Tuesday, August 30, 2016
State of Ohio v. Dajhon Walker, Case no. 2014-0942
Eighth District Court of Appeals (Cuyahoga County)
T. Ryan Legg Irrevocable Trust, UBS Trust Company, N.A., Trustee v, Joseph W. Testa, Tax Commissioner of Ohio, Case no. 2015-0917
Ohio Board of Tax Appeals
State of Ohio v. Hamza Shalash, Case no. 2015-1782
Twelfth District Court of Appeals (Warren County)
Did Shooter Convicted of Aggravated Murder Act with Prior Calculation and Design?
State of Ohio v. Dajhon Walker, Case no. 2014-0942
Eighth District Court of Appeals (Cuyahoga County)
ISSUES:
- Did an appellate court properly weigh the sufficiency of the evidence and show the proper deference to a jury verdict when it reversed an aggravated murder conviction?
- Did an appellate court wrongfully reject evidence accepted by a jury of “prior calculation and design” when it reversed an aggravated murder conviction?
BACKGROUND:
In 2012, Antwon Shannon and Ivor Anderson went to a Cleveland nightclub where they met with other friends. While on the dance floor, they encountered Robert Steele, who was dancing wildly and spilled champagne on Anderson. Anderson told Steele “you’re doing too much,” and the two separated. Steele then walked over to a group of friends that included Dajhon Walker. Video cameras from the club recorded Walker, Steele, and a group of friends gathering on the dance floor and grabbing champagne bottles. The men then attacked and beat Anderson with the bottles when Shannon tried to break up the fight, and was struck by Walker with a bottle. While Shannon continued to try to break up the fight, Walker retreated behind a pillar in the club and then shot Shannon in the back with a handgun.
Walker’s flight from the club was caught on another camera. The video showed him stuffing an object into his waistband, engaging in a celebratory jump in the air, and pumping his fists as he left the scene. Shannon died from the wound.
About eight months later when arrested for the shooting, Walker denied knowing anything about the gunshot and couldn’t recall who he was with at the club. Walker and others involved were convicted of several felonies. A jury convicted Walker of aggravated murder, felony murder, and four counts of felonious assault. A judge convicted him of having a weapon under disability. The trial court sentenced him to 25 years to life in prison, and he appealed his sentence to the Eighth District Court of Appeals.
The Eighth District reversed Walker’s conviction for aggravated murder, modifying it to murder by finding insufficient evidence of prior calculation and design, which is a required element under R.C. 2903.01 for an aggravated murder conviction. The court affirmed all other convictions. The Cuyahoga County Prosecutor’s Office appealed the decision, and the Supreme Court agreed to hear the case.
Prosecutor Argues Court Overstepped Authority
When considering a jury conviction, the state argues the Eighth District is required to review the sufficiency of the evidence and is required to draw all reasonable inferences of guilt in the favor of the state. The state maintains Walker presented the jury with numerous pieces of evidence showing Walker’s group planned the attack on Anderson and Shannon and celebrated it afterward.
“When all of the evidence in this case is included in a properly-applied sufficiency review, the State provided clear evidence to support Walker’s conviction for aggravated murder,” the prosecutor’s brief states.
The state explains a sufficiency-of-the evidence review is extremely deferential because a jury evaluated and weighed the evidence. It argues the Eighth District showed no deference to the prosecution and instead conducted its own independent review, limited its review only to the videos presented to the jury, and accepted new arguments made by Walker that he didn’t make at trial.
Additionally, the state suggests the appeals court should have affirmed the lower court’s ruling that Walker acted with the “prior calculation and design” required by R.C. 2903.1(A). The state notes there is no “bright line test” to determine prior calculation and design, but pointed to the Supreme Court’s 1997 State v. Taylor decision where it set up a three-part test to determine prior calculation and design, which asks:
- Did the accused and the victim know each other, and if so, was that relationship strained?
- Did the accused give thought or preparation to choosing the murder weapon or murder site?
