons or statements made by them, tending to support his statement that he had no intent to defraud"). Moreover, the district court further allowed Palmer to testify that: (1) West made full disclosure regarding the transactions; (2) he advised West that the Frisco house transaction "was a legal and proper transaction"; (3) the Frisco house transaction caused no harm to West's creditors; (4) the Jett note was exempt from the claims of creditors; (5) the Jett note retained its exempt status after the Frisco house transaction because it was "used in the acquisition of the new homestead which is what [the homestead] exemption is all about"; and (6) he advised West that West was free to use payments made both pursuant to the Jett note and after West had sought bankruptcy protection because such payments were exempt. Consequently, West's defense—that he in good faith relied on the advice of counsel—was squarely placed before the jury.37 Because the typical juror is qualified to determine intelligently and to the best degree possible both the reasonableness of a client relying upon the advice of an attorney and accountant retained to render such advice and whether the client did so in good faith after making full disclosure, expert testimony as to the legal basis underlying the advice—i.e., the reasonableness of their interpretation of the provisions of the Texas Homestead Act—would not have assisted the jury. See Fed.R.Evid. 702 advisory committee's note (noting that the test "for determining when experts may be used" is "the common sense inquiry whether the untrained layman would be qualified to determine intelligently and to the best possible degree the particular issue without enlightenment from those having a specialized understanding of the subject") (internal quotation omitted). Accordingly, the district court did not abuse its discretion in refusing to admit expert testimony regarding the Texas Homestead Act.

West nonetheless contends that precedent required the district court to admit the experts' testimony. West primarily relies upon United States v. Garber, 607 F.2d 92, 97-100 (5th Cir.1979) (en banc), where we held that because the taxability of the unreported income at issue was uncertain as a matter of law, the trial court erred in excluding the testimony of an expert about the unresolved nature of the law.38 We find Garber inapposite given the substantial differences between the facts of that case and the case sub judice.39 For example, the trial court in Garber refused to allow the defendant to present any testimony suggesting that the law supported her actions. Id. at 99 ("By disallowing [the expert's testimony] that a recognized theory of tax law supports Garber's feelings, the court deprived the defendant of evidence showing her state of mind to be reasonable."). Here, however, the district court allowed West to testify both that he consulted with Reeder and Palmer before structuring the Dondi Farms, Broadway Building, and Frisco house transactions and that he followed their advice. Additionally, the district court allowed both Palmer and Reeder to testify that they advised West to structure the transactions as he did and that the transactions were perfectly legal. Thus, West's reliance upon Garber is misplaced.40 Moreover, West has not argued on appeal that the relevant law was unsettled, that he or his advisors subjectively saw any such uncertainty, or that his advisors explained the Texas Homestead Act to him in anything other than very general terms. See United States v. Harris, 942 F.2d 1125, 1132 n. 6 (7th Cir. 1991) (noting that where the defendant or his tax advisors may have subjectively, but wrongly, seen an ambiguity, the defendant may present evidence to the jury demonstrating the basis of the erroneous, good faith belief). The typical juror is perfectly capable of determining, based on the evidence presented, whether West acted in good faith, disclosed all the relevant facts, and then acted in reliance upon the advice obtained. Consequently, we must reject West's contention that the district court erred in excluding the proposed testimony regarding the provisions of the Texas Homestead Act. Cf. United States v. Burton, 737 F.2d 439, 444 (5th Cir.1984) (noting that the trial court "ordinarily will be the sole source of the law").

V

For the foregoing reasons, we AFFIRM the judgment of the district court.