- Was the act drawn out or “an almost spontaneous eruption of events?”
In this case, the state asserts that Walker didn’t know Shannon before the incident and after the champagne spill, Walker formed a motive to harm Shannon. For the second factor, the state maintains it was met because Walker brought a gun with him to the club and was able to either conceal it while passing a pat-down search or obtained it once in the club, and that he chose the murder site by withdrawing from the fight, lying in wait behind the pillar, and waiting until he had a clear shot at Shannon. The state concludes that the 15 minutes spent on the dance floor conferring between the time of the drink spill and the attack was not a spontaneous eruption of events and that the totality of circumstances, including the video evidence of Walker celebrating his acts afterward and trying to cover up his involvement when arrested, all are consistent with a planned murder.
The state suggests a jury accepted all the elements to find prior calculation and design and the appeals court isn’t in the position to substitute the jury’s view of the evidence with their own.
Video Refutes State’s Case, Walker Counters
Walker refutes the state’s argument, arguing there was insufficient evidence to establish that he acted with prior calculation and design to justify an aggravated murder conviction. He asserts the club’s video completely contradicts the state’s case, and that none of the three factors in Taylor were met.
Walker confirms he and Shannon were strangers and suggests that in the 15-minute time span between the drink spill and the fight, the two did not develop a relationship, let alone a strained relationship. He didn’t choose a weapon or murder site, and noted that in cases where prior calculation and design that stemmed from a fight were proven, the attacker left the scene and returned with a weapon. He also contends the fight carried his way, proving he didn’t select a murder site.
“Walker moved only a few feet, behind a pillar in the bar, and did not retrieve a weapon; he already had one. That leaves only the twenty two seconds for Walker to have formulated the ‘prior calculation and design’ required for conviction of aggravated murder, and no court decision in the forty-two years since that element was adopted would permit a conviction under those circumstances,” Walker’s brief states.
He also contends there is no link between fleeing the club and celebrating to the elements needed to prove prior calculation and design. In contradiction with the third element of Taylor, he asserts this was an almost “spontaneous eruption of events” rather than a drawn-out act. Walker notes that by affirming the Eighth District’s conviction for murder rather than aggravated murder it only reduces his minimum sentence to 20 years rather than 25 years in prison.
“That was a craven act, and a criminal one, and Walker will pay a heavy price for it: his sentence for murder will be only five years shorter than the sentence initially imposed upon him,” his brief states.
Friend-of-the-Court Brief
An amicus curiae brief supporting Walker’s position has been submitted by Cuyahoga County Public Defender and Cuyahoga Criminal Defense Lawyers Association. The groups note that while an appeals court must view the evidence in the light most favorable to the prosecution, it “does not mandate blind adherence to a prosecution theory grounded on speculation rather than facts.” They maintain the Eighth District’s decision and standard of review is consistent with other appellate courts reviewing similar bar fight convictions.
- Dan Trevas
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing the State of Ohio from the Cuyahoga County Prosecutor’s Office: Christopher Schroeder, 216.443.7733
Representing Dajhon Walker: Leif Christman, 216.241.5019
Are Gains from Stock of Ohio-Based Company Sold by Delaware-Based Trust Subject to State Income Tax?
T. Ryan Legg Irrevocable Trust, UBS Trust Company, N.A., Trustee v, Joseph W. Testa, Tax Commissioner of Ohio, Case no. 2015-0917
Ohio Board of Tax Appeals
ISSUES:
- For the purpose of taxing the sale of an Ohio corporation’s stock by a Delaware-based trust, were the corporation’s books “available” to the trust, which is a required element of R.C. 5747.01(BB)(2) to determine if the proceeds are taxable?
- If the proceeds of a corporate stock sale by a trust aren’t a qualifying trust amount, can the proceeds be considered business income that results from a partial liquidation of an Ohio company, making the income taxable in Ohio?
- Is a Delaware-based trust without a qualifying beneficiary domiciled in Ohio not subject to Ohio income tax?
BACKGROUND:
In 1997, T. Ryan Legg and Ken Oaks formed Total Quality Logistics (TQL), a trucking logistics business that operated in Cincinnati. Legg moved from Kentucky to Cincinnati in 2001 as TQL, an IRS-designated Subchapter S corporation, began to grow. Legg and Oaks each owned 50 percent of the company, 100 shares each. While Legg was the company’s chief executive officer, and Oaks was the president, the relationship strained. In 2005 Legg stopped participating in business decisions and allowed Oaks to operate TQL.
Legg sought advice from attorneys and investment advisers on how to structure a sale of his share of TQL to plan for his family’s future. Legg created the T. Ryan Legg Irrevocable Trust, and U.S. Trust Company of Delaware was named the trustee. It was established as a Delaware resident trust and the trust agreement stated that no distributions would be made during its initial formation stage, which stretched from November 2005 until January 2007. Neither Legg nor any family members were beneficiaries of the trust in 2005 and 2006.
Once the trust was formed, Legg transferred 65 shares of TQL stock to the trust. The trust then sold the shares to Oaks for about $18.5 million. In 2006, Legg and family moved from Ohio to his native West Virginia and then to North Carolina. The trust’s tax preparer in 2006 filed an Ohio fiduciary income tax return that indicated it was a Delaware resident trust that realized a gain from the sale of TQL stock, but because it wasn’t Ohio-based and TQL didn’t make its books available to the trust, the trust reported none of its income was taxable in Ohio.
The Ohio Department of Taxation audited the trust in 2008 and determined the gains were business income subject to a $1.28 million tax assessment. The trust objected to the findings, and after years of attempting to resolve the issue, the Ohio tax commissioner issued his final determination in 2013 that the funds were a “qualifying trust amount” and the tax had to be paid.
UBS Trust took over as trustee in 2009 and then merged with the company that it now designated as the trustee, Reliance Trust Company of Delaware. The trust appealed to the Ohio Board of Tax Appeals (BTA) which affirmed the tax commissioner’s position in 2015. The trust appealed to the Ohio Supreme Court. While the tax commissioner supports the BTA decision ordering the trust to pay the tax, he claims the trust didn’t have the authority to appeal his decision, and has asked the Court to dismiss the case. Because the BTA is an administrative agency, the Supreme Court must hear the appeal.
Trust Contends BTA Mistaken and Raises Constitutional Questions
The trust argues its gain for the sale of TQL stock is not a qualifying trust amount as defined by R.C. 5747.01(BB)(2) because the book value of TQL’s assets were not “available” to the trust. The trust also maintains the gain isn’t modified business income arising from the liquidation of TQL because TQL wasn’t liquidated and still operates, and the trust asserts that because it’s a Delaware-based nonresident trust with no beneficiaries living in Ohio, the gain from the sale isn’t subject to Ohio income tax.
The trust also raises claims that taxing the stock sale income would violate its equal protection rights under the U.S. Constitution’s Fourteenth Amendment. The trust notes that the BTA doesn’t consider constitutional claims so the Court will be the first to hear arguments on those claims.
The trust points to the Supreme Court’s 1989 Alcan Aluminum Corp. v. Limbach decision to find the definition of “available” in the context of computing taxable income of a corporation. For the gain to count as a qualifying trust amount, TQL’s book value of its physical assets must be available to the trust. The BTA had found that the trust and TQL used the same accountant, and the accountant prepared the trust’s taxes with full access to TQL’s books. However, the trust counters that while the accountant had access to both, he couldn’t legally use his services for the company to provide information to the trust without TQL’s permission. He did not have the permission, and the trust alleges it was contractually blocked from reviewing the book value of TQL once it sold the stock.
The BTA stated that had it adopted the trust’s position that the gains weren’t a qualifying trust amount, then the proceeds still would have been taxable in Ohio because they arise from the partial liquidation of TQL, which makes it taxable under R.C. 5747.01(B). The trust counters that a liquidation means to wind down a company going out of business, but the trust selling its share so that Oaks would have full control of the company as it carried on isn’t a liquidation, and the proceeds are not income.
The trust maintains that while the company is based in Ohio and Legg lived in Ohio when it was created, it was formed in Delaware and is subject to Delaware’s tax laws. To be taxed in Ohio under R.C. 5747.01, the trust must have a qualifying beneficiary domiciled in Ohio, and for the 2006 tax year in dispute, the trust articulated it was making no distributions until 2007 at the earliest and had no beneficiaries at the time.
Because it is a Delaware resident, the trust claims the state is violating its federal constitutional rights because there isn’t a significant link between the state and trust to make the gains taxable. Further, because Ohio taxes the sellers of stock in an S corporation different than holders of IRS-designated C corporations, that also violates its federal rights.
Book Value Available to Trust, Commissioner Counters
The tax commissioner supports the BTA’s conclusion, which found under three separate theories that the gains were taxable in Ohio and relied on the same case, Alcan, to determine the book values were available to the trust. Further, he asserts that through the shared accountant the trust actually used TQL’s book value to calculate the trust’s income and tax liability even while claiming to be exempt from Ohio taxation.
The commissioner argues under R.C 1701.37(C) that any Ohio corporate shareholder has a right to access the books and records of the company and that Legg, as a former owner and 50 percent shareholder, certainly knew the location and value of the physical assets of the company. The commissioner further states the contractual agreements between the trust and the company didn’t block the trust from reviewing TQL’s books and the company didn’t prevent the accountant from viewing the books and records to prepare the trust’s returns.
In response to the claims that the Delaware trust isn’t subject to the tax, the commissioner maintains the stock gains are generated from the value of TQL and that value is derived from the company’s extensive activities in Ohio. He argues the state isn’t prohibited by Ohio law or the federal constitution from imposing the tax on the trust.
The tax commissioner objects to the BTA’s and the Court’s acceptance of the appeal of his determination because it was filed by an attorney representing Legg. The commissioner argues only the trustee of the trust can file an appeal, and at the time an appeal could have been made, UBS Trust was listed as the trustee and had to file an appeal. He argues Legg wasn’t the trustee and his representative made no attempt to get UBS’s consent to file the appeal. The BTA rejected the commissioner’s argument and he raises it again, asking the Court to dismiss the case.
- Dan Trevas
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing T. Ryan Legg Irrevocable Trust, UBS Trust Company, N.A., trustee: Mark Loyd, 502.587.3552
Representing Joseph W. Testa, tax commissioner of Ohio, from the Ohio Attorney General’s Office: Daniel Fausey, 614.995.9032
Was Sale of “Analog” Drugs Illegal Between October 2011 and December 2012?
State of Ohio v. Hamza Shalash, Case no. 2015-1782
Twelfth District Court of Appeals (Warren County)
ISSUE: Were “controlled substance analogs” criminalized on Oct. 17, 2011, the effective date of House Bill 64, or on Dec. 20, 2012, the effective date of House Bill 334?
BACKGROUND:
Hamza Shalash was indicted on May 21, 2012, for multiple counts of trafficking in “controlled substance analogs,” which are drugs that have a similar effect and chemical makeup as a regulated drug. He allegedly sold the drugs in January and February 2012 from the Lebanon, Ohio, gas station he co-owned.
Following a trial in March 2013, a jury convicted Shalash for trafficking and engaging in a pattern of corrupt activity. The court sentenced him to 11 years in prison.
Shalash appealed to the Twelfth District Court of Appeals, which in June 2014 overturned his conviction and returned the case to the trial court for a hearing related to expert testimony that had been given at trial about the substances. The trial court held the hearing, and Shalash then asked the court to dismiss the case, arguing the sale of controlled substance analogs wasn’t made illegal until December 2012, months after his alleged offenses and indictment. The trial court denied Shalash’s motion, and he pled no contest and again was found guilty.
The Twelfth District upheld his convictions in his second appeal. However, the court noted a conflict between its decision and State v. Smith (2014) from the Tenth District Court of Appeals. In Smith, the Tenth District concluded that while laws enacted in 2011’s House Bill 64 were clear, the legislature created confusion by not placing the definition of analogs in R.C. Chapter 29, the state’s criminal code. The court then ruled that the alleged sale of certain analog drugs wasn’t clearly defined at the time as a criminal offense.
The Supreme Court was notified of the conflict and accepted the issues for review.
2011 Legislation Addresses Drug Analogs
In 2011, the General Assembly passed House Bill 64, effective on Oct. 17 of that year. The legislation defined “controlled substance analog” in part as a substance with a “chemical structure … substantially similar to the structure of a controlled substance in schedule I or II” and enacted R.C. 3719.013, which stated, “A controlled substance analog, to the extent intended for human consumption, shall be treated for purposes of any provision of the Revised Code as a controlled substance in schedule I.”
Substances Sold in Early 2012 Weren’t Yet Illegal, Store Owner Suggests
Shalash argues that R.C. 3719.013 is a civil, not a criminal, statute regulating the licensing and use of controlled substances. What H.B. 64 criminalized, Shalash maintains, was certain specifically named compounds of “Spice,” which is a synthetic substance similar to marijuana, and “bath salts,” which is a man-made stimulant similar to Ecstasy, by adding them to the list of Schedule I controlled substances. Only in the later House Bill 334, which went into effect on Dec. 20, 2012, did the law then criminalize controlled substance analogs by adding them into the drug offense criminal statutes, he asserts.
Shalash points to Ohio statutes that explain that “[n]o conduct constitutes a criminal offense against the state unless it is defined as an offense in the Revised Code” and “[a]n offense is defined when one or more sections of the Revised Code state a positive prohibition or enjoin a specific duty, and provide a penalty for violation of such prohibition or failure to meet such duty.” Citing the Tenth District’s Smith decision, he contends that before H.B. 334 became effective in December 2012, Ohio law contained no prohibition against trafficking in controlled substance analogs and no penalty for this activity. Nothing he sold was illegal based on the statutes in operation at the time, he concludes.
Legislative Intent in 2011 Bill Was to Criminalize All Analogs, State Reasons
The Warren County prosecutor emphasizes that R.C. 3719.013 states analogs are Schedule I drugs “for purposes of any provision of the Revised Code.” The prosecutor contends in the brief to the Court that the law clearly and “specifically incorporates the concept of controlled substance analogs … into every part of the Ohio Revised Code, including Chapter 29,” the state’s criminal laws, making the unauthorized possession and trafficking of scheduled controlled substances illegal. Because R.C. 3719.013 was enacted in H.B. 64, the prosecutor asserts that the law criminalized possession and sale of analogs in October 2011. The legislative purpose listed in the bill further reflects and reinforces the legislature’s clear intent to make controlled substance analogs illegal, the prosecutor maintains.
The prosecutor disagrees with the Smith ruling from the Tenth District, countering that when reading the relevant statutes together, controlled substance analogs were made illegal in October 2011. Following the Tenth District’s interpretation that analogs weren’t criminalized in H.B. 64 makes the legislation meaningless, the prosecutor argues.
Attorney General and Another Prosecutor File Briefs
Amicus curiae briefs supporting the Warren County prosecutor’s position have been submitted by the Franklin County Prosecutor’s Office and the Ohio Attorney General’s Office.
The Supreme Court granted a request by the attorney general and the Warren County prosecutor to share the 15 minutes allotted to the county for oral argument.
- Kathleen Maloney
Docket entries, memoranda, briefs (including amicus briefs), and other information about this case may be accessed through the case docket.
Contacts
Representing Hamza Shalash from the Ohio Public Defender’s Office: Terrence Scott, 614.466.5394
Representing the State of Ohio from the Warren County Prosecutor’s Office: Kathryn Horvath, 513.695.1325
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